Document:

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                                                                    Exhibit 4.34

September 29, 2005

LORI FREEDMAN

DEAR LORI FREEDMAN:

     As you know, Control Delivery Systems, Inc. (the "Company") is
contemplating certain strategic transactions, including a possible sale or
merger involving the Company and pSvida Ltd. (the "Potential Acquiror"). There
is no assurance that the Company will enter into an agreement with respect to
any such transaction or consummate any such transaction even if such an
agreement is reached. However, the Company has been advised that the prospects
of a combination with the Potential Acquiror would be advanced if you and
certain other key personnel were to agree to certain undertakings designed to
assure the continuation of your services to the Company for at least a
transition period following any such combination. The Company believes that the
terms of this letter agreement (this "Retention Agreement") will be in the best
interests both of you and the shareholders of the Company by assisting in the
realization of the proposed combination.

     The terms of this Retention Agreement set forth herein are as follows:

     The Company and you are parties to a restricted stock award agreement or
agreements (the "Stock Agreements") pursuant to which you currently hold 20,000
shares of common stock of the Company that is subject to a substantial risk of
forfeiture (the "Restricted Stock"). Schedule A hereto lists the Restricted
Stock shares that you hold and the dates on which those shares were awarded to
you. Notwithstanding the provisions of the Stock Agreements or any other
agreement between you and the Company to the contrary, you hereby agree that the
following vesting and forfeiture rules shall apply:

          (a) Except as hereinafter provided, the Restricted Stock subject to
     the Stock Agreements, including your rights to any cash or property paid
     with respect thereto or exchanged therefor in connection with a Liquidity
     Event, or thereafter, (the Restricted Stock and such other securities,
     cash, property or other rights, if any, being herein referred to as the
     "Restricted Property") shall vest on the date that is six (6) months after
     the Liquidity Event Date if you are then employed by the Company or its
     successor (or a parent or subsidiary thereof) (the "Employer"); provided,
     that if there has been no Liquidity Event Date by December 31, 2005, the
     Restricted Property shall vest on June 30, 2006 if you are then still
     employed by the Employer. The applicable vesting date described in the
     preceding sentence is hereinafter referred to as the "Scheduled Vesting
     Date." For purposes of this Retention Agreement, the terms "Liquidity
     Event" and "Liquidity Event Date" shall have the meaning set forth in the
     Stock Agreements.

          (b) On the Liquidity Event Date relating to the transaction with the
     Potential Acquiror you will be granted shares (American Depository Shares
     or American Depository Receipts, hereinafter "ADSs") of the common equity
     of the Potential Acquiror traded in the U.S. having a fair market value on
     the date of closing equal to $132,497.00 (the "Additional Shares"). The
     Additional Shares shall be subject to the

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     same restrictions as the Restricted Property and shall be treated for all
     purposes of this Retention Agreement as the Restricted Property. For
     purposes of this Retention Agreement, "fair market value" means the average
     of the closing price of pSivida ADSs on the Nasdaq National Market for each
     of the ten (10) trading days ending on the trading day that is four (4)
     full trading days prior to the Liquidity Event Date.

          (c) Subject to the following sentence, if your employment with the
     Employer terminates for any reason prior to the Scheduled Vesting Date all
     of your Restricted Property shall be automatically and immediately
     forfeited or vested to the extent provided in the Stock Agreements, Amended
     and Restated Control Delivery Systems Change of Control Agreement dated
     August 17, 2004 (the "Change of Control Agreement") and Severance Agreement
     dated February 20, 2004, as amended (the "Severance Agreement"), except
     that in applying the provisions of such agreements the Restricted Property
     shall not be deemed to be vested merely because the Stock Agreements would
     have provided for scheduled vesting earlier than the Scheduled Vesting
     Date. Notwithstanding the foregoing, if your employment with the Employer
     is (i) involuntarily terminated, other than for "Cause" as hereinafter
     defined, by the Employer, or (ii) terminated by the Participant for "Good
     Reason" as hereinafter defined, in either case prior to the Scheduled
     Vesting Date, all of your Restricted Property shall be treated for all
     purposes as having vested in full immediately prior to such termination of
     employment. For purposes of the preceding sentence, "Cause" and "Good
     Reason" shall have the meanings assigned to them in your Change of Control
     Agreement.

     Upon the occurrence of the Liquidity Event Date the sections of your Stock
Agreements captioned "Restrictions on Transfer of Vested Shares" (paragraph (a)
only), "Right of First Refusal on Dispositions of Vested Shares" and "Right of
Repurchase of Vested Shares" shall be of no further force and effect.

     Except as expressly provided in this Retention Agreement, the terms of your
Stock Agreements, Change of Control Agreement, Severance Agreement and other
agreements, if any, with the Employer shall remain in full force and effect.

     Nothing in this Retention Agreement shall be construed as either limiting
or expanding such rights, if any, as you may have to continued employment with
the Employer.

     This Retention Agreement shall be binding on and enforceable against the
Company and its successors and assigns and upon and against you and your heirs
and assigns.

     This Retention Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, except for the conflicts of laws provisions
thereof.

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     If you agree with the terms of this Retention Agreement, please so indicate
by signing the enclosed copy of this Retention Agreement in the space indicated
below and returning the enclosed copy to Cristin Rothfuss, whereupon this
Retention Agreement shall take effect as of the date first set forth above as an
agreement under seal.

                                        CONTROL DELIVERY SYSTEMS, INC.

                                        By: /s/ Michael Soja
                                            ------------------------------------
                                            /s/ Lori Freedman
                                            ------------------------------------
                                            Lori Freedman

The undersigned pSvida Limited hereby
acknowledges its obligations
hereunder as the Potential Acquiror
in the event that a Liquidity Event
involving pSivida occurs and agrees
to be bound by this Agreement and to
perform such obligations upon and
after the closing of a Liquidity
Event involving pSivida.

PSIVIDA LIMITED

By: /s/ Gavin Rezos
    ---------------------------------
Name: Gavin Rezos
      -------------------------------
Title: Managing Director
       ------------------------------

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SCHEDULE A

                                Restricted Stock

1. 20,000 shares Issued on 08/16/04

2. 51,700 shares Issued on 10/20/04

3. 11,700 shares issued on 05/28/03 (transferred to above grant)

4. 30,000 shares issued on 10/07/03 (transferred to above grant)

5. 10,000 shares issued on 10/07/03 (transferred to above grant)

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                                                                    Exhibit 4.35

                            NON-COMPETITION AGREEMENT

     IN CONSIDERATION of and as a condition to my (i) receiving consideration
pursuant to the terms of the Agreement and Plan of Merger, dated October 3, 2005
(the "MERGER AGREEMENT") by and among pSivida Limited ("PARENT"), pSivida Inc.
and Control Delivery Systems, Inc. (the "COMPANY"), and (ii) receiving an offer
of employment with Parent consistent with the terms set forth in Section 2(b)
below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, I, Paul Ashton (referred to herein
as "I", "ME" or as "EXECUTIVE"), agree with Parent as follows:

     1. DEFINITIONS.

          (a) "AGREEMENT" shall mean this Non-Competition Agreement.

          (b) "CAUSE" shall mean, in respect of the termination of Executive's
employment by Parent, (a) willful malfeasance, gross misconduct or gross
negligence in the performance by Executive of the duties of his position that
has a material adverse effect on the Parent, (b) the material breach by
Executive of Sections 3(a), 4, 5 or 6 of this Agreement, (c) fraud or dishonesty
by Executive with respect to Parent or any of its affiliates or his employment,
(d) Executive's conviction of any crime that involves deception, fraud or moral
turpitude or any felony (including, in each case, entry of a guilty or nolo
contendere plea, and, excluding traffic violations or similar minor offenses),
or (e) repeated or prolonged absence from work by Executive other than for
illness, Disability or authorized vacation. Parent may treat a termination of
Executive's employment as termination for Cause only after (i) giving Executive
written notice of the intention to terminate for Cause, including a description
of the conduct that the Parent believes constitutes the basis for a Cause
termination, and of his right to a hearing by Parent's Board of Directors (the
"Board"), (ii) in the event of a termination under clause (a), (b) or (e) above,
providing Executive a 30-day period in which to cure the conduct giving rise to
the Parent's notice of a Cause termination, unless, with respect to clause (a)
and (b) above, (I) in Parent's reasonable judgment, protective action
inconsistent with such cure period (e.g., immediate termination) is necessary to
avoid harm to Parent or (II) Parent reasonably determines that Executive's
conduct is egregious, in which event, Parent may shorten the cure period or
terminate Executive's employment immediately (subject to the requirements set
forth in clauses (iii) and (iv) below), (iii) at least 30 days after giving the
notice, conducting a hearing by the Board at which Executive may be represented
by counsel, and (iv) giving Executive written notice of the results of the
hearing and the factual basis for the Board's determination of Cause, which
shall require a vote of a majority of the members of the Board then in office
other than Executive. Except in connection with Executive's opportunity, if any,
to cure the conduct giving rise to Parent's notice of termination for Cause as
set forth in clause (ii) above, nothing in the foregoing sentence shall prevent
Parent from terminating Executive's employment pending any determination of
Cause as set forth in the foregoing sentence, any such determination shall be
retroactive to the date of termination, and Parent shall not be obligated to
compensate Executive hereunder for the period from such termination until such
time as a determination by Parent's Board of Directors that such termination was
not for Cause. Notwithstanding the foregoing, cause shall not include an act or
failure to act based on authority given pursuant to a resolution duly adopted by
the Board or based on the advice of Parent's General Counsel or willful failure

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due to incapacity resulting from Disability or any actual or anticipated failure
after Executive provides written notice of a termination for Good Cause.

          (c) "CLOSING" shall have the meaning set forth in the Merger
Agreement.

          (d) "DEVELOPMENTS" shall have the meaning set forth in Section 5(a).

          (e) "DISABILITY" shall mean physical or mental incapacity of a nature
which prevents Executive, in the professional judgment of Executive's physician
or, at Parent's election, a board-certified physician mutually agreed upon by
Parent and Executive, from performing the essential functions of Executive's
position with Parent with or without a reasonable accommodation for a period of
ninety (90) consecutive days or one hundred eighty (180) days during any
consecutive 12-month period.

          (f) "EFFECTIVE TIME" shall have the meaning set forth in the Merger
Agreement.

          (g) "GOOD CAUSE" shall mean, in respect of the termination of
Executive's employment by Executive, (i) failure by Parent to maintain Executive
in the positions of Head of R&D Ophthalmology for the Surviving Company and
Executive Director Strategy of Parent, without Executive's consent, (ii) a
material diminution of Executive's duties and responsibilities in such positions
or a material diminution of Executive's authority with respect to such
positions, as described in Section 2(b) hereof and otherwise set forth in the
employment agreement referenced therein (assuming the parties execute such
employment agreement), excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by Parent
promptly after receipt of written notice thereof given by Executive, (iii) a
breach by Parent of any material term of this Agreement or the employment
agreement referenced in Section 2(b) (assuming the parties execute such
employment agreement), or (iv) relocation of Executive's principal place of work
to a location more than thirty (30) miles from Executive's address set forth in
Section 11(e) below without Executive's consent. Executive may treat a
resignation from employment as termination for Good Cause only after (a) giving
Parent written notice of the intention to terminate for Good Cause, (b)
providing Parent at least 30 days after receipt of such notice to cure the
conduct or action giving rise to Good Cause, unless, with respect to clause (i)
and (ii), Executive reasonably determines that Parent's conduct is egregious and
has resulted in significant, irreparable harm to Executive, in which event,
Executive may shorten the cure period or terminate his employment immediately,
and (c) if applicable, Parent has failed to cure the action or conduct giving
rise to Good Cause during the 30 day cure period.

          (h) "MERGER" shall have the meaning set forth in the Merger Agreement.

          (i) "PROPRIETARY INFORMATION" shall have the meaning set forth in
Section 4(a).

          (j) "REAR-OCULAR DRUG DELIVERY BUSINESS" shall have the meaning set
forth in Section 3(b)(i).

          (k) "RESTRICTED ACTIVITIES" shall have the meaning set forth in
Section 3(b).

                                      -2-

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          (l) "SURVIVING COMPANY" shall have the meaning set forth in the Merger
Agreement.

     2. EFFECTIVENESS.

          (a) This Agreement shall enter into full force and effect as of the
Effective Time. In the event that the Merger Agreement is terminated prior to
the Effective Time, this Agreement shall be null and void and neither party
shall have any rights or obligations hereunder.

          (b) Parent represents that, prior to the Effective Time, it shall
provide Executive with an employment agreement setting forth the material terms
of his employment with Parent as of the Effective Time. Such employment
agreement shall include, among other things, the following material terms: (i) a
title Head of Research & Development Ophthalmology of the Surviving Company,
responsible for duties typically associated with such position; (ii) a title
with Parent of Executive Director Strategy, reporting directly to Parent's chief
executive officer, responsible for, among other things, the production of
overall strategic business and development plans; (iii) a title of interim
President of the Surviving Company, responsible for, among other things,
ensuring effective communication among Parent business units particularly with
respect to milestones and participation in the general management of Parent
including regular meetings and discussions with Parent's chief executive officer
and chairman; (iv) a compensation package commensurate with other senior
executives of Parent, which shall include, without limitation: (A) a base salary
of $300,000 per year, (B) annual discretionary bonus eligibility on terms that
are no less favorable than that which Executive was entitled as of the date of
this Agreement, (C) entitlement to benefits that are no less favorable than
those to which Executive was entitled as of the date of this Agreement, and (D)
a grant of options to purchase capital stock in the Parent commensurate with
other senior executives of Parent, including without limitation, subject to
confirmation of Parent's remuneration committee and shareholder approval,
500,000 options vesting as to half in 12 months and the balance in 24 months,
subject to achieving milestones; (v) four (4) weeks paid vacation per calendar
year; (vi) a principal work location located no more than thirty (30) miles from
Executive's address set forth in Section 11(e) below without Executive's
consent; and (vii) eligibility for severance and related post-termination
benefits on terms no less favorable to Executive than those set forth in that
certain Severance Agreement between Executive and Company dated February 20,
2004, as amended on August 17, 2004 (the "Severance Agreement") and no greater
than those set forth in that certain Change in Control Agreement between
Executive and Company dated August 17, 2004 (the "Change in Control Agreement"),
which shall supercede and/or terminate Executive's entitlement to severance and
related post-termination benefits pursuant to the Severance Agreement and the
Change in Control Agreement. Parent and Executive agree to negotiate in good
faith and use their reasonable best efforts to finalize the employment agreement
consistent with the terms of this Agreement and the contracts referenced herein.

          (c) If (i) Parent fails to offer Executive an employment agreement
consistent with the requirements of Section 2(b), or Parent revokes such offer
prior to the Effective Time for any reason and (ii), as a result of any of the
above, Executive declines Parent's offer of employment on or before the
Effective Time, then (I) this Agreement shall be null and void and neither party
shall have any obligations hereunder, and (II) both the Severance Agreement and
Change in Control Agreement shall continue to be in effect as of the Effective
Time.

                                      -3-

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          (d) If (i) Parent offers Executive an employment agreement consistent
with the requirements of Section 2(b) and (ii) Executive declines Parent's offer
of employment for any reason (other than his death or Disability), then (I) this
Agreement shall continue in full force and effect as of the Effective Time and
(II) the Severance Agreement but not the Change in Control Agreement shall
continue to be in effect upon the Effective Time. Such declination by Executive
shall be deemed a termination of employment with Parent by Executive for other
than Good Cause under Section 3(b) below.

     3. COVENANT NOT TO COMPETE.

          (a) I understand that Parent is engaged worldwide in the development,
production and commercialization of drug delivery and other products based on
platform technologies. As of the Effective Time, I agree that I will not, during
my employment with Parent, render (as a provider of services, consultant or
otherwise) any services related to the business of Parent to anyone other than
Parent.

          (b) In the event of: (i) the termination of my employment with Parent
(other than termination by reason of death or Disability) by me for any reason
(whether voluntary on my part, or involuntary) other than Good Cause; or (ii)
the termination of my employment with Parent (other than termination by reason
of death or Disability) by Parent for Cause, I agree that for a period of twelve
(12) months from the date of such termination, I will neither:

               (i) engage directly for myself, or in conjunction with or on
     behalf of any person or entity, or otherwise own, manage, operate, control,
     acquire, hold any interest in, or participate in the ownership, management,
     operation or control of any person or entity engaged in the development,
     production or commercialization of systems for the delivery of therapeutic
     drugs to the tissues in the posterior segment of the eye (the "REAR-OCULAR
     DRUG DELIVERY BUSINESS"), nor

               (ii) work for or become employed by or associated with (in any
     capacity, including without limitation officer, director, employee,
     partner, stockholder, owner, member, proprietor, consultant, investor,
     salesperson, co-owner, trustee, promoter, technician, engineer, analyst,
     agent, representative, distributor, supplier, lender, advisor or manager)
     any person or entity that is engaged in the Rear-Ocular Drug Delivery
     Business (the activities set forth in (i) and (ii) (as modified by the
     following paragraph) are collectively referred to as the "RESTRICTED
     ACTIVITIES").

Notwithstanding the foregoing, Parent accepts that nothing in this Section 3(b)
shall prevent Executive from and after the date six (6) months after termination
of Executive's employment from engaging in activities predominantly academic
(and not commercial) in nature, including without limitation teaching,
lecturing, writing and publishing articles or engaging in research; provided
that (I) unless approved by Parent in writing or otherwise described below,
Executive receives no compensation (including without limitation salary,
benefits, bonus, profit sharing, dividends, commissions, gifts, gratuities, or
any other payments, whether in cash or otherwise, present or future) whatsoever
for such activities, other than reimbursement of expenses, for any period in
which he is receiving severance payments from the Parent under this Agreement,
his employment agreement with Parent or any other agreement between Executive
and Parent,

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except where the payment of compensation is required by the academic institution
and Executive agrees in writing to donate the full amount of such compensation
to a registered charitable organization; and (II) in the course of engaging in
such activities Executive does not breach his obligations under this Agreement,
including without limitation any obligations under Sections 4 and 5 herein.

Within six (6) months after the termination of my employment for the reasons set
forth above, Parent may at its sole discretion extend my obligations under this
Section 3(b) for an additional twelve-month period; provided that in such a case
Parent will pay me an amount equal to my annual base salary as of the date of
termination, to be paid in equal monthly installments over such additional
twelve-month period.

          (c) In the event of the termination of my employment with Parent
(other than termination by reason of death or Disability) (x) by me for Good
Cause, or (y) by Parent for any reason other than for Cause, I agree that, at
Parent's option, exercisable by written notice given:

               (i)  not less than 30 days after Parent receives notice of such
                    termination by me hereunder; and/or

               (ii) at the time of such termination by Parent hereunder; and/or

               (iii) with respect to a follow-on notice to Executive, no later
                    than six months after the termination of my employment with
                    Parent hereunder,

for a period of up to twenty-four (24) months from the date of such termination,
as specified in Parent's notice or notices, I will not engage in any Restricted
Activities; provided that in such case Parent will pay me an amount equal to
1/24th of $800,000 for each month in the period specified, which amount may be
offset against any severance or other payments owed to me in connection with the
termination of my employment as described in this Section 3(c). I understand
that any payments made to me pursuant to the preceding sentence are made in
consideration of my not engaging in any Restricted Activities or otherwise
violating the terms of this Agreement, and that, in addition to any other rights
or remedies available to Parent at law or in equity, Parent shall have the right
to terminate such payments if, and only if, I engage in Restricted Activities
during the specified period or otherwise violate the terms of this Agreement and
such conduct continues following my receipt of written notice from the Company
that describes the basis for the Company's contention that I have engaged in
Restricted Activities or otherwise violated the terms of this Agreement. I
understand that the Company may provide more than one written notice to extend
the noncompete period under this Section 3(c), provided that such notices are
sent within the six (6) month period after the termination of my employment.

          (d) My obligations under this Section 3 shall extend to all
geographical areas of the world in which Parent, or any of its related
companies, is offering its services, either directly or indirectly, through
licenses or otherwise, during the time period specified in this Section 3.

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          (e) I further agree that while I remain employed by Parent and for the
duration of any period during which I am prohibited from engaging in the
Restricted Activities pursuant to this Section 3, I will not, on behalf of
myself or any other person or entity, (i) compete for, or engage in the
solicitation of, or attempt to divert or take away from the Company, Parent or
any of their affiliates, any customer of the Company, Parent or any of their
affiliates who has done business with the Company, Parent or any of their
affiliates, as the case may be, during the period of my employment by Parent;
(ii) compete for, solicit or attempt to divert or take away from the Company,
Parent or any of their affiliates, any prospective customer that has within the
twelve (12) month period prior to such termination, expressed an interest in
doing business with the Company, Parent or any of their affiliates and about
which I learned during my employment with Parent; or (iii) hire or engage or
attempt to hire or engage any individual, or attempt to induce an individual to
terminate their employment or other service arrangement, who was an employee of
or other service provider to the Company, Parent or any of their affiliates at
any time during the twelve (12) month period prior to my termination from
employment.

          (f) Further, while I remain employed by Parent and for the duration of
any period during which I am prohibited from engaging in the Restricted
Activities pursuant to this Section 3, I shall not, directly or indirectly, make
or cause to be made to any Person any disparaging, derogatory or other negative
statement about the Company, Parent or any of their affiliates, including their
businesses, products, services, policies, practices, operations, employees,
sales representatives, agents, officers, members, managers or directors.
Similarly, during the period set forth in the preceding sentence, Parent shall
not and shall not authorize or encourage any members of its Board of Directors
or employees to directly or indirectly, make or cause to be made to any person
any disparaging, derogatory or other negative statement about Executive,
including the performance of his duties on behalf of the Company or the
circumstances surrounding his separation from employment.

          (g) I REPRESENT AND WARRANT THAT THE KNOWLEDGE, SKILLS AND ABILITIES I
POSSESS ARE SUFFICIENT TO PERMIT ME, IN THE EVENT OF TERMINATION OF MY
EMPLOYMENT WITH PARENT FOR ANY REASON, TO EARN, FOR A PERIOD OF UP TO
TWENTY-FOUR (24) MONTHS FROM SUCH TERMINATION, A LIVELIHOOD SATISFACTORY TO ME
WITHOUT VIOLATING ANY PROVISION OF SECTION 3 HEREOF, FOR EXAMPLE BY USING SUCH
KNOWLEDGE, SKILLS AND ABILITIES, OR SOME OF THEM, IN THE SERVICE OF A PERSON OR
ENTITY WHO OR WHICH DOES NOT COMPETE WITH PARENT AS DESCRIBED HEREIN.

     4. PROPRIETARY INFORMATION.

          (a) I agree that all information and know-how, whether or not in
writing, of a private, secret or confidential nature concerning the Company,
Parent or any of their affiliates or their respective businesses, financial
affairs or operations (collectively, "PROPRIETARY INFORMATION") is and shall be
the exclusive property of the Company, Parent or any of their affiliates, as the
case may be. By way of illustration, but not limitation, Proprietary Information
may include inventions, products, manufacturing and other processes, methods,
techniques, formulas, compositions, compounds, projects, developments, plans,
research data, financial data, personnel data, computer programs, and customer
and supplier lists. I will not disclose any Proprietary Information to others
outside the Company, Parent or any of their affiliates, provided

                                      -6-

<PAGE>

that my obligation not to disclose shall not apply to any information that (i)
has become generally available to the public other than as a result of a breach
by Executive of his obligations hereunder, (ii) may be required or appropriate
in response to any summons or subpoena or in connection with any litigation, or
investigation or review by any governmental agency or authority and (iii) must
be disclosed in order to comply with any law, order, regulation or ruling
applicable to Executive. I will not use any Proprietary Information for any
purposes other than my work for the Company, Parent or any of their affiliates,
without prior written approval by the Board of Directors of Parent, either
during or after my providing services. If I have any questions as to what
constitutes Proprietary Information, I will consult with the Board of Directors
of Parent or an individual designated by the Board of Directors for this
purpose.

          (b) I agree that all files, letters, memoranda, reports, records,
data, sketches, drawings, program listings, or other written, photographic, or
other tangible material containing Proprietary Information, whether created by
me or others, which shall come into my custody or possession, shall be and are
the exclusive property of the Company, Parent or any of their affiliates, as the
case may be, to be used by me only in the performance of my duties for Parent.
All such records or copies thereof and all tangible property of the Company,
Parent or any of their affiliates in my custody or possession shall be delivered
to Parent within ten (10) calendar days from the earlier of (i) a request by
Parent or (ii) termination of my providing services to Parent. After such
delivery, I shall not retain any such records or copies thereof or any such
tangible property.

          (c) I agree that my obligation not to disclose or to use information,
know-how and records of the types set forth in paragraphs (a) and (b) above, and
my obligation to return records and tangible property, set forth in paragraph
(b) above, also extends to such types of information, know-how, records and
tangible property of customers of the Company, Parent or any of their affiliates
or suppliers to the Company, Parent or any of their affiliates or other third
parties who may have disclosed or entrusted the same to Parent or to me in the
course of Parent's business with an expectation or understanding that such
information was to be maintained as confidential.

     5. DEVELOPMENTS.

          (a) I will make full and prompt disclosure to Parent of all
inventions, improvements, discoveries, methods, developments, products,
processes, techniques, formulas, compositions, compounds, software, works of
authorship and all ideas for trademarks, trade-names and the like, related in
any way to the Parent's current, planned or potential products or services,
whether patentable or not and whether copyrightable or not, which are created,
made, conceived or reduced to practice by me or under my direction or jointly
with others during my employment by Parent, whether or not during normal working
hours or on the premises of Parent (all of which are collectively referred to in
this Agreement as "DEVELOPMENTS").

          (b) Except as hereinafter provided, I agree to assign and do hereby
assign to Parent (or any person or entity designated by Parent) all my right,
title and interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. I expressly agree that all
of my Developments capable of protection under copyright laws shall be deemed
and are works made for hire with the understanding that Parent shall own all of
the

                                      -7-

<PAGE>

exclusive rights to such developments under the United States Copyright Act and
all international copyright conventions and foreign laws, and any successor laws
thereto.

          (c) I agree to cooperate fully with Parent, both during and after my
employment with Parent, with respect to the procurement, maintenance and
enforcement of copyrights and patents (both in the United States and foreign
countries) relating to Developments. I shall sign all papers, including, without
limitation, copyright applications, patent applications, trademark or service
mark applications, declarations, oaths, formal assignments, assignment of
priority rights, and powers of attorney, which Parent may deem necessary or
desirable in order to protect its rights and interests in any Development.

     6. CURRENT EMPLOYMENT; NO CONTRARY AGREEMENTS.

          I hereby represent that I am not bound by the terms of any agreement
with any current or previous employer or other party to refrain from using or
disclosing any trade secret or confidential or Proprietary Information in the
course of my employment with Parent or to refrain from competing, directly or
indirectly, with the business of such previous employer or any other party. I
further represent that, and agree that, in the performance of my duties as a
provider of services to Parent, I will not breach any agreement to keep in
confidence Proprietary Information, knowledge or data acquired by me in
confidence or in trust prior to my employment with Parent, and I will not
disclose to Parent or induce Parent to use any confidential or proprietary
information or material belonging to any previous employer or others. I
represent and warrant to Parent that I am not now under any obligation of a
contractual nature to any person, firm or corporation which is inconsistent or
in conflict with this Agreement.

     7. INJUNCTIVE RELIEF.

          The restrictions contained herein are necessary for the protection of
the business and goodwill of the Company, Parent and their affiliates and are
considered by me to be reasonable for such purposes. I understand and agree that
Parent will suffer irreparable harm in the event that I breach any of my
obligations under this Agreement and that monetary damages will be inadequate to
compensate Parent for such breach. Accordingly, I agree that, in the event of a
breach or threatened breach by me of any of the provisions of this Agreement,
Parent, in addition to and not in limitation of any other rights, remedies or
damages available to Parent at law or in equity, shall be entitled to a
permanent injunction in order to prevent or to restrain any such breach by me,
or by my partners, agents, representatives, employers, employees and/or any and
all persons directly or indirectly acting for or with me.

     8. ACCOUNTING FOR PROFITS.

          I covenant and agree that, if I shall violate any of my covenants or
agreements under this Agreement, Parent, at its own expense, shall be entitled
to an accounting and repayment of all profits, compensation, commissions,
remunerations or benefits which I directly or indirectly have realized and/or
may realize as a result of, growing out of or in connection with any such
violation; such remedy shall be in addition to and not in limitation of any
injunctive relief or other rights or remedies to which Parent is or may be
entitled at law, in equity or under this Agreement.

                                      -8-

<PAGE>

     9. NO EMPLOYMENT CONTRACT.

          I understand that this Agreement does not constitute a contract of
employment and does not imply that my employment will continue for any period of
time.

     10. ENFORCEABILITY AND SCOPE.

          In the event that any Section of this Agreement, or any provision of
any such Section, shall for any reason be held to be wholly invalid, illegal or
unenforceable, such invalidity, illegality, or unenforceability shall not affect
any other Section hereof, or any other provision of an affected Section, and
this Agreement shall be construed as if, and enforced as fully as if, such
invalid, illegal or unenforceable Section or provision had never been contained
herein. In the event any Section, or any provision thereof, is found to be
partially invalid, illegal or unenforceable (on the ground, for example, that it
is excessive in scope), then such Section or provision shall be enforced to the
extent not invalid, illegal or unenforceable, and its partial invalidity,
illegality or unenforceability shall not affect any other Section or provision
of this Agreement. If any restriction set forth in Section 3 above is found by a
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time, over too great a range of activities or in too broad a
geographic area, such restriction shall be interpreted to extend only over the
maximum period of time, maximum range of activities or maximum geographic area
as to which it may be deemed to be enforceable.

     11. GENERAL.

          (a) This Agreement supersedes all prior agreements, written or oral,
between me and Parent relating to the subject matter of this Agreement, except
for the the Change in Control Agreement and the Severance Agreement, which are
referenced herein. This Agreement may not be modified, changed or discharged in
whole or in part, except by an agreement in writing signed by me and Parent. I
agree that any change or changes in my duties, salary or compensation after the
signing of this Agreement shall not affect the validity or scope of this
Agreement.

          (b) This Agreement will be binding upon my heirs, executors and
administrators and will inure to the benefit of and be binding upon Parent and
its successors and assigns.

          (c) No delay or omission by Parent in exercising any right under this
Agreement will operate as a waiver of that or any other right. A waiver or
consent given by Parent on any one occasion is effective only in that instance
and will not be construed as a bar to or waiver of any right on any other
occasion.

          (d) I expressly consent to be bound by the provisions of this
Agreement for the benefit of the Company, Parent or any of their affiliates to
whose employ or other service providing arrangement I may be transferred without
the necessity that this Agreement be re-signed at the time of such transfer.

                                      -9-

<PAGE>

          (e) Any notices required or permitted to be sent under this Agreement
shall be effective when delivered by hand or mailed by registered or certified
mail, return receipt requested, and addressed as follows:

     If to Parent:

          pSivida Limited
          Level 12, BGC Centre
          28 The Esplanade, Perth
          WA 6000 Australia
          GPO Box 2535
          Perth, WA 6831

     With a copy to:

          Curtis, Mallet-Prevost, Colt & Mosle LLP
          101 Park Avenue
          New York, NY 10178
          Attn: Lawrence Goodman, Esq.

     If to Executive:

          Paul Ashton
          19 Brimmer Street
          Boston, MA 02108

Either party may change its address for receiving notices by giving notice to
the other party.

          (f) This Agreement is governed by and will be construed as a sealed
instrument under and in accordance with the laws of the Commonwealth of
Massachusetts.

     I ACKNOWLEDGE AND UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO
COMPETE WITH PARENT OR TO DISCLOSE AND USE PARENT'S PROPRIETARY INFORMATION OR
DURING AND AFTER MY EMPLOYMENT.

     I HAVE READ ALL OF THE PROVISIONS OF THIS AGREEMENT CAREFULLY AND I
UNDERSTAND, AND AGREE TO, EACH OF SUCH PROVISIONS.

                     [SIGNATURE PAGE TO IMMEDIATELY FOLLOW]

                                      -10-

<PAGE>

     IN WITNESS WHEREOF, I have executed this Agreement under seal as of this 3
day of October, 2005.

                                        /s/ Paul Ashton
                                        ----------------------------------------
                                        Paul Ashton

ACKNOWLEDGED AND AGREED:

PSIVIDA LIMITED

By: /s/ Gavin Rezos
    ---------------------------------
Name: Gavin Rezos
Title: Managing Director

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