• Ballard will receive $18.4 million in Technology Solutions revenue for technology transfer services, production equipment specification and procurement services, training and commissioning support in relation to the establishment of a production line in Yunfu for the manufacture and assembly of FCvelocity-9SSL fuel cell stacks, with most of this revenue expected to be recognized in 2017;

• On closing of the transaction, expected in late-2016, a joint venture will be created to undertake the stack manufacturing operations and will be owned 90% by Synergy and 10% by Ballard; and

• On commissioning of the operation, expected in 2017, Ballard will be the exclusive supplier of membrane electrode assemblies (MEAs) for each fuel cell stack manufactured by the joint venture, with minimum annual MEA volume commitments on a “take or pay” basis totaling in excess of $150 million over the initial 5-year term from 2017 to 2021.

The transaction represents significant progress for Ballard’s China strategy over the past 18-months, accelerated by a meeting and key talks at Ballard’s headquarters in Vancouver on 9 May this year with the visit of Hu Chunhua, Party Secretary of Guangdong Province.

Our China strategy and business model is simple—we engage strong Chinese partners to localize fuel cell production in China to reduce costs, drive scale, mitigate market risk, avoid capital investment, and protect our core intellectual property.

We expect this transaction to deliver a number of high-value benefits to Ballard, including attractive near-term and long-term deal economics and cash flows, positive market reception, risk mitigation, scaling of MEA production with guaranteed volumes, and capital efficiency. In addition, Ballard is not exposed to any compromise of our core intellectual property since we will maintain production of all MEAs at our headquarter facility.

—andy MacEwen, Ballard's President and CEO

Under the terms of the joint venture, Ballard will contribute RMB 20 million (approximately $3.0 million) for its 10% joint venture interest, appoint one of the three joint venture board directors, have veto rights over certain key joint venture decisions, agree on the marketing strategy and will have no further obligation to provide future funding to the joint venture.

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

This deal is transformational in terms of positioning fuel cells as a compelling solution for clean energy buses and commercial vehicles in China's high-population cities where air quality is a top priority. By localizing stack and module production, we will drive costs down to enable sustainable market demand for fuel cell buses and commercial vehicles based on economics, zero emissions and passenger experience.

—Frank Ma, Chairman of Guangdong Nation Synergy Hydrogen Power Technology Co. Ltd.

The transaction is scheduled to close in 2016, subject to customary closing conditions including required regulatory approvals.