BALLARD POWER SYSTEMS
INC.

ANNUAL INFORMATION FORM

FEBRUARY 23, 2012

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TABLE OF
CONTENTS

|CORPORATE STRUCTURE                           | 2 
|--------------------------------------------- | --
|Name, Address and
      Incorporation         | 2 
|Intercorporate Relationships                  | 2 
|Recent History                                | 3 
|Ebara Ballard Corporation Transaction         | 3 
|Sale and Lease-back of Head Office            | 4 
|Dantherm Power Transaction                    | 4 
|                                              |   
|OUR BUSINESS                                  | 4 
|Strategy                                      | 4 
|Revenues from Market Segments                 | 5 
|Our
      Markets and Products                | 6 
|Product & Service Overview                    | 6 
|Fuel
      Cell Products                      | 8 
|Motive Power                                  | 8 
|Material Handling                             | 8 
|Buses                                         | 9 
|Stationary Power                              | 10
|Back-up Power                                 | 10
|Distributed Generation                        | 12
|Engineering Services                          | 13
|Contract Automotive                           | 14
|Material Products                             | 14
|Impact
      of Regulations and Public Policy | 15
|United States                                 | 15
|Other Jurisdictions                           | 16
|Research and Product Development              | 17
|Intellectual Property                         | 17
|Manufacturing                                 | 17
|Facilities                                    | 18
|Human
      Resources                         | 19
|SHARE CAPITAL AND MARKET FOR
      SECURITIES | 19
|                                              |   
|DIVIDEND RECORD AND POLICY                    | 20
|                                              |   
|DIRECTORS AND OFFICERS                        | 20
|Board
      of Directors                      | 20
|Corporate Governance                          | 23
|Compliance in Canada and the United States    | 24
|Board Composition                             | 24
|Share Ownership Guidelines                    | 25
|Roles and Responsibilities                    | 25

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|Board Orientation and Education                             | 26
|----------------------------------------------------------- | --
|Shareholder Feedback and Communication                      | 27
|Board and Director Performance Evaluations                  | 27
|Board Committees                                            | 27
|Audit Committee                                             | 27
|Management Development, Nominating & Compensation Committee | 29
|Corporate Governance Committee                              | 30
|Executive Officers                                          | 31
|Shareholdings of Directors and Senior Officers              | 31
|TRANSFER AGENT AND REGISTRAR                                | 32
|                                                            |   
|MATERIAL CONTRACTS                                          | 32
|Dantherm Power Acquisition                                  | 32
|Superior Plus Transaction and Associated Material Contracts | 33
|Indemnification Arrangements                                | 33
|RISK FACTORS                                                | 35
|                                                            |   
|ADDITIONAL INFORMATION                                      | 43
|                                                            |   
|APPENDIX "A" Board of Directors
      Mandate               | 44
|                                                            |   
|APPENDIX "B" Audit Committee
    Mandate                    | 47
|                                                            |   
|Committee Timetable                                         | 59
|Committee Timetable                                         | 59

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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", "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 achieve commercialization of our products on the
timetable we anticipate, or at all; 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; a mass market for our products
may never develop or may take longer to develop than we anticipate; we may not
be able to successfully execute our business plan; we have limited experience
manufacturing fuel cell products on a commercial basis; global economic
conditions are beyond our control and may have an adverse impact on our business
or our key suppliers and/or customers; potential fluctuations in our financial
and business results make forecasting difficult and may restrict our access to
funding for our commercialization plan; we could be adversely affected by risks
associated with acquisitions; we are subject to risks inherent in international
operations; 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 are dependent upon Original Equipment
Manufacturers and Systems Integrators to purchase certain of our products; we
are dependent on third party suppliers for the supply of key materials and
components for our products; 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 depend on our intellectual property, and our
failure to protect that intellectual property could adversely affect our future
growth and success; we could be liable for environmental damages resulting from
our research, development or manufacturing operations; our products use
flammable fuels, which could subject our business to product liability claims;
and the other risks and uncertainties discussed elsewhere in this Annual
Information Form.

***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.***

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CORPORATE STRUCTURE

Name, Address and
Incorporation

Ballard was incorporated on November 12, 2008 under the Canada Business Corporations Act, under the name "7076991 Canada Inc.". Ballard
changed its name to "Ballard Power Systems Inc." on December 31, 2008. 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.

In this Annual
Information Form, references to "Corporation", "Ballard", "BPS", "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.

Intercorporate
Relationships

We have four
principal subsidiaries and affiliates: Ballard Material Products Inc., a
Delaware corporation that develops and manufactures carbon fiber products for
use in the automotive and fuel cell markets; Dantherm Power A/S
("Dantherm Power"), a Denmark-based corporation jointly owned with
Danfoss Ventures A/S and Dantherm A/S that develops clean energy backup power
systems across Europe; AFCC Automotive Fuel Cell Cooperation Corp.
("AFCC"), a British Columbia corporation that develops
fuel cell products for the automotive fuel cell market; and BDF IP Holdings Ltd.
("IP Holdings"), a Canadian corporation that holds intellectual
property assets.

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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
February 23, 2012:



|Notes |  |                                                                                                                                                                                                                                                                             
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)   |  | The
      Corporation holds a 52% interest in Dantherm Power, with the remaining 48%
      held by Dantherm A/S and Danfoss Ventures A/S.                                                                                                                                   
|      |  |                                                                                                                                                                                                                                                                             
|(2)   |  | The
      Corporation holds a 19.9% minority interest in AFCC with 50.1% held by
      Daimler AG and 30% held by Ford Motor Company. Ballards minority interest
      in AFCC is the subject of a forward-sale arrangement with Ford Motor
      Company.                 
|      |  |                                                                                                                                                                                                                                                                             
|(3)   |  | 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.

Recent History

Over the past three years, we have continued to focus on our core fuel
cell business and on markets with near-term commercial prospects. In support of
this strategy, we have focused on bolstering our cash reserves to strengthen our
capability to execute on our growth priorities. On December 21, 2009, we closed
an agreement with a financial institution to monetize our rights under the
purchase agreement with Ford relating to our 19.9% equity interest in AFCC for
initial net proceeds of approximately $34 million and a further contingent
payment of $7.5 million due on or before January 31, 2013 (the contingent
payment was subsequently monetized and extinguished for $5 million in July
2010). On January 18, 2010, we acquired a controlling interest in Dantherm
Power, a Denmark-based corporation, which develops clean energy backup power
through utilization of our hydrogen fuel cell technology.

***Ebara
Ballard Corporation Transaction***

In May 2009, we
decided to discontinue operations of Ebara Ballard Corporation, our joint
venture company with Ebara Corporation, as it became evident that the timeframe
to commercialization for the residential cogeneration market in Japan was longer than anticipated, and due to an increasing
investment requirement for continued system development work. Ebara Ballard
Corporation was dissolved in October 2009.

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Sale and Lease-back of Head Office

In December 2009,
we entered into a sale-and-leaseback agreement pursuant to which Ballard sold
its head office building located in Burnaby, British Columbia in return for net
cash proceeds of approximately $20 million. We also entered into an initial
fifteen-year lease agreement for the same property. The transaction closed on
March 9, 2010.

***Dantherm Power Transaction***

On January 18,
2010, we acquired a controlling interest in Denmark-based Dantherm Power,
partnering with co-investors Danfoss Ventures A/S and Dantherm A/S. In exchange
for an initial investment of DKK 30m (approximately $6m) funded in two tranches
in January and August 2010, Ballard obtained a 52% interest in Dantherm Power.
Dantherm Power develops clean energy backup power systems utilizing Ballard's
hydrogen fuel cell technology, for telecom equipment suppliers.

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
development and commercialization. Our principal business is the design,
development, manufacture, sale and service of fuel cell products for a variety
of applications, focusing on motive power (material handling and buses) and
stationary power (back-up power and distributed generation) markets. We also
provide engineering services 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. As long as fuel is supplied, the fuel cell
produces electricity efficiently and continuously without combustion, with water
and heat as the main by-products when hydrogen is used as the fuel source.
Ballard® fuel cell products feature high fuel efficiency, low
operating temperature, low noise and vibration, compact size, quick response to
changes in electrical demand, modular design and environmental
cleanliness.

Strategy

We provide our
customers the positive economic and environmental benefits unique to fuel cell
power. 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.

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Our focus is on leveraging the inherent reliability and durability
derived in our legacy automotive technology into non-automotive markets where
demand is near term. Our target markets include: motive power (material handling
and buses) and stationary power (back-up power and distributed generation). We
also supply engineering services to a number of customers. We believe these
markets represent a large global opportunity for fuel cell products. We are also
actively considering other key markets for which our products are well suited
and we are confident that there are opportunities for our products in additional
geographic markets as well as product extension opportunities in different
applications.

Revenues from Market
Segments

In 2011, we
operated in three market segments:

| | (a) |  | Fuel Cell Products:
      fuel cell products and services for motive power (material handling and
      bus markets) and stationary power (back-up power and distributed
      generation markets) and engineering services for a variety of fuel cell
      applications;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    
| | (b) |  | Contract Automotive:
      contract manufacturing services provided primarily for Daimler. With the
      completion of the Daimler manufacturing contract, this segment will cease
      to be an operating segment as of the end of 2011; and                           
| |    
| | (c) |  | Material Products:
      carbon fiber products primarily for automotive transmissions and gas
      diffusion layers ("GDLs") for fuel
      cells.                                                                                                                       

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The following chart shows
the percentage of total revenues derived from each segment, and the portion of
revenues from each segment which arises from sales to investees and sales of
products and services to other customers, for the years 2011and
2010:

|                                                                   | 2011  | 2010(1)
|------------------------------------------------------------------ | ----- | -------
|Revenues from Fuel Cell Products                                   |       |        
|Percentage of total
revenues                                       | 61.1% | 52.7%  
|Portion
      representing sales to investees(2)                   | 3.2%  | 2.0%   
|Portion
      representing sales to customers other than investees | 57.9% | 50.7%  
|                                                                   |       |        
|Revenues from Contract Automotive                                  |       |        
|Percentage of total revenues                                       | 12.2% | 15.1%  
|Portion
      representing sales to investees(2)                   | 0.4%  | 1.9%   
|Portion
      representing sales to customers other than investees | 11.8% | 13.2%  
|                                                                   |       |        
|Revenues from Material Products                                    |       |        
|Percentage of total
revenues                                       | 26.6% | 32.2%  
|Portion
      representing sales to investees                      | Nil   | Nil    
|Portion
      representing sales to customers other than investees | 26.6% | 32.2%  

Our Markets and Products

Product & Service Overview

Ballard's product
offering provides for a cost effective and flexible set of fuel cell power
solutions. Ballard provided product in three distinct product classes:

|(1) |  | Fuel cell stacks:
      Ballard provides fuel cell stacks to original equipment manufacturer
      (OEM) customers and system integrators that use
      the stacks to produce fuel cell systems for power solutions. As the stack
      provider, Ballard is the power inside the system.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Fuel cell modules:
      Ballard builds the stacks into self-contained modules that are
      plug-and-play into a larger system. As a fuel cell module provider, we
      make it easier for OEMs and system integrators to create fuel cell
      system.                                 

|(1) |  | 2010 revenues restated to conform with the
      2011 market segment reporting structure.
|--- |  | -----------------------------------------------------------------------------------------
|(2) |  | In the table, "investees" means
    AFCC.                                                

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|(3) |  | Fuel cell
      systems: Ballard also builds complete fuel cell systems that are designed
      to solve certain energy needs of our customers.                                         
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(4) |  | Material
      Products: We design, develop, manufacture, sell and service carbon fiber
      materials that can be used in a variety of fuel cell and non-fuel cell
      applications.
|   
|(5) |  | Engineering Services: We provide engineering services for a variety
      of fuel cell applications.                                                                                    

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®-HD6                                                                          
|                                                                                         
|Stationary
      Power Product Family: FCgen®Fuel Cell Products and System
      Products
|Product Name                                                                             
|FCgen®-9SSL                                                                              
|FCgen®-1020ACS                                                                           
|FCgen®-1300                                                                              
|CLEARgen                                                                                
|DBX 2000 / 5000                                                                          

- 7 -

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|Product
      Family: MaterialProducts       
|---------------------------------------------
|Product Name                                 
|AvCarb gas diffusion layerfuel cell products
|Carbon friction materials                    

Fuel Cell Products

Motive Power

Material Handling

The material
handling market includes target 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 primary
product for the material handling market is the FCvelocity®-9SSL, which is applicable to Class 1, Class 2 and
Class 3 forklift truck solutions. We supply the FCvelocity®-1020ACS, our second-generation air-cooled fuel
cell product, for light-duty material handling applications.

Our principle
customer 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. The addition of the previously unavailable
system for Class 2 lift trucks filled out Plug Power's product portfolio and
enables full facility conversions, which will help advance market
penetration.

In 2010, we
extended our existing supply agreement with Plug Power through 2014. We are the
exclusive supplier of fuel cell stacks for Plug Power's full suite of GenDrive
power units and Plug Power is the exclusive systems integrator for Ballard's
fuel cell stacks in the material handling market in North America. In July 2011,
Ballard received a purchase order from Plug Power for a minimum purchase of
3,250 Ballard fuel cell stacks by the end of 2012, and which also included
requirements for the air-cooled FCvelocity-1020ACS product.

Material handling
shipments to Plug Power in 2011 totalled 1,422 fuel cells which represents a 29%
increase over 2010 shipment levels.

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In
order to support market growth, we continue to pursue cost reduction of our
FCvelocity®-9SSL fuel
cell product. To date we have reduced the cost of this fuel cell product by
roughly 55% since its introduction in 2008. With the recent purchase order
commitment from Plug Power, we anticipate that both the scale and cadence of
associated product shipments will contribute to increased manufacturing
efficiency and further reductions in fuel cell stack costs.

*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 ("ICE") 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
Hydrogenics and Nuvera. We seek to gain a competitive advantage through fuel
cell designs that provide superior performance, efficiency, durability and
cost.

Advanced battery
technology continues to make progress in the material handling market. However,
advanced battery technology 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.

Buses

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

Ballard designs
and manufactures the FCvelocity®-HD6 fuel cell module delivering 75 -
150 kW of power for use in the bus market. Ballard supplies the fuel cell
modules to hybrid drive and coach manufacturer customers that deliver
zero-emission fuel cell-powered buses to transit operators around the world.

At the end of
2011, there were 41 Ballard-powered fuel cell buses operating in nine cities
worldwide: Whistler, BC (20)  the largest fuel cell bus fleet in the world;
Palm Desert, California (2); London (5); Oslo (5); Amsterdam (2); Cologne (2);
Shanghai (3); Mumbai (1); and São Paulo (1). To date, Ballard-powered fuel cell
buses have accumulated more than 200,000 hours of operation, accumulated more
than three million kilometres in service and transported more than seven million
passengers.

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In
2011, we signed a Letter of Intent with the City of São Paulo in support of a 10
to 30 fuel cell bus RFP for that city. This opportunity is subject to final
agreements which are is now being negotiated. Also in 2011 we signed an
equipment supply agreement with Van Hool NV for up to 21 fuel cell modules for
several bus fleet opportunities in Europe: binding commitments are subject to
Van Hool securing agreements relating to these opportunities.

Product cost
reduction efforts for the FCvelocity®-HD6 fuel cell module in 2011
have focused on unit cell design enhancements, including extension of durability
and lifetime. This ongoing effort has been partially funded by a $4.8 million
award received in January 2010 from Sustainable Development Technology Canada
(SDTC) to further develop fuel cell power module
technology for the transit bus market.

*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 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. Recently, hydrogen internal combustion engines have been demonstrated
in transit buses with both conventional and hybrid drive systems. These have not
been widely adopted primarily because of very low fuel efficiency, low power and
low operational reliability.

We believe that
fuel cells are the best zero-emission alternative for transit applications. They
offer much greater fuel efficiency than conventional diesel buses, eliminate
greenhouse gas emissions and eliminate the need for unsightly overhead catenary
wires.

Companies
developing fuel cell systems for transit bus applications include United
Technologies, Hydrogenics and Nedstack. 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 our competitors.

***Stationary Power***

Back-up Power

Our focus in the
back-up power market is on the telecommunications industry, which is currently
dominated by batteries and diesel generators. The back-up power market is
characterized by infrequent power demand, where outages typically occur
 monthly or less frequently and last
less than eight hours; whereas the supplemental power market is characterized by
often daily outages lasting 4-8 hours or more.

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The FCgen®-1020ACS
fuel cell product is our primary stack platform in the back-up power market.
Shipment of fuel cell stacks to backup power market customer in 2011 totalled
1,447 units, down 16% from last year.

Dantherm Power develops clean energy
fuel cell backup power systems for telecom equipment suppliers, for installation
in either indoor or outdoor applications. Dantherm Powers system deployments
include the largest European fuel cell installation for TETRA emergency
networks. In 2010, Dantherm Power launched two new hydrogen-fuelled systems
utilizing Ballard's FCgen®-1020ACS fuel cell
product: the DBX 2000 (2kW) and DBX 5000 (5kW).

In 2011, Ballard supplied a 50 kW
unit to GS Platech for demonstration of waste-to-energy power generation for the
local South Korean electrical grid. Dantherm Power also provided a 150 kW system
to Anglo American Platinum Limited.The demonstration fuel cell system supplied power to the local
electricity grid during the 17th Conference of the Parties (COP17) to the United
Nations Framework Convention on Climate Change, a high-level summit on climate
change held in Durban, South Africa. Following COP17 Anglo American Platinum
plans to redeploy the system to provide power at one of its mining operations in
South Africa.

Our primary indirect channel partner
is IdaTech, with whom we have a supply agreement through 2012. IdaTech supplies
hydrogen and methanol systems to multiple markets. Recent installations have
been in SE Asia, with more than 500 systems deployed by Hutchison in Indonesia,
for example; with continued growth seen in other regions, including Central and
Latin America. In October 2011, the Idatech board recommended delisting from AIM
and privatizing the company to its shareholders, with the objective of greater
flexibility in future financing and strategic partner relationships.

Although Ballard dissolved the Ebara
joint venture company, it will continue to sell its FCgen®-1030v3
fuel cell product for applications such as residential cogeneration, including
supply of this product to Baxi Innotech GmbH ("Baxi Innotech") for the German Callux
Project. On March 11, 2009, Ballard entered into a three-year supply agreement
with Baxi Innotech, the leading European developer and manufacturer of fuel cell
micro combined heat and power units. Under the agreement, Baxi Innotech will
exclusively purchase Ballard fuel cells through to the end of Phase 2 of the
German Callux Project, scheduled to conclude in 2012.

- 11 -

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*Competition*

The back-up power market is
currently dominated by ICEs (primarily diesel gensets) and batteries. Advanced
battery technology continues to make modest progress in the back-up 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.

Companies developing PEM fuel cell
systems for back-up power applications include Hydrogenics, Distributed Energy
Systems and ReliOn. We seek to gain competitive advantage through fuel cell
designs that provide superior performance, efficiency, durability and
cost.

Distributed Generation

Large scale distributed generation
("DG") is
an exploratory new market for Ballard. We first entered into this space in 2009,
with the announcement of the supply agreement to deliver a 1 MW solution
utilizing our motive power fuel cells to FirstEnergy, an Ohio based energy
company, for use in a utility load management demonstration project. The unit
was shipped in the third quarter of 2010, and began operation on November 1,
2010. The unit will be operated for demonstration purposes for the next five
years and will serve as an important reference site in this market.

The second generation DG product
currently under development is the Ballard CLEARgen fuel cell system. The
CLEARgen system is a complete turnkey for zero-emission power. The system can
operate continuously for baseload power generation, or intermittently, providing
peak power during times of high demand. The 1 MW modular units are scalable in
500 kW increments, enabling tailored solutions to meet each customers
needs.

In October 2011, we received a Frost
& Sullivan award for new product innovation for the CLEARgen fuel cell
system (North American Stationary PEM category). The system was praised for
surpassing the competition in terms of fuel cell durability, product cost and
load-following capability, all keys to commercially viable grid-scale solutions.

In 2010, Ballard entered into an
agreement with K2 Pure Solutions ("K2") to deploy a 163 kW CLEARgen fuel
cell system at a K2 bleach plant in Pittsburg, California. The agreement was
subject to the receipt of a routine air permit exemption for the fuel cell
system from the Bay Area Air Quality Management District and a final reservation
notice letter for a grant from California's Self Generation Incentive Program,
both of which were received by February 2011. Installation and commissioning of
the generator is planned for completion in earlyto-mid 2012.

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Also in 2010, Ballard entered into a
contract for the sale of 1.25 MW of our FCgen®-1300 product,
together with engineering support services, to Real Time Engineering PTE Ltd.
("RTE"), a
Singapore-based system integrator. In 2011, 150 FCgen®-1300 stacks
were delivered to RTE, with commissioning of the 1 MW fuel cell generator
targeted for 2012.

In April 2011, Ballard entered into
an agreement with Toyota Motor Sales USA Inc. (Toyota) to deploy a 1 MW CLEARgen
fuel cell system to provide peak electrical power and heat at the Toyota
facility in Torrance, California. The unit is scheduled to be operational in the
first half of 2012.

In February 2011, Ballard was
awarded up to C$7 million in funding by SDTC to extend the operating life and
lower the product cost of FCgen®-1300, the fuel cell stack for the
CLEARgen fuel cell system.

*Competition*

The distributed generation market is
large and varied. As such, depending on the application, diesel gensets or
natural gas gensets would be considered current technologies. Hydrogen fuelled
IC engines, advanced battery technologies and other fuel cell systems are
emerging as competitive technologies. Fuel cell systems offer significant
efficiency and emissions improvements over gensets and hydrogen fuelled IC
engines. Advanced battery technologies cannot meet desired run times without
requiring substantial capital cost and installation space.

Companies developing PEM fuel cell
systems for distributed generation market applications include Nedstack and
Hydrogenics. Companies developing other fuel cell systems for this market are
United Technologies Corporation (phosphoric acid fuel cells), Fuel Cell Energy
(molten carbonate fuel cells) and Bloom Energy (solid oxide fuel cells).

Engineering Services

During the last half of 2011, we
refined our business strategy and established a new engineering services
operating unit in order to leverage our expertise in fuel cell design,
prototyping, manufacturing and servicing. This new operating unit offers a full
suite of fuel cell engineering solutions for a variety of fuel cell applications
and is recorded in our core Fuel Cell Products segment.

- 13 -

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Contract Automotive

In September 2011, the Daimler
manufacturing contract came to completion with the successful delivery of the
final FCvelocity®-1100 units. As a result, Contract Automotive will
cease to be a market segment as of December 2011.

Material Products

We develop, manufacture and sell
carbon-based engineered material products into a variety of markets. These
products are in the form of roll goods as either woven carbon fiber textile
fabrics or as carbon fiber papers.

A major application for carbon fiber
fabrics is the friction surface in torque converters for light vehicle automatic
transmissions. We are a Tier 1 supplier with QS-9000 and TS-16949 quality
certification. In 2010, we negotiated a six-year extension to our exclusive
supply contract for this product by one of our automotive manufacturing
customers, valued at more than $60 million. The use of our product is also
expanding at a second automotive OEM and expanding globally with multiple new
applications in Europe and Asia.

The fuel cell GDL supply business
continues to steadily grow. Our AvCarb GDL materials are available in
continuous rolls, and are designed to enable membrane electrode assemblies
(MEAs) to
be manufactured using high-speed automated assembly techniques. The first two
members of this family of products are the AvCarb P-50 and the AvCarb P-50T.
We supply several key fuel cell industry participants (UTC Power, BASF, 3M and
Johnson Matthey) with GDLs for both PEM and non-PEM platforms, and we use our
GDLs in our own fuel cell products.

Ballard Material Products was
awarded the US Department of Energys 2011 Annual Merit Review Award,
recognizing our success in reducing the manufacturing cost of the GDL material.

We also provide material supply
chain management services to our customers, where we manage several
subcontractor suppliers.

*Competition*

Ballard competes in a market where
the friction characteristics and durability of carbon materials make them
desirable for high performance applications in the automotive industry.
Competitors for friction products include the SGL Group, Toray and Toho Tenax.
Competitors for GDL products include the SGL Group, Mitsubishi and Toray.

- 14 -

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Impact of Regulations and Public
Policy

***United States***

At the federal level, the Emergency
Economic Stabilization Act of 2008 includes tax incentives to help minimize the
cost of hydrogen and fuel cell projects. It offers an investment tax credit of
30% for qualified fuel cell property or $3,000/kW of the fuel cell nameplate
capacity (i.e., expected system output), whichever is less. The equipment must
be installed by Dec. 31, 2016. In addition, it features a credit of 10% for
combined-heat-and-power-system property.

The American Recovery and
Reinvestment Act of 2009 expands incentives to encourage the installation of
fuel cells and hydrogen fueling infrastructure. Incentives include:

- A fueling facility tax credit, which increases the
  dollar cap of the 30% hydrogen fueling infrastructure tax credit from $30,000
  to $200,000.
- Grants for fuel cell power systems (in lieu of tax
  credits), which allow facilities with insufficient tax liabilities to apply
  for grants instead of claiming investment or production tax credits. Only
  entities that pay taxes are eligible.To be eligible, the fuel cell system must have
  been placed in service in 2009  2011, or placed in service after 2011 but
  only if construction began during 2009  2011.
- A manufacturing credit, which creates a 30% credit
  for investment in property used for manufacturing fuel cells and other
  technologies.
- A residential energy-efficiency credit, which
  raises the investment-tax-credit dollar cap for residential fuel cells in
  joint occupancy dwellings to $3,334/kW.

At the state level, the California
Self-Generation Incentive Program, which is funded by ratepayers and
administered by utilities, provides incentives for fuel cell generation. In 2011
the incentive was $2250/kW for power plants that operate on hydrogen from
non-renewable resources and $4250/kW for those that operate on hydrogen from
renewable resources. The program is funded annually and guidelines are published
in a yearly handbook.

The availability of these incentives
is expected to help drive demand for fuel cell products.

- 15 -

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***Other
Jurisdictions***

In Canada, SDTC operates the $590
million SD Tech Fund which supports projects that address climate change, air
quality, clean water, and clean soil. The SD Tech Fund provides financial
contributions to projects aimed at supporting the late-stage development and
pre-commercial demonstration of clean technology solutions. SDTC does not
require any repayments of the financial contributions it provides to funded
projects through the SD Tech Fund. As noted elsewhere, SDTC agreed to provide
Ballard with up to $11.8 million for funded projects that will extend through
2013.

As of 2011, feed-in tariff policies
have been enacted in 87 jurisdictions around the world to encourage the adoption
of renewable energy sources. Under a feed-in tariff, utilities are obligated to
buy electricity from all eligible participants at rates based on the cost of
renewable energy generation, which enables a diversity of projects to be
developed at a reasonable return on investment. The rates are typically designed
to ratchet downward over time to track technology improvements and overall cost
reductions. Feed-in tariff programs also typically offer long-term (1525 year)
guaranteed purchase contracts for the electricity generated from such projects.
Programs that support energy generation from hydrogen sources are expected to
help drive demand for fuel cell products.

Another policy that is emerging in
importance is the quota or renewable portfolio standard (RPS). A quota/RPS is a
government-mandated obligation on a utility company, group of companies, or
consumers to provide or use a predetermined amount of renewable electricity. By
early 2011, quota/RPS policies existed in 10 countries at the national level and
in at least 50 other jurisdictions at the state, provincial, or regional level.

Beginning in 2012, the Ministry of
Commerce, Industry and Energy (MOCIE) in Korea will introduce an RPS as an
alternative plan to the FIT. The program will mandate that 14 utilities generate
4% of electricity from renewables in 2015, increasing to 10% by 2020. Fuel cell
projects receive the highest level of support under the Korea RPS system and
this is expected to help drive demand for our products.

In Europe, the Fuel Cells and
Hydrogen Joint Undertaking (FCH
JU)  part of the Joint Technology
Initiative - is a public private partnership supporting research, technological
development and demonstration activities in fuel cell and hydrogen energy
technologies that provides subsidies for eligible projects through a cost share
mechanism. FCH JU has a total budget amounting to nearly 1bn EUR to be invested
by 2013 for projects through 2017. The fifth annual call for proposals has been
published with a due date of January 2012.

- 16 -

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Research and Product Development

Ballards research activities are
primarily focused on the MEA and its sub-components, aimed at improving the
overall cost, durability, and reliability of our products. Material development
of 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, further cost reduction will be enabled through
improved durability and reliability growth.

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 25 years of research and product development.

As of January 31, 2012, Ballard owns
or controls through IP Holdings, patents approximately as follows: 79 United
States granted patents, 69 non-United States granted patents, 8 United States
published patent applications and 51 published non-United States patent
applications. Our patents will expire between 2012 and 2031.

We hold licence rights to additional
intellectual property from a number of third parties. These licences include
non-exclusive, royalty-free access to all of the intellectual property rights
held by NuCellSys GmbH ("NuCellSys"), 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),
including any intellectual property rights developed by them while we continue
to be a shareholder of AFCC. As of January 31, 2012, of the approximately 2,000
patents and patent applications that were included in these licenses,
approximately 700 of them are currently granted or pending.

Manufacturing

Our fuel cell manufacturing facility
is located in Burnaby, British Columbia and is designed to provide the
manufacturing capacity necessary to meet expected product demand through the
initial market introduction and early adoption phase. As product demand grows,
we will increase capacity either by further investment in automation to improve
throughput, while decreasing both costs and footprint, or, in outsourcing
selective manufacturing processes.

- 17 -

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Many of the components and materials
we use to manufacture our fuel cell products are unique and have been developed
in conjunction with suppliers and our R&D and Engineering Teams. Strategic
relationships have been developed with these key suppliers to ensure security of
supply, protection of our intellectual property, and adherence to our strict
quality and reliability standards.

In Burnaby, we have an Integrated
Management System registered to ISO 9001 and TS16949 standards, as well as
robust internal practices in the areas of environment, health and safety. We
also strive for continuous manufacturing improvement through practices such as
Lean Manufacturing, 5-S and advocacy of Six Sigma.

Our facility in Lowell,
Massachusetts, produces friction products for the automotive industry as well as
GDL product for both ourselves and others in the fuel cell market. As a Tier 1
automotive supplier, this facility is both ISO 9001 and QS 9000 registered and
specializes in continuous roll-to-roll manufacturing processes.

Facilities

We currently have the following
principal facilities: (a) a leased 116,797 square foot (10,850 square meter)
facility in Burnaby, British Columbia that houses our corporate headquarters and
our fuel cell development, manufacturing and testing activities; (b) a leased
112,000 square foot (10,398 square meter) facility in Burnaby, British Columbia
that houses some of our manufacturing facilities and manufacturing facilities
that we subleased to Mercedes-Benz Canada and AFCC; (c) a 137,000 square foot
(12,728 square meter) facility in Lowell, Massachusetts, owned by us, that is
used for the development and manufacture of carbon fiber products; and (d) a
leased 4100 square foot (381.5 square meter) facility in Hobro, Denmark.

We are committed to developing and
manufacturing products, and operating all of our facilities, in full compliance
with all applicable local, regional, national and international environmental,
health and safety regulatory standards. Our commitment is reflected in our
corporate "Quality, Safety and Environmental Policy and Guiding Principles", and
our underlying programs and initiatives. We have completed a detailed
environmental assessment of our operations in Burnaby. In turn, we developed
policies, procedures, and work instructions to manage environmental matters
including air, water, and waste management and reduction, transportation of
dangerous goods, environmental impact and hazard assessment, and internal and
external recycling programs.

- 18 -

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Human Resources

As of December 31, 2011, we had
approximately 440 employees, 360 in Canada, 45 in the United States and 35 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 February 23, 2012, our issued share capital consisted of
84,550,524 common shares. Our common shares are listed and trade on the Toronto
Stock Exchange ("TSX") under the symbol "BLD" and on the National Association of
Securities Dealers Automated Quotation Global Market ("NASDAQ") under the symbol
"BLDP".

The following table shows the
monthly trading activity for our common shares on the TSX and NASDAQ during
2011:

|         | TSX                     | NASDAQ                      
|-------- | ----------------------- | ----------------------------
|         | Price
      Range(CDN$) | Average
      DailyVolume(#)
|January  | $1.58-1.66              | 86,447                      
|February | $1.67-2.13              | 339,356                     
|March    | $1.95-2.36              | 192,035                     
|April    | $1.96-2.35              | 100,006                     
|May      | $1.56-2.00              | 71,789                      
|June     | $1.50-1.72              | 45,308                      
|July     | $1.42-1.56              | 33,911                      

- 19 -

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|          | TSX                     | NASDAQ                      
|--------- | ----------------------- | ----------------------------
|          | Price
      Range(CDN$) | Average
      DailyVolume(#)
|August    | $1.24-1.47              | 48,064                      
|September | $1.25-1.50              | 37,170                      
|October   | $1.18-1.48              | 31,862                      
|November  | $1.25-1.49              | 25,735                      
|December  | $1.10-1.31              | 38,809                      

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.

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 February 23, 2012: 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.

- 20 -

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|Name,Province/Stateand
      Country ofResidence(1) |  | Principal
      Occupation(1)   |  | DirectorSince |  | SharesBeneficiallyOwned
      orControlled orDirected(1)(#/% of
    Class) |  | DeferredShare
      UnitsOwned orControlled(2)(#/% of
    Class)
|--------------------------------------------------- |  | ------------------------------- |  | ------------- |  | -------------------------------------------------------------------------- |  | ----------------------------------------------------------------
|Ian
      A. Bourne                                 |  | Corporate Director and          |  | 2003          |  | 26,824/0.032%                                                              |  | 77,707/26.72%                                                   
|Alberta, Canada                                     |  | Chair of the Board of           |  |               |  |                                                                            |  |                                                                 
|                                                    |  | Ballard since May 2006.         |  |               |  |                                                                            |  |                                                                 
|                                                    |  | Formerly Executive 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.                   |  |               |  |                                                                            |  |                                                                 
|                                                   
|Edwin J. Kilroy                                     |  | Corporate Director of           |  | 2002          |  | 2,752/0.003%                                                               |  | 42,844/14.73%                                                   
|Ontario, Canada                                     |  | Ballard. Formerly Chief         |  |               |  |                                                                            |  |                                                                 
|                                                    |  | Executive Officer of Symcor     |  |               |  |                                                                            |  |                                                                 
|                                                    |  | Inc. (business process          |  |               |  |                                                                            |  |                                                                 
|                                                    |  | outsourcing services) from      |  |               |  |                                                                            |  |                                                                 
|                                                    |  | January 2005 to November        |  |               |  |                                                                            |  |                                                                 
|                                                    |  | 2010.                           |  |               |  |                                                                            |  |                                                                 
|                                                   
|Dr.
      Chong Sup                                 |  | Corporate Director of           |  | 2007          |  | 17,091/0.020%                                                              |  | 0/0%                                                            
|(C.S.) Park                                         |  | Ballard. Formerly               |  |               |  |                                                                            |  |                                                                 
|California,                                         |  | Chairman of the Board and       |  |               |  |                                                                            |  |                                                                 
|U.S.A.                                              |  | Chief Executive Officer of      |  |               |  |                                                                            |  |                                                                 
|                                                    |  | Maxtor Corporation (storage     |  |               |  |                                                                            |  |                                                                 
|                                                    |  | solutions and hard disk drives) |  |               |  |                                                                            |  |                                                                 
|                                                    |  | from November 2004 to           |  |               |  |                                                                            |  |                                                                 
|                                                    |  | May
      2006.                 |  |               |  |                                                                            |  |                                                                 

- 21 -

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|Name,Province/Stateand Country
      ofResidence(1) |  | Principal Occupation(1)                                                                                                                                                                                                                                                                                                             |  | DirectorSince |  | SharesBeneficiallyOwned orControlled
      orDirected(1)(#/% of Class) |  | DeferredShare UnitsOwned
      orControlled(2)(#/% of Class)
|--------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ---------------------------------------------------------------------- |  | ------------------------------------------------------------
|John
      W.SheridanBritishColumbia,Canada         |  | President and
      ChiefExecutive Officer of Ballardsince October 2005.                                                                                                                                                                                                                                                            |  | 2001          |  | 472,430/0.56%                                                          |  | 57,943/19.93%                                               
|                                                   
|David J.
      SmithBritishColumbia,Canada          |  | Corporate Director
      ofBallard. Member, BritishColumbia SecuritiesCommission since
      July2006. Counsel with LawsonLundell LLP (*law firm*)
      fromMay 2005 to April 2006.                                                                                                                                                |  | 2006          |  | 8,411/0.010%                                                           |  | 14,841/5.10%                                                
|                                                   
|David
      B.SutcliffeBritishColumbia,Canada       |  | Corporate Director
      ofBallard. Corporate Directorof Sierra Wireless, Inc.                                                                                                                                                                                                                                                      |  | 2005          |  | 3,600/0.004%                                                           |  | 25,528/8.78%                                                
|                                                   
|Mark A. SuwynFlorida, U.S.A.                        |  | Corporate Director
      ofBallard. Formerly ExecutiveChairman of the Board ofNewPage
      Corporation(*coated paper*), from March2009 to June 2010;
      ActingChief Executive Officerfrom March 2009 to January2010;
      and Chief ExecutiveOfficer and Chairman ofthe Board from April
      2006and May 2005, respectively. |  | 2003          |  | 7,237/0.009%                                                           |  | 35,019/12.04%                                               

- 22 -

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|Name,Province/Stateand
      Country ofResidence(1) |  | Principal
      Occupation(1)                                                                                                                                                                                 |  | DirectorSince |  | SharesBeneficiallyOwned
      orControlled orDirected(1)(#/% of
    Class) |  | DeferredShare
      UnitsOwned orControlled(2)(#/% of
    Class)
|--------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | -------------------------------------------------------------------------- |  | ----------------------------------------------------------------
|Douglas
      W.G.WhiteheadBritishColumbia,Canada   |  | Corporate Director ofBallard. Chairman ofFinning
      International Inc.(*heavy equipment reseller*).Formerly
      President andChief Executive Officer ofFinning International
      from1999 to May 2008. |  | 1998          |  | 5,383/0.006%                                                               |  | 36,916/12.69%                                                   

_________________________

|Notes
|-----
|(1)  
|     
|(2)  

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.

Corporate Governance

Our Board and senior management
consider good corporate governance to be central to our effective and efficient
operation. We monitor corporate governance initiatives as they develop and
benchmark industry practices to ensure that we are in compliance with corporate
governance rules.

Our corporate governance practices
are reflected in our "Corporate Governance Guidelines", which provide for
director qualification standards, director responsibilities, the form and amount
of director compensation, director orientation and continuing education,
management succession planning and performance evaluation of the Board. A copy
of the Corporate Governance Guidelines can be found on our website.

We also reviewed our internal
control and disclosure procedures, and are satisfied that they are sufficient to
enable our Chief Executive Officer and Chief Financial Officer to certify our
interim and annual reports filed with Canadian securities authorities, and to certify our annual
reports filed with or submitted to the United States Securities and Exchange
Commission ("SEC").

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Compliance in Canada and the United States

We believe that we comply with all applicable Canadian securities
administrators (CSA) and NASDAQ corporate governance rules and guidelines. The
CSA requires that listed corporations subject toNational Instrument 58-101 - Disclosure of Corporate Governance
Practices("NI 58-101") disclose their policies
respecting corporate governance. We comply with NI 58-101, which addresses
matters such as the constitution and independence of corporate boards, the
functions to be performed by boards and their committees, and the effectiveness
and education of board members. We are exempt from the NASDAQ corporate
governance rule requiring that each NASDAQ quoted company has in place a minimum
quorum requirement for shareholder meetings of 33 1/3% of the outstanding shares
of the companys voting common stock. Our by-laws currently provide that a
quorum is met if holders of at least five percent of the votes eligible to be
cast at a shareholders meeting are present or represented by proxy at the
meeting.

***Board Composition***

All of our directors are independent except for John Sheridan, our
President and Chief Executive Officer. "Independence" is judged in accordance
with the provisions of the United StatesSarbanes-Oxley Act of 2002("Sarbanes-Oxley"), and as determined by the CSA and the NASDAQ. We conduct an annual
review of the other corporate boards on which our directors sit, and have
determined that currently there are no board interlocks with respect to our
directors. The Board has also established a guideline for the maximum number of
corporate boards on which a director should sit. This guideline has been set at
five corporate boards (not including non-profit boards).

The Board established director resignation guidelines, which set out the
circumstances under which a director would be compelled to offer a resignation
or be asked to resign, including a majority voting policy. This policy requires
that any nominee for director who receives a greater number of votes "withheld"
than "for" his or her election shall tender his or her resignation to the Board
following our annual shareholders meeting, to take effect immediately upon
acceptance by the Board. Upon receipt of such conditional resignation, the
Corporate Governance Committee will consider the matter and, as soon as
possible, make a recommendation to the full Board regarding whether or not such
resignation should be accepted. After considering the recommendation of the
Corporate Governance Committee, the Board will decide whether or not to accept
the tendered resignation and will, not later than 90 days after the annual
shareholders meeting, issue a press release which either confirms that they
have accepted the resignation or provides an explanation for why they have
refused to accept the resignation. The director tendering his or her resignation
will not participate in any meeting of the Board or the Corporate Governance Committee. Subject to any restrictions or requirements contained in applicable corporate law or Ballards constating documents, the Board may: (a) leave a resulting vacancy unfilled until the next annual shareholders meeting; (b) appoint a replacement director whom the Board considers merits the confidence of the shareholders; or (c) call a special meeting of shareholders to elect a replacement director nominated by management. The policy does not apply in respect of any contested shareholders meeting, which is any meeting of shareholders where the number of nominees for director is greater than the number of directors to be elected.

- 24 -

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Share
Ownership Guidelines

We have minimum share ownership guidelines that apply to our independent
directors. The guidelines were revised by the board of directors effective
September 21, 2011.

All independent directors must hold the number of Ballard common shares
having a value equivalent to three times the directors annual retainer.
Directors may apply DSUs they have received as payment for all or part of their
annual retainer towards the minimum share ownership requirements.

The value of shares held by directors will be measured on or about
September 1st of each year based on the purchase price actually paid
by the director for such shares, or the value of DSUs or shares received by the
director when issued to him or her by the Corporation, as applicable.

Directors that were members of the Board at the time the guidelines were
adopted in September 2011 have until September 2013 to comply with this
requirement. Directors elected subsequently have five years from the date that
they are first elected to the Board to comply. The Chair of the Board has five
years from his original appointment as Chair in February 2006 to satisfy the
minimum share ownership requirements for the Chair. Any director who fails to
comply with the share ownership requirement may not stand for re-election.
Currently, all directors have met or are on track to achieve these guidelines.

***Roles and Responsibilities***

The Board operates under a formal mandate (a copy of which is attached as
Appendix "A" and is posted on our website), which sets out its duties and
responsibilities, including matters such as corporate strategy, fiscal
management and reporting, selection of management, legal and regulatory
compliance, risk management, external communications and performance evaluation.
The Board has also established terms of reference and corporate governance
guidelines for individual directors (copies of which are also posted on our
website), which set out the directors individual responsibilities and duties. Terms of reference are also established for the Board chair and the CEO. These terms of reference and guidelines serve as a code of conduct with which each director is expected to comply, and address matters such as conflicts of interest, the duties and standard of care of directors, the level of availability expected of directors, requirements for maximizing the effectiveness of Board and committee meetings, and considerations that directors are to keep in mind in order to make effective and informed decisions.

- 25 -

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In addition,
we have a Board-approved "Code of Ethics", which applies to all members of the
Board, as well as our officers and employees. A copy of the Code of Ethics can
be found on our website. This document is reviewed annually and updated or
revised as necessary. Annually, all employees in Sales & Marketing, Finance
& Administration, Supply Chain, Customer Service and Quality, and all
management employees and officers, are required to formally acknowledge they
have read, reviewed and comply with the Code of Ethics. A compliance report is
then presented to the Audit Committee and Board.

The Chair of the Board is responsible for ensuring the appropriate
organization, content and flow of information to the Board and that all concerns
of the directors are addressed. The Chair of the Board reviews and sets the
agenda for each Board meeting. The Chair of the Board is also responsible for
organizing and setting the frequency of Board meetings and ensuring that Board
meetings are conducted efficiently. The Chair of the Board is an independent
director.

Each year, the Board identifies a list of focus priorities for the Board
during the year. The Corporate Governance Committee regularly monitors the
Boards progress against these priorities throughout the year.

***Board Orientation and Education***

We have established a formal director orientation and ongoing education
program. Upon joining our Board, each director receives an orientation regarding
our business. Such orientation consists of site visits to all of our
manufacturing facilities, presentations regarding our business, technology and
products, and a manual that contains various reference documents and
information. Continuing education is offered by way of ongoing circulation of
informative materials aimed at topical subject matters and management
presentations at Board meetings, as well as guest speakers who are invited to
speak to our Board on various topics. In the past, we have invited guest
speakers to speak to our Board about the fuel cell industry, government
regulation, corporate governance and risk management, and internal management
representatives to speak about various issues relating to our technology and
business. The educational presentations that are made by internal management
provide an opportunity for Board members to meet and interact with members of
our management team.

- 26 -

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Shareholder Feedback and Communication

We have set up an e-mail process for shareholders to communicate with the
Board, through the Chair of the Board. Shareholders who wish to send a message
to the Chair of the Board can find the details of this process on our website.
In addition, a summary of shareholder feedback that is received by us is
provided to the Board through a semi-annual report.

***Board and Director Performance Evaluations***

Each year, the Board conducts an evaluation and review of its performance
during the past year. The evaluation is conducted through a process determined
from time to time by the Corporate Governance Committee which elicits responses
from individual directors on a confidential basis regarding the Board and
individual directors. The process may include the completion of a questionnaire
by all of the directors as well as individual director self-evaluations and peer
evaluations. The Corporate Governance Committee presents the summary results to
the full Board, which then, based on the results of the evaluation, determines
appropriate changes to improve board effectiveness.

Board Committees

Our Board has established three standing committees: the Audit Committee;
the Management Development, Nominating & Compensation Committee; and the
Corporate Governance Committee. Each of these committees has been delegated
certain responsibilities, performs certain advisory functions, and either makes
certain decisions or makes recommendations to the full Board. Each of the
committee chairs reports on the activities of the committee to the Board
following each committee meeting. None of the members of these committees are
current or former officers or employees of ours, or any of our subsidiaries.

***Audit Committee***

The Audit Committee is constituted in accordance with SEC rules,
applicable securities laws and applicable NASDAQ rules, and assists the Board in
fulfilling its responsibilities by reviewing financial information, the systems
of corporate controls and the audit process.

The Audit Committee is responsible for overseeing the audit process and
the preparation of our financial statements, ensuring that our financial
statements are fairly presented in accordance with International Financial
Reporting Standards (IFRS), approving our quarterly financial statements, and
reviewing and recommending to the Board our year-end financial statements and
all financial disclosure contained in our public documents. The Audit Committee
meets with our financial officers and our internal and external auditors to
review matters affecting financial reporting, the system of internal accounting and financial disclosure controls and procedures, and the audit procedures and audit plans. The Audit Committee reviews our significant financial risks and the appointment of senior financial executives, and annually reviews our insurance coverage, tax loss carry forwards, pension and health care liabilities, and off-balance sheet transactions. The Audit Committee has at least one member, Ian A. Bourne, who qualifies as an audit committee financial expert under applicable securities regulations. All of the members of the Audit Committee are independent directors and are financially literate.

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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 in 2011 and 2010 for audit and non-audit related
work, all of which were approved by the Audit Committee:

Type of Audit
      Fees
    
    2011
    
    2010Audit Fees
    
    $351,078
    
    $353,302Audit-Related Fees
    
    Nil
    
    NilTax Fees (1)
    
    Nil
    
    $19,265All Other Fees
    
    Nil
    
    Nil


|Notes
|-----
|(1)  

In addition, the Audit Committee is mandated to review all financial
disclosure contained in prospectuses, annual reports, annual information forms,
management proxy circulars and other similar documents. The Audit Committee is
also responsible for ensuring that the internal audit function is being
effectively carried out. The Audit Committee reviews and approves, in advance,
related party transactions on a case-by-case basis.

As of February 23, 2012, the committee was composed of Ian A. Bourne,
Edwin J. Kilroy (Chair), Mark A. Suwyn and Douglas W.G. Whitehead, all of whom
are independent of management. In addition to each committee members general
business experience, the education and experience of each member that is
relevant to the performance of his or her responsibilities as a member of the Audit Committee is set forth below.

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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.

Mr. Kilroy was the Chief Executive Officer of Symcor Inc. from January
2005 to November 2010. Prior to that, Mr. Kilroy was the Chief Executive Officer
of IBM Canada Ltd. from April 2001 to January 2005.

Mr. Suwyn held various board and executive positions at NewPage
Corporation from May 2005 to June 2010. From January 1996 to October 2004, Mr.
Suwyn was also the Chairman of the Board and the Chief Executive Officer of
Louisiana-Pacific Corporation.

Mr. Whitehead is the Chairman of Finning International Inc., and was
elected to Finning Internationals board of directors on April 23, 1999. Mr.
Whitehead was President and Chief Executive Officer of Finning International
from 1999 to May 2008.

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 "B" and posted on our
website. This mandate is reviewed annually and the Audit Committees performance
is assessed annually through a process overseen by the Corporate Governance
Committee.

***Management Development, Nominating & Compensation
Committee***

The Management Development, Nominating & Compensation Committee is
responsible for considering and authorizing the terms of employment and
compensation of executive officers and providing advice on compensation
structures in the various jurisdictions in which we operate. In addition to
approving the compensation of our executive officers, the committee also
regularly reviews and sets the minimum share ownership requirement for executive
officers. The committee also provides advice on our organizational structure,
reviews all distributions under our equity-based compensation plans, and reviews
and approves the design and structure of, and any amendments to, those plans.
The committee seeks out and recommends nominees for election to the Board,
annually reviews the Board succession plan and annually reviews the composition
of director talents and skills against Board requirements to identify any gaps.

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The committee
ensures appropriate senior management succession planning, recruitment,
development, training and evaluation. In particular, the committee annually
reviews the performance objectives of our Chief Executive Officer and is
responsible for conducting his annual performance evaluation. Any compensation
consultants engaged by us, at the direction of the committee, report directly to
the committee, and the committee has the authority to appoint such consultants,
determine their level of remuneration, and oversee and terminate their services.
In 2011, the committee directly retained Towers Watson to provide independent
compensation analysis and advice specifically related to Ballard executive
compensation items.

As of February 23, 2012, the committee was composed of Ian A. Bourne, Dr.
C.S. Park, David B. Sutcliffe (Chair) and Mark Suwyn, all of whom are
independent of management.

A copy of the Management Development, Nominating & Compensation
Committees mandate is posted on our website. The mandate is reviewed annually
and the committees performance is assessed annually through a process overseen
by the Corporate Governance Committee.

***Corporate Governance Committee***

The Corporate Governance Committee is responsible for recommending to the
Board the size of the Board, monitoring corporate governance, including the
formation and membership of committees of the Board, conducting succession
planning for the Chair of the Board and determining director compensation. The
committee regularly reviews the level of director compensation and approves the
design and structure of, and any amendments to, our director compensation plans.
Any compensation consultants engaged by us, at the direction of the committee,
report directly to the committee, and the committee has the authority to appoint
such consultants, determine their level of remuneration, and oversee and
terminate their services. In 2011, the committee directly retained Towers Watson
to provide independent compensation analysis and advice specifically related to
Ballard director compensation items. The committee is responsible for ensuring a
formal process exists to evaluate the performance of the Board, Board
committees, individual directors, and the Chair of the Board, and ensuring that
appropriate actions are taken, based on the results of the evaluation, to
improve the effectiveness of the Board.

The Corporate Governance Committee makes recommendations to the Board to
enable the Board to comply with best corporate governance practices in Canada
and the United States. The committee is also responsible for maintaining an
ongoing education program for Board members.

As of February 23, 2012, the committee was composed of Ian A. Bourne, Dr.
C.S. Park and David J. Smith (Chair), all of whom are independent of
management.

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A copy of the Corporate Governance Committees mandate is posted on our
website. The mandate is reviewed annually and the committees performance is
assessed annually through a process overseen by the Board.

Executive
Officers

As of February 23, 2012, we had five executive 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                                                                                                           
|------------------------------------------------- |  | ------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------
|John W. SheridanBritish Columbia, Canada          |  | President and ChiefExecutive Officer             |  | Executive of Ballard.                                                                                                          
|Tony GuglielminBritish
      Columbia, Canada     |  | Vice President and
      ChiefFinancial Officer  |  | Executive of
      Ballard.Formerly SVP Finance andChief Financial Officer
      ofCanada Line Rapid TransitInc. (2005 to 2009)
|                                                  |  |                                                  |  |                                                                                                                                
|Paul CassBritish
      Columbia, Canada           |  | Vice President,
      Operations                 |  | Executive of
      Ballard.Formerly Director,Operations of Ballard.                                                            
|                                                  |  |                                                  |  |                                                                                                                                
|Michael
      GoldsteinBritish Columbia, Canada   |  | Vice President and
      ChiefCommercial Officer |  | Executive of
      Ballard.Formerly President andChief Executive Officer
      ofActuality Systems (2006 to2009).              
|                                                  |  |                                                  |  |                                                                                                                                
|Christopher J.
      GuzyBritish Columbia, Canada |  | Vice President and
      ChiefTechnical Officer  |  | Executive of
      Ballard.                                                                                                    

Shareholdings of Directors and
Senior Officers

As of February 23, 2012, our directors and executive officers, as a
group, beneficially owned, or controlled or directed, directly or indirectly,
788,079 of our common shares, being 0.93% of our issued and outstanding common
shares, and 290,798 DSUs.

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TRANSFER AGENT AND REGISTRAR

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

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.

Dantherm Power Acquisition

On January 18, 2010, Ballard acquired a controlling interest in
Denmark-based Dantherm Power A/S ("Dantherm
Power"), partnering with co-investors Danfoss
Ventures A/S ("Danfoss") and Dantherm A/S ("Dantherm"). Pursuant to a share
subscription agreement among Ballard, Dantherm, Danfoss and Dantherm Power (the
"Subscription Agreement"), Ballard obtained an initial 45% interest in Dantherm Power
including the right to nominate a majority of the members of the Board of
Directors. In return, Ballard invested DKK 15m (approximately $3m) and
contributed knowledge and intellectual property related to core fuel cell
technology. On September 1, 2010, Ballard invested a further DKK 15m
(approximately $3m) pursuant to the Subscription Agreement, increasing its
interest in Dantherm Power to 52%.

As part of the acquisition, Ballard and Dantherm Power entered into a
technology transfer agreement (the "Technology
Transfer and License Agreement", dated
January 18, 2010). Under the agreement, Dantherm Power transferred all
Intellectual Property Rights relating to fuel cells or fuel cell systems.
Ballard agreed to transfer certain Know-How to Dantherm Power and granted a
non-exclusive, royalty-free license to Ballard Intellectual Property Rights for
use in Stationary Power Systems.

Dantherm Power develops clean energy backup power systems, utilizing
Ballards fuel cell technology, for telecom equipment suppliers including
Motorola and Ericsson. Dantherm Power will continue its current commercial
initiatives, including sales of hydrogen-based products incorporating Ballards
fuel cell stack. In addition to its cash investment, Dantherm agreed to continue
to provide operational support and collaborative sales and marketing activities
through its worldwide sales organization. Danfoss invested cash, proprietary
technology, expertise, as well as operational and commercial assistance through
its network of 93 sites in 25 countries. Executives from the three companies
formed a new board of directors for Dantherm Power.

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Ballard filed
a Business Acquisition Report in respect of the Dantherm Power transaction on
SEDAR on April 16, 2010.

Superior Plus Transaction and
Associated Material Contracts

We entered into an arrangement agreement dated October 30, 2008 with
Superior Plus (the "Arrangement
Agreement"), which specified the parties
respective obligations with respect to the Superior Plus Transaction. That
transaction was implemented by way of a statutory plan of arrangement under
section 192 of theCanada Business
Corporations Act, whereby Ballard caused its
entire business and operations, including all assets and liabilities, to be
transferred to a new corporate entity, such that the new corporate entity now
has all of the same assets, liabilities, directors, management and employees as
Ballard formerly had under its old corporate entity, except for its tax
attributes. Under the arrangement, Ballard shareholders exchanged their common
shares in the capital of the old corporate entity for common shares in the
capital of the new corporate entity on a one-for-one basis, and Superior Plus
obtained 100% of the common shares in the capital of Ballards old corporate
entity. Ballard received a cash payment of approximately C$46.3 million (C$41
million net of expenses) in consideration for allowing Superior Plus to use its
old corporate entity as the vehicle to complete its conversion from an income
trust to a corporation. Following completion of the Superior Plus Transaction,
Ballard continued to carry on its business operations as a public entity, and
retained all the rights it previously held to related intellectual property.

The purpose of the Superior Plus Transaction was to obtain non-dilutive
financing for Ballard. In addition to the increase in both Ballards cash
reserves and shareholders equity of approximately C$41 million, the Superior
Plus Transaction allowed Ballard to step up the Canadian tax basis in its
assets, which may be applied towards sheltering future taxable income.

***Indemnification Arrangements***

We entered into an indemnification agreement with Superior Plus dated
December 31, 2008 (the "Indemnity
Agreement"), which specifies the parties
respective continuing indemnification obligations to the other. The Indemnity
Agreement provides that we are liable to Superior Plus for all Losses (as
defined in the Indemnity Agreement) which it may suffer, sustain, pay or incur,
and we will indemnify and hold Superior Plus harmless from and against all
Losses which may be brought against or suffered by Superior Plus or which
Superior Plus may suffer, sustain, pay or incur arising out of, resulting from,
attributable to or connected with:

| | (a) |  | any debts, liabilities,
      commitments or obligations of any nature (whether matured or unmatured,
      accrued, fixed, contingent or otherwise) of any kind whatsoever resulting
      from any matters, actions, events, facts or circumstances related to the
      activities, affairs or business of Ballard which occurred prior to the
      Effective Time (as defined in the Indemnity Agreement);                                                                                                                                                                                 
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    
| | (b) |  | any debts, liabilities,
      commitments or obligations of any nature (whether matured or unmatured,
      accrued, fixed, contingent or otherwise) of any kind whatsoever resulting
      from any matters, actions, events, facts or circumstances related to the
      activities, affairs or business of Ballard which occur on or after the
      date of the Indemnity Agreement; and                                                                                                                                                                                                    
| |    
| | (c) |  | any breach (including any failure
      or inaccuracy) of any of the representations and warranties of Ballard
      under the Arrangement Agreement, or any failure of Ballard to perform or
      observe any covenant or agreement to be performed by it under the
      Arrangement Agreement, excluding any Losses which Superior Plus may
      suffer, sustain, pay or incur, relating to or based upon the existence or
      availability of Superior Plus Tax Pools (as defined in the Indemnity
      Agreement), other than as a result of fraud or wilful
      misrepresentation.

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The Indemnity
Agreement also provides that Superior Plus will be liable to the Corporation for
all Losses which the Corporation may suffer, sustain, pay or incur and will
indemnify and hold the Corporation harmless from and against all Losses which
may be brought against or suffered by the Corporation or which the Corporation
may suffer, sustain, pay or incur arising out of, resulting from, attributable
to or connected with any breach (including any failure or inaccuracy) of any of
the representations and warranties of Superior Plus under the Arrangement
Agreement, or any failure of Superior Plus to perform or observe any covenant or
agreement to be performed by it under the Arrangement Agreement.

The Indemnity Agreement does not contain any limit on the amount of the
claims that can be indemnified nor is there any threshold before indemnification
is provided. In addition, the Indemnity Agreement specifically extends the
limitation period within which a party is entitled to make a claim under the
Indemnity Agreement to two years after the notice of claim with respect to such
obligation was given. However, with the exception of certain limited adjustments
to address differences in the amount of specific Tax Pools of Ballard, which is
described below, the indemnification provisions of the Indemnity Agreement do
not provide indemnification to Superior Plus in respect of the amount or the
availability of the Tax Pools.

The Indemnity Agreement also provides for certain compensation payments
to be made by Ballard and Superior Plus depending on the final determination of
the amount of certain Tax Losses (as defined in the Indemnity Agreement) of
Ballard to the extent that such amounts are more or less than the amounts
estimated at the time the Arrangement Agreement was executed or
to the extent that such Tax Pools are used to reduce Ballards income, taxable
income, or income taxes for any period ending at any time at or before the
completion of the Arrangement. Ballards obligations under the Indemnity
Agreement relating to NCL Obligations (as defined in the Indemnity Agreement)
are limited to an aggregate of C$7,350,000 with a threshold amount of C$500,000
before there is an obligation to make a compensation payment.

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The Indemnity
Agreement provides detailed procedures for claims under the Indemnity Agreement,
which, provided Ballard acknowledges liability under the Indemnity Agreement
with respect to such matter, gives Ballard the right to elect to take carriage
and control of the dispute process relating to such claims.

RISK FACTORS

An investment in our common shares involves risk. Investors should
carefully consider the risks 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, 2011. 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 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 ICEs 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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We expect our cash reserves will be
reduced due to future operating lossesand 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.

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 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.

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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.

Global 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
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.

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 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-to-day 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. These risks are applicable to our acquisition of Dantherm Power in
the first quarter of 2010.

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.

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

Our
revenues are particularly affected by fluctuations in the exchange rate between
the Canadian dollar and the United States dollar. We generate approximately 90%
of our revenues in United States dollars while approximately 60% of our
operating expenses, cost of revenues and capital expenditures are in Canadian
dollars. As a result, any decrease in the value of the United States dollar
relative to the Canadian dollar reduces the amount of Canadian dollar revenues
we realize on sales, without a corresponding decrease in expenses. Exchange rate
fluctuations are beyond our control, and the United States dollar may depreciate
against the Canadian dollar in the future, which would result in lower revenues
and margins. In order to reduce the potential negative effect of a weakening
United States dollar, we have entered 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, affect our costs. Platinum is a key component of our fuel
cell products. Platinum is a scarce natural resource and we are dependent upon a
sufficient supply of this commodity. While we do not anticipate significant near
or long-term shortages in the supply of platinum, 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 have entered into various hedging
programs.

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

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.

- 39 -

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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.

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.

- 40 -

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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 in the United States and other countries have
driven interest in fuel cells. We cannot guarantee that these laws and policies
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, the United States government and other 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.

We depend on our intellectual
property, and our failure to protect that intellectual property could adversely
affect our 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: (a) 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 (b) 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 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.

- 42 -

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**Our products use flammable
fuels, which could subject our business to product liability
claims.**

Our
business exposes us to potential product liability claims that are inherent in
hydrogen and products that use hydrogen. Hydrogen is a flammable gas and
therefore a potentially dangerous product. 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.

ADDITIONAL
INFORMATION

Additional information regarding Ballard may be found on SEDAR at
www.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, 2011, each interim financial statement issued after December 31,
2011, 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 at www.ballard.com.

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APPENDIX "A" BOARD OF
DIRECTORS MANDATE

Purpose

The board of directors (the "Board") is
responsible for the overall corporate governance of the Corporation. It oversees
and directs the management of the Corporations business and affairs. In doing
so, it must act honestly, in good faith, and in the best interests of the
Corporation. The Board guides the Corporations strategic direction, evaluates
the performance of the Corporations executive officers, monitors the
Corporations financial results, and is ultimately accountable to the
Corporations shareholders, employees, customers, suppliers, and regulators.
Board members are kept informed of the Corporations operations at meetings of
the Board and its committees, and through reports and analyses by, and
discussions with, management. The Board manages the delegation of
decision-making authority to management through Board resolutions under which
management is given authority to transact business, but only within specific
limits and restrictions. In this Mandate, the "Corporation" means Ballard Power
Systems Inc. and a "director" means a Board member.

COMPOSITION

|A) |  | As stated in the Articles of the
      Corporation, the Board will be composed of no fewer than five and no more
      than fifteen directors.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|  
|B) |  | The Board will have a majority of
      independent directors.                                                                                
|  
|C) |  | The Board will appoint its own
      Chair.                                                                                                   

MEETINGS

|D) |  | Meetings of the Board will be
      held as required, but at least four times a year.                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|E) |  | The Board will appoint its own
      Secretary, who need not be a director. The Secretary, in conjunction with
      the Chair of the Board, will draw up an agenda, which will be circulated
      in advance to the members of the Board along with the materials for the
      meeting. The Secretary will be responsible for taking and keeping the
      Boards meeting minutes.                                                                       
|  
|F) |  | As set out in the By-laws of the
      Corporation, meetings will be chaired by the Chair of the Board, or if the
      Chair is absent, by a member chosen by the Board from among
      themselves.                                                                                                                                                                                                                                                        
|  
|G) |  | If all directors consent, and
      proper notice has been given or waived, a director or directors may
      participate in a meeting of the Board by means of such telephonic,
      electronic or other communication facilities as permit all persons
      participating in the meeting to communicate adequately with each other,
      and a director participating in such a meeting by any such means is deemed
      to be present at that meeting.

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|H) |  | The Board will conduct an
      in-camera session excluding management at the end of each Board
      meeting.                                                                                                              
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|I) |  | A majority of directors
      constitute a quorum.                                                                                                                                                                          
|  
|J) |  | All decisions made by the Board
      may be made at a Board meeting or evidenced in writing and signed by all
      Board members, which will be fully effective as if it had been made or
      passed at a Board meeting.

DUTIES AND RESPONSIBILITIES

|K) |  | Selection of
      Management
|-- |  | -----------------------------

The Board is responsible for appointing
the Chief Executive Officer ("CEO"), for monitoring and evaluating the CEOs
performance, and approving the CEOs compensation. Upon recommendation of the
CEO and the Management Development, Nominating & Compensation Committee, the
Board is also responsible for appointing all officers. The Board also ensures
that adequate plans are in place for management development and succession and
conducts an annual review of such plans.

|L) |  | Corporate
    Strategy
|-- |  | ----------------------

The Board is responsible for reviewing
and approving the Corporations corporate mission statement and corporate
strategy on a yearly basis, as well as determining the goals and objectives to
achieve and implement the corporate strategy, while taking into account, among
other things, the opportunities and risks of the business. Each year, the Board
meets for a strategic planning session to set the plans for the upcoming year.
In addition to the general management of the business, the Board expects
management to achieve the corporate goals set by the Board, and the Board
monitors throughout the year the progress made against these goals.

In addition, the Board approves key
transactions, which have strategic impact to the Corporation, such as
acquisitions, key collaborations, key supply arrangements, and strategic
alliances. Through the delegation of signing authorities, the Board is
responsible for setting out the types of transactions that require approval of
the Board before completion.

|M) |  | Fiscal Management and
      Reporting
|-- |  | -------------------------------------

The Board monitors the financial
performance of the Corporation and must ensure that the financial results are
reported: (a) to shareholders and regulators on a timely and regular basis; and
(b) fairly and in accordance with generally accepted accounting principles. The
Board must also ensure that all material developments of the Corporation are
disclosed to the public on a timely basis in accordance with applicable
securities regulations. In the spring of each year, the Board reviews and
approves the Annual Report, which is sent to shareholders of the Corporation and
describes the achievements and performance of the Corporation for the preceding
year.

- 45 -

---



|N) |  | Legal
  Compliance
|-- |  | ------------------

The Board is responsible for overseeing
compliance with all relevant policies and procedures by which the Corporation
operates and ensuring that the Corporation operates at all times in compliance
with all applicable laws and regulations, and to the highest ethical and moral
standards.

|O) |  | Statutory
      Requirements
|-- |  | ----------------------------

The Board is responsible for approving
all matters, which require Board approval as prescribed by applicable statutes
and regulations, such as payment of dividends and issuances of shares.
Management ensures that such matters are brought to the attention of the Board
as they arise.

|P) |  | Formal Board
      Evaluation
|-- |  | -----------------------------

The Board, through a process led by the
Corporate Governance Committee, conducts an annual evaluation and review of the
performance of the Board, Board committees, and the Chair of the Board. The
Corporate Governance Committee reviews the results of such evaluation and
together with the Chair of the Board, discusses potential ways to improve Board
effectiveness. The Corporate Governance Committee discusses the results of the
evaluation and the recommended improvements with the full Board. The Board also
sets annual effectiveness goals and tracks performance against those goals. In
addition, each individual directors performance is evaluated and reviewed
regularly.

|Q) |  | Risk
  Management
|-- |  | -----------------

The Board is responsible for
identifying the Corporations principal risks and ensuring the implementation of
appropriate systems to manage these risks. The Board is also responsible for the
integrity of the Corporations internal controls and management information
systems.

|R) |  | External
      Communications
|-- |  | -----------------------------

The Board is responsible for overseeing
the establishment, maintenance and annual review of the Corporations external
communications policies which address how the Corporation interacts with
analysts and the public and which also contain measures for the Corporation to
avoid selective disclosure. The Board is responsible for establishing a process
for receiving shareholder feedback. This is achieved through a semi-annual
presentation of an investor relations report, which contains a summary of the
feedback and common enquiries received from shareholders, as well as a Board
e-mail address, which has been set up for the public to submit messages to the
Board.

- 46 -

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APPENDIX "B"
AUDIT COMMITTEE MANDATE

Purpose

The purpose of the Audit Committee (the
"Committee") is to assist the board of directors in fulfilling its oversight
responsibilities by reviewing the financial information which will be provided
to the shareholders and the public, the systems of corporate controls which
management and the board of directors have established, and overseeing the audit
process. The Committee also is mandated to review and approve all related party
transactions, as further described below under "Duties and Responsibilities",
other than those related party transactions in respect of which the board has
delegated review to a special committee of independent directors.

In this Mandate, the Corporation
means Ballard Power Systems Inc. and a director means a board
member.

More specifically the purpose of the
Committee is to satisfy itself that:

|A) |  | the Corporations annual
      financial statements are fairly presented in accordance with generally
      accepted accounting principles and to recommend approval of the annual
      financial statements to the board;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|B) |  | the financial information
      contained in the Corporations quarterly financial statements, Annual
      Report to Shareholders and other financial publications such as
      Managements Discussion and Analysis, the Annual Information Form,
      Management Proxy Circular and information contained in any prospectus is
      complete and accurate in all material respects and to recommend to the
      board approval of these materials other than the quarterly financial
      statements for which approval authority has been delegated to the
      Committee hereunder;                                                                                                                                                                                                       
|  
|C) |  | the Corporation has appropriate
      systems of internal control over the safeguarding of assets and financial
      reporting to ensure compliance with legal and regulatory requirements and
      to manage financial and asset related risks;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|D) |  | the external audit function has
      been effectively carried out and that any matter which the external
      auditors wish to bring to the attention of the Committee or board of
      directors has been addressed. The Committee is also responsible for
      recommending the appointment (for approval by the shareholders at the
      Corporations annual meeting of shareholders) of, and overseeing the
      external auditors, monitoring the external auditors qualifications and
      independence, pre-approving all substantive audit services and non-audit
      services performed by the external auditors, and determining the
      appropriate level of remuneration for the external auditors. The external
      auditors will report directly to the Audit
Committee;

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|E) |  | management has established and is
      maintaining processes to assure compliance by the Corporation with all
      applicable laws, regulations and corporate policies;                                                                                                                                                                           
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|F) |  | the internal audit function is
      being effectively carried out, that the Committee is meeting with the
      internal auditor (or persons responsible for the function) as necessary,
      and that any matter which the internal auditor wishes to bring to the
      attention of the Committee or board of directors has been
    addressed;
|  
|G) |  | the related party transactions
      being reviewed by the Committee are in the best interests of the
      Corporation; and                                                                                                                                                                                                                        
|  
|H) |  | it has engaged any necessary
      independent counsel or other advisors in fulfilling its duties and
      responsibilities, as set forth in this Mandate.                                                                                                                                                                                         

Composition and Eligibility

|A) |  | Following each annual meeting of
      shareholders of the Corporation, the board will appoint from its members
      not less than three directors to serve on the Committee. Each member of
      the Committee must meet the independence and expertise requirements for
      audit committees imposed by any listing standards of NASDAQ or
      requirements of the Canadian securities regulatory authorities under
      National Instrument 52-110, any applicable statutes, or applicable rules
      or regulations of the U.S. Securities Exchange Commission.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|B) |  | 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.                                                                                                                                                                                                                 
|  
|C) |  | All members of the Committee must
      have working familiarity with basic finance and accounting practices, and
      be able to read and understand fundamental financial statements, including
      a balance sheet, income statement and cash flow statement at the time of
      their appointment.                                                                                                                                                                                                                                                                 
|  
|D) |  | At least one member of the
      Committee must be an audit committee "financial expert" as defined by the
      applicable rules set out by the U.S. Securities and Exchange Commission
      (the "SEC") or any other regulatory authority. The financial expert must
      have all of the following five attributes:                                                                                                                                                                                                                                                   

- 48 -

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| | (i)   |  | an understanding of Generally
      Accepted Accounting Principles ("GAAP") or the generally accepted
      accounting principles used by the issuer in preparing its primary
      financial statements filed with the SEC;                                                                                                                                                                                                  
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      
| | (ii)  |  | the ability to assess the general
      application of such principles in connection with the accounting for
      estimates, accruals and reserves;                                                                                                                                                                                                                                                                          
| |      
| | (iii) |  | experience preparing, auditing,
      analyzing or evaluating financial statements that present a breadth and
      level of complexity of accounting issues that are generally comparable to
      the breadth and complexity of issues that can reasonably be expected to be
      raised by the Corporations financial statements, or experience actively
      supervising one or more person engaged in such activities;
| |      
| | (iv)  |  | an understanding of internal
      controls and procedures for financial reporting; and                                                                                                                                                                                                                                                                                                                                       
| |      
| | (v)   |  | an understanding of audit
      committee functions.                                                                                                                                                                                                                                                                                                                                                                          

The financial expert must have acquired
the requisite attributes through any one or more of the following methods:

| | (i)   |  | education and experience as a
      principal financial officer, principal accounting officer, controller,
      public accountant or auditor or experience in one or more positions that
      involve the performance of similar functions;
| | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      
| | (ii)  |  | experience actively supervising a
      principal financial officer, principal accounting officer, controller,
      public accountant, auditor or person performing similar
    functions;                                                  
| |      
| | (iii) |  | experience overseeing or
      assessing the performance of companies or public accountants with respect
      to the preparation, auditing or evaluation of financial statements;
      or                                                  
| |      
| | (iv)  |  | other relevant experience, based
      on the determination by the board of directors as to the specific
      experience, which satisfies this
requirement.                                                                                 

|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

|A) |  | The Committee will meet at least
      quarterly. The meetings will be scheduled to permit timely review of the
      interim and annual financial statements, as well as the Corporations
      other financial disclosures and related party transactions.
  The Chair, CEO, CFO, Controller,
      internal and external auditors or any member of the Committee may request
      additional meetings.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|B) |  | The Committee will
      appoint its own Secretary, who need not be a director. The Secretary in
      conjunction with the Chair of the Committee will draw up an agenda, which
      will be circulated, in advance to the members of the Committee with the
      materials for the meeting. The Secretary will be responsible for taking
      and keeping the Committees meeting minutes.                                                                           
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|C) |  | Meetings will be
      chaired by the Chair of the Committee, or if the Chair is absent, by a
      member chosen by the Committee from among themselves.                                                                                                                                                                                                                                                                                                                 
|  
|D) |  | If all members
      consent, and proper notice has been given or waived, a member or members
      of the Committee may participate in a meeting of the Committee by means of
      such telephonic, electronic or other communication facilities as permit
      all persons participating in the meeting to communicate adequately with
      each other, and a member participating in such a meeting by any such means
      is deemed to be present at that meeting.
|  
|E) |  | All directors who are
      not Committee members will be given notice of every meeting of the
      Committee and will be allowed to attend as observers, unless deemed
      inappropriate by the Committee in cases where a potential conflict of
      interest may exist, such as discussions concerning related party
      transactions.                                                                                                                           
|  
|F) |  | The CEO, CFO,
      Controller and internal auditor shall have direct access to the Committee
      and shall receive notice of and attend all meetings of the Committee,
      except the in-camera sessions.                                                                                                                                                                                                                                                            
|  
|G) |  | The external auditors
      will be given notice of, and have the right to appear before and to be
      heard at, every meeting of the Committee and will appear before the
      Committee when requested to do so by the Committee.                                                                                                                                                                                                                                    
|  
|H) |  | The Committee is
      authorized to request the presence, at any meeting, of senior management,
      legal counsel or anyone else who could contribute substantively to the
      subject of the meeting.                                                                                                                                                                                                                                                               
|  
|I) |  | The Committee members
      will receive minutes of all meetings of the Corporations internal
      Disclosure Committee.                                                                                                                                                                                                                                                                                                                                                
|  
|J) |  | A majority of
      Committee members constitute a
quorum.                                                                                                                                                                                                                                                                                                                                                                                                                

- 50 -

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|K) |  | All decisions made by the
      Committee may be made at a Committee meeting or evidenced in writing and
      signed by all Committee members, which will be fully effective as if it
      had been made or passed at a Committee meeting.                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|L) |  | The minutes of all meetings of
      the Committee will be provided to the board of directors. The Chair of the
      Committee will provide an oral report on the Committees activities to the
      board of directors at the next regularly scheduled meeting of the board
      following each Committee meeting.                                                                                
|  
|M) |  | Supporting schedules and
      information reviewed by the Committee will be available for examination by
      any director upon request to the Secretary of the Committee.                                                                                                                                                                                                                          
|  
|N) |  | The Committee may form and
      delegate authority to subcommittees. In particular, the Committee may
      delegate to one or more of its members the authority to pre-approve audit
      or permissible non-audit services, provided that the decisions of any
      member(s) to whom pre-approval authority is delegated will be presented to
      the Committee at the next Committee meeting.

Duties and Responsibilities

|A) |  | Investigations                                                                                                                                                                                                                                                                                                                                                               
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Committee is
      empowered to investigate any activity of the Corporation and all employees
      are to co-operate as requested by the Committee. The Committee may retain
      outside advisors having special expertise to assist it in fulfilling its
      responsibilities, and determine the appropriate level of remuneration for
      such outside advisors.
|  
|B) |  | Financial Reporting
      Control Systems                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | The Committee
      will:                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | (i)                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | (ii)                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | (iii)                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | (iv)                                                                                                                                                                                                                                                                                                                                                                         

- 51 -

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|   |  | (v)                                                                                                                                                                                                                                                                                                                 |  | review the appointment of the financial senior
      executives of the Corporation, prior to recommendation by the Management
      Development, Nominating & Compensation Committee ("MDNCC") to the
      board;                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | (vi)                                                                                                                                                                                                                                                                                                                |  | establish and maintain a set of procedures for the
      receipt, retention and treatment of complaints received by the Corporation
      concerning accounting, internal accounting controls or auditing matters
      and the confidential anonymous submission by employees of concerns
      regarding questionable accounting or auditing matters;
|  
|   |  | (vii)                                                                                                                                                                                                                                                                                                               |  | discuss and consider policies with respect to risk
      assessment and risk management, including:                                                                                                                                                                                                                                                    
|   |  |                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                     |  | a) review and periodic approval of
      managements risk philosophy and risk management policies;                                                                                                                                                                                                                                                    
|   |  |                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                     |  | b) review with management, at least
      annually, of reports demonstrating compliance with risk management
      policies; and                                                                                                                                                                                                                       
|   |  |                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                     |  | c) discussing with management, at least
      annually, the Corporations major financial risk exposures and the steps
      management has taken to monitor and control such expenses including the
      Corporations risk assessment and risk management policies.                                                                                 
|  
|   |  | (viii)                                                                                                                                                                                                                                                                                                              |  | meet separately and periodically, no less than annually,
      with management, with internal auditors (or the persons responsible for
      the internal audit function) and with external auditors.                                                                                                                                                  
|  
|C) |  | Interim Financial
      Statements                                                                                                                                                                                                                                                                                 
|  
|   |  | The Committee will, prior to
      their release, review and approve the interim (quarterly) financial
      statements and Managements Discussion and Analysis with the Corporations
      officers and external auditors. This will include significant
      transactions, which have occurred in the quarter.
|  
|D) |  | Annual Financial Statements and
      Other Financial Information                                                                                                                                                                                                                                                  
|  
|   |  | The Committee will:                                                                                                                                                                                                                                                                                                
|  
|   |  | (i)                                                                                                                                                                                                                                                                                                                 |  | review any changes in accounting policies or financial
      reporting requirements that may affect the current years financial
      statements;                                                                                                                                                                                                     
|  

- 52 -

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|   |  | (ii)                                      |  | obtain summaries of significant
      transactions, and other complex matters whose treatment in the annual
      financial statements merits advance consideration;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | ----------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | (iii)                                     |  | obtain draft annual financial
      statements in advance of the Committee meeting and assess, on a
      preliminary basis, the reasonableness of the financial statements in light
      of the analyses provided by the Corporations officers;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | (iv)                                      |  | review a summary provided by the
      Corporations legal counsel of the status of any material pending or
      threatened litigation, claims and assessments;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | (v)                                       |  | review and approve the annual
      financial statements, Managements Discussion and Analysis and the
      auditors report thereon, and discuss them in detail with the
      Corporations officers and the external auditors;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | (vi)                                      |  | review and recommend to the board
      of directors approval of all financial disclosure contained in
      prospectuses, annual information forms, management proxy circulars and
      other similar documents;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | (vii)                                     |  | before the release of each
      quarterly report and the annual financial statements, discuss with the
      external auditors all matters required by SAS 61 (including the auditors
      responsibility under GAAP, the selection of and changes in significant
      accounting policies or their application, management judgments and
      accounting estimates, significant audit adjustments, the external
      auditors responsibility for information other than financial statements,
      disagreements with management, consultation with other accountants, and
      difficulties encountered in performing the audit) and CICA Handbook
      section 5751 (which governs the communications between the external
      auditors and the Committee); and
|  
|   |  | (viii)                                    |  | provide the board of directors
      with a recommendation for approval of the annual financial statements;
      and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | (ix)                                      |  | discuss earnings press releases
      and earnings guidance, as well as the release of significant new financial
      information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|E) |  | Relationship with
      External Auditors
|  
|   |  | The Committee
      will:                
|  
|   |  | (i)                                       |  | recommend the appointment of the
      external auditors (for approval by the shareholders at the Corporations
      annual meeting of shareholders); if there is a plan to change auditors,
      review all issues related to the change and the steps planned for an
      orderly transition. The external auditors will report directly to the
      Committee. The Committee will not recommend the appointment of an external
      auditor who has previously employed the Corporations CEO, CFO, Controller
      or chief accounting officer and where such person participated in any
      capacity in the audit of the Corporation within the past
year;                                                                                                       

- 53 -

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| | (ii)  |  | annually review and
      approve the terms of engagement and determine the remuneration of the
      external auditors;                                                                                                                                                                                                                                              
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      
| | (iii) |  | review the quarterly
      and annual representation letters given by management to the external
      auditors;                                                                                                                                                                                                                                                      
| |      
| | (iv)  |  | monitor the external
      auditors qualifications and independence through the activities listed in
      section (G) below, "Independence of External Auditors";                                                                                                                                                                                                   
| |      
| | (v)   |  | review the audit plan
      with the external auditors and approve all substantive audit services in
      advance;                                                                                                                                                                                                                                                   
| |      
| | (vi)  |  | approve in advance any
      services to be provided by the external auditors which are not related to
      the audit, including the fees and terms of engagement relating to such
      non-audit services for the Corporation and its subsidiaries. Specifically,
      the Committee must not allow the external auditors to provide the
      following services:
| |      
| |       |  | a)                                                                                                                                                                                                                                                                                                                                                                    
| |      
| |       |  | b)                                                                                                                                                                                                                                                                                                                                                                    
| |      
| |       |  | c)                                                                                                                                                                                                                                                                                                                                                                    
| |      
| |       |  | d)                                                                                                                                                                                                                                                                                                                                                                    
| |      
| |       |  | e)                                                                                                                                                                                                                                                                                                                                                                    
| |      
| |       |  | f)                                                                                                                                                                                                                                                                                                                                                                    
| |      
| |       |  | g)                                                                                                                                                                                                                                                                                                                                                                    
| |      
| |       |  | h)                                                                                                                                                                                                                                                                                                                                                                    
| |      
| |       |  | i)                                                                                                                                                                                                                                                                                                                                                                    

- 54 -

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|   |  | (vii)                     |  | review quarterly all fees paid to external auditors;                                                                                                                                                                                                                     
|-- |  | ------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | (viii)                    |  | review performance against audit proposal plan;                                                                                                                                                                                                                          
|  
|   |  | (ix)                      |  | discuss in private with the external auditors matters affecting the
      conduct of their audit and other corporate matters;                                                                                                                                            
|  
|   |  | (x)                       |  | receive from the external auditors a report with respect to:                                                                                                                                                                                                             
|  
|   |  |                           |  | a)                                                                                                                                                                                                                                                                       
|  
|   |  |                           |  | b)                                                                                                                                                                                                                                                                       
|  
|   |  |                           |  | c)                                                                                                                                                                                                                                                                       
|  
|   |  |                           |  | d)                                                                                                                                                                                                                                                                       
|  
|   |  |                           |  | e)                                                                                                                                                                                                                                                                       
|  
|   |  |                           |  | f)                                                                                                                                                                                                                                                                       
|  
|   |  | (xi)                      |  | resolve all disagreements between management and the external
      auditors regarding financial reporting; and                                                                                                                                                          
|  
|   |  | (xii)                     |  | ensure that the audit partners representing the external auditors
      meet the rotation requirements set out by the U.S. Securities and Exchange
      Commission and by any other applicable Canadian or U.S. securities
      regulatory authority or stock exchange.
|  
|F) |  | Treasury                 
|  
|   |  | The
      Committee will:
|  
|   |  | (i)                       |  | review and approve the Treasury Policy;                                                                                                                                                                                                                                  

- 55 -

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|   |  | (ii)                                                                                             |  | review the quarterly Treasury
      Report;                                                                                                                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | (iii)                                                                                            |  | review and approve the Foreign
      Exchange Policy; and                                                                                                                                                                                                                                                                                                        
|  
|   |  | (iv)                                                                                             |  | review and approve any
      commodities hedging policy.                                                                                                                                                                                                                                                                                                         
|  
|G) |  | Independence of
      External Auditors                                                         
|  
|   |  | The Committee will
      oversee the independence of the Corporations external auditors
    by:
|  
|   |  | (i)                                                                                              |  | receiving from the external
      auditors, on a periodic basis, a formal written statement delineating all
      relationships between the external auditors and the Corporation consistent
      with ISBS No. 1 and CICA Handbook Section 5751;                                                                                                               
|  
|   |  | (ii)                                                                                             |  | reviewing and actively discussing
      with the board of directors, if necessary, and the external auditors, on a
      periodic basis, any relationships or services between the external
      auditors and the Corporation or any other relationships or services that
      may impact the objectivity and independence of the external
      auditors;     
|  
|   |  | (iii)                                                                                            |  | recommending, if necessary, that
      the board of directors take action to satisfy itself, of the external
      auditors independence; and                                                                                                                                                                                                                   
|  
|   |  | (iv)                                                                                             |  | ensuring that the Corporation
      does not hire as the Corporations CEO, CFO, Controller or chief
      accounting officer any person who was employed by the Corporations
      external auditors and who participated in any capacity in the audit of the
      Corporation during the one-year period preceding the initiation of the
      current audit.
|  
|H) |  | Internal Audit and
      Controls                                                               
|  
|   |  | (i)                                                                                              |  | The Committee will ensure that
      the Corporation has appropriate systems of internal control over the
      safeguarding of assets and financial reporting to ensure compliance with
      legal and regulatory requirements and to manage financial and asset
      related risks.                                                                          
|  
|   |  | (ii)                                                                                             |  | The Committee will review
      quarterly the internal auditors report on the adequacy of the
      Corporations internal controls, policies and procedures.                                                                                                                                                                                                   
|  
|   |  | (iii)                                                                                            |  | The Committee will annually
      review and approve the internal audit plan.                                                                                                                                                                                                                                                                                    
|  
|   |  | (iv)                                                                                             |  | The Committee will regularly
      review progress against the approved internal audit plan, and adjust the
      plan to deal with emerging issues as required.                                                                                                                                                                                                 

- 56 -

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|I) |  | Related Party
      Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Committee will
      review and approve all related party transactions, other than those
      related party transactions in respect of which the board has delegated
      review to a special committee or independent directors or those related
      party transactions which are previously approved under the mandate of the
      MDNCC, including, but not limited to, executive employment agreements and
      compensation matters. A related party transaction is defined as a
      transaction in which the Corporation or any of its subsidiaries is to be a
      party, which involves an amount exceeding U.S. $60,000 and in which any of
      the following persons have a direct or indirect material
    interest:
|  
|   |  | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |  | In
      carrying out its responsibilities in reviewing and approving related party
      transactions, the Committee will:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | (v)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | (vi)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | (vii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | (viii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | (ix)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | (x)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

- 57 -

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|   |  | (xi)                                                                                                                                                                                                        |  | if approval of the board of
      directors is necessary, provide a recommendation to the board of directors
      with respect to the related party transaction; and                                    
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | (xii)                                                                                                                                                                                                       |  | review a summary of completed
      related party transactions to ensure that such transactions are consistent
      with the terms and conditions previously approved by the
    committee.             
|  
|   |  | As part of its review
      of all related party transactions, the Committee will review all
      modifications to existing loans and advances to the Corporations
      executive officers or directors.
|  
|J) |  | Other                                                                                                                                                                                                      
|  
|   |  | The Committee
      will:                                                                                                                                                                                  
|  
|   |  | (i)                                                                                                                                                                                                         |  | perform an annual review of
      managements compliance with the Corporations Code of Ethics &
      Workplace Guidelines and Corporate Watch Policy;                                                 
|  
|   |  | (ii)                                                                                                                                                                                                        |  | perform an annual review of the
      Corporations Code of Ethics & Workplace Guidelines and Corporate
      Watch Policy, with any recommended changes being forwarded to the board
      for approval;
|  
|   |  | (iii)                                                                                                                                                                                                       |  | perform an annual review of the
      succession plans for the Corporations CFO and Controller;                                                                                                         
|  
|   |  | (iv)                                                                                                                                                                                                        |  | perform an annual review of this
      Committee mandate, with any recommended changes being forwarded to the
      Corporate Governance Committee and ultimately the board for approval;
      and      
|  
|   |  | (v)                                                                                                                                                                                                         |  | annually review the audit of the
      expense reports of the Chair of the Board of Directors and the
    CEO.                                                                                           
|  
|K) |  | Performance
      Evaluation                                                                                                                                                                               
|  
|   |  | The Committee will
      perform an annual evaluation of its performance, having regard to the
      issues reviewed during the year.                                                                      

- 58 -

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COMMITTEE TIMETABLE

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

|Committee Timetable
|-------------------
|Agenda Items       
|A)                 
|(i)                
|(ii)               
|(iii)              
|(iv)               
|(v)                
|(vi)               
|(vii)              
|(viii)             
|(ix)               

59

---



|Committee Timetable
|-------------------
|Agenda Items       
|B)                 
|(i)                
|C)                 
|(i)                
|(ii)               
|(iii)              
|(iv)               
|(v)                
|(vi)               
|(vii)              
|(viii)             
|(ix)               
|***D)***           
|(i)                

60

---



|Committee Timetable
|-------------------
|**Agenda Items**   
|(ii)               
|(iii)              
|(iv)               
|(v)                
|(vi)               
|(vii)              
|(viii)             
|(ix)               
|(x)                
|                   
|                   
|                   
|                   
|                   
|                   

61

---



|Committee Timetable
|-------------------
|**Agenda Items**   
|(xi)               
|(xii)              
|E)                 
|(i)                
|(ii)               
|(iii)              
|F)                 
|(i)                
|(ii)               
|(iii)              
|(iv)               
|G)                 
|(i)                

62

---



|Committee Timetable
|-------------------
|Agenda Items       
|(ii)               
|(iii)              
|H)                 
|(i)                
|(ii)               
|I)Other            
|(i)                
|(ii)               
|(iii)              
|(iv)               
|J)                 
|(i)                

63

---