Document:

Exhibit 4.5

 

ARTICLES OF AMENDMENT

 

to the

 

ARTICLES OF INCORPORATION

 

of

 

ALABAMA POWER COMPANY

 

 

Pursuant to, and with the effect provided in, Section 10-2B-6.02 of the Code of Alabama, 1975, as amended (the “Code”), the undersigned company adopts the following Articles of Amendment to its Articles of Incorporation:

 

	
            FIRST:  
 	
            The name of the company is “Alabama Power Company” (the “Company”).
 

 

SECOND:  The following resolutions amending the Company's Articles of Incorporation, as amended, providing for, among other things, the issuance and sale of not more than 8,000,000 shares of Preference Stock (Stated Capital $25 Per Share), not in excess of an aggregate $200 million, in one or more series and establishing each series of the new stock (as defined below), was duly adopted in the manner provided by the Code by the Company's Board of Directors at a meeting held on July 27, 2007; the Company issued 6,000,000 shares of Preference Stock in a series designated as the “6.45% Series Preference Stock,” Non-Cumulative Par Value $1 Per Share (Stated Capital $25 Per Share); and the Company has determined that it desires to subsequently issue 2,000,000 shares of the Preference Stock, for an aggregate amount of $50 million, shareholder approval therefor not being required:

 

RESOLVED, That the relative rights and preferences of not more than 8,000,000 authorized but unissued shares of undesignated Preference Stock (Stated Capital $25 Per Share) (the “new stock”) in those respects in which the shares thereof may vary from the shares of other series of Preference Stock which may now or hereafter be authorized or created shall be as follows: 

 

(1)               The officers of the Company be and hereby are authorized to determine the dividend rate or rates of the new stock, not to exceed 7.5% of the stated capital per annum, from and after the date issued, but only when declared by the Board of Directors and the dividend payment dates shall be the first days of January, April, July and October (the “Dividend Payment Date”) in each year commencing on the applicable Dividend Payment Date succeeding the date of issuance of the new stock. If declared, 

 

 

dividends shall be payable to shareholders of record on a date as may be determined by the Board of Directors.  If any Dividend Payment Date is not a business day, the related dividend, if declared, will be paid on the next succeeding business day with the same force and effect as though paid on the Dividend Payment Date, without any increase to account for the period from such Dividend Payment Date through the date of actual payment.

 

(2)               Dividends payable on the new stock shall be non-cumulative and, accordingly, if the Board of Directors of the Company does not declare a dividend or declares less than a full dividend on the new stock for a dividend period, holders of the new stock will have no right to receive a dividend or the full dividend, as the case may be, for the dividend period and the Company will have no obligation to pay a dividend for that dividend period, whether or not the Company pays dividends in full or has sufficient funds to pay dividends in the future.  Dividends payable on the new stock for the initial dividend period and any period less than a full dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months and the actual number of
days elapsed in such period.

 

(3)               (a)The Company may redeem any or all of the new stock, from time to time, at a redemption price equal to:

 

(i)         if the date on which the shares of the new stock are to be redeemed (the “Redemption Date”) is prior to October 1, 2017 (the “Initial Redemption Date”), the greater of (1) $25.00 per share of the new stock to be redeemed or (2) the sum of the present values of the liquidation amount and the remaining scheduled dividend payments on the shares of the new stock to be redeemed to the Initial Redemption Date (for purposes of this calculation, the $25.00 per share liquidation amount of the new stock is deemed payable on the Initial Redemption Date and the remaining scheduled dividend payments are those dividend payments payable on or before the Initial Redemption Date (presuming full dividends are declared for each Dividend Payment Date) for the period from the Dividend Payment Date immediately
preceding the Redemption Date to the Initial Redemption Date (excluding any accrued and unpaid dividends (whether or not declared) to the Redemption Date)) discounted (for purposes of determining present 

 

 

value) to the Redemption Date on a quarterly 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 25 basis points; or

 

(ii)         if the Redemption Date is on or after the Initial Redemption Date, $25.00 per share of the new stock to be redeemed,

 

plus, in each case, an amount equal to the amount of the accrued and unpaid dividends (whether or not declared) from the Dividend Payment Date immediately preceding the Redemption Date to but excluding the Redemption Date, but without accumulation of unpaid dividends on the new stock for prior dividend periods.

 

 (b)            In the event the Company shall determine to redeem any or all of the new stock as aforesaid, the Company will give notice of any such redemption to holders of record of the new stock not more than 60 nor less than 30 days prior to the date fixed by the Board of Directors for such redemption.  Failure to give notice to any holder of record of the new stock shall not affect the validity of the proceedings for the redemption of shares of any other holder of record of the new stock being redeemed.

 

 (c)            Notice having been given as herein provided, from and after the Redemption Date, dividends on the new stock called for redemption shall cease to accrue and such new stock called for redemption will no longer be deemed outstanding, and all rights of the holders thereof, other than the right to receive the redemption price as herein provided, will cease.

 

 (d)            Holders of the new stock will have no right to require redemption of any shares of the new stock.

 

 (e)            Any shares of the new stock that are redeemed shall thereafter have the status of authorized but unissued shares of preference stock of the Company undesignated as to series, and may thereafter be reissued by the Board of Directors in the same manner as any other authorized and unissued shares of preference stock.

 

 (f)             If the Company shall deposit on or prior to any date fixed for redemption of the new stock, with any bank or trust company having a capital, surplus and undivided profits aggregating at least fifty million dollars ($50,000,000), as a trust fund, a fund sufficient to redeem the shares called for redemption, 

 

 

with irrevocable instructions and authority to such bank or trust company to pay on and after the date fixed for redemption or such earlier date as the Board of Directors may determine, to the respective holders of such shares, the redemption price thereof, then from and after the date of such deposit (although prior to the date fixed for redemption) such shares so called shall be deemed to be redeemed and dividends thereon shall cease to accrue after said date fixed for redemption and such deposit shall be deemed to constitute full payment of said shares to the holders thereof and thereafter said shares shall no longer be deemed to be outstanding, and the holders thereof shall cease to be shareholders with respect to such shares, and shall have no rights with respect thereto except only the right to receive from said bank or trust company payment of the redemption price of such shares without interest.

 

 (g)            In case the holder of any such new stock shall not, within six years after said deposit, claim the amount deposited as above stated for the redemption thereof, the bank or trust company shall upon demand pay over to the Company such amounts so deposited and the bank or trust company shall thereupon be relieved from all responsibility to the holder thereof.  No interest on such deposit shall be payable to any such holder.

 

 (h)            Nothing contained in this paragraph (3) shall limit any legal right of the Company to purchase or otherwise acquire any shares of the new stock.

 

(4)               The amount payable in the event of liquidation shall be $25 per share, plus accrued and unpaid dividends (whether or not declared) for the then current quarterly dividend period, accrued to but excluding the date of such liquidation payment, but without accumulation of unpaid dividends for any prior dividend periods.

 

(5)               The shares of such class shall not be, by their terms, convertible or exchangeable.

 

(6)               The shares of such class shall not be, by their terms, entitled to the benefit of any sinking fund.

 

(7)               Upon the issuance of shares of the new stock, there shall be transferred from the Premium on Capital Stock Account to the Preference Stock Account an amount equal to $24 per share, and thereafter the stated capital of each share of the new stock shall be $25 per share.

 

 

 

 

(8)               The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below.

 

(a)               A “business day” means a day other than (i) a Saturday or Sunday or (ii) a day on which banks in New York, New York are authorized or obligated by law or executive order to remain closed.

 

(b)               “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 new stock to the Initial Redemption Date that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate securities of comparable maturity to the Initial Redemption Date.

 

(c)               “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.

 

(d)               “Independent Investment Banker” means an independent investment banking institution of national standing appointed by the Company.

 

(e)               “Reference Treasury Dealer” means a primary United States Government securities dealer in New York City appointed by the Company.

 

(f)                “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).

 

(g)               “Treasury Yield” means, with respect to any Redemption Date, the rate per annum equal to the quarterly 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.

 

THIRD:  The undersigned officers of the Company pursuant to the authority granted them by the Company’s Board of Directors at a meeting held on July 27, 2007 hereby establish and designate, on behalf of the Company, a series of Preference Stock comprising 2,000,000 shares of 6.50% Series Preference Stock, Non-Cumulative, Par Value $1 Per Share (Stated Capital $25 Per Share) (the “6.50% Series Preference Stock”).  Dividends shall be payable upon the 6.50% Series Preference Stock at a rate of 6.50% of the stated capital per annum.

 

 

 

IN WITNESS WHEREOF, the undersigned officers of the Company do hereby set their hand and the seal of the Company on the 17th day of October, 2007. 

 

 

	
            /s/ Art P. Beattie
 

 

	
            Art P. Beattie
 	
             

	
            Executive Vice President, Chief Financial
 
	
            Officer and Treasurer
 	
             

	
            Alabama Power Company
 	
             

				

 

 

	
            /s/ Ceila H. Shorts
 

 

	
            Ceila H. Shorts
 	
             

	
            Assistant Secretary
 	
             

	
            Alabama Power Company
 
			

 

This Instrument was prepared by:

Monica W. Sargent

Balch & Bingham LLP

1901 Sixth Avenue North, Suite 2600

Birmingham, AL  35203Exhibit 4.2

                              ALABAMA POWER COMPANY

                                       TO

                              THE BANK OF NEW YORK,
                                     TRUSTEE

                       THIRTY-NINTH SUPPLEMENTAL INDENTURE

                          DATED AS OF OCTOBER 18, 2007

                 SERIES 2007C 6.00% SENIOR INSURED MONTHLY NOTES

                              DUE OCTOBER 15, 2037

<PAGE>

                              TABLE OF CONTENTS(1)
                                Table of Contents

                                                                     Page

ARTICLE 1 Series 2007C Senior Insured Monthly Notes....................1

SECTION 101.   Establishment...........................................1
               --------------
SECTION 102.   Definitions.............................................2
               ------------
SECTION 103.   Payment of Principal and Interest.......................3
               ----------------------------------
SECTION 104.   Denominations...........................................4
               --------------
SECTION 105.   Global Securities.......................................4
               ------------------
SECTION 106.   Transfer................................................5
               ---------
SECTION 107.   Redemption at the Company's
               ---------------------------
                Option.................................................5
               --------
SECTION 108.   Mandatory Redemption....................................5
               --------------------

ARTICLE 2 Special Insurance Provisions.................................6

SECTION 201.   Supplemental Indentures.................................6
               -----------------------
SECTION 202.   Events of Default and Remedies..........................6
               ------------------------------
SECTION 203.   Insurance Policy Payment Procedures.....................6
               -----------------------------------
SECTION 204.   Application of Term "Outstanding" to
               Series 2007C Notes......................................8
               ------------------
SECTION 205.   Insurer as Third Party Beneficiary......................8
               ----------------------------------
SECTION 206.   Concerning the Special Insurance
               Provisions..............................................8
               ----------
SECTION 207.   Concerning the Policy...................................8
               ---------------------

ARTICLE 3 Miscellaneous Provisions.....................................8

SECTION 301.   Recitals by Company.....................................8
               -------------------
SECTION 302.   Ratification and Incorporation of
               Original Indenture......................................8
               ------------------
SECTION 303.   Executed in Counterparts................................9
               ------------------------

EXHIBIT A  FORM OF SERIES 2007C NOTE

EXHIBIT B  CERTIFICATE OF AUTHENTICATION

_____________________________

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-NINTH SUPPLEMENTAL INDENTURE is made as of the 18th day of
October, 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, Floor 8W, 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)), 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-Ninth 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-Ninth 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:

                                   ARTICLE 1

                    Series 2007C Senior Insured Monthly 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 2007C 6.00% Senior
Insured Monthly Notes due October 15, 2037 (the "Series 2007C Notes").

                                       1
<PAGE>

         There are to be authenticated and delivered $200,000,000 aggregate
principal amount of Series 2007C Notes, and such principal amount of the Series
2007C Notes may be increased from time to time pursuant to Section 301 of the
Original Indenture. All Series 2007C 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 2007C Notes. Any such additional Series 2007C
Notes will have the same interest rate, maturity and other terms, including the
benefit of the Policy (appropriately increased to cover the principal amount of
and interest due on the additional Series 2007C Notes, subject to Section 207
hereof), as those initially issued. No Series 2007C 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 2007C Notes shall be issued in definitive fully registered form.

         The Series 2007C 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 2007C Notes shall be The Depository Trust
Company.

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

         Each Series 2007C 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.

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.

         "Insurance Agreement" means that certain Insurance Agreement, dated as
of October 18, 2007, by and between the Company and the Insurer.

         "Insurance Trustee" means The Bank of New York, New York, New York, or
any successor thereto, as the Insurance Trustee under the Policy.

         "Insurer" means Ambac Assurance Corporation, a Wisconsin-domiciled
stock insurance company, or any successor thereto.

         "Interest Payment Dates" means the fifteenth day of each month,
commencing on November 15, 2007.

         "Mandatory Redemption Event" means the Company's failure to comply with
(i) Section 1.02 of the Insurance Agreement, the continuance of such failure for
a period in excess of 10 days after receipt by the Company of written notice
thereof from the Insurer and the receipt by the Trustee of notice thereof in
accordance with Section 108 hereof; or (ii) Section 3.01 or Section 3.02 of the
Insurance Agreement, the continuance of such failure for a period in excess of
30 days after receipt by the Company of written notice thereof from the Insurer

                                       2
<PAGE>

and the receipt by the Trustee of notice thereof in accordance with Section 108
hereof.

         "Original Issue Date" means October 18, 2007.

         "Policy" means the financial guaranty insurance policy issued by the
Insurer with respect to payments due for principal of and interest on the Series
2007C Notes (including any additional Series 2007C Notes referred to in the
second paragraph of Section 101 hereof, subject to Section 207 hereof) as
provided in such policy.

         "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 October 15, 2037.

SECTION 103.      Payment of Principal and Interest.

         The principal of the Series 2007C Notes shall be due at Stated Maturity
(unless earlier redeemed). The unpaid principal amount of the Series 2007C Notes
shall bear interest at the rate of 6.00% per annum until paid or duly provided
for. Interest shall be paid monthly in arrears on each Interest Payment Date to
the Person in whose name the Series 2007C 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 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 2007C 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
2007C 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 2007C 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 2007C Notes will include interest
accrued to but excluding the respective Interest Payment Dates. Interest
payments for the Series 2007C 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 2007C 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 2007C Notes shall be made upon surrender of the
Series 2007C Notes at the Corporate Trust Office of the Trustee. The principal
of and interest on the Series 2007C 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

                                       3
<PAGE>

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  2007C Notes may be issued in
denominations  of $1,000, or any integral multiple thereof.

SECTION 105.      Global Securities.

         The Series 2007C 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 2007C Notes represented by one or more Global Securities
will not be exchangeable for, and will not otherwise be issuable as, Series
2007C 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 2007C 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 to a successor Depositary or its
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 2007C 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 2007C Notes. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for Series

                                       4
<PAGE>

2007C 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
2007C 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, transfer or exchange
any Series 2007C Notes, except to the Insurer, 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 2007C Notes to be called for redemption, and ending at the
close of business on the day of the mailing, or (b) to issue, transfer or
exchange any Series 2007C Notes theretofore selected for redemption in whole or
in part, except the unredeemed portion of any Series 2007C Notes redeemed in
part.

SECTION 107.      Redemption at the Company's Option.

         The Series 2007C Notes will be subject to redemption at the option of
the Company in whole or in part, without premium or penalty, at any time and
from time to time, on or after October 15, 2012, upon not less than 30 nor more
than 60 days' notice, at a Redemption Price equal to 100% of the principal
amount of the Series 2007C Notes to be redeemed plus any accrued and unpaid
interest thereon to the Redemption Date.

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

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

         Notice of redemption pursuant to this Section 107 shall be given as
provided in Section 1104 of the Original Indenture.

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

SECTION 108. Mandatory Redemption. Upon the occurrence of a Mandatory Redemption
Event, the Company shall redeem the Series 2007C Notes, in whole but not in
part, prior to the Stated Maturity upon not less than 30 nor more than 60 days'
notice at a Redemption Price equal to (i) 102% of the principal amount to be
redeemed plus any accrued and unpaid interest thereon to the Redemption Date if
the Redemption Date is prior to October 15, 2012 or (ii) 100% of the principal
amount to be redeemed plus any accrued and unpaid interest thereon to the
Redemption Date if the Redemption Date is on or after October 15, 2012. A
Mandatory Redemption Event will be deemed to have occurred at the time that the

                                       5
<PAGE>

Trustee receives written notice from the Insurer of the occurrence of a
Mandatory Redemption Event and such notice shall constitute the notice required
by Section 1102 of the Original Indenture and shall not be required to be
evidenced by a Board Resolution. Subject to the notice requirements set forth
herein, the Company shall redeem the Series 2007C Notes on a date fixed by the
Company within 60 days after the occurrence of the Mandatory Redemption Event.
Any notice of redemption required to be given by the Trustee in connection with
a redemption required by this Section 108 need not be given earlier than 15 days
after the date the Trustee receives notice of a Mandatory Redemption Event
pursuant to this Section 108.

                  Notice of redemption pursuant to this Section 108 shall be
given to the Holders of the Series 2007C Notes as provided in Section 1104 of
the Original Indenture.

                                   ARTICLE 2

                          Special Insurance Provisions

SECTION 201. Supplemental Indentures. The consent of the Insurer shall be
required with respect to any indenture or indentures supplemental to the
Original Indenture requiring the consent of the Holders of the Series 2007C
Notes pursuant to Section 902 of the Original Indenture. Any provision of this
Thirty-Ninth Supplemental Indenture or the Original Indenture expressly
recognizing or granting rights to the Insurer may not be amended in any manner
which affects the rights of the Insurer without the prior written consent of the
Insurer.

SECTION 202. Events of Default and Remedies. Subject to Section 107 of the
Original Indenture and to the Trust Indenture Act, including, without
limitation, Sections 316(a)(1) and 317(a) thereof, if an Event of Default occurs
with respect to the Series 2007C Notes and is continuing, the Insurer shall be
entitled to control and direct the enforcement of all rights and remedies
granted to the Holders of the Series 2007C Notes or the Trustee for the benefit
of the Holders of the Series 2007C Notes under the Indenture, including, without
limitation, (i) the right to accelerate the principal of the Series 2007C Notes
as provided in Section 502 of the Original Indenture, and (ii) the right to
annul any such declaration of acceleration, and the Insurer shall also be
entitled to approve any waiver of an Event of Default with respect to the Series
2007C Notes, the obligation of the Trustee to comply with any such direction to
be subject to compliance with the conditions set forth in Sections 512 and
603(e) of the Original Indenture (as if references in those Sections to Holders
were references to the Insurer) and the protections provided to the Trustee by
Section 601(c)(3) of the Original Indenture shall be applicable with respect to
any direction from the Insurer given pursuant hereto (as if references in said
Section to Holders were references to the Insurer).

SECTION 203.      Insurance Policy Payment Procedures.

         (a) On each Interest Payment Date and on the Business Day immediately
preceding the Stated Maturity, the Trustee will determine whether there are
sufficient funds to pay the principal of or interest on the Series 2007C Notes
on such Interest Payment Date or at the Stated Maturity, as the case may be. If
the Trustee determines that there are insufficient funds available, the Trustee
shall so notify the Insurer. Such notice shall specify the amount of the

                                       6
<PAGE>

deficiency and whether the Series 2007C Notes are deficient as to principal or
interest, or both. The Insurer will make payments of principal or interest due
on the Series 2007C Notes in accordance with the Policy on or before the first
(1st) Business Day next following the date on which the Insurer shall have
received notice of Nonpayment (as defined in the Policy) from the Trustee.

         (b) In the event of Nonpayment and notification thereof to the Insurer,
the Trustee shall make available to the Insurer and, at the Insurer's direction,
to the Insurance Trustee, the books kept by the Trustee for the registration and
for the registration of transfer of Series 2007C Notes as provided in the
Indenture.

         (c) The Trustee shall, at the time it provides notice to the Insurer
pursuant to (a) above, notify Holders of Series 2007C Notes entitled to receive
the payment of principal or interest thereon from the Insurer (i) as to the fact
of such entitlement, (ii) that the Insurer will remit to them all or a part of
the interest payments next coming due upon proof of Holder entitlement to
interest payments and delivery to the Insurance Trustee, in form satisfactory to
the Insurance Trustee, of an appropriate assignment of the Holder's right to
payment, (iii) that should they be entitled to receive full payment of principal
from the Insurer, they must surrender their Series 2007C Notes (along with an
appropriate instrument of assignment in form satisfactory to the Insurance
Trustee to permit ownership of such Series 2007C Notes to be registered in the
name of the Insurer) for payment to the Insurance Trustee, and not the Trustee
or any Paying Agent and (iv) that should they be entitled to receive partial
payment of principal from the Insurer, they must surrender their Series 2007C
Notes for payment thereon first to the Trustee, who shall note on such Series
2007C Notes the portion of the principal paid by the Trustee, and then, along
with an appropriate instrument of assignment in form satisfactory to the
Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid
portion of principal.

         (d) In the event that the Trustee has notice that any payment of
principal of or interest on a Series 2007C Note which has become Due for Payment
(as defined in the Policy) and which is made to a Holder by or on behalf of the
Company has been deemed a preferential transfer and theretofore recovered from
its Holder pursuant to the United States Bankruptcy Code by a trustee in
bankruptcy in accordance with a final, nonappealable order of a court having
competent jurisdiction, the Trustee shall, at the time the Insurer is notified
pursuant to (a) above, notify all Holders of the Series 2007C Notes that in the
event that any Holder's payment is so recovered, such Holder will be entitled to
payment from the Insurer to the extent of such recovery if sufficient funds are
not otherwise available, and the Trustee shall furnish to the Insurer its
records evidencing the payments of principal of and interest on the Series 2007C
Notes which have been made by the Trustee and subsequently recovered from
Holders and the dates on which such payments were made.

         (e) In addition to those rights granted the Insurer under the
Indenture, the Insurer shall, to the extent it makes payment of principal of or
interest on Series 2007C Notes, become subrogated to the rights of the
recipients of such payments in accordance with the terms of the Policy, and to
evidence such subrogation (i) in the case of subrogation as to claims for past

                                       7
<PAGE>

due interest, the Trustee shall note the Insurer's rights as subrogee on the
registration books of the Company maintained by the Trustee upon receipt from
the Insurer of proof of the payment of interest thereon to the Holders of the
Series 2007C Notes and (ii) in the case of subrogation as to claims for past due
principal, the Trustee shall note the Insurer's rights as subrogee on the
registration books of the Company maintained by the Trustee upon surrender of
the Series 2007C Notes by the Holders thereof together with proof of the payment
of principal thereof.

SECTION 204. Application of Term "Outstanding" to Series 2007C Notes. In the
event that the principal and/or interest due on the Series 2007C Notes shall be
paid by the Insurer pursuant to the Policy, the Series 2007C Notes shall remain
Outstanding for all purposes of the Indenture, not be considered defeased or
otherwise satisfied and not be considered paid by the Company, and the Indenture
and all covenants, agreements and other obligations of the Company to the
Holders of the Series 2007C Notes shall continue to exist and such covenants,
agreements and other obligations shall run to the benefit of the Insurer, and
the Insurer shall be subrogated to the rights of such Holders to the extent of
each such payment.

SECTION 205. Insurer as Third Party Beneficiary. To the extent that the
Indenture confers upon or gives or grants to the Insurer any right, remedy or
claim under or by reason of the Indenture with respect to the Series 2007C
Notes, the Insurer is hereby explicitly recognized as being a third party
beneficiary and may enforce any such right, remedy or claim conferred, given or
granted hereunder.

SECTION 206. Concerning the Special Insurance Provisions. The provisions of this
Article 2 shall apply notwithstanding anything in the Indenture to the contrary,
but only so long as the Policy shall be in full force and effect and the Insurer
is not in default thereunder.

SECTION 207. Concerning the Policy. Should the Company issue additional Series
2007C Notes, as contemplated in Section 101 hereof, such additional Series 2007C
Notes will have the benefit of the Policy upon the endorsement of the Policy by
the Insurer pursuant to a mutually acceptable agreement of the Company and the
Insurer at or prior to the time of such issuance. The Insurer is under no
obligation to endorse the Policy to extend its benefits to any additional Series
2007C Notes if it does not reach such an agreement with the Company.

                                   ARTICLE 3

                            Miscellaneous Provisions

SECTION 301. Recitals by Company. The recitals in this Thirty-Ninth 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 2007C Notes and of this Thirty-Ninth Supplemental Indenture as
fully and with like effect as if set forth herein in full.

SECTION 302. 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

                                       8
<PAGE>

supplemented and as supplemented by this Thirty-Ninth Supplemental Indenture
shall be read, taken and construed as one and the same instrument.

SECTION 303. Executed in Counterparts. This Thirty-Ninth 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.

                [Remainder of the Page Intentionally Left Blank]

                                       9
<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/ Francine Kincaid               By:      /s/ Robert A. Massimillo
   ----------------------------                      -------------------------
         Francine Kincaid                            Robert A. Massimillo
         Vice President                              Vice President

                                       10
<PAGE>

                                    EXHIBIT A

                            FORM OF SERIES 2007C NOTE

NO. __                                                      CUSIP NO. 010392EX2

                              ALABAMA POWER COMPANY

                 SERIES 2007C 6.00% SENIOR INSURED MONTHLY NOTE

                              DUE OCTOBER 15, 2037

       Principal Amount:         $

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

       Original Issue Date:      October 18, 2007

       Stated Maturity:          October 15, 2037

       Interest Payment Dates:   The fifteenth day of each month, beginning
                                 November 15, 2007

       Interest Rate:            6.00%

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

       Initial Redemption Date:  October 15, 2012

         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, monthly in arrears on each Interest Payment Date as specified
above, commencing on November 15, 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

<PAGE>

paid to the Person to whom principal is payable. Except as otherwise provided in
the Indenture, any such interest not so punctually paid or 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 2007C Notes shall be made upon surrender of the
Series 2007C Notes at the Corporate Trust Office of the Trustee. The principal
of and interest on the Series 2007C 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.

         Financial Guaranty Insurance Policy No. 27147BE (the "Policy") with
respect to payments due for principal of and interest on this Note has been
issued by Ambac Assurance Corporation ("Ambac Assurance"). The Policy has been
delivered to The Bank of New York, New York, New York, as the Insurance Trustee
under said Policy and will be held by such Insurance Trustee or any successor
insurance trustee. The Policy is on file and available for inspection at the
principal office of the Insurance Trustee and a copy thereof may be secured from
Ambac Assurance or the Insurance Trustee. All payments required to be made under
the Policy shall be made in accordance with the provisions thereof. The owner of
this Note acknowledges and consents to the subrogation rights of Ambac Assurance
as more fully set forth in the Policy.

<PAGE>

         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:
                                           ------------------------------------
                                                 Name:
                                                 Title:

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 2007C 6.00% Senior Insured Monthly Notes due October 15,
2037 (the "Series 2007C 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 Company shall have the right, subject to the terms and conditions
of the Indenture, to redeem this Note at any time on or after October 15, 2012
at the option of the Company, without premium or penalty, in whole or in part,
at a Redemption Price equal to 100% of the principal amount to be redeemed plus
accrued but unpaid interest to the Redemption Date.
         Upon the occurrence of a "Mandatory Redemption Event" (as defined
below), this Note shall be subject to mandatory redemption, upon not less than
30 nor more than 60 days' notice, in whole but not in part, at a Redemption
Price equal to (i) 102% of the principal amount of the Series 2007C Notes plus
accrued and unpaid interest to the Redemption Date if the Redemption Date is
prior to October 15, 2012 or (ii) 100% of the principal amount of the Series
2007C Notes plus accrued and unpaid interest to the Redemption Date if the
Redemption Date is on or after October 15, 2012. "Mandatory Redemption Event"
means the Company's failure to comply with (x) Section 1.02 of the Insurance
Agreement, dated as of October 18, 2007 (the "Insurance Agreement"), by and
between the Company and Ambac Assurance Corporation (the "Insurer"), the
continuance of such failure for a period in excess of 10 days after receipt by
the Company of written notice thereof from the Insurer and the receipt by the
Trustee of notice thereof, or (y) Section 3.01 or Section 3.02 of the Insurance
Agreement, the continuance of such failure for a period in excess of 30 days
after receipt by the Company of written notice thereof from the Insurer and the
receipt by the Trustee of notice thereof. Subject to the notice requirements of
the Indenture, the Company shall redeem the Series 2007C Notes within 60 days
after the occurrence of the Mandatory Redemption Event.

         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 2007C 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.

<PAGE>

         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
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

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

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

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

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

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

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 Signatory

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}]]