Document:

<PAGE>   1
                                                                    EXHIBIT 10.6

               CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED
                  BASED ON A REQUEST FOR CONFIDENTIAL TREATMENT

                   OMITTED PORTIONS HAVE BEEN SEPARATELY FILED
                   WITH THE SECURITIES AND EXCHANGE COMMISSION

                             COLLABORATION AGREEMENT

                                     between

                           BALLARD POWER SYSTEMS INC.

                                       and

                            UCAR CARBON COMPANY INC.

<PAGE>   2

                             COLLABORATION AGREEMENT

THIS AGREEMENT is made May 3, 1999

BETWEEN:

                  BALLARD POWER SYSTEMS INC., a Canadian corporation having an
                  office at 9000 Glenlyon Parkway, Burnaby, British Columbia,
                  Canada, V5J 5J9

                  ("BPS")

AND:

                  UCAR CARBON COMPANY INC., a Delaware corporation having an
                  office at 3102 West End Avenue, Suite 1100, Nashville,
                  Tennessee 37203, USA

                  ("UCAR CARBON")

WHEREAS:

(A) BPS has developed, is in the possession of and is the beneficial owner of,
substantial and valuable expertise, know-how and certain intellectual property
rights relating to the field of PEM Fuel Cells and the design, manufacture and
marketing of PEM Fuel Cells and components therefor for the generation of
electrical power for a variety of applications;

(B) BPS wishes to enhance its PEM Fuel Cell technology through the development
of improved fuel cell components;

(C) UCAR CARBON has developed, is in the possession of and is the beneficial
owner of, substantial and valuable expertise, know-how and certain intellectual
property rights relating to the field of flexible graphite and treated natural
graphite and sells such materials and articles made therefrom having mechanical,
physical, chemical and electrical properties suitable for a wide variety of
industrial uses;

(D) BPS and UCAR CARBON wish to co-operate in the research and development of
the Target Products for use in PEM Fuel Cells and derivatives thereof and have
entered into this Agreement for the purposes of the Collaboration;

(E) BPS intends to procure its supply of the Materials from UCAR CARBON for
itself and possibly also for certain of its Affiliates and licensees if the
development of the Target Products pursuant to the collaboration under this
Agreement is successful;

(F) UCAR and BPS are parties to the Mutual Secrecy Agreement;

NOW THEREFORE this Agreement witnesses that the parties mutually covenant and
agree as follows:

<PAGE>   3
-5-

                                     PART 1

                         DEFINITIONS AND INTERPRETATIONS

DEFINITIONS

1.1 In this Agreement, including the recitals, except as otherwise expressly
provided or unless the context otherwise requires,

         AFFILIATE, in relation to a specified Person, means a Person that
         directly or indirectly controls, is under common control with, or is
         controlled by the specified Person, and for the purposes hereof, a
         Person will be deemed to control a corporation if

                  (a) securities of the corporation to which are attached more
                  than 50% of the votes that may be cast to elect directors of
                  the specified corporation or other rights to elect a majority
                  of the directors are held, other than by way of security only,
                  by or for the benefit of the Person, and

                  (b) the votes attached to those securities are sufficient, if
                  exercised, to elect a majority of the directors of the
                  corporation,

         ARISING IPR means, collectively, BPS Arising IPR and UCAR Arising IPR
         arising pursuant to the Collaboration,

         BACKGROUND IPR means, collectively, BPS Background IPR and UCAR
         Background IPR,

         BPS ARISING IPR means all IPR arising pursuant to the Collaboration
         concerning any of the following:

                  (a) PEM Fuel Cells and PEM Fuel Cell components and
                  assemblies, including electrically conductive fuel cell
                  separator plates, the design, composition, manufacturing
                  techniques and methodology respecting any of the foregoing,
                  and applications thereof; and

                  (b) the use of any of the Materials in electrically conductive
                  fuel cell separator plates and manufacturing techniques and
                  methodology for fabrication of such plates incorporating the
                  Materials,

         BPS BACKGROUND IPR means all IPR concerning any of the following:

                  (a) PEM Fuel Cells and PEM Fuel Cell components and
                  assemblies, including electrically conductive fuel cell
                  separator plates, the design composition, manufacturing
                  techniques and methodology respecting any of the foregoing,
                  and applications thereof, owned or controlled by BPS before
                  the Effective Date; and

                                       2
<PAGE>   4
-5-

                  (b) the use of any of the Materials, in electrically
                  conductive fuel cell separator plates, owned or controlled by
                  BPS before the Effective Date,

         BUSINESS DAY means a day that is not a Saturday or a Sunday or a
         British Columbia provincial, Canadian federal, a United States national
         or Tennessee state, holiday,

         CHIEF EXECUTIVE OFFICER means, in the case of BPS, BPS's Chief
         Operating Officer and in the case of UCAR CARBON, UCAR CARBON's
         President,

         COLLABORATION means the collaboration between the parties described in
         Section2.1 and includes the collaborative activities of the parties set
         forth in the SOW which occur from and after the Effective Date,

         COLLABORATION PERIOD has the meaning ascribed to it in Section 2.3,

         COMMITTEE has the meaning ascribed to it in Section 2.4,

         CONFIDENTIAL INFORMATION means, in relation to a Person, information
         known or used by such Person in connection with its business and
         technology, including, but not limited to, such Person's Intellectual
         Property, customer information, financial information, marketing
         information, and information as to business opportunities and research
         and development,

         DISPUTE NOTICE has the meaning ascribed to it in Section 6.1,

         EFFECTIVE DATE has the meaning ascribed to it in Section 2.3,

         EVENT OF DEFAULT in relation to a party means an event of default
         arising as a result of a party being subject to one or more of the
         following circumstances:

                  (a) an order is made or a resolution is passed or a petition
                  is filed by such party for the liquidation, dissolution or
                  winding-up of such party,

                  (b) such party is in material breach of its obligations under
                  Part 4,

                  (c) such party commits a material default in observing or
                  performing any other material covenant, agreement or condition
                  of this Agreement on its part to be observed or performed and,
                  where such default is curable, such party does not rectify or
                  cure such default within 30 days after receipt of written
                  notice from the other party to this Agreement specifying such
                  default;

                  (d) an execution, sequestration or any other process of any
                  court becomes enforceable against such party or any distress
                  or analogous process is levied upon any material part of the
                  property, assets and undertaking of such party and any such
                  process or distress is not stayed or otherwise suspended by a
                  court of competent jurisdiction within 30 days and has, or
                  could have, a material adverse effect on the business or
                  condition, financial or otherwise, of such party;

                                       3
<PAGE>   5
-5-

                  (e) such party applies to be put in bankruptcy, takes any
                  action that would permit its creditors to make an application
                  to put such party in bankruptcy, is adjudged or declared
                  bankrupt or makes an assignment for the benefit of creditors,
                  consents to a proposal or similar action under any bankruptcy
                  or insolvency legislation applicable to it, or commences any
                  other proceedings relating to it under any reorganization,
                  arrangement, readjustment of debt, dissolution or liquidation
                  law or statute of any jurisdiction whether now or hereafter in
                  effect, or consents to any such proceeding;

                  (f) a custodian, liquidator, receiver, receiver and manager,
                  receiver-manager, trustee or any other person with similar
                  powers is appointed for such party or in respect of any
                  material property or assets or material part of the property
                  or assets of such party and not discharged within 30 days
                  after its appointment and before any action is taken by it in
                  respect of such property or assets which will materially
                  affect the rights of the parties to this Agreement thereto; or

                  (g) a final, non-appealable, decision of any judicial,
                  administrative, governmental or other authority or arbitrator
                  is made which enjoins or restrains, or renders illegal or
                  unenforceable, the performance or observance by such party of
                  any material term of this Agreement,

         EXCLUSIVE PERIOD has the meaning ascribed to it in Section 2.9,

         INTELLECTUAL PROPERTY means in relation to a Person, each patent,
         patent application, industrial design, invention, design, trade secret,
         idea, work, methodology, technology, innovation, creation, concept,
         moral right, development drawing, research, analysis, know-how,
         experiment, copyright, data, formula, method, procedure, process,
         system or technique of such Person but does not include trademarks or
         tradenames,

         IPR means Intellectual Property rights,

         MATERIALS means any one or more of treated graphite flakes, expanded
         graphite flakes and flexible graphite (commonly referred to as graphite
         sheet or foil) [TEXT DELETED] or other [TEXT DELETED] developed
         pursuant to the Collaboration, as well as such materials developed by
         UCAR CARBON before the Effective Date, including, but not limited to
         the materials listed in Schedule B,

         MUTUAL SECRECY AGREEMENT means the secrecy agreement made effective May
         17, 1996, a copy of which is annexed hereto as Schedule C,

         NOTICE has the meaning ascribed to it in Section 8.4,

         PEM FUEL CELL means a solid polymer fuel cell and includes a direct
         oxidation fuel cell,

         PERSON means an individual, corporation, body corporate, firm, limited
         liability company, partnership, syndicate, joint venture, society,
         association, trust or unincorporated organization or trustee or other
         such legal representative,

                                       4
<PAGE>   6
-5-

         PROJECT MANAGER has the meaning ascribed to it in Section 2.7,

         SOW means the Statement of Work annexed hereto as Schedule A,

         SUPPLY AGREEMENT DEADLINE DATE has the meaning ascribed to it in
         Section 5.1,

         TARGET PRODUCT means an electrically conductive fuel cell separator
         plate developed pursuant to the Collaboration utilizing any of the
         Materials,

         UCAR ARISING IPR means all IPR arising pursuant to the Collaboration
         concerning

                  (a) any of the Materials,

                  (b) articles made from the Materials, other than electrically
                  conductive fuel cell separator plates,

                  (c) compositions which include one or more of the Materials
                  for use in applications other than in electrically conductive
                  fuel cell separator plates,

                  (d) methodology relating to, or relating to the use of, any of
                  the foregoing other than methodology relating to, or relating
                  to the use of any of the foregoing in, electrically conductive
                  fuel cell separator plates,

         but excludes IPR concerning electrically conductive fuel cell separator
         plates as well as everything comprising the BPS Arising IPR, and

         UCAR BACKGROUND IPR means all IPR concerning any of the following:

                  (a) treated graphite flakes, expanded graphite flakes and
                  flexible graphite [TEXT DELETED] or [TEXT DELETED] by UCAR
                  CARBON, its Affiliates or subcontractors with [TEXT DELETED]
                  and other [TEXT DELETED] and [TEXT DELETED], compositions
                  which include one or more of the foregoing, and articles made
                  therefrom and methodology relating thereto, and methodology
                  relating to the use of any of the foregoing, which were owned
                  or controlled by UCAR CARBON before the Effective Date; and

                  (b) the materials described in Schedule B, but excludes
                  everything comprising the BPS Background IPR.

         INTERPRETATION

         1.2 In this Agreement, except as otherwise expressly provided or unless
         the context otherwise requires,

             (a) "this Agreement" means this Collaboration Agreement as from
             time to time supplemented or amended by one or more agreements
             entered into pursuant to the applicable provisions hereof,

             (b) the headings in this Agreement are inserted for convenience
             only and do not form a part of this

                                       5
<PAGE>   7
-5-

             Agreement and are not intended to interpret, define or limit the
             scope, extent or intent of this Agreement or any provision hereof,

             (c) the word "including", when following any general statement or
             term, is not to be construed as limiting the general statement or
             term to the specific items or matters set forth or to similar items
             or matters, but rather as permitting the general statement or term
             to refer to all other items or matters that could reasonably fall
             within its broadest possible scope,

             (d) except where otherwise specified, all references to currency
             mean currency of the United States of America,

             (e) a reference to a statute includes all regulations made
             thereunder, all amendments to the statute or regulations in force
             from time to time, and any statute or regulation that supplements
             or supersedes such statute or regulations,

             (f) a reference to an entity includes any successor to that entity,

             (g) words importing the masculine gender include the feminine or
             neuter, words in the singular include the plural, words importing a
             corporate entity include individuals, and vice versa,

             (h) a reference to "approval", "authorization" or "consent" means
             written approval, authorization or consent,

             (i) a reference to a Part is to a Part of this Agreement and the
             symbol Section followed by a number or some combination of numbers
             and letters refers to the section, paragraph, subparagraph, clause
             or subclause of this Agreement so designated.

  SCHEDULES

1.3 The following schedules are incorporated in to this Agreement by reference
and form a part hereof:

                  Schedule A - Statement of Work
                  Schedule B - List of Materials
                  Schedule C - Mutual Secrecy Agreement

                                     PART 2

                                  COLLABORATION

COLLABORATION

2.1 BPS and UCAR CARBON will work jointly and individually at their respective
facilities and will co-operate in their research and development activities as
may be required or expedient to produce or create commercially viable versions
of the Target Products primarily for use in PEM Fuel Cells.

LIMITED PURPOSE

2.2 The Collaboration will be for the purposes of research and development only,
will include the
                                       6
<PAGE>   8
-5-

activities described in the SOW, and will encompass all research, design,
development, improvement and other experimentation and performance testing of
the Target Products during the Collaboration Period and the provision of reports
and advice by the parties to one another with respect to the development of such
products and techniques and methods of their manufacture and exploitation.

COLLABORATION TERM

2.3 The term of the Collaboration (the "Collaboration Period") will be three
years commencing on the date set forth on page 1 of this Agreement (the
"Effective Date") subject to extension or earlier termination as provided in
this Agreement or as may be mutually agreed to by the parties.

STEERING COMMITTEE

2.4 The parties will establish a steering committee (the "Committee") comprising
two representatives of each party. Each party may replace, from time to time,
any member appointed by it on the Committee by giving written notice thereof to
the other party. The Committee will meet regularly but not less than twice per
year and meetings of the Committee may be held by telephone conference. The
decisions of the Committee will be made unanimously by all of its members. All
proceedings and decisions of the Committee will be recorded in minutes which
will be signed by at least one member of the Committee appointed by each party.

DUTIES OF COMMITTEE

2.5      The Committee will, among other things,

         (a) monitor the progress and review the performance of each of the
         parties,

         (b) oversee all work to be performed by each of the parties pursuant to
         the Collaboration (including, but not limited to, the work for which
         each party is responsible as may be described in any work-plan
         pertaining to the Collaboration),

         (c) review patent-related and other intellectual property issues and
         define the parties' general strategy concerning the same,

         (d) promptly resolve problems and disputes submitted to the Committee
         by either party,

         (e) evaluate the results of each phase of the Collaboration and discuss
         all technical issues arising with regard to the Collaboration,

         (f) determine the ownership of Arising IPR which may result pursuant to
         the Collaboration but only to the extent the same is not provided for
         in this Agreement,

         (g) modify the SOW as and when deemed necessary,

         (h) review, on a regular basis, the cost of developing and producing
         the Materials and the projected date of commercialization of PEM Fuel
         Cells containing Target Products and make recommendations to the
         parties regarding the same, and

                                       7
<PAGE>   9
-5-

         (i) review, and where appropriate approve the written summaries
         prepared by the Project Managers pursuant to Section 2.7(d).

WORK AND COSTS

2.6 Each party will use all reasonable efforts to successfully, diligently and
on a timely basis, carry out the portion of the work for which it is responsible
as set forth in the SOW for the achievement of the objectives of the
Collaboration. Unless otherwise agreed, each party will bear all its own costs
and expenditures in connection with its activities pursuant to the Collaboration
except that jointly incurred costs will be borne by the parties equally.

PROJECT MANAGER

2.7 Each of the parties will appoint and maintain, until the expiry of the
Collaboration Period, a project manager ("Project Manager") and may from time to
time change its Project Manager, upon prior written notice to the other party.
Each party's Project Manager will be responsible for that party's performance
under this Agreement and will coordinate and cooperate with the Committee
concerning the management, coordination and administration of the activities of
such party under this Agreement. Specifically, the Project Managers will

    (a) exchange results and all other relevant information arising pursuant to
the Collaboration,

    (b) specify detailed objectives of the Collaboration, the work to be
performed by each party and relevant specifications and appropriate targets, to
the extent deemed necessary for the success of the Collaboration,

    (c) maintain books and written records of the dates on which technology is
disclosed by one party to the other pursuant to the Collaboration, and

    (d) jointly prepare a written summary for the Committee every six months on
the results and progress of the Collaboration.

PRODUCT DEVELOPMENT LEAD TIME

2.8      During the Collaboration Period,

         (a) UCAR CARBON will not, and it will ensure that its Affiliates will
         not, directly or indirectly,

         (i) be involved with any Person other than BPS in any development of
         electrically conductive fuel cell separator plates or enter into any
         negotiations with any Person regarding the same, or

         (ii) develop or manufacture fuel cells or electrically conductive fuel
         cell separator plates or market, or offer for sale or sell fuel cells
         or electrically conductive fuel cell separator plates, whether for
         development, testing or other purposes, except for and on behalf of and
         at the request of BPS, and

    (b)  BPS will not, and it will ensure that its Affiliates will not,
         directly or indirectly,

         (i) be involved with any Person other than UCAR CARBON in any
         development of the Materials

                                       8
<PAGE>   10
-5-

    for use in electrically conductive fuel cell separator plates or enter into
    any negotiations with any Person regarding the same, or

         (ii) except as specifically permitted under Section 2.9 and Part 7,
         develop or manufacture the Materials for use in electrically conductive
         fuel cell separator plates or market, or offer for sale or sell the
         same, whether for development, testing or other purposes.

LICENSE BY UCAR

2.9 Subject to Section 7.2(d) and the confidentiality obligations under Part 4,
UCAR hereby grants to BPS, for the period (the "Exclusive Period") commencing
the Effective Date and ending six years after the end of the Collaboration
Period, which period shall automatically continue for 1 year periods thereafter
unless written notice is given by one party to the other 60 days prior to the
end of the current period, an exclusive (even as to UCAR), worldwide,
royalty-free and paid-up right and license, sublicensable by BPS, to exploit the
UCAR Arising IPR and the UCAR Background IPR, solely to enable BPS to make, have
made, use or sell the Materials only in connection with the development,
manufacture, use or sale of electrically conductive fuel cell separator plates
and for no other purpose.

SUBLICENSE BY BPS

2.10 Subject to the confidentiality obligations under Part 4, BPS hereby grants
to UCAR, for the Exclusive Period, a non-exclusive, worldwide, royalty-free and
paid-up right and license, by way of sublicense, solely to use the UCAR Arising
IPR and the UCAR Background IPR to produce the Materials exclusively for and on
behalf of BPS, and where requested by BPS, BPS's Affiliates and licensees. So
long as UCAR CARBON is not subject to an Event of Default, BPS will not grant
any other sublicense of UCAR CARBON's license to BPS under Section 2.9.

2.11 From and after the expiration of the Exclusive Period, as defined in
Section 2.9 above, BPS covenants not to sue UCAR CARBON on account of any sale
by UCAR CARBON of Materials included in Arising IPR for use in PEM Fuel Cells
and electrically conductive fuel cell separator plates and BPS further covenants
not to sue any purchaser from UCAR CARBON of such Materials on account of such
use.

                                     PART 3

                             INTELLECTUAL PROPERTY

DISCLOSURE OF IPR FOR THE COLLABORATION
3.1 Each party will disclose to the other its Background IPR but only to the
extent strictly necessary for the Collaboration.

BPS'S LICENSE TO UCAR CARBON FOR COLLABORATION

3.2 BPS hereby grants to UCAR CARBON a non-exclusive, non-transferable,
royalty-free, right (without the right to sub-license) to use, subject to
Section 3.1, the BPS Background IPR and the BPS

                                       9
<PAGE>   11
-5-

Arising IPR (in each case subject to the confidentiality obligations contained
in Part 4) until the end of the Collaboration Period for the sole purpose of
carrying out the work under the Collaboration. For greater certainty the license
granted by BPS to UCAR CARBON under this Section 3.2 does not include any right
to manufacture, sell or distribute products using, or to otherwise exploit, the
BPS Background IPR or the BPS Arising IPR for any other purpose.

UCAR CARBON'S LICENSE TO BPS FOR COLLABORATION

3.3 UCAR CARBON hereby grants to BPS a non-exclusive, non-transferable,
royalty-free, right (without the right to sub-license) to use, subject to
Section 3.1, the UCAR Background IPR and the UCAR Arising IPR (in each case
subject to the confidentiality obligations contained in Part 4) until the end of
the Collaboration Period for the sole purpose of carrying out the work under the
Collaboration. For greater certainty, except as otherwise set forth in
Section 2.9 and Part 7, the license granted by UCAR CARBON to BPS under this
Section 3.3 does not include any right to manufacture, sell or distribute
products using, or to otherwise exploit, the UCAR Background IPR or the UCAR
Arising IPR for any other purpose.

OWNERSHIP OF ARISING IPR

3.4 Where pursuant to the Collaboration any Intellectual Property which
specifically relates to the Materials or the Target Products is invented,
discovered, improved or otherwise developed or made by one party, such party
will disclose the same to the other. Regardless of inventorship, ownership of
all Intellectual Property in any such invention, discovery, improvement or
development will vest immediately and is hereby assigned in accordance with the
definitions of BPS Arising IPR and UCAR Arising IPR. To this end the parties
will execute or cause to be executed such deeds, documents, instruments,
assignments and moral rights waivers as may be necessary to effect the intent of
this Section 3.4.

PATENTS

3.5 Each party that is entitled to ownership of any Intellectual Property
created pursuant to the Collaboration as described in Section 3.4 will, at its
option, prosecute patents with respect to the same. Each party will execute all
such documents, execute or obtain such assignments and waivers, including
waivers of moral rights, and do all such other things as are reasonably
requested by the owner of such Intellectual Property in connection with any
application or prosecution of patents in respect of the same and will assist the
owner in all respects necessary to enable filing and prosecution of any such
application. The owner will be responsible for filing, prosecuting and
maintaining patent applications it files.

CONSENT TO USE OF CONFIDENTIAL INFORMATION

3.6 Neither party's patent applications may include any Background IPR, Arising
IPR or Confidential Information of the other without the express written consent
of the other party.

INFRINGEMENT CLAIM

3.7 If during the Collaboration Period either party discovers any third party
infringement of IPR
                                       10
<PAGE>   12
-5-

belonging to either party, it will promptly notify the other party.

                                     PART 4

                                 CONFIDENTIALITY

CONFIDENTIALITY OBLIGATIONS

4.1 Each party (for purposes of this Part 4, the "Recipient"), at all times
during the Collaboration Period and for a period of ten years after the expiry
thereof,

    (a) will, and will ensure that each of its directors, officers, employees,
        Affiliates, licensees, including sublicensees (collectively, the
        "Recipient's Agents") will, hold in confidence and keep confidential the
        Confidential Information of a party (the "Disclosing Party") disclosed
        to it by the Disclosing Party,

    (b) will not, and will ensure that the Recipient's Agents will not, directly
        or indirectly, use or disclose any such Confidential Information except
        to the extent that it is strictly necessary for the Collaboration,

    (c) will cause the Recipient's Agents that are recipients of or exposed to
        such Confidential Information, to execute confidentiality agreements to
        protect the same,

    (d) will not, and will ensure that the Recipient's Agents will not, except
        to the extent necessary for the Collaboration, make copies of or
        otherwise reproduce such Confidential Information, and

    (e) will, and will ensure that each of the Recipient's Agents will, use
        commercially reasonable best efforts to maintain all such Confidential
        Information in a manner so as to protect the same against wrongful
        disclosure, misuse, espionage and theft.

EXCEPTIONS FOR CONFIDENTIALITY

    4.2 Nothing in this Agreement will prevent the Recipient or the Recipient's
Agents from making use of or disclosing any Confidential Information disclosed
to them by the Disclosing Party

(a) which is or becomes generally available to the public through no breach of
this Agreement or any other obligation of the Recipient or the Recipient's
Agents to the Disclosing Party,

(b) of which the Recipient or the Recipient's Agents had knowledge before the
date of this Agreement, as evidenced by competent proof, unless the same was
disclosed to the Recipient or the Recipient's Agents by the Disclosing Party,

(c) of which the Recipient or the Recipient's Agents obtained knowledge from a
third party, as evidenced by competent proof, unless such third party obtained
such Confidential Information in violation of any duty of confidence owed to
the Disclosing Party, or

(d) which is required to be disclosed pursuant to law or a rule, regulation,
policy or order of a governmental authority having jurisdiction or pursuant to
a final order or judgment of a court of competent jurisdiction and in such case
the parties will cooperate with one another to obtain an appropriate

                                       11
<PAGE>   13
-5-

protective order or other reliable assurance that confidential treatment will be
afforded to such Confidential Information.

EMPLOYMENT RELATIONS

4.3 Neither party will, during the Collaboration Period and for a period of two
years next after the expiry thereof, solicit for employment any individual who
is, at the time of such solicitation, employed by the other party or its
Affiliates nor will such party, directly or indirectly, induce any such
individual to leave his or her employment. Nothing herein will prevent a party
from employing any such employee so long as no solicitation or inducement has
been made to such employee by or on behalf of such party.

REASONABLE RESTRICTION

4.4 Each party agrees that the restrictions contained in this Part 4 are
reasonable for the protection of the respective legitimate business interests of
the parties.

NON-DISCLOSURE OF COLLABORATION

4.5 Except as may be required by law or applicable securities regulatory
authorities, neither party will make public the existence of this Agreement or
the Collaboration hereunder or the negotiations leading to or pursuant to this
Agreement, without the written consent of the other party. Notwithstanding the
foregoing, as soon as reasonably practicable after the execution by the parties
of an agreement governing the supply of the Materials by UCAR CARBON to BPS as
contemplated in Section 5.1, each party will be entitled to make public the
existence of such agreement provided that the form and substance of any such
publicity is first approved by the other party.

MUTUAL SECRECY AGREEMENT

4.6 The provisions of the Mutual Secrecy Agreement (and not Section 4.1 and
Section 4.2 hereof) will apply to all "Proprietary Information" (as defined in
such agreement) disclosed by the parties to one another before the Effective
Date notwithstanding that such Proprietary Information may be disclosed again as
Confidential Information under this Agreement.

ADDITIONAL CONFIDENTIALITY OBLIGATION OF UCAR CARBON

4.7 During the Exclusive Period, UCAR CARBON will not use or disclose, or permit
the use or disclosure of, any IPR that are the subject matter of the license
granted by UCAR to BPS under Section 2.9 other than for the purposes specified
in Section 2.9 and Section 2.10.

                                     PART 5

                                     SUPPLY

SUPPLY

5.1 UCAR CARBON will manufacture and supply to BPS, and BPS will purchase from
UCAR

                                       12
<PAGE>   14
-5-

CARBON, all of BPS's requirements of the Materials during the Collaboration
Period; provided that BPS may acquire the Materials from sources other than UCAR
CARBON for electrically conductive fuel cell separator plates during that
period, but solely for benchmarking. The parties will negotiate in good faith
and use all commercially reasonable best efforts to conclude, within 90 days
after the Effective Date or such other date as may be agreed to by the parties
in writing (the "Supply Agreement Deadline Date"), an agreement governing the
supply of the Materials, both during and beyond the Collaboration Period, by
UCAR CARBON to BPS and, where required by BPS, to BPS's Affiliates and
licensees.

                                     PART 6

                               DISPUTE RESOLUTION

INITIATION OF PROCESS

6.1 If at any time a dispute between the parties with respect to any matter
relating to this Agreement arises, a party that wishes that the issue be
considered further may give written notice (the "Dispute Notice") to the other
and to the Committee requiring that such issue or dispute be decided pursuant to
this Part 6.

REFERRAL TO COMMITTEE

6.2 If a Dispute Notice is given, either party may, in the first instance, ask
the Committee to initiate discussions with a view to settling the issue or
matter. A decision reached by the Committee and communicated by it in writing to
the parties will be binding on the parties and will be implemented.

REFERRAL TO CHIEF EXECUTIVE OFFICERS

6.3 If no decision is communicated by the Committee within 30 days after such
issue or dispute is referred to it, either party may at any time before a
decision thereon is so communicated, ask the Chief Executive Officers of each of
the parties to initiate discussions with a view to settling the issue or matter.
Once the issue or dispute is referred to the Chief Executive Officers, the
Committee will no longer have jurisdiction to decide on the issue. A decision
reached by such Chief Executive Officers and communicated by them in writing to
the parties will be binding on the parties and will be implemented.

SUBMISSION TO ARBITRATION

6.4 If no decision is communicated by the Chief Executive Officers within 30
days after such issue or dispute is referred to them, either party may at any
time before a decision thereon is so communicated and less than 120 days after
delivery of the Dispute Notice, by further notice given to the other, submit the
issue or dispute for determination by a three member arbitration panel in
accordance with the rules of arbitration of the International Chamber of
Commerce.

ACCEPTANCE AND IMPLEMENTATION

                                       13
<PAGE>   15
-5-

6.5 Each of the parties will accept and proceed in good faith diligently to
implement the award or decision of the arbitrators on an arbitration pursuant to
Section 6.4.

PLACE OF ARBITRATION

6.6 All arbitration proceedings will be conducted in San Francisco, California
or in such other place as the parties may agree.

LEGAL PROCEEDINGS

6.7 A legal proceeding commenced by a party to this Agreement in respect of an
issue or dispute that may be arbitrated under this Agreement will be stayed
until the time during which arbitration may be initiated has expired or, if
arbitration is initiated, a decision on the arbitration is delivered or the
arbitration process has otherwise ended.

EXCLUSIONS

6.8 This Part 6 will not apply to the grant of provisional remedies, including
injunctions, restraining orders and specific performance, and each party
reserves its right to commence such action or seek such remedies from a court of
competent jurisdiction.

                                     PART 7

                                   TERMINATION

TERMINATION

7.1 Subject to earlier termination as provided in this Section 7.1, the
Collaboration hereunder will end as provided in Section 2.3. Thereafter the
Collaboration may be renewed year-to-year by mutual agreement. Notwithstanding
the foregoing, the Collaboration hereunder may be terminated by either party,

    (a) without cause, upon 90 days' written notice to the other to that effect,
        or

    (b) by written notice to the other, if the other becomes the subject to an
    Event of Default, or

    (c) by written notice to the other, if no agreement for the supply of the
    Materials by UCAR CARBON to BPS has been concluded by the Supply Agreement
    Deadline Date, or

    (d) by written notice to the other, if the parties

        (i) have completed the work required of them under the SOW before the
        end of the Collaboration Period, and

        (ii) cannot agree on additional work to be done or the milestones or
        other deliverables to be met, during the balance of the Collaboration
        Period.

RIGHTS AND OBLIGATIONS OF THE PARTIES AFTER TERMINATION

                                       14
<PAGE>   16

7.2 Notwithstanding the foregoing, all rights and obligations of the parties
accruing before the effective date of the termination of the Collaboration
herein and all rights and obligations expressly stated to continue after or
accrue as a result of, the termination of the Collaboration, will survive the
effective date of such termination and will continue in full force and effect,
provided that

    (a) if UCAR CARBON terminates the Collaboration herein without cause, or BPS
    terminates the Collaboration as a result of UCAR CARBON being the subject of
    an Event of Default,

        (i) Section2.10 will cease to apply, and

        (ii) subject to the confidentiality obligations under Part 4, BPS will
        have, and UCAR CARBON will be deemed to have granted to BPS, a
        perpetual, irrevocable, worldwide, non-exclusive, royalty-free and
        paid-up right and license, sublicensable by BPS, to exploit the UCAR
        Arising IPR and, to the extent reasonably necessary, the UCAR Background
        IPR, to enable BPS to make, have made, use or sell the Materials, in
        connection with the development, manufacture, use or sale of
        electrically conductive fuel cell separator plates. The grant of the
        license under this Section7.2(a)(ii) will be without prejudice and in
        addition to the license granted underSection2.9 and includes the right
        by BPS to disclose UCAR CARBON's Confidential Information to BPS's
        sublicensees in connection with the production, use or sale of the
        Materials. UCAR CARBON will promptly, upon request, transfer to and
        provide BPS with all relevant technology, information, training and
        technical assistance as may be necessary for such purpose at a fee that
        reflects no more than the reasonable cost of effecting such technology
        transfer, training and technical assistance,

    (b) if BPS terminates the Collaboration herein without cause, or UCAR CARBON
    terminates the Collaboration as a result of BPS being the subject of an
    Event of Default,

        (i) Section2.9 and Section2.10 will cease to apply, and

        (ii) subject to the confidentiality obligations under Part 4, BPS will
        provide UCAR CARBON with such irrevocable consents as may be necessary
        to permit UCAR CARBON to make, have made and sell the Materials,

    (c) if the supply agreement contemplated in Section5.1 is not concluded on
    or before the Supply Agreement Deadline Date, UCAR will, if so requested by
    BPS, continue supplying the Materials to BPS on commercially reasonable
    terms, at commercially reasonable prices for a period not exceeding 6
    months. If the parties fail to agree on such terms or prices within 60 days
    after the Supply Agreement Deadline Date, the matter will be determined by
    arbitration pursuant to Section6.4, mutatis mutandis,

    (d) Section7.2(a) and (b), Section2.8, Section2.9 and Section2.10 will be
    suspended if the agreement for the supply of the Materials by UCAR CARBON to
    BPS, as contemplated in Section5.1 has not been concluded on or before the
    Supply Agreement Deadline Date; provided that

        (i) subject to Section7.2(d)(ii), such provisions will reapply
        immediately following the execution of any such agreement at any time
        after such date, and

                                       15
<PAGE>   17
        (ii) such provisions will be deemed cancelled if such an agreement has
        not been concluded within 9 months after the Supply Agreement Deadline
        Date, and

    (e) for greater certainty, Section7.2(a) and Section7.2(b) will not apply if
    the Collaboration is terminated pursuant to Section7.1(d).

RETURN OF CONFIDENTIAL INFORMATION

7.3 Except as may be required for the purposes of effectively utilizing any
licensing rights arising upon or continuing after the end of the Collaboration,
forthwith upon termination of the Collaboration, each party will, upon request,
return or cause to be returned to the other all Confidential Information of the
other in its possession or under its control, regardless of form, including all
known and existing copies and reproductions thereof.

                                     PART 8

                                     GENERAL

MODIFICATIONS, APPROVALS AND CONSENTS

8.1 No amendment, modification, supplement, termination or waiver of any
provision of this Agreement will be effective unless in writing signed by the
appropriate party and then only in the specific instance and for the specific
purpose given.

FURTHER ASSURANCES

8.2 The parties will execute such further assurances and other documents and
instruments and do such further and other things as may be necessary to
implement and carry out the intent of this Agreement.

ENTIRE AGREEMENT

8.3 The provisions in this Agreement constitute the entire agreement between the
parties hereto and supersede all previous expectations, understandings,
communications, representations and agreements whether verbal or written between
the parties.

NOTICES

8.4 Every notice, request, demand, direction or other communication (each, for
the purposes of Section8.4, Section8.5 and Section8.6, a "Notice") required or
permitted to be given pursuant to this Agreement will be deemed to be well and
sufficiently given if in writing and delivered by hand (including recognized
overnight courier service) or transmitted by facsimile, in each case addressed
as follows:

    (a) if to BPS at:

        9000 Glenlyon Parkway

                             16
<PAGE>   18
        Burnaby, British Columbia
        Canada V5J 5J9
        Attention:        Chief Operating Officer
        Facsimile:        (604) 412-3131

        with a copy to BPS's Vice-President and General Counsel at the same
        address and facsimile number; and

    (b) if to UCAR CARBON at:

        3102 West End Avenue,
        Suite 1100
        Nashville, Tennessee
        USA 37203
        Attention:        The President
        Facsimile:        (615) 760-7797

        with a copy to UCAR CARBON's Vice-President and General Counsel at the
        same address and facsimile number;

or to such other address or transmission receiving station as is specified by
the particular party by Notice to the others.

DEEMED RECEIPT

8.5 Any Notice delivered or sent as aforesaid will be deemed conclusively to
have been effectively given and received on the day Notice was delivered or sent
as aforesaid if it was delivered or sent on a day that was a Business Day or on
the next day that is a Business Day if it was delivered or sent on a day that
was not a Business Day.

CHANGE OF ADDRESS

8.6 A party may at any time, by Notice to the others, change its address to some
no less convenient address and will so change its address whenever its address
ceases to be suitable for delivery by hand.

ENUREMENT

8.7 This Agreement will enure to the benefit of and be binding upon the parties
and their respective successors and permitted assigns.

APPLICABLE LAW

8.8 This Agreement will be deemed to have been made in British Columbia, Canada
and the construction, validity and performance of this Agreement will be
governed in all respects by the laws of British Columbia and applicable laws of
Canada. The application of the provisions of the United Nations Convention on
Contracts for the International Sale of Goods are hereby

                                       17
<PAGE>   19
excluded.

ATTORNMENT

8.9 Each party irrevocably attorns to the exclusive jurisdiction of the courts
of British Columbia, Canada and all courts having appellate jurisdiction
thereover in respect of any proceeding arising out of or relating to this
Agreement.

FORCE MAJEURE

8.10 Neither party will be liable to the other for default or delay in the
performance of its obligations under this Agreement if such default or delay is
caused by fire, strike, riot, war, act of God, delay of carriers, governmental
orders or regulation, complete or partial shutdown of plant by reason of
inability to obtain sufficient raw material or power, or any other occurrence
beyond the reasonable control of such party. The party whose performance is
prevented by any such occurrence will notify the other party of the same in
writing as soon as is reasonably possible after the commencement thereof, will
provide the other with full written particulars of such occurrence and attempts
made to remedy the same, will use commercially reasonable best efforts to remedy
such occurrence with all reasonable dispatch and, upon cessation of the
occurrence, will give prompt written notice to the other party of the same.

SEVERABILITY

8.11 If any provision contained in this Agreement is found by any court or
arbitrator for any reason, to be invalid, illegal or unenforceable in any
respect in any jurisdiction,

    (a) the validity, legality and enforceability of such provision will not in
    any way be affected or impaired thereby in any other jurisdiction and the
    validity, legality and enforceability of the remaining provisions contained
    herein will not in any way be affected or impaired thereby, unless in either
    case as a result of such determination this Agreement would fail in its
    essential purpose, and

    (b) the parties will use their best efforts to substitute for any provision
    that is invalid, illegal or unenforceable in any jurisdiction a valid and
    enforceable provision which achieves to the greatest extent possible the
    economic, legal and commercial objectives of such invalid, illegal or
    unenforceable provision and of this Agreement and, failing the agreement of
    the parties on such a substitution within 30 days after the finding of the
    court or arbitrator, either party may refer the matter for dispute
    resolution under Part 6.

COUNTERPARTS

8.12 This Agreement may be executed in counterparts or by facsimile, each of
which will together, for all purposes, constitute one and the same instrument,
binding on the parties, and each of which will together be deemed to be an
original, notwithstanding that both parties are not signatories to the same
counterpart or facsimile.

ASSIGNMENT

                                       18
<PAGE>   20
8.13 Neither party may assign any right, benefit or interest in this Agreement
without the written consent of the other party, and any purported assignment
without such consent will be void.

IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.

BALLARD POWER SYSTEMS INC.

By: /s/ Noordon S.K. Nanji
    ---------------------------------

Its: Vice President and General Counsel

UCAR CARBON COMPANY INC.

By: /s/ Peter B. Mancino
    --------------------

Its: Vice President

                                       19

<PAGE>   21
                                   Schedule A

                                Statement of Work

Project Plan For Materials and Target Products Development

BACKGROUND

The development of Materials for electrically conductive fuel cell separator
plates has taken several years and demonstrates that BPS and, where applicable,
one or more of its Affiliates (collectively "Ballard") and UCAR CARBON can work
together successfully. Because of the past success of the co-operative effort
and the technical aspects of the material we now need to enter into a closer
relationship and to focus our efforts on taking this product into high volume
production. To this end we have entered into a Collaboration Agreement and in
support of that agreement a detailed Development Plan has been constructed. This
plan has been developed in a series of meetings with UCAR CARBON, BPS and
Ballard Power Systems GmbH ("Ballard Germany"). This plan is intended to guide
the development and outline the resources needed to achieve our goals.

THE DEVELOPMENT PLAN

The work over the next few years has been divided into 5 programs. For each
program a "champion" has been selected at both Ballard and UCAR CARBON. Each of
these programs has interactions with the others and it will be a significant
challenge to co-ordinate the activities at the three work locations. Monthly
telephone meetings will be held by the team to discuss progress.

The plan will be guided by the Committee which will set goals and priorities.
The Committee will consist of a manager and one of the technical team leaders
from each of Ballard and UCAR CARBON. The Committee will meet twice annually to
evaluate progress and set or adjust the goals. The individual teams will be
responsible for detailed scheduling and planning.

Each of the programs discussed below (with the exception of the production
preparation study) has an iterative nature. Each program also has associated
technical risks. It is expected that each iteration will produce an improvement
than can be integrated with the results of other programs and used in the
continued development of the fuel cell. A second series of programs will then be
planned and executed to make further improvements. For this reason specific
deliverables have been identified for 1999 but not for future years. The
Committee should set these based on the progress made in 1999.

1.    Material [TEXT DELETED] for [TEXT DELETED]

Goal: To improve the ability of a Material to [TEXT DELETED].
      To improve the ability of the [TEXT DELETED]

Ballard Champion  David Brown
UCAR Champion     Jeff Gough
<PAGE>   22
Methodology:

The most important variable in the time it takes to [TEXT DELETED] the parts has
been shown to be the grade of Materials. Because the process time has a strong
effect on the process costs it is important to reduce it by identifying the
difference between grades of Materials that cause the effect. This study will be
undertaken to try to improve the Materials either by [TEXT DELETED], [TEXT
DELETED] or [TEXT DELETED], so that they can be [TEXT deleted] more easily. The
Materials inhibit the [TEXT DELETED] of [TEXT DELETED]. The reason for this
effect is unknown and significant [TEXT deleted] could be realized with a less
severe [TEXT DELETED]. For this work interaction with the [TEXT DELETED]
supplier is needed. UCAR CARBON will produce various test grades of Materials
and Ballard will perform [TEXT DELETED] studies on them. Leading Materials will
be qualified for use in Target Products in fuel cell stacks at Ballard.

Deliverables:

1.    UCAR CARBON will supply Ballard with different grades of Materials to
      enhance [TEXT DELETED] by 15 Jan 1999

2.    Ballard will finish evaluation by 12 march 1999

3.    Preliminary specification for new grade Materials with enhanced [TEXT
      DELETED] will be issued by the team before 10 May 1999. This specification
      will then be integrated in to other projects.

2.    Expanded Supply Base and Cost Reduction

Goal:  To reduce the cost of Materials by expanding the supply base and
reducing the chemical treatment costs.

Ballard Champion: Mike Sexsmith
UCAR Champion     Jeff Gough

Methodology:

The cost of the Materials depends on the [TEXT DELETED], [TEXT DELETED] and
[TEXT DELETED]. Each of these parameters interact with the final properties of
the Materials. New grades which meet the overall technical requirements must be
developed based on a broader supply base as well as less costly treatment
processes. As each of these variables will impact the chemistry of the
Materials, the new grades must be tested in fuel cells to determine if the [TEXT
DELETED] the fuel cells. UCAR CARBON will produce series of test grades of
Materials and screen them using leach tests. Ballard will then check the leading
Materials for performance in Target Products. From the initial matrix of grades
the most promising grades will integrated into the other programs. The aim will
be to qualify multiple grades from UCAR CARBON's existing sources.

Deliverables

1.    UCAR CARBON will supply Ballard with [TEXT DELETED] of Materials from
      [TEXT DELETED] and [TEXT DELETED] by Feb 18 1999.

2.    Ballard and UCAR CARBON will evaluate these grades of Materials Ex Situ by
      April 15, 1999.

                                       2
<PAGE>   23
3.    UCAR CARBON will deliver a new grade of Material [TEXT DELETED] and lower
      cost grades by July 5th 1999.

3.    Continuous Processing Study for [TEXT DELETED] of Target Products

Goal:  To develop a [TEXT DELETED] process to [TEXT DELETED] and [TEXT
DELETED] the Materials into Target Products.

Ballard Champion: Clemens Schwab
UCAR Champion     Jeff Gough

Methodology:

[TEXT DELETED] has been demonstrated to be an effective method for [TEXT
DELETED] electrically conductive fuel cell separator plates. It is now necessary
to study the process and optimize the process parameters to give the highest
rate with the best plate properties. The primary variables to study are [TEXT
DELETED], [TEXT DELETED], [TEXT DELETED] and [TEXT DELETED]. The primary output
parameters are [TEXT DELETED], [TEXT DELETED], [TEXT DELETED], [TEXT DELETED]
and quality of [TEXT DELETED]. A set of tools will be commissioned and used to
test a matrix of starting Materials. As new grades are developed in the other
studies they will be integrated into this program. This is the expected process
for Mk9O2 parts electrically conductive fuel cell separator plates.

Deliverables

1.    UCAR CARBON will deliver first [TEXT DELETED] samples of the [TEXT
      DELETED] Material to Ballard Germany by Nov 30 1998. Second [TEXT DELETED]
      of [TEXT DELETED] to be delivered by the end of March 1999.

2.    Ballard will demonstrate the feasibility of [TEXT DELETED] and [TEXT
      DELETED] the Materials [TEXT DELETED] to [TEXT DELETED] Target Products by
      April 12 1999.

4.    Advanced Material Development

Goal:  To develop a [TEXT DELETED] Material based on expanded graphite which
can be formed [TEXT DELETED] into a Target Product.

Ballard Champion: Andreas Gaulhofer
UCAR Champion:    Michael Wardrupp

Methodology:

A [TEXT DELETED] Material grade has been demonstrated to meet many of our
requirements. Further work is needed to define the actual composition of the new
Material. As the composition is refined, [TEXT DELETED] trials will be carried
out to determine the processing characteristics. Initially this will be done
with [TEXT DELETED] and when the Material is more developed [TEXT DELETED] will
be made to [TEXT DELETED] the Material into Target Products. As work progresses
in developing lower cost grades of Materials and [TEXT DELETED], these concepts
will be integrated

                                       3
<PAGE>   24
into this program.

1.    UCAR CARBON will deliver to Ballard 4 [TEXT DELETED] of [TEXT DELETED]
      Materials in 1999.

2.    UCAR CARBON will demonstrate a [TEXT DELETED] at a laboratory scale on
      July 30 1999.

3.    Ballard will examine each set of [TEXT DELETED] Material and report on its
      suitability for use in Target Products within 2 months after the delivery
      date.

4.    UCAR CARBON and Ballard will issue a preliminary specification for the
      [TEXT DELETED] to be incorporated in the Material on July 30 1999.

5.    Target Product Production Preparation Study

Goal: To determine what infrastructure will be needed for high volume production
of Target Products. The process logistics and cost structure will be determined
based on the different technology options.

Ballard Champion: David Brown (Peter Hedrich)
UCAR Champion:    Walter Burroughs

Methodology:

As the production volumes of Target Products begin to rise, the [TEXT deleted]
and [TEXT DELETED] will no longer meet our needs. The study must identify all of
the [TEXT DELETED] ([TEXT DELETED], [TEXT DELETED], [TEXT DELETED] etc.) needed
to build such Target Product production line and to determine what the most
[TEXT DELETED] is for the [TEXT DELETED] of work. The study should form the
basis of an [TEXT DELETED] for the [TEXT DELETED] Ballard commercial production
line.

Deliverables

1.    Ballard and UCAR CARBON will issue preliminary [TEXT DELETED] of an [TEXT
      DELETED], which define the basic process from [TEXT DELETED] to Materials
      to Target Products by June 30 1999.

2.    Ballard and UCAR CARBON to define milestones and critical dates by Dec
      1999 for implementation activities to meet commercial production goals.

3.    Ballard and UCAR CARBON to define the possible [TEXT DELETED] of [TEXT
      DELETED] and [TEXT DELETED] for all [TEXT DELETED] and [TEXT DELETED]
      needed for the [TEXT DELETED] by [TEXT DELETED].

                                       4
<PAGE>   25
                                   Schedule B

                                List of Materials

<TABLE>
<CAPTION>
Grade                 Date Sent       Description
<S>                   <C>             <C>
[TEXT DELETED]         9/6/96         Qualified for use in [TEXT DELETED]
[TEXT DELETED]         1/31/97        [TEXT DELETED]
[TEXT DELETED]         10/1/98        Qualified for use in [TEXT DELETED]
[TEXT DELETED]         8/26/98        [TEXT DELETED]
[TEXT DELETED]         3/17/97        [TEXT DELETED]
[TEXT DELETED]         2/3/99         [TEXT DELETED] with [TEXT DELETED]
[TEXT DELETED]         10/3/97        [TEXT DELETED]
[TEXT DELETED]         10/3/97        [TEXT DELETED]
[TEXT DELETED]         4/23/98        [TEXT DELETED]
[TEXT DELETED]         12/16/98       [TEXT DELETED] materials
[TEXT DELETED]         12/16/98       [TEXT DELETED] materials
[TEXT DELETED]         12/16/98       [TEXT DELETED] materials
[TEXT DELETED]         12/16/98       [TEXT DELETED] materials
[TEXT DELETED]         12/16/98       [TEXT DELETED] materials
[TEXT DELETED]         12/16/98       [TEXT DELETED] materials
[TEXT DELETED]         2/3/99         [TEXT DELETED] graphite
[TEXT DELETED]         2/3/99         [TEXT DELETED] graphite
[TEXT DELETED]         2/3/99         [TEXT DELETED] graphite
[TEXT DELETED]         2/3/99         [TEXT DELETED] graphite with [TEXT DELETED]
</TABLE>
<PAGE>   26
                                   Schedule C

                            MUTUAL SECRECY AGREEMENT

      This AGREEMENT effective as of the 17th day of May, 1996, is between UCAR
CARBON COMPANY INC., a Delaware corporation, having offices at 39 Old Ridgebury
Road, Danbury, Connecticut 06817 (hereinafter referred to as "UCAR CARBON"); and
BALLARD POWER SYSTEMS INC., having an office at 9000 Glenlyon Parkway, Burnaby,
B.C. Canada V5J 5J9 (hereinafter referred to as "BALLARD").

      WHEREAS, UCAR CARBON possesses certain proprietary information
(hereinafter UCAR CARBON Proprietary Information) relating to the manufacture of
flexible graphite for use in fuel cells.

      WHEREAS, BALLARD possesses certain proprietary information (hereinafter
BALLARD Proprietary Information) relating to fuel cells and components for fuel
cells.

      WHEREAS, UCAR CARBON and BALLARD desire to exchange such proprietary
information (hereinafter individually and collectively referred to as
"Proprietary Information") for the purpose of UCAR CARBON supplying flexible
graphite produced employing UCAR CARBON Proprietary Information to BALLARD under
a separate purchase order.

      WHEREAS, each party is willing to disclose to the other party its
Proprietary Information for the specific purposes of this Agreement under the
following conditions:

      1. During the term of this Agreement, the receiving party agrees to hold
in confidence and not disclose to any person or persons, other than its
employees with a need to know, or use except for the purpose of this agreement,
for a period of fifteen (15) years from the date of each disclosure, any and all
Proprietary Information disclosed in writing and identified as Proprietary
Information by the disclosing party. If Proprietary Information is disclosed
orally or
<PAGE>   27
in other than written form, it must be identified as Proprietary
Information at the time of disclosure and summarized in writing and identified
as Proprietary Information by the disclosing party within thirty (30) days from
the date of the disclosure. It is understood that the foregoing obligation of
confidentiality does not apply to:

      a)    information which at the time of disclosure is in the public
            domain;

      b)    information which is published or otherwise becomes part of the
            public domain through no fault of the receiving party after the
            disclosure hereunder;

      c)    information which the receiving party can demonstrate by reasonably
            convincing evidence is already known or in the possession of the
            receiving party at the time of disclosure hereunder;

      d)    information that the receiving party can show was received by it
            after the time of the disclosure hereunder from a third party on a
            non-confidential basis who did not acquire such information directly
            or indirectly from the disclosing party under an obligation of
            confidence; or

      e)    information that is developed by an employee of the receiving party
            independent of any such disclosure under this Agreement.

      2. The receiving party agrees to use at least the same degree of care in
maintaining the other party's Proprietary Information confidential as it does
for maintaining the confidentiality of its own Proprietary Information of a
similar nature.

      3. The receiving party agrees not to copy any Proprietary Information
without the written permission of the disclosing party, and shall return such
Proprietary Information and any copies when requested to do so by the disclosing
party during the term of this Agreement

      4. No license, express or implied, is granted by either party to the other
party under any patent, trade secret or copyright now or hereafter owned by
either party under this Agreement.

      5. This Agreement shall be construed and interpreted, and its performance
shall be
<PAGE>   28
governed by substantive laws of the state of Connecticut, U.S.A., without
recourse to its conflict of laws, rules or principles.

      6. Either party upon thirty (30) days notice given in writing to the other
party may terminate this Agreement. However, termination of the Agreement will
not affect the confidentiality and non-use obligations of either party.

AGREED:

BALLARD POWER SYSTEMS INC.                UCAR CARBON COMPANY INC.

By  /s/ Keith B. Prater                   By  /s/ R.M. Flowers
    -------------------                       ----------------
Name    Keith B. Prater                   Name    R.M. Flowers
Title   Vice President                    Title   Dir.-Worldwide Tech.

Date  21 Jun 96                           Date  July 2, 1996
      ---------                                 ------------
<PAGE>   29
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
PART 1 DEFINITIONS AND INTERPRETATIONS..................................     2

DEFINITIONS.............................................................     2

INTERPRETATION..........................................................     5

SCHEDULES...............................................................     6

PART 2 COLLABORATION....................................................     6

COLLABORATION...........................................................     6

LIMITED PURPOSE.........................................................     7

COLLABORATION TERM......................................................     7

STEERING COMMITTEE......................................................     7

DUTIES OF COMMITTEE.....................................................     7

WORK AND COSTS..........................................................     8

PROJECT MANAGER.........................................................     8

PRODUCT DEVELOPMENT LEAD TIME...........................................     8

LICENSE BY UCAR.........................................................     9

SUBLICENSE BY BPS.......................................................     9

PART 3 INTELLECTUAL PROPERTY............................................    10

DISCLOSURE OF IPR FOR THE COLLABORATION.................................    10

BPS'S LICENSE TO UCAR CARBON FOR COLLABORATION..........................    10

UCAR CARBON'S LICENSE TO BPS FOR COLLABORATION..........................    10

OWNERSHIP OF ARISING IPR................................................    10

PATENTS.................................................................    10

CONSENT TO USE OF CONFIDENTIAL INFORMATION..............................    11

INFRINGEMENT CLAIM......................................................    11

PART 4  CONFIDENTIALITY.................................................    11

CONFIDENTIALITY OBLIGATIONS.............................................    11

EXCEPTIONS FOR CONFIDENTIALITY..........................................    11

EMPLOYMENT RELATIONS....................................................    12

REASONABLE RESTRICTION..................................................    12

NON-DISCLOSURE OF COLLABORATION.........................................    12
</TABLE>

                                      -i-
<PAGE>   30
                               TABLE OF CONTENTS
                                   (Continued)

<TABLE>
                                                                           Page
                                                                          -----
<S>                                                                      <C>
MUTUAL SECRECY AGREEMENT................................................    12

ADDITIONAL CONFIDENTIALITY OBLIGATION OF UCAR CARBON....................    13

PART 5 SUPPLY...........................................................    13

SUPPLY..................................................................    13

PART 6  DISPUTE RESOLUTION..............................................    13

INITIATION OF PROCESS...................................................    13

REFERRAL TO COMMITTEE...................................................    13

REFERRAL TO CHIEF EXECUTIVE OFFICERS....................................    13

SUBMISSION TO ARBITRATION...............................................    14

ACCEPTANCE AND IMPLEMENTATION...........................................    14

PLACE OF ARBITRATION....................................................    14

LEGAL PROCEEDINGS.......................................................    14

EXCLUSIONS..............................................................    14

PART 7  TERMINATION.....................................................    14

TERMINATION.............................................................    14

RIGHTS AND OBLIGATIONS OF THE PARTIES AFTER TERMINATION.................    15

RETURN OF CONFIDENTIAL INFORMATION......................................    16

PART 8  GENERAL.........................................................    16

MODIFICATIONS, APPROVALS AND CONSENTS...................................    16

FURTHER ASSURANCES......................................................    17

ENTIRE AGREEMENT........................................................    17

NOTICES.................................................................    17

DEEMED RECEIPT..........................................................    18

CHANGE OF ADDRESS.......................................................    18

ENUREMENT...............................................................    18

APPLICABLE LAW..........................................................    18

ATTORNMENT..............................................................    18

FORCE MAJEURE...........................................................    18

SEVERABILITY............................................................    19

COUNTERPARTS............................................................    19
</TABLE>

                                      -ii-
<PAGE>   31
                               TABLE OF CONTENTS
                                   (Continued)

<TABLE>
                                                                           Page
                                                                          -----
<S>                                                                      <C>
ASSIGNMENT..............................................................    19
</TABLE>

                                      -iii-<PAGE>   1
                                                                    Exhibit 10.7

               CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED
                  BASED ON A REQUEST FOR CONFIDENTIAL TREATMENT

                   OMITTED PORTIONS HAVE BEEN SEPARATELY FILED
                   WITH THE SECURITIES AND EXCHANGE COMMISSION

                                SUPPLY AGREEMENT

THIS AGREEMENT is made the _____ day of _________, 1999

BETWEEN:

                  UCAR CARBON COMPANY INC., a Delaware corporation having an
                  office at 3102 West End Avenue, Suite 1100, Nashville,
                  Tennessee, 37203, USA

                  ("UCAR CARBON")

AND:

                  BALLARD POWER SYSTEMS INC., a company organized and existing
                  under the laws of Canada, the main office of which is at 9000
                  Glenlyon Parkway, Burnaby, British Columbia, Canada V5J 5J9

                   ("BPS")

WHEREAS:

A)       UCAR CARBON and BPS have entered into the Collaboration Agreement for
the development of Target Products;

(B)      BPS seeks an assured source of supply of the Materials in connection
with the development and manufacture of electrically conductive fuel cell
separator plates;

(C)      BPS wishes to purchase from UCAR CARBON, and UCAR CARBON wishes to
supply to BPS, the Materials, on the terms and subject to the conditions set
forth in this Agreement;

NOW THEREFORE the parties covenant and agree as follows:
<PAGE>   2
                                     PART 1

                         DEFINITIONS AND INTERPRETATION

DEFINITIONS

1.1      In this Agreement, including the recitals and schedules, except as
expressly provided or unless the context otherwise requires,

         AFFILIATE, in relation to a specified Person, means a Person that
         directly or indirectly controls, is under common control with, or is
         controlled by the specified Person, and for the purposes hereof, a
         Person will be deemed to CONTROL a corporation if

                  (a)      securities of the corporation to which are attached
                  more than 50% of the votes that may be cast to elect directors
                  of the specified corporation or other rights to elect a
                  majority of the directors are held, other than by way of
                  security only, by or for the benefit of the Person, and

                  (b)      the votes attached to those securities are
                  sufficient, if exercised, to elect a majority of the directors
                  of the corporation,

         BUSINESS DAY means a day that is not a Saturday, a Sunday or a British
         Columbia provincial, Canadian federal, United States national or
         Tennessee state, holiday,

         CHIEF EXECUTIVE OFFICER means, in the case of BPS, BPS's Chief
         Operating Officer and in the case of UCAR CARBON, UCAR CARBON's
         President,

         COLLABORATION has the meaning ascribed to it in the Collaboration
         Agreement,

         COLLABORATION AGREEMENT means the Collaboration Agreement between UCAR
         CARBON and BPS made May 3, 1999,

         COMMENCEMENT DATE means the date of execution of this Agreement,

         CONFIDENTIAL INFORMATION means, in relation to a Person, information
         known or used by such Person in connection with its business or
         technology, including, but not limited to, such Person's Intellectual
         Property, customer information, financial information, marketing
         information, and information as to business opportunities and research
         and development,

         DISCLOSING PARTY has the meaning ascribed to it in Section 6.1,

         EVENT OF DEFAULT in relation to a party means an event of default
         arising as a result of a party being subject to one or more of the
         following circumstances:

                  (a)      an order is made or a resolution is passed or a
                  petition is filed by such
<PAGE>   3
                  party for the liquidation, dissolution or winding-up of such
                  party,

                  (b)      such party is in material breach of its obligations
                  under Part 6,

                  (c)      such party commits a material default in observing or
                  performing any other material covenant, agreement or condition
                  of this Agreement on its part to be observed or performed and,
                  where such breach is curable, does not rectify or cure such
                  breach within 30 days after receipt of written notice from the
                  other party to this Agreement specifying such breach;

                  (d)      an execution, sequestration or any other process of
                  any court becomes enforceable against such party or any
                  distress or analogous process is levied upon any material part
                  of the property, assets or undertaking of such party and any
                  such process or distress is not stayed or otherwise suspended
                  by a court of competent jurisdiction within 30 days and has,
                  or could have, a material adverse effect on the business or
                  condition, financial or otherwise, of such party;

                  (e)      such party applies to be put in bankruptcy, takes any
                  action that would permit its creditors to make an application
                  to put such party in bankruptcy, is adjudged or declared
                  bankrupt or makes an assignment for the benefit of creditors,
                  consents to a proposal or similar action under any bankruptcy
                  or insolvency legislation applicable to it, or commences any
                  other proceedings relating to it under any reorganization,
                  arrangement, readjustment of debt, dissolution or liquidation
                  law or statute of any jurisdiction whether now or hereafter in
                  effect, or consents to any such proceeding;

                  (f)      a custodian, liquidator, receiver, receiver and
                  manager, receiver-manager, trustee or any other person with
                  similar powers is appointed for such party or in respect of
                  any material property or assets or material part of the
                  property or assets of such party and not discharged within 30
                  days after its appointment and before any action is taken by
                  it in respect of such property or assets which will materially
                  affect the rights of the parties to this Agreement thereto;

                  (g)      a final, non-appealable, decision of any judicial,
                  administrative, governmental or other authority or arbitrator
                  is made which enjoins or restrains or renders illegal or
                  unenforceable, the performance or observance by such party of
                  any material term of this Agreement;

         EXCLUSIVE LICENSE means the exclusive license granted by UCAR to BPS
         under Section 2.9 of the Collaboration Agreement,

         FIRST YEAR MATERIALS FORECAST means BPS's preliminary forecast of its
         requirements for the Materials for the first Year of this Agreement as
         set forth in Schedule B,

         FIRST YEAR MATERIALS PRICING means the pricing of the Materials
         described in Schedule C based on and applicable to the First Year
         Materials Forecast,
<PAGE>   4
         FORCE MAJEURE means an act of God, strike, lockout or other industrial
         disturbance, war, blockade, insurrection, riot, earthquake, typhoon,
         hurricane, flood, fire, explosion or other similar occurrence beyond
         the reasonable control of a party which prevents such party from
         performing its obligations under the Agreement,

         INTELLECTUAL PROPERTY means in relation to a Person, each patent,
         patent application, industrial design, invention, design, trade secret,
         idea, work, methodology, technology, innovation, creation, concept,
         moral right, development drawing, research, analysis, know-how,
         experiment, copyright, data, formula, method, procedure, process,
         system or technique of such Person, but does not include trademarks or
         tradenames,

         LICENSE has the meaning ascribed to it in Section 5.1,

         MATERIALS means any one or more of treated graphite flakes, expanded
         graphite flakes and flexible graphite (commonly referred to as graphite
         sheet or foil) [TEXT DELETED] or other [TEXT DELETED] or [TEXT DELETED]
         developed pursuant to the Collaboration, as well as such materials
         developed by UCAR CARBON before the Effective Date (as defined in the
         Collaboration Agreement), including, but not limited to the materials
         listed in Schedule A to the Collaboration Agreement,

         MUTUAL SECRECY AGREEMENT has the meaning ascribed to it in the
         Collaboration Agreement,

         NOTICE has the meaning ascribed to it in Section 9.4,

         PERSON means an individual, corporation, body corporate, firm, limited
         liability company, partnership, syndicate, joint venture, society,
         association, trust or unincorporated organization or trustee or other
         such legal representative,

         PEM FUEL CELL means a solid polymer fuel cell and includes a direct
         oxidation fuel cell,

         RECIPIENT has the meaning ascribed to it in Section 6.1,

         RECIPIENT'S AGENTS has the meaning ascribed to it in Section 6.1(a),

         SPECIFICATIONS means BPS's specifications for the Materials as set
         forth in Schedule A or such other specifications for the same as the
         parties may agree from time to time,

         SUPPLIER EVALUATION SYSTEM means at any particular time, BPS's then
         existing standard of evaluating supplier performance and product
         quality, the current criteria in respect of which is set forth in
         Schedule D,

         TARGET PRODUCT means an electrically conductive fuel cell separator
         plate developed pursuant to the Collaboration utilizing any of the
         Materials,

         TERMS AND CONDITIONS means the terms and conditions of purchase set
         forth in Section 3.1 as may be amended from time to time by the
         parties, and
<PAGE>   5
         YEAR means the period of 12 months commencing on the Commencement Date
         and where applicable, each consecutive period of 12 months thereafter
         during the term of this Agreement.

INTERPRETATION

1.2      In this Agreement, except as otherwise expressly provided or unless the
context otherwise requires,

         (a)      "this Agreement" means this Supply Agreement, including the
         Schedules hereto, as from time to time supplemented or amended by one
         or more agreements entered into pursuant to the applicable provisions
         hereof,

         (b)      the headings in this Agreement are inserted for convenience
         only and do not form a part of this Agreement and are not intended to
         interpret, define or limit the scope, extent or intent of this
         Agreement or any provision hereof,

         (c)      the word "including", when following any general statement or
         term, is not to be construed as limiting the general statement or term
         to the specific items or matters set forth or to similar items or
         matters, but rather as permitting the general statement or term to
         refer to all other items or matters that could reasonably fall within
         its broadest possible scope,

         (d)      all accounting terms not otherwise defined herein have the
         meanings assigned to them in accordance with Canadian generally
         accepted accounting principles applied on a consistent basis,

         (e)      except where otherwise specified, all references to currency
         mean currency of the United States of America,

         (f)      a reference to a statute includes all regulations made
         thereunder, all amendments to the statute or regulations in force from
         time to time, and any statute or regulation that supplements or
         supersedes such statute or regulations,

         (g)      a reference to an entity includes any successor to that
         entity,

         (h)      words importing the masculine gender include the feminine or
         neuter, words in the singular include the plural, words importing a
         corporate entity include individuals, and vice versa,

         (i)      a reference to "approval", "authorization" or "consent" means
         written approval, authorization or consent,

         (j)      a reference to a Part is to a Part of this Agreement and the
         symbol Section followed by a number or some combination of numbers and
         letters refers to the section, paragraph, subparagraph, clause or
         subclause of this Agreement so designated.
<PAGE>   6
SCHEDULES

1.3      The following are the schedules attached and incorporated in this
Agreement by reference and are deemed to form a part hereof:

<TABLE>
<S>                                <C>
          Schedule A               Materials Specifications
          Schedule B               First Year Products Forecast
          Schedule C               First Year Products Pricing
          Schedule D               Supplier Evaluation System Criteria
</TABLE>

                                     PART 2

                                SALE OF MATERIALS

MATERIALS SALE

2.1      During the term of this Agreement, BPS will purchase from UCAR CARBON,
and UCAR CARBON will sell to BPS, all of BPS's requirements of the Materials in
connection with the development and manufacture of electrically conductive fuel
cell separator plates. Notwithstanding the foregoing, BPS may acquire treated
graphite flakes, expanded graphite flakes and flexible graphite from sources
other than UCAR CARBON, but solely for benchmarking purposes. BPS's obligations
under this Section 2.1 are subject to BPS qualifying the Materials according to
the quality assurance procedures as defined in BPS's quality assurance manual
and UCAR CARBON being able, on a consistent basis, to meet BPS's requirements as
to pricing, delivery, quality and service in respect of the Materials from time
to time.

SUPPLIER EVALUATION SYSTEM

2.2      In evaluating whether or not UCAR CARBON is meeting BPS's requirements
as to pricing, delivery, quality and service, BPS will utilize its Supplier
Evaluation System. BPS will provide UCAR CARBON with, and train UCAR CARBON as
to its then current criteria in respect of, its Supplier Evaluation System. No
change to the Supplier Evaluation System will be effective as to UCAR CARBON
until the parties have agreed to such change. If UCAR CARBON is unable to meet
BPS's requirements as aforesaid or any agreed changes thereto within six months
after being requested to do so BPS will be deemed to have been granted a Default
License, as defined in Section 5.2, for such time as UCAR CARBON remains in
non-compliance and BPS may acquire the Materials from one or more alternative
sources without prejudice to its rights to continue acquiring the Materials from
UCAR CARBON under this Agreement. UCAR CARBON may revoke the Default License
granted pursuant to this Section 2.2 at such time as it becomes compliant under
this section. Upon revocation of the Default License, all sublicenses granted as
a result shall be revoked by BPS and UCAR CARBON shall [TEXT DELETED] from [TEXT
DELETED] any [TEXT DELETED] that BPS may have acquired, if any, for the [TEXT
DELETED] of [TEXT DELETED] and [TEXT DELETED] BPS's related, [TEXT DELETED] and
[TEXT DELETED] under the Default License. The purchase price for the [TEXT
DELETED] shall be the value of the [TEXT DELETED] as recorded on the books of
BPS as of the date of purchase subject to normal accounting practices with
regard to
<PAGE>   7
[TEXT DELETED].

MOST FAVOURED CUSTOMER

2.3      If after termination of the Exclusive Period as defined in Section 2.9
of the Collaboration Agreement, UCAR CARBON sells or supplies or offers to sell
or supply to another Person a like quantity of like Materials under like
circumstances at a price or on other terms that are more favourable to such
Person than the price or other terms offered to BPS, UCAR CARBON will so inform
BPS promptly. If in any [TEXT DELETED] period the price at which Materials are
sold or offered for sale to such Person is [TEXT DELETED] than the [TEXT
DELETED] or [TEXT DELETED] to BPS for a [TEXT DELETED] quantity of [TEXT
DELETED] Materials on [TEXT DELETED] terms during such period, the [TEXT
DELETED] by BPS to UCAR CARBON for the Materials will automatically be [TEXT
DELETED] to that [TEXT DELETED] price from the date on which such price was
[TEXT DELETED] to the other person. If the other [TEXT DELETED] to such other
Person are more [TEXT DELETED] than the [TEXT DELETED] to BPS, such [TEXT
DELETED] to BPS will be amended so that the more [TEXT DELETED] terms will apply
to all [TEXT DELETED] and as to all [TEXT DELETED] between BPS and UCAR CARBON.
Where applicable, the parties will make such adjustments to payments or
otherwise as may be necessary to fulfill the intent of this Section 2.3.

FIRST YEAR FORECAST AND PRICING

2.4      During the first year of this Agreement BPS agrees to buy at a minimum
the quantities set out in BPS's First Year Materials Forecast as set forth in
Schedule B and UCAR CARBON agrees to sell Materials at the prices set forth in
UCAR CARBON'S First Year Materials Pricing as set forth in Schedule C. UCAR
CARBON's pricing and delivery schedule for the first year is subject to change
if BPS makes a material change in its First Year Materials Forecast.

FUTURE FORECASTS AND PRICING

2.5      Future forecasts, pricing and production for the Materials will be
dealt with as follows:

         (a)      commencing no later than 60 days before the expiry of the
         first year of this Agreement, and thereafter no later than the end of
         each quarter, BPS will provide UCAR CARBON with a rolling three-year
         forecast of its yearly requirements of the Materials from UCAR CARBON,
         which forecast will not be binding upon BPS;

         (b)      within 30 days after receipt of each Anniversary Forecast
         (being that three-year forecast that is provided for the quarter which
         begins on each one-year anniversary date of this Agreement, i.e. the
         first being produced at the end of the first year), UCAR CARBON will
         provide BPS in writing with its pricing of the quantity or volume of
         the Materials forecast as required by BPS for the first year of each
         Anniversary Forecast and account for minor variations from quantities
         forecast for such year together with a delivery schedule that reflects
         such forecast;

         (c)      no later than 30 days after receipt of UCAR CARBON's quote for
         such Materials, BPS will provide UCAR CARBON with a written binding
         commitment to
<PAGE>   8
         purchase a specified quantity or volume of Materials during each first
         year of the Anniversary Forecast, which commitment may vary from the
         forecast given by BPS for such year ("Annual Commitment");

         (d)      if the quantity, timing or volume of the Materials set out in
         the Annual Commitment is substantially different from the first year of
         BPS's Anniversary Forecast, UCAR CARBON will no longer be bound to its
         original price and delivery quote but must, within 30 days after
         receipt of such Annual Commitment, provide BPS with new quotes and
         delivery schedules that take into account such difference. The parties
         will make the appropriate adjustments to the pricing and delivery
         schedules to reflect the new quotes and delivery schedules; and

         (e)      in addition to the foregoing, UCAR CARBON will, from time to
         time at the request of BPS, provide BPS with firm fixed quotes
         governing volumes of Materials for such periods of time above and
         beyond the Annual Commitment as may, from time to time, be specified by
         BPS.

DELIVERY OF MATERIALS

2.6      Without derogating from its obligations to supply the Materials on a
timely basis, UCAR CARBON must achieve, in any eight-week period

         (a)      during the first three months after the date of execution of
         this Agreement, greater than an 90% on-time delivery rate for the
         Materials with a variance from the agreed delivery date of such
         Materials during the period of no more than two days,

         (b)      subject to Section(c), after the first three months after the
         date of execution of this Agreement, greater than a 95% on-time
         delivery rate for the Materials with a variance from the agreed
         delivery date of the Materials during such period of no more than two
         days, and

         (c)      after the first nine months after the date of execution of
         this Agreement, greater than a 99% on-time delivery rate for the
         Materials with a variance from the agreed delivery date of the
         Materials of two days or such lesser period as is acceptable by
         competitive industry standards or as agreed to by the parties.

For the purposes hereof, in determining on-time delivery dates, Materials that
do not meet the agreed Specifications will be deemed not to have been delivered.

LICENSE TO USE OF MATERIALS

2.7      Subject to Section 2.9 of the Collaboration Agreement, UCAR CARBON
hereby grants to BPS a perpetual, irrevocable, worldwide, non-exclusive,
royalty-free and paid-up right and license under UCAR CARBON's Intellectual
Property rights to use the Materials supplied by UCAR CARBON to BPS in
connection with the development, manufacture, use or sale of electrically
conductive fuel cell separator plates.
<PAGE>   9
IMPROVEMENTS TO MATERIALS

2.8      If during the term of this Agreement but after the term of the
Collaboration, UCAR CARBON develops material or technology which is relevant for
the development or manufacture of electrically conductive fuel cell separator
plates, UCAR CARBON will, to the extent that it is not otherwise prohibited from
disclosing the information, advise BPS of the new developments, subject to the
standards of confidentiality established in the Mutual Secrecy Agreement. UCAR
CARBON will, to the extent that it is not otherwise prohibited from selling the
materials or technology, offer to sell to BPS the new materials or to grant to
BPS a new license in respect of the new technology, subject to the further
agreement of the parties.

2.9      If during the term of this Agreement but after the term of the
Collaboration, BPS develops material or technology which is relevant for the
development or manufacture of flexible graphite materials, articles made from/of
flexible graphite materials (other than electrically conductive fuel cell
separator plates), or compositions which include flexible graphite materials,
BPS will, to the extent that it is not otherwise prohibited from disclosing the
information, advise UCAR CARBON of the new developments subject to the standards
of confidentiality established in the Mutual Secrecy Agreement. BPS will, to the
extent that it is not otherwise prohibited from selling the new material or
technology, offer to sell to UCAR CARBON the new materials or to grant to UCAR
CARBON a new license in respect of the new technology, subject to further
agreement of the parties.

                                     PART 3

                               CONDITIONS OF SALE

SALES/PURCHASE ORDER CONDITIONS

3.1      All sales of Materials and all purchase orders issued and acknowledged
under this Agreement will be subject to the Terms and Conditions set forth
below:

         (a)      ACCEPTANCE

         A purchase order is not binding on BPS until accepted by UCAR CARBON.
         Acceptance of a purchase order and all terms and conditions as set out
         in this Section 3.1 will take place when (i) BPS receives UCAR CARBON's
         acknowledgement by electronic mail, fax or other agreed form, or (ii)
         UCAR CARBON delivers to BPS the materials or items ordered, whichever
         is earlier.

         (b)      PRICE

         The price for the materials or items ordered will be paid by BPS in
         cleared funds to the bank nominated by UCAR CARBON within 30 days after
         the later of

                  (a)      receipt by BPS of the ordered goods, and

                  (b)      the date of the applicable invoice,
<PAGE>   10
         such payment to be made by check, credit transfer or irrevocable
         confirmed letter of credit; provided that, subject to BPS's rights
         under Section 3.1(h) and in the purchase order, BPS will only be
         obligated to pay for materials or items that are actually received by
         it. In addition, to the purchase price, BPS will pay to UCAR CARBON the
         amount of all taxes, excises or other governmental charges (except
         taxes on or measured by income) that UCAR CARBON may be required to pay
         with respect to the production, sale or transportation of any materials
         or items delivered to BPS under the purchase order.

         (c)      OVERSHIPMENTS, INSTALLMENTS

         BPS will pay only for the maximum quantities ordered. Overshipments
         will be held at UCAR CARBON's risk and expense for a reasonable time
         while awaiting shipping instructions from UCAR CARBON. Return shipping
         charges for excess quantities will be at UCAR CARBON's expense. Any
         provision herein for delivery of materials or items by installment will
         not be construed as rendering the obligations of UCAR CARBON severable
         and BPS will only be obliged to pay the price of the materials or items
         included in such installment after such installment is actually
         received by BPS.

         (d)      PACKING AND SHIPMENT

         Unless otherwise specified in the purchase order, if the price of the
         ordered materials or items is based on the weight thereof, such price
         must reflect the net weight of the materials or items ordered only, and
         no charges will be allowed for boxing, crating, handling damage,
         carting, drayage, storage or other packing requirements. Unless
         otherwise specified in the purchase order, all ordered materials or
         items must be securely packed in cartons, boxes or other containers,
         and marked and otherwise prepared for shipment in a manner which is

                  (i)      in accordance with good commercial practice,

                  (ii)     acceptable to common carriers for shipment at the
                  lowest rate for the particular materials or items, and

                  (iii)    adequate to ensure safe arrival of the ordered
                  materials or items at the named destination.

         UCAR CARBON must mark all containers with necessary lifting, handling
         and shipping information, purchase order numbers, date of shipment and
         the names of the consignee and consignor, if applicable. An itemized
         packaging sheet must accompany each shipment. No partial or complete
         delivery will be permitted hereunder before the date or dates specified
         for delivery without BPS's prior written consent thereto. If the
         ordered materials or items are improperly delivered for shipment, any
         additional cost thereby incurred will be for the account of, and will
         be paid by, UCAR CARBON, and may be deducted by BPS from the payment of
         the price for such materials or items.

         (e)      DELIVERY
<PAGE>   11
         Unless otherwise directed by BPS or specifically provided in the
         purchase order, the materials or items called for hereunder will be
         delivered on a FCA origin basis. The term "FCA" has the meaning
         ascribed thereto in, and is to be interpreted in accordance with, the
         Incoterms 1990 published by the International Chamber of Commerce.
         Notwithstanding the shipping terms contained in the purchase order,
         title to the materials or items and risk will remain with UCAR CARBON
         and not pass to BPS until delivery to BPS's named destination for
         importation.

         (f)      WARRANTIES

         UCAR CARBON warrants, represents, covenants and agrees as follows:

                  (i)      the materials or items supplied pursuant to the
                  purchase order will

                           (A)      be in full compliance with BPS's
                           Specifications, blueprints, drawings and data,

                           (B)      be in conformity with samples approved by
                           BPS,

                           (C)      not infringe any patent, copyright, trade
                           secret, mask work right, trademark or other
                           intellectual property right of any person covering
                           the material or item itself but UCAR CARBON does not
                           warrant against infringement by reason of the use of
                           such material or item in combination with other
                           articles or material or in the practice of any
                           process other than a process for which such item has
                           been expressly manufactured by UCAR CARBON,

                           (D)      be so supplied, and BPS will have title
                           thereto, free and clear of all liens, charges,
                           encumbrances and security interests;

                  (ii)     THERE ARE NO EXPRESS WARRANTIES BY UCAR CARBON OTHER
                  THAN THOSE SPECIFIED IN THIS SECTION. NO WARRANTIES BY UCAR
                  CARBON (OTHER THAN WARRANTY OF TITLE AS PROVIDED BY THE
                  UNIFORM COMMERCIAL CODE) SHALL BE IMPLIED OR OTHERWISE CREATED
                  AT LAW OR IN EQUITY, INCLUDING, BUT NOT LIMITED TO, WARRANTY
                  OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR
                  PURPOSE. Without limiting the generality of the foregoing, BPS
                  assumes all risk and liability for the results obtained by the
                  use of any products delivered hereunder in combination with
                  other articles or material or in the practice of any process
                  other than a process for which such item has been expressly
                  manufactured by UCAR CARBON.

                  (iii)    BPS's receipt of any products delivered hereunder
                  shall be an unqualified acceptance of, and a waiver by BPS of
                  any and all claims (including claims arising under the
                  warranties specified in this Section 3.1(f)) with respect to,
                  such products unless BPS gives UCAR CARBON notice of claim
                  within 150 days after such receipt or within ten days after
                  BPS shall have received
<PAGE>   12
         written notice of any claim of infringement covered by clause (i)
         above,

         (iv)     if any materials or items delivered hereunder do not meet the
         warranties specified herein, BPS may, at its option

         (A)      require the UCAR CARBON to correct, at no cost to BPS, any
         defective or non-conforming materials or items by repair or
         replacement, or

         (B)      return such defective or non-conforming materials or items at
         UCAR CARBON's expense to the UCAR CARBON and recover from the UCAR
         CARBON the purchase order price thereof, or

         (C)      correct the defective or non-conforming materials or items
         itself and charge UCAR CARBON with the cost of such correction.

         The foregoing remedies are exclusive to BPS.

         (v)      No waiver by BPS of any drawing or specification requirement
         for one or more of the materials or items ordered will constitute a
         waiver of such requirements for the remaining materials or items to be
         delivered hereunder, unless specified by BPS in writing. The provisions
         of this Section 3.1(f) will not limit or affect the rights of BPS under
         Section 3.1(h).

(g)      INVOICES

Each invoice issued as a result of the purchase order must

         (i)      be rendered separately for each delivery,

         (ii)     not cover more than one purchase order,

         (iii)    contain the purchase order number under which it is issued,
         and

         (iv)     be rendered to the proper Accounts Payable Department of BPS
         as set forth in the purchase order.

         Invoice payment terms will be calculated from the date the invoice is
         received by the proper Accounts Payable Department of BPS by electronic
         mail, fax or other agreed form.

(h)      INSPECTION

Materials or items purchased pursuant to the purchase order are subject to BPS's
inspection and approval at any place BPS may reasonably designate. BPS may,
without liability hereunder or otherwise and without prejudice to any other
rights or remedies available to it, reject and refuse acceptance of any
materials or items, which do not conform in all respects to
<PAGE>   13
         (i)      any instructions contained in the purchase order,

         (ii)     BPS's Specifications, drawings, blueprints and data, or

         (iii)    UCAR CARBON's warranties.

With respect to any materials or items which do not so conform, BPS may, in
BPS's sole discretion, hold such materials or items for UCAR CARBON's inspection
at UCAR CARBON's risk upon notification to UCAR CARBON, or return such materials
or items to UCAR CARBON at UCAR CARBON's expense. BPS's rejection of any
materials or items subject to the purchase order will be without prejudice to
its rights to require UCAR CARBON to perform its obligations in respect of the
balance of the purchase order. Payment for any item will not be deemed to be an
acceptance thereof.

(i)      CHANGES

BPS may, with reasonable notice to UCAR CARBON, at any time change

         (i)      the Specifications, drawings, blue prints and data concerning
         the ordered materials or items where such materials or items are to be
         specifically manufactured for BPS,

         (ii)     the method of packaging, packing or shipment of the ordered
         materials or items, and

         (iii)    the place and/or time of delivery of such materials or items.

If any such change causes an increase or decrease in the cost (including any
unusable work in progress) or the time required for the delivery of the
materials or items ordered, UCAR CARBON will claim an equitable adjustment in
the price or delivery schedule, or both within 30 days after receipt by UCAR
CARBON of the requested change.

(j)      INDEMNIFICATION

Each party will indemnify and hold the other harmless from and against any
claim, demand, cause of action, damage, costs and expenses which the other might
sustain or become liable for arising from or in connection with that party's
performance or nonperformance hereunder. No claims of any kind, with the
exception of those claims arising out of Section 3.1(f)(i)(C), Section
3.1(f)(i)(D), Section 3.1(k) or Part 6 of the Agreement with respect to any
material or item covered by this document, whether as to materials or items
delivered or for delayed delivery or non-delivery of the material or item and
whether or not based on negligence or warranty, shall be greater in aggregate
amount than the purchase price of the materials or items in respect of which
such claims are made. In no event, with the exception of those claims arising
out of Section 3.1(f)(i)(C), Section 3.1(f)(i)(D), Section 3.1(k) or Part 6 of
the Agreement shall either party be liable for special, indirect or
consequential damages, whether or not caused by or resulting from the negligence
of such party.
<PAGE>   14
(k)      PATENTS

UCAR CARBON will defend, at UCAR CARBON's own expense, all suits, actions or
proceedings in which BPS, or any of the BPS's distributees or dealers, or the
users, lessees or customers of any of BPS's products, are made defendants for
actual or alleged infringement of any copyright, trademark, trade secret, mask
work right, Canadian, U.S. or other foreign patent or other intellectual
property right resulting from the possession, use, sale or resale of any
material or item purchased hereunder. If by virtue of a patent infringement suit
an injunction is issued against BPS which prohibits or limits the use of any
materials or items ordered or purchased hereunder or UCAR CARBON notifies BPS to
cease use of any materials or items purchased hereunder, UCAR CARBON, at BPS's
request, will supply BPS with non-infringing replacement materials or items of a
similar kind, quality and quantity. BPS will cease use of materials or items
purchased hereunder which are subject to an infringement action upon receipt of
notice of such action and upon request by UCAR CARBON. UCAR CARBON's obligations
under this Section 3.1(k) or Section 3.1(j) do not apply to any suits, actions
or proceedings in which the actual or alleged infringement results from the use
of such material or item in combination with other articles or material or in
the practice of any process other than a process for which such item has been
expressly manufactured by UCAR CARBON.

(l)      COMPLIANCE WITH LAW

UCAR CARBON warrants and represents that it has complied with, and will
continue, during the performance of its obligations hereunder, to comply with,
all laws and conform to all requirements of each applicable governmental
authority with respect to the supply of the ordered materials or items,
including those concerning the packaging, storage, shipment and exportation of
all or any part thereof, and will ensure that no chemical substance delivered to
BPS is on the list of prohibited substances described in applicable
environmental laws. UCAR CARBON will obtain all federal, provincial, state,
municipal and other government or regulatory licenses, permits or other
documents or permissions that are required by BPS that are incidental to the
sale or shipment of the ordered materials or items to BPS.

BPS warrants and represents that it has complied with, and will continue, during
the performance of its obligations hereunder, to comply with, all laws and
conform to all requirements of each applicable governmental authority with
respect to the ordered materials or items and payment therefor and importation
thereof.

(m)      NON-PUBLICITY

Except as may be required by law or applicable governmental regulatory
authorities, neither party will, without the prior written consent of the other
party

         (i)      make any news release, public announcement, denial or
         confirmation of any purchase order or its subject matter, or
<PAGE>   15
         (ii)     in any manner advertise or publish the fact that BPS has
         placed any purchase order with UCAR CARBON.

(n)      PROPERTY

All tooling, equipment or material of every description owned by a party to this
Agreement (the "Owner") and furnished to the other party or specifically paid
for by the Owner, and any replacement thereof, will remain the property of the
Owner. Such property, and whenever practical, each individual item thereof, will
be plainly marked or otherwise properly identified as the "Property of the
Owner." and will be safely stored. The party will not substitute any property
for the Owner's property and will not use such property except in fulfilling the
purchase order. Such property, while in the party's custody or control, will be
held at that party's expense, and will be insured by that party in an amount
equal to its replacement cost with loss payable to Owner. Such property will be
prepared for shipment and delivered in good condition, normal wear and tear
excepted, to the Owner on a FCA origin basis immediately upon request by the
Owner.

(o)      TERMINATION

BPS may require UCAR CARBON to terminate work under any purchase order in whole
or in part at any time by notice to UCAR CARBON in writing, whereupon UCAR
CARBON will immediately stop work on the purchase order, or the terminated
portion thereof, and notify its subcontractors to do likewise. Except for such
termination as is caused by a default or delay of UCAR CARBON, UCAR CARBON will
be entitled to reimbursement for its actual costs applicable to the termination
incurred up to and including the date of termination. UCAR CARBON will also be
entitled to reasonable profit on the work done before such termination at a rate
not exceeding the rate used in establishing the original purchase price. The
total amount of such claim will not exceed the cancelled commitment value of the
purchase order.

(p)      TERMINATION FOR DEFAULT

The BPS and UCAR CARBON covenant and agree as follows:

         (i)      BPS may, by written notice, terminate any purchase order in
         whole or in part if UCAR CARBON fails

                  (A)      to make delivery of the ordered materials or items or
                  to perform the services in the manner and within the time
                  specified therefor or any extension thereof by written change
                  order or amendment, or

                  (B)      to replace or correct defective materials or items in
                  accordance with Section 3.1(f) and Section 3.1(h), or

                  (C)      to perform any other provision of the purchase order,
                  or

                  (D)      to make progress so as to endanger performance of its
<PAGE>   16
                  obligations under the purchase order;

         (ii)     if a purchase order is terminated by reason of UCAR CARBON's
         default, UCAR CARBON will transfer title and deliver to BPS, promptly
         at BPS's request, in the manner and to the extent directed by BPS,

                  (A)      any completed materials or items, and

                  (B)      such particularly completed materials or items as
                  UCAR CARBON has produced or acquired for the performance of
                  the terminated part of the purchase order.

         UCAR CARBON will protect and preserve such property in the possession
         of UCAR CARBON. Payment for completed materials or items delivered to
         and accepted by BPS will be in an amount agreed upon by UCAR CARBON and
         BPS, which amount must not exceed the contract price therefor; and

         (iii)    failure by BPS to enforce any of its rights under the purchase
         order will not be deemed a waiver thereof.

(q)      ATTORNEY'S FEES

         If UCAR CARBON and BPS are unable to resolve any dispute arising under
         the purchase order and any suit or other judicial proceeding is
         instituted with reference thereto, the successful party in any such
         suit or other judicial proceeding will be paid promptly by the other
         party an additional amount equal to the successful party's reasonable
         attorney's fees and costs incurred.

(r)      GENERAL

The following general provisions will apply to all purchase orders:

         (i)      time will be of the essence hereof;

         (ii)     the purchase order is given pursuant to this Agreement and
         will be subject to the terms of this Agreement and in the event of any
         conflict between the terms of this Agreement and the terms of the
         purchase order, the terms of this Agreement will govern;

         (iii)    waiver by a party of any of its rights or default by the other
         hereunder will not be deemed a waiver by such party of any other right
         or default;

         (iv)     UCAR CARBON will not change a purchase order or ship
         non-conforming items without first obtaining the written consent of
         BPS;

         (v)      UCAR CARBON will, from time to time upon request by BPS, do,
         execute, acknowledge, deliver, or cause to be done, executed,
         acknowledged and delivered, all and every such further acts, bills of
         sale, bills of
<PAGE>   17
                  lading, deeds, transfers and assurances as BPS may reasonably
                  request to evidence or protect BPS's ownership interest in the
                  ordered items or to carry into effect the intentions of the
                  parties as set out in this purchase order.

                  (vi)     UCAR CARBON will, at BPS's request, make available to
                  BPS's Affiliates those items or materials of the kind that are
                  the subject matter of the purchase order at prices payable by
                  BPS under the purchase order. UCAR CARBON may but is not
                  required, at BPS's request, to make available to BPS licensees
                  and customers those items or materials of the kind that are
                  the subject matter of the purchase order at prices payable by
                  BPS under the purchase order.

         (s)      ASSIGNMENTS

         Neither party may assign any rights or obligations under a purchase
         order (including the right to receive monies due hereunder) without the
         prior written consent of the other party, and any purported assignment
         without such consent will be void. No assignment will relieve the
         assigning party from its obligations under the purchase order.

         (t)      NOTICE OF LABOR DISPUTE

         Whenever an actual or potential labor dispute is delaying or threatens
         to delay the timely performance of a purchase order, the affected party
         will, as soon as practicable, notify the other party of such dispute
         and furnish all relevant details. Receipt by the other party of such
         notice will not constitute a waiver by that party of the affected
         party's obligation to meet the delivery schedule; however, such dispute
         may constitute an event of Force Majeure as governed by this Agreement.

         (u)      DISPUTE RESOLUTION AND APPLICABLE LAW

         The Dispute Resolution and Applicable Law provisions set out in Parts 7
         and Section 9.8 of this Agreement shall apply to all purchase orders.

EFFECT OF PURCHASE ORDER TERMS AND CONDITIONS

3.2      The terms and conditions set forth in this Part 3 apply only as to
individual purchase orders issued and accepted in the sale of materials under
this Agreement. In no way should any term contained in Section 3.1 be construed
to give greater rights to a party or alter or amend the obligations of BPS or
UCAR CARBON under the other terms of this Agreement. While a breach of the
individual terms of a purchase order may give rise to a remedy under that
particular purchase order, as set out in this Part 3, in no event will such
breach of an individual purchase order be considered an Event of Default under
this Agreement.

REVISED PURCHASE ORDER TERMS AND CONDITIONS

3.3      BPS will notify UCAR CARBON as soon as reasonably practicable of any
proposed changes to, or substitutions of, the Terms and Conditions. No change to
the Terms and Conditions will be effective as to UCAR CARBON until the parties
have agreed to such change in writing as
<PAGE>   18
provided for in this Agreement.
<PAGE>   19
                                     PART 4

                              PRICE OF THE PRODUCTS

PRICE

4.1      Subject to Section 2.3, the price payable by BPS for the Materials will
be as follows:

         (a)      UCAR CARBON will provide, at no cost to BPS, other than the
         costs associated with shipping, insurance and other miscellaneous
         expense related to packing or transportation not already assumed by
         BPS, those minimal amounts of Materials that are necessary for the
         performance of the work under the Collaboration or to be incorporated
         into PEM Fuel Cells as a part of a developmental program of BPS or any
         of its Affiliates or licensees. The maximum amount of materials
         provided under this Section 4.1(a) will be determined subject to UCAR
         CARBON's sole discretion;

         (b)      for all other Material supplied by UCAR CARBON and purchased
         by BPS the price will be as may be agreed upon by the parties pursuant
         to Section 2.4 and Section 2.5.

                                     PART 5

                                GRANT OF LICENSE

GRANT OF CESSATION LICENSE

5.1      Subject to Part 8 and during the term of the Exclusive Period as
defined in Section 2.9 of the Collaboration Agreement, UCAR CARBON may only
elect to cease supply of Materials to BPS if UCAR CARBON has elected to cease
supplying like Materials or like materials to all other persons for use in
electrically conductive fuel cell separator plates. If UCAR CARBON determines to
make such an election, UCAR CARBON will promptly notify BPS of its intention to
cease the supply and grant to BPS, for so long as BPS is not in material default
with regard to its obligations under this Agreement, and for so long as UCAR
CARBON does not supply such Material(s) (the license term not to exceed the term
of this Agreement, as renewed,), a worldwide, non-exclusive, right and license
(the "Cessation License") sublicensable by BPS, to use the Intellectual Property
rights of UCAR CARBON to enable BPS to make, have made, use or sell such
Material or Materials in connection with the development, manufacture, use or
sale of electrically conductive fuel cell separator plates. In any event, UCAR
CARBON agrees to continue to supply the Materials for a one-year period
following the date on which UCAR CARBON gives notice of its intent to cease to
supply the Material(s).

GRANT OF DEFAULT LICENSE

5.2      Should BPS provide notice of default to UCAR CARBON as a result of UCAR
CARBON being the subject of an Event of Default that has occurred and is
continuing to occur for reasons other than UCAR CARBON's election to cease to
supply a Material(s) as the result of a dispute between the parties as to price
or terms (regardless of whether the dispute was arbitrated), UCAR CARBON will be
deemed to have granted to BPS for the original term of this Agreement, or if
<PAGE>   20
the term has been renewed, as renewed, an irrevocable, worldwide, non-exclusive,
royalty-free and paid-up right and license (the "Default License") sublicensable
by BPS, to use the Intellectual Property rights of UCAR CARBON to enable BPS to
make, have made, use or sell the Materials in connection with the development,
manufacture or sale of electrically conductive fuel cell separator plates.

LICENSE RESTRICTIONS

5.3      Any licenses granted pursuant to this Part 5 will be in addition to,
not in substitution for, and without prejudice to, the Exclusive License or any
other license granted by UCAR CARBON to BPS under the Collaboration Agreement or
otherwise and includes the right by BPS to disclose UCAR CARBON's Confidential
Information to BPS's sublicensees only to the extent necessary and in connection
with the production, use or sale of the Materials licensed under this Part 5.
With regard to any license granted by UCAR CARBON under this Agreement, BPS
shall obtain from each of its sublicensees or other third parties from whom it
may obtain the Material(s) a contractual obligation which shall subject the
sublicensee or third party to obligations of confidentiality at least as
restrictive as that established in this Agreement and require a commitment that
the sublicensee or third party shall use the license, Materials and technology
solely for the production of Materials for BPS and for no other purpose. In
addition to all other remedies available under this Agreement, at law or in
equity, UCAR CARBON may notify BPS that BPS's sublicensee or third party appears
to be in breach of these requirements. Upon receipt of UCAR CARBON's notice, BPS
shall immediately, and at its own expense, take all necessary action to require
and insure that its sublicensee or third party complies with these requirements
including but not limited to termination of the sublicense or third party
contract, legal action to enforce the sublicense or third party contract, and
assistance to UCAR CARBON in the prosecution of any action UCAR CARBON may wish
to pursue.

TECHNOLOGY TRANSFER

5.4      UCAR CARBON will, promptly upon the grant of either a Cessation License
or a Default License, transfer to and provide BPS on a one-time basis all then
available and relevant technology, information, training and technical
assistance as may be necessary for the exploitation of the license for a
reasonable fee to be determined by the parties reflecting the reasonable cost of
effecting such technology transfer, training and technical assistance. If the
parties are unable to agree on a reasonable fee the matter will be referred to
the Dispute Resolution Procedures outlined in Part 7 of this Agreement.

FURTHER ASSURANCES FOR LICENSED MATERIALS

5.5      UCAR CARBON will execute such further assurances and other documents
and instruments and do such further and other things as may be necessary to
implement and carry out the intent of the provisions of this Part 5.

SURVIVAL OF PART 5 PROVISIONS

5.6      Notwithstanding anything in this Agreement and subject to the
limitations set out in Section 5.3,
<PAGE>   21
any license granted pursuant to the provisions of this Part 5 prior to the
termination of this Agreement, will survive and continue to apply after any
early termination of this Agreement for the original term of the Agreement, or
if the term has been renewed, as renewed, and any reference in this Agreement to
termination will not affect this Part 5 unless specifically agreed to in writing
by the parties.

                                     PART 6

                                 CONFIDENTIALITY

CONFIDENTIALITY OBLIGATIONS

6.1      Each party (for purposes of this Part 6, the "Recipient"), at all times
during this Agreement and for a period of ten years after the expiry hereof,

         (a)      will, and will ensure that each of its directors, officers,
         employees, Affiliates, licensees, including sublicensees (collectively,
         the "Recipient's Agents") will, hold in confidence and keep
         confidential the Confidential Information of a party (the "Disclosing
         Party") disclosed to it by the Disclosing Party,

         (b)      will not, and will use reasonable efforts to ensure that the
         Recipient's Agents will not, directly or indirectly, use or disclose
         any such Confidential Information except to the extent that it is
         strictly necessary under this Agreement or the Collaboration Agreement,

         (c)      will cause the Recipient's Agents that are recipients of or
         exposed to such Confidential Information, to execute confidentiality
         agreements to protect the same,

         (d)      will not, and will ensure that the Recipient's Agents will
         not, except to the extent necessary for the purposes of this Agreement,
         make copies of or otherwise reproduce such Confidential Information,
         and

         (e)      will, and will ensure that each of the Recipient's Agents
         will, use commercially reasonable best efforts to maintain all such
         Confidential Information in a manner so as to protect the same against
         wrongful disclosure, misuse, espionage and theft.

EXCEPTIONS FOR CONFIDENTIALITY

6.2      The Confidentiality obligations set out in Section 6.1 shall not apply
to any Confidential Information:

         (a)      which is or becomes generally available to the public through
         no breach of this Agreement or any other obligation of the Recipient or
         the Recipient's Agents to the Disclosing Party,

         (b)      of which the Recipient or the Recipient's Agents had knowledge
         before the
<PAGE>   22
         date of this Agreement, as evidenced by competent proof, unless the
         same was disclosed to the Recipient or the Recipient's Agents by the
         Disclosing Party,

         (c)      of which the Recipient or the Recipient's Agents obtained
         knowledge from a third party, as evidenced by competent proof, unless
         such third party obtained such Confidential Information in violation of
         any duty of confidence owed to the Disclosing Party, or

         (d)      which is required to be disclosed pursuant to law or a rule,
         regulation, policy or order of a governmental authority having
         jurisdiction or pursuant to a final order or judgment of a court of
         competent jurisdiction and in such case the parties will cooperate with
         one another to obtain an appropriate protective order or other reliable
         assurance that confidential treatment will be afforded to such
         Confidential Information.

EMPLOYMENT RELATIONS

6.3      Neither party will, during the term of this Agreement and for a period
of two years next after the expiry or termination hereof, solicit for employment
any individual who is, at the time of such solicitation, employed by the other
party or its Affiliates nor will such party, directly or indirectly, induce any
such individual to leave his or her employment. Nothing herein will prevent a
party from employing any such employee so long as no solicitation or inducement
has been made to such employee by or on behalf of such party.

REASONABLE RESTRICTION

6.4      Each party agrees that the restrictions contained in this Part 6 are
reasonable for the protection of the respective legitimate business interests of
the parties.

MUTUAL SECRECY AGREEMENT AND COLLABORATION AGREEMENT

6.5      The provisions of

         (a)      the Mutual Secrecy Agreement (and not Section 6.1 and
         Section 6.2 hereof) will apply to all "Proprietary Information" (as
         defined in such agreement) disclosed by the parties to one another
         before the Effective Date (as defined in the Collaboration Agreement)
         notwithstanding that the same Proprietary Information is disclosed
         again as Confidential Information under this Agreement, and

         (b)      the provisions of the Collaboration Agreement (and not
         Section 6.1 and Section 6.2) will apply to all Confidential Information
         disclosed by the parties to one another during the term of the
         Collaboration notwithstanding that the same Confidential Information is
         disclosed again during the term of this Agreement.

SURVIVAL OF PART 6 PROVISIONS

6.6      Notwithstanding anything in this Agreement, the provisions of this Part
6 will be separate and distinct covenants and agreements enforceable after the
termination of this Agreement in
<PAGE>   23
accordance with the terms of this Part 6, and any reference in this Agreement to
termination will not affect this Part 6 unless specifically agreed to by the
parties.

                                     PART 7

                               DISPUTE RESOLUTION

INITIATION OF PROCESS

7.1      If at any time a dispute between the parties with respect to any matter
relating to this Agreement arises, a party that wishes that the issue be
considered further must give written notice (the "Dispute Notice") to the other
requiring that such issue or dispute be decided pursuant to this Part 7.

REFERRAL TO CHIEF EXECUTIVE OFFICERS

7.2      If a Dispute Notice is given, the Chief Executive Officers of each of
the parties will initiate discussions with a view to settling the issue or
matter. A decision reached by such Chief Executive Officers and communicated by
them in writing to the parties will be binding on the parties and will be
implemented.

SUBMISSION TO ARBITRATION

7.3      If no decision is communicated by the Chief Executive Officers within
30 days after such issue or dispute is referred to them, either party may at any
time before a decision thereon is so communicated and less than 120 days after
delivery of the Dispute Notice, by further notice given to the other, submit the
issue or dispute for a binding determination by a three member arbitration panel
in accordance with the rules of arbitration of the International Chamber of
Commerce.

ACCEPTANCE AND IMPLEMENTATION

7.4      Each of the parties will accept and proceed in good faith diligently to
implement the binding award or decision of an arbitrator on an arbitration
pursuant to Section 7.3.

PLACE OF ARBITRATION

7.5      All arbitration proceedings will be conducted in San Francisco,
California or in such other place as the parties may agree.

LEGAL PROCEEDINGS

7.6      A legal proceeding commenced by a party to this Agreement in respect of
an issue or dispute that may be arbitrated under this Agreement will be stayed
until the time during which arbitration may be initiated has expired or, if
arbitration is initiated, a decision on the arbitration is delivered or the
arbitration process has otherwise ended.
<PAGE>   24
EXCLUSIONS

7.7      This Part 7 will not apply to any action under Part 6 or for the grant
of provisional remedies, including injunctions, restraining orders and specific
performance, and each party reserves its right to commence such action or seek
such remedies from a court of competent jurisdiction.

                                     PART 8

                              TERM AND TERMINATION

TERM

8.1      This Agreement will come into force on the Commencement Date and,
subject to Section 5.6 and Section 6.6, will continue for a period of nine years
unless terminated sooner pursuant to Section 8.2. Thereafter, unless terminated
as provided above, this Agreement will be deemed renewed automatically from year
to year until terminated by either party pursuant to Section 8.2 or upon written
notice of a party's election to not renew given by that party to the other 60
days before the end of the then current period. UCAR CARBON may, at any time,
terminate this Agreement and the Exclusive License arising under the
Collaboration Agreement on 30 days notice if it is determined that through
technological advances or otherwise, BPS no longer requires the Materials in the
development and manufacture of electrically conductive fuel cell separator
plates. The parties will review this Agreement within 90 days after each of the
third and sixth anniversary dates of the Commencement Date and will make such
changes to this Agreement as may be necessary or desirable in light of any
changed circumstances. If during such review period the parties cannot agree as
to the necessity or content of any such changes, the disagreement as to the
proposed changes shall be submitted to the Dispute Resolution Process set out in
Part 7 and the Agreement will continue in effect as if no review had been
initiated.

TERMINATION FOR DEFAULT

8.2      Subject to Section 5.6 and Section 6.6, either party will be entitled
to terminate this Agreement in accordance with the terms hereof by written
notice to the other if the other has become the subject of an Event of Default;
provided that if BPS is in breach of its obligations under Section 2.1 and not
under circumstances upon which a license has been granted under Section 2.2 or
Part 5, UCAR CARBON will have the usual remedies available under law or equity
and may terminate all licenses extended to BPS including the Exclusive License
except with respect to that limited license required for BPS's use of the
Materials and UCAR CARBON will not be entitled to terminate this Agreement with
regard to its obligations to supply BPS with the Materials.

NO PREJUDICE

8.3      The right to terminate this Agreement will not prejudice any other
right or remedy of either party in respect of the breach concerned (if any) or
any other breach.

NO FURTHER OBLIGATIONS
<PAGE>   25
8.4      Subject to Section 5.6 and Section 6.6 and the Collaboration Agreement,
upon the termination of this Agreement for any reason, except for any rights or
obligations which may have accrued before termination, or rights specifically
contemplated to continue after termination or arise as a result of termination,
neither party will have any further rights or obligations to the other under
this Agreement.

                                     PART 9

                                  MISCELLANEOUS

MODIFICATIONS, APPROVALS AND CONSENTS

9.1      No amendment, modification, supplement, termination or waiver of any
provision of this Agreement will be effective unless in writing signed by both
parties and then only in the specific instance and for the specific purpose
given.

FURTHER ASSURANCES

9.2      The parties will execute such further assurances and other documents
and instruments and do such further and other things as may be necessary to
implement and carry out the intent of this Agreement.

ENTIRE AGREEMENT

9.3      This Agreement and the Collaboration Agreement constitute the entire
agreement between the parties hereto and supersede all previous expectations,
understandings, communications, representations and agreements whether verbal or
written between the parties.

NOTICES

9.4      Every notice, request, demand, direction or other communication (each,
for the purposes of Section 9.4, Section 9.5 and Section 9.6, a "Notice")
required or permitted to be given pursuant to this Agreement will be deemed to
be well and sufficiently given if in writing and delivered by hand (or
recognized overnight courier service addressed as follows:

         (a)      if to BPS at:

                  9000 Glenlyon Parkway
                  Burnaby, British Columbia
                  Canada  V5J 5J9
                  Attention:  President and Chief Operating Officer
                  Facsimile:  (604) 412-3131

                  with a copy to BPS's Vice-President, Corporate Affairs at the
                  same address; and

         (b)      if to UCAR CARBON at:
<PAGE>   26
                  3102 West End Avenue
                  Suite 1100
                  Nashville, Tennessee
                  USA 37203
                  Attention:  The President
                  Facsimile:  (615) 760-7797

with a copy to UCAR CARBON's General Counsel at the same address; or to such
other address as is specified by the particular party by Notice to the others.

DEEMED RECEIPT

9.5      Any Notice delivered as aforesaid will be deemed conclusively to have
been effectively given and received on the day Notice was delivered if it was on
a day that was a Business Day or on the next day that is a Business Day if it
was delivered on a day that was not a Business Day.

CHANGE OF ADDRESS

9.6      A party may at any time, by Notice to the others, change its address.

ENUREMENT

9.7      This Agreement will enure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.

APPLICABLE LAW

9.8      This Agreement will be deemed to have been made in British Columbia,
Canada and the construction, validity and performance of this Agreement will be
governed in all respects by the laws of British Columbia and applicable laws of
Canada. The application of the provisions of the United Nations Convention on
Contracts for the International Sale of Goods are hereby excluded.

ATTORNMENT

9.9      Each party irrevocably attorns to the exclusive jurisdiction of the
courts of British Columbia, Canada and all courts having appellate jurisdiction
thereover in respect of any proceeding arising out of or relating to this
Agreement.

JUDGMENT CURRENCY

9.10     If, for the purposes of obtaining a judgment in any court, it is
necessary to convert a sum awarded in Canadian Dollars (the "Original Currency")
into United States Dollars (the "Judgment Currency"), the parties agree that the
rate of exchange used
<PAGE>   27
shall be established on the business day preceding the date on which the final
judgment is rendered by the court. If it is necessary to convert a sum awarded
in United States Dollars (the "Original Currency") into Canadian Dollars (the
"Judgment Currency"), the parties agree that the rate of exchange used shall be
established on the business day preceding the date on which the final judgment
is rendered by the court. The rate of exchange shall be determined by reference
to the Bank of Canada noon rate of exchange for Canadian to U.S. Dollars or U.S.
to Canadian as published by Reuters. In the event such rate is not available
through Reuters the rate shall be ascertained by reference to any other means by
which such rate is published from time to time by the Bank of Canada.

FORCE MAJEURE

9.11     Neither party will be liable to the other for default or delay in the
performance of its obligations under this Agreement if such default or delay is
caused by fire, strike, riot, war, act of God, delay of carriers, governmental
orders or regulation, complete or partial shutdown of plant by reason of
inability to obtain sufficient raw material or power, or any other occurrence
beyond the reasonable control of such party. The party whose performance is
prevented by any such occurrence will notify the other party of the same in
writing as soon as is reasonably possible after the commencement thereof, will
provide the other with full written particulars of such occurrence and attempts
made to remedy the same, will use commercially reasonable efforts to remedy such
occurrence with all reasonable dispatch and, upon cessation of the occurrence,
will give prompt written notice to the other party of the same. Should an event
of Force Majeure continue for such a period of time that UCAR CARBON will not be
able to meet BPS's monthly forecast as originally established in the Annual
Commitment for the Materials, UCAR CARBON shall use reasonable commercial
efforts to obtain an alternative source for performance which may include
leasing production time, assigning a temporary license to allow a third party
(which may include BPS) to fulfill the immediate production concerns and/or
other appropriate actions.

SEVERABILITY

9.12     If any provision contained in this Agreement is found by any court or
arbitrator for any reason to be invalid, illegal or unenforceable in any
respect,

         (a)      the validity, legality and enforceability of the remaining
         provisions contained herein will not in any way be affected or impaired
         thereby, unless in either case as a result of such determination this
         Agreement would fail in its essential purpose, and

         (b)      the parties will use their best efforts to substitute for any
         provision that is invalid, illegal or unenforceable a valid and
         enforceable provision which achieves to the greatest extent possible
         the economic, legal and commercial objectives of such invalid, illegal
         or unenforceable provision and of this Agreement and, failing the
         agreement of the parties on such a substitution within 30 days after
         the finding of the court or arbitrator, either party may refer the
         matter for dispute resolution under Part 7.

COUNTERPARTS

9.13     This Agreement may be executed in counterparts or by facsimile, each of
which will together, for all purposes, constitute one and the same instrument,
binding on the parties, and each of which will together be deemed to be an
original, notwithstanding that both parties are not
<PAGE>   28
signatories to the same counterpart or facsimile.

ASSIGNMENT

9.14     Neither party may assign any right, benefit or interest in this
Agreement without the written consent of the other party, such consent not to be
unreasonably withheld, and any purported assignment without such consent will be
void. Notwithstanding the foregoing, upon notice to the other party, either
party may assign this Agreement to a wholly owned subsidiary of that party
without the other party's consent provided that no such assignment will release
the assignor from its obligations under this Agreement.

NO PARTNERSHIP

9.15     Nothing in this Agreement will create, or be deemed to create, a
partnership between the parties.

Dated as of the day and year first above written.

UCAR CARBON COMPANY INC.                BALLARD POWER SYSTEMS INC.

By: /s/ G.E. Playford, CEO              By: /s/ Michael Graydon
   --------------------------------        -----------------------------
         Authorized Signatory                  Authorized Signatory

By: /s/ Karen G. Narwold, Asst. Sec.    By: /s/ Noordon S.K. Nanji
   --------------------------------        -----------------------------
         Authorized Signatory                  Authorized Signatory

<PAGE>   29
                                   SCHEDULE A

                            MATERIALS SPECIFICATIONS

                     SEE ATTACHED MATERIALS SPECIFICATIONS.

THE MATERIALS SPECIFICATIONS INCLUDED IN THIS SCHEDULE A MAY BE AMENDED BY THE
PARTIES AS CONTEMPLATED BY THE COLLABORATION AGREEMENT.
<PAGE>   30
                                   SCHEDULE A

<TABLE>
<CAPTION>
               MATERIAL SPECIFICATION                        TITLE
                                                             Flexible Graphite [TEXT DELETED] Material [TEXT DELETED]
-------------------             -----------------            -----------                  -------------
<S>                             <C>                          <C>                          <C>
AUTHOR                          DATE                         APPROVED                     DATE
Author: M. Sexsmith             Date: Oct 7, 1998            M. Sexsmith                  July 12, 1999
-------------------             -----------------            -----------                  -------------
</TABLE>

1.       SCOPE

         1.1.     This specification covers flexible graphite material supplied
         by UCAR as [TEXT DELETED]. The Specification covers several possible
         [TEXT DELETED] and [TEXT DELETED].

2.       APPLICABLE DOCUMENTS

         2.1.     American Society for Testing and Materials (ASTM)

                  2.1.1.   - [TEXT DELETED] [TEXT DELETED] Measurement Technique

                  2.1.2.   - [TEXT DELETED] [TEXT DELETED] Measurement

                  2.1.3.   - [TEXT DELETED] [TEXT DELETED] and [TEXT DELETED] of
                           Gasket Materials

3.       REQUIREMENTS

         3.1.     Precedence - In the event of any conflict between the
         requirements of this specification and the referenced documents, this
         specification shall govern.

         3.2.     Visual Requirements - The material shall have no gross
         physical defects including [TEXT DELETED], [TEXT DELETED], [TEXT
         DELETED] or [TEXT DELETED] on the surface. There may not be more than
         [TEXT DELETED] between [TEXT DELETED] and [TEXT DELETED] in diameter in
         any [TEXT DELETED] by [TEXT DELETED] area. There shall be no [TEXT
         DELETED] more than [TEXT DELETED] in diameter in the material.

         3.3.     Chemical Requirements - All flexible graphite material shall
         conform to the following requirements:

<TABLE>
<CAPTION>
         -----------------------    ----------------------    -----------------------    --------------------------
                Property                Specification               Tolerance                   Test Method
         -----------------------    ----------------------    -----------------------    --------------------------
<S>                                 <C>                       <C>                        <C>
             [TEXT DELETED]            [TEXT DELETED]             [TEXT DELETED]              [TEXT DELETED]
         -----------------------    ----------------------    -----------------------    --------------------------
             [TEXT DELETED]            [TEXT DELETED]             [TEXT DELETED]              [TEXT DELETED]
         -----------------------    ----------------------    -----------------------    --------------------------
             [TEXT DELETED]            [TEXT DELETED]             [TEXT DELETED]              [TEXT DELETED]
         -----------------------    ----------------------    -----------------------    --------------------------
</TABLE>
<PAGE>   31
3.4.     Physical Properties - Shall conform to the following requirements:

<TABLE>
<S>                                    <C>         <C>        <C>        <C>            <C>
          ---------------------------  ----------  ---------  ---------  -------------  --------------------------
            [TEXT DELETED] gm/cm(2)    [TEXT       [TEXT      [TEXT         [TEXT          See Section 4.5.2.1
                                       DELETED]    DELETED]   DELETED]     DELETED]
          ---------------------------  ----------  ---------  ---------  -------------  --------------------------
              [TEXT DELETED] mm        [TEXT       [TEXT      [TEXT         [TEXT
                                       DELETED]    DELETED]   DELETED]     DELETED]
          ---------------------------  ----------  ---------  ---------  -------------  --------------------------
                [text deleted          [TEXT       [TEXT      [TEXT         [TEXT          See Section 4.5.2.3
                                       DELETED]    DELETED]   DELETED]     DELETED]
          ---------------------------  ----------  ---------  ---------  -------------  --------------------------
              [TEXT DELETED] mm        [TEXT       [TEXT      [TEXT         [TEXT          See Section 4.5.2.3
                                       DELETED]    DELETED]   DELETED]     DELETED]
          ---------------------------  ----------  ---------  ---------  -------------  --------------------------
                [TEXT DELETED]         [TEXT       [TEXT      [TEXT         [TEXT          See Section 4.5.2.2
                                       DELETED]    DELETED]   DELETED]     DELETED]
          ---------------------------  ----------  ---------  ---------  -------------  --------------------------
                [TEXT DELETED]         [TEXT       [TEXT      [TEXT         [TEXT          See Section 4.5.2.4
                                       DELETED]    DELETED]   DELETED]     DELETED]
          ---------------------------  ----------  ---------  ---------  -------------  --------------------------
                [TEXT DELETED]         [TEXT       [TEXT      [TEXT         [TEXT          See Section 4.5.2.4
                                       DELETED]    DELETED]   DELETED]     DELETED]
          ---------------------------  ----------  ---------  ---------  -------------  --------------------------
</TABLE>

         3.5.     Dimensional Requirements - Plates produced from this material
                  shall conform to the dimensions specified on the relevant part
                  drawing. On occasion Ballard may request material to be sent
                  for testing purposes, only that does not have the dimensions
                  listed in this document. The results of tests requiring
                  specific dimensions will not be considered to be requirements
                  but should be performed and included in the Certificate of
                  Compliance. Such data should be labeled as such.

4.       QUALITY ASSURANCE PROVISIONS

         4.1.     Responsibility for Inspection - Unless otherwise specified,
                  the supplier is responsible for the performance of all
                  inspections specified in Section 3. The supplier may use their
                  own, or any other facility suitable, for the performance of
                  the inspections specified herein.

         4.2.     Quality Verification - Ballard Power Systems Inc. will have
                  the right to subject any requested lot of material to any of
                  the inspection requirements specified to verify that the lot
                  will comply with the requirements specified herein.

         4.3.     Process Change Notification - The supplier shall provide
                  advance information in writing concerning any changes in
                  process or preservations from the product previously approved.
                  Approval to ship product incorporating changes shall be
                  dependant upon Ballard's evaluation that these changes do not
                  violate this specification or the intended use of the product.
                  Ballard Power Systems Inc.
<PAGE>   32
                  reserves the right to perform a qualification inspection if
                  necessary.

         4.4.     Certificate of Compliance - The supplier is required to
                  provide a certificate of compliance with data for each lot
                  number of material. Failure to supply a certificate may be
                  cause for rejection except as noted in section 3.4. The
                  supplier is required to provide the following data:

                  4.4.1.   Material Lot Number, Purchase Order Number and BPS
                           Part Number.

                  4.4.2.   Chemical Analysis (see Section 3.2.).

                  4.4.3.   Physical Property Inspection Data (see Section 3.3).

         4.5.     Methods of Inspection

                  4.5.1.   Chemical Requirements Inspection - A chemical
                           analysis shall be performed on each lot of material.
                           The analysis shall conform to the requirements of
                           Section 3.2.

                  4.5.2.   Physical Property Inspection. The physical tests
                           shall be performed according to the following
                           methods.

                           4.5.2.1. [TEXT DELETED] - A sample of the [TEXT
                                    DELETED] material shall be [TEXT DELETED] to
                                    a known [TEXT DELETED] and [TEXT DELETED]
                                    and [TEXT DELETED].

                           4.5.2.2. [TEXT DELETED] - [TEXT DELETED] samples
                                    [TEXT DELETED] by [TEXT DELETED] are [TEXT
                                    DELETED] from [TEXT DELETED] on the [TEXT
                                    DELETED]. Each of the samples is placed in
                                    the [TEXT DELETED] and [TEXT DELETED] for
                                    [TEXT DELETED]. The test parameters are:

<TABLE>
<CAPTION>
-------------------------------  ---------------  ---------------------  -----------------------
        Test Condition           Specification         Tolerance                Accuracy
-------------------------------  ---------------  ---------------------  -----------------------
<S>                              <C>              <C>                    <C>
     [TEXT DELETED] Load         [TEXT DELETED]      [TEXT DELETED]          [TEXT DELETED]
-------------------------------  ---------------  ---------------------  -----------------------
         Test Current            [TEXT DELETED]      [TEXT DELETED]          [TEXT DELETED]
-------------------------------  ---------------  ---------------------  -----------------------
        [TEXT DELETED]           [TEXT DELETED]      [TEXT DELETED]          [TEXT DELETED]
-------------------------------  ---------------  ---------------------  -----------------------
</TABLE>

                           4.5.2.3. [TEXT DELETED] Strength - A sheet of the
                                    material is [TEXT DELETED] to the [TEXT
                                    DELETED]. [TEXT deleted] samples of
                                    specified size are [TEXT DELETED] from a
                                    sample component in [TEXT DELETED] from each
                                    other. The samples are tested according to
                                    the requirements of [TEXT DELETED] according
                                    to the following test parameters. The
                                    ultimate flexural load shall exceed the
                                    specified limit and the [TEXT
<PAGE>   33
                                    DELETED] at the [TEXT DELETED] shall exceed
                                    the specified limit.

<TABLE>
<CAPTION>
---------------------------  ---------------------  ----------------------  -----------------------
      Test Condition            Specification             Tolerance                Accuracy
---------------------------  ---------------------  ----------------------  -----------------------
<S>                          <C>                    <C>                     <C>
        Test Span               [TEXT DELETED]         [TEXT DELETED]           [TEXT DELETED]
---------------------------  ---------------------  ----------------------  -----------------------
       Beam Length              [TEXT DELETED]         [TEXT DELETED]           [TEXT DELETED]
---------------------------  ---------------------  ----------------------  -----------------------
        Beam Width              [TEXT DELETED]         [TEXT DELETED]           [TEXT DELETED]
---------------------------  ---------------------  ----------------------  -----------------------
      Beam Thickness            [TEXT DELETED]         [TEXT DELETED]           [TEXT DELETED]
---------------------------  ---------------------  ----------------------  -----------------------
  Support and Load Pins         [TEXT DELETED]         [TEXT DELETED]           [TEXT DELETED]
---------------------------  ---------------------  ----------------------  -----------------------
</TABLE>

                           4.5.2.4. [TEXT DELETED] - A piece of material is
                                    tested according to [TEXT DELETED]. The test
                                    conditions are given in the following table:

<TABLE>
<CAPTION>
---------------------------  -------------------------  ------------------------
Penetrator                   Preload                    Total Load
---------------------------  -------------------------  ------------------------
<S>                          <C>                        <C>
[TEXT DELETED]               [TEXT DELETED]             [TEXT DELETED]
---------------------------  -------------------------  ------------------------
</TABLE>

5.       PACKAGING

         5.1.     Documentation - A packing list and certificate of compliance
                  will accompany each shipment. The packing list will contain
                  information as shown in Section 5.2. The certificate of
                  compliance will contain information as shown in Section 4.4.

6.       REVISION HISTORY

         6.1.     New Issue. M. Sexsmith

         6.2.     Change doc number to [TEXT DELETED] 07/10/98 M. Sexsmith

         6.3.     Change [TEXT DELETED] thickness and [TEXT DELETED] numbers
                  27/10/98 M. Sexsmith

         6.4.     Change all references to Grafoil to flexible graphite
                  (including document title), updated section 3.3 to include
                  [TEXT DELETED], and updated [TEXT DELETED] numbers. 02/09/99
                  E. Gallagher
<PAGE>   34
<TABLE>
<CAPTION>
-------------------------------------------------------------  ----------------------------------------------------------
                  MATERIAL SPECIFICATION                       TITLE
                                                               Flexible Graphite [TEXT DELETED] Material [TEXT DELETED]
-------------------------------  ----------------------------  ----------------------------  ----------------------------
<S>                              <C>                           <C>                           <C>
AUTHOR                           DATE                          APPROVED                      DATE
Author:  M. Sexsmith             Date:  July 20, 1999          M. Sexsmith                   July 12, 1999
-------------------------------  ----------------------------  ----------------------------  ----------------------------
</TABLE>

1.       SCOPE

         1.1.     This specification covers flexible graphite material supplied
                  by UCAR as blend [TEXT DELETED]. The Specification covers
                  [TEXT DELETED] and [TEXT DELETED].

2.       APPLICABLE DOCUMENTS

         2.1.     American Society for Testing and Materials (ASTM)

                  2.1.1.   - [TEXT DELETED] [TEXT DELETED] Measurement Technique

                  2.1.2.   - [TEXT DELETED] [TEXT DELETED] Measurement

                  2.1.3.   - [TEXT DELETED] [TEXT DELETED] and [TEXT DELETED] of
                           Gasket Materials

3.       REQUIREMENTS

         3.1.     Precedence - In the event of any conflict between the
                  requirements of this specification and the referenced
                  documents, this specification shall govern.

         3.2.     Visual Requirements - The material shall have no gross
                  physical defects including [TEXT DELETED], [TEXT DELETED],
                  [TEXT DELETED] or [TEXT DELETED] on the surface. There may not
                  be more than [TEXT DELETED] between [TEXT DELETED] and [TEXT
                  DELETED] in diameter in any [TEXT DELETED] by [TEXT DELETED]
                  area. There shall be no [TEXT DELETED] more than [TEXT
                  DELETED] in diameter in the material.

         3.3.     Chemical Requirements - All flexible graphite material shall
                  conform to the following requirements:

<TABLE>
<CAPTION>
------------------    ------------------    ---------------------    -------------------------------------
    Property            Specification            Tolerance                       Test Method
------------------    ------------------    ---------------------    -------------------------------------
<S>                   <C>                   <C>                      <C>
 [TEXT DELETED]        [TEXT DELETED]          [TEXT DELETED]                   [TEXT DELETED]
------------------    ------------------    ---------------------    -------------------------------------
 [TEXT DELETED]        [TEXT DELETED]          [TEXT DELETED]                   [TEXT DELETED]
------------------    ------------------    ---------------------    -------------------------------------
 [TEXT DELETED]        [TEXT DELETED]          [TEXT DELETED]                   [TEXT DELETED]
------------------    ------------------    ---------------------    -------------------------------------
</TABLE>

         3.4.     Physical Properties - Shall conform to the following
                  requirements:
<PAGE>   35
<TABLE>
<CAPTION>
---------------------------------  ----------  -----------  --------------  ---------------------------
<S>                                <C>         <C>          <C>             <C>
      [TEXT DELETED]gm/cm(2)       [TEXT       [TEXT            [TEXT          See Section 4.5.2.1
                                   DELETED]     DELETED]      DELETED]
---------------------------------  ----------  -----------  --------------  ---------------------------
       [TEXT DELETED] mm           [TEXT       [TEXT            [TEXT
                                   DELETED]     DELETED]      DELETED]
---------------------------------  ----------  -----------  --------------  ---------------------------
         [TEXT DELETED]            [TEXT       [TEXT            [TEXT          See Section 4.5.2.3
                                   DELETED]     DELETED]      DELETED]
---------------------------------  ----------  -----------  --------------  ---------------------------
       [TEXT DELETED] mm           [TEXT       [TEXT            [TEXT          See Section 4.5.2.3
                                   DELETED]     DELETED]      DELETED]
---------------------------------  ----------  -----------  --------------  ---------------------------
         [TEXT DELETED]            [TEXT       [TEXT            [TEXT          See Section 4.5.2.2
                                   DELETED]     DELETED]      DELETED]
---------------------------------  ----------  -----------  --------------  ---------------------------
         [TEXT DELETED]            [TEXT       [TEXT            [TEXT          See Section 4.5.2.4
                                   DELETED]     DELETED]      DELETED]
---------------------------------  ----------  -----------  --------------  ---------------------------
         [TEXT DELETED]            [TEXT       [TEXT            [TEXT          See Section 4.5.2.4
                                   DELETED]     DELETED]      DELETED]
---------------------------------  ----------  -----------  --------------  ---------------------------
</TABLE>

         3.5.     Dimensional Requirements - Plates produced from this material
                  shall conform to the dimensions specified on the relevant part
                  drawing. On occasion Ballard may request material to be sent
                  for testing purposes, only that does not have the dimensions
                  listed in this document. The results of tests requiring
                  specific dimensions will not be considered to be requirements
                  but should be performed and included in the Certificate of
                  Compliance. Such data should be labeled as such.

4.       QUALITY ASSURANCE PROVISIONS

         4.1.     Responsibility for Inspection - Unless otherwise specified,
                  the supplier is responsible for the performance of all
                  inspections specified in Section 3. The supplier may use their
                  own, or any other facility suitable, for the performance of
                  the inspections specified herein.

         4.2.     Quality Verification - Ballard Power Systems Inc. will have
                  the right to subject any requested lot of material to any of
                  the inspection requirements specified to verify that the lot
                  will comply with the requirements specified herein.

         4.3.     Process Change Notification - The supplier shall provide
                  advance information in writing concerning any changes in
                  process or preservations from the product previously approved.
                  Approval to ship product incorporating changes shall be
                  dependant upon Ballard's evaluation that these changes do not
                  violate this specification or the intended use of the product.
                  Ballard Power Systems Inc. reserves the right to perform a
                  qualification inspection if necessary.

         4.4.     Certificate of Compliance - The supplier is required to
                  provide a certificate of compliance with data for each lot
                  number of material. Failure to supply a certificate may be
                  cause for rejection except as noted in section 3.4 The
                  supplier is required to provide the following data:

                  4.4.1.   Material Lot Number, Purchase Order Number and BPS
<PAGE>   36
                           Part Number.

                  4.4.2.   Chemical Analysis (see Section 3.2).

                  4.4.3.   Physical Property Inspection Data (see Section 3.3).

         4.5.     Methods of Inspection

                  4.5.1.   Chemical Requirements Inspection - A chemical
                           analysis shall be performed on each lot of material.
                           The analysis shall conform to the requirements of
                           Section 3.2.

                  4.5.2.   Physical Property Inspection. The physical tests
                           shall be performed according to the following
                           methods.

                           4.5.2.1. Area Weight - A [TEXT DELETED] of the [TEXT
                                    DELETED] shall be [TEXT DELETED] to a known
                                    area [TEXT DELETED] and [TEXT DELETED] and
                                    weighed.

                           4.5.2.2. [TEXT DELETED] - Two [TEXT DELETED] by [TEXT
                                    DELETED] are [TEXT DELETED] from random
                                    locations on the plate. Each of the samples
                                    is placed in the [TEXT DELETED] and tested
                                    for [TEXT DELETED]. The test parameters are:

<TABLE>
<CAPTION>
-------------------------------  ---------------  ---------------------  -----------------------
        Test Condition           Specification         Tolerance                Accuracy
-------------------------------  ---------------  ---------------------  -----------------------
<S>                              <C>              <C>                    <C>
       Compression Load          [TEXT DELETED]      [TEXT DELETED]          [TEXT DELETED]
-------------------------------  ---------------  ---------------------  -----------------------
         Test Current            [TEXT DELETED]      [TEXT DELETED]          [TEXT DELETED]
-------------------------------  ---------------  ---------------------  -----------------------
     Ambient Temperature         [TEXT DELETED]      [TEXT DELETED]          [TEXT DELETED]
-------------------------------  ---------------  ---------------------  -----------------------
</TABLE>

                           4.5.2.3. [TEXT DELETED] - A sheet of the material is
                                    compressed to the specified thickness. Two
                                    samples of specified size are cut from a
                                    sample component in perpendicular attitude
                                    from each other. The samples are tested
                                    according to the requirements of [TEXT
                                    DELETED] according to the following test
                                    parameters. The [TEXT DELETED] shall exceed
                                    the specified limit and the displacement at
                                    the [TEXT DELETED] shall exceed the
                                    specified limit.

<TABLE>
<CAPTION>
---------------------------  ---------------------  ----------------------  -----------------------
Test Condition               Specification          Tolerance               Accuracy
---------------------------  ---------------------  ----------------------  -----------------------
<S>                          <C>                    <C>                     <C>
Test Span                    [TEXT DELETED]         [TEXT DELETED]          [TEXT DELETED]
---------------------------  ---------------------  ----------------------  -----------------------
Beam Length                  [TEXT DELETED]         [TEXT DELETED]          [TEXT DELETED]
---------------------------  ---------------------  ----------------------  -----------------------
Beam Width                   [TEXT DELETED]         [TEXT DELETED]          [TEXT DELETED]
---------------------------  ---------------------  ----------------------  -----------------------
Beam Thickness               [TEXT DELETED]         [TEXT DELETED]          [TEXT DELETED]
---------------------------  ---------------------  ----------------------  -----------------------
Support and Load Pins        [TEXT DELETED]         [TEXT DELETED]          [TEXT DELETED]
---------------------------  ---------------------  ----------------------  -----------------------
</TABLE>
<PAGE>   37
                           4.5.2.4. [TEXT DELETED] - A piece of material is
                                    tested according to ASTM F 36. The test
                                    conditions are given in the following table:

<TABLE>
<CAPTION>
---------------------------    -------------------------    ------------------------
Penetrator                     Preload                      Total Load
---------------------------    -------------------------    ------------------------
<S>                            <C>                          <C>
[TEXT DELETED]                 [TEXT DELETED]               [TEXT DELETED]
---------------------------    -------------------------    ------------------------
</TABLE>

5.       PACKAGING

         5.1.     Documentation - A packing list and certificate of compliance
                  will accompany each shipment. The packing list will contain
                  information as shown in Section 5.2. The certificate of
                  compliance will contain information as shown in Section 4.4.

6.       REVISION HISTORY

         6.1.     [TEXT DELETED]

         6.2.     [TEXT DELETED] July 7, 1999 Initial Release.

         6.3.     Change all references to Grafoil to flexible graphite
                  (including document title), updated section 3.3 to include
                  [TEXT DELETED] determination, and updated [TEXT DELETED]
                  numbers. 02/09/99 E. Gallagher
<PAGE>   38
                                   SCHEDULE B

                           FIRST YEAR PRODUCT FORECAST

                                  SEE ATTACHED
<PAGE>   39
                                   SCHEDULE B

                           GRAFOIL MATERIAL FORECASTS

<TABLE>
<CAPTION>
------  ---------------------  ------------  ---------  -------------  ------------  ------------  -------------  ------------
        Part No./Description   [TEXT         [TEXT      [TEXT          [TEXT         [TEXT         [TEXT          [TEXT
                               DELETED]      DELETED]   DELETED]       DELETED]      DELETED]      DELETED]       DELETED]
------  ---------------------  ------------  ---------  -------------  ------------  ------------  -------------  ------------
<S>     <C>                    <C>           <C>        <C>            <C>           <C>           <C>            <C>
1       [TEXT DELETED]         [TEXT
                               DELETED]

2       [TEXT DELETED],
        [TEXT DELETED]
        width, [TEXT
        DELETED]  length,
        [TEXT DELETED]               [TEXT   [TEXT
        thick [TEXT DELETED]      DELETED]   DELETED]

3       [TEXT DELETED]                       [TEXT         [TEXT
                                             DELETED]     DELETED]

4       [TEXT DELETED],
        [TEXT DELETED]
        width, [TEXT
        DELETED] length,                     [TEXT      [TEXT          [TEXT            [TEXT
        [TEXT DELETED] thick                 DELETED]   DELETED]       DELETED]       DELETED]

5       [TEXT DELETED]
        width roll, [TEXT
        DELETED] thick on a
        approx. [TEXT
        DELETED] core [TEXT                  [TEXT         [TEXT          [TEXT         [TEXT         [TEXT          [TEXT
        DELETED]                             DELETED]     DELETED]      DELETED]      DELETED]       DELETED]      DELETED]
</TABLE>
<PAGE>   40
                                   SCHEDULE C

                           FIRST YEAR PRODUCTS PRICING

                                  SEE ATTACHED
<PAGE>   41
                                   SCHEDULE C

UCAR CARBON COMPANY INC.
P.O. Box 94637, Cleveland, Ohio 44101 U.S.A.
                                                       Date 08/03/99
      Ballard Power Systems Inc.
      9000 Glenlyon Parkway                            Quotation Number: 99G1203
      Burnby, BC
      Canada  V5J 5J9                                  Inquiry Number:

      Attn: V. Totten

          In response to your inquiry, we are pleased to quote as follows:

<TABLE>
<CAPTION>
==============  =================  ================================================================  ====================
ITEM            QUANTITY                                     DESCRIPTION                                    PRICE
--------------  -----------------  ----------------------------------------------------------------  --------------------
<S>             <C>                <C>                                                               <C>

                                   "GRAFOIL" Products
                                   Per Ballard Power Systems Supply Agreement
                                   [TEXT DELETED] provided 7/29/1999

1               Volumes            [TEXT DELETED],         [TEXT DELETED] thick x [TEXT DELETED]           $[TEXT
                Per [TEXT          x [TEXT DELETED]                                                  DELETED]/ea
                DELETED]           BPS P/N [TEXT DELETED]
2

                                   [TEXT DELETED],         [TEXT DELETED] thick x [TEXT DELETED]           $[TEXT
3                                  x [TEXT DELETED]                                                  DELETED]/ea

                                   [TEXT DELETED]    [TEXT DELETED] x [TEXT DELETED] x [TEXT               $[TEXT
4                                  DELETED]                                                          DELETED]/ea
                                   BPS P/N [TEXT DELETED]
5                                                                                                          $[TEXT
                                   [TEXT DELETED],   [TEXT DELETED] x [TEXT DELETED] x [TEXT         DELETED]/ea
                                   DELETED]

                                                                                                           $[TEXT

                                                                                                     DELETED]/ea

                                   [TEXT DELETED],   [TEXT DELETED] x [TEXT DELETED] wide x [TEXT
                                   DELETED]

                                                   SEE PARAGRAPH 1 ON REVERSE SIDE

==============  =================  ================================================================  ====================
</TABLE>

              Delivery Point            FCA Factory - Cleveland, Ohio
              Items of Payment:         Date Draft  30 Days
              Estimated Time of Shipment From Plant: As Required

                  This date will be confirmed upon receipt of order. If it is
                  unsatisfactory please let us know.

                  The sale of the products described herein shall be governed by
                  the terms and conditions contained in any written contract
                  currently in effect between Buyer and Seller covering such
                  sale. If there is no such contract, then Seller hereby offers
                  to sell such product to Buyer only upon the terms set forth
                  herein,
<PAGE>   42
                  including those on the reverse side of this document.

                  This quotation is subject to acceptance within (30) days from
                  the date hereof.

                  Thank you for this inquiry. Be assured your order will receive
                  our prompt attention.

                                                  Very truly yours,
                  cc:   P. Calarco UCAR
                        J.J. Gough UCAR           /s/ John R. Smith
                        M.H. Burns UCAR
<PAGE>   43
                                   SCHEDULE D

                       SUPPLIER EVALUATION SYSTEM CRITERIA

The Supplier Evaluation System Criteria shall consist of the following general
categories to be further defined and implemented at a later date subject to
Section 2.2 of the Agreement. Criteria has been established for the Delivery
category as set out in the attached "2.2 Delivers on Time" and "2.3 Delivers
Proper Quantities."

PRICE:

1.       Competitive pricing
2.       Advanced notice on pricing changes
3.       Frequency of price reductions
4.       Price accuracy

DELIVERY:

1.       Meets due dates without constant follow-up
2.       Delivers on time
3.       Delivers proper quantities
4.       Responses to emergency delivery requirements
5.       Accurate documentation and information
6.       Lead time competitiveness

QUALITY:

1.       Meets Specifications
2.       Product documentation
3.       Product reliability
4.       Durability
5.       Product packaging

SERVICE:

1.       Support on professional and technical matters
2.       Inside sales support effectiveness, provides feedback from factory
3.       Issues credit notes in a timely manner
4.       Invoicing efficiency
<PAGE>   44
2.2      DELIVERS ON TIME

Application:

Refers to the delivery of material, or completion of services requested by way
of purchase orders.

Question:

1.       Does the vendor deliver ordered material or perform required services
         on time?

Considerations:

Early deliveries usually mean early invoices. This has an adverse effects on the
Company's cash flow. Late deliveries have unfavorable effect and can results in
stock-outs (back orders) which inconvenience the internal and external
customers. Sometimes, late deliveries cause the Company's customers to look
elsewhere for product (loss of opportunity for the Company).

The delivery date is the date agreed by both the buyer and the vendor. The
delivery date cannot be change without the approval of both the buyer and the
vendor. To allow for shipping and handling delays, the Company applies a
delivery grace period of two working days before or after the required date. If
the vendor delivers the product within this period, the buyer considers the
shipment on time. This performance criteria item measures the delivery of each
purchase order line item. For example, an order for 3 pencils, 5 pens and 2
erasers would be three (3) line items.

Supporting Documentation:

Purchase Order, Invoice, Order Confirmation.

This performance item is calculated using the following formula:

         Formula:          TLI= Total Line Items

                           LLI = Late Line Items (outside the two (2) day grace
                                 period

                           (TLI-LLI)/TLI x 100 = % of One-time Deliveries

The rating criteria will be as follows:

         % of Line Items

         Delivered on Time:                     Rating:

         [TEXT DELETED]%- [TEXT DELETED]% E Highly Competitive (Exceptional)

         [TEXT DELETED]%- [TEXT DELETED]% A Fully Competitive (Acceptable)

         [TEXT DELETED]%- [TEXT DELETED]% M Generally Competitive
                                            (Marginally Acceptable)
<PAGE>   45

         Less than [TEXT DELETED]% U Not Competitive (Unacceptable)

         This PDQ'S Evaluation Criteria item will be measured primarily by
         Ballard. The supplier will have direct input to this item and it will
         be measured monthly.

Supplier Price, Delivery, Quality and Service Evaluation Criteria

         2.3      DELIVER PROPER QUANTITIES

         Application:

         Refers to the delivery of material, or completion of services requested
         by way of purchase orders.

         Question:

         1.       How many incorrect quantities does the vendor ship?

         2.       Does the vendor split shipments on contracted items?

         Considerations:

         Incorrect quantities are either short shipments, over shipments or
         split shipments. All of these conditions are significant contributors
         to nonconformance costs. Short shipments and over shipments both
         require vendor contact to rectify the problem. With split shipments the
         vendor makes multiple shipments to fill the purchase order line item.
         The Company incurs additional costs in handling material. Additional
         costs are also incurred in accounting when the vendor sends a split
         shipment invoices.

         A grace quantity of five (5) percent on a under-shipment or ten (10)
         percent on a over-shipment are acceptable.

         Supporting Documentation:

         Quantity Quotation, Purchase Order, Invoice, Order Confirmation.

         This performance item is calculated using the following formula:

              Formula:              TLQ= Total Line Item Quantities Received

                                    ILQ= Incorrect Line Item Quantities Received

                (TLQ-ILQ)/TLQ x 100 = % of Correct Line Item Quantities Received

         The rating criteria will be as follows:

              % of Line Items

              Quantities Received:                   Rating:
<PAGE>   46
<TABLE>
<S>                                                  <C>
              [TEXT DELETED]%                        E  Highly Competitive (Exceptional)

              [TEXT DELETED]%- [TEXT DELETED]%       A  Fully Competitive (Acceptable)

              [TEXT DELETED]%- [TEXT DELETED]%       M  Generally Competitive
                                                              (Marginally Acceptable)

              Less than [TEXT DELETED]%              U  Not Competitive (Unacceptable)
</TABLE>

         This PDQ'S Evaluation Criteria item will be measured primarily by
         Ballard. The supplier will have direct input to this item and it will
         be measured monthly.

Supplier Price, Delivery, Quality and Service Evaluation Criteria
<PAGE>   47
                                SUPPLY AGREEMENT

                            MADE AS OF AUGUST 5, 1999

                                     BETWEEN

                            UCAR CARBON COMPANY INC.

                                       AND

                           BALLARD POWER SYSTEMS INC.
<PAGE>   48
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>                                                                                       <C>
PART 1  DEFINITIONS AND INTERPRETATION ................................................      2

DEFINITIONS ...........................................................................      2

INTERPRETATION ........................................................................      5

SCHEDULES .............................................................................      6

PART 2  SALE OF MATERIALS .............................................................      6

MATERIALS SALE ........................................................................      6

SUPPLIER EVALUATION SYSTEM ............................................................      6

MOST FAVOURED CUSTOMER ................................................................      7

FIRST YEAR FORECAST AND PRICING .......................................................      7

FUTURE FORECASTS AND PRICING ..........................................................      7

DELIVERY OF MATERIALS .................................................................      8

LICENSE TO USE OF MATERIALS ...........................................................      8

IMPROVEMENTS TO MATERIALS .............................................................      8

PART 3  CONDITIONS OF SALE ............................................................      9

SALES/PURCHASE ORDER CONDITIONS .......................................................      9

EFFECT OF PURCHASE ORDER TERMS AND CONDITIONS .........................................     17

REVISED PURCHASE ORDER TERMS AND CONDITIONS ...........................................     17

PART 4 PRICE OF THE PRODUCTS ..........................................................     17

PRICE .................................................................................     17

PART 5  GRANT OF LICENSE ..............................................................     18

GRANT OF [TEXT DELETED] ...............................................................     18

GRANT OF DEFAULT LICENSE ..............................................................     18

LICENSE RESTRICTIONS ..................................................................     19

TECHNOLOGY TRANSFER ...................................................................     19

FURTHER ASSURANCES FOR LICENSED MATERIALS .............................................     19

SURVIVAL OF PART 5 PROVISIONS .........................................................     19

PART 6  CONFIDENTIALITY ...............................................................     20

CONFIDENTIALITY OBLIGATIONS ...........................................................     20

EXCEPTIONS FOR CONFIDENTIALITY ........................................................     20

EMPLOYMENT RELATIONS ..................................................................     21
</TABLE>

                                      -i-
<PAGE>   49
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<S>                                                                                       <C>
REASONABLE RESTRICTION ................................................................     21

MUTUAL SECRECY AGREEMENT AND COLLABORATION AGREEMENT ..................................     21

SURVIVAL OF PART 6 PROVISIONS .........................................................     21

PART 7  DISPUTE RESOLUTION ............................................................     22

INITIATION OF PROCESS .................................................................     22

REFERRAL TO CHIEF EXECUTIVE OFFICERS ..................................................     22

SUBMISSION TO ARBITRATION .............................................................     22

ACCEPTANCE AND IMPLEMENTATION .........................................................     22

PLACE OF ARBITRATION ..................................................................     22

LEGAL PROCEEDINGS .....................................................................     22

EXCLUSIONS ............................................................................     22

PART 8  TERM AND TERMINATION ..........................................................     23

TERM ..................................................................................     23

TERMINATION FOR DEFAULT ...............................................................     23

NO PREJUDICE ..........................................................................     23

NO FURTHER OBLIGATIONS ................................................................     23

PART 9  MISCELLANEOUS .................................................................     24

MODIFICATIONS, APPROVALS AND CONSENTS .................................................     24

FURTHER ASSURANCES ....................................................................     24

ENTIRE AGREEMENT ......................................................................     24

NOTICES ...............................................................................     24

DEEMED RECEIPT ........................................................................     25

CHANGE OF ADDRESS .....................................................................     25

ENUREMENT .............................................................................     25

APPLICABLE LAW ........................................................................     25

ATTORNMENT ............................................................................     25

JUDGMENT CURRENCY .....................................................................     25

FORCE MAJEURE .........................................................................     26

SEVERABILITY ..........................................................................     26

COUNTERPARTS ..........................................................................     26
</TABLE>

                                      -ii-
<PAGE>   50
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<S>                                                                                       <C>
ASSIGNMENT ............................................................................     26

NO PARTNERSHIP ........................................................................     27
</TABLE>

                                     -iii-
<PAGE>   51
                  An extra section break has been inserted above this paragraph.
Do not delete this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00012-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00012-of-00352.parquet"}]]