Westaim : Management Information Circular

THE WESTAIM CORPORATION

NOTICE OF ANNUAL AND SPECIAL MEETING

TO BE HELD ON MAY 18, 2023

AND

MANAGEMENT INFORMATION CIRCULAR

March 31, 2023

THE WESTAIM CORPORATION

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the annual and special meeting of shareholders (the "Meeting") of The Westaim Corporation (the "Corporation") will be held at Vantage Venues, 150 King Street West, 27th Floor, Toronto, Ontario M5H 1J9 on Thursday, May 18, 2023 at 9:00 a.m. (Eastern Time) to:

1. receive and consider the financial statements of the Corporation for the financial year ended December 31, 2022 together with the auditors' report thereon;
2. elect as directors for the forthcoming year the nominees proposed by management of the Corporation;
3. re-appointDeloitte LLP, Chartered Professional Accountants, as auditors of the Corporation and to authorize the audit committee of the board of directors of the Corporation (the "Board") to fix the auditors' remuneration and terms of engagement;
4. consider and, if deemed appropriate, pass a resolution confirming and approving the amended and restated 10% rolling incentive stock option plan of the Corporation; and
5. transact such other business as may properly come before the Meeting or any adjournment(s) or postponement(s) thereof.

This Notice of Meeting is accompanied by a management information circular and a form of proxy (a "Proxy Instrument").

The record date for the determination of shareholders of the Corporation entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof is March 31, 2023 (the "Record Date"). Shareholders of the Corporation whose names have been entered in the register of shareholders of the Corporation at the close of business on the Record Date will be entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof.

A shareholder of the Corporation may attend the Meeting in person or may be represented by proxy. Registered shareholders of the Corporation who are unable to attend the Meeting or any adjournment(s) or postponement(s) thereof in person are requested to date, sign and return the accompanying Proxy Instrument for use at the Meeting or any adjournment(s) or postponement(s) thereof.

To be effective, the enclosed Proxy Instrument must be returned to Computershare Investor Services Inc. by: (i) mail using the enclosed return envelope; or (ii) hand delivery to Computershare at 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1. Alternatively, you may vote by telephone at 1-866-732-VOTE (8683) (toll-free within North America) or 1-312-588-4290 (outside North America), by Internet using the 15 digit control number located at the bottom of the Proxy Instrument at www.investorvote.com or by facsimile to 1-866-249-7775/416-263-9524. All instructions are listed on the enclosed Proxy Instrument. Your proxy or voting instructions must be received in each case no later than 9:00 a.m. (Eastern time) on May 16, 2023 or, if the Meeting is adjourned, at least 48 hours (excluding Saturdays, Sundays and statutory holidays in the Province of Ontario) before the beginning of any adjournment or postponement to the Meeting.

If you are a non-registeredbeneficial shareholder, a voting information form (also known as a VIF), instead of a form of proxy, may be enclosed. You must follow the instructions provided by your intermediary in order to vote your common shares.

DATED at Toronto, Ontario this 31st day of March, 2023.

BY ORDER OF THE BOARD

(signed) "J. Cameron MacDonald"

J. Cameron MacDonald

Director, President and Chief Executive Officer

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	TABLE OF CONTENTS
PARTICULARS OF MATTERS TO BE ACTED UPON	1
1.	Financial Statements	1
2.	Election of Directors	1
3.	Appointment of Auditors	3
4. Approval of Option Plan	4
GENERAL STATUTORY INFORMATION	5
Solicitation of Proxies	5
Non-registered Shareholders	5
Appointment of Proxyholders	6
Revocation of Proxy	6
Voting of Proxies and Discretion Thereof	6
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF	7
Voting Securities	7
Principal Holders of Voting Securities	7
Control Restrictions	7
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS	8
Aggregate Indebtedness	8
Indebtedness of Directors and Executive Officers Under (1) Securities Purchase and (2) Other Programs	8
SECURITY BASED COMPENSATION ARRANGEMENTS	8
Equity Compensation Plan Information	8
Summary of Terms and Conditions of the Incentive Plan	9
Summary of Terms and Conditions of the Option Plan	13
STATEMENT OF EXECUTIVE COMPENSATION	14
Compensation Discussion and Analysis	14
Risks Associated with the Compensation Policies and Practices	16
Hedging	17
Compensation Consultant	17
Compensation Determinations	17
Summary Compensation Table	18
Incentive Plan Awards - Outstanding Option-Based and Share-Based Awards	19
Incentive Plan Awards - Value Vested or Earned During the Year	20
Pension Plan Benefits	20
Termination and Change of Control Benefits	20
Director Compensation	24
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Director Compensation Table	24
Outstanding Option-Based and Share-Based Awards	25
Value of Awards Vested or Earned During the Year	25
Directors and Officers Liability Insurance	26
STATEMENT OF CORPORATE GOVERNANCE	26
Board of Directors	26
Directorships	26
Orientation and Continuing Education	26
Ethical Business Conduct	26
Nomination of Directors	27
HR and Compensation Committee	27
Audit Committee	27
Assessments	28
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON	28
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS	28
ADDITIONAL INFORMATION	28
APPENDIX "A" - INCENTIVE STOCK OPTION PLAN………………………………...……………………... A-1

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THE WESTAIM CORPORATION ("Westaim" or the "Corporation")

MANAGEMENT INFORMATION CIRCULAR

This management information circular (the "Information Circular") is dated March 31, 2023 and is furnished in connection with the solicitation of proxies by and on behalf of management of the Corporation ("Management") for use at the annual and special meeting (the "Meeting") of shareholders of the Corporation (the "Shareholders") to be held at Vantage Venues, 150 King Street West, 27th Floor, Toronto, Ontario M5H 1J9 on Thursday, May 18, 2023 at 9:00 a.m. (Eastern Time) for the purposes set out in the notice of meeting (the "Notice") accompanying this Information Circular.

All dollar amounts herein are expressed in United States dollars unless otherwise indicated.

PARTICULARS OF MATTERS TO BE ACTED UPON

1. Financial Statements

The audited financial statements of the Corporation for the fiscal year ended December 31, 2022, together with the report of the auditors thereon, (the "Financial Statements") will be presented to the Shareholders at the Meeting.

2. Election of Directors

The articles of the Corporation require a minimum of three and a maximum of fifteen directors of the Corporation. There are currently seven directors of the Corporation, and six directors are to be elected at the Meeting. The present term of office of each current director of the Corporation will expire at the Meeting.

Pursuant to the provisions of a governance agreement among Westaim and Fairfax Financial Holdings Limited ("Fairfax") made as of June 2, 2017 (the "Governance Agreement"), Westaim granted, among other things, certain nomination rights to Fairfax. Under the terms of the Governance Agreement, at the Meeting, and at each annual general or special meeting of Shareholders at which directors of Westaim are to be elected thereafter, Westaim will, at the request of Fairfax, nominate for election to the board of directors of the Corporation (the "Board") one individual designated by Fairfax. If Fairfax ceases to own at least 5% of the outstanding common shares in the capital of the Corporation (the "Common Shares") (calculated on a partially-diluted basis), its right to nominate any directors of Westaim will immediately terminate. Fairfax currently owns more than 5% of the outstanding Common Shares (on a partially-diluted basis). As of the date hereof, Fairfax has not designated any individual to be nominated to the Board.

Management proposes to nominate at the Meeting the persons whose names are set forth in the table below, each to serve as a director of the Corporation until the next meeting of Shareholders at which the election of directors is considered, or until his or her successor is duly elected or appointed, unless he or she resigns, is removed or becomes disqualified in accordance with the Corporation's by-laws or the Business Corporations Act (Alberta). The persons named in the accompanying form of proxy (the "Proxy Instrument") intend to vote for the election of such persons at the Meeting, unless otherwise directed. Management does not contemplate that any of the nominees will be unable to serve as a director of the Corporation.

The following table and the notes thereto set out the name of each person proposed by Management to be nominated for election as a director of the Corporation at the Meeting, the period during which he or she has been a director of the Corporation, his or her principal occupation within the five preceding years, all offices of the Corporation now held by such person, and his or her shareholdings, which includes the number of voting securities of the Corporation beneficially owned, or over which control or direction is exercised, directly or indirectly.

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