AMENDED
        AND RESTATED ASSIGNMENT AGREEMENT

      


      This
        amended and restated assignment agreement (the "Assignment
        Agreement") is
        entered into
        as
        of 18 September 2006, among:

       

      (i)
        NAVIGATOR
        ASSET MANAGEMENT LIMITED, a company incorporated in Nevis,
        B.W.I. located at Meridian Trust, Hunkins Waterfront Plaza, Main Street,
        Memorial Square, Charlestown, Nevis, British West Indies, and whose executive
        offices
        are located c/o Trident Trust at I I Bath Street, St. Helier, Jersey JE4
        8UT,
Channel
        Islands (the "Assignor"),

       

      (ii)
        ABSOLUTE
        OCTANE FUND advised by Absolute Capital Management (Spain) S.L.,
        located at Edificio Reina Constanza, Porto Pi 8 Planta 10 A, 07015 Palma
        de
Mallorca.,
        and Absolute Octane Fund ("AOF"),
        a
        company
        incorporated in the Cayman Islands, located at 215 North Church Street, PO
        Box
        10630 APO, Grand Cayman, 10630, Cayman Islands (the "First
        Assignee"),

       

      (iii)
        AUSTRALIAN
        IT INVESTMENTS LIMITED, a company incorporated in Nevis, B.W.I.
        located at Meridian Trust, Hunkins Waterfront Plaza, Main Street, Memorial
        Square,
        Charlestown, Nevis, British West Indies, and whose executive offices are
        located
        c/o Trident Trust at 11 Bath Street, St. Helier, Jersey JE4 8UT, Channel
        Islands
        (the "Second
        Assignee") and

       

      (iv) PSIVIDA
        LIMITED, a company incorporated in Australia located at Level 12 BGC
Centre,
        28 The Esplanade, Perth WA 6000, Australia (the "Company").

      


      WHEREAS,
        the Assignor and the Company entered into an amended and restated consulting
        agreement dated 18 September 2006 (the "Consulting
        Agreement") attached
        hereto as
        Exhibit
        A,
        whereby
        the Assignor provides certain consulting services to the Company for total
        compensation,
        as follows: (a) an aggregate consulting fee of USD 750,000 (the "Cash
        Consulting
        Fee") and
        (b)
        warrants to purchase 500,000 of the Company's American Depository Shares
        at an
        exercise price of USD 2.00 for a term of five years (the "Warrants").

      


      WHEREAS,
        the Assignor and the Company will enter into a securities purchase agreement
        (the "Securities
        Purchase Agreement") in
        the
        form attached hereto as Exhibit
        B at
        such
        time
        as the Company's shareholders approve ("Shareholder
        Approval") the
        transactions contemplated
        by the term sheet dated July 27, 2006,

      


      WHEREAS,
        the Company and certain investors will enter into a registration rights
        agreement (the "Registration
        Rights Agreement") in
        the
        form attached hereto as Exhibit
        C at
        the
        time
        of Shareholder Approval,

      


      NOW,
        THEREFORE, in consideration of the mutual agreements herein set forth, the
        Assignor,
        the First Assignee and the Second Assignee agree as follows:

      


      
        	 	
                1.
                  

              	
                The
                  Assignor assigns and transfers the Cash Consulting Fee to the First
                  Assignee and the Second Assignee, and the First Assignee and the
                  Second
                  Assignee accept the assignment and transfer of the Cash Consulting
                  Fee
                  from the Assignor as per the following ratio: (1.1) 27.27% of the
                  Cash
                  Consulting Fee, in the amount of USD 204,525, to be assigned by
                  the
                  Assignor to the First Assignee and (1.2) 72.73% of the Cash Consulting
                  Fee, in the amount of USD 545,475, to be assigned by the Assignor
                  to the
                  Second Assignee.

              


      

      


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      
        	 	
                2.
                  

              	
                The
                  Assignor assigns and transfers the Warrants to the First Assignee
                  and the
                  Second Assignee, and the First Assignee and the Second Assignee
                  accept the
                  assignment and transfer of the Warrants from the Assignor as per
                  the
                  following ratio: (1.1) 27.27% of the Warrants equal to 136,350
                  Warrants,
                  to be assigned by the Assignor to the First Assignee and (1.2)
                  72.73% of
                  the Warrants equal to 363,650 Warrants, to be assigned by the Assignor
                  to
                  the Second Assignee.

              


      

      


      
        	 	
                3.
                  

              	
                The
                  Assignor assigns and transfers its right to enter into the Securities
                  Purchase Agreement to the First Assignee and the Second Assignee,
                  and the
                  First Assignee and the Second Assignee accept the assignment and
                  transfer
                  of the Assignor's right to enter into the Securities Purchase Agreement
                  from the Assignor, and the Company consents to such
                  assignment.

              


      

      


      
        	 	
                4.

              	
                Pursuant
                  to the Consulting Agreement, the Company has agreed to include,
                  in the
                  term "Registrable Securities" under the Registration Rights Agreement,
                  the
                  shares issuable to the First Assignee and the Second Assignee upon
                  exercise of the Warrants assigned to them
                  hereunder.

              


      

      


      
        	 	
                5.
                  

              	
                This
                  Assignment Agreement shall be governed by and construed in accordance
                  with
                  the laws of England and Wales and the parties hereby submit to
                  the
                  exclusive jurisdiction of the High Court of Justice, Queen's Bench
                  Division, Royal Courts of Justice, Strand, London WC2A 2LL,
                  England.

              


      

       

      
        	
                Agreed
                  and Assigned

                ASSIGNOR:

                Navigator
                  Asset Management Limited

              	 	
                FIRST ASSIGNEE:

                Absolute
                  Octane Fund

              
	 	 	 
	
                By:
                  /s/ Gary
                  Williams                                            
                  

                Name:
                  Gary
                  Williams

                Its:
                  Authorized Signatory

              	 	
                By:
                  /s/
                  illegible                  
                                   
                  

                Name:

                Its:
                  Authorized Signatory

              
	 	 	 
	
                Agreed
                  and Accepted:

                SECOND
                  ASSIGNEE:

                Australian
                  IT Investments Limited

              	 	
                Agreed
                  and Accepted: 

                COMPANY:
                  pSivida
                  Limited

              
	 	 	 
	
                By:
                  /s/ Gary
                  Williams                                            
                  

                Name:
                  Gary
                  Williams

                Its:
                  Authorized Signatory

                Agreed
                  and Accepted:

              	 	
                By:
                  /s/ Michael J.
                  Soja                        
                  

                Name:
                  Michael
                  J. Soja

                Its:
                  Authorized Signatory