BALLARD POWER SYSTEMS INC.

ANNUAL INFORMATION FORM

MARCH 1, 2017

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**TABLE OF
CONTENTS**

|CORPORATE STRUCTURE                                                             | 2 
|------------------------------------------------------------------------------- | --
|Name, Address and Incorporation                                                 | 2 
|Our Mission, Vision and Values                                                  | 2 
|Intercorporate Relationships                                                    | 3 
|Recent History                                                                  | 4 
|Volkswagen Group & Audi
      Accelerate Fuel Cell Technology Solutions         |   
|Program                                                                         | 4 
|Strategic Collaboration and
      Equity Investment Deal With Broad-Ocean Motor | 4 
|Local Production of Fuel
      Cell Stacks in China                             | 6 
|Technology Solutions
      Transaction for Hydrogen Backup Power Systems in     |   
|China                                                                           | 7 
|Protonex Receives $5.8M
      Follow-On Product Order for the U.S. Army         | 7 
|Sale of Methanol Telecom
      Backup Power Business                            | 7 
|Equipment Supply Agreement
      with Nation-Synergy                            | 8 
|Nisshinbo Holdings Inc.
      Private Placement & Technology Solutions Program  | 8 
|Light Rail Agreement with
      Tangshan Railway Vehicle Company, Limited       | 8 
|Acquisition of Protonex
      Technology Corporation                            | 8 
|Sale of ElectraGen®Hydrogen Modules to
      the Aditya Birla Group             | 9 
|Agreements with CRRC
      Qingdao Sifang Company, Ltd.                         | 9 
|July 2015 Public Offering
      of Common Shares                                | 9 
|Nantong Zehe New Energy
      Technology Co., Ltd. and Guangdong Synergy        |   
|Hydrogen Power Technology
      Co., Ltd. License and Supply Agreements         | 9 
|Audi IP Asset
      Transfer                                                    | 10
|Plug Long Term Sales
      Agreement                                            | 10
|UTC IP
Acquisition                                                              | 10
|2013 Public
    Offerings                                                       | 10
|OUR BUSINESS                                                                    | 11
|Strategy                                                                        | 11
|Revenues from Market Segments                                                   | 13
|Our Markets, Products and Services                                              | 14
|Product & Service
      Overview                                                | 14
|Fuel Cell Products and Services                                                 | 16
|Power Products
      Markets                                                    | 16
|Impact of Regulations and Public Policy                                         | 22
|Research and Product Development                                                | 23
|Intellectual Property                                                           | 24
|Manufacturing                                                                   | 24

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|Safety                                                      |  | 25
|----------------------------------------------------------- |  | --
|Quality                                                     |  | 25
|Facilities                                                  |  | 26
|Human Resources                                             |  | 26
|SHARE CAPITAL AND MARKET FOR
      SECURITIES               |  | 26
|DIVIDEND RECORD AND POLICY                                  |  | 28
|DIRECTORS AND OFFICERS                                      |  | 28
|Board of Directors                                          |  | 28
|Senior Officers                                             |  | 32
|Shareholdings of Directors and Senior Officers              |  | 32
|AUDIT COMMITTEE MATTERS                                     |  | 33
|Audit Committee Mandate                                     |  | 33
|Composition of the Audit
      Committee                    |  | 33
|Audit Fees                                                  |  | 35
|Audit-Related Fees                                          |  | 35
|Tax Fees                                                    |  | 36
|All Other Fees                                              |  | 36
|TRANSFER AGENT AND REGISTRAR                                |  | 36
|LEGAL PROCEEDINGS                                           |  | 36
|INTERESTS OF EXPERTS                                        |  | 36
|INTERESTS OF MANAGEMENT AND OTHERS IN
      MATERIAL        |  |   
|TRANSACTIONS                                                |  | 36
|MATERIAL CONTRACTS                                          |  | 36
|FCveloCity®-9SSL fuel cell
      stack production operation |  | 37
|Protonex Acquisition                                        |  | 37
|Audi IP Asset Transfer                                      |  | 38
|UTC IP Acquisition                                          |  | 38
|Technology Development Agreement with
      Volkswagen      |  | 39
|RISK FACTORS                                                |  | 40
|ADDITIONAL INFORMATION                                      |  | 53
|APPENDIX A AUDIT COMMITTEE MANDATE                        |  | 54

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This Annual Information Form and
the documents incorporated by reference herein contain forward-looking
statements that are based on the beliefs of management and reflect our current
expectations as contemplated under the safe harbor provisions of Section 21E of
the United States Securities Exchange Act of 1934, as amended. When used in this
Annual Information Form, the words estimate, project, believe,
anticipate, intend, expect, plan, predict, may, could, should,
will, the negatives of these words or other variations thereof and comparable
terminology are intended to identify forward-looking statements. Such statements
reflect our current views with respect to future events based on currently
available information and are subject to risks and uncertainties that could
cause actual results to differ materially from those contemplated in those
forward-looking statements, including, without limitation the following risks
and uncertainties which are discussed in the section of this Annual Information
Form entitled Risk Factors: we may not be able to successfully execute our
business plan; in our Heavy-Duty Motive market, we depend on Chinese customers
for a majority of our revenues. Macro-economic conditions, including government
subsidy programs and significant and recent volatility in Chinas capital
markets, may adversely impact our Chinese customers access to capital and
program plans which could adversely impact our business; in our Technology
Solutions market, we depend on a single customer for the majority of our
revenues; in our Portable Power market, defense spending volatility could have
an adverse impact on our business; in our Portable Power market, defense
acquisition process changes could have an adverse impact on our business; in our
Material Handling market, we depend on a single customer for the majority of our
revenues and are subject to risks from that customers internal fuel cell stack
development and commercialization plans; in our Heavy-Duty Motive market a
significant amount of operations are conducted by a joint venture that we cannot
operate solely for our benefit; we expect our cash reserves will be reduced due
to future operating losses and working capital requirements, and we cannot
provide certainty as to how long our cash reserves will last or that we will be
able to access additional capital when necessary; potential fluctuations in our
financial and business results make forecasting difficult and may restrict our
access to funding for our commercialization plan; we are dependent upon Original
Equipment Manufacturers and Systems Integrators to purchase certain of our
products; we may not be able to achieve commercialization of our products on the
timetable we anticipate, or at all; a mass market for our products may never
develop or may take longer to develop than we anticipate; we have limited
experience manufacturing fuel cell products on a commercial basis; warranty
claims could negatively impact our gross margins and financial performance; we
could be adversely affected by risks associated with acquisitions; we are
subject to risks inherent in international operations; we depend on our
intellectual property, and our failure to protect that intellectual property
could adversely affect our expected future growth and success; we may experience
cybersecurity threats to our information technology infrastructure and systems,
and unauthorized attempts to gain access to our proprietary or confidential
information, as may our customers, suppliers, subcontractors and joint venture
partners; global macro-economic conditions are beyond our control and may have
an adverse impact on our business or our key suppliers and/or customers; we
currently face and will continue to face significant competition; we could lose
or fail to attract the personnel necessary to run our business; public policy
and regulatory changes could hurt the market for our products; we are dependent
on third party suppliers for the supply of key materials and components for our
products and services; exchange rate fluctuations are beyond our control and may
have a material adverse effect on our business, operating results, financial
condition and profitability; commodity price fluctuations are beyond our control
and may have a material adverse effect on our business, operating results, financial condition and profitability; we could be
liable for environmental damages resulting from our research, development or
manufacturing operations; our products use flammable fuels and some generate
high voltages, which could subject our business to product liability claims; and
the other risks and uncertainties discussed elsewhere in this Annual Information
Form.

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The forward-looking statements
contained in this Annual Information Form speak only as of the date of this
Annual Information Form. Except as required by applicable legislation, Ballard
does not undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this Annual Information Form, including the occurrence of unanticipated
events.

In this Annual Information Form,
references to Corporation, Ballard, we, us and our refers to Ballard
Power Systems Inc. and, as applicable, its subsidiaries. All dollar amounts are
in United States dollars unless otherwise indicated. Canadian dollars are
indicated by the symbol C$, and euros by the symbol €.

Except where otherwise indicated, all
information presented is as of December 31, 2016.

CORPORATE STRUCTURE

Name, Address and Incorporation

Ballard was incorporated on November
12, 2008 under theCanada Business
Corporations Act, under the name 7076991
Canada Inc. Ballard changed its name to Ballard Power Systems Inc. on
December 31, 2008. On August 24, 2016, Ballard continued into British Columbia
under theBusiness Corporations
Act. Ballards head office is located at 9000
Glenlyon Parkway, Burnaby, British Columbia, Canada V5J 5J8, and its registered
office is located at Suite 1700, 666 Burrard Street, Vancouver, British
Columbia, Canada V6C 2X8.

Previously, Ballard Power Systems Inc.
was a British Columbia company incorporated on May 30, 1989. The original
predecessor to Ballard was founded in 1979 under the name Ballard Research Inc.
to conduct research and development on high-energy lithium batteries. In the
course of investigating environmentally-clean energy systems with commercial
potential, we began to develop fuel cells and have been developing fuel cell
products since 1983.

Our Mission, Vision and Values

Our vision is to be the leading global
provider of innovative clean energy solutions, and our mission is to use our
extensive fuel cell and systems know-how to profitably deliver innovative clean
energy solutions to our customers, create rewarding opportunities for our team,
and provide extraordinary value to our shareholders.

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Our values represent our core beliefs,
and underpin how we carry on our business: Listen and Deliver  We listen to our
customers, understand their business, and deliver valuable solutions for lasting
partnerships; Quality. Always  We deliver quality in everything we do, without
exception; Inspire Excellence  We inspire excellence through leadership,
empowerment and consistent demonstration of integrity, urgency, and passion; Row
Together  We achieve success through collaboration, respect, and trust; Own It
 We step up, take ownership for our results, and trust others to do the
same.

Intercorporate Relationships

We have six principal subsidiaries and
affiliates: Ballard Fuel Cell Systems Inc., a Delaware corporation that provides
certain services to customers in the U.S. and internationally and does certain
development work; Ballard Power Systems Europe A/S (formerly Dantherm Power A/S)
(Ballard Europe), a Danish corporation; BDF IP Holdings Ltd. (IP Holdings), a Canadian
corporation that holds intellectual property assets; Ballard Services Inc., a
British Columbia company that provides engineering services; and Protonex
Technology Corporation (Protonex), a Delaware corporation
that is a leading designer and manufacturer of advanced power management
products and portable fuel cell solutions; and Guangzhou Ballard Power Systems
Co., Ltd., a recently incorporated Chinese wholly foreign-owned entity that will
provide engineering services in China.

The following chart shows these
principal subsidiaries and affiliates, their respective jurisdictions of
incorporation and our percentage of share ownership in each of them, all as of
March 1, 2017:





Notes

|(1) |  | The Corporation acquired all of
      the shares of Ballard Europe previously owned by Dantherm A/S on January
      10, 2017. As of December 31, 2016, the Corporation owned 57% of the shares
      of Ballard Europe and Dantherm A/S owned 43%.                         
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | The Corporation holds all of the
      non-voting, participating shares of IP Holdings and 34% of the voting,
      non-participating shares of IP Holdings, with each of Daimler AG and Ford
      Motor Company holding 33% of the voting, non-participating
      shares.

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Recent History

Over the past three years, we have
continued to focus on building a clean energy business and expanding our
recognized leadership in proton exchange membrane(PEM) fuel cell development and commercialization. The following are key
recent developments:

Volkswagen Group & Audi
Accelerate Fuel Cell Technology Solutions Program

On September 26, 2016, we announced
that automotive original equipment manufacturer (OEM) Audi AG (Audi) has issued purchase
orders to Ballard to accelerate certain key development activities under the
current long-term Technology Solutions program that the Volkswagen Group has
with Ballard arising from the March 6, 2013 agreement discussed
below.

As announced in a February 11, 2015
press release, the current 6-year engineering services contract with the
Volkswagen Group runs to March 2019, with an optional 2-year extension beyond
that date. The contract has an estimated value of C$100-140 million
(approximately $80-112 million at the time of the press release). The HyMotion
program encompasses automotive fuel cell stack development as well as system
design support activities.

In 2016 the Volkswagen Group
transferred responsibility for fuel cell development to its Audi luxury brand,
and is also accelerating the timeline for series production. The acceleration in
HyMotion program activities is focused on reconfiguration of the current fuel
cell stack and acceleration in the development of a next-generation fuel cell
stack.

On March 6, 2013, we entered into an
agreement with Volkswagen under which we will provide Volkswagen with
engineering services to advance development of fuel cells for use in powering
demonstration cars in Volkswagens fuel cell automotive research program,
including the design and manufacture of a next-generation fuel cells for use in
Volkswagen HyMotion demonstration cars.

Strategic Collaboration and
Equity Investment Deal With Broad-Ocean Motor

On July 26, 2016, Zhongshan Broad-Ocean
Motor Co., Ltd. (Broad-Ocean) and Ballard entered into a strategic collaboration that
included a $28.3 million equity investment in Ballard.

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On August 18, 2016, the investment by
Broad-Ocean was completed through a subscription and purchase of 17,250,000
common shares of Ballard issued from treasury at a price per share based on a
20-day volume weighted average price calculation (the calculated price per share
was $1.64), and representing approximately 9.9% of Ballards then-outstanding
common shares.

Broad-Ocean and Ballard also entered
into an Investor Rights Agreement under which Broad-Ocean has agreed to a
two-year hold period on the common shares purchased; provided Ballard with a
right of first refusal to sell Broad-Ocean additional treasury shares if
Broad-Ocean wishes to increase its ownership position up to 20%; and has agreed
to a two-year standstill under which it will not purchase more than 19.9% of
Ballards outstanding common shares without receiving Ballard board approval.
Ballard has granted Broad-Ocean anti-dilution rights to maintain its 9.9%
ownership interest. Finally, Broad-Ocean has no special right to appoint
nominees to Ballards board of directors.

The strategic collaboration framework
agreement between Ballard, Broad-Ocean and Guangdong Nation-Synergy Hydrogen
Power Technology Co. Ltd. (Nation-Synergy) was signed on July
26, 2016, and encompassed a number of collaboration activities conducted on
commercial terms in China, including:

|● | market development activities and
      product development for hydrogen fuel cell vehicles, including buses and
      commercial vehicles;                                                   
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|● | potential license and local assembly of Ballard fuel cell modules
      by Broad-Ocean in selected Chinese cities;                                                                            
|● | integration of Ballard fuel cell modules with Broad-Ocean EV drive
      systems to provide customers with turnkey fuel cell engines;
      and                                               
|● | leveraging of Broad-Oceans global operations and supply chain
      infrastructure to lower the cost of Ballard fuel cell engines and the cost
      of integration with vehicle drivetrains.

On February 16, 2017, we announced that
we signed a definitive agreement relating to technology transfer, licensing and
supply arrangements with Broad-Ocean for the assembly and sale of
FCveloCity®30-kilowatt (kW) and 85kW
fuel cell engines in China. Under the deal, Broad-Ocean will manufacture fuel
cell modules in three strategic regions in China, including Shanghai.
Broad-Ocean will make payments to Ballard at closing and based on certain
commissioning milestones, initial supply agreements, and recurring royalty
payments. Ballard will also have the exclusive right to purchase fuel cell
engines from any of the Broad-Ocean manufacturing operations for sale outside
China.

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The deal has an estimated value of
approximately $25 million in revenue to Ballard over the initial 5-year term,
including $12 million in Technology Solutions revenue. The transaction is
subject to customary closing conditions and is expected to close by Q2
2017.

Local Production of Fuel Cell
Stacks in China

On July 18, 2016, we signed definitive
agreements in Foshan, China with Nation-Synergy for the establishment of an
FCveloCity®-9SSL fuel cell stack production operation in the City of
Yunfu, in Guangdong Province. The fuel cell stacks will be packaged into
locally-assembled fuel cell engines and integrated into zero-emission buses and
commercial vehicles in China.

Ballard will receive $18.4 million in
Technology Solutions revenue for technology transfer services, production
equipment specification and procurement services, training and commissioning
support in relation to the establishment of an FCveloCity®-9SSL fuel
cell stack production line in Yunfu, with most of this revenue expected to be
recognized in 2017.

On commissioning of the operation,
expected in 2017, Ballard will be the exclusive supplier of membrane electrode
assemblies (MEA) for each fuel cell stack manufactured by the joint venture, named
Guangdong Synergy Ballard Hydrogen Power Co., Ltd. (Stack Joint Venture), with minimum
annual MEA volume commitments on a take or pay basis totaling in excess of
$150 million over the initial 5-year term from 2017 to 2021.

The transaction completed on October
25, 2016 and in connection with the completion the Stack Joint Venture was
formed to undertake the stack manufacturing operations. The Stack Joint Venture
is 90% owned by Nation-Synergy and 10% owned by Ballard Hong Kong Limited. Under
the terms of the joint venture, Ballard will contribute RMB 6.7 million
(approximately $1.0 million) for its 10% joint venture interest, appoint one of
the three members of the joint venture board directors, have veto rights over
certain key Stack Joint Venture decisions, agree on the marketing strategy, and
will have no obligation to provide additional funding to the Stack Joint
Venture.

After commissioning of the operation,
the joint venture will have an exclusive right to manufacture and sell
FCveloCity®-9SSL stacks in China. Exclusivity will be subject to
certain performance criteria of the joint venture, including compliance with a
code of ethics, compliance with Ballards quality policies, compliance with
Ballards branding policies, achievement of the minimum annual take or pay MEA
volumes, compliance with payment terms, and compliance with certain intellectual
property covenants. Ballard will have the exclusive right to purchase fuel cell
stacks and subcomponents from the Stack Joint Venture for sale outside
China.

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Technology Solutions Transaction
for Hydrogen Backup Power Systems in China

On July 11, 2016, we announced that we
had signed a definitive agreement with Nation-Synergy for a Technology Solutions
transaction to enable Nation-Synergy to exclusively manufacture and sell
Ballards direct hydrogen FCgen®-H2PM fuel cell backup power systems
in China.

Under the agreement Ballard licensed
the designs of its 1.7 kW and 5 kW FCgen®-H2PM systems to
Nation-Synergy for manufacture in the City of Yunfu in Guangdong Province and
exclusive sales in China. Nation-Synergy has paid Ballard an upfront Technology
Solutions fee of $2.5 million for the license and related technology services
and will make additional recurring payments to Ballard for each unit sold,
subject to annual minimums. Ballard will also be the exclusive supplier of
air-cooled fuel cell stacks to Nation-Synergy for use in the
FCgen®-H2PM systems that it produces and sells.

Protonex Receives $5.8M Follow-On
Product Order for the U.S. Army

On June 1, 2016, we announced that the
Corporations subsidiary, Protonex, received a $5.8 million purchase order for
the supply of Squad Power Manager (SPM-622) Special Operations Kits for U.S.
Special Operations Command. The purchase order is the largest order in Protonex
history and represents follow-on business from the $2.8 million order from the
same customer received in December 2015 for more than 400 SPMs (a value of
approximately $2.8 million). All products under this new order were shipped in
2016.

The purchase order was issued by the
Program Executive Office (PEO)  Soldier, as part of the Nett Warrior program.
These Protonex SPM-622 kits have been specifically designed for the requirements
of U.S. Special Operations Command and will be deployed with designated Special
Operations forces for use in the field.

Sale of Methanol Telecom Backup
Power Business

On May 17, 2016, we announced that we
has entered into a definitive agreement to sell certain of the Corporations
methanol Telecom Backup Power business assets to Chung-Hsin Electric &
Machinery Manufacturing Corporation (CHEM), a major Taiwanese power
equipment company, for a purchase price of up to $6.1 million.

At the closing, CHEM made an upfront
payment of $3 million. An additional earnout of up to $3.1 million may be
payable to the Corporation based on certain sales objectives during a
pre-defined earnout period. In addition to the purchase price, CHEM has agreed
to purchase fuel cell stacks exclusively from the Corporation over the earnout
period, with a minimum spend of $2 million. On May 31, 2016, the sale of the
Corporations methanol Telecom Backup Power business
assets contemplated by the definitive agreement closed.

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Equipment Supply Agreement with
Nation-Synergy

On January 21, 2016, we announced the
signing of an equipment supply agreement, valued at $12 million, with
Nation-Synergy to provide FCveloCity®-9SSL fuel cell stacks for range
extension applications in commercial vehicles in China. The majority of the fuel
stacks were delivered in 2016 with the balance to be delivered in 2017.
Nation-Synergy will collaborate with Dongfeng Xiangyangtouring Car Co., Ltd.,
which is part of Dongfeng Motor Corporation, a Chinese state-owned automobile
manufacturer headquartered in Wuhan, China, and the largest manufacturer of
commercial vehicles in China.

Nisshinbo Holdings Inc. Private
Placement & Technology Solutions Program

On November 10, 2015, we successfully
closed a $5 million strategic equity investment in Ballard by Nisshinbo Holdings
Inc. (Nisshinbo). The investment was made through a private placement subscription of
3,322,479 common shares issued from treasury at a price per share of
$1.5049.

On January 20, 2016, we announced that
we had received a follow-on purchase order from Nisshinbo for a further phase of
a Technology Solutions program related to the development of a breakthrough
catalyst technology intended to reduce the cost of certain proton exchange
membrane fuel cells. The program, now in its seventh phase, has been underway
for approximately 2.5 years. This is a continuation of the Technology Solutions
project work related to the development of the breakthrough catalyst technology
announced in May 2015.

Light Rail Agreement with
Tangshan Railway Vehicle Company, Limited

In November 2015, we signed a
definitive agreement with Tangshan Railway Vehicle Company, Limited
(TRC), a
part of CRRC Corporation Limited, for development of a new fuel cell module that
will be designed to meet the requirements of tram or Modern Ground Rail Transit
Equipment applications. The value of this work to Ballard is approximately $3
million and represents the next step toward a commercial product, following the
June 2015 signing and announcement of a framework agreement between Ballard and
TRC.

Acquisition of Protonex
Technology Corporation

On October 1, 2015, we completed the
acquisition of Protonex. As consideration for the merger, Ballard assumed and
paid certain of Protonexs debt obligations and transaction costs at closing,
being approximately $3.8 million, and paid the balance of the consideration through
the issuance of approximately 11.4 million Ballard shares from
treasury.

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Sale of
ElectraGen®Hydrogen Modules to the Aditya Birla Group

On September 30, 2015, we
announced receipt of a purchase order from Aditya Birla Group for fifty
ElectraGen®-H2 direct hydrogen modules that will be deployed in the
Idea Cellular network in India, representing the culmination of the extensive
testing and trialing undertaken by Idea Cellular of Ballards
ElectraGen® products since late-2013. All of the modules were shipped
in 2015.

Agreements with CRRC
Qingdao Sifang Company, Ltd.

On September 28, 2015, we
signed a joint development agreement and a supply agreement to develop and
commercialize a fuel cell engine specifically designed for integration into low
floor trams manufactured by CRRC Qingdao Sifang Company, Ltd.(CRRC Sifang), a Chinese
rolling stock manufacturer. The agreements include the expected delivery in 2016
of ten customized FCveloCity® modules. The joint development
agreement and supply agreement have an initial value expected to be
approximately $6 million. An initial deployment of eight fuel cell-powered trams
is planned by CRRC Sifang and the City of Foshan on the Gaoming Line starting in
2017.

July 2015 Public
Offering of Common Shares

On July 7, 2015, we closed
an underwritten offering of 9,343,750 common shares for gross proceeds of
approximately $15.0 million, which included the exercise in full by the
underwriters of their option to purchase up to an additional 15% of common
shares to cover over-allotments.

Nantong Zehe New
Energy Technology Co., Ltd. and Guangdong Synergy Hydrogen Power Technology
Co., Ltd. License and Supply Agreements

On May 26, 2015, we entered
into license and supply agreements with Nantong Zehe New Energy Technology Co.,
Ltd. to provide fuel cell power products and technology solutions to support the
planned deployment of an initial 33 fuel cell-powered buses in two Chinese
cities. On September 25, 2015, Ballard signed long-term license and supply
agreement with Guangdong Synergy Hydrogen Power Technology Co., Ltd.,
predecessor in title to Guangdong Nation-Synergy Hydrogen Power Technology Co.,
Ltd., to provide fuel cell Power Products and Technology Solutions in support of
the planned deployment of approximately 300 fuel cell-powered buses in the
cities of Foshan, China and Yunfu, China. The long-term license and supply
agreement has an estimated initial value of $17 million expected through 2016,
with the opportunity for significant recurring royalties starting in
2017.

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Audi IP Asset
Transfer

On February 11, 2015, we
entered into an agreement with Audi under which we agreed to transfer to Audi
certain of the transportation-related fuel cell intellectual property assets we
previously acquired from United Technologies Corporation UTC). These assets consist of approximately 900 patents and patent
applications as well as know-how primarily related to proton exchange membrane
fuel cell technology. On February 23, 2015 as consideration for the patents and
patent applications, Ballard received $40 million from Audi, of which $10
million was paid to UTC as a royalty under the terms of our prior acquisition
from UTC. As consideration for the transfer of the know-how, Ballard received
$10 million from Audi in the first quarter of 2016, of which $900,000 was paid
to UTC. In addition, we retain the sole right to use the knowhow, patents and
patent applications transferred to Audi for all non-automotive purposes, as well
as a non-exclusive right for use in buses, and a non-exclusive right for use in
certain limited pre-commercial automotive purposes, all on a royalty-free basis.
We also retain the right to provide technology solutions services to other
automotive OEMs. In connection with the transaction, Volkswagen AG
(Volkswagen) extended its existing technology development
agreement with us as described below.

Plug Long Term Sales
Agreement

On October 8, 2014, we
entered into a long term supply agreement with Plug Power Inc. (Plug Power) to provide fuel cell stacks for use in Plug Powers
GenDrive® systems deployed in forklift trucks. The new supply
agreement replaces an existing agreement and runs to the end of 2018, with the
potential for two 1-year extensions.

UTC IP Acquisition

On April 24, 2014, we
acquired the transportation-related and stationary-related fuel cell
intellectual property assets of UTC. As consideration for the patents and patent
applications, as well as patent licenses, invention disclosures and know-how,
UTC received 5,121,507 common shares of Ballard, $2 million in cash, a grant
back license to use the patent portfolio in UTCs existing businesses, and a
royalty on Ballards future intellectual property licensing income generated
from the combined intellectual property portfolio.

2013 Public
Offerings

In October 2013 and March
2013 we closed underwritten offerings in the United States of certain units,
which consisted of a common share and either (a) 0.25 of a warrant to purchase
one common share in the case of the October 2013 offering October 2013 Offering) and (b) one warrant to purchase one common
share in the case of the March 2013 offering (March 2013 Offering). As of December 31, 2016, 1.675 million share
purchase warrants from the October 2013 Offering and 122,563 share purchase
warrants from the March 2013 Offering remain outstanding.

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OUR BUSINESS

At Ballard, we are building
a clean energy growth company. We are recognized as a world leader in proton
exchange membrane (PEM) fuel cell and power
system development and commercialization.

Our principal business is
the design, development, manufacture, sale and service of PEM fuel cell products
for a variety of applications, focusing on our power product markets of
Heavy-Duty Motive (consisting of bus and tram applications), Portable Power,
Material Handling, and Backup Power, as well as the delivery of Technology
Solutions, including engineering services, technology transfer and the license
and sale of our extensive intellectual property portfolio and fundamental
knowledge for a variety of fuel cell applications.

A fuel cell is an
environmentally clean electrochemical device that combines hydrogen fuel with
oxygen (from the air) to produce electricity. The hydrogen fuel can be obtained
from natural gas, kerosene, methanol or other hydrocarbon fuels, or from water
through electrolysis. Ballards clean-energy fuel cell products feature high
fuel efficiency, low operating temperature, low noise and vibration, compact
size, quick response to changes in electrical demand and modular design.
Embedded in each Ballard PEM fuel cell product lies a stack of unit cells
designed with Ballards proprietary technology which draws on intellectual
property from our patent portfolio together with our extensive experience and
know-how in key areas of fuel cell stack design, operation and system
integration.

We plan to build value for
our shareholders by developing, manufacturing, selling and servicing
industry-leading fuel cell products to meet the needs of our customers in select
target markets.

Strategy

We are pursuing a corporate
strategy and business model that mitigates risk by diversifying our business
across a portfolio of market opportunities that are enabled by substantially
the same core competencies, technology, products and intellectual property. Our
business model includes two growth platforms, multiple markets within each of
these platforms, geographic diversification and customer
diversification.

We are also pursuing a
strategy that provides us with the opportunity for near-term commercialization,
revenue and profitability, while also enabling significant future value based on
longer-term market opportunities for our technology, products and intellectual
property, such as the global automotive fuel cell market.

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Our two-pronged approach is
to build shareholder value through the sale and service of power products and
the delivery of technology solutions. In power product sales, our focus is on
meeting the power needs of our customers by delivering high value, high
reliability, high quality and innovative clean energy power products that reduce
customer costs and risks. Through technology solutions, our focus is on enabling
our customers to solve their technical and business challenges and accelerate
their fuel cell programs by delivering customized, high value, bundled
technology solutions, including specialized engineering services, access to our
deep intellectual property portfolio and know-how through licensing or sale, and
providing technology component supply.

Starting in 2015, we
increased our efforts on growing our business in China. China represents a
potentially unique opportunity for clean energy solutions, given the convergence
of macro trends that include:

|● | continued urbanization of Chinas
      population;                                                                                                                                                                       
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|● | continued infrastructure development and
      build-out of mass urban transportation;                                                                                                                                    
|● | the large size and continued growth of the
      Chinese vehicle market;                                                                                                                                                  
|● | rapid adoption of electric vehicles in
      China;                                                                                                                                                                       
|● | serious air quality challenges in a number
      of Chinese cities;                                                                                                                                                       
|● | a Chinese government mandate to address
      climate change; and                                                                                                                                                         
|● | strong national and local government
      commitment supporting the adoption and commercialization of fuel cells in
      transportation applications, including the implementation of supporting
      subsidy programs.

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We have been pursuing a
strategy that includes the development of a local fuel cell supply chain and
related ecosystem to address the fast-growing clean energy bus and commercial
vehicle markets in China. As part of our strategy, we are pursuing technology
transfer and licensing opportunities with Chinese partners in order to localize
the manufacture of Ballard-designed fuel cell modules and fuel cell stacks for
heavy-duty motive applications in China, including bus, commercial vehicles and
light-rail train applications. Key elements of our strategy include adopting a
risk-adjusted and capital-light business model where we mitigate market adoption
risk and capital investment by engaging in
business partnerships with strong local companies that market our products and
invest in manufacturing operations and supply chain localization. We typically
seek to structure our arrangements in a way that provide us with the payment
from our partners of significant value for technology transfer early in the
transfer process, requirements for ongoing purchases by our partners of
component supply by us, and the requirement of our partners to comply with
certain performance conditions and reporting requirements, including quality,
branding, intellectual property and minimum payments. We believe these typical
deal structures provide for near-, mid- and long-term revenue and cash flow
streams by building in program phases, technology transfer payments, license
payments, required supply purchases, and recurring royalty structures. We also
typically structure our commercial deals in China to restrict sales within China
and to position Ballard as the exclusive purchaser of fuel cell modules or fuel
cell stacks manufactured by our partners in China for sale outside of China. We
believe this structure provides us with additional flexibility in satisfying
global market demand for our modules and stacks by supplementing or mitigating
our mid- and long-term manufacturing strategy.

We also structure our
business model in China to protect our core intellectual property. For example,
we do not provide technology transfer and licensing relating to the manufacture
of our proprietary membrane electrode assemblies (MEAs), which is a key technology component in our fuel cell stacks. We
currently plan to continue to manufacture our MEAs in our head office facilities
in Burnaby, Canada. Also, we typically restrict technology transfer and licenses
to current generation technology and products. We continue to make significant
investment in next generation products and technology, including fuel cell
modules and systems integration, stacks, and MEAs. We reserve flexibility on how
we introduce these next generation products to the markets, including to
China.

Revenues from Market
Segments

During 2016, we reported
our results in the single operating segment of Fuel Cell Products and Services.
Our Fuel Cell Products and Services segment consists of the sale and service of
PEM fuel cell products for our power product markets of Heavy-Duty Motive
(consisting of bus and tram applications), Portable Power, Material Handling and
Backup Power, as well as the delivery of Technology Solutions, including
engineering services, technology transfer and the license and sale of our
extensive intellectual property portfolio and fundamental knowledge for a
variety of fuel cell applications.

As a result of the sale of
certain of our methanol Backup Power assets to CHEM in the second quarter of
2016, we have renamed the former Telecom Backup Power market as the Backup Power
market. The Backup Power market includes revenues associated with our direct
hydrogen fuel cell backup power systems, methanol fuel cell backup power systems prior
to the CHEM transaction, and fuel cell stacks sold for all backup power
applications including those sold to CHEM.

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The following chart shows
the percentage of total revenues which arises from sales to investees and sales
of products and services to other customers, for the years 2016 and 2015:

|                                                                   |  | 2016 | 2015
|------------------------------------------------------------------ |  | ---- | ----
|Revenues from Fuel Cell Products and
      Services                |  |      |     
|Percentage
      of total revenues                                 |  | 100  | %   
|Portion
      representing sales to investees (1)                  |  | 5.2  | %   
|Portion
      representing sales to customers other than investees |  | 94.8 | %   

(1)In this
table, investees means Guangdong Synergy Ballard Hydrogen Power Co. Ltd., a
joint venture in China of which we hold a 10% equity interest.

Our Markets, Products
and Services

Product & Service
Overview

Ballards product offering
provides for a cost effective and flexible set of fuel cell power solutions.
Ballard provides products in four distinct product classes:

|(1) |  | **Fuel cell
      stacks**: Ballard providesFCgen®andFCveloCity®fuel cell stacks to OEM customers and
      system integrators that use the stacks to produce fuel cell systems for
      power solutions. As the fuel cell stack provider, Ballard is the power
      inside the system.                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Fuel
      cell modules: Ballard builds the fuel cell stacks into
      self-contained FCveloCity®motive modules
      that are plug-and-play into commercial vehicle powertrains. As a fuel cell
      module provider, we make it easier for OEMs and system integrators to
      create fuel cell powertrains.
|   
|(3) |  | Fuel
      cell systems: Ballard also builds complete fuel cell
      systems for stationary power markets that are designed to solve certain
      energy needs of our customers.                                                                                                                               
|   
|(4) |  | Power management systems: Ballard,
      through our Protonex subsidiary, builds power management devices for
      military customers that allow them to optimize their energy
  use.                                                                                                                           

Ballards technology
solutions offering primarily involves the provision of engineering services and
customer access through licensing to Ballards deep intellectual property
portfolio and know-how.

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The following table lists
the key fuel cell and non-fuel cell products we currently produce, have under
development or are testing.

|Motive
      Power Product Family: FCveloCity® Fuel Cell Products
|-----------------------------------------------------------------
|Product
      Name                                               
|FCveloCity®-9SSL                                                 
|FCveloCity®-1020ACS                                              
|FCveloCity®modules                                               

|Stationary
      Power Product Family: FCgen® Fuel Cell Products and System
      Products
|------------------------------------------------------------------------------------------
|Product
      Name                                                                        
|FCgen®-1020ACS                                                                            
|FCgen®-H2PM                                                                               

|Portable Power Product Family: Power Management
      Products
|--------------------------------------------------------------
|Product
      Name                                            
|SPM-622
      (squad power manager)                           
|ABC
      (adaptive battery charger)                          
|VPM-402
      (vest power manager)                            

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Fuel Cell Products and
Services

Power Products
Markets

Heavy Duty Motive

We provide fuel cell
modules for public transit systems including buses and light rail. These fuel
cell buses and light rail systems rely on centralized fuelling depots that
simplify the hydrogen infrastructure requirements and are government-subsidized,
thus enabling the purchase of pre-commercial fleets.

We design and manufacture
the FCveloCity® fuel cell module platform, which in various forms is
capable of delivering 30 kW to 200 kW of power for use in the Heavy Duty Motive
market. We supply the fuel cell modules to hybrid drive, bus and light rail
manufacturer customers that deliver zero-emission fuel cell-powered vehicles to
transit operators around the world. The demand for zero-emission mass transit
systems is driven in many jurisdictions by the requirement to reduce greenhouse
gases and other harmful emissions that are impacting urban areas.

FCveloCity®
power module platform cost reduction efforts have focused on unit cell design
enhancements, including improved durability and lifetime. This ongoing effort
was partially funded by a C$4.8 million award announced in January 2010 (revised
to C$6.9 million in June 2012) from Sustainable Development Technology Canada
(SDTC), and was successfully completed in 2014 to
further develop fuel cell power module technology for the transit bus market.
Product cost reductions continued with the launch in 2015 of our seventh
generation motive module FCveloCity® platform, which reduced the
total cost of the module by 25%. This new platform is available in various
configurations ranging in power from 30 kW to 200 kW to address different levels
of battery/fuel cell hybridization and a variety of applications. The
FCveloCity®-MD series is optimized for smaller buses (less than 12
meters in length), the FCveloCity®-HD module is the workhorse of the
standard-size (12-18 meter) fuel cell bus industry, and the
FCveloCity®-XD series is aimed at light rail.

To date, Ballard-powered
fuel cell buses have accumulated more than 10 million kilometres in service,
with several fuel cell buses having passed the 20,000 operating hour
threshold.

In 2015, Ballard
FCveloCity® power modules were used to power the worlds first fuel
cell light rail system in Foshan, China opening up a new market for the
FCveloCity® heavy duty power modules.

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Competition

Diesel-powered buses
currently dominate the market today. Compressed natural gas (CNG) and diesel electric hybrid buses are lower-emission alternatives to diesel buses, but are in
limited service today. Other variants available today include gasoline hybrid
buses and CNG hybrid buses. Electric trolley buses provide a zero-emission
alternative; however, their purchase price is high and the overhead catenary
power infrastructure is expensive to maintain and is considered aesthetically
undesirable in many urban centres. The recent developments in battery-powered
powertrain vehicles have created a zero emission alternative to fuel cell buses
in the form of battery electric buses. These buses will continue to offer a
viable zero emission bus for applications where long range and extended
operating hours between recharges are not a requirement.

We believe that fuel cells
are the best zero-emission alternative for transit applications. They offer much
greater fuel efficiency than conventional diesel buses, reduce greenhouse gas
and other harmful emissions and eliminate the need for unsightly overhead
catenary wires. Fuel cell buses are the most flexible zero-emissions option.
Unlike other electric solutions, fuel cell buses can be operated like diesel
buses providing longer daily driving distances and faster refuelling.

Companies developing fuel
cell systems for transit bus applications include Hydrogenics Corporation
(Hydrogenics). We have accumulated far more operating hours
in real transit operations than any other fuel cell manufacturer. We believe
this experience has enabled us to produce more reliable, more durable and easier
to integrate products than those of our competitors.

Portable Power Management
Solutions

Protonex is a leading
designer and manufacturer of advanced power management products and portable
fuel cell solutions. Protonex has developed several products designed for
end-users in military and commercial markets that are currently underserved by
batteries and small generators. Protonex is also developing products for OEM
customers looking to integrate high-performance power systems into their
products and applications.

Protonex has effectively
commercialized and deployed several of its products, and has received
development programs from U.S. military and U.S. government organizations,
including the Air Force, the Army, the Navy, the Marines, DARPA (the Defense
Advanced Research Projects Agency), the DOE (Department of Energy), and SOCOM
(Special Operations Command).

Reduction in the number and
type of batteries used in combat operations has been identified as an urgent
need within the Office of Secretary of Defense. To address this need, Protonex
developed man-wearable power management devices that allow the user access to a
variety of available energy sources (e.g. vehicles, solar and batteries) to
capitalize on their existing rechargeable batteries. The result is a significant
reduction in number and types of batteries, reduced field logistics
requirements, enhanced power reliability, cost savings,
and up to 50% improvement in energy use with corresponding weight reductions.

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Protonex has also developed
portable fuel cells focused on low power applications for use in extended
surveillance applications, including vehicle auxiliary power units (APUs),
unmanned aerial (UAV), unmanned ground (UGV), and underwater (UUV) vehicle
propulsion.

Competition

In the power manager arena,
Protonex has a leadership position within the U.S. Department of Defense given
our extensive history of development with various organizations. Within the
Department of Defense our biggest competition is the status quo: operation
without a power manager. As these devices are becoming more prevalent, more
companies are developing similar products to compete. To date, several of these
competitive products have gained traction in international markets (e.g. Smart
Fuel Cell Power Manager).

In the arena of small fuel
cell systems, our systems are typically displacing legacy battery or engine
solutions that are underserving the customers needs. Specifically in unmanned
systems applications, our small fuel cell systems have been shown to extend
mission duration over existing battery solutions by 200  700%. Typically, these
fuel cell systems are developed in concert with the systems integrator. There
are a number of companies that have developed competitive fuel cell systems,
including Horizon Fuel Cell and Smart Fuel Cell. To date no company has
developed a leadership position in this nascent market.

Material Handling

The material handling
market includes industrial vehicles such as forklifts, automated guided vehicles
(AGVs) and ground support equipment. Our initial focus
is on battery-powered Class 1 counter balance lift trucks, Class 2 reach trucks
and Class 3 pallet forklifts and AGVs. Our products for the material handling
market are the FCveloCity®-9SSL, which
is applicable to Class 1, Class 2 and Class 3 forklift truck solutions, and the
FCveloCity®-1020ACS stack, our
second-generation air-cooled fuel cell product, for Class 3 material handling
applications.

Our main customer and
partner in North America is Plug Power, a specialized system integrator
achieving early market penetration deploying its GenDrivebattery pack replacement fuel cell systems. In 2010, Plug Power began
offering commercial GenDrive systems designed for Class 1, Class 2 and Class 3
trucks, all using Ballard fuel cells. Ballards current equipment supply
agreement with Plug Power continues until 2018 with the potential for two 1-year
extensions.

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Competition

Class 2 and Class 3
forklift trucks are currently dominated by lead-acid battery-powered solutions,
as are Class 1 forklift trucks intended for indoor applications. Internal
combustion engine power is typically seen as the solution for forklift trucks in
Class 1 for outdoor applications. Compared to batteries, fuel cell systems in
Class 1, Class 2 and Class 3 forklift trucks can provide extended run time
without frequent and lengthy battery replacement and recharging cycles. For
high-throughput, multi-shift warehouse or manufacturing operations, fuel cell
forklift trucks can provide a lower life cycle cost and total cost of ownership
when compared with traditional lead-acid battery solutions.

Companies developing fuel
cell systems for material handling applications include Nuvera, which was
acquired by Hyster-Yale in 2014, and Hydrogenics. We seek to gain a competitive
advantage through our engineering know-how and fuel cell designs that provide
superior performance, efficiency, durability and cost. Plug Power is the only
person currently offering a full suite of class 1, 2 and 3 forklift solutions to
the material handling market. We currently sell and supply fuel cell stacks to
Plug Power. Plug Power is currently developing its own air-cooled and
liquid-cooled fuel cell stacks to vertically integrate into their material
handling solutions. If Plug Power is successful at developing and
commercializing its own fuel cell stacks, then these fuel cell stacks are
expected to compete with our fuel cell stacks for supply in Plug Powers
business.

Advanced battery technology
continues to make progress in the material handling market. However, the high
up-front cost of advanced batteries continues to be a barrier to broad market
adoption. Furthermore, advanced battery technologies still requires significant
time for recharging and, in many cases, cannot meet desired run times without
requiring spare batteries and substantial space for battery charging and
storage.

Backup Power

The backup power market
includes stationary applications for telecommunications equipment and other
critical data communications infrastructure. As we announced in 2016, we had
been looking to execute on strategic alternatives for our methanol based backup
power assets. In May 2016, we sold our methanol ElectraGen®-ME assets
to CHEM for up to $6.1 million.

We continue to supply the
backup power market through the sale and licensing of our hydrogen backup power
product, the FCgen®-H2PM. The FCgen®-H2PM is manufactured
by Ballard Europe. In addition to manufacturing products for sale, we also look
for opportunities to exploit our systems-based intellectual property and, in July 2016, entered into a licensing
arrangement with Nation-Synergy for the FCgen®-H2PM.

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We continue to provide fuel cell
systems to back-up critical communication infrastructure following the sale of
the methanol back-up product line to CHEM with a focus on fibre optics network
backbones, critical hub sites and emergency communication networks (police,
fire, ambulance and other emergency response services) in Europe with our
FCgen®-H2PM product. Several Scandinavian countries have passed
regulations to impose extended backup time (more than 12 hours) for critical
infrastructure.

In our increasingly connected world,
power outages are severely disruptive, heightening the need for reliable and
cost-effective backup power solutions to ensure maximum network uptime to
protect operators revenues and ensure customer satisfaction. Fuel cell
technology provides an alternative power solution with a compelling value
proposition to ensure site power availability during unexpected power outages to
harden critical telecommunication networks.

Ballards FCgen®-H2PM fuel
cell system has been designed to integrate easily with existing power equipment
and can be installed at a low cost in many environments including dense urban
areas and rooftop sites. Using the FCgen®-H2PM backup power solution,
operators will harden their network while reducing operating costs.

Competition

The backup power market is currently
dominated by diesel generators and batteries. Advanced battery technology
continues to make modest progress in the backup power generation market.
However, advanced battery technologies still require lengthy recharging and, in
many cases, cannot meet desired run times without requiring substantial space.
We believe that PEM fuel cell products are superior to batteries in some
applications, because of their ability to provide extended run time without
frequent or lengthy recharging, as well as their ability to offer lower life
cycle costs, given that batteries require periodic replacement. Fuel cell backup
power offers a strong value proposition against diesel generators with lower
operating cost; low emission and noise; and less risk of theft.

Companies developing PEM fuel cell
systems for backup power applications include Altergy, Hydrogenics, and Plug
Power. We seek to gain competitive advantage through fuel cell designs that
provide superior performance, efficiency, durability and cost.

- 20 -

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Technology Solutions

This market (formerly named Engineering
Services) was established in late 2011 to leverage our expertise in fuel cell
design, prototyping, manufacturing and servicing. The mandate of the Technology
Solutions division is to help customers solve difficult technical and business
challenges in their PEM fuel cell programs. We offer customized, bundled
technology solutions, including world-class, specialized engineering services,
access to our intellectual property portfolio and know-how, as well as the
supply of test equipment and technology components.

Our current Technology Solutions
efforts are predominantly in support of multiple automotive research and product
development programs; however, in 2016 we also executed on contracts in bus,
light rail, stationary, and military applications. We are also continuing to
pursue new activities in a number of other emerging markets, including materials
handling, unmanned vehicles and marine.

As noted in the Recent History section
above, in 2016 the Volkswagen Group transferred responsibility for fuel cell
development to its Audi luxury brand, and is also accelerating the timeline for
series production. Audi issued purchase orders to Ballard to accelerate certain
key development activities under the current long-term Technology Solutions
program that Volkswagen Group has with Ballard. The current 6-year engineering
services contract with the Volkswagen Group runs to March 2019, with an optional
2-year extension beyond that date. The contract has an estimated value of
C$100-140 million (approximately $80-112 million at the time of the press
release). The resulting HyMotion program encompasses automotive fuel cell stack
development as well as system design support activities.

In addition to our work with
Audi/Volkswagen, throughout 2016 we have also continued to execute engineering
services projects for other automotive customers.

Also noted in the Recent History
section, in 2016, we signed definitive agreements with Nation-Synergy for the
establishment of an FCveloCity®-9SSL fuel cell stack production
operation in the City of Yunfu, in Guangdong Province, China. Ballard will
receive $18.4 million in Technology Solutions revenue for technology transfer
services, production equipment specification and procurement services, training
and commissioning support in relation to the establishment of a production line
in Yunfu for the manufacture and assembly of FCveloCity®-9SSL fuel
cell stacks, with most of this revenue expected to be recognized in
2017.

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Competition

In the automotive sector, our main
competition for engineering services is the automakers in-house capabilities.
Companies providing fuel cell test equipment include FuelCon and Greenlight
Innovation. More broadly, Intelligent Energy provides a partnership model
approach across several markets, including automotive and stationary, ranging
from technology licensing and royalty-based agreements to collaborative joint
ventures. Ricardo offers modeling services and system design, but has more
limited capability in core fuel cell technology.

Impact of Regulations and Public
Policy

Public funding for hydrogen and fuel
cells in Japan, Germany, Europe, South Korea and the United States each exceed
$100 million per year, with the worldwide total exceeding $1 billion per year.
This funding has, and is expected to continue to, help drive demand for fuel
cell products.

The Federal Transit Agency manages the
Low or No Emission competitive program which provides funding to state and local
governmental authorities for the purchase or lease of zero-emission and
low-emission transit buses as well as acquisition, construction, and leasing of
required supporting facilities. Under the FAST Act, $55 million per year is
available until fiscal year 2020.

At the state level, the California
Self-Generation Incentive Program, which is funded by ratepayers and
administered by utilities, provides incentives for fuel cell and other clean
distributed generation technologies. In 2014, the California state senate
extended the program through 2019. The California Air and Resource Board
(CARB)
Low Carbon Transportation and AQIP programs provide mobile source incentives to
reduce greenhouse gas (GHG) emissions, criteria pollutants, and air toxics
through the development of advanced technology and clean transportation. Low
Carbon Transportation investments are supported by California Cap-and-Trade
auction proceeds projects. AQIP, established by the California Alternative and
Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007
is a voluntary incentive program administered by CARB to fund clean vehicle and
equipment projects, research of biofuels production. Each year, the legislature
appropriates funding to CARB for low carbon transportation and the air quality
impacts of alternative fuels, and workforce training. On August 31, 2016, the
California Legislature appropriated $363 million to CARB for Low Carbon
Transportation projects and provided direction on how these funds will be used.
Among the funded projects in 2016 were the Zero-Emission Truck and Bus Pilot
Commercial Deployment Project which will fund the deployment of 25 fuel cell
electric buses in California.

- 22 -

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In Europe, the Fuel Cells and Hydrogen
Joint Undertaking (FCH JU)  a partnership of the European Commission with
industry and the research community under the framework of the Fuel Cells and
Hydrogen Joint Technology Initiative  supports research, technological
development and demonstration (RTD) activities in fuel cell and hydrogen energy
technologies in Europe. Its aim is to accelerate the market introduction of
these technologies. In May 2014, the Council of the European Union formally
agreed to continue the Fuel Cells and Hydrogen Joint Technology Initiative under
the EU Horizon 2020 Framework Program. This phase (2014  2020), will have a
total budget of €1.33 billion, provided on a matched basis. Calls for proposals
under Horizon 2020 have occurred for 2014, 2015, and 2016, with 2017 calls for
proposals open through April 2017. The Horizon 2020 budget for 2017 is €116
million. As part of the 2016 call for proposal, the Joint Initiative for
hydrogen Vehicles across Europe  commonly known as the JIVE project  was
officially launched on February 26, 2017. This collaborative initiative is set
to deploy 144 fuel cell electric buses across Europe.

In China, the Ministry of Finance in
April 2015 extended subsidies for new energy vehicles, which provide incentives
for low emission vehicles, to 2020, with subsidies for battery electric vehicles
being reduced by 20 percent by 2018 and by 40 percent by 2020, though the policy
does not current provide for subsidy reductions for fuel cell vehicles.
Subsidies will be granted to buyers of pure electric, highly electrified plug-in
hybrid and fuel-cell vehicles, including both cars and buses.

In Japan, incentives focus on fuel cell
systems for residential co-generation systems and transportation. A cumulative
total of 130,000 co-generation systems were installed in Japan in 2009 through
2014, with more than 50,000 of those in 2014 alone. The current government
subsidy for the purchase of a hydrogen fuel cell car is approximately $20,000.
The government recently announced that it plans to spend 45.2 billion yen (more
than $350 million) on fuel-cell vehicle subsidies and hydrogen stations for the
2020 Olympics as part of a plan to reduce Japans reliance on nuclear power.

In Canada, SDTC operates the SD Tech
Fund which supports the late-stage development and pre-commercial demonstration
of clean technology solutions. These solutions being products and processes that
contribute to clean air, clean water and clean land, that address climate change
and improve the productivity and the global competitiveness of the Canadian
industry.

Research and Product Development

Ballards research activities are
primarily focused on the MEA and its subcomponents, aimed at improving the
overall cost, durability, and reliability of our products. Material development
for other unit cell components, such as bipolar plates, frames, seals and
adhesives, is another area of research focus. Product development activities
have been primarily directed at cost reduction. Progress is driven by leveraging
stack component designs, materials, and manufacturing processes across multiple
product platforms. In addition, warranty cost reduction is enabled through
improved durability and reliability growth.

- 23 -

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Intellectual Property

Ballards technical strengths lay in
our proprietary MEA design, combined with our extensive stack and system
integration capabilities, which enables development of complete end-user systems
that meet or exceed customer specifications, across a wide range of market
applications.

Our intellectual property covers
multiple aspects of our technology, including: materials and components; cell,
stack and systems architecture; stack/system operation and control; and
manufacturing processes. Our intellectual property portfolio is not limited to
our patents and patent applications; it also includes know-how and trade secrets
developed over more than 30 years of research and product
development.

As of March 1, 2017, Ballard owns or
controls through IP: 84 United States granted patents; 102 non-United States
granted patents; 9 United States published patent applications; and 33 published
non-United States patent applications. Our patents will expire between May 2017
and February 2036.

Protonexs intellectual property
comprises approximately 41 United States granted patents, 23 non-US granted
patents, 7 United States published patent applications and 21 published
non-United States patent applications.

We hold licence rights to additional
intellectual property from a number of third parties. We have a royalty-free
license to approximately 750 issued patents and pending patent applications from
Audi for bus and non-automotive applications as well as for certain limited
pre-commercial purposes in automotive applications. In addition, these licences
include non-exclusive, royalty-free access to all of the intellectual property
rights held by NuCellSys GmbH, a Daimler subsidiary, and to all of the
intellectual property rights relating to fuel cells developed by Daimler, Ford
and their subsidiaries (either directly or through AFCC Automotive Fuel Cell
Cooperation Corp. (AFCC)), including any intellectual property rights developed by
them to January 31, 2013. As of March 1, 2017, of the approximately 2,000
patents and patent applications that were included in these licenses,
approximately 430 of them are currently granted or pending.

Manufacturing

We currently produce our fuel cell
products in four facilities  three in Burnaby, British Columbia, and one in
Southborough, Massachusetts. Along with these facilities the Stack Joint
Venture, of which Ballard is a 10% owner, is in the process of commissioning a
high volume fuel cell stack assembly line in Yunfu, China. The Burnaby
facilities are focused on our core fuel cell competencies, which include the
production of MEAs, integration and testing of fuel cell stacks, assembly and
testing of motive modules, as well as support of other products required through
our engineering services contracts.

- 24 -

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We continue to make investments in our
manufacturing capabilities and processes which are targeted at supporting high
volume production and automated processing to support future growth. Protonex
develops, tests, and manufactures its portable power management products in
Southborough, Massachusetts.

Many of the materials and components
used in the production of MEAs, fuel cell stacks, and balance of plant are
proprietary in nature and have been developed in joint collaboration between
Ballard and our key supply base. Strategic supply agreements have been executed
with these suppliers to ensure security of supply, protection of our
intellectual property, and adherence to our strict quality and reliability
standards.

Safety

Our products are designed and
manufactured with the safety of our employees, customers, and end-users in mind.
All equipment and processes that are introduced into our working environment are
evaluated using a rigorous Preliminary Hazard Assessment procedure to ensure
they are safe to use.

In 2016 we continued our commitment to
demonstrating an industry leading culture of safety. We improved the consistency
and timeliness of our incident investigation procedure, we enhanced the
capabilities of our First Aid Incident Response Team, and in 2017 will be
training with real time scenarios in the working areas of our facilities. In
2016 we also initiated an Ergonomics Program targeted at improving the working
conditions of both our production work space along with our office areas. In
December 2016 we completed the maintenance audit for the Occupational Safety
Standard of Excellence (OSSE) certification and will leverage the results to
continue improvements in our cross functional communications and improve our
training system for the front line workers.

Quality

Quality is an integral part of the
Ballard culture. Our processes and systems are focused on ensuring that every
product that is shipped to our customers conforms to their expectations and
contractual requirements while being produced in a safe and environmentally
conscious manner. We adhere to our Quality Policy Statement, which reads, At
Ballard, Quality is intrinsic to our identity. Our team is empowered to do
things right  the first time  to satisfy customer needs and deliver on our
promise.

Ballard maintains quality registration
to ISO 9001 in our manufacturing facilities. Conformance to these quality
systems is ensured through our Integrated Management System. We also strive for
continuous improvements in our manufacturing processes through such practices as
Lean Manufacturing, 5-S and Six Sigma. We have trained over 70 people across the
organization in Lean Six Sigma practices.

- 25 -

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Facilities

We, or our wholly-owned subsidiaries,
currently have the following principal facilities: (a) a leased 116,797 ft2
(10,850 m2) facility in Burnaby, British Columbia that houses our corporate
headquarters and our fuel cell development, manufacturing and testing
activities; (b) a leased 112,000 ft2 (10,405 m2) facility in Burnaby that houses
some of our manufacturing facilities, as well as manufacturing facilities of
Mercedes-Benz Canada Inc. and AFCC through subleases; (c) approximately 10,000
ft2 (930 m2) of assembly space in Burnaby that is used to support motive module
assembly; (d) a leased 4,100 ft2 (381 m2) facility in Hobro, Denmark; (e) a
leased 17,000 ft2 (1580 m2) facility in Southborough, Massachusetts that houses
all of Protonexs operations. The Stack Joint Ventures operations in Yunfu,
China will occupy approximately 40,000 ft2 of a purpose built 120,000 ft2
facility dedicated to fuel cell stack and module assembly.

As per our Quality Statement, we are
committed to ensuring that each of these facilities is operated in full
compliance with all applicable laws, as well as all health, safety, and
regulatory standards.

Human Resources

As of December 31, 2016, we had
approximately 363 employees in Canada, 66 in the United States), and 36 in
Denmark, representing such diverse disciplines as electrochemistry, polymer
chemistry, chemical, mechanical, electronic and electrical engineering,
manufacturing, marketing, sales, business development, legal, finance, human
resources, information technology and business management. Our employees in
Canada and the United States are not represented by any labour union. In
Denmark, there are two groups of technical employees subject to collective
agreements, totalling less than 15 employees. Each employee must agree to
confidentiality provisions as part of the terms of his or her employment, and
certain employees have also executed non-competition agreements with
us.

SHARE CAPITAL AND MARKET FOR
SECURITIES

Our authorized share capital consists
of an unlimited number of common shares and an unlimited number of preferred
shares. As of March 1, 2017, our issued share capital consisted of174,749,630 common shares. Our
common shares are listed and trade on the Toronto Stock Exchange
(TSX)
under the symbol BLDP and on the National Association of Securities Dealers
Automated Quotation Global Market(NASDAQ) under the symbol BLDP. Prior to January 1, 2017 our common shares
traded on the TSX under the symbol BLD.

- 26 -

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The following table shows the monthly
trading activity for our common shares on the TSX and NASDAQ during
2016:

|          | TSX                   | NASDAQ                          
|--------- | --------------------- | --------------------------------
|          | Price
      Range(C$) | **Average
      DailyVolume(#)**
|January   | $1.73  2.13          | 91,069                          
|February  | $1.77  1.91          | 66,493                          
|March     | $1.76  2.04          | 87,977                          
|April     | $1.71  2.01          | 100,856                         
|May       | $1.74  1.90          | 87,605                          
|June      | $1.61  1.89          | 77,170                          
|July      | $1.62  2.67          | 603,619                         
|August    | $2.33  2.76          | 416,833                         
|September | $2.52  2.88          | 281,055                         
|October   | $2.63  3.28          | 396,247                         
|November  | $2.58  2.68          | 168,348                         
|December  | $2.22  2.51          | 144,918                         

The holders of our common shares are
entitled to one vote for each share held on all matters to be voted on by such
shareholders and, subject to the rights and priorities of the holders of
preferred shares, are entitled to receive such dividends as may be declared by
our Board out of funds legally available therefor and, in the event of
liquidation, wind-up or dissolution, to receive our remaining property, after
the satisfaction of all outstanding liabilities.

Our preferred shares are issuable in
series and our Board is entitled to determine the designation, preferences,
rights, conditions, restrictions, limitations and prohibitions to be attached to
each series of such shares. Currently there are no preferred shares outstanding.

- 27 -

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DIVIDEND RECORD AND POLICY

To date, we have not paid any dividends
on our shares and, because it is anticipated that all available cash will be
needed to implement our business plans, we have no plans to pay dividends in the
immediate future.

DIRECTORS AND OFFICERS

Board of Directors

The following chart provides the
following information as of March 1, 2017: the name and province or state of
residence of each of our directors; each directors respective positions and
offices held with Ballard, their principal occupation during the past five
years; the period of time each has served as a director; and the number of
shares and deferred share units (the DSUs) beneficially owned or
controlled by each of them.

|Name,                                             |  | Principal Occupation(1)                                                                                                                                                                                                                                                                                             |  | Director |  | Shares          |  | Deferred Share  
|------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- |  | --------------- |  | ----------------
|Province/State                                    |  |                                                                                                                                                                                                                                                                                                                     |  | Since    |  | Beneficially    |  | Units Owned     
|and Country of                                    |  |                                                                                                                                                                                                                                                                                                                     |  |          |  | Owned or        |  | or Controlled(2)
|Residence(1)                                      |  |                                                                                                                                                                                                                                                                                                                     |  |          |  | Controlled or   |  | (#/% of Class)  
|                                                  |  |                                                                                                                                                                                                                                                                                                                     |  |          |  | Directed(1)(#/% |  |                 
|                                                  |  |                                                                                                                                                                                                                                                                                                                     |  |          |  | of Class)       |  |                 
|Ian A. BourneAlberta, Canada                      |  | Corporate Director and Chair of
      the Board of Ballard since May 2006. FormerlyExecutive Vice President and Chief Financial Officer of TransAlta
      Corporation (electricity generation and
      marketing) from January 1998 to
      December 2006, and from January 1998 to December 2005, respectively. |  | 2003     |  | 26,824/0.015%   |  | 271,897/24.16%  
|Douglas P. HayhurstBritish
      Columbia, Canada |  | Corporate Director of Ballard.
      Formerly an executive with IBM Canada Business Consulting Services(consulting services)and a Partner with PricewaterhouseCoopers Management
      Consultants(consulting
      services).                                                                                      |  | 2012     |  | 5,000/0.003%    |  | 165,032/14.67%  

- 28 -

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|Name,                                            |  | Principal Occupation(1)                                                                                                                                                                                                                                                                                                                                                |  | Director |  | Shares          |  | Deferred Share  
|------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- |  | --------------- |  | ----------------
|Province/State                                   |  |                                                                                                                                                                                                                                                                                                                                                                        |  | Since    |  | Beneficially    |  | Units Owned     
|and Country of                                   |  |                                                                                                                                                                                                                                                                                                                                                                        |  |          |  | Owned or        |  | or Controlled(2)
|Residence(1)                                     |  |                                                                                                                                                                                                                                                                                                                                                                        |  |          |  | Controlled or   |  | (#/% of Class)  
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                        |  |          |  | Directed(1)(#/% |  |                 
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                        |  |          |  | of Class)       |  |                 
|Duy-Loan LeTexas, USA                            |  | Corporate Director of Ballard.
      Senior Fellow at Texas Instruments Incorporated (semiconductors).
      National Association of Corporate Directors Board Leadership Fellow.
      Engineering advisory board at the University of Texas Cockrell College of
      Engineering. Executive board for the University of Houstons Bauer College
      of Business. |  | 2017     |  | 0/0%            |  | 0/0%            
|R. Randall MacEwenBritish Columbia,
      Canada |  | President, Chief Executive Officer
      and Corporate Director of Ballard since October 2014.                                                                                                                                                                                                                                                                         |  | 2014     |  | 59,562/0.034%   |  | 116,667/10.37%  

- 29 -

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|Name,                               |  | Principal Occupation(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Director |  | Shares                 |  | Deferred Share      
|----------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- |  | ---------------------- |  | --------------------
|Province/State                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Since    |  | Beneficially           |  | Units Owned         
|and Country of                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |          |  | Owned or               |  | or
    Controlled(2)
|Residence(1)                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |          |  | Controlled or          |  | (#/% of Class)      
|                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |          |  | Directed(1)
      (#/% |  |                     
|                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |          |  | of Class)              |  |                     
|Marty T. NeeseCalifornia,
      USA |  | Mr. Neese is Chief Operating Officer of Velodyne LiDAR, Inc. (autonomous vehicles).  Previously, he was Chief
      Operating Officer of SunPower Corporation (solar power equipment and services) from 2008 to 2017. Prior to that, Mr. Neese was responsible for Global
      Operations at Flextronics (electronics
      manufacturing servicesfrom 2007 to 2008 following its acquisition of Solectron Corporation (electronics manufacturing services) where he was Executive Vice President from 2004 to 2007.                        |  | 2015     |  | 0/0%                   |  | 28,943/2.57%        
|James RocheOntario,
      Canada    |  | Corporate Director of Ballard.
      Founding member and executive at Newbridge Networks Corporation. President
      and currently the CEO of Stratford Managers Corporation. to President
      and CEO of Stratford Managers Corporation (management consulting services). Formerly President and
      CEO of Tundra Semiconductor (semiconductor
      component manufacturer) from 1995-2006 and Founding member and
      executive at Newbridge Networks Corporation (communications equipment manufacturer) from
      1986-1995. |  | 2015     |  | 50,000/0.029%          |  | 36,174/3.21%        

- 30 -

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|Name,                                   |  | Principal Occupation(1)                                                                                                                                                                                                                                                                                                                                                                     |  | Director |  | Shares           |  | Deferred Share  
|--------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- |  | ---------------- |  | ----------------
|Province/State                          |  |                                                                                                                                                                                                                                                                                                                                                                                             |  | Since    |  | Beneficially     |  | Units Owned     
|and Country of                          |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |          |  | Owned or         |  | or Controlled(2)
|Residence(1)                            |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |          |  | Controlled or    |  | (#/% of Class)  
|                                        |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |          |  | Directed(1) (#/% |  |                 
|                                        |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |          |  | of Class)        |  |                 
|Carol M.StephensonOntario,
      Canada |  | Corporate Director of
      Ballard. Formerly Dean of the Richard Ivey School of Business at the
      University of Western Ontario, a position she had held since 2003.
      Previously, served as President and Chief Executive Officer of Lucent
      Technologies Canada from 1999 to 2003.                                                                                          |  | 2012     |  | 3,550/0.002%     |  | 150,526/13.38%  
|Ian SutcliffeOntario,
      Canada      |  | Corporate Director of Ballard.
      Partner at Sutcliffe & Associates Management Consultants (management consulting services)since June 1985. Formerly CEO, Chairman and independent
      director of BluePoint Data (IT
      services) from September 2001 to June
      2011 and Vice Chair and CEO of BCS Global (video conferencing services)
      from January 2003 to March 2004. |  | 2013     |  | 10,000/0.006%    |  | 64,852/5.76%    

Notes

|(1) |  | The information as to
      place of residence, principal occupation, business or employment of, and
      shares beneficially owned, or controlled or directed, directly or
      indirectly, by a director is not within the knowledge of our management
      and has been furnished by the director.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Rounded to the
      nearest whole number.                                                                                                                                                                                                                                                              

Directors are elected
yearly at our annual shareholders meeting and serve on the Board until the
following annual shareholders meeting, at which time, they either stand for
re-election or leave the Board. If no meeting is held, each director serves
until his or her successor is elected or appointed, unless the director resigns
earlier.

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Senior Officers

As of March 1, 2017, we had
six senior officers. The name and province or state of residence of each
executive officer, the offices held by each officer and each officers principal
occupation during the last five years are as follows:

|Name and Province/State
      ofResidence           |  | Position                                                |  | Principal Occupation                                                                                                                                   
|--------------------------------------------------- |  | ------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|R. Randall
      MacEwenBritish Columbia, Canada    |  | President and Chief
      Executive Officer             |  | Executive of Ballard.
      Formerly CEO of Sparq Systems Inc. (2013 to 2014) and Founder and Managing
      Director at NextCleanTech LLC (2010-2014).
|                                                    |  |                                                         |  |                                                                                                                                                        
|Tony
      GuglielminBritish Columbia,
      Canada |  | Vice President and
      Chief Financial Officer        |  | Executive of Ballard.
      Formerly SVP Finance and Chief Financial Officer of Canada Line Rapid
      Transit Inc. (2005 to 2009).                   
|                                                    |  |                                                         |  |                                                                                                                                                        
|David
      WhyteBritish Columbia,
      Canada     |  | Vice President,
      Operations                        |  | Senior officer of
      Ballard. Formerly Director, Operations of Ballard.                                                                             
|                                                    |  |                                                         |  |                                                                                                                                                        
|Kevin
      ColbowBritish Columbia,
      Canada    |  | Vice President ,
      Technology & Product Development |  | Senior officer of
      Ballard. Formerly Vice President, Technology Solutions of Ballard.                                                             
|                                                    |  |                                                         |  |                                                                                                                                                        
|Karim
      KassamBritish Columbia,
      Canada    |  | Vice President,
      Commercial                        |  | Senior officer of
      Ballard. Formerly Vice President, Business and Corporate Development of
      Ballard.                                         
|                                                    |  |                                                         |  |                                                                                                                                                        
|Paul
      OsenarMassachusetts, USA                 |  | President, Protonex                                     |  | Senior officer of
      Protonex.                                                                                                                      

Shareholdings of
Directors and Senior Officers

As of March 1, 2017, our
directors and senior officers, as a group, beneficially owned, or controlled
or directed, directly or indirectly, 791,609 of our common shares, being
0.45% of our issued and outstanding common shares, and 934,228 DSUs.

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AUDIT COMMITTEE
MATTERS

Audit Committee Mandate

The Audit Committee
operates under a mandate that is approved by the Board and which outlines the
responsibilities of the Audit Committee. A copy of the Audit Committees mandate
is attached as Appendix A and posted on our website. This mandate is reviewed
annually and the Audit Committees performance is assessed.

Composition of the Audit
Committee

The following table sets
forth the name of each of the current members of the Audit Committee, whether
such member is independent, whether such member is financially literate and the
relevant education and experience of such member.

|**Name**                       |  | **Independent?** |  | FinanciallyLiterate? |  | **Relevant Education and Experience**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------------------------------ |  | ---------------- |  | -------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Ian A.Bourne(ex
      officio) |  | Yes              |  | Yes                  |  | Mr. Bourne was
      TransAlta Corporations Executive Vice President from January 1998 to
      December 2006. From January 1998 to December 2005, Mr. Bourne was the
      Chief Financial Officer of TransAlta and was responsible for all financial
      policy, planning and reporting, as well as tax, treasury and risk
      management planning and implementation. Mr. Bourne has completed the
      Directors Education Program of the Institute of Corporate Directors and
      has received his ICD.D designation.                                                                                                                                 
|                               |  |                  |  |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Douglas P.Hayhurst             |  | Yes              |  | Yes                  |  | Mr. Hayhurst was an
      executive with IBM Canada Business Consulting Services and a Partner with
      PricewaterhouseCoopers Management Consultants.Prior to that, Mr. Hayhurst held various senior executive
      management roles with Price Waterhouse including National Deputy Managing
      Partner (Toronto) and Managing Partner for British Columbia (Vancouver).
      Mr. Hayhurst received a Fellowship (FCA) from the Institutes of Chartered
      Accountants of British Columbia and of Ontario. He has completed the
      Directors Education Program of the Institute of Corporate Directors and
      has received his ICD.D designation.

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|**Name**            |  | **Independent?** |  | FinanciallyLiterate? |  | **Relevant Education and Experience**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------------------- |  | ---------------- |  | -------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Duy-Loan Le         |  | Yes              |  | Yes                  |  | Ms. Le was a Senior Fellow at
      Texas Instruments Incorporated (semiconductors). National Association of
      Corporate Directors Board Leadership Fellow. Engineering advisory board at
      the University of Texas Cockrell College of Engineering. Executive board
      for the University of Houstons Bauer College of
Business.                                                                                                                                                                                                                
|                    |  |                  |  |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Marty T.Neese       |  | Yes              |  | Yes                  |  | Mr. Neese is Chief Operating Officer of Velodyne LiDAR, Inc. (autonomous vehicles).  Previously, he was Chief Operating
      Officer of SunPower Corporation (solar power equipment and services) from 2008 to 2017. Prior to that, Mr. Neese was responsible for Global Operations at Flextronics (electronics manufacturing services) from 2007 to 2008 following its acquisition of Solectron Corporation (electronics manufacturing services) where he was  Executive Vice President
      from 2004 to 2007.                                            
|                    |  |                  |  |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|James Roche         |  | Yes              |  | Yes                  |  | Mr. Roche is
      currently President and CEO of Stratford Managers Corporation, and was a
      founding member and executive at Newbridge Networks Corporation. He
      subsequently co-founded Tundra Semiconductor Corporation, and was
      President and CEO of the publicly-traded company before it was acquired by
      IDT in 2006. Mr. Roche has also served as President and CEO of CMC
      Microsystems and CANARIE Inc.                                                                                                                   
|                    |  |                  |  |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Carol M.Stephenson  |  | Yes              |  | Yes                  |  | Ms. Stephensons
      principal occupation is corporate director. Previously, she was the Dean
      of the Richard Ivey School of Business at the University of Western
      Ontario from 2003 until 2013. Prior to that, she served as President and
      Chief Executive Officer of Lucent Technologies Canada from 1999 to 2003.
      Ms. Stephenson was invested as an Officer into the Order of Canada in
      2010.                                                                                                                               
|                    |  |                  |  |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Ian
      Sutcliffe |  | Yes              |  | Yes                  |  | Mr. Sutcliffe has
      been a partner at Sutcliffe & Associates Management Consultants since
      June 1985. Previously, he was CEO, Chairman and independent director of
      BluePoint Data from September 2001 to June 2011 and Vice Chair and CEO of BCS Global
      from January 2003 to March 2004. Mr. Sutcliffe was President of
      Mediconsult.com from June 1995 to June 1999 and President and CEO from
      1999 to 2001. Prior to that, he was with Coopers & Lybrand in
      Vancouver and London, England from June 1979 to June 1985.

- 34 -

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The Audit Committee is
responsible for recommending the appointment of our external auditors (for
shareholder approval at our annual general meeting), monitoring the external
auditors qualifications and independence, and determining the appropriate level
of remuneration for the external auditors. The external auditors report directly
to the Audit Committee. The Audit Committee also approves in advance, on a
case-by-case basis, any services to be provided by the external auditors that
are not related to the audit. The following table shows the costs incurred with
KPMG LLP in 2016 and 2015 for audit and non-audit related work, all of which
were approved by the Audit Committee:

|Type of Audit Fees   | 2016     | 2015    
|-------------------- | -------- | --------
|                     | (C$)     | (C$)    
|Audit
      Fees     | $448,000 | $534,000
|Audit-Related Fees   | Nil      | $7,500  
|Tax
      Fees       | Nil      | Nil     
|All Other
      Fees | $20,000  | Nil     

Audit Fees

Audit fees were for
professional services rendered by KPMG LLP for the audit of the annual financial
statements, quarterly reviews and services provided in connection with statutory
and regulatory filings or engagements relating to prospectuses and other
offering documents.

Audit-Related Fees

Audit-related fees were for
assurance and related services reasonably related to the performance of the
audit or review of the annual statements and are not reported under the heading
audit fees above.

- 35 -

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Tax Fees

There were no fees paid to
KPMG LLP that would be considered Tax Fees in 2016 or 2015.

All Other Fees

All other fees to be
disclosed under this category would be for products and services other than
those described under the headings audit fees, audit-related fees and tax fees
above. All Other Fees for 2016 related to valuation advisory services.

TRANSFER AGENT AND
REGISTRAR

Our transfer agent and
registrar is Computershare Trust Company of Canada, 100 University Avenue,
9th Floor, Toronto, Ontario, M5J 2Y1.

LEGAL PROCEEDINGS

We are not involved in any
material legal proceedings, nor are any such proceedings known to be
contemplated. From time to time, we may be involved in litigation relating to
claims arising out of our operations in the normal course of business.

INTERESTS OF EXPERTS

KPMG LLP, our independent
auditors, has audited our consolidated financial statements for the years ended
December 31, 2016 and 2015. As at the date hereof, KPMG LLP has confirmed that
they are independent with respect to the Corporation within the meaning of the
Rules of Professional Conduct of the Institute of Chartered Accountants of
British Columbia and the Public Company Accounting Oversight Board (United
States).

INTERESTS OF MANAGEMENT
AND OTHERS IN MATERIAL TRANSACTIONS

None of our insiders,
directors or executive officers, nor any associate or affiliate of such persons,
has had any material interest, direct or indirect, in any transaction of ours
within our three most recently completed financial years, nor in any transaction
or proposed transaction within our current financial year that has materially
affected or would materially affect us or any of our subsidiaries.

MATERIAL CONTRACTS

Particulars of every
contract that is material to Ballard, other than a contract entered into in the
ordinary course of business that is not required to be disclosed under the
CSAsNational Instrument 51-102 
Continuous Disclosure Obligations, and that was entered into within the most recently completed financial
year, or before the most recently completed financial year but is still in
effect, are listed below.

- 36 -

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FCveloCity®-9SSL fuel
cell stack production operation

On July 18, 2016 we entered
definitive agreements in Foshan, China with Nation-Synergy for the establishment
of an FCveloCity®-9SSL fuel cell stack production operation in the
City of Yunfu, in Guangdong Province. The fuel cell stacks will be packaged into
locally-assembled fuel cell engines and integrated into zero-emission buses and
commercial vehicles in China.

The transaction completed
on October 25, 2016 and has a contemplated minimum value to Ballard of $168
million over 5-years and includes these key elements:

|● | Ballard will receive
      $18.4 million in Technology Solutions revenue for technology transfer
      services, production equipment specification and procurement services,
      training and commissioning support in relation to the establishment of a
      production line in Yunfu for the manufacture and assembly of
      FCveloCity®-9SSL fuel cell stacks, with most of this revenue
      expected to be recognized in 2017;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|● | On closing of the
      transaction, expected in late-2016, a joint venture will be created to
      undertake the stack manufacturing operations and will be owned 90% of
      Synergy and 10% by Ballard; and                                                                                                                                                                                                                           
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|● | On commissioning of
      the operation, expected in 2017, Ballard will be the exclusive supplier of
      MEA for each fuel cell stack manufactured by the joint venture, with
      minimum annual MEA volume commitments on a take or pay basis totaling in
      excess of $150 million over the initial 5 - year term from 2017 to
      2021.                                                                                      

Ballard filed the 9SSL
Production Line Master Agreement and form of Equity Joint Venture Agreement on
SEDAR on July 27, 2016 in conjunction with the filing of a Material Change
Report in respect of the transaction. On November 4, 2016, we filed the final
Equity Joint Venture Agreement and Sales and Marketing Agreement in conjunction
with the filing of a Material Change Report in respect of the closing of the
transaction.

Protonex Acquisition

On June 29, 2015, Ballard
entered into an agreement and plan of merger with BPC Subco Inc.
(MergerCo), a wholly-owned subsidiary of Ballard, and
Protonex (the Merger
Agreement) under which MergerCo
merged with Protonex. Pursuant to the Merger Agreement Ballard Power
Corporation, a wholly-owned subsidiary of Ballard, became the sole stockholder
of the post-merger corporation, also named Protonex Technology
Corporation.

- 37 -

---





As consideration for the
merger Ballard assumed and paid certain of Protonexs debt obligations and
transaction costs at closing, which occurred October 1, 2015, being
approximately $3.8 million, and paid the balance of the consideration through
the issuance of approximately 11.4 million Ballard shares.

On June 29, 2015 Ballard
filed the Merger Agreement on SEDAR in conjunction with the filing of a Material
Change Report in respect of the transaction.

Audi IP Asset Transfer

On February 11, 2015, we
entered into an agreement with Audi (the IP Transfer and License Agreement) under which we agreed to transfer to Audi certain of the
transportation-related fuel cell intellectual property assets we previously
acquired from United Technologies Corporation. These assets consist of
approximately 900 patents and patent applications as well as know-how primarily
related to PEM fuel cell technology.

As consideration for the
patents and patent applications, Ballard received $40 million from Audi, of
which $10 million was paid to UTC as a royalty under the terms of our prior
acquisition from UTC. As consideration for the know-how, Ballard will receive
$10 million from Audi on transfer thereof, which is expected to occur in the
first quarter of 2016, of which $900,000 will be paid to UTC.

In addition, we retain the
sole right to use the patents, patent applications and know-how transferred to
Audi for all non-automotive purposes, as well as a non-exclusive right for use
in buses, and a non-exclusive right for use in certain limited pre-commercial
automotive purposes, all on a royalty-free basis. We also retain the right to
provide technology solutions services to other automotive OEMs.

In connection with the
transaction, Volkswagen AG extended its existing technology development
agreement with us as described below.

Ballard filed the IP
Transfer and License Agreement on SEDAR on February 20, 2015 in conjunction with
the filing of a Material Change Report in respect of the transaction.

UTC IP Acquisition

On April 24, 2014, we
acquired the transportation- and stationary-related fuel cell intellectual
property assets of UTC. These assets consist of approximately 800 patents and
patent applications as well as patent licenses, invention disclosures and
know-how primarily related to proton exchange membrane fuel cell
technology.

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As consideration for the
patents and patent applications, as well as patent licenses, invention
disclosures and know-how, UTC received 5,121,507 million common shares of
Ballard, $2 million in cash, a grant back license to use the patent portfolio in
UTCs existing businesses and a royalty on Ballards future intellectual
property licensing income generated from the combined intellectual property
portfolio.

In connection with the
transaction, Ballard and UTC formed a strategic alliance led by a joint Advisory
Council that will focus on licensing and other commercial market opportunities
arising from the combination of the acquired UTC portfolio and Ballards
extensive intellectual property.

Ballard filed the
technology portfolio purchase agreement on SEDAR on May 2, 2014 in conjunction
with the filing of a Material Change Report in respect of the
transaction.

Technology Development
Agreement with Volkswagen

On March 6, 2013, we entered into an agreement
with Volkswagen (the Technology
Development Agreement) under
which we will provide Volkswagen with engineering services to advance
development of fuel cells for use in powering demonstration cars in Volkswagens
fuel cell automotive research program. The original contract term was for 4
years, with an option for a 2-year extension. The original expected contract
value was in the range of C$60-100 million.

Work involves the design
and manufacture of a next-generation fuel cell for use in Volkswagen HyMotion
demonstration cars. Ballard engineers are supporting critical areas of fuel cell
product design  including the MEA, plate and stack components  along with
testing and integration work. Volkswagen will own all intellectual property
generated during the program while Ballard retains a royalty-free license to use
it for all non-vehicular applications.

Ballard filed the
Technology Development Agreement on SEDAR on March 15, 2013 as an attachment to
the Material Change Report in respect of the transaction.

On February 11, 2015, we
entered into an agreement with Volkswagen (the TDA Amending Agreement) under which Volkswagen extended the Technology
Development Agreement for 2 years to February 2019 for anticipated revenues of
approximately C$30-50 million and also extended the notice period for
Volkswagens right to terminate the Technology Development Agreement for
convenience from 1 year to 2 years. These extensions do not affect Volkswagens
continuing right to extend the term of the Technology Development Agreement for
a further 2-year period. Ballard and Volkswagen have also confirmed Ballards
position as a potential supplier of PEM fuel cell products to the Volkswagen
Group.

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Ballard filed the TDA
Amending Agreement on SEDAR on February 20, 2015 in conjunction with the filing
of a Material Change Report in respect of the transaction.

RISK FACTORS

An investment in our common
shares involves risk. Investors should carefully consider the risks and
uncertainties described below and the other information contained in, and
incorporated into, this Annual Information Form, including Managements
Discussion and Analysis and our financial statements for the year ended
December 31, 2016. The risks and uncertainties described below are not the only
ones we face. Additional risks and uncertainties, including those that we do not
know about now or that we currently deem immaterial, may also adversely affect
our business.

We may not be able to
successfully execute our business plan.

The execution of our
business plan poses many challenges and is based on a number of assumptions. We
may not be able to successfully execute our business plan. If we experience
significant cost overruns on our programs, or if our business plan is more
costly than we anticipate, certain research and development activities may be
delayed or eliminated, resulting in changes or delays to our commercialization
plans, or we may be compelled to secure additional funding (which may or may not
be available) to execute our business plan. We cannot predict with certainty our
future revenues or results from our operations. If the assumptions on which our
revenue or expenditure forecasts are based change, the benefits of our business
plan may change as well. In addition, we may consider expanding our business
beyond what is currently contemplated in our business plan. Depending on the
financing requirements of a potential acquisition or new product opportunity, we
may be required to raise additional capital through the issuance of equity or
debt. If we are unable to raise additional capital on acceptable terms, we may
be unable to pursue a potential acquisition or new product
opportunity.

In our Heavy-Duty Motive
market, we depend on Chinese customers for a majority of our revenues.
Macro-economic conditions, including government subsidy programs and significant
and recent volatility in Chinas capital markets, may adversely impact our
Chinese customers access to capital and program plans which could adversely
impact our business.

We sell most of our
products in the Heavy-Duty Motive market to a small number of Chinese customers,
and while we are continually seeking to expand our customer base, we expect this
will continue for the next several years. Any significant economic slowdown in
China or change in Chinese government policy around subsidies for zero-emission
vehicles could have an adverse impact on our business, financial condition and
results of operations. Our future success is dependent upon the continued
purchases of our products by these customers. Any fluctuations in demand from
these customers may negatively impact our business, financial condition and
results of operations. If we are unable to broaden our customer base and expand
relationships with other potential customers in other geographic markets, our
business in the Heavy-Duty Motive market will continue to be impacted by
unanticipated demand fluctuations due to our dependence on these customers.
Unanticipated demand fluctuations can have a negative impact on our revenues and
business, and an adverse effect on our business, financial condition and results
of operations. In addition, our dependence on a small number of customer in this
market exposes us to numerous other risks, including: (i) a slowdown or delay in
the customers deployment of our products could significantly reduce demand for
our products as well as increase pricing pressure on our products due to
increased purchasing leverage; (ii) reductions in a few customers forecasts and
demand could result in excess inventories; (iii) the current or future economic
conditions could negatively affect our major customers and cause them to
significantly reduce operations, or file for bankruptcy; (iv) concentration of
accounts receivable credit risk, which could have a material adverse effect on
our liquidity and financial condition if one of our major customer declared
bankruptcy or delayed payment of their receivables; and (v) changes in
government support for clean energy vehicles could have adversely affect the
end-user cost of vehicles incorporating our heavy-duty motive
products.

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In our Technology
Solutions market, we depend on a single customer for the majority of our
revenues.

We provide most of our
services in the Technology Solutions market to a single customer, Volkswagen,
and while we are continually seeking to expand our customer base, we expect this
will continue for the next several years. Our future success in this market is
dependent upon the continued demand by this customer and expansion of our
customer base. Any decline in or loss of demand from this customer or other
customers for any reason may have a negative impact on our revenues, and an
adverse effect on our business, financial condition and results of operations.
In addition, our dependence on a single customer in this market exposes us to
numerous other risks, including: the current or future economic conditions could
negatively affect our major customer and cause them to significantly reduce
operations or file for bankruptcy.

In our Portable Power
market, defense spending volatility could have an adverse impact on our
business.

Defense spending in the
U.S. has been volatile but with potential upsides in the areas of innovation,
modernization and increased efficiency. Budget volatility could have negative
consequences for Protonex, both with respect to timing and volume of development
programs with defense partners and with respect to product orders.

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In our Portable Power market,
defense acquisition process changes could have an adverse impact on our
business.

The U.S. Department of Defense at times
modifies its procurement processes, cycles, and regulations. There can be no
assurance that the government will not change its processes, regulations, and
policies in a manner that will adversely affect Protonexs ability to sell
products and services to the Department of Defense, which in turn would harm
Protonexs business operations.

In our Material Handling market, we
depend on a single customer for the majority of our revenues and are subject to
risks from that customers internal fuel cell stack development and
commercialization plans.

We sell most of our products in the
Material Handling market to a single customer, Plug Power, and while we are
continually seeking to expand our customer base, we expect this will continue
for the next several years. Plug Power is currently developing its own fuel cell
stacks to integrate into their material handling products. If Plug Power is
successful at developing and commercializing its own fuel cell stacks, then
these fuel cell stacks may compete directly with our fuel cell stacks. Any
decline in business with this customer could have an adverse impact on our
business, financial condition and results of operations. Our future success is
dependent upon the continued purchases of our products by this customer. Any
fluctuations in demand from this customer or other customers may negatively
impact our business, financial condition and results of operations. If we are
unable to broaden our customer base and expand relationships with other
potential customers, our business in this market will continue to be impacted by
unanticipated demand fluctuations due to our dependence on a single customer.
Unanticipated demand fluctuations can have a negative impact on our revenues and
business, and an adverse effect on our business, financial condition and results
of operations. In addition, our dependence on a single customer in this market
exposes us to numerous other risks, including: (i) a slowdown or delay in the
customers deployment of our products could significantly reduce demand for our
products as well as increase pricing pressure on our products due to increased
purchasing leverage; (ii) reductions in a single customers forecasts and demand
could result in excess inventories; (iii) the current or future economic
conditions could negatively affect our major customer and cause them to
significantly reduce operations, or file for bankruptcy; (iv) concentration of
accounts receivable credit risk, which could have a material adverse effect on
our liquidity and financial condition if our major customer declared bankruptcy
or delayed payment of their receivables; and (v) reductions in a single
customers demand as a result of their own strategic action to dual source their
supply of fuel cell stacks.

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In our Heavy-Duty Motive market a
significant amount of operations are conducted by a joint venture that we cannot
operate solely for our benefit.

Stack manufacturing in the Heavy-Duty
Motive market in China will be carried out by our joint venture. We share
ownership and management of the joint venture company with one or more parties
who may not have the same goals, strategies, priorities or resources as we do
and may compete with us outside the joint venture. Joint ventures are intended
to be operated for the equal benefit of all co-owners, rather than for our
exclusive benefit. Operating a business as a joint venture often requires
additional organizational formalities as well as time-consuming procedures for
sharing information and making decisions. If a co-owner changes or relationships
deteriorate, our success in the joint venture may be materially adversely
affected. In addition, because we have a minority share ownership, we may have
limited control over the actions of a joint venture. As a result, we may be
unable to prevent misconduct or other violations of applicable laws by the joint
venture. To the extent another party makes decisions that negatively impact the
joint venture or internal control issues arise within the joint venture, we may
have to take responsive or other action or we may be subject to penalties, fines
or other related actions for these activities.

We expect our cash reserves will be
reduced due to future operating losses and working capital requirements, and we
cannot provide certainty as to how long our cash reserves will last or that we
will be able to access additional capital when necessary.

We expect to incur continued losses and
generate negative cash flow until we can produce sufficient revenues to cover
our costs. We may never become profitable. Even if we do achieve profitability,
we may be unable to sustain or increase our profitability in the future. For the
reasons discussed in more detail below, there are substantial uncertainties
associated with our achieving and sustaining profitability. We expect our cash
reserves will be reduced due to future operating losses and working capital
requirements, and we cannot provide certainty as to how long our cash reserves
will last or that we will be able to access additional capital if and when
necessary.

Potential fluctuations in our
financial and business results make forecasting difficult and may restrict our
access to funding for our commercialization plan.

We expect our revenues and operating
results to vary significantly from quarter to quarter. As a result,
quarter-to-quarter comparisons of our revenues and operating results may not be
meaningful. Due to the stage of development of our business, it is difficult to
predict our future revenues or results of operations accurately. We are also
subject to normal operating risks such as credit risks, foreign currency risks
and fluctuations in commodity prices. As a result, it is possible that in one or
more future quarters, our operating results may fall below the expectations of
investors and securities analysts. Not meeting investor and security analyst
expectations may materially and adversely impact the trading price of our common shares, and restrict our ability to secure required funding to pursue our commercialization plans.

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We are dependent upon Original Equipment Manufacturers and Systems Integrators to purchase certain of our products.

To be commercially useful, our fuel cell products must be integrated into products manufactured by Systems Integrators and OEMs. We can offer no guarantee that Systems Integrators or OEMs will manufacture appropriate, durable or
safe products or, if they do manufacture such products, that they will choose to use our fuel cell products.  Any integration, design, manufacturing or marketing problems encountered by Systems Integrators or OEMs could adversely affect the market
for our fuel cell products and our financial results.

We sell most of our products in the Heavy Duty Motive market in China and to relatively small System Integrator customers with limited experience developing fuel cell system products on a commercial basis. We do not know know
whether these customers will be able to successfully develop, manufacture or market products to their customers. In addition, our dependence on such customers in this market increases the risks of difficulties in integration, design, manufacturing
or marketing of their products; and that current or future macro-economic conditions in China could negatively affect them and cause them to significantly reduce operations, or file for bankruptcy.

We may not be able to achieve commercialization of our products on the timetable we anticipate, or at all.

We cannot guarantee that we will be able to develop commercially viable fuel cell products on the timetable we anticipate, or at all. The commercialization of our fuel cell products requires substantial technological advances to
improve the durability, reliability and performance of these products, and to develop commercial volume manufacturing processes for these products. It also depends upon our ability to significantly reduce the costs of these products, since they are
currently more expensive than products based on existing technologies, such as internal combustion engines and batteries. We may not be able to sufficiently reduce the cost of these products without reducing their performance, reliability and
durability, which would adversely affect the willingness of consumers to buy our products. We cannot guarantee that we will be able to internally develop the technology necessary for commercialization of our fuel cell products or that we will be
able to acquire or license the required technology from third parties.

In addition, before we release any product to market, we subject it to numerous field tests.  These field tests may encounter problems and delays for a number of reasons, many of which are beyond our control.  If these field tests
reveal technical defects or reveal that our products do not meet performance goals, our commercialization schedule could be delayed, and potential purchasers may decline to
purchase our products.

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A mass market for our products may
never develop or may take longer to develop than we anticipate.

Our fuel cell products represent
emerging markets, and we do not know whether end-users will want to use them in
commercial volumes. In such emerging markets, demand and market acceptance for
recently introduced products and services are subject to a high level of
uncertainty and risk. The development of a mass market for our fuel cell
products may be affected by many factors, some of which are beyond our control,
including the emergence of newer, more competitive technologies and products,
the cost of fuels used by our products, regulatory requirements, consumer
perceptions of the safety of our products and related fuels, and end-user
reluctance to buy a new product.

If a mass market fails to develop, or
develops more slowly than we anticipate, we may never achieve profitability. In
addition, we cannot guarantee that we will continue to develop, manufacture or
market our products if sales levels do not support the continuation of the
product.

We have limited experience
manufacturing fuel cell products on a commercial basis.

To date, we have limited experience
manufacturing fuel cell products on a commercial basis. We cannot be sure that
we will be able to develop efficient, low-cost, high-volume automated processes
that will enable us to meet our cost goals and profitability projections. While
we currently have sufficient production capacity to fulfill customer orders in
the near-term, we expect that we will increase our production capacity based on
market demand. We cannot be sure that we will be able to achieve any planned
increases in production capacity or that unforeseen problems relating to our
manufacturing processes will not occur. Even if we are successful in developing
high-volume automated processes and achieving planned increases in production
capacity, we cannot be sure that we will do so in time to meet our product
commercialization schedule or to satisfy customer demand. If our business does
not grow as quickly as anticipated, our existing and planned manufacturing
facilities would, in part, represent excess capacity for which we may not
recover the cost, in which case our revenues may be inadequate to support our
committed costs and planned growth, and our gross margins and business strategy
would be adversely affected. Any of these factors could have a material adverse
effect on our business, results of operations and financial performance.

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Warranty claims could negatively
impact our gross margins and financial performance.

There is a risk that our warranty
accrual estimates are not sufficient and we may recognize additional expenses,
including those related to litigation, as a result of warranty claims in excess
of our current expectations. Such warranty claims may necessitate changes to our
products or manufacturing processes and/or a product recall, all of which could
hurt our reputation and the reputation of our products and may have an adverse
impact on our financial performance and/or on future sales. While we attempt to
mitigate against these risks through product development, quality assurance and
customer support and service processes, there can be no assurance that these
processes are adequate. Even in the absence of any warranty claims, a product
deficiency such as a design or manufacturing defect could be identified,
necessitating a product recall or other corrective measures, which could hurt
our reputation and the reputation of our products and may have an adverse impact
on our financial performance and/or on future sales.

New products may have different
performance characteristics from previous products. In addition, we have limited
field experience with existing commercial products from which to make our
warranty accrual estimates.

We could be adversely affected by
risks associated with acquisitions.

We may in future, seek to expand our
business through acquisitions. Any such acquisitions will be in part dependent
on managements ability to identify, acquire and develop suitable acquisition
targets in both new and existing markets. In certain circumstances, acceptable
acquisition targets might not be available. Acquisitions involve a number of
risks, including: (i) the possibility that we, as successor owner, may be
legally and financially responsible for liabilities of prior owners; (ii) the
possibility that we may pay more than the acquired company or assets are worth;
(iii) the additional expenses associated with completing an acquisition and
amortizing any acquired intangible assets; (iv) the difficulty of integrating
the operations and personnel of an acquired business; (v) the challenge of
implementing uniform standards, controls, procedures and policies throughout an
acquired business; (vi) the inability to integrate, train, retrain and motivate
key personnel of an acquired business; and (vii) the potential disruption of our
ongoing business and the distraction of management from our day-today
operations. These risks and difficulties, if they materialize, could disrupt our
ongoing business, distract management, result in the loss of key personnel,
increase expenses and otherwise have a material adverse effect on our business,
results of operations and financial performance.

The post-acquisition risk factors
highlighted under the heading Risk Factors in the prospectus supplement dated
July 1, 2015 to the Short Form Base Shelf Prospectus dated May 21, 2014 continue
to apply to the integration of Protonex.

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We are subject to risks inherent in
international operations.

Our success depends in part on our
ability to secure international customers. We have limited experience developing
and manufacturing products that meet foreign regulatory and commercial
requirements in our target markets. We face numerous challenges in our
international business activities, including war, insurrection, civil unrest,
strikes and other political risks, negotiation of contracts with government
entities, unexpected changes in regulatory and other legal requirements,
fluctuations in currency restrictions and exchange rates, longer accounts
receivable requirements and collections, difficulties in managing international
operations, potentially adverse tax consequences, restrictions on repatriation
of earnings and the burdens of complying with a wide variety of international
laws. Any of these factors could have a material adverse effect on our business,
results of operations and financial performance.

We depend on our intellectual
property, and our failure to protect that intellectual property could adversely
affect our expected future growth and success.

Failure to protect our existing
intellectual property rights may result in the loss of our exclusivity or the
right to use our technologies. If we do not adequately ensure our freedom to use
certain technology, we may have to pay others for rights to use their
intellectual property, pay damages for infringement or misappropriation, or be
enjoined from using such intellectual property. We rely on patent, trade secret,
trademark and copyright laws to protect our intellectual property. However, some
of our intellectual property is not covered by any patent or patent application,
and the patents to which we currently have rights expire between 2011 and 2027.
Our present or future-issued patents may not protect our technological
leadership, and our patent portfolio may not continue to grow at the same rate
as it has in the past. Moreover, our patent position is subject to complex
factual and legal issues that may give rise to uncertainty as to the validity,
scope and enforceability of a particular patent. Accordingly, there is no
assurance that: (i) any of the patents owned by us or other patents that third
parties license to us will not be invalidated, circumvented, challenged,
rendered unenforceable or licensed to others; or (ii) any of our pending or
future patent applications will be issued with the breadth of claim coverage
sought by us, if issued at all. In addition, effective patent, trade secret,
trademark and copyright protection may be unavailable, limited or not applied
for in certain countries.

We also seek to protect our proprietary
intellectual property, including intellectual property that may not be patented
or patentable, in part by confidentiality agreements and, if applicable,
inventors rights agreements with our strategic partners and employees. We can
provide no assurance that these agreements will not be breached, that we will
have adequate remedies for any breach, or that such persons or institutions will
not assert rights to intellectual property arising out of these relationships.

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Certain of our intellectual property
have been licensed to us on a non-exclusive basis from third parties who may
also license such intellectual property to others, including our competitors. If
necessary or desirable, we may seek further licences under the patents or other
intellectual property rights of others. However, we may not be able to obtain
such licences or the terms of any offered licences may not be acceptable to us.
The failure to obtain a licence from a third party for intellectual property we
use could cause us to incur substantial liabilities and to suspend the
manufacture or shipment of products or our use of processes requiring the use of
such intellectual property.

We may become subject to lawsuits in
which it is alleged that we have infringed the intellectual property rights of
others or commence lawsuits against others who we believe are infringing upon
our rights. Our involvement in intellectual property litigation could result in
significant expense to us, adversely affecting the development of sales of the
challenged product or intellectual property and diverting the efforts of our
technical and management personnel, whether or not such litigation is resolved
in our favour.

We may experience cybersecurity threats
to our information technology infrastructure and systems, and unauthorized
attempts to gain access to our proprietary or confidential information, as may
our customers, suppliers, subcontractors and joint venture partners.

We depend on information technology
infrastructure and systems (IT systems), hosted internally or outsourced, to
process, transmit and store electronic data and financial information (including
proprietary or confidential information), and manage business operations. Our
business requires the appropriate and secure utilization of sensitive,
confidential or personal data or information belonging to our employees,
customers and partners. In addition, Ballard proprietary or confidential
information may be stored on IT systems of our suppliers, customers and
partners. Increased global cybersecurity vulnerabilities, threats and more
sophisticated and targets cyber-related attacks pose a risk to the security of
Ballards and its customers, partners, suppliers and third-party service
providers IT systems and the confidentiality, availability and integrity of
Ballards and its customers and partners data or information. While we have
made investments seeking to address these threats, including monitoring of
networks and systems, hiring of experts, employee training and security policies
for employees, we may face difficulties in anticipating and implementing
adequate preventative measures and remain potentially vulnerable. We must rely
on our own safeguards as well as the safeguards put in place by our suppliers,
customers and partners to mitigate the threats. Our internal systems are audited
for cybersecurity vulnerabilities by third party security firms to ensure we are
prepared for new and emerging threats. Our suppliers, customers and partners
have varying levels ofcybersecurity expertise
and safeguards, most have yearly compliance audits that are available upon
request.

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An IT system failure or
non-availability, cyber-attack or breach of systems security could disrupt our
operations, cause the loss of, corruption of, or unauthorized access to
sensitive, confidential or personal data or information or expose us to
regulatory investigation, litigation or contractual penalties. Our customers,
partners or governmental authorities may question the adequacy of cybersecurity
processes and procedures and this could have a negative impact on existing
business or future opportunities. Furthermore, given the highly evolving nature
of cybersecurity threats or disruptions and their increased frequency, the
impact of any future incident cannot be easily predicted or mitigated, and the
costs related to such threats or disruptions may not be fully insured or
indemnified by other means.

Global macro-economic conditions are
beyond our control and may have an adverse impact on our business or our key
suppliers and/or customers.

Current global economic conditions,
including volatility in China, may adversely affect the development of sales of
our products, and thereby delay the commercialization of our products. Customers
and/or suppliers may not be able to successfully execute their business plans;
product development activities may be delayed or eliminated; new product
introduction may be delayed or eliminated; end-user demand may decrease; and
some companies may not continue to be commercially viable.

We currently face and will continue
to face significant competition.

As fuel cell products have the
potential to replace existing power products, competition for our products will
come from current power technologies, from improvements to current power
technologies, and from new alternative energy technologies, including other
types of fuel cells. Each of our target markets is currently serviced by
existing manufacturers with existing customers and suppliers. These
manufacturers use proven and widely accepted technologies such as ICEs and
batteries as well as coal, oil and nuclear powered generators.

Additionally, there are competitors
working on developing technologies other than PEM fuel cells (such as other
types of fuel cells and advanced batteries) in each of our targeted markets.
Some of these technologies are as capable of fulfilling existing and proposed
regulatory requirements as the PEM fuel cell.

Within the PEM fuel cell market, we
also have a large number of competitors. Across the world, corporations,
national laboratories and universities are actively engaged in the development
and manufacture of PEM fuel cell products and components. Each of these
competitors has the potential to capture market share in each of our target
markets.

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Many of our competitors have
substantial financial resources, customer bases, manufacturing, marketing and
sales capabilities, and businesses or other resources, which give them
significant competitive advantages over us.

We could lose or fail to attract the
personnel necessary to run our business.

Our success depends in large part on
our ability to attract and retain key management, engineering, scientific,
marketing, manufacturing and operating personnel. As we develop additional
manufacturing capabilities and expand the scope of our operations, we will
require more skilled personnel. Recruiting personnel for the fuel cell industry
is highly competitive. We may not be able to continue to attract and retain
qualified executive, managerial and technical personnel needed for our business.
Our failure to attract or retain qualified personnel could have a material
adverse effect on our business.

Public policy and regulatory changes
could hurt the market for our products.

Changes in existing government
regulations and the emergence of new regulations with respect to fuel cell
products may hurt the market for our products. Environmental laws and
regulations have driven interest in fuel cells. We cannot guarantee that these
laws and policies including subsidies or incentives associated with the adoption
of clean energy products, will not change. Changes in these laws and other laws
and policies, or the failure of these laws and policies to become more
widespread, could result in manufacturers abandoning their interest in fuel cell
products or favouring alternative technologies. In addition, as fuel cell
products are introduced into our target markets, governments may impose
burdensome requirements and restrictions on the use of fuel cell products that
could reduce or eliminate demand for some or all of our products.

Government budgetary constraints could
reduce the demand for our products by restricting the funding available to
public transportation agencies and militaries. We cannot guarantee that current
government direct and indirect financial support for our products will
continue.



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We are dependent on third party
suppliers for the supply of key materials and components for our products and
services.

We have established relationships with
third party suppliers, on whom we rely to provide materials and components for
our products. A suppliers failure to supply materials or components in a timely
manner, or to supply materials and components that meet our quality, quantity or
cost requirements, or our inability to obtain substitute sources for
these materials and components in a timely manner or on terms acceptable to us,
could harm our ability to manufacture our products. In addition, to the extent
that our product development plans rely on development of supplied materials or
components, we cannot guarantee that we will be able to leverage our
relationships with suppliers to support these plans. To the extent that the
processes that our suppliers use to manufacture the materials and components are
proprietary, we may be unable to obtain comparable materials or components from
alternative suppliers, which could adversely affect our ability to produce
viable fuel cell products or significantly raise our cost of producing such
products.

Exchange rate fluctuations are
beyond our control and may have a material adverse effect on our business,
operating results, financial condition and profitability.

We report our financial results in
United States dollars. Our operating expenditures are particularly affected by
fluctuations in the exchange rate between the Canadian dollar and the United
States dollar. We generate the majority of our revenues in United States dollars
while the majority of our operating expenditures are incurred in Canadian
dollars. As a result, any increase in the value of the Canadian dollar, relative
to the United States dollar, increases the amount of reported operating
expenditures in excess of any corresponding increase in revenues and gross
margins. Exchange rate fluctuations are beyond our control, and the Canadian
dollar may appreciate against the United States dollar in the future, which
would result in higher operating expenditures and lower net income. In order to
reduce the potential negative effect of a strengthening Canadian dollar, we
occasionally enter into various hedging programs. However, if the Canadian
dollar increases in value, it will negatively affect our financial results and
our competitive position compared to other fuel cell product manufacturers in
jurisdictions where operating costs are lower.

Commodity price fluctuations are
beyond our control and may have a material adverse effect on our business,
operating results, financial condition and profitability.

Commodity prices, in particular the
price of platinum and palladium, affect our costs. Platinum and palladium are
key components of our fuel cell products. Platinum and palladium are scarce
natural resources and we are dependent upon a sufficient supply of these
commodities. While we do not anticipate significant near or long-term shortages
in the supply of platinum or palladium, such shortages could adversely affect
our ability to produce commercially viable fuel cell products or significantly
raise our cost of producing such products. In order to reduce the impact of
platinum price fluctuations, we occasionally enter into various hedging
programs.

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We could be liable for environmental
damages resulting from our research, development or manufacturing operations.

Our business exposes us to the risk of
harmful substances escaping into the environment, resulting in personal injury
or loss of life, damage to or destruction of property, and natural resource
damage. Depending on the nature of the claim, our current insurance policies may
not adequately reimburse us for costs incurred in settling environmental damage
claims, and in some instances, we may not be reimbursed at all. Our business is
subject to numerous laws and regulations that govern environmental protection
and human health and safety. These laws and regulations have changed frequently
in the past and it is reasonable to expect additional and more stringent changes
in the future. Our operations may not comply with future laws and regulations,
and we may be required to make significant unanticipated capital and operating
expenditures. If we fail to comply with applicable environmental laws and
regulations, governmental authorities may seek to impose fines and penalties on
us, or to revoke or deny the issuance or renewal of operating permits, and
private parties may seek damages from us. Under those circumstances, we might be
required to curtail or cease operations, conduct site remediation or other
corrective action, or pay substantial damage claims.

Our products use flammable fuels and
some generate high voltages, which could subject our business to product
liability claims.

Our business exposes us to potential
product liability claims that are inherent in electrical products, and in
products that use hydrogen or hydrogen-rich reformate fuels. High-voltage
electricity poses potential shock hazards, and hydrogen is a flammable gas and
therefore a potentially dangerous fuel. Any accidents involving our products or
other hydrogen-based products could materially impede widespread market
acceptance and demand for our fuel cell products. Involvement in litigation
could result in significant expense to us, adversely affecting the development
and sales of our products, and diverting the efforts of our technical and
management personnel, whether or not the litigation is resolved in our favour.
In addition, we may be held responsible for damages beyond the scope of our
insurance coverage. We also cannot predict whether we will be able to maintain
our insurance coverage on acceptable terms.

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ADDITIONAL INFORMATION

Additional information regarding
Ballard may be found on SEDAR atwww.sedar.com. In particular, additional
information regarding directors and officers remuneration and indebtedness,
principal holders of our securities and securities authorized for issuance under
security compensation plans is contained in our information circular for our
most recent annual meeting of securityholders that involved the election of
directors. Additional financial information is provided in our financial
statements and Managements Discussion and Analysis for the most recently
completed financial year.

Copies of this Annual Information Form
and the documents incorporated by reference herein, our comparative financial
statements (including the auditors report) for the year ended December 31,
2016, each interim financial statement issued after December 31, 2016, our
management proxy circular and our Annual Report may be obtained upon request
from our Corporate Secretary, 9000 Glenlyon Parkway, Burnaby, British Columbia,
V5J 5J8, or on our website atwww.ballard.com.

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APPENDIX A AUDIT COMMITTEE MANDATE

The Board has established an Audit
Committee (the Committee) to assist the Board in fulfilling its oversight
responsibilities regarding the integrity of the Corporations accounting and
financial reporting, the Corporations systems of internal controls over
financial reporting, the independence and performance of the Corporations
external and internal auditors, the identification and management of the
Corporations risks, the Corporations Whistleblower Reporting processes, the
Corporations financial policies and the review and approval of related party
transactions, as further described below.

In this Mandate, the Corporation
means Ballard Power Systems Inc. and a director means a Board member. CGCC
means the Corporations Corporate Governance & Compensation Committee.

Composition and Eligibility

|A) | The Committee will have a minimum
      of three members, including the chair of the Committee. Following each
      annual meeting of shareholders of the Corporation the Board, upon the
      recommendation of the Corporate Governance & Compensation Committee,
      will appoint the members of the Committee, including the Committee chair.
      Any member may be removed or replaced at any time by the Board and will
      cease to be a member upon ceasing to be a director of the Corporation.
      Each member will hold office until the close of the next annual meeting of
      shareholders of the Corporation or until the member resigns or is
      replaced, whichever occurs first.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|B) | Each member of the Committee will
      be an independent director as set out in applicable securities laws, rules
      and regulations, and standards of the stock exchanges on which the
      Corporations securities are listed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|C) | All members of the Committee will
      be financially literate, as defined in accordance with applicable
      securities laws, rules and regulations, and standards of the stock
      exchanges on which the Corporations securities are listed.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|D) | At least one member of the
      Committee must be an audit committee "financial expert" as defined by
      applicable applicable securities laws, rules and regulations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|E) | Any member of the Committee who
      serves on more than three public company audit committees must inform the
      Chair of the Board, so that the Board may consider and discuss with such
      member any issues related to his or her effectiveness and time
      commitment.                                                                                                                                                                                                                                                                                                                                                                                                                            

Meetings & Quorum

|A) | The Committee will meet at least
      quarterly and otherwise as necessary. Any member of the Committee may
      request additional meetings.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------

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|B) | The CEO, CFO, Controller and
      internal auditor shall have direct access to the Committee. The CEO, CFO,
      Controller, internal and external auditors will receive notice of every
      meeting of the Committee and may request a meeting of the Committee be
      called by notifying the chair of the Committee.                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|C) | A majority of Committee members
      constitute a quorum necessary for the transaction of business at Committee
      meetings. A quorum once established is maintained even if members of the
      Committee leave the meeting prior to conclusion.                                                                                                                                                                                            
|  
|D) | All directors of the Company,
      including management directors, may attend meetings of the Committee
      provided, however, that no director is entitled to vote at such meetings
      and is not counted as part of the quorum for the Committee if he or she is
      not a member of the Committee.                                                                                                                                     
|  
|E) | As part of every
      regularly-scheduled meeting, the Committee will hold in-camera sessions
      with: (1) the external auditors and the internal auditors; (2) with the
      external auditors only; and (3) of the Committee itself, without
      management or management directors present. The Committee may also hold
      other in-camera sessions with such members of management present as the
      Committee deems appropriate.
|  
|F) | The Corporate Secretary or his or
      her nominee will act as Secretary to the Committee.                                                                                                                                                                                                                                                                                                                                                       
|  
|G) | The Committee will report to the
      Board on its meetings and each member of the Board will have access to the
      minutes of the Committees meetings, regardless of whether the director is
      a member of the Committee.                                                                                                                                                                                                               

Duties and Responsibilities

|A) | Financial Reporting
      Control Systems                                                                                                                                                                                                    
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                              
|   | The Committee is
      responsible for monitoring the quality and integrity of the Corporations
      accounting and financial reporting process through discussions with
      management, the external auditors and the internal auditors.
|  
|   | In discharging this
      responsibility, the Committee will review:                                                                                                                                                                         
|  
|   | (i)                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                              
|   | (ii)                                                                                                                                                                                                                                         
|  
|   | (iii)                                                                                                                                                                                                                                        

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| | (iv)                                                                                                                                                                     | managements report assessing the
      adequacy and effectiveness of the Corporations disclosure controls and
      procedures and systems of internal control; and                          
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                          |                                                                                                                                                                                                
| | (v)                                                                                                                                                                      | the evaluation by either the
      internal or external auditors of managements internal control systems,
      and managements responses to any identified deficiencies or
      weaknesses.
| |                                                                                                                                                                         
| | Prior to public disclosure, the
Committee will review and approve (where authority has been delegated by Board
to the Committee) or recommend to the Board for approval:
| |                                                                                                                                                                         

| | (i)   | the audited annual
      consolidated financial statements and unaudited interim condensed
      consolidated financial statements of the Corporation;                                                                                                                                            
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                   
| | (ii)  | the interim and annual
      managements discussion and analysis of financial condition and results of
      operations (MD&A) of the Corporation; and                                                                                                                                           
| |      
| | (iii) | all other material
      financial public disclosure documents of the Company and those of its
      subsidiaries that are reporting issuers, including prospectuses, material
      press releases with financial results, the Annual Information Form and
      management information circular.

|   |                                                                                                
|-- | -----------------------------------------------------------------------------------------------
|B) | External
      Auditors                                                                        
|  
|   | The external
      auditors will report directly to the Committee and the Committee
      will:
|  
|   | (i)                                                                                            
|   |                                                                                                
|   | (ii)                                                                                           
|  
|   | (iii)                                                                                          
|  
|   | (iv)                                                                                           
|  
|   |                                                                                                
|   |                                                                                                
|   |                                                                                                

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| |        | c)                                                                                                                                                                                                                                                                                                                                                   | any other material written
      communications between the external auditors and management;                                                                                                                                                                                                                                                                                             
| | ------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                           
| | (v)    | review reports of the
      external auditors;                                                                                                                                                                                                                                                                                                      
| |       
| | (vi)   | review the quarterly and
      annual representation letters given by management to the external
      auditors;                                                                                                                                                                                                                                    
| |       
| | (vii)  | at least annually,
      obtain and review a report by the external auditors
  describing:                                                                                                                                                                                                                                                          
| |       
| |        | a)                                                                                                                                                                                                                                                                                                                                                   | the firm's internal
      quality-control procedures;                                                                                                                                                                                                                                                                                                                                     
| |       
| |        | b)                                                                                                                                                                                                                                                                                                                                                   | any material issues raised by the
      most recent internal quality control review, or peer review of the firm,
      or by any inquiry or investigation by governmental, regulatory or
      professional authorities, within the preceding five years, respecting one
      or more independent audits carried out by the firm, and any steps taken to
      deal with such issues; and
| |       
| |        | c)                                                                                                                                                                                                                                                                                                                                                   | all relationships between the
      external auditors and the Company.                                                                                                                                                                                                                                                                                                                    
| |       
| | (viii) | annually assess and
      confirm the independence of the external auditors and require the external
      auditors to deliver an annual report to the Committee regarding its
      independence, and hold discussions with the external auditors as to any
      relationship or services that may impact their objectivity or
      independence;
| |       
| | (ix)   | ensure that the audit
      partners representing the external auditors meet the rotation requirements
      set out by applicable securities laws, rules and regulations, and
      standards of the stock exchanges on which the Corporations securities are
      listed; and                                                                   
| |       
| | (x)    | review and approve
      hiring policies regarding partners, employees and former partners and
      employees of current and former external auditors in accordance with
      applicable securities laws, rules and regulations and the Corporations
      policies.                                                                             

|   |                                                                                                                                                                                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|C) | Monitoring Internal
      Auditors                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                          
|   | The internal auditors
      will report quarterly to the Committee on the results of internal audit
      activities and will also have direct access to the chair of the Committee
      when the internal auditors determine it is necessary. The Committee
      will:
|   |                                                                                                                                                                                                                                                                          
|   | (i)                                                                                                                                                                                                                                                                      
|  
|   | (ii)                                                                                                                                                                                                                                                                     

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|   | (iii)                                                           | oversee the work of the internal
      auditors including reviewing and approving the annual internal audit plan
      and updates thereto; and                                                                                                                                                                                                                                                                                                                                                                
|-- | --------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | (iv)                                                            | review the reports of the
      internal auditors on the status of significant internal audit findings,
      recommendations and managements responses and review any other reports of
      the internal auditors.                                                                                                                                                                                                                                                                                          
|  
|D) | Financial
    Management                                       
|  
|   | The Committee will at least
      annually:                    
|  
|   | (i)                                                             | review with management and
      approve, or make recommendations to the Board to approve, the
      Corporations capital structure strategy; financial policies and
      investment policies, including debt and equity components; current and
      expected financial leverage, interest rate and foreign exchange exposures;
      taking in consideration current and future business needs (including the
      Annual Operating Plan), capital markets and the Corporations credit
      rating; and
|  
|   | (ii)                                                            | review compliance with financial
      policies.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|E) | Risk Management and Internal Controls
      The Committee will:
|  
|   | (i)                                                             | at least annually, review the
      Corporations risk assessment and risk management policies, including the
      Corporations insurance coverage, and managements compliance with
      them;                                                                                                                                                                                                                                                                                                             
|  
|   | (ii)                                                            | review with management, the
      external auditors and legal counsel, as necessary, any litigation, claim
      or other contingency, including any tax assessment, that could have a
      material effect upon the financial position or operating results of the
      Corporation and the appropriateness of the disclosure thereof in the
      documents reviewed by the Committee;                                                                                                                     
|  
|   | (iii)                                                           | review and recommend to the Board
      for approval of the Corporations delegation of financial
    authority;                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | (iv)                                                            | while ensuring confidentiality
      and anonymity, ensure management has established procedures for the
      receipt, retention and treatment of complaints received by the Corporation
      regarding accounting, internal accounting controls or auditing matters or
      employee concerns regarding accounting or auditing matters or breaches of
      the Corporations ethics policies (Whistleblower
Reporting);                                                                                 
|  
|   | (v)                                                             | review quarterly reports on any
      Whistleblower Reporting complaints received by the
  Corporation;                                                                                                                                                                                                                                                                                                                                                                                                        
|  

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|   | (vi)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | at least annually, review
      managements compliance with the Corporations ethics and Whistleblower
      Reporting policies;                                                                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (vii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | at least annually, review the
      Corporations ethics and Whistleblower Reporting policies, and recommend
      changes to the Board for approval;                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (viii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | review managements approach for
      safeguarding corporate assets, data and information systems, the adequacy
      of staffing of key financial functions (including succession plans for the
      Corporations CFO and Controller) and their plans for
    improvements;
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (ix)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | review the appointment of the
      financial senior executives of the Corporation, prior to recommendation by
      the CGCC to the Board;                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (x)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | assist the Board with the
      oversight of the Corporations compliance with applicable legal and
      regulatory requirements; and                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (xi)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | review other risk management
      matters from time to time as the Committee may consider suitable or the
      Board may specifically direct.                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                
|F) | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | A related party transaction is
      defined as a transaction or a series of transactions in which the
      Corporation or any of its subsidiaries is to be a party, which involves an
      amount exceeding U.S. $60,000 in aggregate and in which any of the
      following persons have a direct or indirect material interest:
      ●a director or
      executive officer of the Corporation;
      ●any nominee for
      election as a director of the Corporation;
      ●any security holder
      of the Corporation known by the Corporation to own (of record or
      beneficially) more than 5% of any class of the Corporations voting
      securities; and
      ●any member of the
      immediate family of any of the foregoing persons.
      In carrying out its
      responsibilities in reviewing and approving related party transactions,
      the Committee will:
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | receive details of all related
      party transactions proposed by the Corporation, and actual and potential
      conflicts of interest relating thereto, to verify their propriety and that
      disclosure is appropriate;                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | if a valuation or fairness
      opinion is required by any applicable statutes or regulations, supervise
      the preparation of such valuation or fairness opinion; and                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | if approval of the Board of
      directors is necessary, provide a recommendation to the Board of directors
      with respect to the related party transaction.                                                                                                              

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|G) | Other                    
|-- | -------------------------
|   |                          
|   | The
      Committee will:
|   |                          
|   | (i)                      
|  
|   | (ii)                     
|  
|   | (iii)                    

|Authority
|---------
|         
|A)       
|         
|B)       
|         
|C)       
|         
|D)       

- 60 -

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AUDIT COMMITTEE TIMETABLE

The timetable below generally outlines
the Committees anticipated schedule of activities during the year.

|Audit Committee Timetable
|-------------------------
|Agenda Items             
|A)                       
|                         
|                         
|                         
|                         
|                         
|                         
|                         
|                         
|                         

- 61 -

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|Audit Committee Timetable
|-------------------------
|Agenda Items             
|B)                       
|                         
|                         
|                         
|                         
|                         
|                         
|                         
|                         
|                         
|                         

- 62 -

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|Audit Committee Timetable
|-------------------------
|Agenda Items             
|C)                       
|                         
|                         
|                         
|                         
|D)                       
|                         
|                         
|E)                       
|                         

- 63 -

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|Audit Committee Timetable
|-------------------------
|Agenda Items             
|                         
|                         
|                         
|                         
|                         
|                         
|                         
|                         

- 64 -

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|Audit Committee Timetable
|-------------------------
|Agenda Items             
|F)                       
|                         
|                         
|                         
|G)                       
|                         
|                         
|                         
|                         

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