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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any, jurisdiction where the offer or sale is not permitted.

Preliminary Prospectus, subject to completion, dated March 28, 2006.

PSIVIDA LIMITED

566,500 American Depositary Shares
representing 5,665,000 Ordinary Shares

 

     The selling shareholders may offer and sell from time to time an aggregate of up to 566,500 American Depositary Shares (“ADSs”), each of which is evidenced by an American Depository Receipt and represents ten of our ordinary shares. These ADSs were acquired by the selling shareholders pursuant to either private placements or other exempt transactions between us and the selling shareholders. All of the ADSs listed in this prospectus are being sold by the selling shareholders named in this prospectus or their respective transferees, pledgees, donees or successors-in-interest. The selling shareholders will receive all proceeds from the sale of the ADSs being offered in this prospectus. We may receive proceeds from the exercise of certain warrants held by the selling shareholders, of which the underlying shares are also being registered hereby, if the selling shareholders exercise those warrants through a cash exercise.

     This offering is not being underwritten. The selling shareholders may sell the ADSs being offered by them from time to time on the NASDAQ National Market, in market transactions, in negotiated transactions or otherwise, and at prices and at terms that will be determined by the then prevailing market price for the ADSs or by a combination of such methods of sale. For additional information on the methods of sale, you should refer to the section entitled “Plan of Distribution.”

     Our ADSs are quoted on the NASDAQ National Market under the symbol “PSDV.” The last reported sale price of our ADSs on the NASDAQ National Market on March 22, 2006 was US$5.05.

     Our ordinary shares are listed on the Australian Stock Exchange under the symbol “PSD.” On March 22, 2006, the closing price of our ordinary shares on the Australian Stock Exchange was A$0.73, equivalent to a price of approximately US$5.26 per ADS based on the Federal Reserve Bank of New York noon buying exchange rate on that date of A$1.00 = US$0.7204. Our ordinary shares are also listed on the Frankfurt, Berlin, Munich and Stuttgart stock exchanges under the symbol “PSI” and on the OFEX International Market Service under the symbol “PSD.”

 

Investing in our ADSs involves risks. See “Risk Factors” beginning on page 6.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

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                                                                     Exhibit 4.2

                      FORM OF SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement, dated as of the date of acceptance set
forth below, is between PSIVIDA LIMITED, an Australian company (the "Company"),
and the undersigned (the "Buyer").

     The Company and the Buyer are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded, inter alia, by Rule 506 under Regulation D ("Regulation D") as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 Act"), and/or Section
4(2) of the 1933 Act.

     The Buyer wishes to purchase, upon the terms and subject to the conditions
of this Agreement, (i) such number of American Depositary Shares of the Company,
each representing ten (10) ordinary shares of the Company, as is stated on the
signature page of this Agreement (those American Depositary Shares, the
"Shares"), and (ii) a warrant in the form set forth in Exhibit A hereto (the
"Warrant") to purchase such number of American Depositary Shares of the Company
as is stated on the signature page of this Agreement (American Depositary Shares
issuable in connection with the exercise of the Warrant, the "Warrant Shares"),
subject to acceptance of this Agreement by the Company.

     The parties therefore agree as follows:

     1. Agreement to Purchase; Purchase Price. The undersigned hereby purchases
from the Company the Shares and the Warrant for the purchase price stated on the
signature page of this Agreement. The Buyer shall pay the purchase price for the
Shares and the Warrant by delivering to the Company on the date of this
Agreement immediately available funds in United States Dollars. Upon acceptance
of this Agreement by the Company and receipt of the purchase price, the Company
shall promptly deliver a binding and irrevocable instruction letter to the
Company's Depositary instructing the Depositary to issue an American Depositary
Receipt to the Buyer representing the Shares and shall deliver to the Buyer the
Warrant.

     2. Buyer Representations; Access to Information; Independent Investigation.
The Buyer represents to, and agrees with, the Company as follows:

          (a) Without limiting the Buyer's right to sell the Shares under a
Registration Statement (as defined below) or the Warrant Shares pursuant to the
terms set forth herein and in the Warrant, the Buyer is purchasing the Shares
and the Warrant in the ordinary course of its business for its own account for
investment only and not with a view towards the public sale or distribution
thereof and not with a view to or for sale in connection with any distribution
thereof.

          (b) The Buyer is (1) an "accredited investor" as that term is defined
in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (2) experienced in making investments of the kind represented by
the Shares and the Warrant, (3) able, by reason of the business and financial
experience of its officers (if an entity) and professional advisors (who are not
affiliated with or compensated in any way by the Company or



any of its affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and (4) able to
afford the entire loss of its investment in the Shares and the Warrant.

          (c) All subsequent offers and sales of the Shares, the Warrant or the
Warrant Shares by the Buyer shall be made (i) pursuant to registration of the
Shares or Warrant Shares under the 1933 Act or pursuant to an exemption from
registration and (ii) in compliance with applicable blue sky laws and
regulations.

          (d) The Buyer understands that the Shares and the Warrant are being
offered and sold to the Buyer in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, agreements, acknowledgements and
understandings of the Buyer set forth herein in order to determine the
availability of those exemptions and the eligibility of the Buyer to acquire the
Shares and the Warrant.

          (e) The Buyer and the Buyer's advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Shares and the
Warrant that the Buyer has requested. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Buyer has also had the opportunity to obtain
and to review the Company's SEC Documents (as defined below).

          (f) The Buyer understands that its investment in the Shares and the
Warrant involves a high degree of risk.

          (g) The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Shares or the Warrant.

          (h) This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.

          (i) The Buyer has, in connection with its decision to purchase the
Shares and the Warrant, relied with respect to the Company and its affairs
solely upon the Company's SEC Documents, the representations and warranties of
the Company herein, and other information provided to the Purchaser and oral
statements of the Company's management made at meetings with the Purchaser.

          (j) The Buyer has not engaged and will not engage in any short sales
of the Company's ordinary shares or American Depositary Shares prior to the
effectiveness of the Initial


                                        2



Registration Statement, except to the extent that any such short sale is fully
covered by shares of the Company's stock other than the Shares and Warrant
Shares.

          (k) The Buyer understands that nothing in this Agreement or any other
materials presented to the Buyer in connection with the purchase and sale of the
Shares and the Warrant constitutes legal, tax or investment advice and that no
independent legal counsel has reviewed these documents and materials on the
Buyer's behalf. The Buyer has consulted such legal, tax and investment advisors
as it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of the Shares and the Warrant.

          (l) Notwithstanding any other provision of this Agreement, the Buyer
agrees and undertakes to the Company that the Buyer will not offer to transfer
or otherwise dispose of, or agree to the transfer or disposal of, the Shares,
the Warrant, or the Warrant Shares (or the fully paid ordinary shares underlying
either of them) in Australia (including through trading on the Australian Stock
Exchange) at any time prior to:

               (1) the Company's subsequent lodgment with the Australian
               Securities and Investments Commission of a prospectus under the
               Corporations Act 2001 (Cth) for fully paid ordinary shares of the
               Company (such prospectus incorporating the Initial Registration
               Statement or the Demand Registration Statement (as defined in
               Section 5 below) or extracts of the Initial Registration
               Statement or the Demand Registration Statement as deemed
               appropriate by the Company); or

               (2) the date which is 12 months after the date of issue of the
               Shares and the Warrant,

               (whichever occurs first).

          (m) The Buyer acknowledges that the Company may take any measures the
Company considers necessary or appropriate (in its sole discretion) in relation
to Section 2(l) above, and in particular that the ordinary shares underlying the
Shares and Warrant Shares will be subject to a holding lock on the Company's
Australian register, and entered into a restricted securities sub-register where
transfers of the shares cannot occur without the Company's prior consent.

     3. Company Representations. The Company represents to the Buyer as follows:

          (a) The Company is a company duly organized and in good standing under
the laws of Australia, and has the requisite corporate power to own its
properties and to carry on its business as now being conducted. The Company is
duly qualified as a foreign corporation to do business and is in good standing
in each jurisdiction where the nature of the business conducted or property
owned by it makes such qualification necessary, other than those jurisdictions
in which the failure to so qualify would not have a material adverse effect on
the business, operations, properties or condition (financial or otherwise) of
the Company and its subsidiaries taken as a whole (an "MAE").


                                        3



          (b) The Shares have been duly authorized and, when issued to Buyer,
will be duly and validly issued, fully paid and non-assessable and will not
subject the holder thereof to personal liability by reason of being such a
holder.

          (c) This Agreement and the transaction contemplated hereby have been
duly and validly authorized by the Company, this Agreement has been duly
executed and delivered by the Company, and this Agreement, when executed and
delivered by the Company, will be a valid and binding agreement of the Company
enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium, and
other similar laws affecting the enforcement of creditors' rights generally.

          (d) The execution and delivery of this Agreement by the Company, the
issuance of the Shares and the Warrant, and the consummation by the Company of
the other transactions contemplated by this Agreement do not and will not
conflict with or result in a breach by the Company of any of the terms or
provisions of, or constitute a default under (1) the organizational documents of
the Company, (2) any indenture, mortgage, deed of trust, or other material
agreement or instrument to which the Company is a party or by which it or any of
its properties or assets are bound, (3) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or (4)
to its knowledge, order of any court, administrative agency, or other
governmental body having jurisdiction over the Company or any of its properties
or assets, except such conflict, breach or default that would not have a
material adverse effect on the transaction contemplated herein. The Company is
not in violation of any laws, governmental orders, rules, regulations or
ordinances to which its property, real, personal, mixed, tangible or intangible,
or its businesses related to such properties, are subject except any such
violation that would not have an MAE.

          (e) No authorization, approval or consent of any court, governmental
body, regulatory agency, self-regulatory organization, or stock exchange or
market is required to be obtained by the Company for the issuance and sale of
the Shares and the Warrant to the Buyer as contemplated by this Agreement,
except such authorizations, approvals and consents that have been obtained and
that no representation is made with respect to filings under states securities
or blue sky laws.

          (f) The American Depositary Shares of the Company are listed on the
Nasdaq National Market. The Company is in material compliance with the listing
and maintenance requirements for continued listing of the American Depositary
Shares of the Company on the Nasdaq National Market. The Company has filed on a
timely basis all reports, schedules, forms, statements and other documents
required to be filed by it in 2005 with the SEC (the "Company's SEC Documents").
The Company has disclosed publicly all information which, according to
applicable law, rule or regulation, should have been disclosed publicly by the
Company, other than with respect to the transaction contemplated by this
Agreement.

          (g) As of their respective dates, the Company's SEC Documents complied
in all material respects with the requirements of the 1933 Act or the Securities
Exchange Act of 1934, as amended, as the case may be and the rules and
regulations of the SEC promulgated thereunder and other federal, state and local
laws, rules and regulations applicable to the


                                        4



Company's SEC Documents, and none of the Company's SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company's registration
statement on Form 20-F, dated January 19, 2005, comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (1) as may be otherwise indicated in such financial
statements or the notes thereto or (2) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).

          (h) Since December 31, 2004, there has been no material adverse change
in the business, properties, operations, financial condition, or results of
operations of the Company.

          (i) There is no fact known to the Company (other than general economic
conditions known to the public generally) or as disclosed in the Company's SEC
Documents that has not been disclosed in writing to the Buyer that (1) would
reasonably be expected to have an MAE or (2) would reasonably be expected to
have a material adverse effect the ability of the Company to perform its
obligations pursuant to this Agreement.

     4. Certain Covenants and Acknowledgments. (a) The Buyer acknowledges that
(1) none of the Shares, the Warrant or the Warrant Shares have been registered
under the provisions of the 1933 Act, and none of them may be transferred unless
(A) subsequently registered thereunder, as provided for herein, or (B) the Buyer
shall have delivered to the Company and the Depositary, if required, an opinion
of counsel, reasonably satisfactory in form, scope and substance to the Company,
to the effect that the Shares, the Warrant or the Warrant Shares to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration, and (2) any sale of the Shares, the Warrant or Warrant Shares made
in reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder.

          (b) The Buyer acknowledges and agrees that until such time as the
Shares have been registered under the 1933 Act as contemplated hereby and sold
in accordance with an effective registration statement, the Shares shall bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such Shares):

     THESE SHARES (THE "SHARES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
     ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF
     ANY STATE AND MAY NOT BE SOLD OR OFFERED


                                        5



     FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
     SHARES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
     CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

          (c) The Company shall make all necessary filings in connection with
the sale of the Shares and the Warrant to the Buyer under any United States laws
and regulations, or by any domestic securities exchange or trading market, and
to provide a copy thereof to the Buyer promptly after such filing.

          (d) So long as the Buyer beneficially owns any of the Shares or any
Warrant Shares or the Warrant remains exercisable, the Company shall file all
reports required to be filed with the SEC pursuant to Rule 13a-16 or 15d-16 of
the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination.

     5. Covenant to Register. (a) For purposes of this Section, the following
definitions shall apply:

     "register," "registered," and "registration" refer to a registration under
the 1933 Act, effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of a Registration Statement, document or amendment
thereto.

     "Registrable Securities" means the Shares, the Warrant Shares, and any
securities of the Company or securities of any successor corporation issued as
or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as a dividend or other distribution with respect to, or
in exchange for, or in replacement of, the Shares and/or the Warrant Shares.

     "holder of Registrable Securities" means the Buyer and any permitted
assignee of registration rights in accordance with this Agreement.

          (b) Conditioned on compliance by each holder of Registrable Securities
with the provisions of this Agreement, including Section 5(f) hereof:

               (i) the Company shall use reasonable efforts to promptly prepare
and file a registration statement on an appropriate form covering the sale by
all holders of Registrable Securities of such Registrable Securities (the
"Initial Registration Statement") and cause that registration statement to
become effective as soon as commercially reasonable, but no later than one
hundred eighty (180) days from the date of this Agreement;

               (ii) the Company shall use reasonable efforts to keep the Initial
Registration Statement effective for so long as any holder of Registrable
Securities desires to dispose of the securities covered by the Initial
Registration Statement; provided, however, that in no event shall the Company be
required to keep the Initial Registration Statement effective for a period
greater than two (2) years from the date of this Agreement or, if earlier,
through such date


                                        6



as all of the then-outstanding Registrable Securities can be sold within a given
three-month period or such date as all then-outstanding Registrable Securities
have been sold;

               (iii) on no more then one (1) occasion after the Initial
Registration Statement has ceased to be effective and upon the request given by
not fewer than fifty percent (50%) of the aggregate number of Warrant Shares
then-outstanding or issuable upon the exercise of then-outstanding Warrants, the
Company shall use reasonable efforts to prepare and file a registration
statement on an appropriate form within ninety (90) days of such request
covering the sale by all such holders of such Warrant Shares (the "Demand
Registration Statement", each of the Initial Registration Statement and the
Demand Registration Statement are referred to herein as a "Registration
Statement") and cause that registration statement to become effective as soon as
commercially reasonable after such request; and

               (iv) the Company shall use reasonable efforts to keep the Demand
Registration Statement effective for so long as any holder of Warrant Shares or
Warrants desires to dispose of the Warrant Shares covered by the Demand
Registration Statement; provided, however, that in no event shall the Company be
required to keep the Demand Registration Statement effective for a period
greater than one (1) year after it is declared effective or, if earlier, through
such date as all Warrant Shares can be sold within a given three-month period or
such date as all Warrant Shares have been sold.

          (c) The Company may delay or suspend, without penalty, the
effectiveness of any registration pursuant to Section 5(b) in the event and for
such period of time (i) as such a delay or suspension is required in order to
comply with the rules and regulations of the SEC, or (ii) as commercially
reasonable or necessary in connection with a material event or occurrence
concerning the Company prior to the effectiveness of the initial registration
pursuant to Section 5(b). The Company will use reasonable efforts to cause any
such delay or suspension to terminate at the earliest possible date.

          (d) If the Initial Registration Statement is not declared effective by
the SEC on or prior to one hundred eighty (180) days after the date of this
Agreement (the "Target Date"), unless delayed pursuant to Section 5(c), the
Company shall pay Buyer as liquidated damages an amount equal to one percent
(1%) of the total Purchase Price of the Shares and the Warrant for each thirty
(30) day period following the Target Date until such time as the Initial
Registration Statement is declared effective. Such payment shall be made to the
Buyer within ninety (90) days of the date due by cashier's check or wire
transfer in immediately available funds to such account as shall be designated
in writing by the Buyer.

          (e) Whenever required under this Section 5 to effect the registration
of any Registrable Securities, the Company shall, as promptly as reasonably
possible:

               (i) prepare and file with the SEC such amendments and supplements
to a Registration Statement and the prospectus used in connection with a
Registration Statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by such
Registration Statement and notify the holders of the filing and effectiveness of
such Registration statement and any amendments or supplements;


                                        7



               (ii) furnish to each holder of Registrable Securities such number
of copies of a current prospectus, including a preliminary prospectus,
conforming with the requirements of the 1933 Act, copies of the applicable
Registration Statement and any amendment or supplement to any thereof and any
documents incorporated by reference therein, and such other documents as such
holder of Registrable Securities may reasonably require in order to facilitate
the disposition of Registrable Securities owned by such holder of Registrable
Securities;

               (iii) use reasonable efforts to register and qualify the
securities covered by a Registration Statement under such other securities or
"Blue Sky" laws of such jurisdictions as shall be reasonably requested in
writing by the holder of Registrable Securities; provided however that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented; and

               (iv) notify each holder of Registrable Securities reasonably
promptly of the happening of any event as a result of which the prospectus
included in a Registration Statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and use its reasonable efforts to
promptly update and/or correct such prospectus.

          (f) Upon request of the Company, each holder of Registrable Securities
will furnish to the Company in connection with any registration under this
Section such information regarding itself, the Registrable Securities and other
securities of the Company held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the registration of
the Registrable Securities held by such holder of Registrable Securities. Each
such holder shall promptly notify the Company of any changes in any such
information.

          (g) To the fullest extent permitted by law, the Company shall
indemnify, defend and hold harmless each holder of Registrable Securities that
are included in a Registration Statement and each of its officers, directors,
employees, agents, partners or controlling persons (within the meaning of the
1933 Act) (each, an "indemnified party") from and against, and shall reimburse
such indemnified party with respect to, any and all claims, suits, demands,
causes of action, losses, damages, liabilities, costs or expenses
("Liabilities") to which such indemnified party may become subject under the
1933 Act or otherwise, arising from or relating to (A) any untrue statement or
alleged untrue statement of any material fact contained in a Registration
Statement, any prospectus contained therein or any amendment or supplement
thereto, or (B) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading; provided,
however, that the Company shall not be liable in any such case to the extent
that any such Liability arises out of or is based upon an untrue statement or
omission or alleged untrue statement or omission so made in strict conformity
with information furnished by such indemnified party in writing specifically for
use in a Registration Statement.

          (h) In the event of any registration under the 1933 Act of Registrable
Securities, each holder of such Registrable Securities hereby severally agrees
to indemnity,


                                        8



defend and hold harmless the Company, and its officers, directors, employees,
agents, partners, or controlling persons (within the meaning of the 1933 Act)
(each, an "indemnified party") from and against, and shall reimburse such
indemnified party with respect to, any and all Liabilities to which such
indemnified party may become subject under the 1933 Act or otherwise, arising
from or relating to (A) any untrue statement or alleged untrue statement of any
material fact contained in a Registration Statement, any prospectus contained
therein or any amendment or supplement thereto, or (B) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, that such holders will be liable in
any such case to the extent and only to the extent, that any such Liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in a Registration Statement, prospectus or
amendment or supplement thereto in reliance upon and in conformity with written
information furnished by such holder specifically for use in the preparation
thereof, and such Liability may in no event exceed the value of the Registrable
Securities so registered.

          (i) Promptly after receipt by any indemnified party of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against another party (the "indemnifying party")
hereunder, notify such party in writing thereof, but the omission so to notify
such party shall not relieve such party from any Liability which it may have to
the indemnified party other than under this Section and shall only relieve it
from any Liability which it may have to the indemnified party under this Section
if and to the extent an indemnifying party is materially prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and such indemnified party shall notify an indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel reasonably satisfactory to such indemnified party, and, after
notice from the indemnifying party to the indemnified party of its election so
to assume and undertake the defense thereof, the indemnifying party shall not be
liable to the indemnified party under this Section for any legal expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected; provided, however, that if the defendants in any such action
include both parties and the indemnified party shall have reasonably concluded
that there are reasonable defenses available to them which are different from or
additional to those available to the indemnifying party or if the interests of
the indemnified party reasonably are deemed to conflict with the interests of
the indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the reasonable expenses and fees of one such
separate counsel and other reasonable expenses related to such participation to
be reimbursed by the indemnifying party as incurred.

          (j) With respect to the inclusion of Registrable Securities in a
Registration Statement, all fees, costs and expenses of and incidental to such
registration, inclusion and public offering shall be borne by the Company;
provided, however, that any security holders participating in such registration
shall bear their pro-rata share of the underwriting discounts and commissions,
if any, incurred by them in connection with such registration. The fees, costs
and expenses of registration to be borne by the Company as provided in this
Section 5(j) shall include, without limitation, all registration, filing and
NASD fees, printing expenses, fees and


                                        9



disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or Blue Sky
laws of any jurisdiction or jurisdictions in which securities to be offered are
to be registered and qualified. Subject to appropriate agreements as to
confidentiality, the Company shall make available to the holders of Registrable
Securities and their counsel its documents and personnel for due diligence
purposes, provided that the fees and disbursements of counsel and accountants
for the selling security holders shall be borne by the respective selling
security holders.

          (k) The rights to cause the Company to register all or any portion of
Registrable Securities pursuant to this Section 5 may be assigned by Buyer to a
proper transferee or assignee as described herein. Within a reasonable time
after such transfer, the Buyer shall notify the Company of the name and address
of such transferee or assignee, and the securities with respect to which such
registration rights are being assigned. Such assignment shall be effective only
if (1) the Buyer agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such transfer or assignment (subject to the purchase price
of the Shares being kept confidential by the Buyer and such transferee or
assignee), (2) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (A) the name and address of such
transferee or assignee, and (B) the Registrable Securities with respect to which
such registration rights are being assigned, (3) following such transfer or
assignment, the further disposition of the Registrable Securities by the
transferee or assignee is restricted under the 1933 Act and applicable state
securities laws, (4) at or before the time that the Company receives the written
notice contemplated by clause (2) of this sentence the transferee or assignee
agrees in writing with the Company to be bound by all of the provisions
contained herein, (5) such transfer shall have been made in accordance with the
applicable requirements of the purchase agreement covering the transaction and
(6) such transferee shall be an "accredited investor", as that term is defined
in Rule 501 of Regulation D, promulgated under the 1933 Act.

     6. Governing Law; Miscellaneous. The laws of the State of New York govern
all matters (including without limitation all tort claims) arising out of this
agreement. A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original. The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.

     7. Notices. (a) For a notice or other communication under this agreement to
be valid, it must be in writing and signed by the sending party, and the sending
party must use one of the following methods of delivery: (1) personal delivery;
(2) internationally recognized courier, with all fees prepaid; or (3) facsimile.


                                       10



          (b) For a notice or other communication under this agreement to be
valid, it must be addressed to the receiving party at the one or more addresses
listed below for the receiving party or to any other address designated by the
receiving party in a notice in accordance with this Section 7.

     To the Company: pSivida Limited
                     Level 12, BGC Centre
                     28 The Esplanade
                     Perth, WA 6000
                     Australia
                     Attention: Gavin Rezos, Managing Director
                     Fax: +61 (8) 9226 5499

                     With a copy to:

                     Curtis, Mallet-Prevost, Colt & Mosle LLP
                     101 Park Avenue
                     New York, NY 10178-0061
                     Attention: Lawrence Goodman
                     Fax: (212) 697-1559

     To the Buyer:   At the contact information stated
                     on the signature page of this Agreement

          (c) Subject to Section 7(d), a valid notice or other communication
under this agreement is effective when received or deemed to be received by the
receiving party. A notice or other communication is deemed to have been received
as follows:

               (i) if it is delivered in person or sent by registered or
certified mail or by nationally recognized overnight courier, upon receipt as
indicated by the date on the signed receipt;

               (ii) if it is sent by facsimile, upon receipt by the sending
party of an acknowledgment or transmission report generated by the machine from
which the facsimile was sent indicating that the entire facsimile was sent to a
machine at the receiving party's facsimile number; and

               (iii) if the receiving party rejects or otherwise refuses to
accept it, or if it cannot be delivered because of a change in address for which
no notice was given, then upon that rejection, refusal, or inability to deliver.

          (d) If a notice or other communication is received after 5:00 p.m. on
a business day at the location specified in the address for the receiving party,
or on a day that is not a business day, then the notice is deemed received at
9:00 a.m. on the next business day.


                                       11



     8. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.

     This Agreement is being signed on the date stated below.

     For the purchase price of $__________ per Share, the Buyer tenders herewith
the full purchase price of US$______________ for _____________ Shares and the
Warrant to purchase _____________ Warrant Shares.

                                        BUYER:

                                        ----------------------------------------
                                        Print Name


                                        ----------------------------------------
                                        Signature

                                        ----------------------------------------
                                        Name and title of signatory, if
                                        different from name of Buyer

                                        ----------------------------------------

                                        ----------------------------------------

                                        ----------------------------------------
                                        Address

                                        Fax number:
                                                    ----------------------------

                                        ----------------------------------------
                                        If Buyer is an entity, jurisdiction
                                        of organization and type of entity

     This Agreement is being accepted as of August __, 2005.

                                        PSIVIDA LIMITED


                                        By:
                                            ------------------------------------
                                            Gavin Rezos
                                            Managing Director


                                       12



                                    EXHIBIT A
                                 FORM OF WARRANT

                                                                     Exhibit 4.3

THIS WARRANT AND ANY SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO PSIVIDA LIMITED THAT REGISTRATION IS NOT REQUIRED.

                             FORM OF PSIVIDA LIMITED
                                WARRANT AGREEMENT

              VOID AFTER 5:00 P.M. NEW YORK TIME, SEPTEMBER 9, 2008

Issue Date: September 9, 2005

     1. Basic Terms. This warrant agreement (this "Warrant") certifies that, for
value received, the registered holder specified below or its registered assigns
(the "Holder") is the owner of a warrant of pSivida Limited, an Australian
company having its principal place of business at Level 12, BGC Centre, 28 The
Esplanade, Perth, WA 6000, Australia (the "Company"), subject to adjustments as
provided herein, to purchase ________________ American Depositary Shares of the
Company (the "Warrant Shares"), each representing ten ordinary shares of the
Company, from the Company at the price per share shown below (the "Exercise
Price").

          Holder: ______________________________

          Exercise Price per share: ______________________________

Except as specifically provided otherwise, all references in this Warrant to the
Exercise Price and the number of Warrant Shares purchasable hereunder are to the
Exercise Price and number of Warrant Shares after any adjustments are made
thereto pursuant to this Warrant.

     2. Shares Issuable. The Company represents that the Warrant Shares issuable
upon the exercise of this Warrant will at delivery be fully paid and
non-assessable and free from taxes, liens, encumbrances and charges with respect
to their purchase. The Company shall at all times reserve and hold available
sufficient shares to satisfy all conversion and purchase rights of outstanding
convertible securities, options and warrants of the Company, including this
Warrant.

     3. Method of Exercise; Fractional Shares. This Warrant is exercisable at
the option of the Holder at any time by surrendering this Warrant, on any
business day during



the period (the "Exercise Period") beginning the business day after the issue
date of this Warrant specified above and ending at 5:00 p.m. (New York time)
three years after the issue date. This Warrant may not be exercised for fewer
than 5,000 Warrant Shares per exercise, as adjusted to reflect stock dividends,
stock splits, and other comparable changes. To exercise this Warrant, the Holder
shall surrender this Warrant at the principal office of the Company or that of
the Company's Depositary, together with the executed exercise form
(substantially in the form of that attached hereto) and together with payment
for the Warrant Shares purchased under this Warrant. Payment shall be made by
check payable to the order of the Company or by wire transfer. Promptly after
exercise, the Company shall deliver to the Company's Depositary a binding and
irrevocable instruction letter instructing the Depositary to issue to the Holder
an American Depositary Receipt representing the Warrant Shares issuable in
connection with that exercise. This Warrant is not exercisable with respect to a
fraction of a Warrant Share. In lieu of issuing a fraction of a share remaining
after exercise of this Warrant as to all full shares covered by this Warrant,
the Company shall either at its option (a) pay for the fractional share cash
equal to the same fraction at the fair market price for such share; or (b) issue
scrip for the fraction in the registered or bearer form entitling the Holder to
receive a certificate for a full American Depositary Share on surrender of scrip
aggregating a full share.

     4. Protection Against Dilution. Subject to the Listing Rules of Australian
Stock Exchange Limited, the number of Warrant Shares purchasable under this
Warrant, and the Exercise Price, shall be adjusted as set forth as follows. If
at any time or from time to time after the date of this Warrant, the Company:

          (i)  takes a record of the holders of its outstanding ordinary shares
               or American Depositary Shares for the purposes of entitling them
               to receive a dividend payable in, or other distribution of,
               ordinary shares or American Depositary Shares; or

          (ii) subdivides its outstanding ordinary shares or American Depositary
               Shares into a larger number of ordinary shares or American
               Depositary Shares; or

          (iii) combines its outstanding ordinary shares or American Depositary
               Shares into a smaller number of ordinary shares or American
               Depositary Shares;

then, and in each such case, the Exercise Price shall be adjusted to that price
determined by multiplying the Exercise Price in effect immediately prior to such
event by a fraction (A) the numerator of which is the total number of
outstanding ordinary shares or American Depositary Shares (as applicable)
immediately prior to such event and (B) the denominator of which is the total
number of outstanding ordinary shares or American Depositary Shares (as
applicable) immediately after such event.

Upon each adjustment in the Exercise Price under this Warrant the number of
Warrant Shares purchasable under this Warrant will be adjusted by multiplying
the number of


                                        2



Warrant Shares by a fraction, the numerator of which is the Exercise Price
immediately prior to such adjustment and the denominator of which is the
Exercise Price in effect upon such adjustment.

     5. Adjustment for Reorganization, Consolidation, Merger, Etc.

          (a) During the Exercise Period, the Company shall, prior to
consummation of a consolidation with or merger into another corporation, or
conveyance of all or substantially all of its assets to any other corporation or
corporations, whether affiliated or unaffiliated (any such corporation being
included within the meaning of the term "successor corporation"), or entry into
any agreement to so consolidate, merge or convey assets, require the successor
corporation to assume, by written instrument delivered to the Holder, the
obligation to issue and deliver to the Holder such shares of stock, securities
or property as, in accordance with the provisions of Section 5(b), the Holder is
entitled to purchase or receive.

          (b) In the event of any capital reorganization or reclassification of
the stock of the Company (or any other corporation the stock or other securities
of which are at the time receivable on the exercise of this Warrant) during the
Exercise Period, or in the event that during the Exercise Period the Company (or
any such other corporation) consolidates with or merges into another corporation
or conveys all or substantially all its assets to another corporation, the
Holder, upon exercise, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, will be entitled to
receive, in lieu of Warrant Shares (or stock of such other corporation), the
proportionate share of all stock, securities or other property issued, paid or
delivered for or on all of the stock of the Company (or such other corporation)
as is allocable to the Warrant Shares then called for by this Warrant as if the
Holder had exercised the Warrant immediately prior thereto, all subject to
further adjustment as provided in Section 4.

     6. Notice of Adjustment. On the happening of an event requiring an
adjustment of the Exercise Price or the shares purchasable under this Warrant,
the Company shall immediately give written notice to the Holder stating the
adjusted Exercise Price and the adjusted number and kind of securities or other
property purchasable under this Warrant resulting from the event and setting
forth in reasonable detail the method of calculation and the facts upon which
the calculation is based.

     7. Dissolution, Liquidation. In case of the voluntary or involuntary
dissolution, liquidation or winding up of the Company (other than in connection
with a reorganization, consolidation, merger, or other transaction covered in
Section 5) is at any time proposed, the Company shall give at least thirty days'
prior written notice to the Holder. Such notice shall contain the following: (a)
the date on which the transaction is to take place; (b) the record date (which
shall be at least thirty days after the giving of the notice) as of which
holders of Common Stock will be entitled to receive distributions as a result of
the transaction; (c) a brief description of the transaction, (d) a brief
description of the distributions to be made to holders of ordinary shares of the
Company as a result of the transaction; and (e) an estimate of the fair value of
the distributions. On the date of


                                        3



the transaction, if it actually occurs, this Warrant and all rights under this
Warrant will terminate.

     8. Rights of Holder. The Company shall deliver to the Holder all notices
and other information provided to holders of ordinary shares of the Company or
other securities issuable under this Warrant concurrently with the delivery of
such information to those holders. This Warrant does not entitle the Holder to
any voting rights or, except for the foregoing notice provisions, any other
rights as a shareholder of the Company. No dividends are payable or will accrue
on this Warrant or the Warrant Shares purchasable under this Warrant until, and
except to the extent that, this Warrant is exercised. Upon surrender of this
Warrant and payment of the Exercise Price as provided above, the person or
entity entitled to receive the Warrant Shares issuable upon such exercise shall
be treated for all purposes as the record holder of such shares as of the close
of business on the date of the surrender of this Warrant for exercise as
provided above. Upon the exercise of this Warrant, the Holder will have all of
the rights of a shareholder in the Company.

     9. Exchange for Other Denominations. This Warrant is exchangeable, on its
surrender by the Holder to the Company, for a new Warrant of like tenor and date
representing in the aggregate the right to purchase the balance of the number of
shares purchasable under this Warrant in denominations and subject to
restrictions on transfer contained herein, in the names designated by the Holder
at the time of surrender.

     10. Substitution. Upon receipt by the Company of evidence satisfactory (in
the exercise of reasonable discretion) to it of the ownership of and the loss,
theft or destruction or mutilation of the Warrant, and (in the case or loss,
theft or destruction) of indemnity satisfactory (in the exercise of reasonable
discretion) to it, and (in the case of mutilation) upon the surrender and
cancellation thereof, the Company will issue and deliver, in lieu thereof, a new
Warrant of like tenor.

     11. Restrictions on Transfer; Registration Rights. Neither this Warrant nor
the Warrant Shares issuable on exercise of this Warrant have been registered
under the Securities Act of 1933, as amended, or any other securities laws (the
"Acts"). Neither this Warrant nor the Warrant Shares purchasable hereunder may
be sold, transferred, pledged or hypothecated in the absence of (a) an effective
registration statement for this Warrant or the American Depositary Shares
purchasable hereunder under the Acts, or (b) an opinion of counsel reasonably
satisfactory to the Company that registration is not required under the Acts.
Transfer of this Warrant and the Warrant Shares is further subject to the terms
of the Securities Purchase Agreement between the Holder and the Company dated
the date of this Warrant. If the Holder seeks an opinion as to transfer without
registration from Holder's counsel, the Company shall provide such factual
information to Holder's counsel as Holder's counsel reasonably requests for the
purpose of rendering such opinion. Any certificate evidencing Warrant Shares
purchased hereunder will bear a legend describing the restrictions on transfer
contained in this Section 11 unless, in the opinion of counsel reasonably
acceptable to the Company, the shares need no longer to be subject to the
transfer restrictions.


                                        4



     12. Transfer. Except as otherwise provided in this Warrant, this Warrant is
transferable only on the books of the Company by the Holder in person or by
attorney, on surrender of this Warrant, properly endorsed.

     13. Recognition of Holder. Prior to due presentment for registration of
transfer of this Warrant, the Company shall treat the Holder as the person
exclusively entitled to receive notices and otherwise to exercise rights under
this Warrant. All notices required or permitted to be given to the Holder shall
be in writing and shall be given by first class mail, postage prepaid, addressed
to the Holder at the address of the Holder appearing in the records of the
Company.

     14. Payment of Taxes. The Company shall pay all taxes and other
governmental charges, other than applicable income taxes, that may be imposed
with respect to the issuance of Warrant Shares pursuant to the exercise of this
Warrant.

     15. Headings. The headings in this Warrant are for purposes of convenience
in reference only, shall not be deemed to constitute a part of this Warrant, and
shall not affect the meaning or construction of any of the provisions of this
Warrant.

     16. Miscellaneous. This Warrant may not be changed, waived, discharged or
terminated except by an instrument in writing signed by the Company and the
Holder. This Warrant shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. Under no circumstances may this Warrant
be assigned by the Holder.

     17. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to its
principles governing conflicts of law.

                                        PSIVIDA LIMITED


                                        By:
                                            ------------------------------------
                                            Gavin Rezos
                                            Managing Director


                                        5



                                PSIVIDA LIMITED
                                FORM OF TRANSFER

             (To be executed by the Holder to transfer the Warrant)

For value received the undersigned registered holder of the attached Warrant
hereby sells, assigns, and transfers the Warrant to the Assignee(s) named below:



                                                  Number of Shares
                                                     Subject to
Names of Assignee   Address   Taxpayer ID No.   Transferred Warrant
- -----------------   -------   ---------------   -------------------
                                       



The undersigned registered holder further irrevocably appoints _________________
___________________________________ attorney (with full power of substitution)
to transfer this Warrant as aforesaid on the books of the Company.


Date:
      -----------------------           ----------------------------------------
                                        Signature


                                        6



                                 PSIVIDA LIMITED
                                  EXERCISE FORM

                    (To be executed by the Holder to purchase
               American Depositary Shares pursuant to the Warrant)

The undersigned holder of the attached Warrant hereby: (1) irrevocably elects to
exercise purchase rights represented by such Warrant for, and to purchase,
___________ American Depositary Shares of pSivida Limited, an Australian
company, and encloses a check or has wired payment of $_________________________
therefor; (2) requests that an American Depositary Receipt representing those
American Depositary Shares be issued in the name of the undersigned; and (3) if
such number of shares is not all of the shares purchasable under this Warrant,
that a new Warrant of like tenor for the balance of the remaining shares
purchasable under this Warrant be issued.


Date:
      -----------------------           ----------------------------------------
                                        Signature


                                        7

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration
Statement on Form F-3 of our report dated December 2, 2005 relating to the
financial statements which appears in pSivida Limited's Form 6-K for the year
ended December 31, 2004. We also consent to the references to us under the
headings "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Boston, Massachusetts
March 24, 2006

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

      We consent to the incorporation by reference in this Registration
Statement on Form F-3 of our report dated December 14, 2005 (January 12, 2006 as
to Note 19), relating to the financial statements of pSivida Limited appearing
in the Annual Report on Form 20-F of pSivida Limited for the year ended June 30,
2005 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.


/s/ Deloitte Touche Tohmatsu

DELOITTE TOUCHE TOHMATSU
Perth, Australia
March 28, 2006

VIA EDGAR TRANSMISSION

March 28, 2006

SEC Headquarters
100 F Street, NE
Washington, DC 20549
Office of Investor Education and Assistance

Re: pSivida Limited Registration Statement on Form F-3

Ladies and Gentlemen:

On behalf of pSivida Limited (the “Company”), we respectfully submit this registration statement on Form F-3 that registers the resale of 5,665,000 ordinary shares represented by 566,500 American Depositary Shares (“ADSs”). By means of a private placement, we sold 515,000 ADSs to the selling shareholders named in the registration statement together with warrants to acquire up to 51,500 additional ADSs.

Please note that the Company has simultaneously filed a registration statement on Form F-3 that registers the resale of 4,869,252 ADSs by the holder of a subordinated convertible promissory note and warrant issued in a separate private placement. The Company also expects to file a third registration statement on Form F-3 to register the resale of 159,836,610 ordinary Shares represented by 15,983,661 ADSs issued pursuant to the acquisition of Control Delivery Systems, Inc. by the Company.

Please be advised that the Company anticipates making an oral request for acceleration of effectiveness of this registration statement pursuant to Rule 461 under the Securities Act of 1933 (the “Securities Act”). In that regard, this letter confirms that the Company is aware of its obligations under the Securities Act as they relate to the offering of shares described in this registration statement.

Please call me at (212) 696-8880 if you have any questions about this filing. We would very much appreciate the staff’s assistance in declaring this registration statement effective as soon as possible.

Very truly yours,

Curtis, Mallet-Prevost, Colt & Mosle LLP

/s/ Peter F. Stewart
Peter F. Stewart