<SEC-DOCUMENT>0001104659-22-054357.txt : 20220502
<SEC-HEADER>0001104659-22-054357.hdr.sgml : 20220502
<ACCEPTANCE-DATETIME>20220502121414
ACCESSION NUMBER:		0001104659-22-054357
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20220429
FILED AS OF DATE:		20220502
DATE AS OF CHANGE:		20220502

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TRANSALTA CORP
		CENTRAL INDEX KEY:			0001144800
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC SERVICES [4911]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15214
		FILM NUMBER:		22880398

	BUSINESS ADDRESS:	
		STREET 1:		110 12TH AVE SW BOX 1900 STATION M
		STREET 2:		CALGARY ALBERTA T2P 2MI
		CITY:			CALGARY
		STATE:			A0
		ZIP:			T2P2M1
		BUSINESS PHONE:		403-267-4724

	MAIL ADDRESS:	
		STREET 1:		110-12TH AVENUE SW
		CITY:			CALGARY ALBERTA CANADA
		STATE:			A0
		ZIP:			T2P2M1
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>tm2214113d2_6k.htm
<DESCRIPTION>FORM 6-K
<TEXT>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<!-- Field: Rule-Page --><DIV STYLE="margin-top: 0pt; margin-bottom: 3pt; width: 100%"><DIV STYLE="font-size: 1pt; border-top: Black 2pt solid; border-bottom: Black 1pt solid">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM&nbsp;6-K</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 <BR>
UNDER THE SECURITIES EXCHANGE ACT OF 1934</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the month of April, 2022</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TRANSALTA CORPORATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Translation of registrant&rsquo;s name into English)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>110-12<SUP>th</SUP> Avenue S.W., Box 1900,
Station &ldquo;M&rdquo;, Calgary, Alberta, T2P 2M1</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Address of principal executive offices)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Indicate by check mark whether the registrant files or will file annual
reports under cover Form&nbsp;20-F or Form&nbsp;40-F.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 50%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form&nbsp;20-F </FONT><FONT STYLE="font-family: Wingdings; font-size: 10pt">&#168;</FONT></TD><TD STYLE="text-align: justify; width: 50%">Form&nbsp;40-F
<FONT STYLE="font-family: Wingdings">&#120;</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Indicate by check mark if the registrant is submitting the Form&nbsp;6-K
in paper as permitted by Regulation S-T Rule&nbsp;101(b)(1): <FONT STYLE="font-family: Wingdings">&#168;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Indicate by check mark if the registrant is submitting the Form&nbsp;6-K
in paper as permitted by Regulation S-T Rule&nbsp;101(b)(7): <FONT STYLE="font-family: Wingdings">&#168;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>Incorporation
by reference</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">Exhibit&nbsp;99.1 hereto is specifically incorporated
is hereby filed for the purpose of being and hereby are incorporated by reference into the Registrant&rsquo;s registration statements
filed under the Securities Act of 1933, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
  <TR STYLE="vertical-align: top">
    <TD STYLE="width: 37%; padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>Form</U></FONT></TD>
    <TD STYLE="width: 63%; padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>Registration No.</U></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><A HREF="http://www.sec.gov/Archives/edgar/data/1144800/000095014221003666/eh210201163_s8.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">S-8</FONT></A></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><A HREF="http://www.sec.gov/Archives/edgar/data/1144800/000095014221003666/eh210201163_s8.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">333-260935</FONT></A></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><A HREF="http://www.sec.gov/Archives/edgar/data/1144800/000095014220000704/eh2000423_s8.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">S-8</FONT></A></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><A HREF="http://www.sec.gov/Archives/edgar/data/1144800/000095014220000704/eh2000423_s8.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">333-236894</FONT></A></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><A HREF="http://www.sec.gov/Archives/edgar/data/1144800/000104746902004515/a2094769zs-8.txt" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">S-8</FONT></A></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><A HREF="http://www.sec.gov/Archives/edgar/data/1144800/000104746902004515/a2094769zs-8.txt" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">333-101470</FONT></A></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><A HREF="http://www.sec.gov/Archives/edgar/data/1144800/000091205701536917/a2061762zs-8.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">S-8</FONT></A></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><A HREF="http://www.sec.gov/Archives/edgar/data/1144800/000091205701536917/a2061762zs-8.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">333-72454</FONT></A></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><A HREF="http://www.sec.gov/Archives/edgar/data/1144800/000104746919000806/a2237843zf-10.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-10</FONT></A></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-indent: 1in"><A HREF="http://www.sec.gov/Archives/edgar/data/1144800/000104746919000806/a2237843zf-10.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">333-229991</FONT></A></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>Signatures</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 50%; text-align: left">&nbsp;</TD><TD STYLE="text-align: justify; width: 50%">TransAlta Corporation</TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 50%"></TD><TD STYLE="width: 3%; text-align: left">By:</TD><TD STYLE="border-bottom: Black 1pt solid; padding-left: 0.125in; text-align: justify; width: 47%">/s/ Scott Jeffers</TD>
</TR><TR STYLE="vertical-align: top; text-align: justify">
<TD>&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: justify">Scott Jeffers</TD></TR>
     <TR STYLE="vertical-align: top; text-align: justify">
<TD>&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: justify">Vice President and Corporate Secretary</TD></TR>
     </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Date: April&nbsp;29, 2022</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXHIBIT&nbsp;INDEX</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <TD STYLE="font-size: 10pt; width: 10%"><A HREF="tm2214113d2_ex99-1.htm"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">99.1</FONT></A></TD>
    <TD STYLE="font-size: 10pt; width: 90%; text-align: justify"><A HREF="tm2214113d2_ex99-1.htm"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amended and Restated Shareholder Rights Plan Agreement effective April&nbsp;28, 2022</FONT></A></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>tm2214113d2_ex99-1.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><B>Exhibit 99.1</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SHAREHOLDER RIGHTS PLAN AGREEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DATED AS OF</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>OCTOBER 13, 1992</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AND</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AS AMENDED AND RESTATED AS OF APRIL 28, 2022</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>BETWEEN</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TRANSALTA CORPORATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AND</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>COMPUTERSHARE TRUST COMPANY OF CANADA</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AS RIGHTS AGENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN
AGREEMENT<BR>
TABLE OF CONTENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
  <TR STYLE="vertical-align: top">
    <TD COLSPAN="3"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Article&nbsp;1 INTERPRETATION</B></FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></TD>
    <TD STYLE="text-align: right"><B>2</B></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 84%">&nbsp;</TD>
    <TD STYLE="text-align: right; width: 10%">&nbsp;</TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.1</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain Definitions</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.2</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currency</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.3</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Headings</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.4</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Number and Gender</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.5</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">References to this Agreement</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.6</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Calculation
    of Number and Percentage of Beneficial Ownership of Outstanding Voting Shares</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.7</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Acting Jointly or in Concert</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.8</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Generally Accepted Accounting Principles</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD COLSPAN="3"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Article&nbsp;2 THE RIGHTS</B></FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></TD>
    <TD STYLE="text-align: right">&nbsp;<B>19</B></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.1</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Legend on Certificates</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.2</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Initial Exercise Price; Exercise of Rights; Detachment of Rights</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.3</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Adjustments to Exercise Price; Number of Rights</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.4</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date on Which Exercise Is Effective</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.5</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Execution, Authentication, Delivery and Dating of Rights Certificates</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;29</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.6</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registration, Transfer and Exchange</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;29</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.7</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mutilated, Destroyed, Lost and Stolen Rights Certificates</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.8</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Persons Deemed Owners of Rights</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.9</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Delivery and Cancellation of Certificates</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.10</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Agreement of Rights Holders</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.11</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Rights Certificate Holder Not Deemed a Shareholder</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD COLSPAN="3"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Article&nbsp;3 ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS</B></FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></TD>
    <TD STYLE="text-align: right"><B>33</B></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.1</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Flip-in Event</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;33</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD COLSPAN="3"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Article&nbsp;4 THE RIGHTS AGENT</B></FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></TD>
    <TD STYLE="text-align: right"><B>34</B></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.1</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">General</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;34</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.2</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Merger, Amalgamation or Consolidation or Change of Name of Rights Agent</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;35</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.3</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Duties of Rights Agent</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;36</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.4</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change of Rights Agent</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;38</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.5</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Compliance with Anti-Money Laundering Legislation</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;38</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD COLSPAN="3"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Article&nbsp;5 MISCELLANEOUS</B></FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></TD>
    <TD STYLE="text-align: right"><B>39</B></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.1</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Redemption and Waiver</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;39</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.2</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Expiration</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;41</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.3</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Issuance of New Rights Certificates</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;41</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.4</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Supplements and Amendments</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;41</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.5</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fractional Rights and Fractional Shares</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;43</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.6</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Rights of Action</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;43</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.7</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Regulatory Approvals</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;44</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.8</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Declaration as to Non-Canadian or Non-U.S. Holders</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;44</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.9</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notices</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;44</FONT></TD>
    </TR>
</TABLE>

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<P STYLE="margin: 0"></P>

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<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
  <TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 5%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.10</FONT></TD>
    <TD STYLE="width: 83%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Costs of Enforcement</FONT></TD>
    <TD STYLE="text-align: right; width: 10%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;46</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.11</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Successors</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;46</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.12</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Benefits of this Agreement</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;46</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.13</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Governing Law</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;46</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.14</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Severability</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;46</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.15</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Effective Date</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;46</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.16</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reconfirmation and Approval</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;46</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.17</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Actions by the Board of Directors</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;47</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.18</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fiduciary Duties of the Directors</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;47</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.19</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Privacy Legislation</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;47</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.20</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Language</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;47</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.21</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Time of the Essence</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;47</FONT></TD>
    </TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.22</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Execution in Counterparts</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;48</FONT></TD>
    </TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">ATTACHMENT 1</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B><U>AMENDED
AND RESTATED<BR>
SHAREHOLDER RIGHTS PLAN AGREEMENT</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>MEMORANDUM
OF AGREEMENT</B></FONT>, dated as of October&nbsp;13, 1992, as amended and restated as of April&nbsp;28, 2022, between TransAlta Corporation
(&ldquo;<B>TransAlta</B>&rdquo;), a corporation incorporated under the <I>Canada Business Corporations Act</I>, and Computershare Trust
Company of Canada, a corporation incorporated under the laws of Canada (the &ldquo;<B>Rights Agent</B>&rdquo;) which was appointed successor
to AST Trust Company (Canada), a trust company incorporated under the laws of Canada;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>WHEREAS</B></FONT>
the Board of Directors (as hereinafter defined), in the exercise of its fiduciary duties, has determined that it is in the best interests
of TransAlta to amend and restate this shareholder rights plan (the &ldquo;<B>Rights Plan</B>&rdquo;), subject to receipt of approval
of the shareholders of TransAlta at the 2022 meeting of the shareholders of TransAlta pursuant to Section&nbsp;5.15 hereof, to ensure,
to the extent possible, that all shareholders of TransAlta are treated fairly in connection with any take-over bid for TransAlta;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>AND
WHEREAS</B></FONT> in order to implement the Rights Plan as established by this Agreement, the Board of Directors previously:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">authorized the issuance, effective at 12:01 a.m.&nbsp;(Calgary time) on the Effective Date (as hereinafter
defined), of one Right (as hereinafter defined) in respect of each Common Share (as hereinafter defined) outstanding at 12:01 a.m.&nbsp;(Calgary
time) on the Effective Date (the &ldquo;<B>Record Time</B>&rdquo;); and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">authorized the issuance of one Right in respect of each Common Share issued after the Record Time and
prior to the earlier of the Separation Time (as hereinafter defined) and the Expiration Time (as hereinafter defined);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>AND
WHEREAS</B></FONT> each Right entitles the holder thereof, after the Separation Time, to purchase securities of TransAlta pursuant to
the terms and subject to the conditions set forth herein;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>AND
WHEREAS</B></FONT> TransAlta desires to appoint the Rights Agent to act on behalf of TransAlta and the holders of Rights, and the Rights
Agent is willing to so act, in connection with the issuance, transfer, exchange and replacement of Rights Certificates (as hereinafter
defined), the exercise of Rights and other matters referred to herein;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>AND
WHEREAS</B></FONT> this agreement was originally entered into by TransAlta and Montreal Trust Company of Canada as of October&nbsp;13,
1992 and has been amended from time to time since then (such agreement as amended being the &ldquo;<B>Original Agreement</B>&rdquo;);</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>AND
WHEREAS</B></FONT> the Original Agreement was (i)&nbsp;amended and restated in its entirety on April&nbsp;30,&nbsp;2004; (ii)&nbsp;amended
and restated in its entirety on April&nbsp;22, 2016; (iii)&nbsp;amended and restated in its entirety on April&nbsp;26, 2019; and (iv)&nbsp;is
hereby further amended and restated as provided herein;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>NOW
THEREFORE</B></FONT>, in consideration of the premises and the respective covenants and agreements set forth herein, and subject to such
covenants and agreements, the parties hereby agree as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>Article&nbsp;1<BR>
INTERPRETATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>1.1</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt"><B>Certain Definitions</B></FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">For
purposes of this Agreement, the following terms have the meanings indicated</FONT>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Acquiring Person</B>&rdquo; </FONT>shall
mean any Person who is the Beneficial Owner of 20% or more of the outstanding Voting Shares; provided, however, that the term &ldquo;Acquiring
Person&rdquo; shall not include:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">TransAlta or any Subsidiary of TransAlta;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">any Person who becomes the Beneficial Owner of 20% or more of the outstanding Voting Shares as a result
of one or any combination of (A)&nbsp;a Voting Share Reduction, (B)&nbsp;Permitted Bid Acquisitions, (C)&nbsp;an Exempt Acquisition, (D)&nbsp;Pro
Rata Acquisitions, or (E)&nbsp;Convertible Security Acquisitions; provided, however, that if a Person becomes the Beneficial Owner of
20% or more of the outstanding Voting Shares pursuant to one or any combination of a Voting Share Reduction, Permitted Bid Acquisitions,
an Exempt Acquisition, Pro Rata Acquisitions or Convertible Security Acquisitions and thereafter such Person, while such Person is the
Beneficial Owner of 20% or more of the Voting Shares then outstanding, increases the number of Voting Shares beneficially owned by such
Person by more than 1.0% of the number of Voting Shares outstanding (other than pursuant to one or any combination of a Voting Share Reduction,
a Permitted Bid Acquisition, an Exempt Acquisition, a Pro Rata Acquisition or a Convertible Security Acquisition), then, as of the date
such Person becomes the Beneficial Owner of such additional Voting Shares, such Person shall become an &ldquo;Acquiring Person&rdquo;;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">for a period of ten days after the Disqualification Date (as defined below), any Person who becomes the
Beneficial Owner of 20% or more of the outstanding Voting Shares as a result of such Person becoming disqualified from relying on Subsection
1.1(f)(v)&nbsp;solely because such Person or the Beneficial Owner of such Voting Shares is making or has announced an intention to make
a Take-over Bid, either alone or by acting jointly or in concert with any other Person and, for the purposes of this definition, &ldquo;<B>Disqualification
Date</B>&rdquo; means the first date of public announcement that any Person is making, or has announced an intention to make, a Take-over
Bid alone or by acting jointly or in concert with any other Person;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iv)</FONT></TD><TD STYLE="text-align: justify">an underwriter or member of a banking or selling group acting in such capacity that becomes the Beneficial
Owner of 20% or more of the Voting Shares in connection with a distribution of securities of TransAlta pursuant to a prospectus or by
way of private placement; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(v)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">a Person (a &ldquo;<B>Grandfathered Person</B>&rdquo;)
</FONT>who is the Beneficial Owner of 20% or more of the outstanding Voting Shares determined as at the Record Time, provided, however,
that this exception shall not be, and shall cease to be, applicable to a Grandfathered Person in the event that such Grandfathered Person
shall, after the Record Time, become the Beneficial Owner of additional Voting Shares that increases its Beneficial Ownership of Voting
Shares by more than 1.0% of the number of Voting Shares outstanding as at the Record Time (other than pursuant to one or more or any combination
of a Voting Share Reduction, a Permitted Bid Acquisition, an Exempt Acquisition, a Pro Rata Acquisition or a Convertible Security Acquisition);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Affiliate</B>&rdquo;, </FONT>when used
to indicate a relationship with a Person, shall mean a Person that directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such specified Person;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Agreement</B>&rdquo; </FONT>shall mean
this shareholder rights plan agreement dated as of October&nbsp;13, 1992, as amended and restated as of April&nbsp;28, 2022, between TransAlta
and the Rights Agent;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>annual cash dividend</B>&rdquo; </FONT>shall
mean cash dividends paid in any fiscal year of TransAlta to the extent that such cash dividends do not exceed, in the aggregate, the greatest
of:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">200</FONT>% of the aggregate amount of cash dividends
declared payable by TransAlta on its Common Shares in its immediately preceding fiscal year;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">300</FONT>% of the arithmetic mean of the aggregate
amounts of the annual cash dividends declared payable by TransAlta on its Common Shares in its three immediately preceding fiscal years;
and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">100</FONT>% of the aggregate consolidated net
income of TransAlta, before extraordinary items, for its immediately preceding fiscal year;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(e)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Associate</B>&rdquo;, </FONT>shall
mean, when used to indicate a relationship with a specified Person, a spouse of that Person, any Person of the same or opposite sex with
whom that Person is living in a conjugal relationship outside marriage, a child of that Person or a relative of that Person if that relative
has the same residence as that Person;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(f)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">A </FONT>Person shall be deemed the &ldquo;<B>Beneficial
Owner</B>&rdquo; of, and to have &ldquo;<B>Beneficial Ownership</B>&rdquo; of, and to &ldquo;<B>Beneficially Own</B>&rdquo;,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">any securities as to which such Person or any of such Person&rsquo;s Affiliates or Associates is the direct
or indirect owner at law or in equity;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">any securities as to which such Person or any of such Person&rsquo;s Affiliates or Associates has the
right to become the owner at law or in equity (whether such right is exercisable immediately or within a period of 60 days of the date
of determination of Beneficial Ownership, and whether or not on condition or the happening of any contingency or the making of any payment)
(A)&nbsp;pursuant to any agreement, arrangement, pledge or understanding, whether or not in writing (other than (x)&nbsp;customary agreements
with and between TransAlta and underwriters and/or banking group members and/or selling group members with respect to a distribution of
securities by TransAlta or (y)&nbsp;pledges of securities in the ordinary course of the pledgee&rsquo;s business), or (B)&nbsp;upon the
purchase, conversion, exchange or exercise of any Convertible Security; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">any securities which are Beneficially Owned within the meaning of Subsections 1.1(f)(i)&nbsp;and 1.1(f)(ii)&nbsp;by
any other Person with whom such Person, or any of such Person&rsquo;s Affiliates or Associates is acting jointly or in concert;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">provided,
however, that a Person shall not be deemed the &ldquo;Beneficial Owner&rdquo; of, or to have &ldquo;Beneficial Ownership&rdquo; of, or
to &ldquo;Beneficially Own&rdquo;, any security solely because</FONT>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iv)</FONT></TD><TD STYLE="text-align: justify">such security has been, or has been agreed to be, deposited or tendered pursuant to a Lock-up Agreement,
or is otherwise deposited or tendered, to any Take-over Bid made by such Person, made by any of such Person&rsquo;s Affiliates or Associates
or made by any other Person acting jointly or in concert with such Person until such deposited or tendered security has been taken up
or paid for, whichever shall first occur;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(v)</FONT></TD><TD STYLE="text-align: justify">such Person, any of such Person&rsquo;s Affiliates or Associates or any other Person acting jointly or
in concert with such Person holds such security and:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(A)</FONT></TD><TD STYLE="text-align: justify">the ordinary business of any such Person (the &ldquo;<B>Investment Manager</B>&rdquo;) includes the management
of investment funds for others (which others, for greater certainty, may include or be limited to one or more employee benefit plans or
pension plans) and such security is held by the Investment Manager in the ordinary course of such business in the performance of such
Investment Manager&rsquo;s duties for the account of any other Person (a &ldquo;<B>Client</B>&rdquo;), including the acquisition or holding
of securities in a non-discretionary account held on behalf of a Client by a broker or dealer appropriately registered under applicable
law;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(B)</FONT></TD><TD STYLE="text-align: justify">such Person (the &ldquo;<B>Trust Company</B>&rdquo;) is licensed to carry on the business of a trust company
under applicable laws and, as such, acts as trustee or administrator or in a similar capacity in relation to the estates of deceased or
incompetent Persons (each an &ldquo;<B>Estate Account</B>&rdquo;) or in relation to other accounts (each an &ldquo;<B>Other Account</B>&rdquo;)
and holds such security in the ordinary course of such duties for such Estate Accounts or for such Other Accounts;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(C)</FONT></TD><TD STYLE="text-align: justify">such Person is established by statute for purposes that include, and the ordinary business or activity
of such Person (the &ldquo;<B>Statutory Body</B>&rdquo;) includes, the management of investment funds for employee benefit plans, pension
plans, insurance plans or various public bodies and such security is held by the Statutory Body in the ordinary course of the management
of such investment funds;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(D)</FONT></TD><TD STYLE="text-align: justify">such Person (the &ldquo;<B>Administrator</B>&rdquo;) is the administrator or trustee of one or more pension
funds or plans registered under the laws of Canada or any Province thereof, the laws of the United States of America or any State thereof
or the corresponding laws of the jurisdiction by which such Plan is governed (a &ldquo;<B>Plan</B>&rdquo;), or is a Plan, and holds such
security for the purposes of its activities as such Administrator or Plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(E)</FONT></TD><TD STYLE="text-align: justify">such Person (the &ldquo;<B>Crown Agent</B>&rdquo;) is a Crown agent or agency; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(F)</FONT></TD><TD STYLE="text-align: justify">such Person (the &ldquo;<B>Manager</B>&rdquo;) is the manager or trustee of a mutual fund (&ldquo;<B>Mutual
Fund</B>&rdquo;) that is registered or qualified to issue its securities to investors under the securities laws of any province of Canada
or the laws of the United States of America or any state thereof or is a Mutual Fund and holds such security for the purposes of its activities
as such Manager or Mutual Fund;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">provided,
in any of the above cases, that the Investment Manager, the Trust Company, the Statutory Body, the Administrator, the Plan, the Crown
Agent, the Manager or the Mutual Fund, as the case may be, is not then making a Take-over Bid or has not then announced an intention to
make a Take-over Bid, either alone or acting jointly or in concert with any other Person, other than an Offer to Acquire Voting Shares
or other securities (x)&nbsp;pursuant to a distribution by TransAlta, (y)&nbsp;by means of a Permitted Bid or a Competing Permitted Bid,
or (z)&nbsp;by means of ordinary market transactions (including prearranged trades entered into in the ordinary course of business of
such Person) executed through the facilities of a stock exchange or organized over-the-counter market</FONT>;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(vi)</FONT></TD><TD STYLE="text-align: justify">such Person is (A)&nbsp;a Client of the same Investment Manager as another Person on whose account the
Investment Manager holds such security, (B)&nbsp;an Estate Account or an Other Account of the same Trust Company as another Person on
whose account the Trust Company holds such security, or (C)&nbsp;a Plan with the same Administrator as another Plan on whose account the
Administrator holds such security;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(vii)</FONT></TD><TD STYLE="text-align: justify">such Person is (A)&nbsp;a Client of an Investment Manager and such security is owned at law or in equity
by the Investment Manager, (B)&nbsp;an Estate Account or an Other Account of a Trust Company and such security is owned at law or in equity
by the Trust Company, or (C)&nbsp;a Plan and such security is owned at law or in equity by the Administrator of the Plan; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(viii)</FONT></TD><TD STYLE="text-align: justify">such Person is a registered holder of such security as a result of carrying on the business of, or acting
as a nominee of, a securities depositary;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(g)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Board of Directors</B>&rdquo; </FONT>shall
mean the board of directors of TransAlta or any duly constituted and empowered committee thereof;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(h)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Book Entry Form</B>&rdquo; </FONT>shall
mean, in reference to securities, securities that have been issued and registered in uncertificated form and includes securities evidenced
by an advice or other statement and securities which are maintained electronically on the records of TransAlta&rsquo;s transfer agent
but for which no certificate has been issued;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Book Entry Rights Exercise Procedures</B>&rdquo;
</FONT>shall have the meaning ascribed thereto in Subsection 2.2(c);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(j)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Business Day</B>&rdquo; </FONT>shall
mean any day other than a Saturday, Sunday or a day on which banking institutions in Calgary are authorized or obligated by law to close;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(k)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B><I>Canada Business Corporations Act</I></B>&rdquo;
</FONT>shall mean the Canada Business Corporations Act, R.S.C. 1985, c. C-44 as amended, and the regulations made thereunder and any comparable
or successor laws or regulations thereto;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(l)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Canadian Dollar Equivalent</B>&rdquo;
of </FONT>any amount which is expressed in United States Dollars means, on any date, the Canadian dollar equivalent of such amount determined
by multiplying such amount by the U.S. - Canadian Exchange Rate in effect on such date;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(m)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>certificate</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in Section&nbsp;2.8;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(n)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>close of business</B>&rdquo; </FONT>on
any given date shall mean the time on such date (or, if such date is not a Business Day, the time on the next succeeding Business Day)
at which the principal transfer office in Calgary of the transfer agent for the Common Shares (or, after the Separation Time, the principal
transfer office in Calgary of the Rights Agent) is closed to the public; provided, however, that for the purposes of the definitions &ldquo;Competing
Permitted Bid&rdquo; and &ldquo;Permitted Bid&rdquo;, &ldquo;close of business&rdquo; on any date means 11:59 p.m.&nbsp;(local time at
the place of deposit) on such date (or, if such date is a Saturday, Sunday or statutory holiday in the applicable Canadian jurisdiction,
11:59 p.m.&nbsp;(local time at the place of deposit) on the next succeeding day that is not a Saturday, Sunday or statutory holiday in
the applicable Canadian jurisdiction);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(o)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Common Share</B>&rdquo; </FONT>shall
mean a common share in the capital of TransAlta and any other share of TransAlta into which such share may be subdivided, consolidated,
reclassified or changed from time to time;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(p)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Competing Permitted Bid</B>&rdquo;
</FONT>shall mean a Take-over Bid that:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">is </FONT>made after any previous Permitted Bid
or another Competing Permitted Bid has been made and prior to the expiry, termination or withdrawal of any such previous Permitted Bid
or Competing Permitted Bid;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">satisfies all components of the definition of a Permitted Bid in Subsection 1.1(qq) other than the requirements
set out in Subsection 1.1(qq)(ii)(A)&nbsp;of the definition of a Permitted Bid; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">contains, and the take-up and payment for securities tendered or deposited thereunder is subject to, an
irrevocable and unqualified condition that no Voting Shares and/or Convertible Securities will be taken up or paid for pursuant to the
Take-over Bid prior to the close of business on the last day of the minimum initial deposit period that such Take-over Bid must remain
open for deposits or tenders of securities thereunder pursuant to NI 62-104 after the date of the Take-over Bid constituting the Competing
Permitted Bid;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">provided,
however, that a Take-over Bid that qualified as a Competing Permitted Bid shall cease to be a Competing Permitted Bid at any time and
as soon as such time that such Take-over Bid ceases to meet the provisions of this definition</FONT>;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(q)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>controlled</B>&rdquo;: a </FONT>Person
is &ldquo;controlled&rdquo; by another Person or two or more other Persons acting jointly or in concert if:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">in the case of a body corporate, securities entitled to vote in the election of directors of such body
corporate carrying more than 50% of the votes for the election of directors are held, directly or indirectly, by or for the benefit of
the other Person or Persons and the votes carried by such securities are entitled, if exercised, to elect a majority of the board of directors
of such body corporate; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">in the case of a Person which is not a body corporate, more than 50% of the voting or equity interests
of such entity are held, directly or indirectly, by or for the benefit of the other Person or Persons;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">and
 &ldquo;controls&rdquo;, &ldquo;controlling&rdquo; and &ldquo;under common control with&rdquo; shall be interpreted accordingly</FONT>;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(r)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Convertible Security</B>&rdquo; </FONT>shall
mean a security that is convertible, exercisable or exchangeable into a Voting Share (other than the Rights) or other securities which
are directly or indirectly convertible, exercisable or exchangeable into Voting Shares, whether immediately or within or after a specified
period and whether or not on condition or on the happening of any contingency or the making of any payment;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(s)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Convertible Security Acquisition</B>&rdquo;
</FONT>shall mean the acquisition of Voting Shares by a Person upon the purchase, exercise, conversion or exchange of Convertible Securities
acquired or received by such Person pursuant to a Permitted Bid Acquisition, an Exempt Acquisition or a Pro Rata Acquisition;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(t)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Co-Rights Agents</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in Subsection 4.1(a);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(u)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Disposition Date</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in Subsection 5.1(h);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(v)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Dividend Reinvestment Acquisition</B>&rdquo;
</FONT>shall mean an acquisition of Voting Shares pursuant to a Dividend Reinvestment Plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(w)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Dividend Reinvestment Plan</B>&rdquo;
shall mean a regular dividend reinvestment or other plan of TransAlta made </FONT>available by TransAlta to holders of its securities
and to holders of securities of a Subsidiary of TransAlta, where such plan permits the holder to direct that some or all of:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">dividends paid in respect of shares of any class of TransAlta or a Subsidiary;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">proceeds of redemption of shares of TransAlta or a Subsidiary;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">interest paid on evidences of indebtedness of TransAlta or a Subsidiary; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iv)</FONT></TD><TD STYLE="text-align: justify">optional cash payments;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(v)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">be </FONT>applied to the purchase from TransAlta
of Common Shares;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(x)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Effective Date</B>&rdquo; </FONT>shall
mean December&nbsp;31, 1992, being the effective date of that arrangement under Section&nbsp;192 of the Canada Business Corporations Act
completed by TransAlta and Utilities, as described in that management proxy circular of Utilities dated October&nbsp;22, 1992;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(y)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Election to Exercise</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in Subsection 2.2(e);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(z)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Entity</B>&rdquo; </FONT>shall mean
any form of organization including a body corporate, corporation, limited partnership, partnership or trust;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(aa)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Exempt Acquisition</B>&rdquo; </FONT>shall
mean an acquisition by a Person of Voting Shares and/or Convertible Securities:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">in </FONT>respect of which the Board of Directors
has waived the application of Section&nbsp;3.1 pursuant to the provisions of Subsection 5.1(a), 5.1(h)&nbsp;or 5.1(i);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">made as an intermediate step in a series of related transactions in connection with an acquisition by
TransAlta or its Subsidiaries of a Person or assets, provided that the Person who acquires such securities distributes or is deemed to
distribute such securities to its securityholders within ten Business Days of the completion of such acquisition, and as a result of such
distribution no Person has become the Beneficial Owner of 20% or more of TransAlta&rsquo;s then outstanding Voting Shares; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">pursuant to an amalgamation, merger, reorganization, arrangement, business combination or other similar
transaction (statutory or otherwise, but for greater certainty not including a Take-over Bid) that is conditional upon the approval of
shareholders of TransAlta to be obtained prior to such Person acquiring such securities.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(bb)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Exercise Price</B>&rdquo; </FONT>shall
mean, as of any date, the price at which a holder of a Right may purchase the securities issuable upon exercise of one whole Right which,
until adjustment thereof in accordance with the terms hereof, shall be:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">until the Separation Time, an amount equal to three times the Market Price, from time to time, per Common
Share; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">from and after the Separation Time, an amount equal to three times the Market Price, as at the Separation
Time, per Common Share;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(cc)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Expansion Factor</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in Subsection 2.3(a);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(dd)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Expiration Time</B>&rdquo; </FONT>shall
mean the earlier of:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">the Termination Time; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">unless a Flip-in Event has occurred (other than a Flip-in Event which has been waived pursuant to Subsection
5.1(a), 5.1(h)&nbsp;or 5.1(i)&nbsp;hereof) prior to the date upon which this Agreement would otherwise terminate pursuant to Section&nbsp;5.16,
the close of business on that date on which a Reconfirmation Meeting occurs at which this Agreement is not reconfirmed or presented for
reconfirmation as contemplated by Section&nbsp;5.16;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ee)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Flip-in Event</B>&rdquo; </FONT>shall
mean a transaction or other event in or pursuant to which any Person becomes an Acquiring Person;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ff)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Grandfathered Person</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in Subsection 1.1(a)(v);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(gg)</TD><TD STYLE="text-align: justify">&ldquo;<B>holder</B>&rdquo; shall have the meaning ascribed thereto in Section&nbsp;2.8;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(hh)</TD><TD STYLE="text-align: justify">&ldquo;<B>Independent Shareholders</B>&rdquo; shall mean holders of Voting Shares, other than:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(i)</TD><TD STYLE="text-align: justify">any Acquiring Person;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(ii)</TD><TD STYLE="text-align: justify">any Offeror (other than any Person who by virtue of Subsection 1.1(f)(v)&nbsp; is not deemed to Beneficially
Own the Voting Shares held by such Person);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(iii)</TD><TD STYLE="text-align: justify">any Affiliate or Associate of any Acquiring Person or Offeror;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(iv)</TD><TD STYLE="text-align: justify">any Person acting jointly or in concert with any Acquiring Person or Offeror referred to in paragraph
(ii)&nbsp;of this definition; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(v)</TD><TD STYLE="text-align: justify">any employee benefit plan, deferred profit sharing plan, stock participation plan and any other similar
plan or trust for the benefit of employees of TransAlta or a Subsidiary of TransAlta unless the beneficiaries of the plan or trust direct
the manner in which the Voting Shares are to be voted or withheld from voting or direct whether the Voting Shares are to be tendered to
a Take-over Bid;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Lock-up Agreement</B>&rdquo; </FONT>shall
mean an agreement (the terms of which are publicly disclosed and a copy of which is made available to the public (including TransAlta)):</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">not later than the date on which the Lock-up Bid (as defined below) is publicly announced); or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">if </FONT>the Lock-up Bid has been made prior
to the date on which such agreement has been entered into, forthwith and in any event not later than the Business Day following the date
of such agreement;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">between
a Person and one or more holders of Voting Shares and/or Convertible Securities</FONT> (each a &ldquo;<B>Locked-up Person</B>&rdquo;)
whereby the Locked-up Person agrees to deposit or tender the Voting Shares and/or Convertible Securities held by the Locked-up Person
to such Person&rsquo;s Take-over Bid or to any Take-over Bid made by any of such Person&rsquo;s Affiliates or Associates or made by any
other Person acting jointly or in concert with such Person (the &ldquo;<B>Lock-up Bid</B>&rdquo;), where the agreement permits the Locked-up
Person to terminate its obligation to deposit or tender to or not withdraw Voting Shares and/or Convertible Securities from the Lock-up
Bid, and to terminate any obligation with respect to the voting of such securities, in order to deposit or tender such securities to another
Take-over Bid or to support another transaction:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(A)</FONT></TD><TD STYLE="text-align: justify">where the price or value of the consideration per Voting Share or Convertible Security offered under such
other Take-over Bid or transaction:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 2in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(1)</FONT></TD><TD STYLE="text-align: justify">exceeds the price or value of the consideration per Voting Share and/or Convertible Security offered under
the Lock- up Bid; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 2in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(2)</FONT></TD><TD STYLE="text-align: justify">exceeds by as much as or more than a specified amount (the &ldquo;<B>Specified Amount</B>&rdquo;) the
price or value of the consideration per Voting Share or Convertible Security at which the Locked-Up Person has agreed to deposit or tender
Voting Shares and/or Convertible Securities to the Lock-up Bid, provided that such Specified Amount is not greater than 7% of the price
or value of the consideration per Voting Share or Convertible Security offered under the Lock-up Bid; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(B)</FONT></TD><TD STYLE="text-align: justify">if the number of Voting Shares or Convertible Securities offered to be purchased under the Lock-up Bid
is less than 100% of the Voting Shares or Convertible Securities held by Independent Shareholders, where the price or value of the consideration
per Voting Share or Convertible Security offered under such other Take-over Bid or transaction is not less than the price or value of
the consideration per Voting Share or Convertible Security offered under the Lock-up Bid and the number of Voting Shares and/or Convertible
Securities to be purchased under such other Take- over Bid or transaction:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 2in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(1)</FONT></TD><TD STYLE="text-align: justify">exceeds the number of Voting Shares and/or Convertible Securities that the Offeror has offered to purchase
under the Lock-up Bid; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 2in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(2)</FONT></TD><TD STYLE="text-align: justify">exceeds by as much as or more than a specified number (the &ldquo;<B>Specified Number</B>&rdquo;) the
number of Voting Shares or Convertible Securities that the Offeror has offered to purchase under the Lock-up Bid, provided that the Specified
Number is not greater than 7% of the number of Voting Shares or Convertible Securities offered to be purchased under the Lock-up Bid;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">and,
for greater certainty, the Lock-up Agreement may contain a right of first refusal or require a period of delay to give the Offeror under
the Lock-up Bid an opportunity to at least match the price, value or number in such other Take-over Bid or transaction or other similar
limitation on a Locked-up Person&rsquo;s rights to withdraw Voting Shares and/or Convertible Securities from the Lock-up Agreement and
not tender such Voting Shares and/or Convertible Securities to the Take-over Bid to which the Locked-up Person has agreed to deposit or
tender so long as the limitation does not preclude the exercise by the Locked-up Person of the right to withdraw Voting Shares and/or
Convertible Securities in sufficient time to tender to the other Take-over Bid or support the other transaction</FONT>; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">the agreement does not provide for any &ldquo;break-up fees&rdquo;, &ldquo;top-up fees&rdquo;, penalties,
expenses reimbursement or other amounts that exceed in the aggregate the greater of:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(A)</FONT></TD><TD STYLE="text-align: justify">the cash equivalent of 2.5% of the price or value of the consideration payable under the Lock-up Bid to
the Locked-up Person; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(B)</FONT></TD><TD STYLE="text-align: justify">50% of the amount by which the price or value of the consideration payable under another Take-over Bid
or transaction to a Locked-up Person exceeds the price or value of the consideration that such Locked-up Person would have received under
the Lock-up Bid;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">to
</FONT>be paid by a Locked-up Person pursuant to the Lock-up Agreement in the event that the Locked-up Person fails to deposit or tender
Voting Shares to the Lock-up Bid or withdraws Voting Shares previously tendered thereto in order to tender to another Take-over Bid or
support another transaction;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(jj)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Market Price</B>&rdquo; </FONT>per
share of any securities on any date of determination shall mean the average of the daily closing prices per share of such securities (determined
as described below) on each of the 20 consecutive Trading Days through and including the Trading Day immediately preceding such date;
provided, however, that if an event of a type analogous to any of the events described in Section&nbsp;2.3 hereof shall have caused the
closing prices used to determine the Market Price on any Trading Days not to be fully comparable with the closing price on such date of
determination or, if the date of determination is not a Trading Day, on the immediately preceding Trading Day, each such closing price
so used shall be appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section&nbsp;2.3 hereof in
order to make it fully comparable with the closing price on such date of determination or, if the date of determination is not a Trading
Day, on the immediately preceding Trading Day. The closing price per share of any securities on any date shall be:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">the closing board lot sale price or, in case no such sale takes place on such date, the average of the
closing bid and asked prices for each of such securities as reported by the principal Canadian stock exchange (as determined by volume
of trading) on which such securities are listed or admitted to trading;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">if </FONT>for any reason none of such prices
is available on such day or the securities are not listed or posted for trading on a Canadian stock exchange, the last sale price or,
in case no such sale takes place on such date, the average of the closing bid and asked prices for each of such securities as reported
by the principal national United States securities exchange (as determined by volume of trading) on which such securities are listed or
admitted to trading;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">if </FONT>for any reason none of such prices
is available on such day or the securities are not listed or admitted to trading on a Canadian stock exchange or a national United States
securities exchange, the last sale price or, in case no sale takes place on such date, the average of the high bid and low asked prices
for each of such securities in the over-the-counter market, as quoted by any recognized reporting system then in use; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iv)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">if for </FONT>any reason none of such prices
is available on such day or the securities are not listed or admitted to trading on a Canadian stock exchange or a national United States
securities exchange or quoted by any such reporting system, the average of the closing bid and asked prices as furnished by a recognized
professional market maker making a market in the securities;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">provided,
however, that if for any reason none of such prices are available on such date, the closing price per share of such securities on such
date means the fair value per share of such securities on such date as determined by a nationally recognized investment dealer or investment
banker selected in good faith by the Board of Directors; provided further that if an event of a type analogous to any of the events described
in Section&nbsp;2.3 hereof shall have caused any price used to determine the Market Price on any Trading Day not to be fully comparable
with the price as so determined on the Trading Day immediately preceding such date of determination, each such price so used shall be
appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section&nbsp;2.3 hereof in order to make it
fully comparable with the price on the Trading Day immediately preceding such date of determination. The Market Price shall be expressed
in Canadian dollars and, if initially determined in respect of any day forming part of the 20 consecutive Trading Day period in question
in United States dollars, such amount shall be translated into Canadian dollars on such date at the Canadian Dollar Equivalent thereof</FONT>;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(kk)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>NI 62-104</B>&rdquo; </FONT>shall mean
National Instrument 62-104 - Take-over Bids and Issuer Bids adopted by the Canadian securities regulatory authorities, as amended, re-
enacted or replaced from time to time, and any other comparable or successor laws or instruments thereto;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ll)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Nominee</B>&rdquo; </FONT>shall have
the meaning ascribed thereto in Subsection 2.2(e);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(mm)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Offer to Acquire</B>&rdquo; </FONT>shall
include:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">an offer to purchase or a solicitation of an offer to sell, and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">an </FONT>acceptance of an offer to sell, whether
or not such offer to sell has been solicited,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">or
</FONT>any combination thereof, and the Person accepting an offer to sell shall be deemed to be making an Offer to Acquire to the Person
that made the offer to sell;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(nn)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Offeror</B>&rdquo; </FONT>shall mean
a Person who has announced, and has not withdrawn, an intention to make or who has made, and has not withdrawn, a Take-over Bid, other
than a Person who has completed a Permitted Bid, a Competing Permitted Bid or an Exempt Acquisition;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(oo)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Offeror&rsquo;s Securities</B>&rdquo;
</FONT>shall mean Voting Shares Beneficially Owned by an Offeror on the date of the Offer to Acquire Voting Shares and/or Convertible
Securities;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(pp)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Original Agreement</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in the recitals to this Agreement;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(qq)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Permitted Bid</B>&rdquo; </FONT>shall
mean a Take-over Bid made by way of a take-over bid circular and which also complies with the following additional provisions:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">the </FONT>Take-over Bid is made to all holders
of Voting Shares as registered on the books of TransAlta, other than the Offeror;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">the Take-over Bid contains, and the take-up and payment for securities tendered or deposited thereunder
is subject to, an irrevocable and unqualified provision that no Voting Shares and/or Convertible Securities will be taken up or paid for
pursuant to the Take-over Bid:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(A)</FONT></TD><TD STYLE="text-align: justify">prior to the close of business on the date which is not less than 105 days following the date of the Take-over
Bid or such shorter minimum deposit period that a take-over bid (that is not exempt from any requirements of Division 5 (Bid Mechanics)
of NI 62-104) must remain open for deposits of securities, in the applicable circumstances at such time, pursuant to NI 62-104; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(B)</FONT></TD><TD STYLE="text-align: justify">then only if, at the close of business on the date the Voting Shares and/or Convertible Securities are
first taken up and/or paid for under such Take-over Bid, more than 50% of the Voting Shares held by Independent Shareholders have been
deposited or tendered to the Take-over Bid and not withdrawn;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">unless the Take-over Bid is withdrawn, the Take-over Bid contains an irrevocable and unqualified provision
that Voting Shares and/or Convertible Securities, as applicable, may be deposited or tendered to such Take-over Bid at any time during
the period of time described in Subsection 1.1(qq)(ii)(A)&nbsp;and that any Voting Shares and/or Convertible Securities deposited pursuant
to the Take-over Bid may be withdrawn until taken up and paid for; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iv)</FONT></TD><TD STYLE="text-align: justify">unless the Take-over Bid is withdrawn, the Take-over Bid contains an irrevocable and unqualified provision
that in the event that the deposit condition set forth in Subsection 1.1(qq)(ii)(B)&nbsp;above is satisfied, the Offeror shall make a
public announcement of that fact and the Take-over Bid shall remain open for deposits and tenders of Voting Shares and/or Convertible
Securities, as applicable, for not less than ten days from the date of such public announcement;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">provided,
however, that a Take-over Bid that qualified as a Permitted Bid shall cease to be a Permitted Bid at any time and as soon as such time
as when such Take-over Bid ceases to meet the provisions of this definition</FONT>;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(rr)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Permitted Bid Acquisition</B>&rdquo;
</FONT>shall mean an acquisition of Voting Shares and/or Convertible Securities of any class made pursuant to a Permitted Bid or a Competing
Permitted Bid;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ss)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Person</B>&rdquo; </FONT>shall include
an individual, body corporate, firm, partnership, syndicate or other form of unincorporated association, trust, trustee, executor, administrator,
legal personal representative, group, joint venture, a government and its agencies or instrumentalities and any entity or group whether
or not having legal personality;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(tt)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Privacy Laws</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in Section&nbsp;5.19;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(uu)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Pro Rata Acquisition</B>&rdquo; </FONT>shall
mean an acquisition by a Person of Voting Shares and/or Convertible Securities pursuant to:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">a </FONT>Dividend Reinvestment Acquisition;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">a </FONT>stock dividend, stock split or other
event in respect of securities of TransAlta of one or more particular classes or series pursuant to which such Person becomes the Beneficial
Owner of Voting Shares and/or Convertible Securities on the same pro rata basis as all other holders of securities of the particular class,
classes or series;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">the </FONT>acquisition or the exercise by the
Person of only those rights to purchase Voting Shares and/or Convertible Securities distributed directly by TransAlta to that Person (and
not acquired from any other Person) in the course of a distribution to all holders of securities of TransAlta (other than holders resident
in any jurisdiction where the distribution or exercise of such rights is restricted or impractical as a result of applicable law) of one
or more particular classes or series pursuant to a rights offering or pursuant to a prospectus, provided that the Person does not thereby
acquire a greater percentage of Voting Shares or Convertible Securities so distributed than the Person&rsquo;s percentage of Voting Shares
Beneficially Owned immediately prior to such acquisition or exercise; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iv)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">a </FONT>distribution of Voting Shares and/or
Convertible Securities made pursuant to a prospectus, by way of a private placement, securities exchange take-over bid or a conversion
or exchange of any Convertible Security, provided that the Person does not thereby acquire a greater percentage of Voting Shares or Convertible
Securities so offered than the Person&rsquo;s percentage of Voting Shares Beneficially Owned immediately prior to such acquisition;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(vv)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Reconfirmation Meeting</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in Section&nbsp;5.16;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ww)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Record Time</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in the recitals to this Agreement;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(xx)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Redemption Price</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in Section&nbsp;5.1(b);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(yy)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Right</B>&rdquo; </FONT>shall mean
a right to purchase a Common Share, upon the terms and subject to the conditions set forth in this Agreement;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(zz)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Rights Certificate</B>&rdquo; </FONT>shall
mean the certificates representing the Rights after the Separation Time, which shall be substantially in the form attached hereto as Attachment
1;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(aaa)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Rights Holders&rsquo; Special Meeting</B>&rdquo;
</FONT>shall mean a meeting of the holders of Rights called by the Board of Directors for the purpose of approving a supplement or amendment
to this Agreement pursuant to Subsection 5.4(c);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(bbb)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Rights Plan</B>&rdquo; </FONT>shall
have the meaning ascribed thereto in the recitals to this Agreement;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ccc)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Rights Register</B>&rdquo; and &ldquo;<B>Rights
Registrar</B>&rdquo; </FONT>shall have the respective meanings ascribed thereto in Subsection 2.6(a);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ddd)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Securities Act (Ontario)</B>&rdquo;
</FONT>shall mean the Securities Act, R.S.O. 1990, c.S.5, as amended, and the regulations and rules&nbsp;thereunder, and any comparable
or successor laws or regulations thereto;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(eee)</FONT></TD><TD STYLE="text-align: justify">&ldquo;<B>Separation Time</B>&rdquo; shall mean, subject to Section&nbsp;5.1(h), the close of business
on the tenth Trading Day after the earlier of:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(i)</TD><TD STYLE="text-align: justify">the Stock Acquisition Date;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(ii)</TD><TD STYLE="text-align: justify">the date of the commencement of or first public announcement of the intent of any Person (other than TransAlta
or any Subsidiary of TransAlta) to commence a Take-over Bid (other than a Permitted Bid or a Competing Permitted Bid); and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(iii)</TD><TD STYLE="text-align: justify">the date on which a Permitted Bid or Competing Permitted Bid ceases to be such;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">or such later time as may be determined
by the Board of Directors, provided that, if any Take-over Bid referred to in this Clause (ii)&nbsp;expires, is cancelled, terminated
or otherwise withdrawn prior to the Separation Time, such Take-over Bid shall be deemed, for the purposes of this definition, never to
have been made; and provided that if the Board of Directors determines pursuant to Section&nbsp;5.1 to waive the application of Section&nbsp;3.1
to a Flip-in Event, then the Separation Time in respect of such Flip-in Event shall be deemed never to have occurred;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(fff)</FONT></TD><TD STYLE="text-align: justify">&ldquo;<B>Special Meeting</B>&rdquo; shall mean a special meeting of the holders of Voting Shares, called
by the Board of Directors for the purpose of approving a supplement or amendment to this Agreement pursuant to Subsection 5.4(b);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ggg)</FONT></TD><TD STYLE="text-align: justify">&ldquo;<B>Specified Amount</B>&rdquo; shall have the meaning ascribed thereto in Subsection 1.1(ii)(ii)(A)(II);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(hhh)</FONT></TD><TD STYLE="text-align: justify">&ldquo;<B>Specified Number</B>&rdquo; &ldquo;shall have the meaning ascribed thereto in Subsection 1.1(ii)(ii)(B)(II);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">&ldquo;<B>Stock Acquisition Date</B>&rdquo; shall mean the first date of public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed pursuant to Section&nbsp;5.2(1)&nbsp;of NI 62-104 or Section&nbsp;13(d)&nbsp;of
the U.S. Exchange Act) by TransAlta or an Acquiring Person that an Acquiring Person has become an Acquiring Person;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(jjj)</FONT></TD><TD STYLE="text-align: justify">&ldquo;<B>Subsidiary</B>&rdquo;: shall mean an Entity which in relation to another Entity:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">is controlled by:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(A)</FONT></TD><TD STYLE="text-align: justify">that other, or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(B)</FONT></TD><TD STYLE="text-align: justify">that other and one or more Entities, each of which is controlled by that other; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(C)</FONT></TD><TD STYLE="text-align: justify">two or more Entities, each of which is controlled by that other, or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(ii)</TD><TD STYLE="text-align: justify">is a Subsidiary of an Entity that is that other&rsquo;s Subsidiary;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(kkk)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Take-over Bid</B>&rdquo; </FONT>shall
mean an Offer to Acquire Voting Shares and/or Convertible Securities if, assuming that the Voting Shares and/or Convertible Securities
subject to the Offer to Acquire are acquired and are Beneficially Owned at the date of such Offer to Acquire by the Person making such
Offer to Acquire, such Voting Shares (including Voting Shares that may be acquired upon conversion, exercise or exchange of the Convertible
Securities) together with the Offeror&rsquo;s Securities, constitute in the aggregate 20% or more of the outstanding Voting Shares at
the date of the Offer to Acquire;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(lll)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Termination Time</B>&rdquo; </FONT>shall
mean the time at which the right to exercise Rights shall terminate pursuant to Section&nbsp;5.1(e);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(mmm)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Trading Day</B>&rdquo;, </FONT>when
used with respect to any securities, shall mean a day on which the principal Canadian stock exchange on which such securities are listed
or admitted to trading is open for the transaction of business or, if the securities are not listed or admitted to trading on any Canadian
stock exchange, a Business Day;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(nnn)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>TransAlta</B>&rdquo; </FONT>shall mean
TransAlta Corporation, a corporation subject to the <I>Canada Business Corporations Act</I>;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(ooo)</TD><TD STYLE="text-align: justify">&ldquo;<B>U.S.-Canadian Exchange Rate</B>&rdquo; shall mean, on any date:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">if on such date the Bank of Canada sets an average noon spot rate of exchange for the conversion of one
United States dollar into Canadian dollars, such rate; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">in any other case, the rate for such date for the conversion of one United States dollar into Canadian
dollars calculated in such manner as may be determined by the Board of Directors from time to time acting in good faith;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ppp)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B><I>U.S. Exchange Act</I></B>&rdquo;
</FONT>shall mean the United States Securities Exchange Act of 1934, as amended, and the rules&nbsp;and regulations thereunder as from
time to time in effect, and any comparable or successor laws, rules&nbsp;or regulations thereto;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(qqq)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B><I>U.S. Securities Act</I></B>&rdquo;
</FONT>shall mean the United States Securities Act of 1933, as amended, and the rules&nbsp;and regulations thereunder as from time to
time in effect, and any comparable or successor laws, rules&nbsp;or regulations thereto;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(rrr)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Utilities</B>&rdquo; </FONT>shall mean
TransAlta Utilities Corporation, a corporation subject to the <I>Canada Business Corporations Act</I>;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(sss)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Utilities Common Shares</B>&rdquo;
</FONT>shall mean common shares in the capital of Utilities;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ttt)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Voting Share Reduction</B>&rdquo; </FONT>shall
mean an acquisition or redemption by TransAlta or a Subsidiary of TransAlta of Voting Shares which, by reducing the number of Voting Shares
outstanding, increases the percentage of outstanding Voting Shares Beneficially Owned by any Person to 20% or more of the Voting Shares
then outstanding; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(uuu)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;<B>Voting Shares</B>&rdquo; </FONT>shall
mean the Common Shares and any other shares in the capital of TransAlta entitled to vote generally in the election of all directors.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>1.2</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Currency</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">All
sums of money which are referred to in this Agreement are expressed in lawful money of Canada, unless otherwise specified</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>1.3</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Headings</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
division of this Agreement into Articles, Sections, Subsections, Clauses, Paragraphs, Subparagraphs or other portions hereof and the insertion
of headings, subheadings and a table of contents are for convenience of reference only and shall not affect the construction or interpretation
of this Agreement</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>1.4</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Number
and Gender</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Wherever
the context so requires, terms used herein importing the singular number only shall include the plural and vice versa and words importing
only one gender shall include all others</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>1.5</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">References
to this Agreement</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">References
to &ldquo;this Agreement&rdquo;, &ldquo;hereto&rdquo;, &ldquo;herein&rdquo;, &ldquo;hereby&rdquo;, &ldquo;hereunder&rdquo;, &ldquo;hereof&rdquo;
and similar expressions refer to this Agreement as amended or supplemented from time to time and not to any particular Article&nbsp;or
Section&nbsp;or other portion hereof and include any and every instrument supplemental or ancillary hereto</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>1.6</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Calculation
of Number and Percentage of Beneficial Ownership of Outstanding Voting Shares</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">For
purposes of this Agreement, the percentage of Voting Shares Beneficially Owned by any Person, shall be and be deemed to be the product
determined by the formula</FONT>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">100 x A/B</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">where:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">A=</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">the
number of votes for the election of all directors generally attaching to</FONT>&#8239;<FONT STYLE="font-size: 10pt">the Voting Shares
Beneficially Owned by such Person; and</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">B =</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
number of votes for the election of all directors generally attaching to&#8239;all outstanding Voting Shares.</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Where
any Person is deemed to Beneficially Own unissued Voting Shares, such Voting Shares shall be deemed to be outstanding for the purpose
of calculating the percentage of Voting Shares of the particular class Beneficially Owned by such Person</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>1.7</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Acting
Jointly or in Concert</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">For
the purposes hereof, a Person is acting jointly or in concert with every Person who, as a result of any agreement, commitment, arrangement
or understanding, whether formal or informal or written or unwritten, with the first Person or any Affiliate thereof, acquires or Offers
to Acquire Voting Shares and/or Convertible Securities (other than customary agreements with and between TransAlta and underwriters and/or
banking group members and/or selling group members with respect to a distribution of securities pursuant to a prospectus or by way of
private placement and other than pursuant to pledges of securities in the ordinary course of the pledgee&rsquo;s business</FONT>).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>1.8</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Generally
Accepted Accounting Principles</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Wherever
in this Agreement reference is made to generally accepted accounting principles, such reference shall be deemed to be the recommendations
at the relevant time of the Chartered Professional Accountants of Canada, or any successor institute, applicable on a consolidated basis
(unless otherwise specifically provided herein to be applicable on an unconsolidated basis) as at the date on which a calculation is made
or required to be made in accordance with generally accepted accounting principles. Where the character or amount of any asset or liability
or item of revenue or expense is required to be determined, or any consolidation or other accounting computation is required to be made
for the purpose of this Agreement or any document, such determination or calculation shall, to the extent applicable and except as otherwise
specified herein or as otherwise agreed in writing by the parties, be made in accordance with generally accepted accounting principles
applied on a consistent basis</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>Article&nbsp;2<BR>
THE RIGHTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.1</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Legend
on Certificates</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">Certificates representing Common Shares which are issued after the Record Time but prior to the earlier
of the Separation Time and the Expiration Time, shall also evidence one Right for each Common Share represented thereby and shall have
impressed on, printed on, written on or otherwise affixed to them a legend in a form substantially to the following effect:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;</FONT>Until
the Separation Time (defined in the Shareholder Rights Plan Agreement referred to below), this certificate also evidences rights of the
holder described in a Shareholder Rights Plan Agreement dated October&nbsp;13, 1992, as amended or supplemented from time to time (the
 &ldquo;Shareholder Rights Plan Agreement&rdquo;), between TransAlta Corporation (&ldquo;TransAlta&rdquo;) and Computershare Trust Company
of Canada (as successor to AST Trust Company (Canada)), the terms of which are incorporated herein by reference and a copy of which is
available on demand without charge at the principal executive offices of TransAlta. Under certain circumstances set out in the Shareholder
Rights Plan Agreement, the rights may expire, may become null and void or may be evidenced by separate certificates and no longer evidenced
by this certificate. TransAlta will mail or arrange for the mailing of a copy of the Shareholder Rights Plan Agreement to the holder of
this certificate without charge as soon as practicable after the receipt of a written request therefor.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Certificates
representing Common Shares that are issued and outstanding at the Record Time, including certificates representing Utilities Common Shares,
which as at the Effective Date represent Common Shares, shall also evidence one Right for each Common Share evidenced thereby, notwithstanding
the absence of the foregoing legend, until the close of business on the earlier of the Separation Time and the Expiration Tim</FONT>e.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">Any Common Shares issued and registered in Book Entry Form&nbsp;prior to the earlier of the Separation
Time and the Expiration Time shall evidence, in addition to the Common Shares, one Right for each Common Share represented thereby and
the registration record of such Common Shares shall include the foregoing legend, adapted accordingly as the Rights Agent may reasonably
require.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.2</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Initial
Exercise Price; Exercise of Rights; Detachment of Rights</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">Subject to adjustment as herein set forth, each Right will entitle the holder thereof, from and after
the Separation Time and prior to the Expiration Time, to purchase one Common Share for the Exercise Price (and the Exercise Price and
number of Common Shares are subject to adjustment as set forth below). Notwithstanding any other provision of this Agreement, any Rights
held by TransAlta or any of its Subsidiaries shall be void.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">Until the Separation Time,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">the Rights shall not be exercisable and no Right may be exercised; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">each Right will be evidenced by the certificate for the associated Common Share registered in the name
of the holder thereof (which certificate shall also be deemed to represent a Rights Certificate) or by Book Entry Form&nbsp;registration
for the associated Common Share and will be transferable only together with, and will be transferred by a transfer of, such associated
Common Share of TransAlta.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">From and after the Separation Time and prior to the Expiration Time:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">the Rights shall be exercisable; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">the registration and transfer of Rights shall be separate from and independent of Common Shares of TransAlta.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">Promptly following the Separation Time, TransAlta will determine whether it wishes to issue Rights Certificates
or whether it will maintain the Rights in Book Entry Form. In the event that TransAlta determines to maintain Rights in Book Entry Form,
it will put in place such alternative procedures as are determined necessary in consultation with the Rights Agent for the Rights to be
maintained in Book Entry Form&nbsp;(the &ldquo;<B>Book Entry Rights Exercise Procedures</B>&rdquo;), it being hereby acknowledged that
such procedures shall, to the greatest extent possible, replicate in all substantive respects the procedures set out in this Agreement
with respect to the exercise of the Rights Certificates and that the procedures set out in this Agreement shall be modified only to the
extent necessary, as reasonably determined by the Rights Agent, to permit TransAlta to maintain the Rights in Book Entry Form. In such
event, the Book Entry Rights Exercise Procedures shall be deemed to replace the procedures set out in this Agreement with respect to the
exercise of Rights and all provisions of this Agreement referring to the Rights Certificates shall be applicable to Rights registered
in Book Entry Form&nbsp;in like manner as the Rights in certificated form.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(e)</FONT></TD><TD STYLE="text-align: justify">In the event that TransAlta determines to issue Rights Certificates, TransAlta will prepare and the Rights
Agent will mail to each holder of record of Common Shares as of the Separation Time (other than an Acquiring Person, any other Person
whose Rights are or become void pursuant to the provisions of Subsection 3.1(b)&nbsp;and, in respect of any Rights Beneficially Owned
by such Acquiring Person or any such other Person which are not held of record by such Acquiring Person or such other Person, the holder
of record of such Rights (a &ldquo;<B>Nominee</B>&rdquo;)) and, in respect of each Convertible Security converted into Common Shares after
the Separation Time and prior to the Expiration Time, promptly after such conversion, TransAlta will prepare or cause to be prepared and
the Rights Agent will mail to the holder so converting (other than an Acquiring Person, any other Person whose Rights are or become void
pursuant to the provisions of Subsection 3.1(b)&nbsp;and, in respect of any Rights Beneficially Owned by such Acquiring Person or any
such other Person which are not held of record by such Acquiring Person or such other Person, the Nominee), at such holder&rsquo;s address
as shown by the records of TransAlta (TransAlta hereby agreeing to furnish copies of such records to the Rights Agent for this purpose):</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">a Rights Certificate appropriately completed, representing the number of Rights held by such holder at
the Separation Time and having such marks of identification or designation and such legends, summaries or endorsements printed thereon
as TransAlta may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with
any law, rule, regulation or judicial or administrative order or with any rule&nbsp;or regulation made pursuant thereto or with any rule&nbsp;or
regulation of any self- regulatory organization, stock exchange or quotation system on which the Rights may from time to time be listed
or traded, or to conform to usage; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</FONT>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">a
disclosure statement prepared by TransAlta describing the Rights,</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">provided
that a Nominee shall be sent the materials provided for in (i)&nbsp;and (ii)&nbsp;in respect of all Common Shares held of record by it
which are not Beneficially Owned by an Acquiring Person or any other Person whose Rights are or become void pursuant to the provisions
of Subsection 3.1(b). In order for TransAlta to determine whether any Person is holding Common Shares which are Beneficially Owned by
another Person, TransAlta may require such first Person to furnish such information and documentation as TransAlta deems necessary</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(f)</FONT></TD><TD STYLE="text-align: justify">In the event TransAlta determines to issue Rights Certificates, Rights may be exercised, in whole or in
part, on any Business Day after the Separation Time and prior to the Expiration Time by submitting to the Rights Agent:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">the Rights Certificate evidencing such Rights;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">an election to exercise such Rights (an &ldquo;<B>Election to Exercise</B>&rdquo;) substantially in the
form attached to the Rights Certificate appropriately completed and executed by the holder or his executors or administrators or other
personal representatives or his or their legal attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory
to the Rights Agent; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">payment by certified cheque, banker&rsquo;s draft, money order or wire transfer payable to the order of
TransAlta, of a sum equal to the Exercise Price multiplied by the number of Rights being exercised and a sum sufficient to cover any transfer
tax or other governmental charge which may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates
or the issuance or delivery of certificates for Common Shares in a name other than that of the holder of the Rights being exercised.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(g)</FONT></TD><TD STYLE="text-align: justify">In the event that TransAlta determines to issue Rights Certificates, then upon receipt of a Rights Certificate,
together with a completed Election to Exercise and executed in accordance with Subsection 2.2(e)(ii), which does not indicate that such
Right is null and void as provided by Subsection 3.1(b), and payment as set forth in Subsection 2.2(e)(iii), the Rights Agent (unless
otherwise instructed by TransAlta in the event that TransAlta is of the opinion that the Rights cannot be exercised in accordance with
this Agreement) will thereupon promptly:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">requisition from the transfer agent certificates representing the number of such Common Shares to be purchased
(TransAlta hereby irrevocably authorizing its transfer agent to comply with all such requisitions);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">when appropriate, and subject to Section&nbsp;5.5, requisition from TransAlta the amount of cash to be
paid in lieu of issuing fractional Common Shares;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">after receipt of the certificates referred to in Subsection 2.2(f)(i), deliver the same to or upon the
order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iv)</FONT></TD><TD STYLE="text-align: justify">when appropriate, after receipt, deliver the cash referred to in Subsection 2.2(f)(ii)&nbsp;to or to the
order of the registered holder of such Rights Certificate; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(v)</FONT></TD><TD STYLE="text-align: justify">remit to TransAlta all payments received on exercise of the Rights.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(h)</FONT></TD><TD STYLE="text-align: justify">In case the holder of any Rights shall exercise less than all the Rights evidenced by such holder&rsquo;s
Rights Certificate, a new Rights Certificate evidencing the Rights remaining unexercised (subject to the provisions of Subsection 5.5(a))
will be issued by the Rights Agent to such holder or to such holder&rsquo;s duly authorized assigns.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">TransAlta covenants and agrees that it will:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">take all such action as may be necessary and within its power to ensure that all Common Shares delivered
upon exercise of Rights shall, at the time of delivery of the certificates representing such Common Shares (subject to payment of the
Exercise Price), be duly and validly authorized, executed, issued and delivered and fully paid and non-assessable;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">take all such action as may be necessary and within its power to comply with the requirements of the <I>Canada
Business Corporations Act</I>, the <I>Securities Act</I> (Ontario), the <I>U.S. Exchange Act</I>, the <I>U.S. Securities Act</I>, and
the securities laws or comparable legislation of each of the other provinces and territories of Canada and the states of the United States
of America, and any other applicable law, rule&nbsp;or regulation, in connection with the issuance and delivery of Rights, the Rights
Certificates and the issuance of any Common Shares upon exercise of Rights;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">use reasonable efforts to cause all Common Shares issued upon exercise of Rights to be listed on the principal
stock exchanges on which such Common Shares were traded immediately prior to the Stock Acquisition Date;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iv)</FONT></TD><TD STYLE="text-align: justify">cause to be reserved and kept available out of the authorized and unissued Common Shares, the number of
Common Shares that, as provided in this Agreement, will from time to time be sufficient to permit the exercise in full of all outstanding
Rights;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(v)</FONT></TD><TD STYLE="text-align: justify">pay when due and payable, if applicable, any and all federal, provincial and municipal transfer taxes
and charges (not including any income or capital taxes of the holder or exercising holder or any liability of TransAlta to withhold tax)
which may be payable in respect of the original issuance or delivery of the Rights Certificates, or certificates for Common Shares to
be issued upon exercise of any Rights, provided that TransAlta shall not be required to pay any transfer tax or other governmental charge
which may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery
of certificates for Common Shares in a name other than that of the holder of the Rights being transferred or exercised; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(vi)</FONT></TD><TD STYLE="text-align: justify">after the Separation Time, except as permitted by Section&nbsp;5.1 or Section&nbsp;5.4, not take (or permit
any Subsidiary of TransAlta to take) any action if at the time such action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.3</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Adjustments
to Exercise Price; Number of Rights</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
Exercise Price, the number and kind of securities subject to purchase upon exercise of each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section&nbsp;2.3</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">In the event TransAlta shall at any time after the date of this Agreement:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">declare or pay a dividend on Common Shares payable in Common Shares (or Convertible Securities in respect
thereof or other securities of TransAlta) other than pursuant to any optional stock dividend program or Dividend Reinvestment Plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">subdivide or change the then outstanding Common Shares into a greater number of Common Shares;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">consolidate or change the then outstanding Common Shares into a smaller number of Common Shares; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iv)</FONT></TD><TD STYLE="text-align: justify">issue any Common Shares (or Convertible Securities in respect thereof or other securities of TransAlta)
in respect of, in lieu of or in exchange for existing Common Shares except as otherwise provided in this Section&nbsp;2.3,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">the
Exercise Price and the number of Rights outstanding or, if the payment or effective date therefor shall occur after the Separation Time,
the securities purchasable upon exercise of Rights shall be adjusted as of the payment or effective date in the manner set forth below</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">If
the Exercise Price and number of Rights outstanding are to be adjusted</FONT>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(x)</FONT></TD><TD STYLE="text-align: justify">the Exercise Price in effect after such adjustment will be equal to the Exercise Price in effect immediately
prior to such adjustment divided by the number of Common Shares (or other capital stock) (the &ldquo;<B>Expansion Factor</B>&rdquo;) that
a holder of one Common Share immediately prior to such dividend, subdivision, change, consolidation or issuance would hold thereafter
as a result thereof; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(y)</FONT></TD><TD STYLE="text-align: justify">each Right held prior to such adjustment will become that number of Rights equal to the Expansion Factor,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">and
the adjusted number of Rights will be deemed to be distributed among the Common Shares with respect to which the original Rights were
associated (if they remain outstanding) and the shares issued in respect of such dividend, subdivision, change, consolidation or issuance,
so that each such Common Share (or other capital stock) will have exactly one Right associated with</FONT> it.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">For
greater certainty, if the securities purchasable upon exercise of Rights are to be adjusted, the securities purchasable upon exercise
of each Right after such adjustment will be the securities that a holder of the securities purchasable upon exercise of one Right immediately
prior to such dividend, subdivision, change, consolidation or issuance would hold thereafter as a result of such dividend, subdivision,
change, consolidation or issuance</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Adjustments
made pursuant to this Section&nbsp;2.3(a)&nbsp;shall be made successively, whenever an event referred to in this Section&nbsp;2.3(a)&nbsp;occurs</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">If,
after the Record Time and prior to the Expiration Time, TransAlta shall issue any shares of capital stock other than Common Shares in
a transaction of a type described in Subsection 2.3(a)(i)&nbsp;or (iv), shares of such capital stock shall be treated herein as nearly
equivalent to Common Shares as may be practicable and appropriate under the circumstances and TransAlta and the Rights Agent agree to
amend this Agreement in order to effect such treatment</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">If
an event occurs which would require an adjustment under both this Section&nbsp;2.3 and Section&nbsp;3.1, the adjustment provided for in
this Section&nbsp;2.3 shall be in addition to, and shall be made prior to, any adjustment required under Section&nbsp;3.1</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">In
the event TransAlta shall at any time after the Record Time and prior to the Separation Time issue any Common Shares otherwise than in
a transaction referred to in this Subsection 2.3(a), each such Common Share so issued shall automatically have one new Right associated
with it, which Right shall be evidenced by the certificate representing such associated Common Share</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">In the event TransAlta shall at any time after the Record Time and prior to the Separation Time fix a
record date for the issuance of rights, options or warrants to all holders of Common Shares entitling them (for a period expiring within
45 calendar days after such record date) to subscribe for or purchase Common Shares (or Convertible Securities in respect of Common Shares)
at a price per Common Share (or, if a Convertible Security in respect of Common Shares, having a conversion, exchange or exercise price
per share, including the price required to be paid to purchase such Convertible Security) less than the Market Price per Common Share
on such record date, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">the numerator of which shall be the number of Common Shares outstanding on such record date, plus the
number of Common Shares that the aggregate offering price of the total number of Common Shares so to be offered (and/or the aggregate
initial conversion, exchange or exercise price of the Convertible Security, including the price required to be paid to purchase such Convertible
Security) would purchase at such Market Price per Common Share; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">the denominator of which shall be the number of Common Shares outstanding on such record date, plus the
number of additional Common Shares to be offered for subscription or purchase (or into which the Convertible Security so to be offered
are initially convertible, exchangeable or exercisable).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">In
case such subscription price may be paid by delivery of consideration, part or all of which may be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the holders of Rights. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights, options or warrants are not so issued, or if issued, are not
exercised prior to the expiration thereof, the Exercise Price shall be readjusted to the Exercise Price which would then be in effect
if such record date had not been fixed, or to the Exercise Price which would be in effect based upon the number of Common Shares (or securities
convertible into, or exchangeable or exercisable for Common Shares) actually issued upon the exercise of such rights, options or warrants,
as the case may</FONT> be.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">For
purposes of this Agreement, the granting of the right to purchase Common Shares (whether from treasury or otherwise) pursuant to any stock
dividend plan or Dividend Reinvestment Plan or any employee benefit, stock option or similar plans shall be deemed not to constitute an
issue of rights, options or warrants by TransAlta; provided, however, that, in all such cases, the right to purchase Common Shares is
at a price per share of not less than 95% of the current market price per share (determined as provided in such plans) of the Common Shares</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">In the event TransAlta shall at any time after the Record Time and prior to the Separation Time fix a
record date for the making of a distribution to all holders of Common Shares (including any such distribution made in connection with
a merger, arrangement or amalgamation) of evidences of indebtedness, cash (other than a regular periodic cash dividend or a dividend paid
in Common Shares, but including any dividend payable in other securities of TransAlta other than Common Shares), assets or rights, options
or warrants (excluding those referred to in Subsection 2.3(b)&nbsp;hereof), the Exercise Price to be in effect after such record date
shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">the numerator of which shall be the Market Price per Common Share on such record date, less the fair market
value (as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of Rights), on a per share basis, of the portion of the cash, assets, evidences
of indebtedness, rights, options or warrants so to be distributed; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">the denominator of which shall be such Market Price per Common Share.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Such
adjustments shall be made successively whenever such a record date is fixed, and in the event that such a distribution is not so made,
the Exercise Price shall be adjusted to be the Exercise Price which would have been in effect if such record date had not been fixed</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">Notwithstanding anything herein to the contrary, no adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least one percent in the Exercise Price; provided, however, that any
adjustments which by reason of this Subsection 2.3(d)&nbsp;are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under Section&nbsp;2.3 shall be made to the nearest cent or to the nearest ten-thousandth
of a share. Notwithstanding the first sentence of Subsection 2.3(d), any adjustment required by Section&nbsp;2.3 shall be made no later
than the earlier of:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">three years from the date of the transaction which gives rise to such adjustment; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">the Expiration Time.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(e)</FONT></TD><TD STYLE="text-align: justify">In the event TransAlta shall at any time after the Record Time and prior to the Separation Time issue
any shares of capital stock (other than Common Shares), or rights, options or warrants to subscribe for or purchase any such capital stock,
or Convertible Security for any such capital stock, in a transaction referred to in Subsections 2.3(a)(i)&nbsp;or 2.3(a)(iv)&nbsp;above,
if the Board of Directors acting in good faith determines that the adjustments contemplated by Subsections 2.3(a), 2.3(b)&nbsp;and 2.3(c)&nbsp;above
in connection with such transaction will not appropriately protect the interests of the holders of Rights, the Board of Directors may
determine what other adjustments to the Exercise Price, number of Rights and/or securities purchasable upon exercise of Rights would be
appropriate and, notwithstanding Subsections 2.3(a), 2.3(b)&nbsp;and 2.3(c)&nbsp;above, such adjustments, rather than the adjustments
contemplated by Subsections 2.3(a), 2.3(b)&nbsp;and 2.3(c)&nbsp;above, shall be made. Subject to the prior consent of the holders of the
Voting Shares or the Rights obtained as set forth in Subsection 5.4(b)&nbsp;or 5.4(c), TransAlta and the Rights Agent shall have authority
to amend this Agreement as appropriate to provide for such adjustments.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(f)</FONT></TD><TD STYLE="text-align: justify">Each Right originally issued by TransAlta subsequent to any adjustment made to the Exercise Price hereunder
shall evidence the right to purchase, at the adjusted Exercise Price, the number of Common Shares purchasable from time to time hereunder
upon exercise of a Right immediately prior to such issue, all subject to further adjustment as provided herein.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(g)</FONT></TD><TD STYLE="text-align: justify">Irrespective of any adjustment or change in the Exercise Price or the number of Common Shares issuable
upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Exercise Price
per Common Share and the number of Common Shares which were expressed in the initial Rights Certificates issued hereunder.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(h)</FONT></TD><TD STYLE="text-align: justify">In any case in which this Section&nbsp;2.3 shall require that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, TransAlta may elect to defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the number of Common Shares and other securities of TransAlta, if any, issuable upon
such exercise over and above the number of Common Shares and other securities of TransAlta, if any, issuable upon such exercise on the
basis of the Exercise Price in effect prior to such adjustment; provided, however, that TransAlta shall deliver to such holder an appropriate
instrument evidencing such holder&rsquo;s right to receive such additional shares (fractional or otherwise) or other securities upon the
occurrence of the event requiring such adjustment.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">Notwithstanding anything contained in this Section&nbsp;2.3 to the contrary, TransAlta shall be entitled
to make such reductions in the Exercise Price, in addition to those adjustments expressly required by this Section&nbsp;2.3, as and to
the extent that in their good faith judgment the Board of Directors determines to be advisable, in order that any:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">consolidation or subdivision of Common Shares;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">issuance (wholly or in part for cash) of Common Shares or securities that by their terms are convertible
into or exchangeable for Common Shares;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iii)</FONT></TD><TD STYLE="text-align: justify">stock dividends; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(iv)</FONT></TD><TD STYLE="text-align: justify">issuance of rights, options or warrants referred to in this Section&nbsp;2.3, hereafter made by TransAlta
to holders of its Common Shares, shall not be taxable to such shareholders.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(j)</FONT></TD><TD STYLE="text-align: justify">Whenever an adjustment to the Exercise Price or a change in the securities purchasable upon exercise of
the Rights is made pursuant to this Section&nbsp;2.3, TransAlta shall promptly and in any event, where such change or adjustment occurs
prior to the Separation Time, not later than the Separation Time:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">file with the Rights Agent and with the transfer agent for the Common Shares a certificate specifying
the particulars of such adjustment or change; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">cause notice of the particulars of such adjustment or change to be given to the holders of the Rights.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Failure
to file such certificate or to cause such notice to be given as aforesaid, or any defect therein, shall not affect the validity of such
adjustment or change</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.4</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Date
on Which Exercise Is Effective</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Each
Person in whose name any certificate for Common Shares or other securities, if applicable, or confirmation in Book Entry form is issued
upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Common Shares or other securities,
if applicable, represented thereon, and such certificate or entry shall be dated the date upon which the Rights Certificate evidencing
such Rights was duly surrendered in accordance with Subsection 2.2(e)&nbsp;(together with a duly completed Election to Exercise) and payment
of the Exercise Price for such Rights (and any applicable transfer taxes and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such surrender and payment is a date upon which the Common Share transfer
books of TransAlta are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate or
entry shall be dated, the next Business Day on which the Common Share transfer books of TransAlta are open</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.5</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Execution,
Authentication, Delivery and Dating of Rights Certificates</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Rights
will be evidenced, in the case of Rights in Book Entry Form, by a statement issued under the Rights Agent&rsquo;s direct registration
system, or alternatively, if TransAlta determines to issue Rights Certificates, by the following procedures</FONT>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">The Rights Certificates shall be executed on behalf of TransAlta by its Chair, the President, the Chief
Executive Officer, the Chief Financial Officer or any Vice Presidents, together with any other of such Persons or together with any one
of the Secretary or the Treasurer. The signature of any of these officers on the Rights Certificates may be manual, facsimile or email
scanned copy. Rights Certificates bearing the manual, facsimile or email scanned signatures of individuals who were at any time the proper
officers of TransAlta shall bind TransAlta, notwithstanding that such individuals or any of them have ceased to hold such offices either
before or after the countersignature and delivery of such Rights Certificates.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">Promptly after TransAlta learns of the Separation Time, TransAlta will notify the Rights Agent of such
Separation Time and will deliver a disclosure statement and Rights Certificates executed by TransAlta to the Rights Agent for countersignature,
and the Rights Agent shall countersign (manually, by facsimile or email scanned signature in a manner satisfactory to TransAlta) and send
such disclosure statement and Rights Certificates to the holders of the Rights pursuant to Subsection 2.2(e)&nbsp;hereof. No Rights Certificate
shall be valid for any purpose until countersigned by the Rights Agent as aforesaid.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">Each Rights Certificate shall be dated the date of countersignature thereof.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.6</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Registration,
Transfer and Exchange</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">After the Separation Time, TransAlta will cause to be kept a register (the &ldquo;<B>Rights Register</B>&rdquo;)
in which, subject to such reasonable regulations as it may prescribe, TransAlta will provide for the registration and transfer of Rights.
The Rights Agent is hereby appointed registrar for the Rights (the &ldquo;<B>Rights Registrar</B>&rdquo;) for the purpose of maintaining
the Rights Register for TransAlta and registering Rights and transfers of Rights as herein provided and the Rights Agent hereby accepts
such appointment. In the event that the Rights Agent shall cease to be the Rights Registrar, the Rights Agent will have the right to examine
the Rights Register at all reasonable times.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">After the Separation Time and prior to the Expiration Time, upon surrender for registration of transfer
or exchange of any Rights Certificate, and subject to the provisions of Subsection 2.6(d), TransAlta will execute, and the Rights Agent
will manually countersign and deliver and register, in the name of the holder or the designated transferee or transferees, as required
pursuant to the holder&rsquo;s instructions, one or more new Rights Certificates evidencing the same aggregate number of Rights as did
the Rights Certificates so surrendered. Alternatively, in the case of the exercise of Rights in Book Entry Form, the Rights Agent shall
provide the holder or the designated transferee or transferees with one or more statements issued under the Rights Agent&rsquo;s direct
registration system evidencing the same aggregate number of Rights as did the direct registration system&rsquo;s records for the Rights
transferred or exchanged.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">All Rights issued upon any registration of transfer or exchange of Rights Certificates shall be the valid
obligations of TransAlta, and such Rights shall be entitled to the same benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">Every Rights Certificate surrendered for registration of transfer or exchange shall be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to TransAlta or the Rights Agent, as the case may be, duly
executed by the holder thereof or such holder&rsquo;s attorney duly authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section&nbsp;2.6, TransAlta may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including the reasonable fees and expenses of the Rights Agent)
connected therewith.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.7</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Mutilated,
Destroyed, Lost and Stolen Rights Certificates</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">If any mutilated Rights Certificate is surrendered to the Rights Agent prior to the Expiration Time, TransAlta
shall execute and the Rights Agent shall countersign and deliver in exchange therefor a new Rights Certificate evidencing the same number
of Rights as did the Rights Certificate so surrendered.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">If there shall be delivered to TransAlta and the Rights Agent prior to the Expiration Time:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">evidence to their reasonable satisfaction of the destruction, loss or theft of any Rights Certificate;
and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">such security or indemnity in amount and form as may be reasonably required by them in their sole discretion
to save each of them and any of their agents harmless,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">then,
in the absence of notice to TransAlta or the Rights Agent that such Rights Certificate has been acquired by a bona fide purchaser, TransAlta
shall execute and upon TransAlta&rsquo;s request the Rights Agent shall countersign and deliver, in lieu of any such destroyed, lost or
stolen Rights Certificate, a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so destroyed, lost
or stolen</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">As a condition to the issuance of any new Rights Certificate under Section&nbsp;2.7, TransAlta may require
the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses
(including the reasonable fees and expenses of the Rights Agent) connected therewith.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">Every new Rights Certificate issued pursuant to Section&nbsp;2.7 in lieu of any destroyed, lost or stolen
Rights Certificate shall evidence the contractual obligation of TransAlta, whether or not the destroyed, lost or stolen Rights Certificate
shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Agreement equally and proportionately with
any and all other Rights duly issued hereunder.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.8</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Persons
Deemed Owners of Rights</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">TransAlta,
the Rights Agent and any agent of TransAlta or the Rights Agent may deem and treat the Person in whose name a Rights Certificate (or,
prior to the Separation Time, the associated Common Share certificate) is registered as the absolute owner thereof and of the Rights evidenced
thereby for all purposes whatsoever. As used in this Agreement, unless the context otherwise requires, the term</FONT> &ldquo;<B>holder</B>&rdquo;
of any Rights shall mean the registered holder of such Rights (or, prior to the Separation Time, of the associated Voting Share) and the
term &ldquo;<B>certificate</B>&rdquo;, when used in the context of a certificate representing Voting Shares or a Rights Certificate, shall
include any document or written acknowledgment constituting evidence of book-entry ownership of the applicable securities as may be adopted
from time to time by TransAlta.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.9</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Delivery
and Cancellation of Certificates</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">All
Rights Certificates surrendered upon exercise or for redemption, registration of transfer or exchange shall, if surrendered to any Person
other than the Rights Agent, be delivered to the Rights Agent and, in any case, shall be promptly cancelled by the Rights Agent. TransAlta
may at any time deliver to the Rights Agent for cancellation any Rights Certificates previously countersigned and delivered hereunder
which TransAlta may have acquired in any manner whatsoever, and all Rights Certificates so delivered shall be promptly cancelled by the
Rights Agent. No Rights Certificate shall be countersigned in lieu of or in exchange for any Rights Certificates cancelled as provided
in Section&nbsp;2.9, except as expressly permitted by this Agreement. The Rights Agent shall, subject to applicable laws, and its ordinary
business practices, destroy all cancelled Rights Certificates and deliver a certificate of destruction to TransAlta upon request</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.10</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Agreement
of Rights Holders</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Every
holder of Rights, by accepting the same, consents and agrees with TransAlta and the Rights Agent and with every other holder of Rights</FONT>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">to be bound by and subject to the provisions of this Agreement, as amended from time to time in accordance
with the terms hereof, in respect of all Rights held;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">that prior to the Separation Time, each Right will be transferable only together with, and will be transferred
by a transfer of, the associated Voting Share certificate representing such Right;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">that after the Separation Time, the Rights Certificates will be transferable only on the Rights Register
as provided herein;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">that prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the associated
Common Share certificate) for registration of transfer, TransAlta, the Rights Agent and any agent of TransAlta or the Rights Agent may
deem and treat the Person in whose name the Rights Certificate (or, prior to the Separation Time, the associated Common Share certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing
on such Rights Certificate or the associated Common Share certificate made by anyone other than TransAlta or the Rights Agent) for all
purposes whatsoever, and neither TransAlta nor the Rights Agent shall be affected by any notice to the contrary;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(e)</FONT></TD><TD STYLE="text-align: justify">that such holder of Rights is not entitled to receive any fractional Rights or any fractional shares or
other securities upon exercise of a Right (except as provided herein);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(f)</FONT></TD><TD STYLE="text-align: justify">that notwithstanding anything in this Agreement to the contrary, neither TransAlta nor the Rights Agent
shall have any liability to any holder of a Right or any other Person as a result of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction
or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(g)</FONT></TD><TD STYLE="text-align: justify">that, subject to the provisions of Section&nbsp;5.4, without the approval of any holder of Rights or Voting
Shares and upon the sole authority of the Board of Directors acting in good faith, this Agreement may be supplemented or amended from
time to time to cure any ambiguity or to correct or supplement any provision contained herein which may be inconsistent with the intent
of this Agreement or is otherwise defective, as provided herein.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.11</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Rights
Certificate Holder Not Deemed a Shareholder</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">No
holder, as such, of any Rights or Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose whatsoever
the holder of any Common Share or any other share or security of TransAlta which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights Certificate be construed or deemed or confer upon the holder
of any Right or Rights Certificate, as such, any right, title, benefit or privilege of a holder of Common Shares or any other shares or
securities of TransAlta or any right to vote at any meeting of shareholders of TransAlta whether for the election of directors or otherwise
or upon any matter submitted to holders of Common Shares or any other shares or securities of TransAlta at any meeting thereof, or to
give or withhold consent to any action of TransAlta, or to receive notice of any meeting or other action affecting any holder of Common
Shares or any other shares or securities of TransAlta except as expressly provided herein, or to receive dividends, distributions or subscription
rights, or otherwise, until the Right or Rights evidenced by Rights Certificates shall have been duly exercised in accordance with the
terms and provisions hereof</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>Article&nbsp;3<BR>
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>3.1</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Flip-in
Event</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">Subject to Subsection 3.1(b)&nbsp;and Section&nbsp;5.1, in the event that prior to the Expiration Time
a Flip-in Event shall occur, each Right shall constitute, effective at the close of business on the tenth Trading Day after the Stock
Acquisition Date, the right to purchase from TransAlta, upon exercise thereof in accordance with the terms hereof, that number of Common
Shares having an aggregate Market Price on the date of consummation or occurrence of such Flip-in Event equal to twice the Exercise Price
for an amount in cash equal to the Exercise Price (such right to be appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section&nbsp;2.3 in the event that after such consummation or occurrence, an event of a type analogous to any of the events
described in Section&nbsp;2.3 shall have occurred).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">Notwithstanding anything in this Agreement to the contrary, but subject to Section&nbsp;5.1, upon the
occurrence of any Flip-in Event, any Rights that are or were Beneficially Owned on or after the earlier of the Separation Time and the
Stock Acquisition Date by:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">an Acquiring Person (or any Affiliate or Associate of an Acquiring Person or any Person acting jointly
or in concert with an Acquiring Person or any Affiliate or Associate of an Acquiring Person); or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify">a transferee or other successor in title of Rights, directly or indirectly, from an Acquiring Person (or
any Affiliate or Associate of an Acquiring Person or any Person acting jointly or in concert with an Acquiring Person or any Affiliate
or Associate of an Acquiring Person), where such transferee becomes a transferee concurrently with or subsequent to the Acquiring Person
becoming such in a transfer that the Board of Directors has determined is part of a plan, arrangement or scheme of an Acquiring Person
(or any Affiliate or Associate of an Acquiring Person or any Person acting jointly or in concert with an Acquiring Person or any Associate
or Affiliate of an Acquiring Person), that has the purpose or effect of avoiding Subsection 3.1(b)(i),</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">shall
become null and void without any further action, and any holder of such Rights (including transferees) shall thereafter have no right
to exercise such Rights under any provision of this Agreement and further shall thereafter not have any other rights whatsoever with respect
to such Rights, whether under any provision of this Agreement or otherwise</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
holder of any Rights represented by a Rights Certificate which is submitted to the Rights Agent upon exercise or for registration of transfer
or exchange which does not contain the necessary certifications set out in the Rights Certificate establishing that such Rights are not
void under Subsection 3.1(b)&nbsp;shall be deemed to be an Acquiring Person for the purposes of Subsection 3.1(b)&nbsp;and such Rights
shall become null and void</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">From and after the Separation Time, TransAlta shall do all such acts and things as shall be necessary
and within its power to ensure compliance with the provisions of Section&nbsp;3.1, including without limitation, all such acts and things
as may be required to satisfy the requirements of the Canada Business Corporations Act, the Securities Act (Ontario), the U.S. Exchange
Act, the U.S. Securities Act, and the securities laws or comparable legislation of each of the other provinces and territories of Canada
and each of the states of the United States of America, and any other applicable law, rule&nbsp;or regulation in respect of the issue
of Common Shares upon the exercise of Rights in accordance with this Agreement.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">Any Rights Certificate that represents Rights Beneficially Owned by a Person described in either Subsections
3.1(b)(i)&nbsp;or 3.1(b)(ii)&nbsp;or transferred to any nominee of any such Person, and any Rights Certificate issued upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain the following legend:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;</FONT>The
Rights represented by this Rights Certificate were issued to a Person who was an Acquiring Person or an Affiliate or an Associate of an
Acquiring Person (as such terms are defined in the Shareholder Rights Plan Agreement) or a Person who was acting jointly or in concert
with an Acquiring Person or an Affiliate or Associate of an Acquiring Person. This Rights Certificate and the Rights represented hereby
are void or shall become void in the circumstances specified in Subsection 3.1(b)&nbsp;of the Shareholder Rights Plan Agreement.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Provided,
however, that the Rights Agent shall not be under any responsibility to ascertain the existence of facts that would require the imposition
of such legend but shall impose such legend only if instructed to do so by TransAlta in writing or if a holder fails to certify upon transfer
or exchange in the space provided on the Rights Certificate that such holder is not a Person described in such legend. The issuance of
a Rights Certificate without the legend referred to in Subsection 3.1(d)&nbsp;shall have no effect on the provisions of Subsection 3.1</FONT>(b).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>Article&nbsp;4<BR>
THE RIGHTS AGENT</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>4.1</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">General</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">TransAlta hereby appoints the Rights Agent to act as agent for TransAlta and the holders of the Rights
in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. TransAlta may from time to time
appoint such co-Rights Agents (&ldquo;<B>Co-Rights Agents</B>&rdquo;) as it may deem necessary or desirable, subject to the approval of
the Rights Agent. In the event TransAlta appoints one or more Co-Rights Agents, the respective duties of the Rights Agent and Co- Rights
Agents shall be as TransAlta may determine with the approval of the Rights Agent and the Co-Rights Agent. TransAlta also agrees to indemnify
the Rights Agent, its officers, directors affiliates and employees for, and to hold such Persons harmless against, any and all loss, liability,
or expense, incurred without negligence, bad faith or wilful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending
against any claim of liability. In no event will the Rights Agent be liable for special, indirect, consequential, exemplary or punitive
losses or damages of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the
possibility of such damages. Notwithstanding any other provision of this Agreement, such right to indemnification will survive the termination
of this Agreement and the resignation or removal of the Rights Agent.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration of this Agreement in reliance upon any certificate for Common Shares,
Rights Certificate, certificate for other securities of TransAlta, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it in good faith to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons. The Rights Agent need not
investigate any fact or matter stated in any such document, but it may, in its reasonable discretion, make such further inquiry or investigation
into such facts or matters as it may see fit.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">TransAlta shall inform the Rights Agent in a reasonably timely manner of events which may materially affect
the administration of this Agreement by the Rights Agent and, at any time upon request, shall provide to the Rights Agent an incumbency
certificate certifying the then current officers of TransAlta; provided that failure to inform the Rights Agent of any such events, or
any defect therein, shall not affect the validity of any action taken hereunder in relation to such events.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">TransAlta agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder
or otherwise agreed to with TransAlta in writing and, from time to time, on demand of the Rights Agent, its reasonable expenses (including
counsel fees and disbursements of legal counsel, to the extent they are reasonable) incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(e)</FONT></TD><TD STYLE="text-align: justify">None of the provisions of this Agreement shall require the Rights Agent to expend or risk its own funds
or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory
to it against such risk or liability, to the extent such repayment or indemnity is required under this Agreement, is not assured to it.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>4.2&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Merger,
Amalgamation or Consolidation or Change of Name of Rights Agent</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">Any corporation into which the Rights Agent or any successor Rights Agent may be merged or amalgamated
or with which it may be consolidated, or any corporation resulting from any merger, amalgamation, statutory arrangement or consolidation
to which the Rights Agent or any successor Rights Agent is a party, or any corporation succeeding to the shareholder or stockholder services
business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of Section&nbsp;4.4. In case at the time such successor Rights
Agent succeeds to the agency created by this Agreement any of the Rights Certificates have been countersigned but not delivered, any successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Rights Certificates so countersigned; and
in case at that time any of the Rights Certificates have not been countersigned, any successor Rights Agent may countersign such Rights
Certificates in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Rights
Certificates will have the full force provided in the Rights Certificates and in this Agreement.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="font-size: 10pt; text-align: center; margin-top: 0pt; margin-bottom: 0pt">-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->36<!-- Field: /Sequence -->-</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">In case at any time the name of the Rights Agent is changed and at such time any of the Rights Certificates
shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this Agreement.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>4.3&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Duties
of Rights Agent</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, all of which TransAlta
and the holders of certificates for Common Shares and holders of Rights Certificates, by their acceptance thereof, shall be bound</FONT>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">The Rights Agent, at the expense of TransAlta, may consult with and retain legal counsel (who may be legal
counsel for TransAlta) and such other experts as it shall reasonably consider necessary to perform its duties hereunder, and the opinion
of such counsel or other expert will be full and complete authorization and protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">Whenever in the performance of its duties under this Agreement, the Rights Agent deems it necessary or
desirable that any fact or matter be proved or established by TransAlta prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by a Person believed by the Rights Agent to be the Chair, the President, the Chief Executive Officer, the Chief
Financial Officer, a Vice President or the Secretary of TransAlta and delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance
upon such certificate;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">The Rights Agent will be liable hereunder for its own negligence, bad faith or wilful misconduct;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">The Rights Agent will not be liable for or by reason of any of the statements of fact or recitals contained
in this Agreement or in the certificates for Common Shares or the Rights Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and will be deemed to have been made by TransAlta only;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(e)</FONT></TD><TD STYLE="text-align: justify">The Rights Agent will not have any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due authorization, execution and delivery hereof by the Rights Agent) or in respect of the validity
or execution of any certificate for a Common Share or Rights Certificate (except its countersignature thereof); nor will it be responsible
for any breach by TransAlta of any covenant or condition contained in this Agreement or in any Rights Certificate; nor will it be responsible
for any change in the exercisability of the Rights (including the Rights becoming void pursuant to Subsection 3.1(b)&nbsp;hereof) or any
adjustment required under the provisions of Section&nbsp;2.3 hereof or responsible for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights after
receipt of the certificate contemplated by Section&nbsp;2.3 describing any such adjustment); nor will it by any act hereunder be deemed
to make any representation or warranty as to the authorization of any Common Shares to be issued pursuant to this Agreement or any Rights
or as to whether any Common Shares will, when issued, be duly and validly authorized, executed, issued and delivered and fully paid and
non-assessable;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(f)</FONT></TD><TD STYLE="text-align: justify">TransAlta agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent
for the carrying out or performing by the Rights Agent of the provisions of this Agreement;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(g)</FONT></TD><TD STYLE="text-align: justify">The Rights Agent is hereby authorized and directed to accept instructions in writing with respect to the
performance of its duties hereunder from any individual believed by the Rights Agent to be the Chair, the President, the Chief Executive
Officer, the Chief Financial Officer, a Vice President or the Secretary of TransAlta, and to apply to such individuals for advice or instructions
in connection with its duties, and it shall not be liable for any action taken or suffered by it in good faith in accordance with instructions
of any such individual;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(h)</FONT></TD><TD STYLE="text-align: justify">The Rights Agent and any shareholder or stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in Common Shares, Rights or other securities of TransAlta or become pecuniarily interested in any transaction in
which TransAlta may be interested, or contract with or lend money to TransAlta or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for TransAlta
or Utilities or for any other legal entity; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent will not be answerable or accountable for
any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to TransAlta resulting from any such
act, omission, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>4.4</B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</FONT><FONT STYLE="font-size: 10pt"><B>Change
of Rights Agent</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
Rights Agent may resign and be discharged from its duties under this Agreement upon 90 days&rsquo; notice (or such lesser notice as is
acceptable to TransAlta) in writing mailed to TransAlta and to each transfer agent of Common Shares by registered or certified mail. TransAlta
may remove the Rights Agent upon 30 days&rsquo; notice in writing, mailed to the Rights Agent and to each transfer agent of the Common
Shares by registered or certified mail. If the Rights Agent should resign or be removed or otherwise become incapable of acting, TransAlta
will appoint a successor to the Rights Agent. If TransAlta fails to make such appointment within a period of 30 days after such removal
or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent, then by prior
written notice to the Corporation the resigning Rights Agent or the holder of any Rights (which holder shall, with such notice, submit
such holder&rsquo;s Rights Certificate, if any, for inspection by TransAlta), may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent, at TransAlta&rsquo;s expense. Any successor Rights Agent, whether appointed by TransAlta or by such
a court, shall be a corporation incorporated under the laws of Canada or a province thereof authorized to carry on the business of a trust
company in the Province of Alberta. After appointment, the successor Rights Agent will be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent
upon receipt of all outstanding fees and expenses owing to it, shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, TransAlta will file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares, and mail a notice thereof in writing to the holders of the Rights in accordance with Section&nbsp;5.9.
Failure to give any notice provided for in Section&nbsp;4.4, however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of any successor Rights Agent, as the case may be</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>4.5&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Compliance
with Anti-Money Laundering Legislation</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
Rights Agent shall retain the right not to act and shall not be liable for refusing to act under this Agreement if, due to a lack of information
or for any other reason whatsoever, the Rights Agent reasonably determines that such an act might cause it to be in non-compliance with
any sanctions, legislation or regulation or any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline.
Further, should the Rights Agent reasonably determine at any time that its acting under this Agreement has resulted in it being in non-compliance
with any sanctions, legislation or regulation or any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline,
then it shall have the right to resign on 10 days&rsquo; prior written notice to TransAlta, provided: (a)&nbsp;that the Rights Agent&rsquo;s
written notice shall describe the circumstances of such non-compliance to the extent permitted under any sanctions, legislation or regulation
or any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline; and (b)&nbsp;that if such circumstances
are rectified to the Rights Agent&rsquo;s reasonable satisfaction within such 10-day period, then such resignation shall not be effective</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="font-size: 10pt; text-align: center; margin-top: 0pt; margin-bottom: 0pt">-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->39<!-- Field: /Sequence -->-</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>Article&nbsp;5<BR>
MISCELLANEOUS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.1&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Redemption
and Waiver</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">The Board of Directors acting in good faith may, until the occurrence of a Flip-in Event, upon prior written
notice delivered to the Rights Agent, determine to waive the application of Section&nbsp;3.1 to a particular Flip-in Event that would
result from a Take-over Bid made by way of take-over bid circular to all holders of Voting Shares (which for greater certainty shall not
include the circumstances described in Subsection 5.1(h)); provided that if the Board of Directors waives the application of Section&nbsp;3.1
to a particular Flip-in Event pursuant to this Subsection 5.1(a), the Board of Directors shall be deemed to have waived the application
of Section&nbsp;3.1 to any other Flip-in Event occurring by reason of any Take-over Bid which is made by means of a take-over bid circular
to all holders of Voting Shares prior to the expiry of any Take-over Bid in respect of which a waiver is, or is deemed to have been, granted
under this Subsection 5.1(a).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">Subject to the prior consent of the holders of the Voting Shares or the Rights as set forth in Subsections
5.4(b)&nbsp;or 5.4(c), as applicable, the Board of Directors acting in good faith may, at its option, at any time prior to the provisions
of Section&nbsp;3.1 becoming applicable as a result of the occurrence of a Flip-in Event, elect to redeem all but not less than all of
the outstanding Rights at a redemption price of $0.00001 per Right appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section&nbsp;2.3 if an event of the type analogous to any of the events described in Section&nbsp;2.3 shall have occurred
(such redemption price being herein referred to as the &ldquo;<B>Redemption Price</B>&rdquo;).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">Where a Person acquires pursuant to a Permitted Bid, a Competing Permitted Bid or an Exempt Acquisition
under Subsection 5.1(a)&nbsp;outstanding Voting Shares, other than Voting Shares Beneficially Owned at the date of the Permitted Bid,
the Competing Permitted Bid or the Exempt Acquisition under Subsection 5.1(a)&nbsp;by such Person, then the Board of Directors shall immediately
upon the consummation of such acquisition without further formality and without any approval under Subsections 5.4(b)&nbsp;or 5.4(c)&nbsp;be
deemed to have elected to redeem the Rights at the Redemption Price.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">Where a Take-over Bid that is not a Permitted Bid or Competing Permitted Bid is withdrawn or otherwise
terminated after the Separation Time has occurred and prior to the occurrence of a Flip-in Event, the Board of Directors may elect to
redeem all the outstanding Rights at the Redemption Price and reissue Rights under this Agreement to holders of record of Common Shares
immediately following the time of such redemption.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(e)</FONT></TD><TD STYLE="text-align: justify">If the Board of Directors is deemed under Subsection 5.1(c)&nbsp;to have elected, or elects under either
of Subsection 5.1(b)&nbsp;or 5.1(d), to redeem the Rights and, in circumstances in which Subsection 5.1(b)&nbsp;is applicable, such redemption
is approved by the holders of Voting Shares or the holders of Rights in accordance with Subsections 5.4(b)&nbsp;or 5.4(c), as the case
may be, the right to exercise the Rights will thereupon, without further action and without notice, terminate and the only right thereafter
of the holders of Rights shall be to receive the Redemption Price.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(f)</FONT></TD><TD STYLE="text-align: justify">Within 10 Business Days after the Board of Directors electing or having been deemed to have elected to
redeem the Rights or, if Subsection 5.1(b)&nbsp;is applicable, within 10 Business Days after the holders of Voting Shares or the holders
of Rights have approved the redemption of Rights in accordance with Subsections 5.4(b)&nbsp;or 5.4(c), as the case may be, TransAlta shall
give notice of redemption to the holders of the then outstanding Rights by mailing such notice to each such holder at such holder&rsquo;s
last address as it appears upon the registry books of the Rights Agent or, prior to the Separation Time, on the registry books of the
transfer agent for the Voting Shares. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be
made.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(g)</FONT></TD><TD STYLE="text-align: justify">Upon the Rights being redeemed pursuant to Subsection 5.1(d), all the provisions of this Agreement shall
continue to apply as if the Separation Time had not occurred and Rights Certificates representing the number of Rights held by each holder
of record of Voting Shares as of the Separation Time had not been mailed to each such holder and for all purposes of this Agreement the
Separation Time shall be deemed not to have occurred and the Rights shall remain attached to the outstanding Common Shares subject to
and in accordance with the provisions of this Agreement.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(h)</FONT></TD><TD STYLE="text-align: justify">The Board of Directors may waive the application of Section&nbsp;3.1 in respect of the occurrence of any
Flip-in Event if the Board of Directors has determined within ten Trading Days following a Stock Acquisition Date that a Person became
an Acquiring Person by inadvertence and without any intention to become, or knowledge that it would become, an Acquiring Person under
this Agreement and, in the event that such a waiver is granted by the Board of Directors, such Stock Acquisition Date shall be deemed
not to have occurred. Any such waiver pursuant to this Subsection 5.1(h)&nbsp;must be on the condition that such Person, within 14 days
after the foregoing determination by the Board of Directors or such earlier or later date as the Board of Directors may determine (the
 &ldquo;<B>Disposition Date</B>&rdquo;), has reduced its Beneficial Ownership of Voting Shares such that the Person is no longer an Acquiring
Person. If the Person remains an Acquiring Person at the close of business on the Disposition Date, the Disposition Date shall be deemed
to be the date of occurrence of a further Stock Acquisition Date and Section&nbsp;3.1 shall apply thereto.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify">Subject to the prior consent of the holders of the Voting Shares obtained as set forth in Subsection 5.4(b),
the Board of Directors may, at any time prior to the occurrence of a Flip-in Event, if such Flip-in Event would occur by reason of an
acquisition of Voting Shares otherwise than pursuant to a Take-over Bid made by means of a Take-over Bid circular to all registered holders
of Voting Shares and otherwise than in the circumstances set forth in Subsection 5.1(h), waive the application of Section&nbsp;3.1 to
such Flip-in Event. In such event, the Board of Directors shall extend the Separation Time to a date at least 10 Business Days subsequent
to the meeting of shareholders called to approve such waiver.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(j)</FONT></TD><TD STYLE="text-align: justify">TransAlta shall not be obligated to make a payment of the Redemption Price to any holder of Rights unless
the holder is entitled to receive at least $1.00 in respect of all Rights held by such holder.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Corporation shall give prompt written notice
to the Rights Agent of any waiver of the application of Section&nbsp;3.1 made by the Board of Directors under this Section&nbsp;5.1.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.2&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Expiration</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">No
Person shall have any rights whatsoever pursuant to this Agreement or in respect of any Right after the Expiration Time, except the Rights
Agent as specified in Subsections 4.1(a)&nbsp;and 4.</FONT>1(b).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.3&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Issuance
of New Rights Certificates</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, TransAlta may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board of Directors to reflect any adjustment or change in the number or kind
or class of securities purchasable upon exercise of Rights made in accordance with the provisions of this Agreement</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.4&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Supplements
and Amendments</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">TransAlta may make amendments or supplements to this Agreement to correct any clerical or typographical
error or, subject to Subsection 5.4(e), which are required to maintain the validity of this Agreement as a result of any change in any
applicable legislation, rules&nbsp;or regulations thereunder. Notwithstanding anything in this Section&nbsp;5.4 to the contrary, no supplement
or amendment shall be made to the provisions of Article&nbsp;4 except with the written concurrence of the Rights Agent to such supplement
or amendment.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">Subject to Subsection 5.4(a), TransAlta may, with the prior consent of the holders of Voting Shares obtained
as set forth below, at any time before the Separation Time, amend, vary or rescind any of the provisions of this Agreement and the Rights
(whether or not such action would materially adversely affect the interests of the holders of Rights generally). Such consent shall be
deemed to have been given if provided by the holders of Voting Shares at a Special Meeting, which Special Meeting shall be called and
held in compliance with applicable laws and regulatory requirements and the requirements in the articles and by-laws of TransAlta. Subject
to compliance with any requirements imposed by the foregoing, consent shall be given if the proposed amendment, variation or rescission
is approved by the affirmative vote of a majority of the votes cast by Independent Shareholders present or represented in person or by
proxy at and entitled to be voted at the Special Meeting.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">Subject to Subsection 5.4(a), TransAlta may, with the prior consent of the holders of Rights obtained
as set forth below, at any time after the Separation Time and before the Expiration Time, amend, vary or rescind any of the provisions
of this Agreement and the Rights (whether or not such action would materially adversely affect the interests of the holders of Rights
generally), provided that no such amendment, variation or deletion shall be made to the provisions of Article&nbsp;4 except with the written
concurrence of the Rights Agent thereto. Such consent of the holders of Rights shall be deemed to have been given if provided by the holders
of Rights at a Rights Holders&rsquo; Special Meeting, which Rights Holders&rsquo; Special Meeting shall be called and held in compliance
with applicable laws and regulatory requirements and, to the extent possible, with the requirements in the articles and by-laws of TransAlta
applicable to meetings of holders of Voting Shares, applied mutatis mutandis. Subject to compliance with any requirements imposed by the
foregoing, consent shall be given if the proposed amendment, variation or rescission is approved by the affirmative vote of a majority
of the votes cast by holders of Rights (other than holders of Rights whose Rights have become null and void pursuant to Subsection 3.1(b)),
represented in person or by proxy at and entitled to be voted at the Rights Holders&rsquo; Special Meeting.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">Any approval of the holders of Rights shall be deemed to have been given if the action requiring such
approval is authorized by the affirmative votes of the holders of Rights present or represented at and entitled to be voted at a meeting
of the holders of Rights and representing a majority of the votes cast in respect thereof. For the purposes hereof, each outstanding Right
(other than Rights which are void pursuant to the provisions hereof) shall be entitled to one vote, and the procedures for the calling,
holding and conduct of the meeting shall be those, as nearly as may be, which are provided in TransAlta&rsquo;s by-laws and the <I>Canada
Business Corporations Act </I>with respect to meetings of shareholders of TransAlta.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(e)</FONT></TD><TD STYLE="text-align: justify">Any amendments made by TransAlta to this Agreement pursuant to Subsection 5.4(a)&nbsp;which are required
to maintain the validity of this Agreement as a result of any change in any applicable legislation, rule&nbsp;or regulation thereunder
shall:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(i)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">if </FONT>made before the Separation Time, be
submitted to the holders of Voting Shares at the next meeting of shareholders and the shareholders may, by the majority referred to in
Subsection 5.4(b), confirm or reject such amendment;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(ii)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">if </FONT>made after the Separation Time, be
submitted to the holders of Rights at a meeting to be called for on a date not later than immediately following the next meeting of shareholders
of TransAlta and the holders of Rights may, by resolution passed by the majority referred to in Subsection 5.4(d), confirm or reject such
amendment.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Any
such amendment shall be effective from the date of the resolution of the Board of Directors adopting such amendment, until it is confirmed
or rejected or until it ceases to be effective (as described in the next sentence) and, where such amendment is confirmed, it continues
in effect in the form so confirmed. If such amendment is rejected by the shareholders or the holders of Rights or is not submitted to
the shareholders or holders of Rights as required, then such amendment shall cease to be effective from and after the termination of the
meeting at which it was rejected or to which it should have been but was not submitted or from and after the date of the meeting of holders
of Rights that should have been but was not held, and no subsequent resolution of the Board of Directors to amend this Agreement to substantially
the same effect shall be effective until confirmed by the shareholders or holders of Rights as the case may</FONT> be.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="font-size: 10pt; text-align: center; margin-top: 0pt; margin-bottom: 0pt">-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->43<!-- Field: /Sequence -->-</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(f)</FONT></TD><TD STYLE="text-align: justify">TransAlta shall give notice in writing to the Rights Agent of any amendment or supplement to this Agreement
pursuant to Section&nbsp;5.4 within five Business Days of the date of any such amendment or supplement, provided that failure to give
such notice, or any defect therein, shall not affect the validity of any such supplement or amendment.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.5&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Fractional
Rights and Fractional Shares</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">TransAlta shall not be required to issue fractions of Rights or to distribute Rights Certificates which
evidence fractional Rights. After the Separation Time, in lieu of issuing fractional Rights, TransAlta shall pay to the holders of record
of the Rights Certificates (provided the Rights represented by such Rights Certificates are not void pursuant to the provisions of Subsection
3.1(b), at the time such fractional Rights would otherwise be issuable), an amount in cash equal to the fraction of the Market Price of
one whole Right that the fraction of a Right that would otherwise be issuable is of one whole Right.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">TransAlta shall not be required to issue fractions of Common Shares upon exercise of Rights or to distribute
certificates which evidence fractional Common Shares. In lieu of issuing fractional Common Shares, TransAlta shall pay to the registered
holders of Rights Certificates, at the time such Rights are exercised as herein provided, an amount in cash equal to the fraction of the
Market Price of one Common Share that the fraction of a Common Share that would otherwise be issuable upon the exercise of such Right
is of one whole Common Share at the date of such exercise.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">The Rights Agent shall have no obligation to make any payments in lieu of issuing fractions of Rights
or Common Shares pursuant to Subsections 5.5(a)&nbsp;or 5.5(b), respectively, unless and until TransAlta shall have provided to the Rights
Agent the amount of cash to be paid in lieu of issuing such fractional Rights or Common Shares, as the case may be.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.6&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Rights
of Action</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Subject
to the terms of this Agreement, all rights of action in respect of this Agreement, other than rights of action vested solely in the Rights
Agent, are vested in the respective holders of the Rights. Any holder of Rights, without the consent of the Rights Agent or of the holder
of any other Rights, may, on such holder&rsquo;s own behalf and for such holder&rsquo;s own benefit and the benefit of other holders of
Rights, enforce, and may institute and maintain any suit, action or proceeding against TransAlta to enforce such holder&rsquo;s right
to exercise such holder&rsquo;s Rights or Rights to which such holder is entitled, in the manner provided in such holder&rsquo;s Rights
Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled
to specific performance of the obligations under, and injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.7&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Regulatory
Approvals</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Any
obligation of TransAlta or action or event contemplated by this Agreement shall be subject to the receipt of any requisite approval or
consent from any governmental or regulatory authority including, without limiting the generality of the foregoing, any necessary approvals
of The Toronto Stock Exchange or any other stock exchange, as to the issuance of Common Shares upon the exercise of Rights under Subsection
2.</FONT>2(e).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.8&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Declaration
as to Non-Canadian or Non-U.S. Holders</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">If
in the opinion of the Board of Directors (who may rely upon the advice of counsel) any action or event contemplated by this Agreement
would require compliance by TransAlta with the securities laws or comparable legislation of a jurisdiction outside Canada and the United
States of America, the Board of Directors acting in good faith shall take such actions as it may deem appropriate to ensure such compliance.
In no event shall TransAlta or the Rights Agent be required to issue or deliver Rights or securities issuable on exercise of Rights to
persons who are citizens, residents or nationals of any jurisdiction other than Canada or the United States, in which such issue or delivery
would be unlawful without registration of the relevant Persons or securities for such purposes</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.9&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Notices</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(a)</FONT></TD><TD STYLE="text-align: justify">Notices or demands authorized or required by this Agreement to be given or made by the Rights Agent or
by the holder of any Rights to or on TransAlta shall be sufficiently given or made if delivered, sent by registered or certified mail,
postage prepaid (until another address is filed in writing with the Rights Agent), or sent by facsimile or other form of recorded electronic
communication, charges prepaid and confirmed in writing, as follows:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">TransAlta Corporation<BR>
110 - 12th Avenue S.W.<BR>
Calgary, Alberta T2P 2M1</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">Attention: Corporate Secretary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">Tel.: 403.267.2014<BR>
Fax: 403.267.2559</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(b)</FONT></TD><TD STYLE="text-align: justify">Notices or demands authorized or required by this Agreement to be given or made by TransAlta or by the
holder of any Rights to or on the Rights Agent shall be sufficiently given or made if delivered, sent by registered or certified mail,
postage prepaid (until another address is filed in writing with TransAlta), or sent by facsimile or other form of recorded electronic
communication, charges prepaid, and confirmed in writing, as follows:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">Computershare Trust Company of Canada<BR>
800, 324 &ndash; 8<SUP>th</SUP> Avenue S.W.<BR>
Calgary, AB T2P 2Z2</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">Attention: General Manager</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">Fax: (403) 267 - 6529</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(c)</FONT></TD><TD STYLE="text-align: justify">Notices or demands authorized or required by this Agreement to be given or made by TransAlta or the Rights
Agent to or on the holder of any Rights shall be sufficiently given or made if delivered or sent by registered or certified mail, postage
prepaid, addressed to such holder at the address of such holder as it appears upon the register of the Rights Agent or, prior to the Separation
Time, on the register of TransAlta for its Common Shares. Any notice which is mailed or sent in the manner herein provided shall be deemed
given, whether or not the holder receives the notice.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(d)</FONT></TD><TD STYLE="text-align: justify">Any notice given or made in accordance with Section&nbsp;5.9 shall be deemed to have been given and to
have been received on the day of delivery, if so delivered, on the third Business Day (excluding each day during which there exists any
general interruption of postal service due to strike, lockout or other cause) following the mailing thereof, if so mailed, and on the
day of telegraphing, telecopying or sending of the same by other means of recorded electronic communication (provided such sending is
during the normal business hours of the addressee on a Business Day and if not, on the first Business Day thereafter). Each of TransAlta
and the Rights Agent may from time to time change its address for notice by notice to the other given in the manner aforesaid.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">If
</FONT>mail service is or is threatened to be interrupted at a time when TransAlta or the Rights Agent wishes to give a notice or demand
hereunder to or on the holders of the Rights, TransAlta or the Rights Agent may, notwithstanding the foregoing provisions of this Section&nbsp;5.9,
give such notice by means, of publication once in each of two successive weeks in the business section of the Financial Post and if and
for so long as TransAlta has a transfer agent in the United States, in a daily publication in the United States designated by TransAlta,
or in such other publication or publications as may be designated by TransAlta and notice so published shall be deemed to have been given
on the date on which the first publication of such notice in any such publication has taken place.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">A
</FONT>requirement under this Agreement that a notice, document or other information be given or made in writing may be satisfied by TransAlta
or the Rights Agent by providing an electronic notice, document or other information in accordance with the <I>Canada Business Corporations
Act</I>, <I>the Electronic Commerce Act </I>(Ontario) and other applicable laws. An electronic document is deemed to have been received
when it enters the information system designated by the addressee or, if the notice, document or information is posted on or made available
through a generally accessible electronic source, when the addressee receives notice in writing of the availability and location of that
electronic notice, document or information or, if such notice is sent electronically, when it enters the information system designated
by the addressee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="font-size: 10pt; text-align: center; margin-top: 0pt; margin-bottom: 0pt">-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->46<!-- Field: /Sequence -->-</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.10&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Costs
of Enforcement</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">TransAlta
agrees that if TransAlta fails to fulfil any of its obligations pursuant to this Agreement, then TransAlta will reimburse the holder of
any Rights for the reasonable costs and expenses (including legal fees) incurred by such holder to enforce his rights pursuant to any
Rights or this Agreement</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.11&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Successors</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">All
</FONT>the covenants and provisions of this Agreement by or for the benefit of TransAlta or the Rights Agent shall bind and enure to the
benefit of their respective successors and assigns hereunder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.12</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Benefits
of this Agreement</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Nothing
in this Agreement shall be construed to give to any Person other than TransAlta, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; further, this Agreement shall be for the sole and exclusive benefit of TransAlta,
the Rights Agent and the holders of the Rights</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.13&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Governing
Law</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">This
Agreement and each Right issued hereunder shall be deemed to be a contract made under the laws of the Province of Alberta and for all
purposes shall be governed by and construed in accordance with the laws of such Province applicable to contracts to be made and performed
entirely within such Province</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.14&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Severability</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">If
</FONT>any term or provision hereof or the application thereof to any circumstance shall, in any jurisdiction and to any extent, be invalid
or unenforceable, such term or provision shall be ineffective only as to such jurisdiction and to the extent of such invalidity or unenforceability
in such jurisdiction without invalidating or rendering unenforceable or ineffective the remaining terms and provisions hereof in such
jurisdiction or the application of such term or provision in any other jurisdiction or to circumstances other than those as to which it
is specifically held invalid or unenforceable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.15&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Effective
Date</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Upon
being confirmed and approved by the common shareholders of TransAlta at its 2022 annual and special meeting of shareholders, this Agreement
shall be effective and in full force and effect in accordance with its terms from and after the Effective Date and amends, restates and
replaces in its entirety the Original Agreement</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.16&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Reconfirmation
and Approval</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">This
Agreement must be reconfirmed by a resolution passed by a majority of the votes cast by Independent Shareholders who vote in respect of
such resolution at the annual meeting of TransAlta to be held in 2025 and at every third annual meeting of TransAlta thereafter (each
such annual meeting being</FONT> a &ldquo;<B>Reconfirmation Meeting</B>&rdquo;). If the Agreement is not so reconfirmed or is not presented
for reconfirmation at any such Reconfirmation Meeting, this Agreement and all outstanding Rights shall terminate and be void and of no
further force and effect on and from the close of business on the date of the applicable Reconfirmation Meeting; provided, that termination
shall not occur if a Flip-in Event has occurred (other than a Flip-in Event which has been waived pursuant to Subsection 5.1(a), 5.1(h)&nbsp;or
5.1(i)&nbsp;hereof), prior to the date upon which this Agreement would otherwise terminate pursuant to this Section&nbsp;5.16.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="font-size: 10pt; text-align: center; margin-top: 0pt; margin-bottom: 0pt">-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->47<!-- Field: /Sequence -->-</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.17</B></FONT><B>&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;<FONT STYLE="font-size: 10pt">Actions
by the Board of Directors</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">All
actions, calculations and determinations (including all omissions with respect to the foregoing) which are done, made or approved by the
Board of Directors in good faith for the purposes hereof shall not subject the Board of Directors or any director of TransAlta to any
liability to the holders of the Rights</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.18&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Fiduciary
Duties of the Directors</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">For
clarification it is understood that nothing contained in this Agreement shall be considered to affect the obligations of the Board of
Directors to exercise their fiduciary duties. Without limiting the generality of the foregoing, nothing contained herein shall be construed
to suggest or imply that the Board of Directors shall not be entitled to recommend that holders of the Voting Shares and/or Convertible
Securities reject or accept any Take-over Bid or take any other action including the commencement, prosecution, defense or settlement
of any litigation and the solicitation of additional or alternative Take-over Bids or other proposals to shareholders that the directors
believe are necessary or appropriate in the exercise of their fiduciary duties</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.19&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Privacy
Legislation</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
parties acknowledge that federal and/or provincial legislation that addresses the protection of individual&rsquo;s personal information</FONT>
(collectively, &ldquo;<B>Privacy Laws</B>&rdquo;) applies to obligations and activities under this Agreement. Despite any other provision
of this Agreement, neither party will take or direct any action that would contravene, or cause the other to contravene, applicable Privacy
Laws. TransAlta will, prior to transferring or causing to be transferred personal information to the Rights Agent, obtain and retain required
consents of the relevant individuals to the collection, use and disclosure of their personal information, or will have determined that
such consents either have previously been given upon which the parties can rely or are not required under the Privacy Laws. The Rights
Agent will use commercially- reasonable efforts to ensure that its services hereunder comply with Privacy Laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.20&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Language</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Les
parties aux presentes ont exige que la presente convention ainsi que tous les documents et avis qui s&rsquo;y rattachent et/ou qui en
decouleront soient rediges en langue anglaise. </FONT>The parties hereto have required that this Agreement and all documents and notices
related thereto and/or resulting therefrom be drawn up in the English language.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.21&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Time
of the Essence</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Time
shall be of the essence in this Agreement</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.22&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;&#8239;</B></FONT><B><FONT STYLE="font-size: 10pt">Execution
in Counterparts</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">This
Agreement may be executed and delivered, including by electronic means, in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>[<I>Remainder of Page&nbsp;Intentionally Left
Blank</I>]</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>IN WITNESS WHEREOF</B>, the parties hereto
have caused this Agreement to be duly executed this 28th day of April, 2022, with effect as of April&nbsp;28, 2022.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>TRANSALTA CORPORATION</B></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%">&nbsp;</TD>
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 45%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>(signed) &quot;John Kousinioris&quot;</I></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name: </FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Title:&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>(signed) &quot;Scott Jeffers&quot;</I></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name: </FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Title: </FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>

<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>COMPUTERSHARE TRUST COMPANY OF CANADA&nbsp;</B></P>

</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>(signed) &quot;Kyle Gould&quot;</I></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name: Kyle Gould</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Title: Relationship Manager&nbsp;</P></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>(signed) Tara Israelson</I></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name: Tara Israelson</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Title: General Manager</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ATTACHMENT 1</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">TRANSALTA CORPORATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">SHAREHOLDER RIGHTS PLAN AGREEMENT</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">[Form&nbsp;of Rights Certificate]</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 53%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certificate
No.</FONT></TD>
    <TD STYLE="text-align: right; width: 47%">Rights</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>THE RIGHTS ARE SUBJECT TO REDEMPTION OR TERMINATION
ON THE TERMS SET FORTH IN THE SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SUBSECTION&nbsp;3.1(b)&nbsp;OF
THE SHAREHOLDER RIGHTS PLAN AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR CERTAIN RELATED PARTIES, OR TRANSFEREES OF
AN ACQUIRING PERSON OR CERTAIN RELATED PARTIES, MAY&nbsp;BECOME VOID.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Rights Certificate</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">This
certifies that ______________________________, or registered assigns, is the registered holder of the number of Rights set forth above,
each of which entitles the registered holder thereof, subject to the terms, provisions and conditions of the Shareholder Rights Plan Agreement,
dated as of October&nbsp;13, 1992, as amended and restated (the &ldquo;Shareholder Rights Plan Agreement&rdquo;), between TransAlta Corporation,
a corporation duly incorporated under the <I>Canada Business Corporations Act</I> (&ldquo;TransAlta&rdquo;) and Computershare Trust Company
of Canada, a trust company incorporated under the laws of Canada (the &ldquo;Rights Agent&rdquo;) (which term shall include any successor
Rights Agent under the Shareholder Rights Plan Agreement); to purchase from TransAlta at any time after the Separation Time (as such term
is defined in the Shareholder Rights Plan Agreement) and prior to the Expiration Time (as such term is defined in the Shareholder Rights
Plan Agreement), one fully paid common share of TransAlta (a &ldquo;Common Share&rdquo;) at the Exercise Price referred to below, upon
presentation and surrender of this Rights Certificate with the Form&nbsp;of Election to Exercise (in the form provided hereinafter) duly
executed and submitted to the Rights Agent at its principal office in any of the cities of Vancouver, Calgary, Toronto and Montreal. The
Exercise Price shall initially be $100.00 (Cdn.) per Right and shall be subject to adjustment in certain events as provided in the Shareholder
Rights Plan Agreement</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In certain circumstances described in the Shareholder
Rights Plan Agreement, the number of Common Shares which each Right entitles the registered holder thereof to purchase shall be adjusted
as provided in the Shareholder Rights Plan Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">This
Rights Certificate is subject to all of the terms and provisions of the Shareholder Rights Plan Agreement, which terms and provisions
are incorporated herein by reference and made a part hereof and to which Shareholder Rights Plan Agreement reference is hereby made for
a full description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Rights Agent, TransAlta
and the holders of the Rights Certificates. Copies of the Shareholder Rights Plan Agreement are available at the registered office of
TransAlta</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">This
Rights Certificate, with or without other Rights Certificates, upon surrender at any of the offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing an aggregate number
of Rights equal to the aggregate number of Rights evidenced by the Rights Certificate or Rights Certificates surrendered. If this Rights
Certificate shall be exercised in part, the registered holder shall be entitled to receive, upon surrender hereof, another Rights Certificate
or Rights Certificates for the number of whole Rights not exercised</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Subject to the provisions of the Shareholder Rights
Plan Agreement, the Rights evidenced by this Certificate may be redeemed by the Corporation at a redemption price of $0.00001 per Right,
subject to adjustment in certain events, under certain circumstances at its option.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">No fractional Common Shares will be issued upon
the exercise of any Rights evidenced hereby but in lieu thereof a cash payment will be made, as provided in the Shareholder Rights Plan
Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">No
holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of
Common Shares or of any other securities which may at any time be issuable upon the exercise hereof, nor shall anything contained in the
Shareholder Rights Plan Agreement or herein be construed to confer upon the holder hereof, as such, any of the Rights of a shareholder
of TransAlta or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or
to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except
as provided in the Shareholder Plan Agreement), or to receive dividends or subscription rights, or otherwise, until the Rights evidenced
by this Rights Certificate shall have been exercised as provided in the Shareholder Rights Plan Agreement</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">This
Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">WITNESS
</FONT>the facsimile signature of the proper officers of TransAlta and its corporate seal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Date:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="vertical-align: top">
    <TD COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>TRANSALTA CORPORATION&nbsp;</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD COLSPAN="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD COLSPAN="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; width: 45%">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 5%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; width: 43%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(President)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Secretary)</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Countersigned:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="vertical-align: top">
    <TD COLSPAN="3"></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>COMPUTERSHARE TRUST COMPANY OF CANADA&nbsp;</B></FONT></TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; width: 45%">&nbsp;</TD>
    <TD STYLE="width: 50%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Authorized Signature</FONT></TD>
    <TD></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM&nbsp;OF ASSIGNMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">(To
</FONT>be executed by the registered holder if such holder desires to transfer the Rights Certificate.)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">FOR
VALUE</FONT> RECEIVED _________________________ hereby sells, assigns and transfers unto</P>

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<P STYLE="border-top: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Please print name and address of transferee.)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">the
Rights represented by this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute
and appoint __________________________________, as attorney, to transfer the within Rights on the books of TransAlta, with full power
of substitution</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
  <TR STYLE="vertical-align: top">
    <TD STYLE="width: 51%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dated:</FONT></TD>
    <TD STYLE="width: 49%; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Signature</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Signature Guaranteed:</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Signature must correspond to name as written upon the face of this Rights Certificate&nbsp;in every particular, without alteration or enlargement or any change whatsoever.)</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Signature must be guaranteed by a major Schedule
I Canadian chartered bank, a member of a recognized stock exchange or a member of a recognized Medallion guarantee program.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTIFICATE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(To be completed if true)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
undersigned party transferring Rights hereunder, hereby represents, for the benefit of all holders of Rights and Common Shares, that the
Rights evidenced by this Rights Certificate are not, and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or a Person acting jointly or in concert with an Acquiring Person or an Affiliate
or Associate thereof. Capitalized terms shall have the meaning ascribed thereto in the Shareholder Rights Plan Agree</FONT>ment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 51%">&nbsp;</TD>
    <TD STYLE="text-align: justify; width: 49%">Signature</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(To be attached to each Rights Certificate.)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM&nbsp;OF ELECTION TO EXERCISE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">(</FONT>To
be exercised by the registered holder if such holder desires to exercise the Rights Certificate.)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">TO:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The undersigned hereby irrevocably elects to exercise __________________________________
 &nbsp;<FONT STYLE="font-family: Times New Roman, Times, Serif">whole Rights represented by the attached Rights Certificate to purchase
the Common Shares or other securities, if applicable, issuable upon the exercise of such Rights and requests that certificates for such
securities be issued in the name</FONT> of:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="border-top: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(Name)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="border-top: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(Address)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="border-top: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(City and Province)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="border-top: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Social Insurance Number or other taxpayer identification
number.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">If
such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to</FONT>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="border-top: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(Name)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="border-top: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(Address)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="border-top: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(City and Province)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="border-top: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Social Insurance Number or other taxpayer identification
number.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 7%">Dated:</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify; width: 93%">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
  <TR STYLE="vertical-align: top">
    <TD STYLE="width: 51%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 49%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Signature</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Signature Guaranteed:</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Signature must correspond to name as written upon the face of this Rights Certificate&nbsp;&nbsp;in every particular, without alteration or enlargement or any change whatsoever.)</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Signature must be guaranteed by a major Schedule
I Canadian chartered bank, a member of a recognized stock exchange or a member of a recognized Medallion guarantee program.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTIFICATE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(To be completed if true)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
undersigned party exercising Rights hereunder, hereby represents, for the benefit of all holders of Rights and Common Shares, that the
Rights evidenced by this Rights Certificate are not, and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or a Person acting jointly or in concert with an Acquiring Person or an Affiliate
or Associate thereof. Capitalized terms shall have the meaning ascribed thereto in the Shareholder Rights Plan Agreement</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 51%">&nbsp;</TD>
    <TD STYLE="text-align: justify; width: 49%">Signature</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(To be attached to each Rights Certificate.)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTICE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">In
the event the certification set forth above in the Forms of Assignment and Election is not completed, TransAlta will deem the Beneficial
Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person for purposes of Section&nbsp;3.1(b)&nbsp;of the Shareholder
Plan Agreement. No Rights Certificates shall be issued in exchange for a Rights Certificate owned or deemed to have been owned by an Acquiring
Person or an Affiliate or Associate thereof, or by a Person acting jointly or in concert with an Acquiring Person or an Affiliate or Associate
thereof. Capitalized terms shall have the meanings ascribed thereto in the Shareholder Plan Agreement</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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</TEXT>
</DOCUMENT>
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