Exhibit 99.1

 

NOTICE TO READER At the Annual and Special Meeting of the Shareholders of TransAlta Corporation (the “Company”) to be held on April 21, 2020 and all postponements and adjournments thereof (the “Meeting”), the shareholders of the Company will be asked to  consider and, if deemed appropriate, to pass, with or without variation, an ordinary resolution ratifying, confirming and approving the amendment and restatement of the Amended and Restated By-law No.1 of the Company, in substantially the form that follows.  Further information relating to the amendment and restatement of the Amended and Restated By-law No.1 of the Company, as well as the full text of the ordinary resolution shareholders are being asked to consider, is contained in the Company’s Notice of Annual and Special Meeting of Shareholders and Management Proxy Circular dated March 9, 2020 prepared in connection with the Meeting and available under the Company’s issuer profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.   Appended as Appendix “A” to the amendment and restatement of the Amended and Restated By-law No.1 of the Company is a copy marked to show the changes made to the Company’s existing Amended and Restated By-law No.1 of the Company.

 

 

TRANSALTA CORPORATION
(the “Corporation”)

 

AMENDED AND RESTATED BY-LAW NO. 1

 

A By-law to regulate the business and affairs of the Corporation.

 

ARTICLE 1
 INTERPRETATION

 

1.1          DEFINITIONS

 

In this By-law and all other by-laws and resolutions of the Corporation, unless the context otherwise requires:

 

(a)           the following terms shall have the meanings specified:

 

(i)           “Act” means the Canada Business Corporations Act or any statute which may be substituted therefore, including the regulations thereunder, as amended from time to time;

 

(ii)          “Articles” means the Articles of Amalgamation of the Corporation as amended or restated from time to time;

 

(iii)         “Board” means the Board of Directors of the Corporation;

 

(iv)        “Director” means a member of the Board;

 

(v)         “independent director” means a director who is independent for purposes of the Act, other applicable laws and the rules of any stock exchange on which the securities of the Corporation are then listed for trading;

 

(vi)        “meeting of shareholders” means any meeting of shareholders, including any meeting of holders of one or more classes or series of shares;

 

(vii)       “non-business day” means Saturday, Sunday and any other day that is a holiday as defined in the Interpretation Act (Canada);

 

(viii)      “Officer” means an officer of the Corporation;

 

(ix)        “recorded address” means: (A) in the case of a shareholder, such person’s latest address as shown in the records of the Corporation or its transfer agent, and in the case of joint shareholders, the address appearing in the securities register in respect of the joint holding, or the first address so appearing, if there is more than one; (B) in the case of an Officer or the auditor of the Corporation, such person’s address as shown in the records of the Corporation; and (C) in the case of a Director, such person’s latest address shown in the records of the Corporation or in the

 

 

most recent notice filed by the Corporation in accordance with the Act, whichever is more current; and

 

(x)         “shareholder” means a shareholder of the Corporation, except as otherwise expressly provided; and

 

(b)           except for terms defined in Section 1.1(a), terms used herein that are defined in the Act shall have the meanings given to those terms in the Act; and

 

(c)           words importing the masculine gender shall include the feminine and neuter genders, and words importing the singular number shall include the plural number, and vice versa.

 

1.2          CONFLICT WITH THE ACT OR THE ARTICLES

 

To the extent of any conflict between the provisions of this By-law and the provisions of the Act or the Articles, the provisions of the Act or the Articles shall govern.

 

1.3          HEADINGS AND SECTIONS

 

The headings used throughout this By-law are inserted for convenience of reference only and are not to be used as an aid in the interpretation of this By-law. “Section” followed by a number means or refers to the specified section of this By-law.

 

1.4          INVALIDITY OF ANY PROVISION OF BY-LAWS

 

The invalidity or unenforceability of any provision of this By-law shall not affect the validity or enforceability of the remaining provisions of this By-law.

 

ARTICLE 2
 MEETINGS OF SHAREHOLDERS

 

2.1          ANNUAL AND SPECIAL MEETINGS

 

The Board shall call an annual meeting of shareholders not later than 15 months after the holding of the last preceding annual meeting but no later than six months after the end of the Corporation’s preceding financial year. The Board may at any time call a special meeting of shareholders.

 

2.2          PLACE OF MEETINGS

 

Each meeting of shareholders shall be held in the City of Calgary, in the Province of Alberta, or at such other place within Canada as the Board may determine or, if such place is specified in the Articles or all the shareholders entitled to vote at the meeting so agree, at some place outside Canada. A meeting of shareholders held under Section 2.3 shall be deemed to be held at the place where the registered office of the Corporation is located.

 

2.3          MEETING BY ELECTRONIC MEANS

 

Subject to the Act and the consent of the Directors, if the Directors or shareholders call a meeting of shareholders pursuant to the Act, those Directors or shareholders, as the case may be, may determine that the meeting shall be held, in accordance with the Act, entirely by means

 

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of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, provided the Corporation makes provision for electronic voting at such meeting in accordance with the Act and Section 2.9.

 

2.4          NOTICE OF MEETINGS

 

Notice in writing (or by electronic means as permitted by, and in accordance with, the Act) of the time and place of each meeting of shareholders shall be given in the manner provided in Article 9, and subject to Section 9.4, within the period of time prescribed by the Act (or within such other time periods as may be prescribed by any other applicable law or regulation of a stock exchange) to each shareholder entitled to vote at the meeting, to each Director and to the auditors of the Corporation. The foregoing shall not be construed so as to limit the manner or effect of giving notice by any other means of communication otherwise permitted by applicable law.

 

2.5          QUORUM

 

At any meeting of shareholders, a quorum for the transaction of business shall consist of at least two persons present in person holding or representing by proxy not less than 25 percent of the outstanding shares of the Corporation entitled to be voted at the meeting. If a quorum is present at the opening of a meeting of shareholders, the shareholders present or represented by proxy may proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting. If a quorum is not present at the opening of any meeting of shareholders, the holders present in person holding or representing by proxy a majority of the shares represented at the meeting may adjourn the meeting to a fixed time and place, but no other business may be transacted. Those shareholders present at any duly adjourned meeting shall constitute a quorum.

 

2.6          CHAIR, SECRETARY AND SCRUTINEERS

 

The chair of the Board or, if he or she is not present, the lead director (if any) or, if he or she is not present, the chief executive officer or, if he or she is not present, the president or, in the absence of the foregoing persons, a Director designated by the Board shall act as chair at each meeting of shareholders. If no such Officer or Director is present within 15 minutes from the time fixed for holding the meeting, the persons present and entitled to vote shall choose one of their numbers to be chair. The chair of any meeting of shareholders shall have the power to adjourn the meeting to another place, if any, date and time. The secretary of the Corporation, or, in his or her absence, such other person as the chair of the meeting may appoint, who need not be a shareholder, shall act as secretary of the meeting. If desired, one or more scrutineers, who need not be shareholders, may be appointed by a resolution or by the chair of the meeting with the consent of the meeting.

 

2.7          VOTING

 

Subject to applicable law, voting on any question at any meeting of shareholders shall be by a show of hands except where, either before or after a show of hands, a ballot is required by the chair of the meeting or is demanded by any shareholder or proxyholder who is present and entitled to vote on such question at the meeting. A requirement or demand for a ballot may be withdrawn at any time prior to the taking of the ballot.

 

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On a show of hands, each person present and entitled to vote at the meeting shall have one vote. On a ballot, each shareholder present in person or represented by proxy at the meeting and entitled to vote thereon shall have such number of votes as prescribed by the Act or the Articles. Any ballot shall be taken in such manner as the chair of the meeting directs. In case of an equality of votes at any meeting of shareholders either upon a show of hands or upon a ballot, the chair of the meeting shall not be entitled to a second or casting vote. A declaration by the chair of the meeting that a resolution or other proceeding in respect of the question has, either on a show of hands or on a ballot, been carried or carried by a particular majority or lost or not carried by a particular majority shall be conclusive and an entry to that effect in the minutes of the meeting shall be, in the absence of evidence to the contrary, conclusive evidence thereof, and proof of the number or proportion of the votes, recorded in favour of or against such resolution or other proceeding in respect of the question shall not be necessary, and the result of the vote so taken shall be the decision of the shareholders on the question.

 

2.8          PARTICIPATION IN MEETING BY ELECTRONIC MEANS

 

Subject to the Act and the consent of the Directors, any person entitled to attend a meeting of shareholders may participate in the meeting, in accordance with the Act, by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, if the Corporation makes available such a communication facility. A person participating in a meeting by such means shall be deemed to be present at the meeting.

 

2.9          ELECTRONIC VOTING

 

Notwithstanding Section 2.7, any vote referred to in Section 2.7 may be held, in accordance with the Act, partially or entirely by means of a telephonic, electronic or other communication facility, if the Corporation has made available such a facility in accordance with the Act.

 

Any person participating in a meeting of shareholders under Section 2.3 or 2.8 and entitled to vote at the meeting may vote, in accordance with the Act, by means of the telephonic, electronic or other communication facility that the Corporation has made available for such purpose in accordance with the Act.

 

2.10        JOINT SHAREHOLDERS

 

If two or more persons hold shares jointly, any one of them present in person at a meeting of shareholders may, in the absence of the other or others, vote the shares, but if two or more of those persons are present in person or represented by proxy and vote, they shall vote the shares jointly held by them as one.

 

2.11        PROXYHOLDERS AND REPRESENTATIVES

 

Every shareholder entitled to vote at a meeting of shareholders may by means of a proxy appoint a proxyholder, or one or more alternate proxyholders, who need not be shareholders, as such shareholder’s nominee to attend and act at the meeting in the manner and to the extent authorized and with the authority conferred by the proxy. Alternatively, every shareholder which is a body corporate or association may authorize by resolution of its directors or governing body an individual, who need not be a shareholder, to represent it at a meeting of shareholders and that individual may exercise on the shareholder’s behalf all the powers it could exercise if it were a shareholder. The authority of such an individual shall be established by depositing with the

 

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Corporation a certified copy of the resolution or in such other manner as may be satisfactory to the secretary of the Corporation or the chair of the meeting. A proxy shall be in written or printed format or a format generated by telephonic or electronic means and becomes a proxy when completed and signed in writing or by electronic signature by the shareholder or its proxyholder or attorney authorized by a document that is signed in writing or by electronic signature or, if the shareholder is a body corporate or association, by an officer or attorney thereof duly authorized. The proxy is valid only at the meeting in respect of which it is given or any adjournment or postponement thereof.

 

2.12        TIME FOR DEPOSIT OF PROXIES

 

The Board may specify in a notice calling a meeting of shareholders a time, preceding the time of such meeting by not more than 48 hours (excluding non-business days), before which time proxies to be used at the meeting must be deposited with the Corporation or any agent thereof. A proxy shall be acted on if, (a) before the time so specified, it has been deposited with the Corporation or its agent specified in the notice, or, (b) no such time having been specified in the notice, it has been received by the secretary of the Corporation or by the chair of the meeting or an adjournment or postponement thereof before the time of voting.

 

ARTICLE 3
 DIVIDENDS AND RIGHTS

 

3.1          DIVIDENDS

 

Subject to the Act and to the Articles, the Board may from time to time declare dividends payable to the shareholders according to their respective rights and interests in the Corporation. Subject to the Articles, dividends may be paid in money or property or by issuing fully paid shares of the Corporation.

 

3.2          DIVIDEND PAYMENTS

 

A dividend payable in money may be paid in Canadian dollars or in any equivalent amount in any other currency, at the discretion of the Board, and shall be paid by cheque, wire transfer, electronic means, or such other method as the Board may determine, to the order of each registered holder of shares of the class or series in respect of which the dividend has been declared.

 

Any dividend payment shall be (a) if paid by cheque, mailed by prepaid ordinary mail to the registered shareholder at such holder’s recorded address in the Corporation’s securities register, or (b) sent, if paid by wire transfer or by electronic means or other method determined by the Board, to the registered shareholder in accordance with the payment instruments provided by such holder in the Corporation’s securities register, in each case, unless the holder otherwise directs. In the case of joint holders, the dividend payment shall, unless the joint holders otherwise direct, be made payable to the order of all the joint holders and transferred to them in accordance with the recorded address or wire transfer, electronic or other payment instructions, as applicable, in the Corporation’s securities register and, if paid by cheque and more than one address is recorded in the Corporation’s securities register in respect of such joint holding, the cheque shall be mailed to the first address so appearing.

 

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The mailing of a dividend cheque, unless the cheque is not paid on due presentation, or the sending of a dividend payment by wire transfer, by electronic means or by another method determined by the Board shall satisfy and discharge the Corporation’s liability for the dividend payment to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to, and does, withhold.

 

3.3          NON-RECEIPT OF PAYMENT

 

In the event of non-receipt of any dividend payment by the person to whom the payment is sent, the Corporation shall make a replacement payment to such person for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the Board may from time to time prescribe, whether generally or in any particular case. No dividend shall bear interest against the Corporation.

 

3.4          UNCLAIMED DIVIDENDS

 

No shareholder shall be entitled to recover by action or other legal process against the Corporation any dividend that remains unclaimed for a period of six years from the date on which it was payable and any such unclaimed dividend shall be forfeited and shall revert to the Corporation.

 

ARTICLE 4
 DIRECTORS

 

4.1          NUMBER OF DIRECTORS AND BOARD COMMITTEES

 

The Board shall consist of the number of Directors provided in the Articles, or, if a minimum number and a maximum number of Directors is so provided, the number of Directors of the Corporation shall be the number of Directors holding office immediately following the most recent election or appointment of Directors, whether at an annual or special meeting of shareholders, or determined from time to time by the shareholders or the Directors pursuant to the Act and the Articles.

 

Subject to the Act, the Board may appoint from its number one or more committees of the Board, however designated, and delegate to any such committee any of the powers of the Board.

 

Notwithstanding the foregoing, if the Corporation is a distributing corporation (as such term is defined in the Act), the Board shall appoint annually from among its number an Audit Committee to be composed of not fewer than three Directors who meet such requirements as may be specified by the Act, other applicable laws and the rules of any stock exchange on which the securities of the Corporation are then listed for trading and who are not officers or employees of the Corporation or its affiliates.

 

4.2          PLACE, CALLING AND NOTICE OF MEETINGS

 

Meetings of the Board or its committees may be held at any place in or outside Alberta. Meetings of the Board or its committees shall be held from time to time and at such place as, in the case of meetings of the Board, the chair of the Board, the lead director (if any), the chief executive officer (if a Director), the president (if a Director), any two Directors, or the secretary, on the direction of any of the foregoing, may determine and, in the case of meetings of

 

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committees, as the chair of the committee or any two members of the committee or the secretary, on the direction of any of the foregoing, may determine.

 

Notice of the time and place of every meeting so called shall be given in the manner provided in Article 9 to each required Director, and subject to Section 9.4, not less than 48 hours before the time when the meeting is to be held. In addition, the Board or the applicable committee may by resolution appoint a day or days in any month or months for regular meetings of the Board or the respective committee at a place and hour to be named. A copy of any resolution of the Board or the applicable committee fixing the place and time of regular meetings of the Board or the committee shall be sent to each applicable Director forthwith after being passed.

 

Any meeting of Directors, or of any committee, may be adjourned from time to time by the chair of the meeting, with the consent of the meeting, to a fixed time and place. Notice of an adjourned meeting of Directors or an adjourned committee meeting is not required to be given if the time and place of the adjourned meeting is announced at the original meeting.

 

The powers of the Board or any committee of the Board may be exercised by resolution in writing signed by Directors or all the members of such committee who would have been entitled to vote on that resolution at a meeting, in lieu of a meeting of the Board or the committee, as applicable.

 

4.3          FIRST MEETING OF NEW BOARD OF DIRECTORS

 

Provided a quorum of Directors is present, each newly elected Board may hold its first meeting without notice immediately following the meeting of shareholders at which such Board is elected.

 

4.4          CHAIR AND SECRETARY

 

The chair of the Board or, if he or she is not present, the lead director (if any) or, if he or she is not present, the chief executive officer (if a Director) or, if he or she is not present, the president (if a Director) or, in the absence of any of the foregoing, a Director designated by and from among the Directors present shall act as chair at each meeting of the Board. The secretary of the Corporation shall act as secretary of any meeting of the Board and, if the secretary of the Corporation is absent from any meeting of the Board, the chair of the meeting shall appoint an individual, who need not be a director, to act as secretary of the meeting.

 

4.5          QUORUM AND VOTING

 

Subject to the Act, at meetings of the Board or its committees, a majority of the Directors shall constitute a quorum for the transaction of business. Every question shall be decided by a majority of the votes cast on the question of those Directors entitled to vote and, in the case of an equality of votes, the chair of the meeting shall not be entitled to a second or casting vote.

 

Subject to the Act and unless otherwise determined by the Board, each committee shall have the power to appoint its chair and the rules for calling, holding, conducting and adjourning meetings of the committee which, unless otherwise determined, shall be the same as those governing the Board. Each member of a committee shall serve during the pleasure of the Board and, in any event, only so long as such person shall be a Director. The Directors may fill vacancies in a committee by appointment from among their members. Provided that a quorum

 

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is maintained, the committee may continue to exercise its powers notwithstanding any vacancy among its members.

 

4.6          MEETINGS BY TELEPHONIC, ELECTRONIC OR OTHER COMMUNICATION FACILITY

 

Subject to the Act, if all of the Directors consent generally or in respect of a particular meeting, a Director may participate in a meeting of the Board or of a committee of the Board by means of telephonic, electronic or other communication facilities that permit all persons participating in the meeting to communicate adequately with each other during the meeting. Any required consent of a Director to the participation in the meeting in such manner shall be effective whether given before or after the meeting to which it relates and may be given with respect to all meetings of the Board while the Director holds office. A Director participating in such a meeting in such manner shall be considered present at the meeting and at the place of the meeting and shall be deemed to have consented to such meeting. Subject to the Act, a Director participating by telephonic, electronic or other communication facilities in accordance with this Section 4.6 may vote by means of any such facility.

 

ARTICLE 5
 OFFICERS

 

5.1          APPOINTMENT AND DUTIES OF OFFICERS

 

The Board may from time to time appoint a chief executive officer, a president, a chief financial officer, one or more vice-presidents, a secretary, a treasurer and such other Officers as the Board may determine. The powers and duties of all Officers (aside from the chair of the Board, the lead director (if any), the chief executive officer and the president, whose powers and duties are to be specified only by the Board) shall be such as the terms of their engagement call for or as the Board or chief executive officer may specify from time to time. The Board or the chief executive officer may, from time to time and subject to the Act, vary, add to or limit the powers and duties of any Officer (aside from the chair of the Board, the lead director (if any), the chief executive officer and the president, whose powers and duties are to be varied, added to or limited only by the Board). Subject to Section 5.2 and Section 5.3, an Officer may but need not be a Director and one person may hold more than one office.

 

5.2          CHAIR OF THE BOARD

 

The Board may from time to time appoint a chair of the Board who shall be a Director and, subject to the Act, the chair of the Board shall have such powers and duties as the Board may specify or as are incidental to such office.

 

5.3          LEAD DIRECTOR

 

If the chair of the Board is not an independent director, the Board may appoint a lead director from among the Corporation’s independent directors. If appointed, the Board may assign the lead director any of the powers and duties that are by any provisions of this By-law assigned to the chair of the Board.

 

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ARTICLE 6
 PROTECTION OF DIRECTORS, OFFICERS AND OTHERS

 

6.1          LIMITATION OF LIABILITY

 

To the extent permitted by law, no Director or Officer for the time being shall be liable for:

 

(a)                                 the acts, receipts, neglects or defaults of any other Director or Officer or employee or agent of the Corporation;

 

(b)                                 joining in any receipt or act for conformity;

 

(c)                                  any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired by the Corporation or for or on behalf of the Corporation;

 

(d)                                 the insufficiency or deficiency of any security in or upon which any of the moneys of or belonging to the Corporation shall be placed out or invested;

 

(e)                                  any loss or damage arising from the bankruptcy, insolvency or tortious act of any person, firm or corporation with whom or which any moneys, securities or effects of the Corporation shall be lodged or deposited;

 

(f)                                   any loss, conversion, misapplication or misappropriation of or any damage resulting from any dealings with any moneys, securities or other assets belonging to the Corporation;

 

(g)                                  any loss occasioned by any error of judgment or oversight on such Director’s or Officer’s part; or

 

(h)                                 for any other loss, damage or misfortune whatever which may happen in the execution of the duties of his or her respective office or in relation thereto,

 

unless the same shall happen by or through his or her failure to act honestly and in good faith with a view to the best interests of the Corporation and, in connection therewith, to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. If any Director or Officer shall be employed by, or shall perform services for the Corporation otherwise than as a Director or Officer or shall be a member of a firm or a shareholder, director or officer of a corporation which is employed by, or performs services for, the Corporation, the fact of his being a Director or Officer of the Corporation shall not disentitle such Director or Officer or such firm or corporation, as the case may be, from receiving proper remuneration for such services. Nothing herein shall relieve any Director or Officer from the duty to act in accordance with the Act or from liability for any breach thereof.

 

6.2                               INDEMNITY

 

(a)           Subject to the limitations contained in the Act, but without limiting the right of the Corporation to indemnify any person under the Act or otherwise, the Corporation shall indemnify a Director or Officer, a former Director or Officer, or another individual who acts or acted at the Corporation’s request as a director or officer, or an individual acting in a similar capacity, of another entity, and such individual’s heirs and legal representatives, against all costs, charges

 

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and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by such individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Corporation or other entity, if the individual:

 

(i)             acted honestly and in good faith with a view to the best interests of the Corporation or, as the case may be, to the best interests of the other entity for which the individual acted as director of officer or in a similar capacity at the Corporation’s request; and

 

(ii)          in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that his or her conduct was lawful.

 

(b)           Notwithstanding Section 6.2(a), an individual referred to in Section 6.2(a) is entitled to indemnity from the Corporation in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual’s association with the Corporation or other entity as described in Section 6.2(a), if the individual seeking indemnity:

 

(i)             was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and

 

(ii)          fulfills the conditions set out in Sections 6.2(a)(i) and 6.2(a)(ii).

 

6.3          ADVANCE OF COSTS

 

The Corporation may, to the maximum extent permitted under the Act or otherwise by law, advance moneys to an individual referred to in Section 6.2 for the costs, charges and expenses of a proceeding referred to in Section 6.2. Such individual shall agree in writing, in advance, to repay and shall repay the moneys advanced if the individual does not fulfil the conditions set forth in Sections 6.2(a)(i) and 6.2(a)(ii).

 

6.4          COURT APPROVAL

 

If required by an individual referred to in Section 6.2, the Corporation shall use reasonable commercial efforts to obtain any court or other approvals necessary for any indemnification or advance of costs, charges and expenses pursuant to Section 6.2 or Section 6.3 if the conditions set out in Section 6.2 have been fulfilled.

 

6.5          INDEMNITIES NOT EXCLUSIVE

 

The rights of any person to indemnification granted by the Act or this By-law are not exclusive of any other rights to which any person seeking indemnification may be entitled under any agreement, vote of shareholders or Directors, at law or otherwise, and shall continue as to a person who has ceased to be a Director, Officer, or employee or agent of the Corporation and will enure to the benefit of the heirs and legal representatives of that person.

 

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6.6          INSURANCE

 

Subject to the Act, the Corporation may purchase and maintain such insurance for the benefit of an individual referred to in Section 6.2 as the Board may from time to time determine.

 

ARTICLE 7
 ADMINISTRATION

 

7.1          CORPORATE SEAL

 

The corporate seal of the Corporation, if any, shall be in such form as the Board may from time to time by resolution approve.

 

7.2          EXECUTION OF INSTRUMENTS

 

Contracts, documents or other instruments in writing requiring execution by the Corporation may be signed on behalf of the Corporation by the chief executive officer, the president or any other Officer or Director, or in such other manner as the Board may determine from time to time. In addition, the Board or the signing authority may from time to time direct the manner in which and the persons or persons by whom any particular contract, document or other instrument or class thereof may or shall be signed. Any signing authority may affix the corporate seal (if any) to any instrument. The term “contracts, documents or other instruments in writing” as used in this By-law shall include deeds, mortgages, charges, conveyances, transfers and assignments of property of all kinds including specifically but without limitation transfers and assignments of shares, warrants, bonds, debentures or other securities and all paper writings.

 

7.3                               EXECUTION IN COUNTERPART, BY FACSIMILE AND BY ELECTRONIC SIGNATURE

 

(a)           Subject to the Act, any instrument or document required or permitted to be executed by one or more persons on behalf of the Corporation may be signed by electronic means in accordance with the Act or by facsimile or .pdf file;

 

(b)           Any instrument or document required or permitted to be executed by one or more persons may be executed and delivered in separate counterparts, each of which when duly executed by one or more of such persons shall be an original and all such counterparts together shall constitute one and the same such instrument or document; and

 

(c)           Subject to the Act, whenever a notice, document or other information is required under the Act or this By-law to be created or provided in writing, that requirement may be satisfied by the creation and/or provision of an electronic document.

 

Notwithstanding the foregoing, the Board may from time to time direct the manner in which and the person or persons by whom any particular instrument or class of instruments may or shall be executed.

 

7.4          FINANCIAL YEAR

 

Until changed by the Board, the financial year of the Corporation shall end on the 31st day of December in each year.

 

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7.5          BANKING ARRANGEMENTS

 

The banking business of the Corporation including, without limitation, the borrowing of money and the giving of security therefor, shall be transacted with such banks, trust companies or other bodies corporate or organizations as may from time to time be designated by or under the authority of the Board. Such banking business or any part thereof shall be transacted under such agreements, instructions and delegations of powers as the Board may from time to time prescribe or authorize.

 

7.6          VOTING RIGHTS IN OTHER BODIES CORPORATE

 

The signing authority of the Corporation described in Section 7.2 may execute and deliver instruments of proxy and arrange for the issuance of voting certificates or other evidence of the right to exercise the voting rights attaching to any securities held by the Corporation. Such instruments, certificates or other evidence shall be in favour of such person or persons as may be determined by the signing authority executing or arranging for them. In addition, the Board may from time to time direct the manner in which and the person or persons by whom any particular voting rights or class of voting rights may or shall be exercised.

 

7.7          DIVISIONS

 

Without in any way limiting the powers or authority of the Directors, the Board may from time to time cause the business and operations of the Corporation or any part thereof to be divided into one or more divisions upon such basis, including without limitation, types of business or operations, geographical territories, product lines or goods or services, as the Board may consider appropriate in each case. From time to time the Board may authorize upon such basis as may be considered appropriate in each case:

 

(a)                                 the further division of the business and operations of any such division into sub-units and the consolidation of the business and operations of any such divisions or sub-units;

 

(b)                                 the designation of any such division or sub-unit by, and the carrying on of the business and operations of any such division or sub-unit under, a name other than the name of the Corporation; provided that the Corporation shall set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the Corporation; and

 

(c)                                  the appointment of officers for any such division or sub-unit, the determination of their powers and duties, and the removal of any such officer so appointed without prejudice to such officer’s rights under any employment contract or at law, provided that any such officers shall not, as such, be officers of the Corporation.

 

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ARTICLE 8
 BORROWING

 

8.1          LOANS AND GUARANTEES

 

Without limiting the powers of the Board or the borrowing powers of the Corporation as set forth in the Act, but subject to the Articles, the Board may from time to time on behalf of the Corporation, without authorization of the shareholders:

 

(a)                                 borrow money upon the credit of the Corporation;

 

(b)                                 issue, reissue, sell or pledge bonds, debentures, notes or other evidence of indebtedness of the Corporation whether secured or unsecured;

 

(c)                                  give, directly or indirectly, financial assistance by means of a loan, a guarantee or otherwise on behalf of the Corporation to secure performance of an obligation of any person; and

 

(d)                                 mortgage, hypothecate, pledge or otherwise create a security interest in or charge upon all or any property (including the undertaking and rights) of the Corporation, owned or subsequently acquired, by way of mortgage, hypothec, pledge, or otherwise, to secure payment of any indebtedness, guarantee, or obligation of the Corporation.

 

Nothing in this section limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Corporation.

 

8.2          DELEGATION

 

Subject to the Act and the Articles, the Board may from time to time delegate to a committee of the Board or such one or more of the Directors and Officers or any other person as may be designated by the Board all or any of the powers conferred on the Board by Section 8.1 or by the Act to such extent and in such manner as the Board shall determine at the time of each such delegation.

 

ARTICLE 9
 NOTICES

 

9.1                               METHOD OF GIVING NOTICES

 

Any notice (which term includes any written or electronic communication or document) to be given (which term includes, sent, delivered, transmitted or served) pursuant to the Act, the Articles, the by-laws of the Corporation, or otherwise to a shareholder, Director, Officer, or auditor of the Corporation shall be sufficiently given if (a) delivered personally to such person at such person’s recorded address, (b) mailed by prepaid mail to such person at such person’s recorded address, (c) sent to such person at his or her recorded address by facsimile transmission, with confirmation of transmission by the transmitting equipment, (d) transmitted by electronic document or other electronic means to such person at such person’s recorded address or designated information system in accordance with the Act and other applicable laws, or (e) posted or made available through a generally accessible electronic source, such as a

 

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website, permitted by the Act and other applicable laws. The secretary of the Corporation may change or cause to be changed the recorded address of any shareholder, Director, Officer or auditor in accordance with any information believed by the secretary to be reliable.

 

A notice which is delivered personally is deemed to be given when received. A notice which is mailed is deemed to have been given at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that such person did not receive the notice at the time or at all. A notice transmitted by facsimile is deemed to have been given when the sender transmitting equipment generates a facsimile confirmation slip which discloses that the notice was transmitted to the recorded number used by the person to whom the facsimile is transmitted. A notice which is delivered by electronic document or other electronic means is deemed to have been given when dispatched or transmitted to the information system designated by the addressee. A notice posted or made available through a generally accessible electronic source permitted by the Act or other applicable laws shall be deemed to have been given when the notice of its availability and location is given to the addressee in accordance with the Act and/or other applicable laws.

 

9.2                               NOTICE TO JOINT SHAREHOLDERS

 

If two or more persons are registered as joint holders of any share, any notice shall be addressed to all of such joint holders, but notice to one of such persons shall be sufficient notice to all of them.

 

9.3                               OMISSIONS AND ERRORS

 

The accidental omission to give any notice to any shareholder, Director, Officer, or auditor of the Corporation or the non-receipt of any notice by any such person or any error in any notice not affecting the substance of the notice shall not invalidate any action taken at any meeting held pursuant to such notice or otherwise founded thereon.

 

9.4                               WAIVER OF NOTICE

 

Any shareholder, proxyholder, or other person entitled to attend a meeting of shareholders, Director, Officer, or auditor of the Corporation may at any time waive any notice, or waive or abridge the time for any notice, required to be given to that person under the Act, the Articles the by-laws of the Corporation or otherwise. Any such waiver or abridgement, whether given before or after the meeting or other event of which notice is required to be given, shall cure any default in the giving or in the time of the notice, as the case may be. Any such waiver or abridgement shall be in writing, except a waiver of notice of a meeting of shareholders, the Board or a committee, which may be given in any manner.

 

Attendance of a Director at a meeting of Directors or attendance of a shareholder, proxyholder or any other person entitled to attend a meeting of shareholders, at a meeting of shareholders is a waiver of notice of the meeting except where such Director, shareholder, proxyholder or other person, as the case may be, attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

 

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9.5                               UNDELIVERED NOTICES

 

If any notice given or document sent to a shareholder pursuant to Section 9.1 is returned on two consecutive occasions because the shareholder cannot be found, the Corporation shall not be required to give any further notices or send further documents to the shareholder until the shareholder informs the Corporation in writing of the shareholder’s new address.

 

9.6                               PERSONS ENTITLED BY DEATH OR OPERATION OF LAW

 

Every person who, by operation of law, transfer, death of a shareholder or any other means whatsoever, becomes entitled to any share, shall be bound by every notice in respect of such share which has been duly given to the shareholder from whom that person derives such person’s title to the share before such person’s name and address is entered on the Corporation’s securities register (whether the notice was given before or after the happening of the event on which such person became so entitled) and before such person furnished the Corporation with the proof of authority or evidence of such person’s entitlement prescribed by the Act.

 

ARTICLE 10
 EFFECTIVE DATE

 

10.1        EFFECTIVE DATE

 

This By-law shall come into force when made by the Board in accordance with the Act with effect immediately upon confirmation by the shareholders.

 

10.2        REPEAL

 

All previous by-laws of the Corporation are repealed as of the coming into force and effect of this By-law, except for Advance Notice By-Law No. 2 (as amended or restated from time to time) of the Corporation. The repeal shall not affect (i) the previous operation of any by-law so repealed, (ii) the validity of any act done or right, privilege, obligation or liability acquired or incurred under, (iii) the validity of any contract or agreement made pursuant to, or (iv) the validity of any articles (as defined in the Act) or predecessor charter documents of the Corporation obtained pursuant to, any such by-law before its repeal. All Officers and other persons acting under any by-law so repealed shall continue to act as if appointed under this By-law and all resolutions of the shareholders or the Board or a committee thereof with continuing effect passed under any repealed by-law shall continue to be good and valid except to the extent inconsistent with this By-law and until amended or repealed.

 

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APPROVED by the Board, subject to shareholder confirmation, on March 3, 2020.

 

	(signed) Gordon D. Giffin
	Gordon D. Giffin
	Chair of the Board
	(signed) Scott Jeffers
	Scott Jeffers
	Corporate Secretary

 

CONFIRMED effective by the shareholders on                    , 2020.

 

	Scott Jeffers
	Corporate Secretary

 

 

 

Appendix A - Proposed Changes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.2

 

NOTICE TO READER At the Annual and Special Meeting of the Shareholders of TransAlta Corporation (the “Company”) to be held on April 21, 2020 and all postponements and adjournments thereof (the “Meeting”), the shareholders of the Company will be asked to consider and, if deemed appropriate, to pass, with or without variation, an ordinary resolution ratifying, confirming and approving the amendment and restatement of the Advance Notice By-law No. 2 of the Company, in substantially the form that follows.  Further information relating to the amendment and restatement of the Advance Notice By-law No. 2 of the Company, as well as the full text of the ordinary resolution shareholders are being asked to consider, is contained in the Company’s Notice of Annual and Special Meeting of Shareholders and Management Proxy Circular dated March 9, 2020 prepared in connection with the Meeting and available under the Company’s issuer profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.   Appended as Appendix “A” to the amendment and restatement of the Advance Notice By-law No. 2 of the Company is a copy marked to show the changes made to the Company’s existing Advance Notice By-law No.1 of the Company.

 

 

TRANSALTA CORPORATION

(the “Corporation”)

 

AMENDED AND RESTATED ADVANCE NOTICE BY-LAW NO. 2

 

INTRODUCTION

 

The Corporation is committed to: (i) facilitating an orderly and efficient annual or, where the need arises, special meeting process; (ii) ensuring that all shareholders, including those voting by proxy, receive adequate notice of director nominations and sufficient information with respect to all nominees; (iii) allowing the Corporation, its shareholders and appropriate regulatory bodies to evaluate all nominees’ qualifications and suitability as a director of the Corporation; and (iv) allowing shareholders to cast an informed vote.

 

The purpose of this Amended and Restated Advance Notice By-law No. 2 (the “By-law”) is to provide shareholders, directors and management of the Corporation with guidance on the process for nominating directors. This By-law fixes a deadline by which holders of common shares of the Corporation must submit director nominations to the Corporation prior to any annual or special meeting of shareholders and sets forth the information that a shareholder must include in the notice to the Corporation for the notice to be in proper written form.

 

NOMINATIONS OF DIRECTORS

 

1.                                      Nomination procedures - Subject only to the Canada Business Corporations Act, or any statute which may be substituted therefore, including the regulations thereunder, as amended from time to time (collectively, the “Act”) and the articles of the Corporation as amended or restated from time to time (the “Articles”), only persons who are nominated in accordance with the procedures set forth in this By-law shall be eligible for election as directors of the Corporation. Nominations of persons for election to the board of directors of the Corporation (the “Board”) may be made at any annual meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which the special meeting was called is the election of one or more directors. Such nominations must be made:

 

(a)                                 by or at the direction of the Board (or any duly authorized committee thereof), including pursuant to a notice of meeting;

 

(b)                                 by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the Act, or a requisition of the shareholders made in accordance with the provisions of the Act; or

 

(c)                                  by any person (a “Nominating Shareholder”): (i) who, at the close of business on the date of the giving of the notice provided for below in this By-law and at the close of business on the record date for notice of such meeting, is entered in the securities register of the Corporation as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting; and (ii) who complies with the notice procedures set forth below in this By-law.

 

2.                                      Timely notice - In addition to any other applicable requirements, for a nomination to be made by a Nominating Shareholder, the Nominating Shareholder must have given timely

 

 

notice thereof in proper written form (as set forth below in Sections 3 and 4) to the Corporate Secretary of the Corporation at the registered office of the Corporation.

 

3.                                      Manner of timely notice - To be timely, a Nominating Shareholder’s notice to the Corporate Secretary of the Corporation must be made:

 

(a)                                 in the case of an annual meeting of shareholders, not later than the close of business on the thirtieth (30th) day prior to the date of the annual meeting of shareholders; provided, however, that if the annual meeting of shareholders is to be held on a date that is less than fifty (50) days after the date (the “Notice Date”) on which the first public announcement (as defined below) of the date of the annual meeting of shareholders was made by the Corporation, notice by the Nominating Shareholder may be made not later than the close of business on the tenth (10th) day following the Notice Date;

 

(b)                                 in the case of a special meeting of shareholders (which is not also an annual meeting of shareholders) called for the purpose of electing directors (whether or not called for other purposes), not later than the close of business on the fifteenth (15th) day following the day (the “Special Meeting Notice Date”) on which the first public announcement of the date of the special meeting of shareholders was made by the Corporation; and

 

(c)                                  in the case of an annual meeting of shareholders or a special meeting of shareholders (which is not also an annual meeting of shareholders) called for the purpose of electing directors (whether or not called for other purposes) where notice-and-access is used for delivery of proxy-related materials, not later than the close of business on the fortieth (40th) day prior to the date of the meeting of shareholders; provided, however, that if the shareholders’ meeting is to be held on a date that is less than fifty (50) days after the Notice Date or the Special Meeting Notice Date, as applicable, notice by the Nominating Shareholder shall be made, in the case of an annual meeting of shareholders, not later than the close of business on the tenth (10th) day following the Notice Date and, in the case of a special meeting (which is not also an annual meeting of shareholders) called for the purpose of electing directors (whether or not called for other purposes), not later than the close of business on the fifteenth (15th) day following the Special Meeting Notice Date.

 

4.                                      Proper form of timely notice - To be in proper written form, a Nominating Shareholder’s notice to the Corporate Secretary of the Corporation must set forth:

 

(a)                                 as to each person whom the Nominating Shareholder proposes to nominate for election as a director to the Board: (i) the name, age, business address and residential address of the person; (ii) the principal occupation, business or employment of the person, both present and within the five (5) years preceding the notice; (iii) the country of residence of the person, including the person’s status as a “resident Canadian” (as such term is defined in the Act); (iv) the class or series and number of shares in the capital of the Corporation or any of its subsidiaries (as such term is defined in the Act) which are, directly or indirectly, controlled or directed or which are owned beneficially or of record by the person as of the record date for the meeting of shareholders (if such date shall then have been made publicly available and shall have occurred) and as of the date of

 

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such notice; (v) full particulars of all direct and indirect contracts, agreements, arrangements, understandings or relationships (collectively, “Arrangements”), including without limitation financial, compensation and indemnity related Arrangements, between the person or any associate or affiliate (as those terms are respectively defined in the Act) of such person and (A) any Nominating Shareholder or any of its representatives, or (B) any other person or entity relating to the proposed nominee’s nomination for election, or potential service, as a director of the Corporation; and (vi) any other information relating to the person that would be required to be disclosed in a dissident’s proxy circular in connection with a solicitation of proxies for election of directors pursuant to the Act and Applicable Securities Laws (as defined below); and

 

(b)                                 as to the Nominating Shareholder giving the notice: (i) the class or series and number of shares in the capital of the Corporation or any of its subsidiaries which are, directly or indirectly, controlled or directed or which are owned beneficially or of record, by such person or any other person with whom such person is acting jointly or in concert with respect to the Corporation or any of its shares, as of the record date for the meeting (if such date shall then have been made publicly available and shall have occurred) and as of the date of such notice; (ii) full particulars regarding any proxy or Arrangement pursuant to which such Nominating Shareholder has a right to vote or direct the voting of any shares of the Corporation or nominate directors to the Board; (iii) the interests in, or rights or obligations associated with, any Arrangements, the purpose or effect of which is to alter, directly or indirectly, the Nominating Shareholder’s economic interest in a security of the Corporation or the Nominating Shareholder’s economic exposure to the Corporation; and (iv) any other information relating to such Nominating Shareholder that would be required to be disclosed in a dissident’s proxy circular in connection with a solicitation of proxies for election of directors pursuant to the Act and Applicable Securities Laws.

 

Reference to “Nominating Shareholder” in this By-law shall be deemed to refer to each shareholder that nominates a person for election as a director in the case of a nomination proposal where more than one shareholder is involved in making such nomination proposal.

 

The Corporation may require any proposed nominee for election as a director to the Board to furnish such other information as may be necessary to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation, in the same manner as would be required and disclosed by management nominees, to comply with the Act, Applicable Securities Laws and the rules of any stock exchange on which the securities of the Corporation are then listed for trading.

 

In addition, to be considered timely and in proper written form, a Nominating Shareholder’s notice shall be promptly updated and supplemented, if necessary, so that the information provided or required to be provided in such notice will be true and correct as of the record date for the applicable meeting of shareholders.

 

5.                                      Eligibility for nomination as a director - No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this By-law; provided, however, that nothing in this By-law shall be deemed to preclude discussion by a shareholder (as distinct from the nomination of directors) at a meeting of shareholders of any matter that is properly before such meeting pursuant to the

 

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provisions of the Act. The Chair of the meeting of shareholders shall have the power and duty to determine whether a nomination of a person for election to the Board was made in accordance with this By-law and, if the Chair determines that a nomination does not comply with this By-law, to declare that such defective nomination shall be disregarded.

 

6.                                      Terms - For purposes of this By-law:

 

(a)                                 “public announcement” means disclosure in a press release reported by a national news service in Canada, or in a document publicly filed by or on behalf of the Corporation under the Corporation’s profile on the System for Electronic Document Analysis and Retrieval at www.sedar.com; and

 

(b)                                 “Applicable Securities Laws” means the applicable securities legislation of each applicable province and territory of Canada, as amended from time to time, the rules, regulations and forms made or promulgated under any such statute and the published national instruments, multilateral instruments, policies, bulletins and notices of the securities commission or similar regulatory authority of each applicable province and territory of Canada.

 

7.                                      Delivery of Notice - Notwithstanding any other provision of any of the by-laws of the Corporation, notice given to the Corporate Secretary of the Corporation pursuant to this By-law may only be given by personal delivery, facsimile transmission or email (at such email address as stipulated from time to time by the Corporate Secretary of the Corporation for purposes of such notice), and shall be deemed to have been given and made only at the time it is served by personal delivery to the Corporate Secretary of the Corporation at the address of the registered office of the Corporation or delivered to the Corporate Secretary by facsimile transmission (provided that receipt of confirmation of such transmission has been received) or by email (at the aforesaid email address, provided that receipt of confirmation of such email has been received); provided that if such delivery or electronic communication is made on a day which is a not a business day or later than 5:00 p.m. (Calgary time) on a day which is a business day, then such delivery or electronic communication shall be deemed to have been made on the next subsequent day that is a business day.

 

8.                                      Board Discretion - Notwithstanding any of the foregoing, the Board may, in its sole discretion, waive any requirement in this By-law.

 

9.                                      Effective Date - This By-law shall come into force when made by the Board in accordance with the Act with effect immediately upon confirmation by the shareholders.

 

10.                               Repeal - The previous Advance Notice By-Law No. 2 of the Corporation is repealed as of the coming into force and effect of this By-law. The repeal shall not affect, (a) the previous operation of any by-law so repealed, (b) the validity of any act done or right, privilege, obligation or liability acquired or incurred under, (c) the validity of any contract or agreement made pursuant to, or (d) the validity of any articles (as defined in the Act) or predecessor charter documents of the Corporation obtained pursuant to, any such by-law before its repeal. All officers and other persons acting under any by-law so repealed shall continue to act as if appointed under this By-law and all resolutions of the shareholders or the Board or a committee thereof with continuing effect passed under any repealed by-law shall continue to be good and valid except to the extent inconsistent with this By-law and until amended or repealed.

 

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MADE by the Board, subject to shareholder confirmation, on March 3, 2020.

 

	(signed) Gordon D. Giffin
	Gordon D. Giffin
	Chair of the Board
	(signed) Scott Jeffers
	Scott Jeffers
	Corporate Secretary

 

CONFIRMED by the shareholders on                , 2020.

 

	Scott Jeffers
	Corporate Secretary

 

 

Appendix A - Proposed Changes

 

 

 

 

 

 

 

 

 

Exhibit 99.3

 

NOTICE TO READER At the Annual and Special Meeting of the Shareholders of TransAlta Corporation (the “Company”) to be held on April 21, 2020 and all postponements and adjournments thereof (the “Meeting”), the shareholders of the Company will be asked to consider, and if deemed appropriate, to pass, with or without variation, an ordinary resolution ratifying, confirming and approving the amendments to the Company’s Stock Option Plan to increase the number of shares available for issuance pursuant to options granted under the Stock Option Plan.    Further information relating to the amendments to the Stock Option Plan, as well as the full text of the ordinary resolution shareholders are being asked to consider, is contained in the Company’s Notice of Annual and Special Meeting of Shareholders and Management Proxy Circular dated March 9, 2020 prepared in connection with the Meeting and available under the Company’s issuer profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.   Appended as Appendix “A” to the Stock Option Plan is a copy marked to show the changes made to the Company’s existing Stock Option Plan.

 

 

TRANSALTA CORPORATION

 

STOCK OPTION PLAN

 

1.                                      The Plan

 

1.1                               The stock option plan of TransAlta Corporation pursuant to which stock options can be granted was established effective April 29, 2010, was amended and restated effective January 1, 2017, and is hereby further amended and restated effective March 2, 2020, subject to shareholder confirmation.

 

2.                                      Purpose

 

2.1                               The purpose of the Plan is to encourage employees to promote the financial interests, growth and development of the Corporation by providing them with the opportunity through stock options to acquire a proprietary interest in the Corporation, to recognize the contribution of key employees to the success of the Corporation and to encourage such employees to remain in the employment of the Corporation.

 

3.                                      Definitions

 

Whenever used herein:

 

(a)                                 “Authorized Party” means the Participant, the Participant’s executor, or the Participant’s personal representative;

 

(b)                                 “Board” means the Board of Directors of TransAlta;

 

(c)                                  “CEO” means the Chief Executive Officer of TransAlta;

 

(d)                                 “Change of Control” means the occurrence after the effective date of this Plan of any of the following:

 

(i)                                     the sale to or acquisition by a Holder (except TransAlta or a Subsidiary) of assets of TransAlta or its Subsidiaries having a fair market value greater than 50% of the fair market value of the assets of TransAlta and its Subsidiaries on a consolidated basis determined as of the date of the completion of the transaction or series of integrated transactions, whether such sale or acquisition occurs by way of a reorganization, recapitalization, consolidation, amalgamation, arrangement, merger, transfer, sale, business combination or similar transaction or series of integrated transactions;

 

(ii)                                any Holder becoming the beneficial owner, directly or indirectly, of 50% or more of the voting securities of TransAlta, except for any such acquisition (i) by TransAlta or a Subsidiary, or (ii) by any underwriter or underwriters temporarily holding voting securities pursuant to an offering of such voting securities;

 

(iii)                             any reorganization, recapitalization, consolidation, amalgamation, arrangement, merger, transfer, sale, business combination or other similar

 

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transaction or series of integrated transactions involving TransAlta, its Subsidiaries or its shareholders, where record holders of the voting securities of TransAlta immediately prior to such transaction or series of transactions hold less than 50% of the voting securities of TransAlta or of the continuing entity following the completion of such transaction or series of transactions; or

 

(iv)                              a change in the composition of the Board such that individuals who are members of the Board (the “incumbent board”) cease for any reason to constitute at least 50% of the Board, and for this purpose a new director will be considered a member of the incumbent board if the appointment or nomination for election of such new director was approved by at least a majority of the incumbent board;

 

“Committee” means the Human Resources Committee of the Board;

 

(e)                                  “Corporation” means TransAlta Corporation or its Subsidiaries as the context dictates;

 

(f)                                   “Fair Market Value” means, as of any date: (i) if the Shares are not then publicly traded, the value of such Shares on that date, as determined by the Board in its sole and absolute discretion; or (ii) if the Shares are publicly traded, the volume weighted average trading price of the Shares for the five trading days immediately preceding such date on the TSX or the principal national securities exchange on which the majority of the trading in the Shares occurs or, if the Shares are not listed or admitted to trading on the TSX or any national securities exchange, but are traded in the over-the-counter market, the closing sale price of a Share on that date or, if no sale is publicly reported, the average of the closing bid and asked prices on that date, as furnished by two members of the National Association of Securities Dealers, Inc. who make a market in the Shares selected from time to time by the Corporation for that purpose;

 

(g)                                  “Holder” means a person, a group of persons or persons acting jointly or in concert or persons associated or affiliated, within the meaning of the Securities Act (Ontario), with any of them;

 

(h)                                 “Insider” means an insider as defined by the Securities Act (Ontario) and also includes associates and affiliates of the insider; and “issuances to insiders” includes direct and indirect issuances to insiders;

 

(i)                                     “Option(s)” means a right or rights granted by the Board to purchase Shares under the Plan;

 

(j)                                    “Participant” means a non-union employee who has been designated as a Participant by the Board upon the advice of the CEO;

 

(k)                                 “Plan” means this TransAlta Corporation Stock Option Plan, as amended or restated from time to time;

 

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(l)                                     “Retirement” means any circumstance (whether related to resignation, termination or otherwise) that results in a Participant meeting the criteria for retirement under a retirement plan of TransAlta or any of its Subsidiaries;

 

(m)                             “Shareholder Plan” means the Shareholder Rights Plan dated October 13, 1992 between the Corporation and CIBC Mellon Trust Company, as the same may be amended from time to time, and any other similar plan adopted by the Corporation from time to time;

 

(n)                                 “Shares” means the common shares in the capital of the Corporation and includes any shares of the Corporation into which such common shares have been converted, reclassified, redesigned, subdivided, consolidated, exchanged or otherwise changed;

 

(o)                                 “Stock Option Agreement” means the agreement approved by TransAlta and signed by the Participant relating to the grant of Options under the Plan as such Stock Option Agreement may be amended from time to time;

 

(p)                                 “Subsidiary” means any corporation that is a subsidiary of TransAlta (as such term is defined in the Securities Act (Ontario), in force from time to time), including any joint venture partnership or limited partnership, which is directly or indirectly controlled by TransAlta;

 

(q)                                 “Termination Date” means a Participant’s last day of active employment and does not include any period of reasonable, contractual or statutory notice or any period deemed employment or salary continuance;

 

(r)                                    “TransAlta” means TransAlta Corporation or its Subsidiaries as the context dictates; and

 

(s)                                   “TSX” means the Toronto Stock Exchange;

 

4.                                      Administration

 

4.1                               The Plan shall be administered by the Board. The Board shall have the right to delegate the administration and operation of the Plan, in whole or in part, to the Committee.  Whenever used herein, or in the applicable Stock Option Agreement, the term “Board” shall be deemed to include the Committee. The Board is authorized to approve grants of Options in accordance with the Plan, to construe and interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan and to make all determinations and take all actions necessary or advisable for the Plan’s administration. The Board shall act by vote or written consent of a majority of its members. Whenever the Plan authorizes or requires the Board to take any action, make any determination or decision or form any opinion, then any such action, determination, decision or opinion by the Board shall be in the absolute discretion of the Board.

 

4.2                               The Board shall in its sole and absolute discretion: (i) grant Options to Participants; (ii) interpret and administer the Plan; (iii) establish, amend and rescind any rules and regulations relating to the Plan; (iv) establish conditions relating to the vesting of Options; and (v) make any and all other determinations that the Board deems necessary or desirable for the administration of the Plan.

 

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5.                                      Eligibility and Participation

 

5.1                               The individuals who may be eligible to participate in the Plan are non-union employees of TransAlta who, upon the advice of the CEO, are designated as Participants by the Board.  Notwithstanding anything to the contrary herein, the Board shall determine when and to what extent individuals otherwise eligible for consideration shall become or cease to be Participants for purposes of this Plan and shall determine when, and under what circumstances, any individual shall be considered to have terminated employment for purposes of the Plan.

 

5.2                               The Plan does not grant to any Participant the right to be or to continue to be employed by TransAlta or any of its Subsidiaries. The use of the Plan to determine any or all of a Participant’s compensation is entirely at the discretion of the Board. This Section 5.2 applies notwithstanding any other provision of the Plan.

 

6.                                      Shares Subject to Plan

 

6.1                               The aggregate number of Shares that may be issued pursuant to the exercise of Options shall not exceed at any time 16,500,000 Shares of the Corporation, which shall be made available from the authorized but unissued Shares of the Corporation that have been reserved for issuance upon exercise of Options granted under the Plan. If an Option expires, terminates, ceases to be exercisable or is surrendered before being exercised or without having been exercised in full, then the Shares that were subject to the Option but which were not issued pursuant to the exercise of the Option shall, unless the Plan has been terminated, become available for issuance pursuant to the exercise of Options under the Plan, all within the maximum limitation stated above.

 

6.2                               Notwithstanding the foregoing, the aggregate number of Shares that may be issued at any time under the Plan and any other share compensation arrangements of the Corporation shall not exceed 16,500,000 Shares in the aggregate.

 

6.3                               In addition to the foregoing, the aggregate of the number of Shares: (i) issued to insiders, within any one-year period, and (ii) issuable to insiders at any time, under the Plan, or when combined with all of the Corporation’s other security based compensation arrangements, may not exceed 10% of the Corporation’s total issued and outstanding Shares, respectively.

 

7.                                      Granting of Options

 

7.1                               The Board may from time to time grant Options to Participants. The Board delegates the authority to the CEO to grant Options to Participants below the CEO’s direct reports up to a grant value maximum of one million dollars per year in the aggregate. Subject to the terms of the Plan, the size and terms and conditions of the Option(s) to be granted to each Participant shall be at the discretion of the Board. Notwithstanding such discretion, at any time, the number of Shares that may be acquired by any single Participant pursuant to the exercise of Options under the Plan and pursuant to all other share compensation arrangements of the Corporation, cannot exceed five (5%) percent of the outstanding number of Shares (and for this purpose, the “outstanding number of Shares” is the number outstanding at a particular time, less the number of Shares that have been issued pursuant to the exercise of Options in the previous year).

 

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8.                                      Exercise Price

 

8.1                               The exercise price of an Option shall be fixed by the Board when an Option is granted but such price shall not be less than the last sale price of the Shares on the TSX, or on such other exchange on which the Shares may be listed, on the last business day prior to the day the Option is granted.

 

9.                                      Option Agreement

 

9.1                               Each Option granted under the Plan will be evidenced by a written Stock Option Agreement between the Corporation and the Participant and, subject to the terms of the Plan, shall contain such terms and conditions as may be determined by the Board upon the advice of the CEO. The terms and conditions of the Stock Option Agreements need not be identical. The Stock Option Agreements shall include, among other things, the following:

 

(a)                 the number of Options granted;

 

(b)                 the exercise price of the Option;

 

(c)                  any restrictions on exercise of the Option; and

 

(d)                 the expiry date of the Option.

 

10.                               Exercise of Option

 

10.1                        An Option, or any portion thereof, may be exercised by an Authorized Party by delivering to the Corporation either: (i) a written notice of exercise signed by the Authorized Party specifying the number of Shares with respect to which the Option is being exercised and accompanied by payment in full of the purchase price of the Shares; or (ii) a written notice of cancellation signed by the Authorized Party in which the Authorized Party agrees that all of the rights of the Authorized Party relating to the number of Options specified in such notice shall be exchanged by the Authorized Party and immediately thereafter cancelled in exchange for, and in consideration of, the issuance by TransAlta to the Authorized Party of such number of Shares as is determined by subtracting the exercise price for the Options being so cancelled from the Fair Market Value of the Shares that were issuable under the Options being cancelled on the date of cancellation and then dividing that product by the Fair Market Value of one Share on the date of cancellation, which number of Shares shall be issued by TransAlta to the Participant.

 

10.2                        For greater certainty, in the event Options are exercised in accordance with (ii) above, resulting in the cancellation of a portion of such Options in association with such exercise, the Shares issuable upon the exercise of such cancelled Options shall not return to the pool of Shares available for reservation for issuance upon exercise of Options granted under the Plan.

 

11.                               Alterations in Shares

 

11.1                        Appropriate adjustments in the number of Shares to be issued pursuant to the exercise of an Option and in the exercise price for an Option shall be made by the Corporation to give effect to adjustments in the number of Shares of the Corporation resulting from:

 

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(i)                                     subdivisions or consolidations of the Shares of the Corporation, the payment of stock dividends, the issuance of rights to subscribe for Shares or securities of the Corporation (other than rights issued under the Shareholder Plan); or

 

(ii)                                  the operation of the Shareholder Plan (but not the issue of rights under the Shareholder Plan) including, without limiting the generality of the foregoing, the rights issued thereunder becoming severable from the Shares and exercisable on a dilutive basis (unless the Participant is a person whose rights would be voided if he was a holder of rights under the Shareholder Plan, in which case no adjustment shall be made to the number of Shares to be issued pursuant to the exercise of an Option and to the exercise price for an Option),

 

or other similar changes in the share capital of the Corporation.

 

11.2                        If there is a reclassification of the Shares of the Corporation, adequate provision shall be made by the Corporation so that there shall be substituted under the Option the Shares, securities or property which would have been issuable or payable to the Participant had the Participant then been the holder of record of the number of the Shares then subject to the unexercised portion of the Option.

 

11.3                        Any shares, securities or property added to or substituted for the Shares under the Option shall be subject to adjustment in the same manner and to the same extent as the Shares originally covered by the Option. No fractional Shares shall be issued upon the exercise of the Option.

 

12.                               Change of Control

 

12.1                        In the event of a Change of Control, such as a proposed merger or amalgamation of TransAlta with one or more other corporations, an offer by any person to purchase all of the outstanding Shares of TransAlta, a sale or distribution of all or substantially all of TransAlta’s assets to any other person or any arrangement or corporate reorganization not otherwise provided for herein, the Board may, in its sole and absolute discretion and without the need for the consent of any Participant, take one or more of the following actions contingent upon the occurrence of that Change of Control:

 

(a)                 cause any or all outstanding Options to become vested and immediately exercisable, in whole or in part;

 

(b)                 cause any outstanding Option to become fully vested and immediately exercisable for a reasonable period in advance of the Change of Control and, to the extent not exercised prior to that Change of Control, cancel that Option upon closing of the Change of Control;

 

(c)                  cancel any Option in exchange for a substitute award; or

 

(d)                 with respect to any Option held by a Participant, cancel that Option in exchange for cash and/or other substitute consideration with a value equal to: (A) the number of Shares subject to that Option, multiplied by (B) the difference, if any, between the Fair Market Value per Share on the date of the Change of Control and the exercise price of that Option; provided, that if the Fair Market Value per Share on the date of the Change of Control does not exceed the exercise price of any such

 

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Option, the Board may cancel that Option without any payment of consideration therefor.

 

12.2                        At the discretion of the Board, any cash or substitute consideration payable upon cancellation of an Option may be subjected to (i) vesting terms substantially identical to those that applied to the cancelled Option immediately prior to the Change of Control, or (ii) earn-out, escrow, holdback or similar arrangements, to the extent such arrangements are applicable to any consideration paid to holders of Shares in connection with the Change of Control.

 

13.                               Expiry of Options

 

13.1                        Subject to Section 14, Options granted under the Plan shall expire on the date so established by the Board, but in no event later than the tenth anniversary of the date the Option was granted.

 

14.                               Ceasing to be an Employee

 

14.1                        If the employment of a Participant is terminated by reason of death and the Participant has not fully exercised any then outstanding Options, or if a Participant dies after Retirement without having fully exercised any then outstanding Options, then all unvested Options shall immediately vest and all Options shall be exercisable by the Authorized Party until the earlier of (a) one year after the Termination Date, and (b) the normal expiry date of the Option, and not for more than that number of Shares for which the Participant could have exercised the Option immediately prior to such death.

 

14.2                        If the employment of a Participant is terminated by reason of Retirement and the Participant has not fully exercised any then outstanding Options, then all unvested Options shall continue to vest in the ordinary course as outlined in the Stock Option Agreement and all Options shall be exercisable until the earlier of (a) thirty-six (36) months following the Participant’s Termination Date, and (b) the normal expiry date of the Option.

 

14.3                        If the employment of a Participant is terminated by reason of termination without cause, other than in the case of a Retirement, the Participant may continue to exercise any then outstanding Options, to the extent they were exercisable on the Termination Date, until the earlier of (a) sixty (60) days following the Termination Date, and (b) the normal expiry date of the Option.

 

14.4                        If the employment of a Participant is terminated by reason of termination with cause, any then outstanding Options will immediately expire on the Termination Date.

 

15.                               Non-Assignability of Options

 

15.1                        The interest of a Participant in an Option shall not be transferable or alienable by the Participant either by assignment or in any other manner during the Participant’s lifetime but shall enure to the benefit of the Participant’s executors or personal representatives to the extent provided in Section 14.1.

 

16.                               Rights as a Shareholder

 

16.1                        A Participant shall have no rights whatsoever as a shareholder in respect of his or her Options (including any right to receive dividends or other distributions) until and to the extent that such person exercises his or her Option to purchase Shares.

 

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17.                               Conditions Precedent to Exercise of Option

 

17.1                        The exercise of each Option granted under this Plan shall be subject to the condition that if at any time the Corporation shall determine in its discretion that the satisfaction of withholding tax or other withholding liabilities, or that the listing, registration or qualification of any shares otherwise deliverable upon such exercise upon any securities exchange or under any law, or the consent or approval of any regulatory body, is necessary or desirable as a condition of, or in connection with, such exercise or the delivery or purchase of shares thereunder, then in any such event such exercise shall not be effective unless such withholding, listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Corporation.

 

18.                               Amendment and Termination of Plan

 

18.1                        The Board may, at any time, amend or revise the terms of this Plan, subject to the receipt of all necessary regulatory approvals, provided that no such amendment or revision shall alter the terms of any Options previously granted under the Plan. The Board may also, at any time, amend or revise the terms of any Options previously granted under the Plan, subject to the receipt of all necessary regulatory approvals and the approval of the applicable optionholder. The Board has the discretion to make amendments which it may deem necessary, without having to obtain shareholder approval. Such changes include, without limitation:

 

(a)                                 amendments of a minor nature as may be required from time to time to correct typographical or other minor errors;

 

(b)                                 a change to the vesting provisions of Options; and

 

(c)                                  a change to the termination provisions of Options which does not entail an extension beyond the original expiry date.

 

18.2                        Notwithstanding Section 18.1, the following may not be amended without approval of the shareholders of the Corporation:

 

(a)                                 increases to the maximum number of Shares reserved for issuance under the Plan;

 

(b)                                 amendment to this Section 18 to grant additional powers to the Board to amend the Plan or entitlements without shareholder approval;

 

(c)                                  reduction in the exercise price of Options or other entitlements held by insiders;

 

(d)                                 extension of the term of Options held by insiders; and

 

(e)                                  changes to the insider participation limits which result in shareholder approval to be required on a disinterested basis.

 

18.3                        The Board may at any time and from time to time by resolution terminate the Plan, but no such termination shall, except with the written consent of the Participants concerned, affect the terms and conditions of Options previously granted under the Plan to the extent that they have not been exercised, unless the rights of such Participants shall then have terminated or been wholly exercised.

 

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19.                               Internal Revenue Code 409A (Applicable to United States Taxpayers Only)

 

19.1                        To the extent applicable, the Plan and Stock Option Agreement entered into pursuant to the Plan shall be interpreted in accordance with Section 409A of the United States Internal Revenue Code and Department of Treasury regulations and other interpretive guidance issued thereunder (“Section 409A”). Notwithstanding any provision of the Plan to the contrary, in the event that the Board determines that any Option may be subject to Section 409A, the Board may (without any obligation to do so or duty to indemnify any party for any failure to do so) adopt such amendments to the Plan and the applicable Stock Option Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Board determines are necessary or appropriate to (a) exempt the Option from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Option, or (b) comply with the requirements of Section 409A and related and thereby avoid the application of penalty taxes under  Section 409A.

 

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Appendix A - Proposed Changes