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NUCRYST and Smith & Nephew Revise Agreements
Date:10/1/2007

harge plus direct costs, which will be established

annually.

- The overhead charge payable by Smith & Nephew in 2007 through 2009

has been fixed at a minimum floor amount equal to the 2007 overhead

charge. This floor amount will be payable by Smith & Nephew

regardless of the actual volume of Acticoat(TM) products ordered by

Smith & Nephew. NUCRYST may use any actual overhead cost savings

achieved by NUCRYST over the next two years to offset an annual early

cost of goods relief payment in the amount of $4.5 million that

NUCRYST has agreed to make to Smith & Nephew beginning in 2007

through 2009. In 2010, the parties will establish new fixed prices

after taking into account the cost savings achieved by NUCRYST in the

previous two years.

- NUCRYST will be entitled to immediately include in the cost of goods

sold to Smith & Nephew partial depreciation on a new production

facility and equipment scheduled to be certified by NUCRYST in the

fourth quarter of 2007. Once NUCRYST begins using the new equipment

to produce Acticoat(TM) products, inclusion of the full depreciation

will commence (subject to any proportionate use NUCRYST itself makes

of the equipment). Prior to the revisions to the agreements, NUCRYST

would not have been able to recover any portion of the capital costs

for this capacity expansion until NUCRYST began using the equipment

to produce Acticoat(TM) products.

- A non-compete clause has been deleted from the agreements to allow

Smith & Nephew to broaden their wound care dressings product line to

include other forms of silver. In exchange, Smith & Nephew's

exclusive license has been limited to existing Acticoat(TM) products

and such new wound care or burn products as the parties agree to


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SOURCE NUCRYST Pharmaceuticals Corp.
Copyright©2007 PR Newswire.
All rights reserved

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