Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:  o Form 20-F    x Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:  o Yes    x No

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):    n/a 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Ballard Power Systems Inc.

Date: November 10, 2008

By:

“Glenn Kumoi ”

 Name: 

Glenn Kumoi

Title:

VP Human Resources & Chief Legal Officer

Exhibit No.

Description

99.1

Material Change Report Announcing Plan of Arrangement (including Arrangement Agreement)

Item 1

Name and Address of Company

Ballard Power Systems Inc. ("Ballard")

9000 Glenlyon Parkway

Burnaby, BC V5J 5J8

Item 2

Date of Material Change

October 30, 2008

Item 3

News Release

Item 4

Summary of Material Change

Item 5

Full Description of Material Change

(a)

all outstanding restricted share units and deferred share units of Ballard will be cancelled for no consideration;

(b)

Superior Plus will advance approximately C$46.3 million in cash to Ballard;

(c)

Ballard will transfer its entire business and operations, including all assets and liabilities and the cash payment received from Superior Plus, to Newco;

(d)

all outstanding Ballard shares will be exchanged for shares of Newco, all outstanding Ballard options will be exchanged for Newco options and Newco restricted share units and deferred share units will be granted to holders whose Ballard restricted share units and deferred share units were cancelled;

(e)

Ballard will acquire all of the assets of Superior Plus; and

(f)

Superior Plus will be wound-up and all of the outstanding Ballard shares will be distributed to the Superior Plus unitholders.

Item 6

Reliance on subsection 7.1(2) or (3) of National Instrument 51-102

Item 7

Omitted Information

Item 8

Executive Officer

For further information, contact:

Ballard Power Systems Inc.

9000 Glenlyon Parkway

Burnaby, BC V5J 5J8

Telephone:

(604) 412-3106

Fax:

(604) 453-3600

Item 9

Date of Report

Ballard Power Systems

guy.mcaree@ballard.com

Article 1

INTERPRETATION

1

1.1

Definitions

1

1.2

Interpretation Not Affected by Headings, etc

8

1.3

Number, etc

8

1.4

Date for Any Action

8

1.5

Entire Agreement

8

1.6

Currency

8

1.7

Accounting Matters

8

1.8

Disclosure in Writing

8

1.9

Interpretation Not Affected by Party Drafting

9

1.10

Trust Power and Authority

9

1.11

Exhibits

9

Article 2

THE ARRANGEMENT

9

2.1

Plan of Arrangement

9

2.2

Interim Order

9

2.3

Information Circulars and Meetings

10

2.4

Effective Date

11

2.5

United States Tax Considerations

11

Article 3

COVENANTS

12

3.1

Covenants of the Fund

12

3.2

Covenants of Ballard

13

3.3

Mutual Covenants Regarding the Arrangement

16

3.4

Mutual Covenants Regarding Non-Solicitation

17

3.5

Provision of Information; Access

19

Article 4

REPRESENTATIONS AND WARRANTIES

20

4.1

Representations and Warranties of the Fund

20

4.2

Representations and Warranties of Ballard

21

Article 5

CONDITIONS PRECEDENT

24

5.1

Mutual Conditions Precedent

24

5.2

Additional Conditions to Obligations of the Fund

25

5.3

Additional Conditions to Obligations of Ballard

27

5.4

Notice and Effect of Failure to Comply with Conditions

27

5.5

Satisfaction of Conditions

28

Article 6

AMENDMENT

28

6.1

Amendment

28

Article 7

TERMINATION

29

7.1

Termination

29

7.2

Termination Fee

29

7.3

Damages and Remedies

29

Article 8

Confidentiality

30

8.1

Confidentiality

30

Article 9

NOTICES

31

9.1

Notices

31

Article 10

GENERAL

32

10.1

Binding Effect

32

10.2

Assignment

32

10.3

Disclosure

32

10.4

Costs

32

10.5

Severability

33

10.6

Further Assurances

33

10.7

Time of Essence

33

10.8

Governing Law

33

10.9

Waiver

33

10.10

Obligations

33

10.11

Counterparts

34

Exhibit A plan of arrangement

A 1

PLAN OF ARRANGEMENT UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT

A 1

ARTICLE 1

INTERPRETATION

A 1

1.1

Definitions

A 1

1.2

Number of Fund Units

A 4

1.3

Sections and Headings

A 5

1.4

Number, Gender and Persons

A 5

1.5

Currency

A 5

1.6

Date for any Action

A 5

1.7

Statutory References

A 5

ARTICLE 2

THE ARRANGEMENT

A 5

2.1

Arrangement Agreement

A 5

2.2

Effect of Filing Articles of Arrangement

A 5

ARTICLE 3

THE ARRANGEMENT

A 6

3.1

Arrangement and Related Transactions

A 6

3.2

Effect of Redemptions and Exchanges

A 9

ARTICLE 4

RIGHTS OF DISSENT

A 10

4.1

Rights of Dissent of Fund Unitholders

A 10

4.2

Rights of Dissent of Current Ballard Shareholders

A 10

ARTICLE 5

OUTSTANDING CERTIFICATES

A 11

5.1

Rights of Fund Unitholders

A 11

5.2

Transmittal of New Ballard Shares

A 11

5.3

Lost Certificates

A 11

ARTICLE 6

OUTSTANDING BALLARD SHARE CERTIFICATES

A 11

6.1

Rights of Current Ballard Shareholders

A 11

6.2

Transmittal of New Ballard Shares

A 12

6.3

Lost Certificates

A 12

ARTICLE 7

AMENDMENTS

A 12

7.1

Amendments to Plan of Arrangement

A 12

Article 1

Definitions

B 1

1.1

Definitions

B 1

Article 2

Liability and Indemnity

B 4

2.1

General Indemnity of New Ballard

B 4

2.2

Non-Capital Losses

B 5

2.3

2008 Non-NCL Amount Adjustment

B 6

2.4

Increased Non-capital Losses

B 6

2.5

Application of Tax Pools

B 6

2.6

Liability and Indemnity of Old Ballard

B 7

2.7

Limitations

B 7

Article 3

Indemnity procedures

B 8

3.1

Procedure Regarding Tax Matters

B 8

3.2

Non-Tax Matters Procedure

B 10

3.3

Extension - Limitations Act

B 12

3.4

Access to Books and Record and Cooperation

B 12

3.5

Copies of Books and Records

B 12

Article 4

DIRECTORS' and OFFICERS' Insurance

B 13

4.1

Insurance

B 13

Article 5

guarantee of new holDco

B 13

5.1

New Holdco Guarantee

B 13

Article 6

NOTICES

B 13

6.1

Notices

B 13

Article 7

GENERAL

B 14

7.1

Binding Effect

B 14

7.2

Assignment

B 14

7.3

Severability

B 15

7.4

Further Assurances

B 15

7.5

Time of Essence

B 15

7.6

Governing Law

B 15

7.7

Waiver

B 15

7.8

Counterparts

B 15

EXHIBIT C REQUIRED APPROVALS

 C 1

1.1

Definitions

(a)

any and all proprietary rights in Canada and the United States provided under:

(i)

patent law;

(ii)

copyright law (including moral rights);

(iii)

trade-mark law;

(iv)

design patent or industrial design law;

(v)

semi-conductor chip or mask work or integrated circuit topography law; or

(vi)

any other statutory provision or common law principle applicable to this Agreement, including trade secret law, which may provide a right in either hardware, software, information (including Confidential Information), trade-marks, ideas, formulae, algorithms, concepts, inventions, processes or know-how generally, or the expression or use of the same;

(b)

any and all applications, registrations, licences, sub-licences, franchises, agreements or any other evidence of a right in any of the foregoing; and

(c)

all licences and waivers and benefits of waivers of the intellectual property rights set out in (a) and (b) above, all future income and proceeds from the intellectual property rights set out in (a) and (b) above, and all rights to damages and profits by reason of the infringement or violation of any of the intellectual property rights set out in (a) and (b) above;

1.2

Interpretation Not Affected by Headings, etc.

1.3

Number, etc.

1.4

Date for Any Action

1.5

Entire Agreement

1.6

Currency

1.7

Accounting Matters

1.8

Disclosure in Writing

1.9

Interpretation Not Affected by Party Drafting

1.10

Trust Power and Authority

1.11

Exhibits

A

-

Plan of Arrangement

B

-

Form of Indemnity Agreement

C

-

Required Approvals

2.1

Plan of Arrangement

2.2

Interim Order

(a)

for the purpose of the Fund Meeting:

(i)

the securities of the Fund for which holders shall be entitled to vote on the Fund Resolution at the Fund Meeting shall be the Fund Units;

(ii)

each of the Fund Unitholders shall be entitled to one vote for each Fund Unit held by such holder;

(iii)

the requisite majority for the approval of the Arrangement Resolution shall be two-thirds of the votes cast by the Fund Unitholders present in person or represented by proxy at the Fund Meeting; and

(iv)

the Fund Unitholders will be given a right to dissent on terms similar to Section 190 of the CBCA, provided that such rights must be exercised not less than 48 hours prior to the Fund Meeting and, if properly exercised, will result in their Fund Units being

(b)

for the purpose of the Ballard Meeting:

(i)

the securities of Ballard for which holders shall be entitled to vote on the Ballard Resolution at the Ballard Meeting shall be the Ballard Shares and the Ballard Rights;

(ii)

the Ballard Securityholders shall vote together in a single class and each of the Ballard Shareholders shall be entitled to one vote for each Ballard Share held by such shareholder and each of the Ballard Rightsholders shall be entitled to one vote for each Ballard Share issuable upon exercise of the Ballard Rights held by such rightsholder;

(iii)

the requisite majority for the approval of the Arrangement Resolution shall be two-thirds of the votes cast by the Ballard Securityholders present in person or represented by proxy at the Ballard Meeting; and

(iv)

the Ballard Shareholders (but not the Ballard Rightholders) will be given a right to dissent on terms similar to Section 190 of the CBCA, provided that such rights must be exercised not less than 48 hours prior to the Ballard Meeting and, if properly exercised, will result in their Ballard Shares being exchanged for common shares of New Holdco and thereafter, such common shares of New Holdco will be cancelled and the dissenting Ballard Shareholders will have the right to be paid by New Holdco the fair value of their Ballard Shares.

2.3

Information Circulars and Meetings

(a)

As promptly as practical following the execution of this Agreement and in compliance with the Interim Order and Applicable Laws:

(i)

the Fund shall:

(A)

prepare the Fund Information Circular and cause such circular to be mailed to the Fund Unitholders and filed with applicable regulatory authorities and other governmental authorities in all jurisdictions where the same are required to be mailed and filed; and

(B)

convene the Fund Meeting; and

(ii)

Ballard shall:

(A)

prepare the Ballard Information Circular and cause such circular to be mailed to the Ballard Securityholders and filed with applicable regulatory authorities and other governmental authorities in all jurisdictions where the same are required to be mailed and filed; and

(B)

convene the Ballard Meeting.

2.4

Effective Date

2.5

United States Tax Considerations

(a)

The exchange of Ballard Shares for New Holdco Shares pursuant to section 3.1 of the Plan of Arrangement (the "Ballard Exchange") is intended to qualify as a tax-deferred exchange under Section 351 of the United States Internal Revenue Code of 1986, as amended (the "Code") and/or pursuant to a plan of reorganization within the meaning of Section 368(a) of the Code and this Agreement is intended to be a "plan of reorganization" within the meaning of the Treasury Regulations promulgated under Section 368 of the Code. Each Party agrees to act in a manner that is consistent with the Parties’ intention that the Ballard Exchange be treated as tax-deferred exchange under Section 351 and/or pursuant to a plan of a reorganization within the meaning of Section 368(a) of the Code for all United States federal income tax purposes. Notwithstanding the foregoing, except as provided in the Ballard Information Circular, none of Ballard, the Fund, New Ballard or New Holdco makes or will make any representation or warranty to any other party or to any Ballard Shareholder, or other holder of Ballard securities (including, without limitation, stock options, warrants, debt instruments or other similar rights or instruments) regarding the U.S. tax treatment of the Ballard Exchange, including, but not limited to, whether the Ballard Exchange will qualify as a tax-deferred contribution within the meaning of Section 351 and/or a reorganization within the meaning of Section 368(a) of the Code or as a tax-deferred transaction for purposes of any United States state or local income tax law.

(b)

The exchange of Fund Units for New Ballard Shares pursuant to section 3.1 of the Plan of Arrangement (the "Fund Exchange") is intended to qualify as a tax-deferred exchange pursuant to a plan of reorganization within the meaning of Section 368(a) of the Code and this Agreement is intended to be a "plan of reorganization" within the meaning of the Treasury Regulations promulgated under Section 368 of the Code. Each Party agrees to act in a manner that is consistent with the Parties’ intention that the Fund Exchange be treated as tax-deferred exchange pursuant to a plan of a reorganization within the meaning of Section 368(a) of the Code for all United States federal income tax purposes. Notwithstanding the foregoing, except as provided in the Fund Information Circular, none of Ballard, the Fund, New Ballard or New Holdco makes or will make any representation or warranty to any other party or to any Fund Unitholder, or other holder of Fund securities (including, without limitation, stock options, warrants, debt instruments or other similar rights or instruments) regarding the U.S. tax treatment of the Fund Exchange, including, but not limited to, whether the Fund Exchange will qualify as a reorganization within the meaning of Section 368(a) of the Code or as a tax-deferred transaction for purposes of any United States state or local income tax law.

3.1

Covenants of the Fund

(a)

the Fund will not take any action that could reasonably be expected to preclude, delay or have an adverse effect on the Arrangement or would render, or may reasonably be expected to render, any representation or warranty made by it in this Agreement untrue in any material respect;

(b)

the Fund will promptly disclose in writing to Ballard any material change (actual, anticipated, contemplated or, to the knowledge of the Fund threatened, financial or otherwise) in its business, operations, affairs, assets, capitalization, financial condition, prospects, licenses, permits, rights, privileges or liabilities, whether contractual or otherwise which may reasonably be expected to preclude, delay or have an adverse effect on the Arrangement, or of any change in any representation or warranty provided by the Fund in this Agreement which change is or may be of such a nature to render any representation or warranty misleading or untrue in any material respect and the Fund shall in good faith discuss with Ballard any change in circumstances (actual, anticipated, contemplated, or to the knowledge of the Fund, threatened) which is of such a nature that there may be a reasonable question as to whether disclosure in writing need to be given to Ballard pursuant to this provision;

(c)

the Fund will ensure that it has available funds under its lines of credit or other bank facilities to permit the payment of the maximum amount which may be required by Section 7.2 having regard to its other liabilities and obligations, and shall take all such actions as may be necessary to ensure that it maintains such availability to ensure that it is able to pay such amount if required;

(d)

the Fund will use its reasonable commercial efforts to satisfy or cause satisfaction of the conditions set forth in Sections 5.1, 5.2 and 5.3 as soon as reasonably possible following execution of this Agreement to the extent that the satisfaction of the same is within the control of the Fund;

(e)

the Fund will provide notice to Ballard of the Fund Meeting and allow Ballard's representatives to attend such meeting;

(f)

subject to compliance by Ballard with Section 3.2(l), the Fund will ensure that the Fund Information Circular provides the Fund Unitholders with information required by Applicable Law, and will set out the Ballard Information in the Fund Information Circular in the form approved by Ballard and shall include or incorporate by reference, without limitation: (i) any financial statements in respect of prior acquisitions made by it that are required to be included therein in accordance with Applicable Laws, and (ii) the unanimous determination of the Fund Board of Directors that the Arrangement is fair to the Fund Unitholders and is in the best interests of the Fund and the Fund Unitholders, and include the unanimous recommendation of the Fund Board of Directors that the Fund Unitholders vote in favour of the Arrangement Resolution; provided that, for greater certainty, the Fund Board of Directors shall only be entitled to withdraw, modify or change the recommendation regarding the Arrangement in response to an Alternative Proposal where the Fund has complied with the provisions of Section 3.4 and 7.2;

(g)

the Fund will assist Ballard in the preparation of the Ballard Information Circular and provide to Ballard, in a timely and expeditious manner, all Fund Information for inclusion in the Ballard Information Circular and any amendments or supplements thereto, in each case complying in all material respects with all applicable legal requirements on the date of issue

(h)

except for proxies and other non-substantive communications with securityholders, the Fund will furnish promptly to Ballard or Ballard's counsel, a copy of each notice, report, schedule or other document delivered, filed or received by the Fund in connection with: (i) the Arrangement; (ii) the Fund Meeting; (iii) any filings under Applicable Laws in connection with the transactions contemplated hereby; and (iv) any dealings with Governmental Entities in connection with the transactions contemplated hereby;

(i)

the Fund will solicit proxies to be voted at the Fund Meeting in favour of matters to be considered at the Fund Meeting, including the Fund Resolution;

(j)

the Fund will conduct the Fund Meeting in accordance with the Fund Trust Indenture and any instrument governing the Fund Meeting (including, without limitation, the Interim Order) as applicable, and as otherwise required by Applicable Laws;

(k)

the Fund will make all necessary filings and applications under Applicable Laws required to be made on the part of the Fund in connection with the transactions contemplated herein and shall take all reasonable action necessary to be in compliance with such Applicable Laws; and

(l)

the Fund will promptly advise Ballard of the number of the Fund Units for which the Fund receives notices of dissent or written objections to the Arrangement and provide Ballard with copies of such notices and written objections.

3.2

Covenants of Ballard

(a)

Ballard will not: (i) amend its constating documents; (ii) split, combine or reclassify any of its common shares; (iii) adopt a plan of liquidation or resolutions providing for the liquidation, dissolution, merger, consolidation or reorganization of Ballard; (iv) reorganize, amalgamate, merge or otherwise combine Ballard or Subco with any other Person; or (iv) enter into or modify any contract, agreement, commitment or arrangement to do any of the foregoing;

(b)

Ballard will not: (i) declare, set aside or pay any dividend or other distribution or payment (whether in cash, shares or property) in respect of the outstanding Ballard Shares; (ii) issue, grant, sell or pledge any Ballard Shares or other securities of Ballard, including, without limitation, securities convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, Ballard Shares (other than the grant of Ballard Rights or the issuance of Ballard Shares on the exercise of currently outstanding Ballard Rights; (iii) redeem, purchase or otherwise acquire any of the outstanding Ballard Shares or other securities; or (iv) enter into or modify any contract, agreement, commitment or arrangement to do any of the foregoing; except, in each case, to the extent that such action or matter would not preclude, delay or have an adverse effect on, the Arrangement;

(c)

Ballard will not: (i) acquire (by consolidation or acquisition of shares or assets) any corporation, trust, partnership or other business organization or division thereof, which is not a Subsidiary or affiliate of Ballard, or make any investment therein either by purchase of shares or securities, contributions of capital or property transfer; (ii) incur any indebtedness for borrowed money that is not repaid prior to Closing or incur any other material liability or obligation; (iii) issue any debt securities or assume, guarantee, endorse or otherwise become responsible for, the obligations of any other individual or entity; (iv) enter into any hedges, swaps or other financial instruments or like transactions; (v) enter into any material contract; or (vi) authorize or propose any of the foregoing, or enter into or modify any contract; agreement, commitment or arrangement to do any of the foregoing; except: (vii) in the ordinary course of business consistent with past practice in respect of matters for which the approval of the Ballard Board of Directors is not required; (viii) with the consent of the Fund, not to be unreasonably withheld; or (ix) if in connection with any such action or matter Ballard obtains contractual covenants by the counterparty or counterparties which allow it to assign any and all rights and obligations it acquires or assumes as a result of such transaction to New Ballard without consent of the counterparty or counterparties and which provides that there is no further recourse to Ballard in respect of any such obligations after such assignment (and such rights and obligations are assigned to New Ballard at the Effective Time under the Divestiture Agreement);

(d)

Ballard will not take any action that could reasonably be expected to preclude, delay or have an adverse effect on the Arrangement or would render, or may reasonably be expected to render, any representation or warranty made by it in this Agreement untrue in any material respect;

(e)

Ballard will promptly disclose in writing to the Fund any Material Adverse Change, or of any change in any representation or warranty provided by Ballard in this Agreement which change is or may be of such a nature to render any representation or warranty misleading or untrue in any material respect and Ballard shall in good faith discuss with the Fund any change in circumstances (actual, anticipated, contemplated, or to the knowledge of Ballard, threatened) which is of such a nature that there may be a reasonable question as to whether disclosure in writing need to be given to the Fund pursuant to this provision;

(f)

Ballard will ensure that it has available funds under its lines of credit or other bank facilities to permit the payment of the maximum amount which may be required by Section 7.2 having regard to its other liabilities and obligations, and shall take all such actions as may be necessary to ensure that it maintains such availability to ensure that it is able to pay such amount if required;

(g)

Ballard will use its reasonable commercial efforts to satisfy or cause satisfaction of the conditions set forth in Sections 5.1, 5.2 and 5.3 as soon as reasonably possible following execution of this Agreement to the extent that the satisfaction of the same is within the control of Ballard;

(h)

Ballard will complete the Pre-Arrangement Transactions identified in the Disclosure Letter as being required to be completed prior to Closing;

(i)

in seeking any consents to complete the transactions contemplated by the Divestiture Agreement, Ballard will use its reasonable commercial efforts to obtain a release from such counterparties of any of Ballard's obligations and liabilities which have been assigned to or assumed by New Ballard from such counterparties, such release to be effective at the Effective Time.

(j)

Ballard will provide notice to the Fund of the Ballard Meeting and allow the Fund's representatives to attend such meeting;

(k)

subject to compliance by the Fund with Section 3.1(g), Ballard will ensure that the Ballard Information Circular provides Ballard Securityholders with information required by Applicable Laws, and will set out the Fund Information in the Ballard Information Circular in the form approved by the Fund and shall include or incorporate by reference, without limitation: (i) any financial statements in respect of prior acquisitions made by it that are required to be included therein in accordance with Applicable Laws, and (ii) the unanimous determination of the Ballard Board of Directors that the Arrangement is in the best interests of Ballard and Ballard Securityholders, and include the unanimous recommendation of the Ballard Board of Directors that the Ballard Securityholders vote in favour of the Arrangement Resolution; provided that, for greater certainty, the Ballard Board of Directors shall only be entitled to withdraw, modify or change the recommendation regarding the Arrangement in response to an Alternative Proposal where Ballard has complied with the provisions of Section 3.4 and 7.2;

(l)

Ballard will assist the Fund in the preparation of the Fund Information Circular and provide to the Fund, in a timely and expeditious manner, all Ballard Information for inclusion in the Fund Information Circular and any amendments or supplements thereto, in each case complying in all material respects with all applicable legal requirements on the date of issue thereof and, in particular, to enable the Fund to meet the standard in Item 14 of form 51-102F5 to National Instrument 51-102 - Continuous Disclosure Obligations, including without limitation, required financial statements and any associated audit reports, review engagement reports and auditor consents;

(m)

except for proxies and other non-substantive communications with securityholders, Ballard will furnish promptly to the Fund or the Fund's counsel, a copy of each notice, report, schedule or other document delivered, filed or received by Ballard in connection with: (i) the Arrangement; (ii) the Ballard Meeting; (iii) any filings under Applicable Laws in connection with the transactions contemplated hereby; and (iv) any dealings with Governmental Entities in connection with the transactions contemplated hereby;

(n)

Ballard will solicit proxies to be voted at the Ballard Meeting in favour of matters to be considered at the Ballard Meeting, including the Arrangement Resolution;

(o)

Ballard will conduct the Ballard Meeting in accordance with its articles and by-laws and any instrument governing the Ballard Meeting (including, without limitation, the Interim Order), as applicable, and as otherwise required by Applicable Laws;

(p)

Ballard will make all necessary filings and applications under Applicable Laws, required to be made on the part of Ballard in connection with the transactions contemplated herein and shall take all reasonable action necessary to be in compliance with such Applicable Laws;

(q)

Ballard will, within three Business Days of Ballard receiving from a taxing authority any audit inquiry, assessment, reassessment, confirmation or variation of an assessment, indication that a tax assessment or reassessment is being considered or is pending, request for filing of a waiver or extension of time or any other notice in writing related to taxes, interest penalties, income, losses, or tax pools (an "Assessment"), deliver to the Fund a copy thereof together with a statement setting out, to the extent then determinable, an estimate of the obligations, if any, of Ballard on the assumption that the Assessment is valid; and

(r)

Ballard will promptly advise the Fund of the number of Ballard Shares for which Ballard receives notices of dissent or written objections to the Arrangement and, if dissent rights are given to Ballard Rightsholders under the terms of the Interim Order, Ballard shall promptly advise the Fund of the number of Ballard Rights for which Ballard receives notices of dissent or written objections to the Arrangement and, in each case, provide the Fund with copies of such notices and written objections to the Arrangement.

3.3

Mutual Covenants Regarding the Arrangement

(a)

to obtain all necessary waivers, consents and approvals required to be obtained by it from other parties to loan agreements, leases and other contracts;

(b)

to obtain all necessary consents, assignments, waivers and amendments to or terminations of any instruments and take such measures as may be appropriate to fulfill its obligations hereunder and to carry out the transactions contemplated hereby;

(c)

to prepare and deliver all documents and take all actions required to implement the Arrangement at the Effective Time including, the transfer by Ballard of all of its assets and liabilities to New Ballard, the transfer by the Fund of all of its assets and liabilities to Ballard and the assumption by Ballard of the Debenture Trust Indenture;

(d)

to effect all necessary registrations and filings and submissions of information requested by Governmental Entities required to be effected by it in connection with the Arrangement, and each of the Fund and Ballard will use its reasonable commercial efforts to cooperate with the other in connection with the performance by the other of their obligations under this Section 3.3 including, without limitation, continuing to provide reasonable access to information and to maintain ongoing communications as between officers of the Administrator and Ballard;

(e)

reasonably cooperate with the Other Party and its tax advisors in structuring the Arrangement and the Pre-Arrangement Transactions in a tax effective manner (including, in respect of Ballard, providing the Other Party with access to its Books and Records), and in particular, in a manner to better ensure the balances in the Disclosure Letter of Ballard are available for use by Ballard after the Effective Time, and assist the Other Party and its tax advisors in making such investigations and inquiries with respect to such Party in that regard, as the Other Party and its tax advisors shall consider necessary, acting reasonably, provided that such Party shall not be obligated to consent or agree to any structuring that, in its opinion, acting reasonably: (i) would require it to obtain approval of its securityholders other than at the Ballard Meeting or the Fund Meeting, as the case may be; (ii) would prejudice its securityholders; (iii) would prevent, delay or have an adverse effect on the Arrangement; or (iv) would have an adverse effect on the benefits to be received under the Arrangement by such Party or any of its securityholders;

(f)

reasonably cooperate and consult with the Other Party and its tax advisors on the preparation of the information for the Tax Return of Ballard for the year ended December 31, 2008 (including, in respect of Ballard, providing the Other Party with access to its Books and

(g)

use their reasonable commercial efforts to cause the mailing of the Information Circular to their respective securityholders (the "Mailing Date") to occur as soon as reasonably practicable following the date hereof and in any event by November 24, 2008;

(h)

use their reasonable commercial efforts to obtain a clearance letter from WorkSafeBC indicating Ballard's workers' compensation insurance premiums for the period of time prior to the Effective Date have been paid; and

(i)

to obtain and maintain the Ballard Required Approvals and the Fund Required Approvals which must be obtained from Governmental Entities, including making as promptly as practicable all filings and submissions that are required or are otherwise advisable in order to obtain such approvals and will reasonably cooperate with each other in the preparation of such filings and submissions and the provision of any supplemental information that may be requested or required by Governmental Entities including (i) providing each other with drafts of documentation for review and reasonable comment prior to submission with Governmental Entities and (ii) keeping each other informed as to developments regarding the obtaining of such regulatory approvals.

3.4

Mutual Covenants Regarding Non-Solicitation

(a)

Each Party shall immediately cease and cause to be terminated all existing discussions and negotiations (including, without limitation, through any advisors or other parties on its behalf), if any, with any parties conducted before the date of this Agreement with respect to any Acquisition Proposal and shall immediately request the return or destruction of all information provided to any third parties who have entered into a confidentiality agreement with such Party relating to an Acquisition Proposal and shall use all reasonable commercial efforts to ensure that such requests are honoured.

(b)

Neither Party shall, directly or indirectly, do or authorize or permit any of its officers, directors or employees or any financial advisor, expert or other representative retained by it to do, any of the following:

(i)

solicit, facilitate, initiate or encourage any Acquisition Proposal;

(ii)

enter into or participate in any discussions or negotiations regarding an Acquisition Proposal, or furnish to any other Person any information with respect to its business, properties, operations, prospects or conditions (financial or otherwise) in connection with an Acquisition Proposal or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt of any other Person to do or seek to do any of the foregoing;

(iii)

waive, or otherwise forbear in the enforcement of, or enter into or participate in any discussions, negotiations or agreements to waive or otherwise forbear in respect of, any rights or other benefits under confidential information agreements executed in connection with an Acquisition Proposal, including, without limitation, any "standstill provisions" thereunder; or

(iv)

accept, recommend, approve or enter into an agreement to implement an Acquisition Proposal;

(v)

enter into or participate in any discussions or negotiations with a third party who (without any solicitation, initiation or encouragement, directly or indirectly, after the date of this Agreement, by such Party or any of its officers, directors or employees or any financial advisor, expert or other representative retained by it, whether or not such solicitation, initiation or encouragement was in relation to an Acquisition Proposal or a transaction that would constitute an Acquisition Proposal but for the fact that such transaction does not preclude, delay or have an adverse effect on, the Arrangement) has made a written bona fide Material Acquisition Proposal which the Ballard Board of Directors or the Fund Board of Directors, as the case may be, determines in good faith that the funds or other consideration necessary for the Material Acquisition Proposal are likely to be available (an "Alternative Proposal") and, subject to execution of a confidentiality agreement with a standstill covenant that prevents such third party from making an Acquisition Proposal without the written consent of the Ballard Board of Directors or the Fund Board of Directors, as the case may be, (provided that such confidentiality agreement shall provide for disclosure thereof (along with all information provided thereunder) to the Other Party as set out below), may furnish to such third party information concerning such Party and its business, properties and assets if:

(A)

the Ballard Board of Directors or the Fund Board of Directors, as the case may be, has received the advice of outside counsel that it is necessary to do so in order to properly discharge its fiduciary duties under Applicable Laws or the constating documents of such Party; and

(B)

prior to furnishing such information to or entering into or participating in any such discussions or negotiations with such third party, such Party provides prompt notice to the Other Party to the effect that it is furnishing information to or entering into or participating in discussions or negotiations with such third party together with a copy of the confidentiality agreement referenced above and if not previously provided to the Other Party, copies of all information provided to such third party that is relevant to the Arrangement concurrently with the provision of such information to such third party, and provided further that such Party shall notify the Other Party orally of, and disclose in writing, any inquiries, offers or proposals with respect to an Alternative Proposal (which written disclosure shall include, without limitation, a copy of any such proposal (and any amendments or supplements thereto), the identity of the third party making it, if not previously provided to the Other Party, copies of all information provided to such third party and all other information reasonably requested by the Other Party), within 24 hours of the receipt thereof, shall keep the Other Party informed of the status and details of any such inquiry, offer or proposal and answer the Other Party's questions with respect thereto; or

(vi)

accept, recommend, approve or enter into an agreement to implement an Alternative Proposal, if the Ballard Board of Directors or the Fund Board of Directors, as the case may be, determines the Alternative Proposal to be in the best interests of its

(c)

Each Party in receipt of an Alternative Proposal (a "Receiving Party") shall give the Other Party (the "Responding Party"), orally and disclose in writing, at least three Business Days advance notice of any decision by the Ballard Board of Directors or the Fund Board of Directors, as the case may be, to accept, recommend, approve or enter into an agreement to implement an Alternative Proposal, which notice shall confirm that the Ballard Board of Directors or the Fund Board of Directors, as the case may be, of the Receiving Party has determined that such Acquisition Proposal constitutes an Alternative Proposal, shall identify the third party making the Alternative Proposal and shall provide a true and complete copy thereof and any amendments thereto. During such three Business Day period, the Receiving Party agrees not to accept, recommend, approve or enter into any agreement to implement such Alternative Proposal and not to release the third party making the Alternative Proposal from any standstill provisions and shall not withdraw, redefine, modify or change its recommendation in respect of the Arrangement.

(d)

Each Party agrees that all information that may be provided to it by the Other Party with respect to any Alternative Proposal pursuant to this Section 3.4 shall be confidential and shall not be disclosed or used except in order to enforce its rights under this Agreement in legal proceedings.

(e)

Each Party shall ensure that its officers, directors and employees and any investment bankers or other advisers or representatives retained by it are aware of the provisions of this Section 3.4. The Fund shall be responsible for any breach of this Section 3.4 by Inc's officers, directors, employees, investment bankers, advisers or representatives, and Ballard shall be responsible for any breach of this Section 3.4 by its officers, directors, employees, investment bankers, advisers or representatives.

3.5

Provision of Information; Access

(a)

From and after the date hereof, Ballard shall provide the Fund and its representatives access, during normal business hours and at such other time or times as the Fund may reasonably request, to its premises, books, contracts, records, computer systems, properties, employees and management personnel and shall furnish promptly to the Fund all information concerning its business, properties and personnel as the Fund may reasonably request in the context of completing the Arrangement.

(b)

From and after the date hereof, the Fund shall provide Ballard and its representatives access, during normal business hours and at such other time or times as Ballard may reasonably request, to its premises, books, contracts, records, computer systems, properties, employees and management personnel and shall furnish promptly to Ballard all information concerning its business, properties and personnel as Ballard may reasonably request in the context of completing the Arrangement.

4.1

Representations and Warranties of the Fund

(a)

Organization and Qualification. The Fund is a trust duly created and validly existing under the Laws of the Province of Alberta and has the requisite trust power and authority to own its assets and to conduct its affairs as now conducted.

(b)

Authority Relative to this Agreement. The Fund has the requisite trust power and authority to execute this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement has been duly authorized by the Fund Board of Directors and no other proceedings on the part of the Fund are necessary to authorize this Agreement. This Agreement has been duly executed and delivered by the Fund and constitutes a legal, valid and binding obligation of the Fund enforceable against it in accordance with its terms, subject to the qualification that such enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application relating to or affecting rights of creditors and that equitable remedies, including specific performance, are discretionary and may not be ordered.

(c)

No Violations. Except as contemplated by this Agreement, other than in connection with or in compliance with the provisions of Applicable Laws or which are required to be filed post Arrangement: i) there is no legal impediment to the Fund's consummation of the Arrangement; and ii) no filing or registration with, or authorization, consent or approval of, any domestic or foreign public body or authority is required of the Fund in connection with the consummation of the Arrangement, except for such filings or registrations which, if not made, or for such authorizations, consents or approvals which, if not received, would not have an adverse effect on the ability of the Fund to consummate the Arrangement.

(d)

Board Approval. The Fund Board of Directors has unanimously approved the Arrangement and approved this Agreement, has unanimously determined that the Arrangement and this Agreement are in the best interests of the Fund and the Fund Unitholders and has unanimously determined that the Arrangement is fair to the Fund Unitholders and has resolved to unanimously recommend approval of the Fund Resolution by Fund Unitholders.

(e)

Litigation. There are no actions, suits or proceedings in existence or pending or, to the knowledge of the Fund, threatened or for which there is a reasonable basis, affecting or that would affect Fund at law or in equity or before or by any court or Governmental Entity which action, suit or proceeding involves a possibility of any judgment against or liability of the Fund which, if successful would have an adverse effect on the ability of the Fund to consummate the Arrangement.

(f)

Funds Available. The aggregate cash to be loaned by the Fund to Ballard pursuant to the Arrangement is available to the Fund and will be available at the Effective Time so that the Fund will be able to make such loan in accordance with the terms of the Plan of Arrangement.

4.2

Representations and Warranties of Ballard

(a)

Organization and Qualification. Ballard and Subco are corporations duly incorporated or amalgamated and validly existing under the Laws of their respective jurisdictions of incorporation and have the requisite corporate power and authority to own their assets as now owned and to carry on their business as now conducted. Copies of the constating documents of Ballard and any material contracts provided to the Fund, together with all amendments to date, are accurate and complete as of the date hereof and have not been amended or superseded.

(b)

Authority Relative to this Agreement. Ballard has the requisite corporate power and authority to execute this Agreement carry out its obligations hereunder. The execution and delivery of this Agreement has been duly authorized by the Ballard Board of Directors and no other proceedings on the part of Ballard are necessary to authorize this Agreement. This Agreement has been duly executed and delivered by Ballard and constitutes a legal, valid and binding obligation of Ballard enforceable against it in accordance with its terms, subject to the qualification that such enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application relating to or affecting rights of creditors and that equitable remedies, including specific performance, are discretionary and may not be ordered.

(c)

No Violations. Except as contemplated by this Agreement, other than in connection with or in compliance with the provisions of Applicable Laws or which are required to be filed post Arrangement: i) there is no legal impediment to Ballard's consummation of the Arrangement; and ii) no filing or registration with, or authorization, consent or approval of, any domestic or foreign public body or authority is required of Ballard in connection with the consummation of the Arrangement, except for such filings or registrations which, if not made, or for such authorizations, consents or approvals which, if not received, would not have an adverse effect on the ability of Ballard to consummate the Arrangement.

(d)

Board Approval. The Ballard Board of Directors has unanimously approved the Arrangement and approved this Agreement, has unanimously determined that the Arrangement and this Agreement are in the best interests of Ballard and the Ballard Securityholders, and has unanimously determined that the Arrangement is fair to Ballard Securityholders and has resolved to unanimously recommend approval of the Arrangement Resolution by Ballard Securityholders.

(e)

Litigation. There are no actions, suits or proceedings in existence or pending or, to the knowledge of Ballard, threatened or for which there is a reasonable basis, affecting or that would affect Ballard or Subco at law or in equity or before or by any court or Governmental Entity which action, suit or proceeding involves a possibility of any judgment against or liability of Ballard which, if successful, would have a Material Adverse Effect.

(f)

Reporting Issuer Status. Ballard is a reporting issuer (where such concept exists) in all provinces of Canada. The Ballard Shares are registered pursuant to Section 12 of the U.S. Exchange Act and Ballard is in material compliance with all applicable U.S. Securities Laws, including the Sarbanes Oxley Act of 2002, and the rules and policies of the TSX and NASDAQ.

(g)

Capitalization. As of the date hereof, the authorized capital of Ballard consists of an unlimited number of Ballard Shares and an unlimited number of preferred shares. As of the date hereof, there were issued and outstanding 82,109,460 Ballard Shares and there are no options, warrants or other rights, agreements or commitments of any character whatsoever requiring the issuance, sale or transfer by Ballard of any securities of Ballard (including Ballard Shares) or any securities convertible into, or exchangeable or exercisable for, or otherwise evidencing a right to acquire, any securities of Ballard (including Ballard Shares) other than the Ballard Rights. All outstanding Ballard Shares have been duly authorized and validly issued, are fully paid and non-assessable and are not subject to, nor were they issued in violation of, any pre-emptive rights.

(h)

Financial Statements. As of their respective dates, the Ballard Financial Statements did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading and complied in all material respects with all Applicable Laws. The Ballard Financial Statements were prepared in accordance with GAAP (except (x) as otherwise indicated in such financial statements and the notes thereto or, in the case of audited statements, in the related report of Ballard's independent auditors or (y) in the case of unaudited interim statements, to the extent they may not include footnotes, are subject to normal year end adjustments or may be condensed or summary statements), and present fairly in all material respects in accordance with GAAP the consolidated financial position, results of operations and changes in financial position of Ballard on a consolidated basis as of the dates thereof and for the periods indicated therein (subject, in the case of any unaudited interim financial statements, to normal year-end audit adjustments) and reflect appropriate and adequate reserves in all material respects in respect of contingent liabilities, if any, of Ballard on a consolidated basis.

(i)

Absence of Liabilities. Ballard will, after Closing, not have any have any debts, liabilities, commitments or obligations of any nature (whether matured or unmatured, accrued, fixed, contingent or otherwise) of any kind whatsoever resulting from any matters, actions, events, facts or circumstances related to the activities, affairs or business of Ballard which occurred prior to Closing, including without limitation, as a result of: i) Claims relating to the Intellectual Property of Ballard or the activity of Ballard and/or of its Subsidiaries in relation to the Intellectual Property, including without limitation the development, reproduction, use, and sale or distribution, of all or any part thereof, which infringes upon, or misappropriates, the Intellectual Property Rights of any third Person; ii) Claims relating to Taxes of Ballard for any period of time prior to Closing, including without limitation any Taxes relating to the current audit being conducted with respect to sales taxes; iii) Claims related to any public disclosure of Ballard, including without limitation the Public Record of Ballard and any disclosure relating to Ballard included in the Fund Information Circular, for any period of time prior to Closing; iv) any violation of Applicable Laws, including without limitation applicable Canadian Securities Laws, that occurred prior to Closing; v) any failure to comply with the terms of any agreements, contracts, indentures, licenses, permits, approvals to which it is or was party or which it is or was subject to, or which has been entered into on its behalf or its constating documents; vi) Claims relating to the operation, performance, warranty, maintenance, service, malfunction or liability of Ballard's products prior to Closing; vii) Claims relating to workers' compensation, including without limitation, premiums in Canada or the United States; viii) Claims relating to personal injuries or property damage; or ix) Claims relating to violations of Environmental Laws or the release of Hazardous Substances; except, in each case; (x) as has been assumed by New Ballard and is the subject of the trust conditions of the Divestiture Agreement; or (xi) any liabilities or obligations of Ballard

(j)

Disclosure. To the knowledge of Ballard, Ballard has not withheld from the Fund any material information or documents concerning Ballard or its Subsidiaries that would reasonably be expected to disclose that a Material Adverse Change had occurred after January 1, 2008. No representation or warranty contained herein contains or will contain any untrue statement of a material fact or omits to state a material fact which is necessary in order to make the statements herein not misleading.

(k)

No Material Adverse Change. Since January 1, 2008, other than as disclosed in the Public Record, there has not been any Material Adverse Change.

(l)

Tax Representations:

(i)

Place of Principal Offices. The principal office of Ballard is not located within the United States;

(ii)

Investment Company. Ballard is not an "investment company" within the meaning of the United States Investment Company Act of 1940, as amended;

(iii)

Tax Returns. Ballard has duly and timely filed in the prescribed manner and within the prescribed time with all appropriate Governmental Entities all Tax Returns that it is required to file in respect of any Taxes in respect of any provision in applicable tax legislation, for all fiscal and other reporting periods ending prior to the date hereof, and all of which are, to the best of Ballard's knowledge, true, correct and complete in all material respects;

(iv)

Sales Tax. Except as may be determined under the current audit being conducted with respect to the sales taxes, Ballard has complied with all registration, reporting, collection and remittance requirements in respect of all federal and provincial sales tax legislation including but not limited to the Excise Tax Act (Canada);

(v)

Tax Information. Ballard has provided to the Fund copies of all tax related materials requested by the Fund, including Tax Returns, electronic copies of the general ledger and copies of legal entity financial statements, elections, designations, audit undertakings, notices of determination of loss, all working papers, calculations and schedules relating thereto, together with all communications relating thereto from any Governmental Entities and the response, if any, from Ballard to such communications;

(vi)

Assessments or Reassessments. Except for the current audit being conducted with respect to sales taxes: (A) There are no assessments or reassessments of any Taxes that have been issued and are outstanding pursuant to which there are any amounts owing; (B) Ballard is not negotiating any draft assessment or reassessment with any Governmental Entity; (C) Ballard is not aware of any contingent liabilities for Taxes or any grounds for an assessment or reassessment including, without limitation, aggressive treatment of income, expenses, deductions, credits or other claims for deduction or credit under any Tax Returns; and (D) Ballard has not received any indication from any Governmental Entity that an assessment or reassessment is proposed in respect of any Taxes, regardless of its merits. Ballard has not executed or filed with any Governmental Entity any agreement extending the period for the filing

(vii)

Acquisition of Control. Based on the generally accepted interpretation of the ITA as of the date hereof, during the period commencing December 31, 1998 and ending immediately prior to the date hereof, there has not been any "acquisition of control" of Ballard, as that term is used for purposes of the ITA; and

(viii)

Residency. Ballard is and has been since its inception, resident in Canada and a "taxable Canadian corporation" both for purposes of the ITA.

5.1

Mutual Conditions Precedent

(a)

the Interim Order: i) shall have been granted in form and substance satisfactory to each of the Fund and Ballard, acting reasonably; ii) shall provide that the obligation to comply with any dissent rights granted to Ballard Shareholders in connection with the Arrangement, including without limitation the obligation to pay the fair value of such Ballard Shares to the holders of any such securities which have exercised such dissent rights, shall be an obligation of New Ballard; and iii) shall not have been set aside or modified in a manner unacceptable to the Fund and Ballard, acting reasonably, on appeal or otherwise;

(b)

the Arrangement Resolutions shall have been passed by the requisite majorities specified in the Interim Order and in form and substance satisfactory to each of the Fund and Ballard, acting reasonably;

(c)

the Final Order shall have been granted in form and substance satisfactory to the Fund and Ballard, acting reasonably and shall not have been set aside or modified in any manner unacceptable to the Fund or Ballard, acting reasonably, on appeal or otherwise;

(d)

the Articles of Arrangement to be filed with the Director in accordance with the Arrangement shall be in form and substance satisfactory to each of the Fund and Ballard, acting reasonably and be capable of being filed in sufficient time to ensure that the Arrangement may become effective on or prior to the Deadline; and

(e)

there shall be no action taken under any existing Applicable Law, nor any statute, rule, regulation or order which is enacted, enforced, promulgated or issued by any Governmental Entity, that:

(i)

makes illegal or otherwise directly or indirectly restrains, enjoins or prohibits the Arrangement or any other transactions contemplated herein; or

(ii)

results in a judgment or assessment of material damages directly or indirectly relating to the transactions contemplated herein.

5.2

Additional Conditions to Obligations of the Fund

(a)

except as affected by the transactions contemplated by this Agreement, the representations and warranties of Ballard contained in Section 4.2 shall be true in all material respects (provided that those representations which are subject to qualifications or limitations as to materiality or Material Adverse Effect or Material Adverse Change shall be true in all respects) as at the Effective Date, or as at the date specified in such representation or warranty, where applicable, with the same effect as though such representations and warranties had been made at and as of such time and Ballard shall have complied in all material respects with its covenants in this Agreement and the Fund shall have received a certificate to that effect dated the Effective Date from the Chief Executive Officer and Chief Financial Officer of Ballard acting solely on behalf of Ballard and not in their personal capacity, to the best of their respective information and belief having made reasonable inquiry and the Fund will have no knowledge to the contrary;

(b)

holders of not more than 2% of the outstanding Fund Units shall have exercised rights of dissent in respect of the Arrangement that have not been withdrawn as of the Effective Date;

(c)

immediately prior to the Effective Time, but after completion of the Pre-Arrangement Transactions, the aggregate of federal tax account balances in respect of the pools set out in the Disclosure Letter shall not be less than 90% of the amounts set out in the Disclosure Letter, and the applicable expiry horizons will not be materially different than as set out in the Disclosure Letter;

(d)

at the Effective Time: (i) Ballard shall have no Subsidiaries other than those being transferred to New Ballard in connection with the Arrangement or agreements of any nature to acquire any Subsidiary, or to acquire or lease any other business, assets or operations; (ii) Ballard shall not have in effect any bonus plan, commission plan, profit sharing plan, pension plan, royalty plan or arrangement or employee benefit plan for the benefit of any employees, officers, directors or shareholders of Ballard that will not be terminated, whether pursuant to the Arrangement or otherwise; (iii) Ballard will have no officers, employees or consultants other than those being transferred to New Ballard in connection with the Arrangement; and (iv) there shall be no amounts payable by Ballard under any obligations or liabilities of Ballard to pay any amount to its officers, directors, employees or consultants or any other person not dealing at arm's length with Ballard or any associate or affiliate of any such persons including all severance, termination, change of control arrangements, pay to stay or retention arrangements and salaries and bonuses;

(e)

there shall not have been after the date hereof and prior to the Effective Time any enactment, promulgation or public announcement of any change or proposed change in law (including a specific proposal to amend the ITA publicly announced by the Department of Finance of Canada) or applicable case law, or written and published interpretative guidance or policy of the Canada Revenue Agency or provincial equivalent that, in the opinion of the Fund, acting

(f)

during the period commencing immediately prior to the date hereof and ending immediately prior to the Effective Time, there will not have been any "acquisition of control" of Ballard, as that term is used for purposes of the ITA with the exception of any "acquisition of control" that has occurred on or after the date hereof as a result of the execution of this Agreement or the completion of the transactions contemplated herein, including the Plan of Arrangement;

(g)

the Ballard Shares and the Fund Debentures to be assumed by Ballard (including the Ballard Shares to be issued pursuant to the Arrangement or issuable upon conversion, redemption or maturity of such debentures) shall be conditionally listed so as to be listed and posted for trading on the TSX on the first trading day following the Effective Date and the Ballard Shares shall be delisted from the NASDAQ;

(h)

the Fund shall have received resignations and releases, in the form settled between Ballard and the Fund on or prior to the date hereof, from the directors and officers of Ballard;

(i)

between the date hereof and the Effective Time, there shall not have occurred any Material Adverse Change as described in section i) or ii) of the definition of Material Adverse Change or any Material Adverse Change described in section iii) of such definition which, in the opinion of the Fund, acting reasonably, has a material adverse effect on New Ballard's financial capacity to fulfill its obligations under the indemnity under the Indemnity Agreement which, for greater certainty, shall include a decision by a credit rating agency to downgrade the credit rating or outlook on Superior Plus LP's debt as a result of such Material Adverse Change;

(j)

Ballard shall have: i) been added as an additional insured to the general insurance policies; and ii) as a named insured to the directors' and officers' liability insurance policy of New Ballard or shall have secured "run off" directors’ and officers’ liability insurance, which policies shall have a scope and coverage no less advantageous in scope and coverage to that provided pursuant to Ballard's insurance policies immediately prior to the date of this Agreement and, in the case of the "run off" directors' and officers' liability insurance policy shall cover claims made prior to or within six years after the Effective Time;

(k)

there shall be no security registrations against Ballard under the Personal Property Security Act (British Columbia) or other security registration legislation in other jurisdictions, with the exception of registrations relating to specific goods which, for greater certainty, excludes registrations relating to equipment or other categories of personal property where no specific good is listed, or such other arrangements shall have been made with respect to the discharge of such security registrations as are satisfactory to the Fund;

(l)

New Ballard and New Holdco shall have entered into an indemnity agreement indemnifying Ballard in the form attached hereto as Schedule "B"; and

(m)

the Fund Required Approvals shall have been received by the Fund on a basis acceptable to the Fund, acting reasonably.

5.3

Additional Conditions to Obligations of Ballard

(a)

except as affected by the transactions contemplated by this Agreement, the representations and warranties of the Fund contained in Section 4.1 shall be true in all material respects (provided that those representations which are subject to qualifications or limitations as to materiality or Material Adverse Effect or Material Adverse Change shall be true in all respects) as at the Effective Date, or as at the date specified in such representation or warranty, where applicable, with the same effect as though such representations and warranties had been made at and as of such time and the Fund shall have complied in all material respects with its covenants in this Agreement and Ballard shall have received a certificate to that effect dated the Effective Date from the Chief Executive Officer and Chief Financial Officer of the Administrator acting solely on behalf of the Administrator and not in their personal capacity, to the best of their respective information and belief having made reasonable inquiry and Ballard will have no knowledge to the contrary;

(b)

holders of not more than 2% of the outstanding Ballard Shares shall have exercised rights of dissent in respect of the Arrangement that have not been withdrawn as of the Effective Date;

(c)

the New Ballard common shares (including the New Ballard common shares issuable to Ballard Shareholders pursuant to the Arrangement) shall be conditionally listed so as to be listed and posted for trading on the TSX and the NASDAQ on the first trading day following the Effective Date and any required approvals of the TSX and NASDAQ of the New Ballard rights plans and the listing of the New Ballard common shares issuable thereunder by the TSX and the NASDAQ shall have been received;

(d)

Ballard shall have entered into an indemnity agreement indemnifying New Ballard in the form attached hereto as Schedule "B"; and

(e)

the Ballard Required Approvals shall have been received by Ballard on a basis acceptable to Ballard, acting reasonably.

5.4

Notice and Effect of Failure to Comply with Conditions

(a)

Each of the Fund and Ballard shall give prompt notice to the other of the occurrence, or failure to occur, at any time from the date hereof to the Effective Date of any event or state of facts which occurrence or failure would, or would be likely to: (i) cause any of the representations or warranties of any Party contained herein to be untrue or inaccurate in any material respect, or (ii) result in the failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by any Party hereunder; provided, however, that no such notification will affect the representations or warranties of the Parties or the conditions to the obligations of the Parties hereunder.

(b)

If any of the conditions precedents set forth in Sections 5.1, 5.2 or 5.3 hereof shall not be complied with or waived by the Party or Parties for whose benefit such conditions are provided on or before the date required for the performance thereof, then a Party for whose benefit the condition precedent is provided may terminate this Agreement as provided in Section 7.1 hereof; provided that, prior to the filing of the Articles of Arrangement for the purpose of giving effect to the Arrangement, the Party intending to rely thereon has delivered a written notice to the Other Party, specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Party delivering such notice is asserting as the basis for the non-fulfillment of the applicable conditions precedent. More than one such notice may be delivered by a Party.

5.5

Satisfaction of Conditions

6.1

Amendment

(a)

change the time for performance of any of the obligations or acts of the Parties;

(b)

waive any inaccuracies or modify any representation or warranty contained herein or in any document delivered pursuant hereto;

(c)

waive compliance with or modify any of the covenants herein contained and waive or modify performance of any of the obligations of the Parties; or

(d)

waive compliance with or modify any other conditions precedent contained herein;

7.1

Termination

(a)

by mutual written consent of the Fund and Ballard;

(b)

as provided in Section 5.4(b); or

(c)

by either the Fund or Ballard in order to enter into an Alternative Proposal in accordance with Section 3.4(b)(vi), provided that such Party has complied with its obligations set forth in Section 3.4(c) and concurrently therewith pays the Termination Fee.

7.2

Termination Fee

(a)

is terminated by a Party in the circumstances contemplated in Section 7.1(b) as a result of the failure of the other Party’s securityholders to approve the Arrangement Resolution, and the terminating Party’s securityholders have approved the Arrangement Resolution; or

(b)

is to be terminated by a Party in the circumstances contemplated in Section 7.1(c);

7.3

Damages and Remedies

8.1

Confidentiality

(a)

Each Party will, and will cause its Subsidiaries and its and their directors, officers, employees and agents to, keep all information provided to it hereunder or in connection with the Arrangement (collectively, the "Confidential Information") confidential and will not use or disclose such Confidential Information to any Person except to the extent:

(i)

such use or disclosure is expressly permitted or contemplated pursuant to this Agreement or any agreement contemplated herein;

(ii)

such use or disclosure is strictly necessary to enable the recipient of such Confidential Information to exercise its rights and perform its obligations under this Agreement or any agreement contemplated in this Agreement;

(iii)

such use or disclosure is required by Applicable Laws;

(iv)

such information is in the public domain other than as a result of a breach of this Agreement or any agreement contemplated in this Agreement; or

(v)

such use or disclosure is required 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 the confidentiality of such Confidential Information will be maintained.

(b)

Each Party acknowledges that the Confidential Information of the other Party consists in part of information vital to the business and commercial prospects of those other Party and that such information is the special, valuable and unique property of those other Party and would not normally be disclosed to it. Accordingly, each Party agrees to use all commercially reasonable efforts to protect such Confidential Information and keep it confidential using a standard of care no less than the degree of care that such Party would be reasonably expected to employ for its own similar Confidential Information. In particular, each Party has instructed and shall continue to instruct those employees or advisors responsible for processing Personal Information to protect the confidentiality of such information in a manner consistent with the Parties' obligations hereunder and has ensured and shall continue to ensure that access to the Personal Information shall be restricted to those employees or advisors of the respective Party who have a bona fide need to access to such information in order to complete the Arrangement.

(c)

Neither Party has or hereafter shall use any Personal Information for any purposes other than those related to the performance of this Agreement and the completion of the Arrangement and each Party acknowledges and confirms that the disclosure of Personal Information is necessary for the purposes of determining if the Parties shall proceed with the Arrangement, and that any disclosure of Personal Information relates solely to the carrying on of the business and the completion of the Arrangement.

(d)

Each Party acknowledges and confirms that it has and shall continue to employ appropriate technology and procedures in accordance with Applicable Laws to prevent accidental loss or corruption of the Personal Information, unauthorized input or access to the Personal Information, or unauthorized or unlawful collection, storage, disclosure, recording, copying, alteration, removal, deletion, use or other processing of such Personal Information.

(e)

Each Party shall promptly notify the other Party to this Agreement of all inquiries, complaints, requests for access, and claims of which the Party is made aware in connection with the Personal Information. The Parties shall fully co-operate with one another, with the persons to whom the Personal Information relates, and any authorized authority charged with enforcement of applicable privacy laws, in responding to such inquiries, complaints, requests for access, and claims.

(f)

Upon the expiry or termination of this Agreement, or otherwise upon the reasonable request of either Party, the other Party shall forthwith cease all use of the Personal Information acquired by it in connection with this Agreement and will return to Other Party or, at the Other Party's request, destroy in a secure manner, the Personal Information (and any copies).

(g)

Without prejudice to any other rights or remedies, in the event of litigation relating to a breach of the provisions of this Article 8, if a court of competent jurisdiction determines in a final, non-appealable order that any of such provisions has been breached, the Party in breach will reimburse the other Party for its costs and expenses (including reasonable legal fees and expenses) incurred in connection with all such litigation.

9.1

Notices

(a)

in the case of the Fund, to:

Attention:

Chief Financial Officer

Facsimile:

(403) 218-2973

Attention:

Darren Hribar

Facsimile:

403-264-5973

(b)

in the case of Ballard, to:

Attention:

President and Chief Executive Officer

Facsimile:

(604) 412-3131

Attention:

John Anderson

Facsimile:

(604) 681-1825

10.1

Binding Effect

10.2

Assignment

10.3

Disclosure

10.4

Costs

10.5

Severability

(a)

the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions or parts thereof severed; and

(b)

the invalidity, illegality or unenforceability of any provision or part thereof contained in this Agreement in any jurisdiction shall not affect or impair such provision or part thereof or any other provisions of this Agreement in any other jurisdiction.

10.6

Further Assurances

10.7

Time of Essence

10.8

Governing Law

10.9

Waiver

10.10

Obligations

10.11

Counterparts

SUPERIOR PLUS INCOME FUND, by its

BALLARD POWER SYSTEMS INC.

Administrator, Superior Plus Administration Inc.

Per:     ____________________________________

Per:        ______________________________

Grant D. Billing

John Sheridan

Chairman and Chief Executive Officer

President and Chief Executive Officer

Per:     ____________________________________

Per:        ______________________________

Wayne M. Bingham

Dave Smith

Executive Vice President and Chief

Chief Financial Officer

Financial Officer

1.1

Definitions

1.2

Number of Fund Units

(a)

For purposes of determining the number of Fund Units outstanding on the Effective Date, that number shall conclusively be considered to be the number set forth in a certificate or letter of the registrar and transfer agent of the Fund on that date.

(b)

For purposes of determining the number of Current Ballard Shares outstanding on the Effective Date, that number shall conclusively be considered to be the number set forth in a certificate or letter of the registrar and transfer agent of Ballard on that date.

1.3

Sections and Headings

1.4

Number, Gender and Persons

1.5

Currency

1.6

Date for any Action

1.7

Statutory References

2.1

Arrangement Agreement

2.2

Effect of Filing Articles of Arrangement

3.1

Arrangement and Related Transactions

(a)

the Ballard RSUP and the Ballard RSUs and any other rights issued thereunder shall be, and shall be deemed to be, terminated and cancelled for no consideration;

(b)

the Ballard DSUP and the Ballard DSUs and any other rights issued thereunder shall be, and shall be deemed to be, terminated and cancelled for no consideration;

(c)

the Fund Indenture shall be amended to the extent necessary to facilitate the Arrangement and the implementation of the steps and transactions described herein all as may be reflected in a further amended and restated Fund Indenture to be dated as of the Effective Date;

(d)

the Fund shall loan to Ballard the Fund Loan Amount and, in consideration therefor, Ballard shall issue and deliver to the Fund the Fund Loan Promissory Note;

(e)

Ballard shall transfer, assign and convey to Newco the Divested Assets and as consideration for the Divested Assets, Newco shall issue to Ballard 100,000,000 fully paid Newco Shares and assume the Assumed Obligations all on the terms and conditions set forth in the Divestiture Agreement;

(f)

all of the Current Ballard Shares (including those held by Dissenting Shareholders) shall be, and shall be deemed to be, exchanged by the holders thereof for fully paid New Holdco Shares on the basis of one New Holdco Share for each Current Ballard Share;

(g)

the New Holdco Shares received by Dissenting Shareholders pursuant to subsection 3.1(f) shall be, and shall be deemed to be, cancelled and the Dissenting Shareholders shall cease to have any rights as New Holdco Shareholders other than the right to be paid by New Holdco, in accordance with section 4.2, an amount equal to the fair value of the Current Ballard Shares that were exchanged for their New Holdco Shares;

(h)

New Holdco shall adopt and be deemed to have adopted and implemented the New Holdco RSUP;

(i)

New Holdco shall issue to each Current Ballard RSU Holder whose Ballard RSUs were terminated and cancelled pursuant to subsection 3.1(a) one New Holdco RSU for each Ballard RSU so terminated and cancelled, entitling the holder to acquire one New Holdco Share on the same terms and conditions, mutatis mutandis, as the terminated and cancelled Ballard RSU;

(j)

New Holdco shall adopt and be deemed to have adopted and implemented the New Holdco DSUP;

(k)

New Holdco shall issue to each Current Ballard DSU Holder whose Ballard DSUs were terminated and cancelled pursuant to subsection 3.1(b), one New Holdco DSU for each Ballard DSU so terminated and cancelled, entitling the holder to acquire one New Holdco Share on the same terms and conditions, mutatis mutandis, as the terminated and cancelled Ballard DSU;

(l)

New Holdco shall adopt and be deemed to have adopted an implemented the New Holdco Option Plan;

(m)

all of the Current Ballard Options shall be, and shall be deemed to be, terminated and cancelled and New Holdco Options shall be, and shall be deemed to be, issued to the holders of the Current Ballard Options so terminated and cancelled, on the basis that for each Current Ballard Option so terminated and cancelled, the Current Ballard Optionholder shall receive in exchange therefor a New Holdco Option to purchase the same number of New Holdco Shares as the aggregate number of Current Ballard Shares under the Current Ballard Option so terminated and cancelled, at an exercise price per New Holdco Share equal to the exercise price per Current Ballard Share under the Current Ballard Option so terminated and cancelled and having the same vesting dates and expiry date as the Current Ballard Option so terminated and cancelled, and the New Holdco Options so issued shall be otherwise deemed to have been issued under, and be subject to, the terms and conditions of the New Holdco Option Plan;

(n)

the articles of Ballard shall be amended to change its authorized capital as follows:

(i)

by changing the designation of the Current Ballard Shares to "Redeemable Common Shares", having the same rights, privileges, restrictions and conditions as the Current Ballard Shares, but with each Ballard Redeemable Share being redeemable at the option of Ballard in consideration for one Newco Share;

(ii)

by subdividing and changing the number of outstanding Ballard Redeemable Shares in such manner that the aggregate number of outstanding Ballard Redeemable Shares becomes 100,000,000 Ballard Redeemable Shares;

(iii)

by the creation of a new class of common shares (the "New Ballard Shares"), being an unlimited number of shares designated as "Common Shares", having the following rights, privileges, restrictions and conditions attaching thereto:

(A)

Dividends: The holders of the Common Shares are entitled to receive dividends, if, as and when declared by the board of directors of Ballard, out of the assets of Ballard properly applicable to the payment of dividends in such amounts and payable at such times and at such place or places in Canada as the board of directors may from time to time determine. Subject to the rights of the holders of any other class of shares of Ballard entitled to receive dividends in priority to or rateably with the Common Shares, the board of directors may in its sole discretion declare dividends on the Common Shares to the exclusion of any other class of shares of Ballard;

(B)

Voting Rights: The holders of the Common Shares are entitled to receive notice of and to attend all annual and special meetings of the shareholders of Ballard, and to one vote at all such meetings in respect of each Common Share held; and

(C)

Participation upon Liquidation, Dissolution or Winding-Up: In the event of the liquidation, dissolution or winding-up of Ballard or other distribution of assets of Ballard among its shareholders for the purpose of winding-up its affairs, the holders of the Common Shares shall, subject to the rights of the holders of any other class of shares of Ballard upon such a distribution in priority to the Common Shares, be entitled to participate rateably in any distribution of the assets of Ballard; and

(iv)

by changing the province in Canada where the registered office of Ballard is situated to the Province of Alberta;

(o)

the Fund shall transfer, assign and convey to Ballard all of its assets (including the Fund Loan Promissory Note) and as consideration for such assets, Ballard shall (A) issue to the Fund such number of fully paid New Ballard Shares that are equal to the number of outstanding Fund Units as at the Effective Time; and (B) assume all of the liabilities and obligations of the Fund;

(p)

the Fund shall redeem all of its outstanding Fund Units and distribute all of the New Ballard Shares to Fund Unitholders on the basis of one New Ballard Share for each one Fund Unit held in satisfaction of the redemption of all of the Fund Units;

(q)

the existence of the Fund shall terminate upon completion of the steps provided in subsections 3.1(o) and 3.1(p);

(r)

the New Ballard Shares held by Dissenting Unitholders that were acquired pursuant to subsection 3.1(p) in satisfaction of the redemption of all of the Fund Units shall be, and shall be deemed to be, cancelled and the Dissenting Unitholders shall cease to have any rights as New Ballard Shareholders other than the right to be paid by Ballard, in accordance with section 4.1, the fair value of the Fund Units that were redeemed in satisfaction for their New Ballard Shares;

(s)

all of the issued and outstanding Ballard Redeemable Shares shall be, and shall be deemed to be, redeemed by Ballard, with payment of the aggregate redemption price therefor to be effected by Ballard distributing all of the issued and outstanding Newco Shares held by Ballard to New Holdco, whereupon all of the Ballard Redeemable Shares shall be, and shall be deemed to be, cancelled;

(t)

the name of Ballard shall be changed to "Superior Plus •" and the name of New Holdco shall be changed to "Ballard Power Systems Inc.";

(u)

the incumbent directors of Ballard shall, and shall be deemed to, have resigned and be replaced, as directors, by the directors of the Administrator;

(v)

the initial auditors of New Holdco will be KPMG LLP, who shall continue in office until the close of business of the first annual meeting of the holders of New Holdco Shares, and the directors of New Holdco are authorized to fix the remuneration of such auditors;

(w)

the auditors of Ballard will be Deloitte & Touche LLP, who shall continue in office until the close of business of the next annual meeting of the holders of New Ballard Shares, and the directors of Ballard are authorized to fix the remuneration of such auditors; and

(x)

Newco shall transfer, assign and convey to New Holdco as a distribution upon liquidation, all of its assets and undertakings, including the Divested Assets, and as consideration for such assets and undertakings, New Holdco shall assume all of the liabilities of Newco, including the Assumed Obligations, and, for greater certainty, Newco shall not be dissolved as at the Effective Time as a result of the foregoing.

3.2

Effect of Redemptions and Exchanges

(a)

As a result of the exchange of Current Ballard Shares provided in subsection 3.1(f):

(i)

each Current Ballard Shareholder shall cease to be a holder of the Current Ballard Shares and such holder's name shall be removed from the register of holders of Current Ballard Shares as of the Effective Date;

(ii)

subject to section 4.2, each Current Ballard Shareholder whose Current Ballard Shares are exchanged shall become a holder of the number of New Holdco Shares to which such holder is entitled as a result of such exchange and such holder's name shall be added to the register of holders of New Holdco Shares as of the Effective Date; and