Prepared by MERRILL CORPORATION




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EXHIBIT 4.5  


 
 

TRANSALTA CORPORATION SHARE OPTION PLAN    
  


1.    PURPOSE  


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


2.    DEFINITIONS  


    Whenever used herein:. 



	(a)
	"Board"
means the board of directors of the Corporation;



	(b)
	"Corporation"
means TransAlta Corporation;



	(c)
	"Chairman"
means the Chairman of the Board, President or Chief Executive Officer of the Corporation, as may be determined from time to time by the Committee;



	(d)
	"Committee"
means, from and after November 10, 1994, the Human Resources Committee of the Board;



	(e)
	"Option"
means a right or rights granted by the Committee to purchase Shares under the Plan;



	(f)
	"Participant"
means an individual to whom an Option is granted under the Plan;



	(g)
	"Plan"
means the TransAlta Corporation Share Option Plan;



	(h)
	"Shareholder
Plan" means the Shareholder Bid Approval Plan Agreement dated October 13, 1992 between the Corporation and Montreal Trust Company of Canada, as the same may be
amended from time to time, and any other similar plan adopted by the Corporation from time to time; and



	(i)
	"Shares"
means the Common Shares in the capital of the Corporation. 




3.    ADMINISTRATION  


    The Plan shall be administered by the Committee provided that the Board may exercise any powers reserved herein for the Committee. The Committee is authorized
to approve grants of Options in accordance with the Plan, to construe and interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan and to make all determinations
and take all actions necessary or advisable for the Plan's administration. The Committee shall act by vote or written consent of a majority of its members. Whenever the Plan authorizes or requires the
Committee to take any action, make any determination or decision or form any opinion, then any such action, determination, decision or opinion by or of the Committee shall be in the absolute
discretion of the Committee. 


4.    ELIGIBILITY


    The
individuals who are eligible to receive Options hereunder shall be limited to employees of the Corporation and its subsidiaries (including directors if they are employees of the
Corporation or its subsidiaries) designated by the Committee upon the advice of the Chairman. 


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5.    SHARES SUBJECT TO PLAN


    The
aggregate number of Shares that may be issued pursuant to the exercise of Options shall not exceed at any time 13,000,000 Shares of the Corporation, which shall be made available
from the authorized but unissued Shares of the Corporation that have been reserved for issuance upon exercise of Options granted under the Plan. If an Option expires, terminates, ceases to be
exercisable or is surrendered before being exercised or without having been exercised in full, then the Shares that were subject to the Option but which were not issued pursuant to the exercise of the
Option shall, unless the Plan has been terminated, become available for issuance pursuant to the exercise of Options under the Plan, all within the maximum limitation stated above. For purposes of
determining the aggregate number of Shares that may be issued pursuant to the exercise of Options, common shares of TransAlta Utilities Corporation ("Utilities") previously issued under the Utilities
Share Option Plan shall be deemed to be Shares issued upon exercise of an Option by a Participant. 


    Notwithstanding
the foregoing, the aggregate number of common shares that may be issued at any time under both the Plan and the Corporation's Performance Share Ownership Plan shall
not exceed 13,000,000. 


6.    GRANTING OF OPTIONS


    The
Committee, upon the advice of the Chairman, may from time to time grant Options to eligible employees. Subject to the terms of the Plan, the size and terms and conditions of the
Option or Options to be granted to each Participant shall be in the discretion of the Committee. Notwithstanding such discretion, at any time, the number of Shares that may be acquired by any single
Participant pursuant to the exercise of Options under the Plan and pursuant to all other share compensation arrangements of the Corporation, cannot exceed five (5%) percent of the outstanding number
of Shares (and for this purpose, the "outstanding number of Shares" is the number outstanding at a particular time, less the number of Shares that have been issued pursuant to the exercise of Options
in the previous year). 


7.    OPTION PRICE


    The
option price shall be fixed by the Committee when an Option is granted but such price shall not be less than the last sale price of board lots of the Shares on The Toronto Stock
Exchange on the last business day prior to the day the Option is granted. 



8.    OPTION AGREEMENTS  


    Each Option granted hereunder will be evidenced by a written option agreement between the Corporation and the employee and, subject to the terms of the Plan,
shall contain such terms and conditions as may be determined by the Committee upon the advice of the Chairman. The terms and conditions of the option agreements need not be identical. The option
agreements shall include: 



	(a)
	the
number of Shares optioned,



	(b)
	the
option price,



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



	(d)
	the
expiry date of the Option, 




Subject
to the terms of the Plan and to the receipt of any necessary approvals from The Toronto Stock Exchange, the Committee, with the consent of a Participant, may amend, change or vary the terms
and conditions of an option agreement. 


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9.    EXERCISE OF OPTION


    An
Option, or any portion thereof, may be exercised by a Participant or the Participant's executors or personal representatives delivering to the Corporation a written notice of
exercise specifying the number of Shares with respect to which the Option is being exercised and accompanied by payment in full of the purchase price of the Shares. 


10.   ALTERATIONS IN SHARES



	(a)
	General. Appropriate adjustments in the number of Shares optioned and in the option price per Share shall be made by
the Corporation to give effect to adjustments in the number of Shares of the Corporation resulting from:



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



	(ii)
	the
operation of the Shareholder Plan (but not the issue of rights under the Shareholder Plan) including, without limiting the generality of the foregoing, the rights issued
thereunder becoming severable from the Shares and exercisable on a dilutive basis (unless the Participant is a person whose rights would be voided if he was a holder of rights under the Shareholder
Plan, in which case no adjustment shall be made to the number of Shares optioned or the option price per Share), or other similar changes in the share capital of the Corporation. 









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



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




11.   CORPORATE REORGANIZATION


    In
the case of a proposed merger or amalgamation of the Corporation with one or more other corporations, an offer by any person to purchase all of the outstanding Shares of the
Corporation, a sale or distribution of all or substantially all of the Corporation's assets to any other person or any arrangement or corporate reorganization riot otherwise provided for herein, the
Board shall, in a fair and equitable manner, determine the manner in which all unexercised Options granted under the Plan shall be treated. 


12.   EXPIRY OF OPTIONS



	(a)
	Normal Expire. Subject to subparagraphs 12(b) and (c) Options granted under the Plan shall expire on the date
so established by the Committee, but in no event later than the tenth anniversary of the date the Option was granted. 



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	(b)
	Death. If a Participant dies while employed and at a time when he has not fully exercised any then outstanding Option
or if a Participant dies after retirement or permanent disability without having fully exercised any then outstanding Option then:



	(i)
	if
the Option was granted prior to November 10, 1994, then the Option shall be exercisable by the Participant's executors or personal representatives within one year after
the Participant's death, notwithstanding the passing of the normal expiry date of the Option, but for not more than that number of Shares for which the Participant could have exercised the Option
immediately prior to his death. Except as it may then have been exercised, the Option shall terminate at the expiration of such one year period; or



	(ii)
	if
the Option was granted on or after November 10, 1994, then the Option shall be exercisable by the Participant's executors or personal representatives until the earlier of
one year after the Participant's death, or the normal expiry date of the Option, and for not more than that number of Shares for which the Participant could have exercised the Option immediately prior
to his death. Except as it may then have been exercised, the Option shall terminate upon the earlier of the expiration of such one year period or the normal expiry date of the Option. 









	(c)
	Retirement or Disability. Subject to subparagraph 12(b), in the event of the termination of employment of a
Participant due to retirement under a retirement plan of the Corporation or any of its subsidiaries or due to permanent disability of the Participant, the Participant may, at his or her discretion,
select either (i) ((A) or (B), as applicable), or (ii):



	(i)
	
	(A)
	 if
the Option was granted prior to November 10, 1994, then until one year after such termination notwithstanding the passing of the normal
option expiry date of the Option the Option may be exercised in respect of all Shares which are the subject of the Option whether or not the option exercise time pertaining to all such Shares shall
have occurred. Except as it may then have been exercised, the Option shall terminate at the expiration of such one year period; or



	(B)
	 if
the Option was granted on or after November 10, 1994, then until the earlier of one year after such termination or the normal expiry date
of the Option, the Option may be exercised in respect of all Shares which are the subject of the Option whether or not the option exercise time pertaining to all such Shares shall have occurred.
Except as it may then have been exercised, the Option shall terminate upon the earlier of the expiration of such one year period or the normal expiry date of the Option; or 













	(ii)
	exercise
the Option otherwise in accordance with its terms. 







The
Participant shall notify the Corporation in writing within sixty days of the termination of his employment of which of the above choices the Participant has made. If the Participant fails to
provide such notification to the Corporation within 60 days the Participant shall be deemed to have elected the choice provided in clause 12(c)(ii). 




	(d)
	Termination of Employment. In the case of termination of employment for any other reason except cause, the Participant
may continue to exercise any outstanding Options, to the extent they were exercisable on the date of termination, for sixty days following such termination or until the normal expiry date of such
Options, if earlier.



	(e)
	Termination of Employment for Cause. In the event of termination of employment of a Participant for cause, any
outstanding Options will expire on the date of such termination. 



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13.   NON-ASSIGN ABILITY OF OPTIONS


    The
interest of a Participant in an Option or Options shall not be transferable or alienable by the Participant either by assignment or in any other manner during the Participant's
lifetime but shall enure to the benefit of his executors or personal representatives to the extent provided in subparagraph 12(b). 


14.   RIGHTS AS A SHAREHOLDER


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



15.   CONDITIONS PRECEDENT TO EXERCISE OF OPTION


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


16.   AMENDMENT OR DISCONTINUANCE OF PLAN  


    Subject to the receipt of any necessary approvals from The Toronto Stock Exchange, the Board may amend or discontinue the Plan at any time, but no such
amendment may after or impair any Option previously granted except with the written consent of the holder of the Option. 


    I,
Rodger Conner, Corporate Secretary of TransAlta Corporation, hereby confirm that the foregoing is the definitive version of the TransAlta Corporation Stock Option Plan, including
amendments made effective November 10, 1994, February 10, 1995, and March 7, 1995, and ratified and approved by the holders of common shares at a meeting held on May 12,
1995 and as further amended May 3, 2001. 



	

 	
 	

/s/ RODGER CONNER   
 RODGER CONNER,
 Corporate Secretary




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TRANSALTA CORPORATION SHARE OPTION PLAN