Completing this sale will have four key benefits to Ballard. First, it provides immediate cash benefit to Ballard with recovery of at least US$20 million in expenses incurred since August 2004 and a reduction in annual cash consumption of approximately US$25 million. Second, our committed and outstanding share capital is reduced by 14%, on a fully diluted basis. Third, it initiates the Fourth Alliance Agreement and the next-generation development agreements with our Alliance Partners, Ford and DaimlerChrysler, under which our partners will fund up to US$59 million for the development of our next generation vehicular fuel cell and electric drive system. Finally, by divesting BPSAG to our Alliance Partners, we can focus on our core competency, fuel cell development, and on reaching the targets outlined in our Technology Road Map.

—Dennis Campbell, Ballard President and CEO

At closing, Ballard and its Alliance partners have agreed to sign the Fourth Alliance Agreement and agreements for the next generation automotive fuel cell and fuel cell vehicle electric drive development programs. More details on the agreements will be delivered to shareholders at the beginning of August for discussion.

Some of the changes of The Fourth Alliance Agreement from the existing Third Alliance Agreement are:

• Restricting Ballard from competing with the automotive OEMs in relation to automotive fuel cell support systems.

• Ensuring DaimlerChrysler and Ford have the freedom to operate in automotive fuel cell support systems.

• Ensuring all three parties are able to coordinate their separate development efforts in these areas.

• Providing DaimlerChrysler and Ford with greater clarity regarding their rights in the event Ballard’s technology does not remain competitive, including, under certain limited circumstances, the right to withdraw from the Alliance.

• In exchange for US$12.5 million, payable to Ballard through the return of 3.0 million Ballard common shares owned by Ford, the Fourth Alliance Agreement will impose no restrictions on Ford with respect to hybrid electric drives. Ballard will retain the right to obtain a license from Ford to any electric drive patents that Ford develops for its hybrid vehicles, for use in fuel-cell- and battery-powered vehicles.

• A commitment from DaimlerChrysler and Ford to source a minimum 25% of their vehicular fuel cell requirements from Ballard, subject to standard commercial terms, if they acquire license rights from Ballard to produce vehicular fuel cells in the future.

Under the Development Agreement, DaimlerChrysler and Ford will provide up to a combined US$59 million toward the development of Ballard’s next-generation fuel cell and electric drive.