Westaim and NUCRYST Pharmaceuticals collaborate to form a new company

In order to receive the Redemption Consideration, Nucryst shareholders should follow the instructions set forth under "Information Regarding the Amalgamation-Redemption Procedure" in the Notice and Information Circular of Nucryst dated November 25, 2009 previously delivered to shareholders and filed with securities authorities in Canada on SEDAR at www.sedar.com and with the United States Securities and Exchange Commission on December 1, 2009 as Exhibit (a)(1) to the Schedule 13E-3 Transaction Statement filed by Nucryst, Westaim and 1499642.

The Amalgamation follows the sale (the Sale Transaction) by Nucryst of substantially all of its assets pursuant to an asset purchase agreement dated November 10, 2009, as amended (the Purchase Agreement), among Nucryst, NUCRYST Pharmaceuticals Inc., Smith & Nephew Inc. and Smith & Nephew (Overseas) Limited (collectively, S&N). In connection with the Sale Transaction, Westaim entered into a keep well agreement (the Keep Well Agreement) and an environmental indemnification agreement (the Indemnification Agreement) with S&N. Under the Keep Well Agreement, Westaim agreed not to take any action which would cause Nucryst to breach its covenant in the Purchase Agreement to maintain a minimum net worth of at least US$4 million provided that Westaim's liability for any breach of the Keep Well Agreement cannot exceed US$4 million less any indemnity claims already satisfied by Nucryst. Under the Indemnification Agreement, Westaim agreed to indemnify S&N and its directors, officers and employees from certain environmental liabilities and related costs relating to the premises formerly leased by Nucryst in Fort Saskatchewan, Alberta.