Whereas, The Parties Have Entered Into An Agreement - SYNTHEMED, INC. - 3-31-2003

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Whereas, The Parties Have Entered Into An Agreement - SYNTHEMED, INC. - 3-31-2003 Powered By Docstoc
					EXHIBIT 10.37 AMENDMENT NO. 4 dated as of this 24th day of April, 2002, ("Amendment No. 4") between LIFE MEDICAL SCIENCES, INC. (the "Company") (formerly "BIOMEDICAL POLYMERS INTERNATIONAL, LTD.") and YISSUM RESEARCH DEVELOPMENT COMPANY OF THE HEBREW UNIVERSITY OF JERUSALEM ("Yissum"). WITNESSETH: WHEREAS, the parties have entered into an agreement dated June 14, 1991 (the "1991 Agreement"), which 1991 Agreement was amended pursuant to (i) an amendment dated as of February __, 1994 ("Amendment No. 1"), (ii) an amendment dated as of January 1, 1996, ("Amendment No. 2") and (iii) an amendment dated as of October 1, 1996, ("Amendment No. 3") (the 1991 Agreement as amended by Amendment No. 1, Amendment No. 2 and Amendment No. 3 is referred to herein as the "Original Agreement"); and WHEREAS, the parties wish to modify and amend the Original Agreement upon the terms, provisions and conditions set forth below. NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the parties hereto agree as follows: 1. Section 18 of the Original Agreement is hereby amended to provide that the address at which the Company shall receive all notices and communications shall be 92 Gooseneck Point Road, Oceanport New Jersey 07757, Attention: Robert P. Hickey, Chairman, President & CEO. 2. Research Program IV, a copy of which is attached hereto shall become a part of appendix "A" to the Original Agreement. The initial term of Research Program IV shall be for a period of three (3) months from the date hereof and may be extended by mutual agreement of the parties and shall be subject to the requirements as provided in Sections 2 (f) and (g) of the Original Agreement. The Company will pay to Yissum the $22,000 set forth in the budget of Research Program IV in three equal monthly installments, the first of which shall be paid against receipt of invoice upon execution of Amendment No. 4. 3. Section 8 (c) of the Original Agreement is hereby amended through the addition of the following sentences: "Sections 8(b) (1) and 8(b) (2) are hereby declared null and void. Notwithstanding the provisions of Section 8 (b) (3), in the event that the Company does not reach total net sales of products or achieve income of $1,000,000 by December 31, 2004, Yissum shall not terminate the Original Agreement and the same shall remain in full force and effect for the year

ended December 31, 2005 so long as the Company pays to Yissum a minimum annual royalty payment of $50,000. Notwithstanding the provisions of Section 8 (b) (3), in the event that the Company does not reach total net sales of products or achieve income of $1,000,000 by December 31, 2005, Yissum shall not terminate the Original Agreement and the same shall remain in full force and effect for the year ended December 31, 2006 so long as the Company pays to Yissum a minimum annual royalty payment of $100,000. Notwithstanding the provisions of Section 8 (b) (3), in the event that the Company does not reach total net sales of products or achieve income of $1,000,000 by December 31, 2006, Yissum shall not terminate the Original Agreement and the same shall remain in full force and effect for the year ended December 31, 2007, so long as the Company pays to Yissum a minimum annual royalty payment of $100,000. Any and all minimum royalty payments made by the Company to Yissum in compliance with the terms of Section 8 (c) of the Original Agreement shall be applied in full against the Company's royalty obligation as referenced in Section 7 (a) of the Original Agreement and defined in Appendix E to the Original Agreement." 4. The following language set forth in the first sentence of Section 5 of the Original Agreement: "This Agreement shall take effect on June 14, 1991, and end, if not ended or terminated prior thereto pursuant to the provisions hereof, at the earlier of the following:" is hereby deleted and is hereby replaced with the following: "This Agreement shall take effect on June 14, 1991, and end, if not ended or terminated prior thereto pursuant to the provisions hereof, at the later of the following:". 5. The following language set forth in Section 1 (b) of the Original Agreement: ""product" means any product and/or product component and/or process directly and/or indirectly based on and/or related to the patents, know-how and/or any part thereof." is hereby deleted and is hereby replaced with the following: ""product" means any product and/or product component or process directly or indirectly based on and/or related to any or all of the patents or know-how, including but not limited to any and all patents or patent applications developed, conceived or reduced to practice in the course of the research, as defined in Section 1. (b) of the Original Agreement, or resulting or deriving therefrom." 6. The following new Section 5 (d) is hereby added to the Original Agreement: "In the event of the termination of the Original Agreement by Yissum under the terms of either Section 14 (a), Section 8 (b) or Section 8 (c) herein, in addition to the remedy described in Section 5 (c) of the Original Agreement, all patents and patent applications derived from the research, as defined in Section 1 (b) of the Original Agreement, shall revert in full to Yissum. 7. The following language in the first paragraph in Section 9 of Exhibit A, Exhibit B and Exhibit C of the Original Agreement: "in the field of biopolymeric materials which would be in competition with the Research and/or any activity of LMS, its successors or assigns or which might create such competition." is hereby deleted and is hereby replaced with the following: "in the field of development or commercialization of projects and/or products for post-operative adhesion prevention and controlled release of anti-arrhythmic drugs which would be in competition with any product, product component and/or product development program derived directly from the Research." 2

8. The following language in Section 6 of Appendix E to the Original Agreement: "royalty of 5% per annum of all net sales of licensees," is hereby deleted and is hereby replaced with the following: "the Company shall pay to Yissum a royalty of 5% of the aggregate value of the Company's Net Sales ("Net Sales" defined as sales revenue less discounts, returns, allowances and taxes) of products to third parties, including but not limited to distributors, licensees and other customers, and its licensing income from products," 9. All terms used herein but not otherwise defined herein shall have the same meaning ascribed to such term in the Original Agreement. 10. Amendment No. 4 may be executed in counterparts each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. From and after the execution and delivery of Amendment No. 4, the term "Original Agreement" shall be deemed to include the terms and provisions of Amendment No. 4. 11. By executing Amendment No. 4, Yissum and the Company hereby certify that any and all necessary approvals and consents for the effectiveness of Amendment No. 4 have been obtained. 12. Yissum and the Company further acknowledge that as of the date of execution of Amendment No. 4, the Original Agreement, as amended by Amendment No. 4, is in full force and effect with no current or anticipated events of default. IN WITNESS WHEREOF, the parties have duly executed Amendment No. 4 as of the day and year first above written.
Yissum Research Development Company of the Hebrew University of Jerusalem Life Medical Sciences, Inc.

By:______________________ Name:____________________ Title:___________________

By:_____________________ Name:___________________ Title:__________________

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EXHIBIT 10.38 CONFIDENTIAL SUBSCRIPTION AGREEMENT (European Subscribers) TO: LIFE MEDICAL SCIENCES, INC. AND TO: CLUBB BIOCAPITAL LIMITED RE: SUBSCRIPTION FOR UNITS 1. Subscription The undersigned (the "Purchaser") hereby subscribes for on and subject to the terms and conditions set forth herein, from Life Medical Sciences, Inc. (the "Corporation") 605,000 units (the "Purchased Units") each comprised of one (1) share of Series C Convertible Preferred Stock, par value $0.01 per share, of the Corporation (a "Preferred Share"); one warrant (a "Short Term Warrant") to purchase up to 10 shares of common stock of the Corporation ("Common Shares") at an exercise price of $0.12 per Common Share (the "Short Term Warrant Exercise Price"); and one warrant (a "Two Year Warrant") to purchase up to 10 Common Shares at an exercise price of $0.12 per Common Share (the "Two Year Warrant Exercise Price"). The Purchased Units are being sold to the Purchaser in consideration for $1.20 per Unit (the "Subscription Price"), and as part of an offering (the "Offering") of up to $726,000 of Units. The Short Term Warrants and Two Year Warrants, together with the broker warrants referred to in Section 10 hereof, are sometimes referred to collectively as the "Warrants". There is no minimum number of Units being offered, and the Corporation reserves the right to accept subscriptions as and when received.Clubb Biocapital Limited (the "Agent") is serving as a placement agent for the Offering pursuant to an agency agreement to be entered into with the Corporation (the "Agency Agreement"). 2. Description of Units The Preferred Shares shall have the attributes described in Appendix I hereto. Each Short Term Warrant shall be exercisable to acquire 10 Common Shares at the Short Term Warrant Exercise Price for a period commencing on the date of issue and expiring on June 30, 2003. The Short Term Warrants shall be issued in substantially the form attached hereto as Appendix II. Each Two Year Warrant shall be exercisable to acquire 10 Common Shares at the Two Year Warrant Exercise Price for a period commencing on the date of issue. The Two Year Warrants shall be issued in substantially the form attached hereto as Appendix III.

2 3. Use of Proceeds The proceeds of the Offering will be used by the Corporation to fund product development costs and for working capital and general corporate purposes including the settlement of certain trade liabilities. 4. Documents to be provided by Purchaser The Purchaser must complete, sign and return two executed copies of: (i) this Subscription Agreement, and (ii) the Investor Rights Agreement a copy of which is attached as Appendix IV hereto, and the Subscription Price must be paid in U.S. dollars by wire transfer to the following account: Bank of America NT & SA New York, New York CIBC Toronto Account No. 6550 8 26157 Swift Address: BOFAUS3N Chips Member ID: 015035 ABA No. 026009593 For Further Credit To:

Canadian Imperial Bank of Commerce Main Branch, Commerce Court West Toronto, Ontario M5L 1A2 Transit No. 00002 Beneficiary: Blake, Cassels & Graydon LLP Account No. 02 44414 Reference: JACK - 65283/8 or in such other manner as may be specified by the Agent. At Closing (as defined below), the Subscription Price will be released to the Corporation by Blake, Cassels & Graydon LLP. In either case, such deliveries hereinafter referred to as the "Purchaser's Closing Deliveries." 5. Closing and Delivery of Share and Warrant Certificates Delivery and sale of the Purchased Units will be completed (the "Closing") at the offices of the Corporation (or such other place or places as the Corporation and the Agent may agree) at 10:00 a.m. (Eastern Standard Time) (the "Closing Time") on such date as the Corporation and the Agent may agree (the "Closing Date"), expected to be no later than March 31, 2003. Certificates representing the Preferred Shares, Short Term Warrants and the Two Year Warrants comprising the Purchased Units will be delivered at Closing against delivery by the Purchaser of therequisite funds by wire transfer. The Purchaser, on its own behalf or on behalf of others for whom it is contracting hereunder, hereby appoints the Agent, with full power of substitution, as its true and lawful attorney and agent with the full power

3 and authority in its place and stead to swear, execute, file and record any document necessary to give effect to the delivery and sale of the Purchased Units, to terminate this subscription on its behalf in the event that any condition precedent to the Offering has not been satisfied, to execute a receipt for the Purchased Units and all other documentation, and to modify or waive any conditions or grant any waivers on its behalf in connection with this transaction including any extension to the deadline date for Closing agreed with the Corporation. 6. Certain Matters Relating to the Offering The Purchaser, on its own behalf (or on behalf of others for whom it is contracting hereunder) acknowledges and agrees that: (a) it (or others for whom it is contracting hereunder) has not been provided with a prospectus or an offering memorandum or any similar document in connection with its purchase of Units; (b) its decision to execute this Subscription Agreement and the Investor Rights Agreement and to subscribe for the Purchased Units (on its own behalf or on behalf of others for whom it is contracting hereunder) has not been based upon any verbal or written representations as to fact or otherwise made by or on behalf of the Agent or the Corporation and that the Purchaser's decision (or the decision of others for whom the Purchaser is contracting hereunder) is based entirely upon publicly available information concerning the Corporation (any such information having been delivered to the Purchaser without independent investigation or verification by the Agent); (c) the Agent and its directors, officers, employees, agents and representatives assume no responsibility or liability of any nature whatsoever for the accuracy or adequacy of any such publicly available information or as to whether all information concerning the Corporation required to be disclosed by it has been generally disclosed; (d) neither the Preferred Shares nor the Short Term Warrants nor the Two Year Warrants comprising the Purchased Units have been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), with the result that such Preferred Shares, Short Term Warrants and the Two Year Warrants (and the Common Shares into which they are convertible or exercisable) are "restricted securities" within the meaning of Regulation S and Rule 144 promulgated under the Securities Act and may not be offered or sold within the United States or to or for the account or benefit of a U.S. Person (as defined in Rule 902(o) of Regulation S promulgated under the Securities Act) except pursuant to registration under the Securities Act or an exemption therefrom; (e) the Purchaser (or others for whom the Purchaser is contracting hereunder) has been advised to consult its own legal advisors with respect to any applicable resale restrictions and the Purchaser (or others for whom the Purchaser is contracting hereunder) is solely responsible (and neither the Corporation nor the Agent is in any way responsible) for compliance with applicable resale restrictions;

4 (f) the Purchaser understands that each certificate representing Preferred Shares, Short Term Warrants and Two Year Warrants comprising the Purchased Units, and any securities issued on conversion or exercise thereof or in exchange therefor shall bear a legend in substantially the following form (in addition to any legend required under applicable state securities laws): "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") AND MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE 1933 ACT OR (C) PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS, PROVIDED IN SUCH LATTER CASE THAT THE HOLDER UPON REQUEST PRIOR TO SUCH SALE FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THAT EFFECT REASONABLY SATISFACTORY TO THE CORPORATION." (g) the Purchaser (or others for whom the Purchaser is contracting hereunder) (i) is not a "distributor" of securities as that term is defined in Regulation S nor a dealer in securities, and (ii) acknowledges that it has not engaged in any hedging transactions with regard to the Purchased Units; and (h) during the first quarter of 2003, the Corporation intends to acquire certain assets of Phairson Ltd., a company organized under the laws of the United Kingdom, in exchange for the issuance of approximately 6,900,000 Common Shares (the "Acquisition"). 7. Representations, Warranties and Covenants of the Corporation The Corporation represents, warrants and covenants to the Agent, the Purchaser (and to any others on whose behalf the Purchaser is contracting hereunder) as of the date hereof and as of the Closing Date, which representations, warranties and covenants shall survive any investigation made by the Agent, the Purchaser or such others for a period of two years after the Closing, that: (a) the Corporation is a validly existing corporation in good standing under the laws of the jurisdiction in which it is incorporated, and the Corporation has no subsidiaries;the Corporation is duly qualified and authorized to do business in the jurisdiction(s) in which it carries on business or to own property where required under the laws of the jurisdiction(s) in which any such property is located;

5 (b) the Corporation is current with all material filings required to be made under the laws of any jurisdiction in which it carries on any material business, and the Corporation has all necessary licenses, leases, permits, authorizations and other approvals necessary to permit it to conduct its business as currently conducted, except where the failure to have any such license, lease, permit, authorization or approval would not have a material adverse effect on the Corporation and its business; (c) the audited financial statements of the Corporation as at and for the year ended December 31, 2001 present fairly, in all material respects, the financial position of the Corporation as at that date, and the results of its operations and the changes in its financial position for the 12-month period then ended in accordance with generally accepted accounting principles, and the unaudited financial statements of the Corporation as at and for the nine months ended September 30, 2002 present fairly, in all material respects, the financial position of the Corporation as at that date, and the results of its operations and the changes in its financial position for the ninemonth period then ended; since September 30, 2002, there has been no material adverse change in the business, affairs or financial or other condition of the Corporation or any of its subsidiaries, except as disclosed in the notes to the financial statements for the nine-month period then ended; (d) the Corporation has all requisite power and authority to carry out its obligations under this Agreement, the Investor Rights Agreement, the Preferred Shares, the Short Term Warrants and the Two Year Warrants; (e) this Agreement has been, and the Investor Rights Agreement, the Preferred Shares, the Short Term Warrants and the Two Year Warrants, will be on the Closing Date, duly authorized, executed and delivered by the Corporation and constitute or on the Closing Date will constitute, legal, valid and binding obligations of the Corporation enforceable in accordance with their terms except that: (i) the enforcement hereof or thereof may be limited by bankruptcy, insolvency, reorganization and other laws affecting the enforcement of creditors' rights generally, (ii) rights of indemnity thereunder may be limited under applicable law, and (iii) equitable remedies, including without limitation specific performance and injunctive relief, may be granted only in the discretion of a court of competent jurisdiction; (f) the Preferred Shares comprising part of the Units are or on the Closing Date will be duly and validly authorized and, when issued and delivered against payment therefor, will be duly and validly issued, fully paid and non-assessable shares in the capital stock of the Corporation; (g) the Corporation will reserve a sufficient number of Common Shares unissued as may be required to be issued pursuant to the conversion of the Preferred Shares and the exercise of the Short Term Warrants and the Two Year Warrants comprising the Purchased Units and when issued and delivered upon such conversion or exercise, such Common Shares will be duly and validly issued as fully paid and non-assessable shares in the capital stock of the Corporation;

6 (h) the authorized capital of the Corporation consists of 100,000,000 Common Shares and 5,000,000 shares of preferred stock, $.01 par value per share. Of the preferred stock, 500,000 shares have been designated as Series A Convertible Preferred Stock, 1,116,500 shares have been designated as Series B Convertible Preferred Stock and, on or prior to the Closing Date, not more than 605,000 shares will be designated as Preferred Shares. As of December 31, 2002, there are 16,759,316 Common Shares outstanding, no shares of Series A Convertible Preferred Stock outstanding, 1,112,500 shares of Series B Convertible Preferred Stock outstanding and no Preferred Shares outstanding (other than Preferred Shares issued or to be issued in the Offering. In addition, the Corporation has (i) outstanding a convertible note held by Dimotech (the "Convertible Note") in the principal amount of $40,000 which is convertible, at the holder's option, into Common Shares at a price of $1.00 per share or into any class of preferred shares at the price paid by the purchasers thereof; provided, however, that if any such preferred shares are convertible into Common Shares (as is the case with the Preferred Shares), the holder would be entitled to receive no more than the number of preferred shares which, at the then existing conversion rate, would convert into 40,000 Common Shares, (ii) outstanding a convertible note held by Polymer Technology Group, Inc. ("PTG") (the "PTG Convertible Note") in the principal amount of $70,000 which is convertible, at the holder's option, into Common Shares at a price of $1.00 per share and (iii) available for issuance pursuant to options which have been granted under its 1992 Stock Option Plan, 2000 Stock Option Plan and 2001 Stock Option Plan, an aggregate of approximately 9,400,000 Common Shares and outstanding warrants to purchase an aggregate of approximately 12,300,000 Common Shares, (i) the Corporation is not, and at the Closing Date will not be: (i) in breach or violation of any of the terms or provisions of, or in default under, this Agreement, any other Subscription Agreement for the purchase of Units, the Agency Agreement, the Preferred Shares or the Warrants, any indenture, mortgage, deed of trust or loan agreement, (except as disclosed in the Corporation's SEC filings), other agreement (written or oral) or instrument to which it is a party or by which it is bound or to which any of its property or assets is subject, which breach or violation or the consequences thereof would result in a material adverse change to it or its business; or (ii) in violation of the provisions of its articles, by-laws, resolutions or any statute or any other rule or regulation of any court or governmental agency or body having jurisdiction over it or any of its properties which violation or the consequences thereof would result in a material adverse change to it or its business; (j) the issue and sale of the Purchased Units and the issue of Preferred Shares, Short Term Warrants, Two Year Warrants, any Common Shares on the conversion of Preferred Shares or the exercise of Short Term Warrants and Two Year Warrants, and the performance and consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement (written or oral) or instrument to which the Corporation or any subsidiary is bound or to which any of the property or assets of the Corporation or any subsidiary is subject, which breach or violation or the consequences thereof would result in a material adverse change to the Corporation and its business, nor will any such action conflict with or result in any

7 violation of the provisions of the articles, by-laws or resolutions of the Corporation or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Corporation or any subsidiary or any of its properties which violation or the consequences thereof would result in a material adverse change to the Corporation or its business; (k) the Corporation has established on its books reserves which are adequate for the payment of all taxes not yet due and payable; there are no liens or other liabilities for taxes on the assets of the Corporation except for taxes not yet due; there are no audits of any of the tax returns of the Corporation which are known by the Corporation's management to be pending and there are no claims which have been or may be asserted relating to any such tax returns which, if determined adversely, would result in the assertion by any government or agency of any deficiency having a material adverse effect on the properties, business or assets of the Corporation; (l) the Corporation has good and valid title to its properties, leaseholds and assets, including without limitation the properties, leaseholds and assets reflected in the balance sheet as of September 30, 2002 referred to in clause 7 (d) above, except properties, leaseholds and assets disposed of since such date at fair market value in the ordinary course of business, and has good title to all its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance, charge, rights of first refusal or options to purchase, whether or not relating to extensions of credit or the borrowing of money, other than as disclosed in such balance sheet except as incurred in the ordinary course of business since the date of such balance sheet, and except in any event (i) for a security interest in the Corporation's tangible assets to secure payment of the Convertible Note, and (ii) where the failure to hold good title or the existence of a mortgage, pledge, lien, lease, encumbrance, charge, right of first refusal or option to purchase would not have a material adverse effect on the Corporation or its business; there exists no condition which interferes with the economic value or use of such properties and assets and all tangible assets are in good working condition and repair (subject to ordinary wear and tear) except where the existence of any such condition would not have a material adverse effect on the Corporation or its business; (m) the Corporation owns, or has applied for registration of, all patents, trade-marks, service marks, trade names, and copyrights necessary for the conduct of its business, except where the failure to so own or apply for registration would not have a material adverse effect on the Corporation or its business; to the best of the knowledge, information and belief of the Corporation, none of the past or present activities of the Corporation or the products, services or assets of the Corporation infringe or constitute an unauthorized use of any proprietary rights of others, and the Corporation has not received any notice of infringement of, or conflict with, asserted rights of others with respect to any patent, trade-mark, service mark, trade name, or copyright that, individually or in the aggregate, if the subject of an unfavourable decision, ruling, or finding, would result in a material adverse change to the Corporation or its business; (n) the Corporation has taken reasonable measures to protect and preserve the confidentiality of all trade secrets and other non-patented proprietary information of the Corporation,

8 including without limitation the procurement of proprietary invention assignments and non-disclosure and noncompetition agreements from employees, consultants, subcontractors, customers and other persons who have access to such information; (o) the Corporation has filed all necessary federal, state and municipal property, income and franchise tax returns and has paid all taxes shown as due thereon or otherwise owed by it to any taxing authority except those contested in good faith and for which appropriate amounts have been reserved in accordance with generally accepted accounting principles; there is no tax deficiency which has been, or to the best of the knowledge, information and belief of the Corporation might be, asserted against the Corporation which would materially affect the business or operations of the Corporation; the Corporation has paid all applicable federal and state payroll and withholding taxes; (p) there is no collective bargaining or other union agreement to which the Corporation is a party or by which it is bound, or which is currently being negotiated; the Corporation does not sponsor, maintain or contribute to any pension, retirement, profit sharing, incentive compensation, bonus or other employee benefit plan, including without limitation any employee benefit plan covered by Title 4 of the Employee Retirement Income Security Act of 1974 ("ERISA") or any "multi-employer plan" as defined in Section 4001(a)(3) of ERISA, or any other employee benefit plan; to the best of the knowledge, information and belief of the Corporation, (i) no employee of the Corporation is a party to or bound by any agreement, contract or commitment, or subject to any restrictions, particularly but without limitation in connection with any previous employment of any such person, which would result in a material adverse change to the Corporation and its business, and (ii) no senior officer has any present intention of terminating his employment with the Corporation, and the Corporation has no present intention of terminating any such employment; and (q) there is no adverse claim, action, proceeding or investigation pending or, to the knowledge, information and belief of the Corporation, threatened, which questions the validity of the issue or sale of the Units or the issue of any Preferred Shares, Short Term Warrants, Two Year Warrants or any Common Shares on conversion of the Preferred Shares or exercise of the Short Term Warrants, Two Year Warrants or the validity of any action taken or to be taken by the Corporation in connection with this Agreement or the Investor Rights Agreement or which would result in any material adverse change in the financial condition, results of operations, business or prospects of the Corporation. 8. Representations, Warranties and Covenants of the Purchaser The Purchaser hereby represents, warrants and covenants to and with the Agent and the Corporation (which representations, warranties and covenants shall survive the Closing) that: (a) in the case of the subscription by the Purchaser for Units as principal for its own account and not for the benefit of any other person, the Purchaser is purchasing the Purchased Units as principal for its own account, and not for the benefit of any other person or company, and this Subscription Agreement and the Investor Rights Agreement have been

9 authorized, executed and delivered by, and constitute legal, valid and binding agreements of the undersigned; (b) in the case of the subscription by the Purchaser for Units as agent for a disclosed principal, each beneficial purchaser of the Purchased Units for whom the Purchaser is acting is purchasing as principal for its own account and not for the benefit of any other person and the Purchaser is an agent with due and proper authority to execute this Subscription Agreement, the Investor Rights Agreement and all other documentation in connection with the purchase of the Purchased Units on behalf of the beneficial purchaser and this Subscription Agreement and the Investor Rights Agreement have been duly authorized, executed and delivered by or on behalf of, and constitute legal, valid and binding agreements of, the disclosed principal; (c) in the case of the purchase by the Purchaser of Units as trustee or as agent for a principal which is undisclosed or identified by account number only, this Subscription Agreement and the Investor Rights Agreement have been duly authorized, executed and delivered by, and constitute legal, valid and binding agreements of, the undersigned acting in such capacity; (d) if the Purchaser is a corporation, the Purchaser is a valid and subsisting corporation, has the necessary corporate capacity and authority to execute and deliver this Subscription Agreement and the Investor Rights Agreement and to observe and perform its covenants and obligations hereunder and thereunder and has taken all necessary corporate action in respect thereof or, if the Purchaser is a partnership, syndicate or other form of unincorporated organization, the Purchaser has the necessary legal capacity and authority to execute and deliver this Subscription Agreement and the Investor Rights Agreement and to observe and perform its covenants and obligations hereunder and thereunder and has obtained all necessary approval in respect thereof and, in either case, upon execution by the Corporation, this Subscription Agreement and the Investor Rights Agreement constitute legal, valid and binding contracts of the Purchaser enforceable against the Purchaser in accordance with their respective terms; (e) if the Purchaser is an individual, the Purchaser has attained the age of majority and is legally competent to execute this Subscription Agreement and the Investor Rights Agreement and to take all actions required pursuant hereto and thereto; (f) if required by applicable securities legislation, policy or order of a securities regulatory authority or other regulatory authority, the Purchaser will execute, deliver, file and otherwise assist the Corporation in filing such reports and other documents with respect to the issue of the Purchased Units as may be reasonably required; (g) the Purchaser, whether acting as principal, trustee or agent, is neither a U.S. Person (as defined in Rule 902 (o) of Regulation S promulgated under the Securities Act) nor purchasing the Purchased Units for the account of a U.S. Person or for resale in the United States and the Purchaser confirms that the Purchased Units have not been offered to the Purchaser in the United States and that this Subscription Agreement has not been signed by the Purchaser in the United States;

10 (h) the purchase of the Purchased Units by the Purchaser does not contravene any of the applicable securities legislation in the jurisdiction in which the Purchaser is resident and does not trigger (i) any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase, and (ii) any registration or other obligation on the part of the Corporation or the Agent; (i) the Purchaser has had access to the Corporation's public filings with the Securities and Exchange Commission and has had an opportunity to ask questions of the Corporation's management; (j) the Purchaser is capable of assessing the proposed investment as a result of the Purchaser's financial or investment experience or as a result of advice received from a registered person other than the Corporation or an affiliate thereof, and is able to bear the economic loss of its investment. The Purchaser recognizes that its purchase of Purchased Units involves a high degree of risk in that: (i) the Corporation has incurred losses since inception; at September 30, 2002, the Corporation had an accumulated deficit of approximately $38,217,000; and the Corporation requires substantial funds in addition to the proceeds of this Offering to continue its plan of operations; (ii) an investment in the Corporation is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Corporation and the Purchased Units; (iii) the Purchaser may not be able to liquidate the Purchaser's investment; and (iv) transferability of the securities comprising the Purchased Units is extremely limited. Furthermore, the proceeds of this Offering are projected to last only a limited period of time. The Purchaser has read the Risk Factors section of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2001; (k) the address of the Purchaser (or others for whom the Purchaser is contracting hereunder) furnished by the Purchaser on the Purchaser's signature page of this Subscription Agreement is such person's principal residence if such person is an individual or its principal business address if it is a corporation or other entity; and (l) the Purchaser (or others for whom the Purchaser is contracting hereunder) agrees that it will not disclose the terms of the Offering or any information it may have acquired from the Corporation in the course of executing this Subscription Agreement which the Corporation has identified as material non-public information, except to the extent (i) that such terms or other information becomes generally available to the public other than by disclosure in violation of this Subscription Agreement, (ii) that such information was properly within the Purchaser's possession prior to being furnished by the Corporation, (iii) that such information becomes available to the Purchaser on a non-confidential basis, such as through disclosure by third parties who have the right to disclose the information, and (iv) compelled by judicial process, provided that in the event of compulsion by judicial process the Purchaser will inform the Corporation promptly upon its receipt of notice of judicial process compelling such disclosure.

11 9. Reliance Upon Representations, Warranties and Covenants The Purchaser acknowledges that the representations and warranties and covenants contained in this Subscription Agreement are made with the intent that they may be relied upon by the Agent and by the Corporation to, among other things, determine the Purchaser's eligibility or (if applicable) the eligibility of others on whose behalf it is contracting hereunder to subscribe for the Purchased Units. The Purchaser further agrees that by accepting the Purchased Units, the Purchaser shall be representing and warranting that the foregoing representations and warranties are true as at the Closing Time with the same force and effect as if they had been made by the Purchaser at the Closing Time and that they shall survive the purchase by the Purchaser of the Purchased Units and shall continue in full force and effect notwithstanding any subsequent disposition by it of any Preferred Shares, Short Term Warrants or Two Year Warrants comprising the Purchased Units. 10. Agent's Commission, Fees and Expenses The Purchaser understands that on the Closing Date, the Agent will receive from the Corporation a commission equal to 10% of the gross proceeds raised by the Agent (payable at the election of the Agent in cash or Units (at the issue price thereof) or a combination thereof) and broker warrants (the "Broker Warrants") to acquire that number of Common Shares equal to 10% of the number of Purchased Units issued in respect of proceeds raised by the Agent, as more particularly described and subject to the exclusions contained in the Agency Agreement. No other fee or commission is payable by the Corporation in connection with the sale of the Purchased Units. However, the Corporation will also pay on the Closing Date those expenses of the Agent in connection with the Offering as are set out in the Agency Agreement, including reasonable legal fees and expenses of the Agent's counsel as stipulated in the Agency Agreement. 11. Costs The Purchaser acknowledges and agrees that all costs and expenses incurred by the Purchaser (including any fees and disbursements of any counsel retained by the Purchaser) relating to the sale of the Purchased Units shall be borne by the Purchaser. 12. Appointment of Agent The Purchaser, on its own behalf and (if applicable) on behalf of others for whom the Purchaser is contracting hereunder, hereby: (a) irrevocably authorizes the Agent to negotiate and settle the form of any agreement to be entered into in connection with this transaction and to waive on its own behalf and on behalf of the purchasers of Units in whole or in part, or extend the time for compliance with, any of the closing conditions in such manner and on such terms and conditions as the Agent may determine, acting reasonably, without in any way affecting materially the Purchaser's obligations or the obligations of such others hereunder; and

12 (b) acknowledges and agrees that the Agent and the Corporation may vary, amend, alter or waive, in whole or in part, one or more of the conditions set forth in the Agency Agreement in such manner and on such terms and conditions as they may determine, acting reasonably, without affecting in any way the Purchaser's or such others' obligations hereunder. 13. Governing Law This Subscription Agreement shall be governed by the laws of the State of New York without reference to its rules as to conflicts of laws. 14. Survival This Subscription Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the Purchaser for a period of two years following the completion of the Offering of Units by the Corporation, notwithstanding the completion of the subscription for the Purchased Units by the Purchaser pursuant hereto, and any subsequent disposition by the Purchaser of any Preferred Shares, Short Term Warrants or Two Year Warrants comprising the Purchased Units. 15. Assignment This Subscription Agreement is not transferable or assignable by the parties hereto. 16. Counterparts This Agreement may be exercised in counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same document. The Corporation and the Agent shall be entitled to rely upon delivery by facsimile of an executed copy of this Subscription Agreement and acceptance by the Corporation of such facsimile copies will be legally effective to create a valid and binding agreement between the Purchaser and the Corporation in accordance with the terms hereof.

13 17. Subscription Particulars The aggregate number of Units subscribed for is . The Preferred Shares, Short Term Warrants and Two Year Warrants are to be registered in the name of: (if space is insufficient, attach a list) The certificates representing the Preferred Shares, Short Term Warrants and Two Year Warrants are to be delivered to:

at its office at:

Contact Name and Number: If the Purchaser is signing as agent for a principal and not as agent for a fully managed account, the name and address of the beneficial purchaser is:

(if space is insufficient, attach a list) DATED at this day of , 2003. Name of Purchaser (please type or print) By: (Signature of Authorized Representative) (Name of Person Signing) Office or Title

Address of Purchaser

ACCEPTANCE This Subscription Agreement is hereby accepted and agreed to by Life Medical Sciences, Inc. DATED at the day of , 2003. LIFE MEDICAL SCIENCES, INC. By: Authorized Signing Officer

Appendix I CERTIFICATE OF DESIGNATIONS, RIGHTS AND PREFERENCES OF SERIES C CONVERTIBLE PREFERRED STOCK OF LIFE MEDICAL SCIENCES, INC. Life Medical Sciences, Inc., a Delaware corporation (the "Corporation"), certifies that pursuant to the authority contained in Article FOURTH of its Restated Certificate of Incorporation, as amended, and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, its Board of Directors (the "Board of Directors") has adopted the following resolutions creating a series of the Corporation's Preferred Stock, par value $.01 per share, designated as the Series C Convertible Preferred Stock: RESOLVED, that a series of the class of authorized Preferred Stock, par value $.01 per share, of the Corporation be and hereby is created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof are as follows: 1. Title of Series. The series of the Preferred Stock shall be designated as the Series C Convertible Preferred Stock (the "Series C Preferred"). 2. Number of Shares in Series; Par Value. The number of authorized shares of Series C Preferred shall be [not more than 605,000] shares, par value $.01 per share. 3. Dividends. Subject to Section 6(d)(vii) hereof, the holders of the Series C Preferred shall be entitled to receive dividends only when, as, and if declared by the Board of Directors. 4. Liquidation Preference. (a) Preference. In the event of any liquidation, dissolution or winding up of the Corporation (a "Liquidation Event"), whether voluntary or involuntary, the holders of the Series C Preferred shall be entitled to receive prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of Common Stock of the Corporation, and after any distribution of any assets or surplus funds of the Corporation representing preferential amounts to the holders of shares of other series of preferred stock ranking senior to the Series C Preferred as to payment upon the occurrence of a Liquidation Event ("Senior Securities"), and pari passu with shares of Series B Convertible Preferred Stock,

-2$.01 par value per share (the "Series B Preferred"), and other series of preferred stock ranking on a parity with the Series C Preferred as to payment upon the occurrence of a Liquidation Event (on the basis of the relative liquidation amounts for each such series), an amount equal to $1.20 per share plus a further amount equal to all declared but unpaid dividends on such shares for each share of Series C Preferred then held by them. All of the preferential amounts to be paid to the holders of the Series C Preferred under this Section 4 shall be paid before the payment or setting apart for payment of any amount for, or the distribution of any assets or funds of the Corporation to, the holders of the Common Stock or other series of preferred stock ranking junior to the Series C Preferred as to payment in connection with such Liquidation Event. (b) Insufficient Assets. If upon such Liquidation Event the assets and funds of the Corporation are insufficient to provide for the payment of the full aforesaid preferential amount to the holders of the Series B Preferred, Series C Preferred and all other shares of other series of preferred stock on parity therewith as to payment upon the occurrence of a Liquidation Event, then, subject to distribution or setting aside for distribution of assets or funds for the payment of preferential amounts in respect of Senior Securities, the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among such holders in proportion to the full preferential amount each such holder is otherwise entitled to receive. (c) No Participation. After the payment or the setting apart of payment of the full preferential amounts to the holders of the Series C Preferred, holders of Series C Preferred shall have no claim to the remaining assets and funds of the Corporation. (d) Deemed Liquidation. For purposes of this Section 4, unless waived by the holders of not less than two-thirds of the outstanding shares of Series C Preferred and other series of preferred stock ranking on a parity with the Series C Preferred as to payment upon the occurrence of a Liquidation Event, (i) any acquisition of the Corporation by means of merger or other form of corporate reorganization in which outstanding shares of the Corporation are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary (other than a mere reincorporation transaction), unless the Corporation's stockholders of record immediately prior to such acquisition (by virtue of securities issued as consideration for the Corporation's acquisition) hold at least 50% of the voting power of the surviving or acquiring entity or (ii) a sale of all or substantially all of the assets of the Corporation, shall be treated as a Liquidation Event and shall entitle the holders of Series C Preferred to receive at the closing of such merger, reorganization or sale, in cash, securities or other properties (valued as provided in subsection 4(e) below), amounts as specified in subsections (a), (b) and (c) above; provided, however, that the Acquisition (as such term is defined in the Subscription Agreement of approximate date herewith between the Corporation and the purchasers of Series C Preferred (the "Subscription Agreement")) shall not be a Liquidation Event; (e) Noncash Distributions. If any of the assets or funds of the Corporation are to be distributed other than in cash under this Section 4 or for any purpose, then the Board of Directors shall promptly engage an independent appraiser to determine the value of the assets to be distributed to the holders of the Series C Preferred. The Corporation shall, upon receipt of such appraiser's valuation, give prompt written notice to each holder of shares of the Series C

-3Preferred of the appraiser's valuation. Notwithstanding the above, any securities to be distributed to the stockholders shall be valued as follows: (i) if traded on a securities exchange or interdealer quotation system, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the 30-day period ending three (3) business days prior to the closing; (ii) if actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the 30-day period ending three (3) business days prior to the closing; and (iii) if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board of Directors of the Corporation. 5. Voting Rights. (a) General. Except as set forth herein or as otherwise required by law, a holder of Series C Preferred shall be entitled to that number of votes per share of Series C Preferred equal to the number of shares of the Corporation's common stock (the "Common Stock") into which such share of Series C Preferred would be converted if the conversion took place on the record date for determination of the stockholders entitled to vote on such matters or, if no such record date is established, on the date such vote is taken or any written consent of stockholders is solicited (irrespective of whether the Series C Preferred is then in fact, convertible, or whether there then exists sufficient authorized and unissued shares of Common Stock to permit such conversion), such votes to be counted together with all other shares of stock of the Corporation having general voting power and not counted separately as a class. Except as otherwise provided in this Certificate of Incorporation or as required by applicable law, the holders of shares of Series C Preferred shall have full voting rights and powers equal to the voting rights and powers of the holders of shares of Common Stock, and shall be entitled to notice of any stockholders' meeting in accordance with the Bylaws of the Corporation and applicable law, and shall vote, together with the holders of shares of Common Stock (and any other class or series of stock entitled to vote together as one class with the Common Stock), with respect to any question upon which holders of shares of Common Stock have the right to vote, as a single class, including, but not limited to, actions amending the Certificate of Incorporation of the Corporation to increase the number of authorized shares of Common Stock. 6. Conversion. The Series C Preferred shall be subject to conversion as follows (the "Conversion Rights"): (a) Automatic Conversion. Upon the occurrence of the first anniversary of the Original Issue Date (as defined in Section 6(d)(i)(2) below) each share of Series C Preferred shall automatically convert into such number of fully paid and nonassessable shares of Common Stock (the "Conversion Rate") as is determined by dividing $1.20 by the Series C Conversion Price, as hereinafter provided, in effect at the time of the conversion. The price at which shares of Common Stock shall be deliverable upon conversion of the Series C Preferred (the "Series C Conversion Price") shall initially be $0.12 per share. Such initial Series C Conversion Price shall be subject to adjustment as hereinafter provided.

-4(b) Mechanics of Conversion. No fractional shares of Common Stock shall be issued upon conversion of Series C Preferred, provided that whether or not fractional shares result from a conversion shall be determined on the basis of the total number of shares of Series C Preferred the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall round the number of shares of Common Stock issuable to such holder to the nearest whole number. Before any holder of Series C Preferred shall be entitled to receive a certificate representing shares of Common Stock upon conversion, such holder shall surrender the certificate or certificates representing the related shares of Series C Preferred, duly endorsed, at the office of the Corporation or of any transfer agent for the Series C Preferred and shall give written notice to the Corporation stating the name or names in which the certificate or certificates for shares of Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series C Preferred or its nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. If the conversion is in connection with an underwritten offering of securities pursuant to the Securities Act, the conversion may, at the option of any holder tendering shares of Series C Preferred for conversion, be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the holder entitled to receive the Common Stock upon conversion of the Series C Preferred shall not be deemed to have converted such Series C Preferred until immediately prior to the closing of such sale of securities. (c) Reservation of Stock Issuable Upon Conversion. The Corporation shall use its best efforts at all times to reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series C Preferred, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series C Preferred; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then-outstanding shares of the Series C Preferred, in addition to such other remedies as shall be available to the holders of Series C Preferred, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. (d) Adjustments to Conversion Price. (i) Special Definitions. The following definitions shall apply to this Certificate of Designations: (1) "Options" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock, Series A Convertible Preferred Stock, $.01 par value of the Corporation ("Series A Preferred"), Series B Preferred, Series C Preferred or Convertible Securities. (2) "Original Issue Date" means the first date on which Series C Preferred was issued.

-5(3) "Convertible Securities" shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock. (4) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to subsection 6(d)(iii), deemed to be issued) by the Corporation after the Original Issue Date, other than (A) shares of Common Stock issued or issuable upon conversion of the Series A Preferred, Series B Preferred or Series C Preferred; (B) shares of Common Stock issued or issuable as a dividend or distribution on Series A Preferred, Series B Preferred, Series C Preferred or any event for which adjustment is made pursuant to subsection 6(d)(vi) or 6(d) (vii) hereof; (C) shares of Common Stock issued or issuable pursuant to the valid exercise of all Options and Convertible Securities (including the Warrants, as defined in the Subscription Agreement) which are either currently outstanding or are to be issued upon closing of the Offering, as well as Options to purchase not more than an additional aggregate of 1,000,000 shares of common stock which may from time to time be granted by the Corporation; and (D) shares of Common Stock (or other securities) issued in the Acquisition, or upon conversion or exercise of securities issued in the Acquisition. (ii) No Adjustment of Conversion Price. No adjustment of the Series C Conversion Price shall be made in an amount less than one cent per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be taken into account in any subsequent adjustment to the Series C Conversion Price. (iii) Deemed Issue of Additional Shares of Common Stock. In the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number that would result in an adjustment pursuant to clause (2) below) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued: (1) no further adjustment in the Series C Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities, or upon the receipt of payment for any such conversion or exchange;

-6(2) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Corporation, or increase or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Series C Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; (3) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Series C Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if: (A) in the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities whether or not converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange, and (B) in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation upon the issue of the Convertible Securities with respect to which such Options were actually exercised; (4) no readjustment pursuant to clause (2) or (3) above shall have the effect of increasing the Series C Conversion Price to an amount which exceeds the lower of (A) the Series C Conversion Price on the original adjustment date, or (B) the Series C Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date. (iv) Adjustment of Series C Conversion Price of Series C Preferred Upon Issuance of Additional Shares of Common Stock. In the event that after the Original Issue Date the Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to subsection 6(d) (iii)) without consideration or for a consideration per share less than the Series C Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, such Series C Conversion Price shall be reduced, concurrently with such issue, to a price (subject to Section 6(d)(ii), calculated to the nearest cent) determined by multiplying such Series C Conversion Price by a

-7fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received or deemed received by the Corporation for the total number of Additional Shares of Common Stock so issued or deemed issued would purchase at such Series C Conversion Price; and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common Stock so issued or deemed issued; and provided further that, for the purposes of this subsection (iv), all shares of Common Stock issuable upon conversion of outstanding Series C Preferred and outstanding Convertible Securities or exercise of outstanding Options shall be deemed to be outstanding (whether or not conversion or exercise is then permitted), and immediately after any Additional Shares of Common Stock are deemed issued pursuant to subsection 6(d)(iii), such Additional Shares of Common Stock shall be deemed to be outstanding. (v) Determination of Consideration. For purposes of this Section 6(d), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows: (1) Cash and Property: Except as provided in clause (2) below, such consideration shall: (A) insofar as it consists of cash, be computed as the aggregate amount of cash received by the Corporation, before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof, and excluding amounts paid or payable for accrued interest or accrued dividends; (B) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors; provided, however, that no value shall be attributed to any services performed by any employee, officer or director of the Corporation; and (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received with respect to such Additional Shares of Common Stock, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors. (2) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 6(d)(iii), relating to Options and Convertible Securities, shall initially be determined by dividing: (A) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such

-8consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities by (B) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (vi) Adjustments for Stock Dividends, Subdivisions, Combinations or Consolidations of Common Stock. In the event the outstanding shares of Common Stock shall be subdivided (by stock dividend, stock split, or otherwise), into a greater number of shares of Common Stock, the Series C Conversion Price then in effect shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Series C Conversion Price then in effect shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased. (vii) Adjustments for Other Distributions. In the event the Corporation at any time or from time to time makes, or fixes a record date for the determination of holders of Common Stock entitled to receive, any distribution (other than a distribution described in Section 6(d)(vi)), including a distribution in cash, the holders of Series C Preferred shall be entitled to a proportionate share of any such distribution as though their shares of Series C Preferred were converted into Common Stock on the record date fixed for the determination of holders of shares of Common Stock entitled to receive such distribution. (viii) Adjustments for Reclassification, Exchange and Substitution. If the Common Stock issuable upon conversion of the Series C Preferred shall be changed into the same or a different number of shares of any other class or classes of stock or other securities or property of the Corporation, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for in Section 6(d)(vi), or a transaction that would constitute a deemed liquidation of the Corporation under Section 4(d)), then and in each such event provision shall be made so that each holder of shares of Series C Preferred shall thereafter be entitled to receive, upon conversion of the Series C Preferred, the number of shares of stock or other securities or property of the Corporation or otherwise, receivable upon such reorganization, reclassification or other transaction by a holder of the number of shares of Common Stock into which such shares of Series C Preferred would have been converted if converted immediately prior to such reorganization, reclassification or other transaction. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 6 with respect to the rights of the holders of shares of Series C Preferred after the reorganization, reclassification or other transaction to the end that the provisions of this Section 6 (including adjustments of the Conversion Price then in effect and the number of shares purchasable upon conversion of the Series C Preferred) shall be applicable after that event as nearly equivalent as may be practicable.

-9(ix) No Impairment. Without the prior written consent of the holders of a majority of the Series C Preferred, the Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation but will at all times in good faith assist in the carrying out of all the provisions of Section 6 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of the Series C Preferred against impairment. (x) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Series C Conversion Price pursuant to Section 6, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series C Preferred a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Series C Preferred, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustments and readjustments, (B) the Series C Conversion Price at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of Series C Preferred. 3. Redemption. The Series C Preferred are not redeemable by the Corporation, nor may the holders of Series C Preferred require the Corporation to redeem such shares. 4. Notices of Record Date. In the event that the Corporation shall propose at any time: (a) to declare any dividend or distribution upon its Common Stock, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus; (b) to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) to effect any reclassification or recapitalization of its Common Stock outstanding involving a change in the Common Stock; or (d) to merge or consolidate with or into any other corporation, or sell, lease or convey all or substantially all its property or business, or to liquidate, dissolve or wind up, then, in connection with each such event, unless waived in writing by the holders of a majority of the outstanding shares of Series C Preferred, the Corporation shall send to the holders of the Series C Preferred: (i) at least 20 days' prior written notice of the date on which a record shall be taken for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of the matters referred to in (c) and (d) above; and

- 10 (ii) in the case of the matters referred to in (c) and (d) above, at least 20 days' prior written notice of the date when the same shall take place (and specifying the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon the occurrence of such event) provided, that no such notice shall be required in connection with the Acquisition (as defined in the Subscription Agreement); provided, further, that notice shall be provided in the same manner as any notice actually provided to the holders of Common Stock in connection with the Acquisition. Each such written notice shall be delivered personally or given by first class mail, postage prepaid, addressed to the holders of the Series C Preferred at the address for each such holder as shown on the books of this Corporation. 5. Protective Provisions. In addition to any other rights provided by law, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of at least a majority of the outstanding shares of Series C Preferred, voting together as a single class, amend or repeal any provision of the Corporation's Certificate of Incorporation or Bylaws in such a manner as to adversely affect the rights of the holders of Series C Preferred. IN WITNESS WHEREOF, said Corporation has caused this Certificate to be signed by Robert Hickey, the Chairman, President and Chief Executive Officer of the Corporation. The signature below shall constitute the affirmation or acknowledgement, under penalties of perjury, that the facts herein stated are true.
Dated: , 2003 LIFE MEDICAL SCIENCES, INC. ---------------------

-------------------------------------------By: Robert Hickey Chairman, President and Chief Executive Officer

Appendix III Warrant No: THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), STATE SECURITIES LAWS IN THE UNITED STATES OR THE SECURITIES LAW OF ANY OTHER COUNTRY AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (A) SUCH TRANSACTION OCCURS OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE ACT (OR SUCH SUCCESSOR RULE OR REGULATION THEN IN EFFECT), IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, (B) THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE REGISTERED UNDER THE ACT OR (C) SUCH TRANSACTION CONSTITUTES A TRANSACTION THAT OTHERWISE DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER PRIOR TO SUCH TRANSACTION HAS FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THAT EFFECT REASONABLY SATISFACTORY TO THE CORPORATION, SUBJECT IN EACH CASE TO ANY APPLICABLE UNITED STATES FEDERAL OR STATE OR FOREIGN SECURITIES LAW RESTRICTIONS APPLICABLE TO THE RESALE OF THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON AND NO SECURITIES MAY BE DELIVERED IN THE UNITED STATES UPON EXERCISE OF THIS WARRANT UNLESS THE EXERCISE IS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. ANY PERSON EXERCISING THIS WARRANT WILL BE REQUIRED TO PROVIDE (1) WRITTEN CERTIFICATION THAT IT IS NOT A U.S. PERSON WITHIN THE MEANING OF REGULATION S OF THE ACT AND THAT THIS WARRANT IS NOT BEING EXERCISED WITHIN THE UNITED STATES OR ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON OR A PERSON IN THE UNITED STATES, OR (2) A WRITTEN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THE EFFECT THAT THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE ACT AND UNDER ANY APPLICABLE U.S. STATE SECURITIES LAWS OR ARE EXEMPT FROM REGISTRATION THEREUNDER. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. WARRANT TO PURCHASE COMMON STOCK _________ Shares of Common Stock LIFE MEDICAL SCIENCES, INC. THIS CERTIFIES THAT, for good and valuable consideration, the receipt of which is hereby acknowledged, (the "Warrantholder") with an address at ____________________________________, is the registered holder of this Warrant and is entitled to subscribe for and purchase from Life Medical Sciences, Inc., a Delaware corporation (herein called the "Corporation"), at any time after the date hereof and before the later of 5:00 p.m. (Eastern Standard Time) on , 2005 referred to hereafter as the "Time of Expiry"), up to fully paid and nonassessable shares of Common Stock, par value

2 $.001 per share (the "Shares"), of the Corporation at an exercise price of $0.12 per Share, subject to adjustment as provided below (collectively the "Exercise Price"). This Warrant is subject to the provisions of the Investor Rights Agreement dated , 2003 among the Corporation and certain Warrantholders, as well as to a subscription agreement entered into with the original warrantholder in connection with the offering referred to in Section 1 below (the "Subscription Agreement"), and the following provisions, terms and conditions: 1. Designation This warrant certificate is one of a series of warrant certificates (collectively, the "Warrants") issued pursuant to an offering by the Corporation of up to 605,000 units, each unit consisting of one share of Series C Convertible Preferred Stock, $.01 par value per share, of the Corporation, one Warrant to purchase ten (10) Shares and one short term Warrant scheduled to expire June 30, 2003 to purchase ten (10) Shares at an exercise price of $0.12 per Share. 2. Exercise of Warrants (a) Election to Purchase. This Warrant may be exercised by the Warrantholder prior to the Time of Expiry in whole or in part and in accordance with the provisions hereof by delivery of an Election to Purchase in a form substantially the same as that attached hereto as Annex "A", properly completed and executed, together with this Warrant and payment of the Exercise Price multiplied by the number of Shares specified in the Election to Purchase to the Corporation at P.O. Box 219, Little Silver, New Jersey 07739, U.S.A., Attention: Robert P. Hickey, or such other address as may be notified in writing by the Corporation. Payment shall be made in U.S. dollars by certified or bank cashier's cheque payable to the order of the Corporation. (b) Exercise. The Corporation shall, promptly following the date it receives a duly executed Election to Purchase, this Warrant and payment of the Exercise Price for the number of Shares specified in the Election to Purchase (the "Exercise Date"), issue or cause to be issued that number of Shares specified in the Election to Purchase as fully paid and non-assessable Shares. Such duly executed Election to Purchase shall constitute the Warrantholder's acknowledgement of and undertaking to comply to the reasonable satisfaction of the Corporation and its counsel, with all applicable laws, rules, regulations and policies of every stock exchange upon which the Shares of the Corporation may from time to time be listed or traded, and any other applicable governmental or regulatory authorities. (c) Share Certificates. As promptly as practicable after the Exercise Date (and in any event not later than 10 days after the Exercise Date), the Corporation shall send to the Warrantholder, registered in such name or names as the Warrantholder may direct or if no such direction has been given, in the name of the Warrantholder, a certificate or certificates for the number of Shares specified in the Election to Purchase. To the extent permitted by law, such exercise shall be deemed to have been effected as of the close of business on

3 the Exercise Date, and at such time the rights of the Warrantholder with respect to the number of the Warrants which have been exercised as such shall cease, and the person or persons in whose name or names any certificate or certificates for Shares shall then be issuable upon such exercise shall be deemed to have become the holder or holders of record of the Shares represented thereby. (d) Fractional Shares. No fractional Shares shall be issued upon exercise of this Warrant and no payments or adjustment shall be made upon any exercise on account of any cash dividends on the Shares issued upon such exercise. If any fractional interest in a Share would, except for the provisions of the first sentence of this subsection 2(d), be deliverable upon the exercise of this Warrant, the number of Shares to be issued to the Warrantholder upon the exercise of this Warrant shall be rounded to the nearest whole number. (e) Subscription for Less than Entitlement. The Warrantholder may from time to time subscribe for and purchase a number of Shares less than the aggregate number which the holder is entitled to purchase pursuant to this Warrant. In the event of a purchase of a number of Shares less than the aggregate number which may be purchased pursuant to this Warrant, the holder thereof shall be entitled to receive, without charge, a new Warrant certificate in respect of the balance of the Shares subject to this Warrant which were not purchased by the Warrantholder. (f) Corporate Changes. If the Corporation shall be a party to any reorganization, merger, dissolution or sale of all or substantially all of its assets (the "Event"), (other than a reorganization or merger in which the Corporation is the surviving entity) then the securities purchasable hereunder shall be the securities (the "Event Securities") which the Warrantholder would have received or been entitled to receive in such Event if such Warrantholder had fully exercised this Warrant prior to the record date (or if there was no record date, then prior to the effective date) of such Event, and the Exercise Price shall be adjusted to be the amount determined by multiplying the Exercise Price in effect immediately prior to the Event by the number of Shares as to which this Warrant was unexercised immediately prior to the Event, and dividing the product thereof by the number of Event Securities; provided however, that the Event shall not be carried into effect unless all necessary steps have been taken to ensure that any surviving entity is subject to the terms of this Warrant as adjusted. Notwithstanding anything to the contrary contained in the immediately preceding paragraph, in the event of a transaction contemplated by such paragraph in which the surviving or purchasing corporation demands that all outstanding Warrants be extinguished prior to the closing date of the contemplated transaction, the Corporation shall give prior notice (the "Merger Notice") thereof to the Holders advising them of such transaction. The Holders shall have ten days after the date of the Merger Notice to elect to (i) exercise the Warrants in the manner provided herein, or (ii) receive from the surviving or purchasing corporation the same consideration receivable by a holder of the number of shares of Common Stock for which this Warrant might have been

4 exercised immediately prior to such consolidation, merger, sale, or purchase reduced by such amount of the consideration as has a market value equal to the Exercise Price, as determined by the board of directors of the Corporation in accordance with the terms of the Warrants. If any Holder fails to timely notify the Corporation of its election, the Holder shall be deemed for all purposes to have elected the option set forth in (ii) above. Any amounts receivable by a Holder who has elected the option set forth in (ii) above shall be payable at the same time as amounts payable to stockholders in connection with any such transaction. (g) Subdivision or Consolidation of Shares (i) In the event the Corporation shall subdivide its outstanding Shares into a greater number of Shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in the event the outstanding Shares of the Corporation shall be consolidated into a smaller number of Shares, the Exercise Price in effect immediately prior to such consolidation shall be proportionately increased. (ii) Upon each adjustment of the Exercise Price as provided herein, the Warrantholder shall thereafter be entitled to acquire, at the Exercise Price resulting from such adjustment, the number of Shares (calculated to the nearest tenth of a Share) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Shares which may be acquired hereunder immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. (h) Change or Reclassification of Shares. In the event the Corporation shall change or reclassify its outstanding Shares into a different class of securities, this Warrant shall be adjusted as follows so as to apply to the successor class of securities: (i) the number and kind of the successor class of securities which the Warrantholder shall be entitled to acquire shall be the aggregate number and kind of securities which, if this Warrant had been exercised immediately prior to such change or reclassification, the Warrantholder would have been entitled to receive by reason of such change or reclassification; and (ii) the Exercise Price shall be determined by multiplying the Exercise Price in effect immediately prior to the change or reclassification by the number of Shares as to which this Warrant was unexercised immediately prior to the change or reclassification, and dividing the product thereof by the number of the successor class of securities determined in paragraph 2(h)(i) hereof. (i) Distribution to Shareholders. If and whenever at any time prior to the Time of Expiry the Corporation shall fix a record date or if a date is otherwise

5 established (any such date being hereinafter referred to in this subsection 2(i) as the "record date") for the issuance of rights, options or warrants to all or substantially all the holders of the outstanding Shares of the Corporation entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Shares of the Corporation or securities convertible into or exchangeable for Shares at a price per share or, as the case may be, having a conversion or exchange price per share less than 95% of the Fair Market Value (as hereinafter defined) on such record date, the Exercise Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Exercise Price in effect on such record date by a fraction, of which the numerator shall be the total number of Shares outstanding on such record date plus a number equal to the number arrived at by dividing the aggregate price of the total number of additional Shares offered for subscription or purchase or, as the case may be, the aggregate conversion or exchange price of the convertible or exchangeable securities so offered by the Fair Market Value, and of which the denominator shall be the total number of Shares outstanding on such record date plus the total number of additional Shares so offered (or into which the convertible or exchangeable securities so offered are convertible or exchangeable); Shares owned by or held for the account of the Corporation or any subsidiary of the Corporation shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that any rights or warrants are not so issued or any such rights or warrants are not exercised prior to the expiration thereof, the Exercise Price shall then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or to the Exercise Price which would then be in effect based upon the number of Shares or conversion or exchange rights contained in convertible or exchangeable securities actually issued upon the exercise of such rights or warrants, as the case may be. (j) Additional Subscriptions. If at any time the Corporation grants to its shareholders the right to subscribe for and purchase pro rata additional securities of the Corporation (other than securities described in subsection (2)(i) hereof) or of any other corporation or entity, there shall be no adjustments made to the number of Shares or other securities subject to this Warrant or to the Exercise Price in consequence thereof and this Warrant shall remain unaffected. (k) Carry Over of Adjustments. No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than 1% of the Exercise Price in effect immediately prior to the event giving rise to the adjustment, provided however, that in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to at least 1% of the Exercise Price in effect prior to such adjustment. (l) Notice of Adjustment. Upon any adjustment of the number of Shares and upon any adjustment of the Exercise Price, then and in each such case the Corporation shall give written notice thereof to the Warrantholder, which

6 notice shall state the Exercise Price and the number of Shares or other securities into which each Warrant is exercisable resulting from such adjustment, and shall set forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the request of a Warrantholder there shall be transmitted promptly to all Warrantholders a statement prepared by the firm of independent certified public accountants retained to audit the financial statements of the Corporation to the effect that such firm concurs in the Corporation's calculation of the change. (m) Other Notices. If at any time: (i) the Corporation shall declare any dividend upon its Shares; (ii) the Corporation shall offer for subscription pro rata to the holders of its Shares any additional shares of any class or other rights; (iii) there shall be any capital reorganization or reclassification of the capital stock of the Corporation, or consolidation, amalgamation or merger of the Corporation with, or sale of all or substantially all of its assets to, another corporation (other than the Acquisition as defined in the Subscription Agreement); or (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Corporation, then, in any one or more of such cases, the Corporation shall give to the Warrantholder (A) at least 20 days' prior written notice of the date on which a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, amalgamation, sale, dissolution, liquidation or winding-up and (B) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, at least 20 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause shall also specify (A) in the case of any such dividend, distribution or subscription rights, the date on which the holders of Shares shall be entitled thereto, and (B) in the case of any transaction described in the foregoing clauses (iii) and (iv), the date on which the holders of Shares are to be entitled to exchange their Shares for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, amalgamation, sale, dissolution, liquidation or winding-up, as the case may be. (n) Shares to be Reserved. The Corporation will at all times keep available and reserve out of its authorized Shares, solely for the purpose of issue upon the exercise of this Warrant, such number of Shares as shall then be issuable upon the exercise of these Warrants. The Corporation covenants and agrees that all Shares which shall be so issuable will, upon issuance, be duly authorized and issued, fully paid and non-assessable. The Corporation will take all such action as may be necessary to assure that all such Shares may be so issued

7 without violation of any applicable requirements of any stock exchange upon which the Shares of the Corporation may be listed or in respect of which the Shares are qualified for unlisted trading privileges. The Corporation will take all such action as is within its power to assure that all such Shares may be so issued without violation of any applicable law. (o) Issue Tax. The issuance of certificates for Shares upon the exercise of these Warrants shall be made without charge to the Warrantholder for any issuance tax in respect thereto, provided that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Warrantholder. (p) Fair Market Value. For the purposes of any computation hereunder, unless otherwise specified, the "Fair Market Value" at any date shall be: (i) if the Shares are listed on a stock exchange or quoted on a similar securities market, the weighted average sale price per share for the Shares for any 20 consecutive trading days (selected by the Corporation) commencing not more than 25 trading days before such date on the principal stock exchange or similar securities market upon which the Shares are listed or quoted, as the case may be; or (ii) if the computation is being made in connection with a public offering of Shares, the gross distribution price per Share under the offering; or (iii) in all other cases, the Fair Market Value shall be determined by the Board of Directors in good faith, which determination shall be conclusive. The weighted average sale price shall be determined by dividing the aggregate sale price of all Shares sold on the said exchange or market during the said 20 consecutive trading days by the total number of Shares so sold. (q) The Shares issued upon exercise of the Warrants shall be subject to a stop transfer order and the certificate or certificates evidencing such Shares shall bear the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), STATE SECURITIES LAWS IN THE UNITED STATES OR THE SECURITIES LAWS OF ANY OTHER COUNTRY, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (A) SUCH TRANSACTION OCCURS OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE ACT (OR SUCH SUCCESSOR RULE OR REGULATION THEN IN EFFECT), IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, (B) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE REGISTERED UNDER THE ACT OR (C) SUCH TRANSACTION CONSTITUTES A TRANSACTION THAT OTHERWISE DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER PRIOR TO SUCH TRANSACTION HAS FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THAT EFFECT REASONABLY SATISFACTORY TO THE CORPORATION, SUBJECT IN EACH CASE TO ANY APPLICABLE UNITED STATES FEDERAL, STATE OR FOREIGN SECURITIES LAW RESTRICTIONS APPLICABLE TO THE RESALE OF THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT.

8 3. Transfer Subject to compliance by the Warrantholder with any applicable resale restrictions, the Corporation acknowledges and agrees that this Warrant may be assigned or transferred by the Warrantholder at the Warrantholder's option. It is the sole responsibility of the Warrantholder to ensure that all such restrictions have been observed. Upon any permitted assignment or transfer, the Warrantholder shall furnish the Corporation with such information regarding the transferee as the Corporation may reasonably require to register this Warrant in the name of the transferee. The Corporation shall be obliged to refuse to register any proposed transfer of this Warrant or underlying Shares unless made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an exemption from registration. 4. Replacement Upon receipt of evidence satisfactory to the Corporation of the loss, theft, destruction or mutilation of this Warrant and, if requested by the Corporation, upon delivery of a bond of indemnity satisfactory to the Corporation (or, in the case of mutilation, upon surrender of this Warrant), the Corporation will issue to the Warrantholder a replacement Warrant (containing the same terms and conditions as this Warrant). 5. Expiry Date This Warrant shall expire and all rights to purchase Shares hereunder shall cease and become null and void at 5:00 p.m. (Eastern Standard Time) __________, 2005. 6. Amendment Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, or by the affirmative consent in writing of holders of at least two-thirds of the then outstanding Warrants. 7. Governing Law The laws of the State of New York and applicable federal laws of the United States shall govern this Warrant. 8. Successors This Warrant shall enure to the benefit of and shall be binding upon the Warrantholder and the Corporation and their respective successors. IN WITNESS WHEREOF the Corporation has caused this Warrant to be signed by its duly authorised officers and its corporate seal hereto affixed. DATED . LIFE MEDICAL SCIENCES, INC. By:

Annex "A" to Share Purchase Warrant Election to Purchase The undersigned Warrantholder hereby irrevocably elects to exercise the Warrant issued by Life Medical Sciences, Inc. dated , 2003 for the number of common shares (or other property or securities subject thereto) ("Shares") as set forth below: (a) Number of Shares to be Acquired: ___________________ (b) Exercise Price per Share: $__________________ (c) Aggregate Purchase Price [(a) multiplied by (b)] $__________________ and hereby tenders a certified or cashier's cheque or bank draft for such aggregate purchase price, and directs such Shares to be registered and a certificate therefor to be issued as directed below.
DATED this -----------------------day of , . ------------------- ------

Witness

Signature

Direction as to Registration Name of Registered Holder: Address of Registered Holder:

Annex "B" TO: LIFE MEDICAL SCIENCES, INC. FOR VALUE RECEIVED, the undersigned hereby sells, transfers and assigns unto the within warrant (herein called the "Warrant"). The undersigned hereby irrevocably instructs you to transfer the Warrant on your books of registration and to issue in substitution therefor a new warrant exercisable for the same number of shares or other securities or property as the Warrant. DATED the day of , . Signature of Transferor is hereby guaranteed:

Note: The signature to this Warrant transfer must correspond with the name as set forth on the face of the Warrant in every particular without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or other financial institution acceptable to the Corporation.

Appendix II Warrant No: THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), STATE SECURITIES LAWS IN THE UNITED STATES OR THE SECURITIES LAW OF ANY OTHER COUNTRY AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (A) SUCH TRANSACTION OCCURS OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE ACT (OR SUCH SUCCESSOR RULE OR REGULATION THEN IN EFFECT), IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, (B) THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE REGISTERED UNDER THE ACT OR (C) SUCH TRANSACTION CONSTITUTES A TRANSACTION THAT OTHERWISE DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER PRIOR TO SUCH TRANSACTION HAS FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THAT EFFECT REASONABLY SATISFACTORY TO THE CORPORATION, SUBJECT IN EACH CASE TO ANY APPLICABLE UNITED STATES FEDERAL OR STATE OR FOREIGN SECURITIES LAW RESTRICTIONS APPLICABLE TO THE RESALE OF THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON AND NO SECURITIES MAY BE DELIVERED IN THE UNITED STATES UPON EXERCISE OF THIS WARRANT UNLESS THE EXERCISE IS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. ANY PERSON EXERCISING THIS WARRANT WILL BE REQUIRED TO PROVIDE (1) WRITTEN CERTIFICATION THAT IT IS NOT A U.S. PERSON WITHIN THE MEANING OF REGULATION S OF THE ACT AND THAT THIS WARRANT IS NOT BEING EXERCISED WITHIN THE UNITED STATES OR ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON OR A PERSON IN THE UNITED STATES, OR (2) A WRITTEN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THE EFFECT THAT THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE ACT AND UNDER ANY APPLICABLE U.S. STATE SECURITIES LAWS OR ARE EXEMPT FROM REGISTRATION THEREUNDER. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. WARRANT TO PURCHASE COMMON STOCK ______________ Shares of Common Stock LIFE MEDICAL SCIENCES, INC. _____________ , 2003 to June 30, 2003 THIS CERTIFIES THAT, for good and valuable consideration, the receipt of which is hereby acknowledged, _______________ (the "Warrantholder") with an address at _____________________, is the registered holder of this Warrant and is entitled to subscribe for and purchase from Life Medical Sciences, Inc., a Delaware corporation (herein called the "Corporation"), at any time after the date hereof and before 5:00 p.m. (Eastern Standard Time) on June 30, 2003 (the "Time of Expiry"), up to ______________ fully paid and non-assessable shares of common stock par value $.001 per share of the Corporation ("Shares") at an exercise price of $0.12 per Share, subject to adjustment as provided below (collectively the "Exercise Price"). This Warrant is subject to the provisions of the Investor Rights Agreement dated as of __________________, 2003 among the Corporation and certain Warrantholders as well as to a subscription agreement entered into with the original

Warrantholder in connection with the offering referred to in Section 1 below (the "Subscription Agreement"), and the following provisions, terms and conditions: 1. Designation This warrant certificate is one of a series of warrant certificates (collectively, the "Warrants") issued to Warrantholders for value received by the Corporation in connection with an offering by the Corporation of up to 605,000 units, each unit consisting of one share of Series C Convertible Preferred Stock, $.01 par value per share, of the Corporation, one two year warrant to purchase ten (10) Shares at an exercise price of $0.12 per share and one Warrant to purchase ten (10) Shares. 2. Exercise of Warrants (a) Election to Purchase. This Warrant may be exercised by the Warrantholder prior to the Time of Expiry in whole or in part and in accordance with the provisions hereof by delivery of an Election to Purchase in a form substantially the same as that attached hereto as Annex "A", properly completed and executed, together with this Warrant and payment of the Exercise Price multiplied by the number of Shares specified in the Election to Purchase to the Corporation at P.O. Box 219, Little Silver, New Jersey 07739, U.S.A., Attention: Robert P. Hickey, or such other address as may be notified in writing by the Corporation. Payment shall be made in U.S. dollars by certified or bank cashier's cheque payable to the order of the Corporation. (b) Exercise. The Corporation shall, promptly following the date it receives a duly executed Election to Purchase, this Warrant and payment of the Exercise Price for the number of Shares specified in the Election to Purchase (the "Exercise Date"), issue or cause to be issued that number of Shares specified in the Election to Purchase as fully paid and non-assessable Shares. Such duly executed Election to Purchase shall constitute the Warrantholder's acknowledgement of and undertaking to comply to the reasonable satisfaction of the Corporation and its counsel, with all applicable laws, rules, regulations and policies of every stock exchange upon which the Shares of the Corporation may from time to time be listed or traded, and any other applicable governmental or regulatory authorities. (c) Share Certificates. As promptly as practicable after the Exercise Date (and in any event not later than 10 days after the Exercise Date), the Corporation shall send to the Warrantholder, registered in such name or names as the

3 Warrantholder may direct or if no such direction has been given, in the name of the Warrantholder, a certificate or certificates for the number of Shares specified in the Election to Purchase. To the extent permitted by law, such exercise shall be deemed to have been effected as of the close of business on the Exercise Date, and at such time the rights of the Warrantholder with respect to the number of the Warrants which have been exercised as such shall cease, and the person or persons in whose name or names any certificate or certificates for Shares shall then be issuable upon such exercise shall be deemed to have become the holder or holders of record of the Shares represented thereby. (d) Fractional Shares. No fractional Shares shall be issued upon exercise of this Warrant and no payments or adjustment shall be made upon any exercise on account of any cash dividends on the Shares issued upon such exercise. If any fractional interest in a Share would, except for the provisions of the first sentence of this subsection 2(d), be deliverable upon the exercise of this Warrant, the number of Shares to be issued to the Warrantholder upon the exercise of this Warrant shall be rounded to the nearest whole number. (e) Subscription for Less than Entitlement. The Warrantholder may from time to time subscribe for and purchase a number of Shares less than the aggregate number which the holder is entitled to purchase pursuant to this Warrant. In the event of a purchase of a number of Shares less than the aggregate number which may be purchased pursuant to this Warrant, the holder thereof shall be entitled to receive, without charge, a new Warrant certificate in respect of the balance of the Shares subject to this Warrant which were not purchased by the Warrantholder. (f) Corporate Changes. If the Corporation shall be a party to any reorganization, merger, dissolution or sale of all or substantially all of its assets (the "Event"), (other than a reorganization or merger in which the Corporation is the surviving entity) then the securities purchasable hereunder shall be the securities (the "Event Securities") which the Warrantholder would have received or been entitled to receive in such Event if such Warrantholder had fully exercised this Warrant prior to the record date (or if there was no record date, then prior to the effective date) of such Event, and the Exercise Price shall be adjusted to be the amount determined by multiplying the Exercise Price in effect immediately prior to the Event by the number of Shares as to which this Warrant was unexercised immediately prior to the Event, and dividing the product thereof by the number of Event Securities; provided however, that the Event shall not be carried into effect unless all necessary steps have been taken to ensure that any surviving entity is subject to the terms of this Warrant as adjusted. Notwithstanding anything to the contrary contained in the immediately preceding paragraph, in the event of a transaction contemplated by such paragraph in which the surviving or purchasing corporation demands that all outstanding Warrants be extinguished prior to the closing date of the contemplated transaction, the Corporation shall give prior notice (the "Merger Notice") thereof to the Holders advising them of such transaction. The

4 Holders shall have ten days after the date of the Merger Notice to elect to (i) exercise the Warrants in the manner provided herein, or (ii) receive from the surviving or purchasing corporation the same consideration receivable by a holder of the number of shares of Common Stock for which this Warrant might have been exercised immediately prior to such consolidation, merger, sale, or purchase reduced by such amount of the consideration as has a market value equal to the Exercise Price, as determined by the board of directors of the Corporation in accordance with the terms of the Warrants. If any Holder fails to timely notify the Corporation of its election, the Holder shall be deemed for all purposes to have elected the option set forth in (ii) above. Any amounts receivable by a Holder who has elected the option set forth in (ii) above shall be payable at the same time as amounts payable to stockholders in connection with any such transaction. (g) Subdivision or Consolidation of Shares (i) In the event the Corporation shall subdivide its outstanding Shares into a greater number of Shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in the event the outstanding Shares of the Corporation shall be consolidated into a smaller number of Shares, the Exercise Price in effect immediately prior to such consolidation shall be proportionately increased. (ii) Upon each adjustment of the Exercise Price as provided herein, the Warrantholder shall thereafter be entitled to acquire, at the Exercise Price resulting from such adjustment, the number of Shares (calculated to the nearest tenth of a Share) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Shares which may be acquired hereunder immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. (h) Change or Reclassification of Shares. In the event the Corporation shall change or reclassify its outstanding Shares into a different class of securities, this Warrant shall be adjusted as follows so as to apply to the successor class of securities: (i) the number and kind of the successor class of securities which the Warrantholder shall be entitled to acquire shall be the aggregate number and kind of securities which, if this Warrant had been exercised immediately prior to such change or reclassification, the Warrantholder would have been entitled to receive by reason of such change or reclassification; and (ii) the Exercise Price shall be determined by multiplying the Exercise Price in effect immediately prior to the change or reclassification by the number of Shares as to which this Warrant was unexercised immediately prior to the change or reclassification, and dividing

5 the product thereof by the number of the successor class of securities determined in paragraph 2(h)(i) hereof. (i) Distribution to Shareholders. If and whenever at any time prior to the Time of Expiry the Corporation shall fix a record date or if a date is otherwise established (any such date being hereinafter referred to in this subsection 2 (i) as the "record date") for the issuance of rights, options or warrants to all or substantially all the holders of the outstanding Shares of the Corporation entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Shares of the Corporation or securities convertible into or exchangeable for Shares at a price per share or, as the case may be, having a conversion or exchange price per share less than 95% of the Fair Market Value (as hereinafter defined) on such record date, the Exercise Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Exercise Price in effect on such record date by a fraction, of which the numerator shall be the total number of Shares outstanding on such record date plus a number equal to the number arrived at by dividing the aggregate price of the total number of additional Shares offered for subscription or purchase or, as the case may be, the aggregate conversion or exchange price of the convertible or exchangeable securities so offered by the Fair Market Value, and of which the denominator shall be the total number of Shares outstanding on such record date plus the total number of additional Shares so offered (or into which the convertible or exchangeable securities so offered are convertible or exchangeable); Shares owned by or held for the account of the Corporation or any subsidiary of the Corporation shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that any rights or warrants are not so issued or any such rights or warrants are not exercised prior to the expiration thereof, the Exercise Price shall then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or to the Exercise Price which would then be in effect based upon the number of Shares or conversion or exchange rights contained in convertible or exchangeable securities actually issued upon the exercise of such rights or warrants, as the case may be. (j) Additional Subscriptions. If at any time the Corporation grants to its shareholders the right to subscribe for and purchase pro rata additional securities of the Corporation (other than securities described in subsection (2)(i) hereof) or of any other corporation or entity, there shall be no adjustments made to the number of Shares or other securities subject to this Warrant or to the Exercise Price in consequence thereof and this Warrant shall remain unaffected. (k) Carry Over of Adjustments. No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than 1% of the Exercise Price in effect immediately prior to the event giving rise to the adjustment, provided however, that in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with

6 the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to at least 1% of the Exercise Price in effect prior to such adjustment. (l) Notice of Adjustment. Upon any adjustment of the number of Shares and upon any adjustment of the Exercise Price, then and in each such case the Corporation shall give written notice thereof to the Warrantholder, which notice shall state the Exercise Price and the number of Shares or other securities into which each Warrant is exercisable resulting from such adjustment, and shall set forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the request of a Warrantholder there shall be transmitted promptly to all Warrantholders a statement prepared by the firm of independent certified public accountants retained to audit the financial statements of the Corporation to the effect that such firm concurs in the Corporation's calculation of the change. (m) Other Notices. If at any time: (i) the Corporation shall declare any dividend upon its Shares; (ii) the Corporation shall offer for subscription pro rata to the holders of its Shares any additional shares of any class or other rights; (iii) there shall be any capital reorganization or reclassification of the capital stock of the Corporation, or consolidation, amalgamation or merger of the Corporation with, or sale of all or substantially all of its assets to, another corporation (other than the Acquisition as defined in the Subscription Agreement); or (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Corporation, then, in any one or more of such cases, the Corporation shall give to the Warrantholder (A) at least 20 days' prior written notice of the date on which a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, amalgamation, sale, dissolution, liquidation or winding-up and (B) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, at least 20 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause shall also specify (A) in the case of any such dividend, distribution or subscription rights, the date on which the holders of Shares shall be entitled thereto, and (B) in the case of any transaction described in the foregoing clauses (iii) and (iv), the date on which the holders of Shares are to be entitled to exchange their Shares for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, amalgamation, sale, dissolution, liquidation or winding-up, as the case may be.

7 (n) Shares to be Reserved. The Corporation will at all times keep available and reserve out of its authorized Shares, solely for the purpose of issue upon the exercise of this Warrant, such number of Shares as shall then be issuable upon the exercise of this Warrant. The Corporation covenants and agrees that all Shares which shall be so issuable will, upon issuance, be duly authorized and issued, fully paid and non-assessable. The Corporation will take all such action as may be necessary to assure that all such Shares may be so issued without violation of any applicable requirements of any stock exchange upon which the Shares of the Corporation may be listed or in respect of which the Shares are qualified for unlisted trading privileges. The Corporation will take all such action as is within its power to assure that all such Shares may be so issued without violation of any applicable law. (o) Issue Tax. The issuance of certificates for Shares upon the exercise of this Warrant shall be made without charge to the Warrantholder for any issuance tax in respect thereto, provided that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Warrantholder. (p) Fair Market Value. For the purposes of any computation hereunder, unless otherwise specified, the "Fair Market Value" at any date shall be: (i) if the Shares are listed on a stock exchange or quoted on a similar securities market, the weighted average sale price per share for the Shares for any 20 consecutive trading days (selected by the Corporation) commencing not more than 25 trading days before such date on the principal stock exchange or similar securities market upon which the Shares are listed or quoted, as the case may be; or (ii) if the computation is being made in connection with a public offering of Shares, the gross offering price per Share under the offering; or (iii) in all other cases, the Fair Market Value shall be determined by the Board of Directors in good faith, which determination shall be conclusive. The weighted average sale price shall be determined by dividing the aggregate sale price of all Shares sold on the said exchange or market during the said 20 consecutive trading days by the total number of Shares so sold. (q) The Shares issued upon exercise of the Warrant shall be subject to a stop transfer order and the certificate or certificates evidencing such Shares shall bear the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), STATE SECURITIES LAWS IN THE UNITED STATES OR THE SECURITIES LAWS OF ANY OTHER COUNTRY, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (A) SUCH TRANSACTION OCCURS OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE ACT (OR SUCH SUCCESSOR RULE OR REGULATION THEN IN EFFECT), IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, (B) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE REGISTERED UNDER THE ACT OR (C) SUCH TRANSACTION CONSTITUTES A TRANSACTION THAT OTHERWISE DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER PRIOR TO SUCH TRANSACTION HAS FURNISHED TO THE CORPORATION AN

8 OPINION OF COUNSEL OF RECOGNIZED STANDING TO THAT EFFECT REASONABLY SATISFACTORY TO THE CORPORATION, SUBJECT IN EACH CASE TO ANY APPLICABLE UNITED STATES FEDERAL, STATE OR FOREIGN SECURITIES LAW RESTRICTIONS APPLICABLE TO THE RESALE OF THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT. 3. Transfer Subject to compliance by the Warrantholder with any applicable resale restrictions, the Corporation acknowledges and agrees that this Warrant may be assigned or transferred by the Warrantholder at the Warrantholder's option. It is the sole responsibility of the Warrantholder to ensure that all such restrictions have been observed. Upon any permitted assignment or transfer, the Warrantholder shall furnish the Corporation with such information regarding the transferee as the Corporation may reasonably require to register this Warrant in the name of the transferee. The Corporation shall be obliged to refuse to register any proposed transfer of this Warrant or underlying Shares unless made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an available exemption from registration. 4. Replacement Upon receipt of evidence satisfactory to the Corporation of the loss, theft, destruction or mutilation of this Warrant and, if requested by the Corporation, upon delivery of a bond of indemnity satisfactory to the Corporation (or, in the case of mutilation, upon surrender of this Warrant), the Corporation will issue to the Warrantholder a replacement Warrant (containing the same terms and conditions as this Warrant). 5. Expiry Date This Warrant shall expire and all rights to purchase Shares hereunder shall cease and become null and void at 5:00 p.m. (Eastern Standard Time) on June 30, 2003. 6. Amendment Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, or by the affirmative consent in writing of holders of at least two-thirds of the then outstanding Warrants. 7. Governing Law The laws of the State of New York and applicable federal laws of the United States shall govern this Warrant.

9 8. Successors This Warrant shall enure to the benefit of and shall be binding upon the Warrantholder and the Corporation and their respective successors. IN WITNESS WHEREOF the Corporation has caused this Warrant to be signed by its duly authorised officers and its corporate seal hereto affixed. DATED the day of , 2003. LIFE MEDICAL SCIENCES, INC. By:

Annex "A" to Share Purchase Warrant Election to Purchase The undersigned Warrantholder hereby irrevocably elects to exercise the Warrant issued by Life Medical Sciences, Inc. dated , 2003 for the number of common shares (or other property or securities subject thereto) ("Shares") as set forth below: (a) Number of Shares to be Acquired: ____________________ (b) Exercise Price per Share: $____________________ (c) Aggregate Purchase Price $____________________ [(a) multiplied by (b)] and hereby tenders a certified or cashier's cheque or bank draft for such aggregate purchase price, and directs such Shares to be registered and a certificate therefor to be issued as directed below. DATED this day of , .
---------------------------Witness ---------------------------Signature

Direction as to Registration Name of Registered Holder: --------------------------------------------------Address of Registered Holder: -----------------------------------------------------------------------------------------------------

Annex "B" TO: LIFE MEDICAL SCIENCES, INC. FOR VALUE RECEIVED, the undersigned hereby sells, transfers and assigns unto the within warrant (herein called the "Warrant"). The undersigned hereby irrevocably instructs you to transfer the Warrant on your books of registration and to issue in substitution therefor a new warrant exercisable for the same number of shares or other securities or property as the Warrant. DATED the day of , . Signature of Transferor is hereby guaranteed: (Signature of Transferor) Note: The signature to this Warrant transfer must correspond with the name as set forth on the face of the Warrant in every particular without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or other financial institution acceptable to the Corporation.

Appendix IV LIFE MEDICAL SCIENCES, INC. INVESTOR RIGHTS AGREEMENT This Investor Rights Agreement (the "Agreement") is made and entered into as of January , 2003 by and among Life Medical Sciences, Inc., a Delaware corporation (the "Corporation") and the investors listed on the signature pages hereto (the "Investors"). RECITALS WHEREAS the Corporation desires the Investors to purchase Units of the Corporation ("Units"), each Unit consisting of (i) one share of the Corporation's Series C Convertible Preferred Stock ("Series C Preferred"), par value of $0.01 per share, (ii) one warrant to purchase up to ten (10) shares of Common Stock at an exercise price of $0.12 per share exercisable at any time until the second anniversary of the original issuance date (a "Two Year Warrant"), and (iii) one warrant to purchase up to ten (10) shares of Common Stock at an exercise price of $0.12 per share exercisable at any time until June 30, 2003 (a "Short Term Warrant), at a purchase price of $1.20 per Unit; and WHEREAS the purchase of the Units is in connection with an offering (the "Offering") by the Corporation to the Investors of up to 605,000 Units pursuant to a subscription agreement dated ______ , 2003 (the "Subscription Agreement"); and WHEREAS as an inducement for the Investors to enter into the Subscription Agreement, the Corporation desires to enter into this Agreement with the Investors. NOW THEREFOR in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. REGISTRATION RIGHTS. 1.1 Definitions. (a) "As-Converted Basis" means assuming the conversion into Common Stock or exercise for Common Stock of all securities directly or indirectly convertible into, or exercisable for, Common Stock. (b) "Common Stock" means the Corporation's Common Stock, par value $0.001 per share.

-2(c) "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. (d) "Form S-3" means such form under the Securities Act as is in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Corporation with the SEC. (e) "Holder" means any person owning of record Registrable Securities that have not been sold in a public offering or sold pursuant to Rule 144 promulgated under the Securities Act or any assignee of record of such Registrable Securities to whom rights under this Agreement have been duly assigned in accordance with this Agreement. (f) "Initiating Holder" means any Holder or Holders who in the aggregate are Holders of not less than 30% of the then-outstanding Registrable Securities which have not been sold in a public offering. (g) "June 1999 Placement" means the Corporation's private placement of an aggregate of 1,505,003 shares of Common Stock completed in June 1999. (h) "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement. (i) "Registrable Securities" means: (i) all shares of Common Stock issued or issuable pursuant to the conversion of Series C Preferred or exercise of the Short Term Warrants, Two Year Warrants or Broker Warrants (as defined in the Subscription Agreement) and (ii) any shares of Common Stock or other securities issued in connection with any stock split, stock dividend, recapitalization, reorganization, merger, sale of assets or similar event in respect of the foregoing securities; excluding in all cases, however, any securities that would otherwise be Registrable Securities that have been sold by a person in a transaction in which rights under this Agreement are not assigned in accordance with this Agreement, any securities that would otherwise be Registrable Securities that have been sold in a public offering or sold pursuant to Rule 144 promulgated under the Securities Act, and, solely for the purposes of a registration under Section 1.2, Registrable Securities eligible for sale pursuant to Rule 144(k) promulgated under the Securities Act. Notwithstanding the foregoing, shares of Common Stock issued or issuable pursuant to exercise of the Broker Warrants shall be deemed Registrable Securities only for so long, and for such purposes, as shares of Common Stock issued or issuable pursuant to exercise of the Two Year Warrants continue to be Registrable Securities. (j) "Registration Expenses" means all expenses incurred by the Corporation in complying with Sections 1.2 and 1.3 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and accountants for the Corporation, reasonable fees and expenses of one counsel for all the Holders, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Corporation, which shall be paid in any event by the Corporation). (k) "Securities Act" means the United States Securities Act of 1933, as amended.

-3(l) "Selling Expenses" means all underwriting discounts and selling commissions applicable to the sale of Registrable Securities. (m) "Series A Demand Period" means the period during which holders of Series A Placement Securities (as defined in Section 1.2(b)) are entitled to request demand registration pursuant to Section 1.2 of the Series A Investor Rights Agreement. (n) "Series A Investor Rights Agreement" means the Investor Rights Agreement dated as of December 15, 2000 among the Corporation and the investors named therein in connection with the Series A Private Placement. (o) "Series A Private Placement" mean the Corporation's private placement of an aggregate of 500,000 shares of Series A Convertible Preferred Stock, par value $.01 per share ("Series A Preferred") pursuant to a Stock Purchase Agreement dated as of December 15, 2000. (p) "Series B Demand Period" means the period during which holders of Series B Placement Securities (as defined in Section 1.2 (b) are entitled to request demand registration pursuant to Section 1.2 of the Series B Investor Rights Agreement. (q) "Series B Investor Rights Agreement" means the Investor Rights Agreement dated as of March 21, 2002, among the Corporation and the investors named therein in connection with the Series B Private Placement. (r) "Series B Private Placement" means the Corporation's private placement of an aggregate of 1,112,500 shares of Series B Convertible Preferred Stock, par value $.01 per share ("Series B Preferred") contemplated by a Subscription Agreement dated as of March 21, 2002. 1.2 Requested Registration. (a) Request for Registration by Initiating Holders. If the Corporation shall receive from an Initiating Holder, at any time following conversion of Series C Preferred into Common Stock and expiration of the Series A Demand Period and Series B Demand Period, a written request that the Corporation effect any registration with respect to all or a part of the Registrable Securities, the Corporation will: (i) promptly give written notice of the proposed registration to all other Holders of Registrable Securities; and (ii) use its best efforts to effect, as soon as practicable but in any event within 90 days of receipt of the Initiating Holder's request for registration, such registration of the sale of the Registrable Securities requested by the Initiating Holder, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in written requests received by the Corporation within 30 days after written notice from the Corporation is given under Section 1.2(a)(i)above; provided, however, that the Corporation shall not be obligated to effect, or take any action to effect, any such registration pursuant to this Section 1.2:

-4(1) In any particular jurisdiction in which the Corporation would be required to execute a general consent to service of process in effecting such registration, unless the Corporation is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder; or (2) After the Corporation has effected one such registration pursuant to this Section 1.2 and such registration has been declared or ordered effective. (b) Underwriting; Request by Initiating Holders. If the Initiating Holder intends to distribute the Registrable Securities covered by its request by means of an underwriting, it shall so advise the Corporation as a part of its request and the Corporation shall include such information in the written notice referred to in Section 1.2(a)(i). In such event, the right of any Holder to include such Holder's Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by the Initiating Holder and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Corporation as provided in Section 1.5(e)) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Initiating Holder and reasonably acceptable to the Corporation. Notwithstanding the foregoing, if the managing underwriter advises the Corporation and the Initiating Holder in writing that marketing factors require a limitation of the number of shares to be included in the registration, then the Corporation shall so advise all Holders of Registrable Securities which would otherwise be included in the registration, and the number of shares of Registrable Securities that may be included in the underwriting shall be allocated among all Holders who sought to include Registrable Securities in the registration, in such proportion (as nearly as practicable) among such Holders pro rata based on the amount of Registrable Securities owned by each of them (calculated on an As-Converted Basis). For any Holder which is a partnership or corporation, the partners, retired partners and stockholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single "Holder," and any pro rata reduction with respect to such "Holder" shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such "Holder," as defined in this sentence. In connection with a registration under this Section 1.2, the Corporation may include securities to be sold for its own account, or the account of other persons; provided, however, that if a registration under this Section 1.2 is to be effected through an underwriting, the right of the Corporation and such other persons to include securities in such registration shall be conditioned upon the Corporation's and such other persons' participation in such underwriting and the inclusion of such securities in the underwriting (unless otherwise mutually agreed by the Initiating Holder and the Corporation, in the case of securities to be registered for the account of the Corporation, or by the Initiating Holder and each such other person, in the case of securities to be registered for the account of such other persons) to the extent provided herein. Notwithstanding the foregoing, if the managing underwriter advises the Corporation, such other persons and the Initiating Holder in writing that marketing factors require a limitation of the number of shares to be included in the registration, then (i) all securities that the Corporation sought to be included in the registration shall be removed from the registration before any Registrable Securities are removed from the registration, (ii) all securities of any such other person that do not have registration rights pursuant to (A) the Series A Investor Rights

-5Agreement, (B) a subscription agreement entered into with the Corporation in connection with the June 1999 Placement or (C) the Series B Investor Rights Agreement shall be removed from the registration before any Registrable Securities are removed from the registration and (iii) to the extent that any such other person holds securities that have registration rights pursuant to the Series A Placement ("Series A Placement Securities"), the June 1999 Placement ("June 1999 Placement Securities") or the Series B Placement ("Series B Placement Securities"), and with the Series A Placement Securities and June 1999 Placement Securities, "Other Registrable Securities"), then notwithstanding anything in this Section 1.2(b) to the contrary, the number of shares of Registrable Securities and Other Registrable Securities that may be included in the underwriting shall be allocated among the Holders and such other persons who sought to include their respective securities in the registration, in such proportion (as nearly as practicable) among such Holders and such other persons pro rata based on the amount of Registrable Securities and Other Registrable Securities owned by each of them (calculated on an AsConverted Basis); provided, that notwithstanding anything in the foregoing to the contrary, the rights of the Holders of Registrable Securities to have such Registrable Securities included in any such registration shall be subordinate to the rights of the holders of Series A Placement Securities and of Series B Placement Securities. Any securities excluded from an underwriting under this section shall be withdrawn from the registration. (c) Notwithstanding the foregoing, if the Corporation shall furnish to the Initiating Holder a certificate signed by the President or Chief Executive Officer of the Corporation stating that in the good faith judgment of the Board of Directors of the Corporation, it would be seriously detrimental to the Corporation and its shareholders for such registration statement to be filed and it is therefore essential to defer the filing of such registration statement, then the Corporation shall have the right to defer such filing for a period of not more than 60 days after receipt of the request of the Initiating Holder; provided, however, that the Corporation may not utilize this right more than once in any nine-month period. (d) Except for registration statements on Form S-4, Form S-8 or successor forms thereto, the Corporation will not file with the Commission any other registration statement, whether for its own account or that of other stockholders, from the date of receipt of a notice from the Initiating Holders requesting registration pursuant to this Section 1.2 until three months after the declaration of effectiveness of a registration statement filed under this Section 1.2 (or the earlier termination of such requested registration or the related distribution), except where the Corporation is contemplating a registration solely for its own account and defers the registration requested by the Initiating Holders under Section 1.2(c) to permit the Corporation to complete such registration for its own account. 1.3. Piggyback Registrations. (a) Notice. The Corporation shall notify all Holders of Registrable Securities in writing promptly after determining to file any registration statement under the Securities Act for purposes of effecting a public offering of securities of the Corporation whether for its own account or the account of other stockholders or both (excluding any registration statements on Form S-4, Form S-8 or successor forms thereto, and a registration under Section 1.2) and will include in such registration statement all of the Registrable Securities specified in a written request or requests made by any Holder or Holders in response to such notice from the Corporation. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Corporation, such Holder shall nevertheless continue

-6to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Corporation with respect to offerings of its securities, all upon the terms and conditions set forth herein. (b) Underwriting. If a registration statement under which the Corporation gives notice under Section 1.3(a) is for an underwritten offering, then the Corporation shall so advise the Holders of Registrable Securities in the notice delivered under Section 1.3(a). In such event, the right of any such Holder's Registrable Securities to be included in a registration pursuant to this Section 1.3 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Agreement, if the managing underwriter(s) determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares (including Registrable Securities) from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Corporation, second, to each of the Holders of Registrable Securities requesting inclusion of their Registrable Securities in such registration statement and to holders of Other Registrable Securities, to be allocated among such persons pro rata based on the amount of Registrable Securities and Other Registrable Securities (calculated on an As-Converted Basis) owned by each person and third, to any other holders of the Corporation's securities; provided, that notwithstanding anything in the foregoing to the contrary, the rights of the Holders of Registrable Securities to have such Registrable Securities included in any such registration shall be subordinate to the rights of the holders of Series A Placement Securities and of Series B Placement Securities. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Corporation and the managing underwriter. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For any Holder which is a partnership or corporation, the partners, retired partners and stockholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single "Holder," and any pro rata reduction with respect to such "Holder" shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such "Holder," as defined in this sentence. 1.4. Expenses of Registration. All Registration Expenses incurred in connection with one demand registration (pursuant to Section 1.2) and all piggyback registrations (pursuant to Section 1.3) shall be borne by the Corporation, and all Selling Expenses shall be borne by the Holders of the securities so registered pro rata on the basis of the number of their shares so registered. 1.5. Obligations of the Corporation. Whenever required to effect the registration of any Registrable Securities under this Agreement, the Corporation shall, as expeditiously as reasonably possible: (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and keep such registration statement effective and the related prospectus current until

-7the distribution is completed, but not more than 180 days, provided that such 180-day period shall be extended for a period of time equal to the period the Holder refrains from selling any Registrable Securities included in such registration statement due to circumstances described in Section 1.5(f). (b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. (c) Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and all amendments and supplements thereto, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by them that are included in such registration. (d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided, however, that the Corporation shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions unless the Corporation is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder. (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. (f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act if such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and, following such notification, promptly deliver to each Holder copies of all amendments or supplements referred to in paragraphs (b) and (c) of this Section 1.5. (g) Furnish, at the request of any Holder registering Registrable Securities, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, or on the date that the registration statement becomes effective, if such securities are not being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Corporation for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering addressed to the underwriters, if any, and if there are no underwriters, to the Holders requesting registration of Registrable Securities and (ii) a "comfort" letter dated as of such date, from the independent certified public accountants of the Corporation, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the

-8Holders requesting registration, addressed to the underwriters, if any, and if there are no underwriters, to the Holders requesting registration of Registrable Securities. (h) Use its best efforts to list the Registrable Securities covered by such registration statement with any securities exchange or interdealer quotation system on which the Common Stock is then listed or quoted. (i) Make available for inspection by each seller of Registrable Securities, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by such seller or underwriter (an "Advisor"), all financial and other records, pertinent corporate documents and properties of the Corporation, and cause the Corporation's officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement. Such seller will keep, and will cause its Advisors to keep, such information confidential subject to Section 3.14. 1.6. Furnish Information. It shall be a condition precedent to the obligations of the Corporation to take any action pursuant to Sections 1.2 and 1.3 that the selling Holders shall furnish to the Corporation such information regarding themselves, the Registrable Securities held by them, and the intended method of disposition of such securities as shall be required to timely effect the registration of Registrable Securities. 1.7. Indemnification. In the event any Registrable Securities are included in a registration statement under Sections 1.2 or 1.3: (a) By the Corporation. To the extent permitted by law, the Corporation will indemnify and hold harmless each Holder, the partners, members, officers and directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained or incorporated by reference in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Corporation of the Securities Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement; and the Corporation will reimburse each such Holder, partner, member, officer,or director, underwriter or controlling person for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection shall not apply to amounts

-9paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Corporation (which consent shall not be unreasonably withheld), nor shall the Corporation be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information and expressly stated to be for use in connection with such registration by such Holder, partner, member, officer, director, underwriter or controlling person of such Holder. (b) By Selling Holders. To the extent permitted by law, each selling Holder will, severally and not jointly, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify and hold harmless the Corporation, each of its directors, each of its officers who have signed the registration statement, each person, if any, who controls the Corporation within the meaning of the Securities Act, any underwriter (as defined in the Securities Act) and any other Holder selling securities under such registration statement or any of such other Holder's partners, members, directors or officers or any person who controls such underwriter or other Holder within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Corporation or any such director, officer, controlling person, underwriter or other such Holder, or a member, partner, director, officer or controlling person of such underwriter or other Holder may become subject under the Securities Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder by an instrument duly executed by such Holder and stated to be specifically for use in such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Corporation or any such director, officer, controlling person, underwriter or other Holder, partner, member, officer, director or controlling person of such other Holder or underwriter in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further, that the total amounts payable in indemnity by a Holder under this Section 1.7(b) in respect of any Violation shall not exceed the net proceeds received by such Holder in the registered offering out of which such Violation arises. (c) Notice. Promptly after receipt by an indemnified party of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if the defendants include both the indemnifying party and the indemnified party and the indemnified party shall have reasonably concluded that there may be reasonable

-10defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.7, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under Section 1.7. (d) Contribution. If the indemnification provided for in this Section 1.7 is unavailable to a party entitled to indemnification, then the indemnifying party shall contribute to the aggregate losses, claims, damages or liabilities of the indemnified party as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that, in any such case, (1) no Holder shall be required to contribute any amount in excess of the public offering price of all Registrable Securities offered and sold by such Holder pursuant to such registration statement; and (2) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) Survival. The obligations of the Corporation and Holders under this Section 1.7 shall survive the completion of any offering of Registrable Securities in a registration statement. 1.8. Limitations on Subsequent Registration Rights. From and after the date of this Agreement, so long as any Registrable Securities are outstanding, without the consent of the Holders of a majority of the Registrable Securities, the Corporation shall not enter into any agreement with any holder or prospective holder of any securities of the Corporation that would allow such holder or prospective holder (a) to make a demand registration to the Corporation at any point in time when holders of Registrable Securities are entitled to request registration under Section 1.2, or (b) to have registration rights superior to, or which limit in any way (including by reducing the number of Registrable Securities that may be included in an underwritten offering), the registration rights of the Holders granted hereby. 2. LEGENDS. The Investors understand that the share certificates evidencing any Registrable Securities shall be endorsed with the following legends (in addition to any legends required under applicable state securities laws): THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

-113. MISCELLANEOUS. 3.1. Successors and Assigns. Except as otherwise expressly provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted transferees and permitted assigns of the parties. 3.2. Governing Law. This Agreement shall be governed in all respects by the laws of the State of New York as applied to contracts made and to be performed entirely within that state between residents of that state. 3.3. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument. 3.4. Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 3.5. Stock Splits, etc. All share numbers used in this Agreement are subject to adjustment in the case of any stock split, reverse stock split, combination or similar events. 3.6. Notices. Any notice required or permitted to be given to a party pursuant to the provisions of this Agreement shall be in writing and shall be effective on (a) the date of delivery in person, or the date of delivery by facsimile with confirmation receipt, (b) the business day after deposit with a nationally-recognized courier or overnight service, for United States deliveries or (c) five (5) business days after deposit in the United States mail by registered or certified mail for United States deliveries. All notices not delivered personally or by facsimile will be sent with postage and other charges prepaid and properly addressed to the party to be notified at the address set forth below such party's signature on this Agreement or at such other address as such party may designate by ten (10) days advance written notice to the other parties hereto. All notices for delivery outside the United States will be sent by facsimile, or by nationally recognized courier or overnight service. Any notice given hereunder to more than one person will be deemed to have been given, for purposes of counting time periods hereunder, on the date given to the last party required to be given such notice. Notices to the Corporation will be marked to the attention of the President, with a copy to Keith Moskowitz, Ehrenreich, Eilenberg & Krause LLP, 11 East 44th Street, 17th Floor, New York, NY 10017. Notices shall be sent to the addresses on the signature pages hereto, or such other addresses as a party may provide to the other parties from time to time. 3.7. Attorneys' Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 3.8. Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the party against whom enforcement of such amendment or waiver is sought; provided, however that with respect to any Investor, the consent of the holders of more than sixty-six and two-thirds percent

-12(662/3%) of the Registrable Securities (other than the Broker Warrants) shall be sufficient to bind any and all Investors. 3.9. Severability. If any provision of this Agreement is held to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision was so excluded and shall be enforceable in accordance with its terms. 3.10. Entire Agreement. This Agreement and the Subscription Agreements constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof and supersede all prior negotiations, correspondence, agreements, understandings, duties or obligations among the parties with respect to the subject matter hereof. 3.11. Further Assurances. From and after the date of this Agreement, upon the request of a party, the other parties shall execute and deliver such instruments, documents or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement. 3.12. Assignment. Rights under this Agreement may be assigned in connection with any transfer or assignment of Registrable Securities provided that: (a) such transfer may otherwise be effected in accordance with applicable securities laws, and (b) such other party agrees in writing with the Corporation to be bound by all of the provisions of this Agreement to the same extent as the transferor. 3.13. Changes in Stock. If, and as often as, there is any change in the Common Stock or Series C Preferred by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made to the provisions hereof so that the rights granted hereby shall continue with respect to the Common Stock or Series C Preferred as so changed. 3.14. Confidentiality. Information related to the terms and conditions of the Offering, as well as all information contained in the Subscription Agreement (except information relating solely to an Investor) and instruments and agreements delivered in connection therewith, shall be deemed confidential and shall not be disclosed by the Investor to any person unless and until such information becomes generally available to the public other than by disclosure in violation of this Agreement. All other information that has been designated by the Corporation as "confidential" shall likewise be deemed confidential and not disclosed by the Investor to any person unless and until such (i) is or becomes generally available to the public other than by disclosure in violation of this Agreement, (ii) was properly within such Investor's possession prior to its being furnished by the Corporation to such Investor, or (iii) becomes available to such Investor through disclosure by third parties who have the right to disclose such information.

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE 1 IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights Agreement as of the date first above written. LIFE MEDICAL SCIENCES, INC. By: Robert Hickey Chairman, President and CEO Address: -i-

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE 2 By: Name: Title: Address By: Name: Title: Address By: Name: Title: Address By: Name: Title: Address -ii-

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE 3 By: Name: Title: Address By: Name: Title: Address By: Name: Title: Address By: Name: Title: Address

Confidential Offering Supplement March 21, 2003 Series C Unit Offering of Life Medical Sciences, Inc. This Offering Supplement amends and supplements the Securities Purchase Agreement (the "Purchase Agreement"), a form of which has been distributed by Life Medical Sciences, Inc. (the "Company"), in connection with an offering of up to 550,000 units ("Units"), each Unit comprised of (i) one share of Series C Convertible Preferred Stock, (ii) one warrant exercisable for two years from the original issue date to purchase up to ten (10) shares of Common Stock at an exercise price of $0.12 per share and (iii) one warrant exercisable until June 30, 2003 to purchase up to 10 shares of Common Stock at an exercise price of $0.12 per share, such Units to be offered and sold at a price of $1.20 per Unit, resulting in maximum gross proceeds of $660,000 (the "Series C Financing"). Each of the items referred to below shall be deemed to modify the representations and warranties of the Company contained in, and other terms and conditions of, the Purchase Agreement and related transaction documents to the extent relevant. Acceptance by investors of certificates evidencing the securities purchased in the Series C Financing shall be deemed approval by the investors of this Offering Supplement. Recent Developments 1. On March 21, 2003, each share of then outstanding Series B Convertible Preferred Stock of the Company automatically converted by its terms into 10 shares of common stock of the Company, resulting in the issuance of an aggregate of 11,125,000 shares of common stock. 2. On March 18, 2003, the Company consummated the purchase of certain polymer related assets of Phairson Medial Limited and Phairson Medical Inc. in exchange for the issuance of 6,895,561 shares of restricted common stock of the Company. In connection with the acquisition, the Company granted an option, exercisable for 7 years, to purchase up to 100,000 shares of the Company's common stock at $.09 per share to Dr. Gere S. diZerega, who has served as a medical consultant to Phairson and the Company and who assisted in identifying the acquisition opportunity.

3. Effective March 1, 2003, the Company hired Dr. Eli Pines to serve as the Company's Vice President of Research and Chief Scientific Officer. Dr. Pines had previously served in that capacity for five years until July 2000, after which he continued his relationship in a consulting capacity. The Company entered into an employment agreement with Dr. Pines, pursuant to which Dr. Pines currently receives an annual base salary of $180,000 subject to adjustments for cost-of-living increases and other increases as determined by the Board. The term of Dr. Pines' employment agreement is for a period of three years and is automatically renewed on an annual basis absent three months prior written notice. The Company also extended the provisions of Dr. Pines' prior indemnification agreement to cover the present employment as well. Over-allotment Option The Company has granted an over-allotment option, exercisable at any time until 5:00 p.m. on April 10, 2003, in favor of the placement agent for the Series C Financing, Clubb BioCapital Limited, to solicit qualified investors to purchase up to an additional 55,000 Units in the Series C Financing; it being understood that if the full overallotment option is exercised, an additional $66,000 in gross proceeds would be received by the Company in the Series C Financing; it being further understood that Clubb BioCapital Limited is entitled to compensation with respect to Units placed in the over-allotment option as and to the same extent provided for with respect to Units otherwise placed by it in the Series C Financing. Broker Warrant Correction The Purchase Agreement inaccurately describes the number of shares of common stock underlying a broker warrant that comprises part of Clubb BioCapital Limited's compensation in connection with the Series C Financing. Consistent with an agency agreement executed by the Company and Clubb BioCapital Limited in January 2003, the number of shares of common stock underlying the broker warrant shall be equal to 10% of the aggregate number of shares of common stock issuable upon conversion of the shares of Series C Convertible Preferred Stock sold to investors secured by Clubb BioCapital Limited.

Schedule 4.05(b) Life Medical Sciences, Inc. Options, Warrants and Other Convertible Instruments
Equivalent Shares Common Stock -----------9,360,493 11,125,000 11,125,000 916,670 70,000 40,000 ---------32,637,163

Stock Options (see attached ledger) Series B Preferred Stock Series B Warrants Broker Warrants Convertible Promissory Note - Polymer Technology Group, Inc. Convertible Promissory Note - Dimotech, Ltd. TOTAL

Exercise Price -------------Various $0.12 $0.24 $0.24 $1.00 $1.00

Schedule 4.05(e) Life Medical Sciences, Inc. Plans and Agreements Providing for Acceleration or Other Changes in the Vesting Provisions or Other Terms of such Securities, as the Result of Any Merger, Sale of Stock or Assets, Change of Control or Other Similar Transaction by Life Medical Sciences, Inc.: 1992 Stock Option Plan 2000 Non-Qualified Stock Option Plan 2001 Non-Qualified Stock Option Plan Stock Options Issued Under Other Agreements Certificate of Designations, Rights and Preferences of Series B Convertible Preferred Stock Series B Warrants Series B Broker Warrants Convertible Promissory Note--Polymer Technology Group, Inc. Convertible Promissory Note--Dimotech, Ltd.

CONFIDENTIAL Schedule 4.10(a) Life Medical Sciences, Inc. Patents, Trademarks and Copyrights INFORMATION OMITTED

EXHIBIT 10.39 AGENCY AGREEMENT January 9, 2003 Life Medical Sciences, Inc. P.O. Box 219 Little Silver, NJ 07739 U.S.A Attention: Mr. Robert P. Hickey Chairman, President and Chief Executive Officer Dear Sirs: Re: Offering of Units Clubb BioCapital Limited (the "Agent"), understands that Life Medical Sciences, Inc. (the "Corporation"), a Delaware corporation, proposes to issue to investors secured by the Agent, up to 550,000 units ("Units"), each consisting of one share of the Corporation's Series C Convertible Preferred Stock (a "Preferred Share"), par value of $0.01 per share, one warrant (a "Two Year Warrant") to purchase up to ten shares of the Corporation's Common Stock, par value $0.001, ("Shares") at an exercise price of $0.12 per Share, exercisable at any time until two years after the date of issue and one warrant (a "Short Term Warrant"; together with the Two Year Warrants, the "Warrants") to purchase up to ten Shares at an exercise price of $0.12 per Share, exercisable for a period commencing on the date of issue and expiring on June 30, 2003. The Units shall be issued and sold at a price of $1.20 per Unit or such other price as may be agreed by the Agent and the Corporation (in either case the "Issue Price"). The Preferred Shares shall have the attributes described in Appendix I to the form of subscription agreement attached hereto as Schedule "C" (the "Subscription Agreement") and the Warrants shall be in substantially the form set forth in Appendices II and III to the Subscription Agreement. The offering of the Units (the "Offering") will close no later than February 14, 2003, or such other date mutually agreed to by the Corporation and the Agent (the "Closing Date"). There is no minimum number of Units being offered in the Offering, and there may be multiple closings. 1. Appointment The Corporation hereby appoints the Agent as its non-exclusive agent and the Agent accepts the appointment and agrees to act on a "best efforts" basis as a non-exclusive agent of the Corporation to secure investors for the issuance of the Units by way of private placement to institutional and other sophisticated investors in Europe subject to the terms and conditions and in reliance upon the representations, warranties and covenants of the Corporation set out in this Agreement.

2 The Agent shall be entitled to retain sub-agents selected by it to participate in the soliciting of offers to purchase the Units, provided that the Agent receives from each such sub-agent its agreement to be bound by the obligations of the Agent hereunder prior to any such appointment. The fees payable to such sub-agents shall be the responsibility and for the account of the Agent. 2. Sales Restrictions The Agent represents and agrees that it will comply with the restrictions on offers and sales of the Units set forth in Schedule "A" hereto, as well as the other provisions thereof, all of which are hereby incorporated by reference herein and form a part hereof. 3. Commission and Broker Warrant In consideration of the services rendered and to be rendered by the Agent in acting as agent of the Corporation on a best efforts basis to secure investors for the issuance of the Units, the Corporation agrees to pay to the Agent on the Closing Date a commission (the "Commission") equal to 10% of that portion of the gross proceeds of sale of the Units issued on the Closing Date raised by the Agent, payable at the election of the Agent in either cash or Units at the Issue Price ("Commission Units") or a combination of the two. The Agent acknowledges and agrees that no Commission shall be payable on any Units issued to any of the investors listed on Schedule "B" attached hereto, as the same may subsequently be amended from time to time through the Closing Date (the "Excluded Parties"), or on the Commission Units. In further consideration of the services rendered and to be rendered by the Agent described above, the Corporation agrees to issue to the Agent for no additional consideration, a warrant (the "Broker Warrant") to purchase an aggregate number of Shares equal to 10% of the aggregate number of Shares issuable upon conversion of the Preferred Shares comprising the Units issued on the Closing Date, excluding Units issued to Excluded Parties. The Broker Warrant shall have a term of four (4) years after the date of issue and shall be exercisable to acquire Shares at a price of $0.12 per Share. If for any reason the Offering does not close and within a three (3) year period after termination of the Offering the Corporation raises funding through one or more investors introduced to the Corporation for the first time by the Agent ("Agent Investors"), the Agent shall be entitled to the Commission and Broker Warrants in respect thereof as if the Offering had not been terminated. 4. Closing (a) The issuance of the Units shall be completed (the "Closing") at the offices of the Corporation, or such other place or places as the Corporation and the Agent may agree, at 10:00 a.m. (Eastern Standard Time) (the "Closing Time") on the Closing Date. (b) On or prior to the Closing Date, the Agent shall provide to the Corporation a subscription agreement from each purchaser of Units (a "Purchaser") who is to acquire Units on such Closing Date. Purchasers shall be required to complete and sign the form of Subscription Agreement attached hereto as Schedule "C".

3 (c) At the Closing Time on the Closing Date, upon satisfaction of the conditions contained herein, the Agent shall pay or cause payment to be made of the net purchase price of the Units sold by the Agent in United States funds by wire transfer to such bank and account as may be designated by the Corporation, or in such other manner as may be agreed with the Corporation, such net purchase price to be equal to the aggregate Issue Price of the Units sold by the Agent less the cash portion of the Commission (if the Agent elects to receive all or a part thereof in cash) and the amount in reimbursement of expenses referred to in section 9 hereof. Such payment and delivery shall be made against: (i) delivery of certificates representing the Preferred Shares, the Two Year Warrants and the Short Term Warrants issued on the Closing Date registered in such name or names as are directed in the Subscription Agreements; (ii) delivery of the Commission and the Broker Warrants; and (iii) delivery to the Agent of copies of the certificates, opinions and other documents contemplated hereby. 5. Representations, Warranties and Covenants of the Corporation The Corporation represents, warrants and covenants to the Agent as of the date hereof and as of the Closing Date, which representations, warranties and covenants shall survive the Closing for a period of two years and any investigation made by the Agent, that: (a) the Corporation is a validly existing corporation in good standing under the laws of the jurisdiction in which it is incorporated, and the Corporation has no subsidiaries; (b) the Corporation is duly qualified and authorized to do business in the jurisdiction(s) in which it carries on business or to own property where required under the laws of the jurisdiction(s) in which any such property is located; (c) the Corporation is current with all material filings required to be made under the laws of any jurisdiction in which it carries on any material business, and the Corporation has all necessary licenses, leases, permits, authorizations and other approvals necessary to permit it to conduct its business as currently conducted, except where the failure to have any such license, lease, permit, authorization or approval would not have a material adverse effect on the Corporation and its business; (d) the audited financial statements of the Corporation as at and for the year ended December 31, 2001 present fairly, in all material respects, the financial position of the Corporation as at that date, and the results of its operations and the changes in its financial position for the 12-month period then ended in accordance with generally accepted accounting principles, and the unaudited financial statements of the Corporation as at and for the nine months ended September 30, 2002 present fairly, in all material respects, the financial position of the Corporation as at that date, and the results of its operations and the changes in its financial position for the ninemonth period then ended; since September 30, 2002, there has been no material adverse

4 change in the business, affairs or financial or other condition of the Corporation, except as disclosed in the notes to the financial statements for the nine-month period then ended; (e) the Corporation has all requisite power and authority to carry out its obligations under this Agreement, the investor rights agreement in the form set forth in Appendix II to the Subscription Agreement ( the "Investor Rights Agreement"), the Preferred Shares, the Two Year Warrants and the Short Term Warrants (the Two Year Warrants and the Short Term Warrants collectively referred to as the "Warrants") including any Preferred Shares, Two Year Warrants and Short Term Warrants issued to the Agent in satisfaction or partial satisfaction of the Commission, (hereinafter referred to as the "Commission Preferred Shares" and the Two Year Warrants and Short Term Warrants as the "Commission Warrants", respectively) and any Broker Warrants; (f) this Agreement and the Investor Rights Agreement have been, and the Preferred Shares, Warrants, the Commission Preferred Shares, the Commission Warrants and the Broker Warrants will be on the Closing Date, duly authorized, executed and delivered by the Corporation and constitute or on the Closing Date will constitute, legal, valid and binding obligations of the Corporation enforceable in accordance with their terms except that: (i) the enforcement hereof or thereof may be limited by bankruptcy, insolvency, reorganization and other laws affecting the enforcement of creditors' rights generally, (ii) rights of indemnity thereunder may be limited under applicable law, and (iii) equitable remedies, including without limitation specific performance and injunctive relief, may be granted only in the discretion of a court of competent jurisdiction; (g) the Preferred Shares comprising part of the Units and the Commission Preferred Shares comprising part of any Commission Units are or on the Closing Date will be duly and validly authorized and, when issued and delivered against payment therefor, will be duly and validly issued, fully paid and non-assessable shares in the capital stock of the Corporation; (h) the Corporation will reserve a sufficient number of Shares unissued as may be required to be issued pursuant to the conversion of the Preferred Shares and the Commission Preferred Shares and the exercise of the Warrants comprising the Purchased Units, the Commission Warrants comprising the Commission Units and the Broker Warrants and, when issued and delivered upon such conversion or exercise, such Shares will be duly and validly issued as fully paid and non-assessable shares in the capital stock of the Corporation; (i) the authorized capital of the Corporation consists of 100,000,000 Common Shares and 5,000,000 shares of preferred stock, $.01 par value per share. Of the preferred stock, 500,000 shares have been designated as Series A Convertible Preferred Stock, 1,116,500 shares have been designated as Series B Convertible Preferred Stock and, on or prior to the Closing Date, not more than 605,000 shares will be designated as Preferred Shares. As of December 31, 2002, there are 16,759,316 Common Shares outstanding, no shares of Series A Convertible Preferred Stock outstanding, 1,112,500 shares of Series B Convertible Preferred Stock outstanding and no shares of Preferred Shares outstanding. In addition, the Corporation has (i) outstanding a convertible note held by Dimotech Limited (the "Convertible Note") in the principal amount of

5 $40,000 which is convertible, at the holder's option, into Common Shares at a price of $1.00 per share or into any class of preferred shares at the price paid by the purchasers thereof; provided, however, that if any such preferred shares are convertible into Common Shares (as is the case with the Preferred Shares), the holder would be entitled to receive no more than the number of preferred shares which, at the then existing conversion rate, would convert into 40,000 Common Shares, and (ii) outstanding a convertible note held by Polymer Technology Group, Inc. ("PTG") (the "PTG Convertible Note") in the principal amount of $70,000 which is convertible, at the holder's option, into Common Shares at a price of $1.00 per share and (iii) available for issuance pursuant to options which have been granted under its 1992 Stock Option Plan, 2000 Stock Option Plan and 2001 Stock Option Plan, an aggregate of approximately 9,400,000 Common Shares and outstanding warrants to purchase an aggregate of approximately 12,000,000 Common Shares; (j) the Corporation is not, and at the Closing Date will not be: (i) in breach or violation of any of the terms or provisions of, or in default under, this Agreement, any other Subscription Agreement for the purchase of Units, the Preferred Shares, the Commission Preferred Shares, the Warrants, the Commission Warrants, the Broker Warrants, any indenture, mortgage, deed of trust or loan agreement, other agreement (written or oral) or instrument to which it is a party or by which it is bound or to which any of its property or assets is subject, which breach or violation or the consequences thereof would result in an adverse material change to it or its business; or (ii) in violation of the provisions of its articles, by-laws, resolutions or any statute or any other rule or regulation of any court or governmental agency or body having jurisdiction over it or any of its properties which violation or the consequences thereof would result in a material adverse change to it or its business; (k) the issue and sale of the Units and the issue of Preferred Shares, Commission Preferred Shares, Warrants, Commission Warrants, Broker Warrants, any Shares on the conversion of Preferred Shares or Commission Preferred Shares or the exercise of Warrants, Commission Warrants or Broker Warrants and the performance and consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement (written or oral) or instrument to which the Corporation or any subsidiary is bound or to which any of the property or assets of the Corporation or any subsidiary is subject, which breach or violation or the consequences thereof would result in a material adverse change to the Corporation and its business, nor will any such action conflict with or result in any violation of the provisions of the articles, by-laws or resolutions of the Corporation or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Corporation or any subsidiary or any of its properties which violation or the consequences thereof would result in a material adverse change to the Corporation and its business; (l) the Corporation has established on its books reserves which are adequate for the payment of all taxes not yet due and payable; there are no liens or other liabilities for taxes on the assets of the Corporation except for taxes not yet due; there are no audits of any of the tax returns of the Corporation which are known by the Corporation's management to be pending and there are no claims which have been or may be asserted relating to any such tax returns which, if determined adversely, would result

6 in the assertion by any government or agency of any deficiency having a material adverse effect on the properties, business or assets of the Corporation; (m) the Corporation has good and valid title to its properties, leaseholds and assets, including without limitation the properties, leaseholds and assets reflected in the balance sheet as of September 30, 2002 referred to in clause 5(d) above, except properties, leaseholds and assets disposed of since such date at fair market value in the ordinary course of business, and has good title to all its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance, charge, rights of first refusal or options to purchase, whether or not relating to extensions of credit or the borrowing of money, other than as disclosed in such balance sheet except as incurred in the ordinary course of business since the date of such balance sheet, and except in any event (i) for a security interest in the Corporation's tangible assets to secure payment of the Convertible Note, and (ii) where the failure to hold good title or the existence of a mortgage, pledge, lien, lease, encumbrance, charge, right of first refusal or option to purchase would not have a material adverse effect on the Corporation or its business; there exists no condition which interferes with the economic value or use of such properties and assets and all tangible assets are in good working condition and repair (subject to ordinary wear and tear) except where the existence of any such condition would not have a material adverse effect on the Corporation or its business; (n) the Corporation owns, or has applied for registration of, all patents, trademarks, service marks, trade names, and copyrights necessary for the conduct of its business, except where the failure to so own or apply for registration would not have a material adverse effect on the Corporation or its business; to the best of the knowledge, information and belief of the Corporation none of the past or present activities of the Corporation or the products, services or assets of the Corporation infringe or constitute an unauthorized use of any proprietary rights of others, and the Corporation has not received any notice of infringement of, or conflict with, asserted rights of others with respect to any patent, trade-mark, service mark, trade name, or copyright that, individually or in the aggregate, if the subject of an unfavourable decision, ruling, or finding, would result in a material adverse change to the Corporation or its business; (o) the Corporation has taken reasonable measures to protect and preserve the confidentiality of all trade secrets and other non-patented proprietary information of the Corporation, including without limitation the procurement of proprietary invention assignments and non-disclosure and non-competition agreements from employees, consultants, subcontractors, customers and other persons who have access to such information; (p) the Corporation has filed all necessary federal, state and municipal property, income and franchise tax returns and has paid all taxes shown as due thereon or otherwise owed by it to any taxing authority except those contested in good faith and for which appropriate amounts have been reserved in accordance with generally accepted accounting principles; there is no tax deficiency which has been, or to the best of the knowledge, information and belief of the Corporation might be, asserted against the Corporation which would materially affect the business or operations of the Corporation; the Corporation has paid all applicable federal and state payroll and withholding taxes;

7 (q) there is no collective bargaining or other union agreement to which the Corporation is a party or by which it is bound, or which is currently being negotiated; the Corporation does not sponsor, maintain or contribute to any pension, retirement, profit sharing, incentive compensation, bonus or other employee benefit plan, including without limitation any employee benefit plan covered by Title 4 of the Employee Retirement Income Security Act of 1974 ("ERISA") or any "multi-employer plan" as defined in Section 4001(a)(3) of ERISA, or any other employee benefit plan; to the best of the knowledge, information and belief of the Corporation, (i) no employee of the Corporation is a party to or bound by any agreement, contract or commitment, or subject to any restrictions, particularly but without limitation in connection with any previous employment of any such person, which would result in a material adverse change to the Corporation and its business, and (ii) no senior officer has any present intention of terminating his employment with the Corporation, and the Corporation has no present intention of terminating any such employment; (r) there is no adverse claim, action, proceeding or investigation pending or, to the knowledge, information and belief of the Corporation, threatened, which questions the validity of the issue or sale of the Units or the issue of any Preferred Shares, Commission Preferred Shares, Warrants, Commission Warrants, Broker Warrants or any Shares on conversion of the Preferred Shares or the Commission Preferred Shares or exercise of the Warrants, Commission Warrants or Broker Warrants or the validity of any action taken or to be taken by the Corporation in connection with this Agreement or which would result in any material adverse change in the financial condition, results of operations, business or prospects of the Corporation; (s) the Corporation will permit the Agent and its legal counsel to conduct all due diligence which the Agent may reasonably require; and (t) during the period commencing with the engagement of the Agent on the date of this Agreement and ending on the Closing Date, the Corporation will inform the Agent in writing of the full particulars of any material change (actual, anticipated or threatened) in the assets, liabilities, business or the financial condition of the Corporation. 6. Closing Conditions for the Benefit of the Agent The obligations of the Agent hereunder are subject to the satisfaction, on or before the Closing Time, of the following conditions: (a) the Corporation shall have complied with all of its obligations hereunder; the representations and warranties of the Corporation contained herein shall be true and correct in all material respects on and as of the Closing Date as if made on and as of the Closing Date; and the Agent shall have received on the Closing Date a certificate, dated as of the Closing Date and signed by one or more executive officers or directors of the Corporation on behalf of the Corporation and not in his or their personal capacity, to the foregoing effect; (b) the Agent shall have received on and as of the Closing Date the favourable opinion of the Corporation's legal counsel on such matters as the Agent may reasonably request, including:

8 (i) the Corporation is incorporated and validly existing under the laws of the jurisdiction in which it is incorporated and has the corporate power and authority to conduct its business as currently conducted by it and to issue and sell the Preferred Shares and Warrants comprising the Units, any Commission Preferred Shares and Commission Warrants comprising the Commission Units and the Broker Warrants (the Preferred Shares, any Commission Preferred Shares, Warrants, any Commission Warrants and the Broker Warrants collectively referred to as the "Securities") and to enter into and carry out its obligations under this Agreement, the Subscription Agreement, the Investor Rights Agreement, and the Securities; (ii) as to the Corporation's authorized and issued and outstanding capital; (iii) each of this Agreement, the Subscription Agreement, the Investor Rights Agreement and the Securities has been duly authorized, executed and delivered by the Corporation and is a legal, valid and binding obligation of the Corporation enforceable against it in accordance with its terms; (iv) all necessary action has been taken by the Corporation to authorize the issue of up to 550,000 Units and the issue to the Agent of up to 55,000 Commission Units and a Broker Warrant exercisable for up to 550,000 Shares and the Corporation has sufficient authorized but unissued Shares as may be required to be issued upon the exercise of the Securities; (v) the execution and delivery of this Agreement, the Subscription Agreement and the Investor Rights Agreement and the completion of the transactions contemplated hereby and thereby, the issue of the Units and of any Commission Units and Broker Warrants, and the issue of the Shares issuable upon exercise of the Securities do not violate or constitute a breach of any provisions of the articles of incorporation or by-laws of the Corporation, any material contract or other material agreement to which it is a party or by which it is bound and of which such counsel is aware, or any New York, Delaware corporate or United States law or regulation (other than federal and state Securities or "blue sky" laws, as to which such counsel expresses no opinion in this paragraph); (vi) the Preferred Shares comprising part of the Units and any Commission Preferred Shares comprising part of any Commission Units have been duly and validly issued by the Corporation and are outstanding as fully paid and non-assessable shares in the capital of the Corporation and the Shares issuable upon exercise of the Warrants, Commission Warrants and Broker Warrants or upon conversion of the Preferred Shares and Commission Preferred Shares will, when issued in accordance with the respective terms and conditions of the Warrants, Commission Warrants, Broker Warrants, Preferred Shares and Commission Preferred Shares, be validly issued as fully paid and non-assessable shares in the capital of the Corporation; (vii) the certificates representing the Preferred Shares and Warrants comprising part of the Units and any Commission Preferred Shares and Commission Warrants comprising part of the Commission Units and Broker Warrants comply with

9 the requirements of the state laws and any federal laws of the United States applicable to the Corporation and such certificates have been duly and properly approved by the directors of the Corporation; (viii) the exemption from any consent, approval, authorization, order, registration, filing or qualification of or with any governmental authority of the United States (or New York or Delaware corporate authority) (other than federal and state securities or "blue sky" laws, as to which such counsel expresses no opinion in this paragraph) for the valid authorization, issue, sale and delivery of the Units and Shares issuable upon exercise of Warrants, Commission Warrants and Broker Warrants and upon the conversion of Preferred Shares and Commission Preferred Shares and the issue and delivery of any Commission Units and Broker Warrants; and (ix) the exemption from registration of the issuance of the Securities (including the underlying securities) under the terms contemplated by the Subscription Agreement and the Agency Agreement. In giving the opinions contemplated above, legal counsel to the Corporation shall be entitled to rely, where appropriate, upon opinions of local counsel and, as to matters of fact, to rely upon the representations and warranties of Purchasers contained in the executed Subscription Agreements, a certificate of fact of the Corporation signed by those officers in a position to have knowledge of such facts and their accuracy, and certificates of such public officials and other persons as are necessary or desirable, and may qualify its opinion described in (iii) above with respect to (1) bankruptcy, insolvency, reorganization and other laws affecting the enforcement of creditors' rights generally and (2) limitations on the availability of equitable remedies such as specific performance, and its opinion may include other reasonable and standard opinion qualifications; (c) the Agent shall have received copies of the Subscription Agreement and the Investor Rights Agreement executed by the Corporation; (d) the Agent shall have received such other agreements, certificates, opinions or documents as the Agent may reasonably request; and (e) the fulfilment, to the reasonable satisfaction of counsel for the Agent, of all legal requirements to permit the offer and sale of the Units and the issue of any Commission Units and Broker Warrants to the Agent. The foregoing conditions are included for the benefit of the Agent and may be waived in writing by the Agent, in whole or in part. Notwithstanding anything contained in this Agreement, the Agent may by written notice to the Corporation terminate this Agreement at any time before the Closing Time if, in the opinion of the Agent, there shall have been such a change in national or international financial, political or economic conditions or currency exchange rates or exchange controls as would in its reasonable view be likely to prejudice materially the success of the Offering or distribution of the Units or if the Agent is not reasonably satisfied with the results of its due diligence review of the Corporation and, upon notice being given, the parties to this

10 Agreement shall (except for the liability of the Corporation in relation to expenses as provided in section 8 and except for any liability arising before or in relation to such termination) be released and discharged from their respective obligations under this Agreement. 7. Confidentiality The Agent agrees that it will not disclose the terms of the Offering or any information it may have acquired from the Corporation in the course of executing this Agency Agreement which the Corporation has identified as material non-public information, except to the extent (i) that such terms or other information becomes generally available to the public other than by disclosure in violation of this Agency Agreement, (ii) that such information was properly within the Agent's possession prior to being furnished by the Corporation, (iii) that such information becomes available to the Agent on a non-confidential basis, such as through disclosure by third parties who have the right to disclose the information, and (iv) compelled by judicial process, provided that in the event of compulsion by judicial process the Agent will inform the Corporation promptly upon its receipt of notice of judicial process compelling such disclosure. 8. Expenses In further consideration of the agreement with the Agent herein contained, the Corporation covenants and agrees to reimburse the Agent, regardless of whether the Offering is completed, for the Agent's reasonable fees and expenses including (without limitation) reasonable fees and expenses of Agent's legal counsel, due diligence expenses, travel expenses and expenses incurred in connection with the holding of roadshows, investor meetings and presentations and printing and preparation of any offering documents and marketing materials (collectively the "Expenses"). Other than Agent's legal expenses, the Expenses shall not exceed $1,500, in the aggregate, without the prior written approval of the Corporation.. The Corporation shall not be responsible for Agent's legal expenses in excess of $15,000 (the "Cap"). The Corporation acknowledges and agrees that the Cap has been set based on the parties' joint expectation of the amount of work involved to complete the Offering (based on, for example, an existing set of negotiated documents for an earlier financing for the Corporation in which the Agent participated), and the Corporation further acknowledges and agrees that in the event of unforeseen circumstances or delay in closing the Offering resulting in the greater than anticipated workload for the Agent's legal counsel, it will in good faith consider and discuss with the Agent the reimbursement by the Corporation of such legal counsel's reasonable fees and expenses in excess of the Cap. Expenses incurred up to the Closing Date shall be reimbursed, upon submission to the Corporation of invoices, receipts or similar proof of expenditure, at the Closing Time and, with the Corporation's approval, may be deducted by the Agent from the proceeds of sale at the Closing. Expenses incurred after the Closing Date shall be reimbursed, upon submission to the Corporation of invoices, receipts or similar proof of expenditure, forthwith following the delivery to the Corporation of accounts in respect thereof and will be reimbursed by the Corporation upon its approval. 9. Indemnification (a) The Corporation agrees to indemnify and hold harmless the Agent and Clubb Capital Ltd. and their respective directors, officers, employees and agents from and against

11 any and all losses, claims, damages and liabilities arising out of or in relation to or in connection with any breach or non-compliance by the Corporation of or with any of its covenants or representations and warranties herein, provided that the Corporation shall not be liable under this section to the extent that any such loss, claim, liability or damage arises out of or is based upon a breach by the Agent of the obligations and agreements set forth in section 2 hereof or Schedule "A" attached hereto. (b) In case any proceeding (including any governmental investigation) shall be instituted involving any indemnified party in respect of which indemnity may be sought pursuant to the preceding paragraph, such party shall promptly notify the Corporation in writing, and the Corporation, upon the request of such party, shall retain counsel reasonably satisfactory to such party to represent such party and any others the Corporation may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding. (c) In any such proceeding, such indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such party unless (i) the Corporation and such party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include the Corporation and such party and representation of both parties by the same counsel is not appropriate as a result of differing interests between them. The Corporation shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment or determination in respect of which the indemnity referred to in this section 9 is claimed, the Corporation agrees to indemnify such party from and against any loss or liability by reason of such settlement, judgment or determination. 10. Notices, etc. All notices hereunder may be hand delivered or given by facsimile or any other means of instantaneous written communication to such respective party hereto as follows (or at such other address as may hereafter be communicated by either party hereto to the other party): If to the Agent: Clubb BioCapital Limited 2 Physic Place London SW3 4HQ
England Attention: Telephone: Facsimile: Joerg Gruber 44-20-7349-3101 44-20-7349-3140

12 With a copy to: Blake, Cassels & Graydon LLP 199 Bay Street, Commerce Court West Toronto, ON M5L 1A9 Canada Attention: John A. Kolada Telephone: (416) 863-4171 Facsimile: (416) 863-2653 If to the Corporation: Life Medical Sciences, Inc. P.O. Box 219 Little Silver, NJ 07739 U.S.A
Attention: Robert P. Hickey - Chairman, President and Chief Executive Officer 732-728-1769 732-728-1769 Ehrenreich, Eilenberg & Krause LLP 11East 44th Street, 17th Floor New York, NY 10017 Keith Moskowitz 212-986-9700 212-986-2399

Telephone: Facsimile: With a copy to:

Attention: Telephone: Facsimile: 11. Counterparts

This Agreement may be signed and delivered in counterparts, and by facsimile, with the same effect as if the signatures thereto and hereto were upon the same instrument and delivered in person. 12. Survival All representations, covenants, undertakings and indemnities herein will survive for a period of two years following each and every Closing Date, notwithstanding the completion of the transactions contemplated hereby and shall apply regardless of any investigation made by or on behalf of any indemnified party.

13 13. Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of New York and the federal laws of the United States applicable therein. The courts of the State of New York shall have exclusive jurisdiction to entertain any action in respect of this Agreement. 14. Time Time is of the essence of this Agreement. 15. Entire Agreement This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. There are no conditions, warranties, representations or other agreements between the parties in connection with the subject matter of this Agreement (whether oral or written, express or implied, statutory or otherwise) except as specifically set out in this Agreement. 16. Miscellaneous This Agreement shall enure to the benefit of, and be binding upon, the successors of the Corporation and the Agent. Yours sincerely, CLUBB BIOCAPITAL LIMITED By: Accepted and agreed as of the day of _________________, 2003. LIFE MEDICAL SCIENCES, INC. By: Robert P. Hickey Chairman, President and Chief Executive Officer

Schedule "A" Restrictions on Offers and Sales of the Units 1. The Agent represents and agrees that: (i) it has not offered or sold and, prior to the expiry of the period of six months after the Closing Date, will not offer or sell any Units to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Units in, from or otherwise involving the United Kingdom, and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Units to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to whom such document may otherwise lawfully be issued or passed on; and (iv) it has complied and will comply with all applicable securities laws in the United Kingdom and elsewhere in Europe in connection with the Offering. 2. The Agent acknowledges that the Units and the Shares issuable upon exercise of the Warrants (collectively the "Securities") have not been and will not be registered under the 1933 Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons (as defined in Rule 902(o) of Regulation S promulgated under the Securities Act) except in accordance with Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act. 3. Terms with initial capital letters used but not defined in this Schedule shall have the meanings given to them in the Agency Agreement to which this Schedule is attached.

Schedule "B" List of Excluded Investors As of January 9, 2003 1. Alan Goodman 2. New Enterprise Associates 3. SAE 4. emedsecurities 5. Oscar Gruss & Co. 6. Dominick & Dominick 7. Dechert Price & Rhoads and Allan Bloom 8. Frank Ruderman 9. David Crook 10. Jean-Louis Pourny 11. Steve Seiler and Elan 12. Schroder Ventures 13. Tom Rosse 14. Sage Group 15. AIG Investors, NY, NY 16. Aura Investments, Tel Aviv, Israel 17. Axiom Partner, Hartford, CT 18. BioCapital, Montreal, Canada 19. CB Health Ventures, Boston, MA 20. Clarion Capital, Cleveland, OH 21. CPRUS (LibertyView Capital), Jersey City, NJ 22. DCF Capital, Boston, MA 23. EGS Partners, NY, NY 24. Emerald Ventures, Lancaster, PA 25. Hudson Partners, NY, NY 26. Innovative Technology Partner, LA, CA 27. MedCapital, Morristown, NJ 28. Medica Venture Partners, NY, NY

2 29. Micro Capital, Darien, CT 30. Palladin Investors, Maplewood, NJ 31. Penney Lane Partners, Princeton, NJ 32. Perseus - Soros, NY, NY 33. Radius Ventures, NY, NY 34. Trillium Medical Ventures, NY, NY 35. Versant Ventures, Newport Beach, CA 36. Warburg Pincus, NY, NY 37. TL Ventures, Philadelphia, PA 38. AMT Ventures, Gulf Breeze, FL 39. Dorado Fund LP-1, Coconut Grove, FL 40. A.M. Pappas & Co, Research Triangle Park, NC 41. Key Capital Corp, Cleveland, OH 42. Israel Infinity Fund, NY, NY 43. Cardinal Health Ventures, Princeton, NJ 44. Foresight Ventures (A. Patrickoff), NY, NY 45. Essex Woodlands, Irvine, Ca 46. KBL Health Venture, NY, NY 47. Johnston & Associates, Princeton, NJ 48. Vertical Group, Summit, NJ 49. Javlin Partners, Mobil AL 50. Rosse Enterprises. Boston, MA 51. Connexus Financial Partners, Bridgewater Township, NJ 52. Early Stage Enterprises, Princeton, NJ 53. Dimotech Limited 54. Schweizerische Gesellschaft fur Aktienhandel und Research AG

Schedule "C" SUBSCRIPTION AGREEMENT (European Subscribers)

EXHIBIT 10.40 EMPLOYMENT AGREEMENT THIS AGREEMENT made in Oceanport, New Jersey as of the 1st day of March 2003, between Life Medical Sciences, Inc., a Delaware corporation (the "Company") and Eli Pines the undersigned individual ("Executive"). In consideration of the mutual covenants and agreements hereinafter set forth, the Company and Executive agree as follows: 1. Agreement Term. The term of this Agreement shall be the three-year period commencing on March 1, 2003 (the "Employment Date") and ending on the third anniversary of the Employment Date (the "Agreement Term"). It is understood and agreed by the parties hereto that absent prior written notice to the Executive of the Company's intent to terminate this Agreement, such notice being received by the Executive at least three months prior to the end of the Agreement Term or unless the Company has exercised its right to terminate this Agreement under Sections 5.(b) or 5.(c), the Agreement Term shall automatically be extended in annual increments as of the anniversary of the Employment Date. 2. Employment. (a) Employment by the Company. Executive agrees to be employed by the Company for the Agreement Term upon the terms and subject to the conditions set forth in this Agreement. Executive shall have the title of Vice President of Research and Chief Scientific Officer reporting to the President and CEO. Executive shall have such duties as may be prescribed by the Company and shall serve in such other and/or additional position(s) as the Company may determine from time to time. Executive shall also serve as a Corporate Officer of the Company. The Company will at all times treat the Executive with dignity, honesty and respect, and will provide Executive with such resources as in the Company's judgement shall enable the Executive to discharge his responsibilities. (b) Performance of Duties. Throughout the Agreement Term, Executive shall faithfully and diligently perform Executive's duties in conformity with the directions of the Company and serve the Company to the best of Executive's ability. Executive shall devote Executive's entire working time, attention and energies to the business and affairs of the Company, subject to vacations and sick leave as provided herein and in accordance with Company policy. (c) Place of Performance. During the Agreement Term, Executive shall, subject to travel requirements on behalf of the Company, be based at the Executive's personal residence or such other location(s) in central New Jersey as the Company may determine.

3. Compensation and Benefits. (a) Base Salary. The Company agrees to pay to Executive for employment hereunder a base salary ("Base Salary") at the annual rate of $180,000. The Base Salary shall be increased prospectively on each anniversary of the Employment Date during the Agreement Term, by such amount as the Board of Directors of the Company shall determine is necessary and appropriate to give effect to increases in the cost of living. The Base Salary shall be payable in installments consistent with the Company's payroll practices then in effect. (b) Benefits and Perquisites; Bonus and Stock Options. Executive shall be entitled to participate in, to the extent Executive is otherwise eligible under the terms thereof, the benefit plans and programs, including medical and savings and retirement plans, and receive the benefits and perquisites, generally provided to employees of the same level and responsibility as Executive. Executive shall be entitled to four weeks vacation during each year of the Agreement Term. Nothing in this Agreement shall preclude the Company from terminating or amending from time to time any employee benefit plan or program. Executive shall be eligible for bonuses and stock options, at such times and in such amounts as shall be determined at the discretion of the Board of Directors of the Company based on their assessment of Executive's performance of his duties and on the financial performance of the Company. (c) Travel and Business Expenses. Upon submission of itemized expense statements with supporting receipts in the manner specified by the Company, Executive shall be entitled to reimbursement for reasonable travel and other reasonable business expenses duly incurred by Executive in the performance of Executive's duties under this Agreement in accordance with the policies and procedures established by the Company from time to time for employees of the same level and responsibility as Executive. (d) No Other Compensation or Benefits; Payment. The compensation and benefits specified in Sections 3 and 5 of this Agreement shall be in lieu of any and all other compensation and benefits. Payment of all compensation and benefits to Executive hereunder shall be made in accordance with the relevant Company policies in effect from time to time, including normal payroll practices, and shall be subject to all applicable employment and withholding taxes. (e) Cessation of Employment. In the event Executive shall cease to be employed by the Company for any reason, then Executive's compensation and benefits shall cease on the date of such event, except as otherwise provided herein or in any applicable employee benefit plan or program. -2-

4. Exclusive Employment; Noncompetition. (a) No Conflict; No Other Employment. During the period of Executive's employment with the Company, Executive shall not engage in any activity which conflicts or interferes with or derogates from the performance of Executive's duties hereunder nor shall Executive engage in any other business activity, whether or not such business activity is pursued for gain or profit, except as approved in advance in writing by the President & CEO of the Company. (b) No Competition. Without limiting the generality of the provisions of Sections 2(b) or 4(a) and so long as the Company fulfills its obligations under this Agreement, during the period of Executive's employment with the Company, and for a period of one year thereafter (the "Restricted Period"), Executive shall not, directly or indirectly, own, manage, operate, join, control, participate in, invest in or otherwise be connected or associated with, in any manner, including as an officer, director, employee, partner, stockholder, joint venturer, lender, consultant, advisor, agent, proprietor, trustee or investor, any Competing Business located in the United States or in any other location where the Company operates or sells its products or services; provided, however, that if Executive's employment hereunder is terminated by the Company under Section 5(d), then the provisions of this Section 4(b) shall remain in effect only if the Company shall not have breached its obligation to pay to Executive amounts as severance pursuant to Section 5(d). (i) As used in this Agreement, the term "Competing Business" shall mean any business or venture which engages in any business area, or sells or provides products or services that compete or overlap with any business area, in which the Company engages or is actively developing products or technology to engage in at any time during the Agreement Term, or any business or venture which sells or provides products or services that compete or overlap with the products or services as sold or provided, or are being actively developed to be sold or provided, by the Company at any time during the Agreement Term. (ii) For purposes of this Section 4(b), the term "invest" shall not preclude an investment in not more than one percent (1%) of the outstanding capital stock of a corporation whose capital stock is listed on a national securities exchange or included in the NASDAQ Stock Market, so long as Executive does not have the power to control or direct the management of, or is not otherwise associated with, such corporation. (c) No Solicitation. During the Restricted Period, Executive shall not solicit or encourage any employee or consultant of the Company to leave the employ, or cease his or her relationship with, the Company for any reason, nor employ or retain such an individual in a Competing Business or any other business. -3-

(d) Company Customers. Executive shall not, during the Restricted Period, directly or indirectly, contact, solicit or do business with any "customers" (as hereinafter defined) of the Company for the purpose of selling or providing any product or service then sold or provided by the Company to such customers or being actively developed to be sold or provided to such customers during Executive's employment by the Company or at the time of termination of Executive's employment hereunder. For the purposes of the provisions of this Section 4(d), "customer" shall include any entity that purchased any product or service from the Company within twelve months of the termination of Executive's employment hereunder, without regard to the reason for such termination. The term "customer" also includes any former customer or potential customer of the Company which the Company has solicited within twelve months of such termination, for the purpose of selling or providing any product or service then sold or provided, or then actively being developed to be sold or provided, by the Company. (e) Modification of Covenants. The restrictions against competition set forth in this Section 4 are considered by the parties to be reasonable for the purposes of protecting the business of the Company. However, if any such restriction is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable. 5. Termination of Employment. (a) Termination. The Company may terminate Executive's employment for Cause (as hereinafter defined) in which case the provisions of Section 5(b) shall apply. The Company may also terminate Executive's employment in the event of Executive's Disability (as hereinafter defined), in which case the provisions of Section 5(c) shall apply. The Company may also terminate the Executive's employment for any other reason by written notice to Executive, in which case the provisions of Section 5(d) shall apply. If Executive's employment is terminated by reason of Executive's death, retirement or voluntary resignation, the provisions of Section 5(b) shall apply. (b) Termination for Cause; Termination by Reason of Death or Retirement or Voluntary Resignation without Good Reason. (1) In the event that Executive's employment hereunder is terminated during the Agreement Term (i) by the Company for Cause (as hereinafter defined), (ii) by reason of Executive's death or retirement or (iii) by reason of Executive's voluntary resignation without Good Reason, then the Company shall pay to Executive, within thirty (30) days of the date of such termination, only the Base Salary through such date of termination. -4-

(2) For purposes of this Agreement, "Cause" shall mean (i) conviction of any crime (whether or not involving the Company) constituting a felony in the jurisdiction involved; (ii) engaging in any substantiated act involving moral turpitude; (iii) engaging in any act which, in each case, subjects, or if generally known would subject, the Company to public ridicule or embarrassment; (iv) gross neglect or misconduct in the performance of Executive's duties hereunder; (v) willful or repeated failure or refusal to perform such duties as may be relegated to Executive commensurate with Executive's position; or (vi) breach of any provision of this Agreement by Executive. (3) In the event the Company desires to terminate Executive's employment for Cause as defined in clauses (iv), (v) or (vi) of the definition thereof, the Company shall first attempt to resolve the matter(s) at issue through a meeting between Executive and the Chairman of the Board for Directors of the Company. If such meeting fails to resolve the matter(s), then Executive will meet with the Board of Directors of the Company and attempt to resolve the matter(s). The decision of the Board of Directors of the Company as to the matter(s) shall be final and binding on the parties and not subject to review or appeal by any other person. (c) Disability. If, as a result of Executive's incapacity due to physical or mental illness, Executive shall have been absent from Executive's duties hereunder on a full time basis for either (i) ninety (90) days within any six-month period, or (ii) sixty (60) consecutive days, and within thirty (30) days after written notice of termination is given shall not have returned to the performance of Executive's duties hereunder on a full time basis, the Company may terminate Executive's employment hereunder for "Disability". In that event, the Company shall pay to Executive, within thirty (30) days of the date of such termination, only the Base Salary through such date of termination. During any period that Executive fails to perform Executive's duties hereunder as a result of incapacity due to physical or mental illness (a "Disability Period"), Executive shall continue to receive the compensation and benefits provided by Section 3 hereof until Executive's employment hereunder is terminated; provided, however, that the amount of compensation and benefits received by Executive during the Disability Period shall be reduced by the aggregate amounts, if any, payable to Executive under disability benefit plans and programs of the Company or under the Social Security disability insurance program. (d) Termination By Company For Any Other Reason; Termination for Good Reason by Executive In the event that Executive's employment hereunder is terminated by the Company during the Agreement Term for any reason other than as provided in Sections 5(b) or 5(c) hereof or is terminated for Good Reason by Executive then the Company shall pay to Executive, within thirty (30) days of the date of such termination, the Base Salary through such date of termination and, in lieu of any further compensation and benefits for the balance of the Agreement Term, severance pay equal to the Base Salary that Executive would have otherwise received during the period of six months from the effective date of such termination, commencing with such date of termination at the times and in the amounts such Base Salary would have been -5-

paid; provided, however, that in the event that Executive shall breach Sections 4 or 6 hereof, in addition to any other remedies the Company may have in the event Executive breaches this Agreement, the Company's obligation pursuant to this Section 5(d) to continue such payments of salary shall cease and Executive's rights thereto shall terminate and shall be forfeited. "Good Reason" shall mean (i) the assignment to Executive of duties inconsistent with his title, (ii) a reduction by the Company in the Base Salary as in effect on the date hereof or as it may be increased from time to time, (iii) the failure by the Company to continue any compensation or benefit plan that is material to Executive's total compensation, (iv) a Change in Control, as such term is defined in the Company's 2001 Non-Qualified Stock Option Plan, or (v) a relocation of the Company's offices where Executive is to perform the services required hereby to an unreasonable commuting distance from Executive's residence in the New York City area. (d) No Further Liability; Release. Payment made and performance by the Company in accordance with this Section 5 shall operate to fully discharge and release the Company and its directors, officers, employees, subsidiaries, affiliates, stockholders, successors, assigns, agents and representatives from any further obligation or liability with respect to Executive's employment and termination of employment. Other than paying Executive's Base Salary through the date of termination of Executive's employment and making any severance payment pursuant to and in accordance with this Section 5 (as applicable), the Company and its directors, officers, employees, subsidiaries, affiliates, stockholders, successors, assigns, agents and representatives shall have no further obligation or liability to Executive or any other person under this Agreement. The Company shall have the right to condition the payment of any severance or other amounts pursuant to Sections 5(c) or 5(d) hereof upon the delivery by Executive to the Company of a release in form and substance satisfactory to the Company of any and all claims Executive may have against the Company and its directors, officers, employees, subsidiaries, affiliates, stockholders, successors, assigns, agents and representatives arising out of or related to Executive's employment by the Company and termination of such employment. 6. Confidential Information. (a) Existence of Confidential Information. The Company owns and has developed and compiled, and will develop and compile, certain proprietary technology, know-how and confidential information which have great value to its business (referred to in this Agreement, collectively, as ("Confidential Information"). Confidential Information includes not only information disclosed by the Company to Executive, but also information developed or learned by Executive during the course or as a result of employment with the Company, which information shall be the property of the Company. By way of example and without limitation, Confidential Information includes all information that has or could have commercial value or other utility in the business in which the Company is engaged or contemplates engaging, and all information of which the unauthorized disclosure could be detrimental to the interests of the Company, whether -6-

or not such information is specifically labeled as Confidential Information. By way of example and without limitation, Confidential Information includes any and all information developed, obtained, licensed by or to or owned by the Company concerning trade secrets, techniques, know-how (including research data, designs, plans, procedures, merchandising, marketing, distribution and warehousing know-how, processes, and research records), software, computer programs, and any other intellectual property created, used or sold (through a license or otherwise) by the Company, product know-how and processes, innovations, discoveries, improvements, research, development, test results, reports, specifications, data, formats, marketing data and plans, business plans, strategies, forecasts, unpublished financial information, orders, agreements and other forms of documents, price and cost information, merchandising opportunities, expansion plans, budgets, projections, customer, supplier, licensee, licensor and subcontractor identities, characteristics, agreements and operating procedures, and salary, staffing and employment information. (b) Protection of Confidential Information. Executive acknowledges and agrees that in the performance of duties hereunder Executive develops and acquires, and the Company discloses to and entrusts Executive with, Confidential Information which is the exclusive property of the Company and which Executive may possess or use only in the performance of duties for the Company. Executive also acknowledges that Executive is aware that the unauthorized disclosure of Confidential Information, among other things, may be prejudicial to the Company's interests, an invasion of privacy and an improper disclosure of trade secrets. Executive shall not, directly of indirectly, use, make available, sell, disclose or otherwise communicate to any corporation, partnership, individual or other third party, other than in the course of Executive's assigned duties and for the benefit of the Company, any Confidential Information, either during the Agreement Term or thereafter. In the event Executive desires to publish the results of Executive's work for or experiences with the Company through literature, interviews or speeches, Executive will submit requests for such interviews or such literature or speeches to the Board of Directors of the Company at least fourteen (14) days before any anticipated dissemination of such information for a determination of whether such disclosure is in the best interests of the Company, including whether such disclosure may impair trade secret status or constitute an invasion of privacy. Executive agrees not to publish, disclose or otherwise disseminate such information without the prior written approval of the Board of Directors of the Company. (c) Delivery of Records, Etc. In the event Executive's employment with the Company ceases for any reason, Executive will not remove from the Company's premises without its prior written consent any records, notes, notebooks, files, drawings, documents, equipment, materials and writings received from, created for or belonging to the Company, including those which relate to or contain Confidential Information, or any copies thereof. Upon request or when employment with the Company terminates, Executive will immediately deliver the same to the Company. -7-

7. Invention and Patents. (a) Executive will promptly and fully disclose to the Company any and all inventions, discoveries, trade secrets and improvements, whether or not patentable or whether or not they are made, conceived or reduced to practice during working hours or using the Company's data or facilities, which Executive shall develop, make, conceive or reduce to practice during Executive's employment by the Company, either solely or jointly with others (collectively, "Developments"). All such Developments shall be the sole property of the Company, and Executive hereby assigns to the Company, without further compensation, all his right, title and interest in and to such Developments and any and all related patents, patent applications, copyrights, copyright applications, trademarks and trade names in the United States and elsewhere. (b) Executive shall keep and maintain adequate and current written records of all Developments (in the form of notes, sketches, drawings and as may be specified by the Company), which records shall be available to and remain the sole property of the Company at all times. (c) Executive shall assist the Company in obtaining and enforcing patent, copyright and other forms of legal protection for the Developments in any country. Upon request, Executive shall sign all applications, assignments, instruments and papers and perform all acts necessary or desired by the Company and to enable the Company its successors, assigns and nominees, to secure and enjoy the full exclusive benefits and advantages thereof. (d) Executive understands that Executive's obligations under this section will continue after the termination of his employment with the Company and that Executive shall perform such obligations without further compensation, except (i) for reimbursement of expenses incurred at the request of the Company and (ii) that after the termination of Executive's employment with the Company and notwithstanding anything in this Section 7 to the contrary, Executive shall not be required to provide assistance to the Company in accordance with this Section 7 or Section 9(l) for more than 50 hours during any twelve-month period. If the Company desires assistance beyond such 50-hour limitation, such assistance shall be subject to Executive's consent, not to be unreasonably withheld, and the Company will compensate Executive on a per diem basis at a per diem rate that is determined by dividing the Base Salary in effect when the Employment Term was terminated by 250 days. -8-

8. Assignment and Transfer (a) Company. This Agreement shall inure to the benefit of and be enforceable by, and may be assigned by the Company to, any purchaser of all or substantially all of the Company's business or assets, any successor to the Company or any assignee thereof (whether direct or indirect, by purchase, merger, consolidation or otherwise). The Company will require any such purchaser, successor or assignee to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such purchase, succession or assignment had taken place. (b) Executive. Executive's rights and obligations under this Agreement shall not be transferable by Executive by assignment or otherwise, and any purported assignment, transfer or delegation thereof shall be void; provided, however, that if Executive shall die, all amounts then payable to Executive hereunder shall be paid in accordance with the terms of this Agreement to Executive's devisee, legatee or other designee or, if there be no such designee, to Executive's estate. 9. Miscellaneous. (a) Other Obligations. Executive represents and warrants that he is not a party to any other employment agreement and that neither Executive's employment with the Company nor Executive's performance of Executive's obligations hereunder will conflict with or violate or otherwise are inconsistent with any other agreements to which Executive is or has been a party or with any other obligations, legal or otherwise, which Executive may have. (b) Nondisclosure; Prior Employers. Executive will not disclose to the Company, or use, or induce the Company to use, any proprietary information, trade secrets or confidential business information of others. Executive represents and warrants that Executive has returned all property, proprietary information, trade secrets and confidential business information belonging to all prior employers. (c) Cooperation. Following termination of employment with the Company, Executive shall cooperate with the Company, as requested by the Company, to affect a transition of Executive's responsibilities and to ensure that the Company is aware of all matters being handled by Executive. As compensation for such cooperation, the Company shall pay the Executive on a mutually agreed upon per diem basis. Such compensation shall be over and above any payments due the Executive as defined herein. (d) Protection of Reputation. During the Agreement Term and thereafter, Executive agrees that he will take no action which is intended, or could reasonably be expected, to harm the Company or its reputation or which could reasonably be expected to lead to unwanted or unfavorable publicity to the Company. (e) Governing Law; Arbitration. -9-

(i) Governing Law. This Agreement, including the validity, interpretation, construction and performance of this Agreement, shall be governed by and construed in accordance with the laws of the State of New Jersey applicable to agreements made and to be performed in such state without regard to such states conflicts of law principles. (ii) Arbitration. Subject to Section 9(k) hereof, any controversy or claim which arises out of or relating to this Agreement, or the breach thereof shall be settled by arbitration in accordance with the Rules of the American Arbitration Association then in effect. The controversy or claim shall be submitted to three arbitrators, one of whom shall be chosen by the Employee, one of whom shall be chosen by the Company, and one of whom shall be chosen by the two so selected. The party desiring arbitration shall give written notice to the other party of its desire to arbitrate the particular matter in question, naming the arbitrator selected by it. If the other party shall fail within a period of 15 days after such notice shall have been given to reply in writing naming the arbitrator chosen as above provided, or if the two arbitrators selected by the parties shall fail within 15 days after their selection to agree upon the third arbitrator, then either party may apply to the American Arbitration Association for the appointment of an arbitrator to fill the place so remaining vacant. The decision of any two of the arbitrators shall be final and binding upon the parties hereto. Judgement upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The proceedings shall be held in New York, New York. The arbitrators shall have no power to award punitive or exemplary damages or to ignore or vary the terms of this Agreement, and shall be bound to apply controlling law. Arbitration shall be binding and the remedy for the settlement of the controversy or claims (except as set forth in the preceding paragraph of this Section). (f) Entire Agreement. This Agreement (including the Exhibits hereto) contains the entire agreement and understanding between the parties hereto in respect of the subject matter hereof and supersedes, cancels and annuls any prior or contemporaneous written or oral agreements, understandings, commitments and practices between them respecting the subject matter hereof, including all prior employment agreements, if any, between the Company and Executive, which agreement(s) hereby are terminated and shall be of no further force or effect. (g) Amendment. This Agreement may be amended only by a writing which makes express reference to this Agreement as the subject of such amendment and which is signed by Executive and, on behalf of the Company, by its duly authorized officer. (h) Severability. If any term, provision, covenant or condition of this Agreement or part thereof, or the application thereof to any person, place or circumstance, shall be held to be invalid, unenforceable or void, the remainder of this Agreement and such term, provision, covenant or condition shall remain in full force and effect, and any such invalid, unenforceable or void term, provision, covenant or condition shall be deemed, without further action on the part of the parties hereto, modified, amended and limited to the extent necessary to render the same and -10-

the remainder of this Agreement valid, enforceable and lawful. In this regard, Executive acknowledges that the provisions of Sections 4 and 6 are reasonable and necessary for the protection of the Company. (i) Construction. The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement. The language in all parts of this Agreement shall be in all cases construed according to its fair meaning and not strictly for or against the Company or Executive. The use herein of the word "including," when following any general provision, sentence, clause, statement, term or matter, shall be deemed to mean "including, without limitation". As used herein, "Company" shall mean the Company and its subsidiaries and any purchaser of, successor to or assignee (whether direct or indirect, by purchase, merger, consolidation or otherwise) of all or substantially all of the Company's business or assets which is obligated to perform this Agreement by operation of law. As used herein, the words "day" or "days" shall mean a calendar day or days. (j) Nonwaiver. Neither any course of dealing nor any failure or neglect of either party hereto in any instance to exercise any right, power or privilege hereunder or under law shall constitute a waiver of any other right, power or privilege or of the same right, power or privilege in any other instance. All waivers by either party hereto must be contained in a written instrument signed by the party to be charged and, in the case of the Company, by its duly authorized officer. (k) Remedies for Breach. The parties hereto agree that Executive is obligated under this Agreement to render personal services during the Agreement Term of a special, unique, unusual, extraordinary and intellectual character, thereby giving this Agreement peculiar value, and, in the event of a breach or threatened breach of any covenant of Executive herein, the injury or imminent injury to the value and the goodwill of the Company's business could not be reasonably or adequately compensated in damages in an action at law. Accordingly, Executive expressly acknowledges that the Company shall be entitled to specific performance, injunctive relief or any other equitable remedy against Executive, without the posting of a bond, in the event of any breach or threatened breach of any provision of this Agreement by Executive (including Sections 4 and 6 hereof). Without limiting the generality of the foregoing, if Executive breaches Sections 4 or 6 hereof, such breach will entitle the Company to enjoin Executive from disclosing any Confidential Information to any Competing Business, to enjoin such Competing Business from receiving Executive or using any such Confidential Information and/or to enjoin Executive from rendering personal services to or in connection with such Competing Business. The rights and remedies of the parties hereto are cumulative and shall not be exclusive, and each such party shall be entitled to pursue all legal and equitable rights and remedies and to secure performance of the obligations and duties of the other under this Agreement, and the enforcement of one or more of such rights and remedies by a party shall in no way preclude such party from pursuing, at the same time or subsequently, any and all other rights and remedies available to it. -11-

(l) Notices. Any notice, request, consent or approval required or permitted to be given under this Agreement or pursuant to law shall be sufficient if in writing, and if and when sent by certified or registered mail, return receipt requested, with postage prepaid, to Executive's residence (as reflected in the Company's records or as otherwise designated by Executive on thirty (30) days' prior written notice to the Company) or to the Company's principal executive office, attention: Chairman of the Board (with copies to the General Counsel), as the case may be. All such notices, requests, consents and approvals shall be effective upon being deposited in the United States mail. However, the time period in which a response thereto must be given shall commence to run from the date of receipt on the return receipt of the notice, request, consent or approval by the addressee thereof. Rejection or other refusal to accept, or the inability to deliver because of changed address of which no notice was given as provided herein, shall be deemed to be receipt of the notice, request, consent or approval sent. (m) Assistance in Proceedings, Etc. Executive shall, without additional compensation, during and after expiration of the Agreement Term, upon reasonable notice, furnish such information and proper assistance to the Company as may reasonably be required by the Company in connection with any legal or quasi-legal proceeding, including any external or internal investigation, involving the Company or any of its affiliates or in which any of them is, or may become, a party, unless Executive is adverse to the Company in such proceeding or unless Executive and the Company are both defendants in such proceeding and assisting the Company may impair Executive's ability to defend himself in such proceeding. After the Employment Term Executive shall provide the same assistance under the same conditions, except that Executive shall not be required to provide assistance to the Company in accordance with this Section or Section 7 for more than 50 hours during any twelve-month period. If the Company desires assistance beyond such 50-hour limitation, such assistance shall be subject to Executive's consent, not to be unreasonably withheld, and the Company will compensate Executive on a per diem basis at a per diem rate that is determined by dividing the Base Salary in effect when the Employment Term was terminated by 250 days. (n) Survival. Cessation or termination of Executive's employment with the Company shall not result in termination of this Agreement. The respective obligations of Executive and rights and benefits afforded to the Company as provided in this Agreement shall survive cessation or termination of Executive's employment hereunder. This Agreement shall not terminate upon, and shall remain in full force and effect following, expiration of the Agreement Term and all rights and obligations of the parties hereto as and to the extent provided herein shall survive such expiration. -12-

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed on its behalf by an officer thereunto duly authorized and Executive has duly executed this Agreement, all as of the date and year first written above. LIFE MEDICAL SCIENCES, INC. By:__________________________ Robert P. Hickey Chairman, President & CEO EXECUTIVE Eli Pines, Ph. D.

Life Medical Sciences, Inc. Improving Life Through Discovery March 1, 2003 Eli Pines, Ph. D. 415 Marine St. Santa Monica, CA 90405 Re: Indemnification Agreement Dear Eli: Reference is made to that certain Indemnification Agreement entered into with you on May 29, 1996 (the "Indemnification Agreement") at the time of your prior employment as an executive officer of our company. That employment ended on July 31, 2000. In connection with your rejoining our company as Chief Scientific Officer and Vice President of Research and Development effective March 1, 2003, we hereby agree to extend the term of the Indemnification Agreement so that your Corporate Status (as defined therein) continues uninterrupted from May 29, 1996 through the term of your current employment agreement. Except as modified hereby, the terms of the Indemnification Agreement shall continue in full force and effect. If you are in agreement with the foregoing modification to the Indemnification Agreement, kindly so indicate by signing in the space provided below and returning the originally signed copy to the undersigned. Very truly yours, Robert P. Hickey Chairman, President & CEO Agreed: Eli Pines, Ph.D. PO Box 219, Little Silver, NJ 07739 www.lifemedicalsciences.com Phone/Fax 732-728-1769

EXHIBIT 10.41 ASSIGNMENT AND AMENDMENT AGREEMENT THIS ASSIGNMENT AND AMENDMENT AGREEMENT, dated as of March 7, 2003 (this "Agreement"), by and among SWISS FEDERAL INSTITUTE OF TECHNOLOGY (ETHZ), having an address at Raemistrasse 101, CH-8092 Zurich, Switzerland and UNIVERSITY OF ZURICH, having an address at Raemistrasse 91 CH-8006 Zurich, Switzerland (collectively, "Universities"), PHAIRSON MEDICAL LIMITED, a United Kingdom company ("Phairson"), and LIFE MEDICAL SCIENCES, INC., a Delaware corporation ("LMS"). References to Universities, Phairson and LMS hereunder shall include each of their respective agents, nominees, designees, successors, assigns, heirs or other successors-in-interest. All representations, warranties and covenants of the Universities hereunder shall be joint and several. W I T N E S S E T H: WHEREAS, Phairson has agreed to sell LMS all of its assets related to its polymer-based technology business, pursuant to an Asset Purchase Agreement, dated as of the date hereof, by and between Phairson, an affiliate of Phairson and LMS (the "Asset Purchase Agreement"); WHEREAS, among the assets to be sold to LMS pursuant to the Asset Purchase Agreement are all of Phairson's rights under the contract, dated as of March 1, 1999, between Phairson and Universities, as amended pursuant to an amendment effective June 1, 1999 (the "Development Agreement"); WHEREAS, Universities agree to the assignment of the Development Agreement and the amendment thereof, all subject to and in accordance with the provisions of this Agreement. NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. CONSENT BY UNIVERSITIES TO ASSIGNMENT. Subject to the provisions of this Agreement, and in order to induce the other parties hereto to enter into the Asset Purchase Agreement and to consummate the transactions contemplated thereby, Universities hereby consent to the assignment of the Development Agreement from Phairson to LMS effective as of the closing of the Asset Purchase Agreement (which date shall not be later than March 15, 2003, the "Closing") and agree that, notwithstanding any provision of the Development Agreement to the contrary, Phairson shall not be liable for obligations arising under the Development Agreement from and after the Closing. 2. ASSIGNMENT AND ASSUMPTION OF DEVELOPMENT AGREEMENT. Effective as of the Closing, (i) Phairson hereby sells, assigns, conveys and transfers to LMS all of Phairson's right, title and interest in, to and arising under or relating to the Development Agreement and all intellectual property and other rights of Phairson obtained or arising thereunder, but excluding the Patent Rights (which shall be

transferred to LMS pursuant to separate instrument(s)) and (ii) LMS hereby assumes and shall be solely responsible for all of the obligations and liabilities of Phairson arising under the Development Agreement from and after such date. 3. AMENDMENT OF DEVELOPMENT AGREEMENT. LMS and Universities agree that, effective as of the Closing, the Development Agreement shall be amended as follows: (a) to change all references therein from "Phairson" to "LMS"; to change all references therein from "Foundation" to "Universities"; and to change all references therein from "ETH Zurich Institute of Biomedical Engineering...ETH" to "Swiss Federal Institute of Technology (ETHZ)". (b) to substitute the LMS address and contact information set forth in Section 10 hereof for the address and contact information of the Phairson technical and administrative representatives in Article IV-Designated Representatives of the Development Agreement, and to further add the other provisions of Section 10 hereof (exclusive of the contact information) to the provisions of Article IVDesignated Representatives of the Development Agreement and to substitute the Universities' address and contact information set forth in Section 10 hereof for the address and contact information of the Foundation technical and administrative representatives in Article IV-Designated Representatives of the Development Agreement (c) to substitute the following for Section 4 of Article VI: "4. (a) Universities hereby grant Contractor an exclusive, worldwide, perpetual license under their Proprietary Rights in the Technology, without limitation or restriction as to use or field of use (the "License"). The License includes the right to sublicense. With respect to sublicenses granted by Contractor, Contractor shall promptly provide Universities with a copy of each sublicense issued; and collect payment of all payments due, directly or indirectly, to Universities from Sublicensees and summarize and deliver all reports due, directly or indirectly, to Universities from Sublicensees. Universities reserve the right to use Proprietary Rights in the Technology solely for internal educational and research purposes. In consideration for the License, Contractor agrees to pay Universities, in the aggregate, one tenth of one percent of any and all Net Sales and Sublicense Fees actually received by it. If, prior to receipt by Contractor of Net Sales or Sublicense Fees, Contractor fails to perform any Development Work with respect to the Technology for a period of two years or more, Universities shall have the right to enter into good faith negotiations with Contractor to terminate the License and develop the Technology. (b) For the purposes of this section, the following terms shall have the following meanings: 2

`Development Work' means any technical or business activity relating to the development, manufacture, marketing or commercialization of a Product or Products or efforts to secure intellectual property rights with respect thereto. `Products' means products incorporating the Technology. `Proprietary Rights' means patent rights, copyrights, mask work rights, trademark rights, trade secret rights and any and all other intellectual property or similar rights. `Net Sales' of a party means all revenues actually received by that party or its affiliate(s) with respect to sale of Products in any and all countries in which a valid patent included in the licensed Proprietary Rights then exists, less any allowances for returns, shipping and insurance costs, discounts and promotional allowances, sales, use, value-added and similar taxes and duties and similar governmental assessments. `Sublicense Fees' means any and all revenue received by Contractor in respect of sublicenses of the Proprietary Rights licensed under this Agreement. For the avoidance of doubt, as used in the foregoing sentence the term "revenue" includes the value, as determined in accordance with United States generally acceptable accounting principles, attributable to property, if any, other than cash received by Contractor in respect of sublicenses of the Proprietary Rights under this Agreement." `Technology' means inventions, improvements, discoveries, know-how and the like made or conceived as a result of or in connection with the sponsored work under this Agreement. (d) Beginning January 1, 2004 and ending on the date of first commercial sale of a Product, Contractor shall submit to Universities annual progress reports covering Contractor's (and Sublicensee's) activities to develop and test all Products and obtain governmental approvals necessary for marketing the same. Such reports shall include a summary of work completed; summary of work in progress; current schedule of anticipated events or milestones and market plans for introduction of Products. Contractor shall also report to Universities, in its immediately subsequent progress report, the date of first commercial sale of a Product. After the first commercial sale of a Product anywhere in the world, Contractor shall submit to Universities annually royalty reports on or before each February 28. Each royalty report shall cover Contractor's (and Sublicensee's) most recently completed calendar year and shall show (i) the gross sales and Net Sales during the most recently completed calendar year and the royalties, in U.S. Dollars, payable with respect thereto; (ii) the number of each type of Product sold; (iii) sublicense fees and royalties received during the most recently completed calendar year in US dollars, payable with respect thereto; (iv) the method used to calculate the royalties; and (v) the exchange rates used. If no sale of Products has been made and no sublicense revenue has been received by Contractor during any reporting period, Contractor shall so report. 3

(e) All fees and royalties due Universities shall be paid in United States dollars and all checks shall be made payable to "The University of Zurich", referencing "Unitectra Technology Transfer UZ-04/201". When Products are sold in currencies other than United States dollars, Contractor shall first determine the earned royalty in the currency of the country in which Products were sold and then convert the amount into equivalent United States funds, using the exchange rate quoted in the Wall Street Journal on the last business day of the applicable reporting period. Royalties shall accrue when Products are invoiced, or if not invoiced, when delivered to a third party. Contractor shall pay earned royalties on or before February 28. Each such payment shall be for earned royalties accrued within Contractor's most recently completed calendar year. Royalties earned on sales occurring or under sublicense granted pursuant to this Agreement in any country shall not be reduced by Contractor for any taxes, fees, or other charges imposed by the government of such country on the payment of royalty income, except that all payments made by Contractor in fulfillment of Universities' tax liability in any particular country may be credited against earned royalties or fees due Universities for that country. Contractor shall pay all bank charges resulting from the transfer of such royalty payments. In the event royalty, reimbursement and/or fee payments are not received by Universities when due, Contractor shall pay to Universities interest charges at a rate of ten percent (10%) per year. Such interest shall be calculated from the date payment was due until actually received by Universities. (f) To substitute the following for Section 3 of Article VI. At its sole discretion and expense, Contractor shall diligently prosecute and maintain the patent applications and patents relating to Proprietary Rights using counsel of its choice. Contractor or its counsel shall, upon request, provide Universities with copies of all relevant documentation relating to such prosecution including, but not limited to, draft patent applications, office actions and responses thereto, and appropriate correspondence with counsel and agents. All patents and patent applications relating to Proprietary Rights shall be assigned jointly to Contractor and Universities (ie. "Swiss Federal Institute of Technology(ETHZ)" and "University of Zurich"). Contractor shall, at its sole discretion and expense, apply for an extension of the term of any patent in Patent Rights if appropriate. Contractor shall prepare all documents for such application, and Universities shall execute such documents and take any other additional action as Contractor reasonably requests in connection therewith. (g) The license granted is provided "AS IS" and without WARRANTY OF MERCHANTABILITY or WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE or any other warranty, express or implied. UNIVERSITIES make no representation or warranty that the Product(s) or the use of 4

Proprietary Rights or Technology will not infringe any other patent or other proprietary rights. Contractor shall indemnify, hold harmless and defend UNIVERSITIES, its officers, employees, and agents and the Inventors of the patents and patent applications in Proprietary Rights and their employers (collectively, the "Indemnified Parties") against any and all claims, suits, losses, damage, costs, fees and expenses resulting from or arising out of any theory of product liability relating to the Product(s). Notwithstanding the foregoing, Contractor shall have no obligation pursuant to this paragraph with respect to any claim resulting from or arising out of any negligent or wrongful action or inaction of any of the Indemnified Parties or which has been settled by an Indemnified Party without the prior consent of Contractor (which consent shall not be unreasonably withheld). Contractor shall have the right to direct the defense of any action brought against an Indemnified Party with respect to the subject of indemnity contained herein, and to retain counsel of its choosing in connection therewith (subject to the reasonable approval of the Indemnified Parties). All other provisions of the Development Agreement shall remain in full force and effect. 4. REPRESENTATIONS AND WARRANTIES OF UNIVERSITIES. Universities hereby represent and warrant to LMS and Phairson, as of the date hereof, that: (i) this Agreement has been duly authorized by Universities, and the execution, delivery and performance of this Agreement by Universities and the consummation of the transactions contemplated hereby do not and will not constitute a breach of any agreement to which it is a party or violate any provision of any law to which it is subject; (ii) no consent of any person or governmental entity is required in connection with the execution or delivery of this Agreement by Universities or the consummation by Universities of the transactions contemplated hereby; (iii) there are no actions, suits, proceedings, orders, grievance proceeding or claims pending or, to Universities' knowledge, threatened against them relating to the Development Agreement or this Agreement, or the subject matter thereof and hereof; (iv) there is no default, or event which with the passage of time would constitute a default, under the Development Agreement by either Universities or, to Universities' knowledge, by Phairson; (v) Universities have delivered to Phairson complete written disclosures with respect to all Inventions under the Development Agreement and Universities acknowledge that all of the Inventions were conceived and/or made jointly by Universities and Phairson (vi) upon consummation of the transactions contemplated by this Agreement, there will be no amounts owed Universities by Phairson or Phairson by Universities; and (vii) the Development Agreement, a true and complete copy of which is attached as Exhibit A hereto, has not been amended other than the amendment effective June 1, 1999 (a form of which is included as part of Exhibit A), is in full force and effect and is enforceable in accordance with its terms, and, upon consummation of the transactions contemplated by this Agreement, will be enforceable against Universities by LMS in accordance with its terms (as amended hereby); and (viii) the Universities have no objection to the Contract dated 1 December 1998 between Phairson and Professor J. A. Hubbell. 5. REPRESENTATIONS AND WARRANTIES OF PHAIRSON. Phairson hereby represents and warrants to Universities and LMS, as of the date hereof, that: (i) this Agreement has been duly authorized by Phairson, and the execution, delivery and 5

performance of this Agreement by Phairson and the consummation of the transactions contemplated hereby do not and will not constitute a breach of the organizational or constituent documents of Phairson or any agreement to which Phairson is a party or violate any provision of any law to which it is subject; (ii) no consent of any person or governmental entity is required in connection with the execution or delivery of this Agreement by Phairson or the consummation by Phairson of the transactions contemplated hereby; (iii) there are no actions, suits, proceedings, orders, grievance proceeding or claims pending or, to Phairson's knowledge, threatened against it relating to the Development Agreement or this Agreement, or the subject matter thereof and hereof; (iv) there is no default, or event which with the passage of time would constitute a default, under the Development Agreement by either Phairson, or to Phairson's knowledge, by Universities; (v) upon consummation of the transactions contemplated by this Agreement, there will be no amounts owed Universities by Phairson or Phairson by Universities; and (vi) the Development Agreement, a true and complete copy of which is attached as Exhibit A hereto, has not been amended other than the amendment effective June 1, 1999 (a form of which is included as part of Exhibit A) and, upon consummation of the transactions contemplated by this Agreement, will be enforceable by each party against the other in accordance with its terms (as amended hereby). 6. REPRESENTATIONS AND WARRANTIES OF LMS. LMS hereby represents and warrants to Universities and Phairson, as of the date hereof, that: (i) this Agreement has been duly authorized by LMS, and the execution, delivery and performance of this Agreement by LMS and the consummation of the transactions contemplated hereby do not and will not constitute a breach of the Certificate of Incorporation or By-laws of LMS or any agreement to which LMS is a party or violate any provision of any law to which it is subject; (ii) no consent of any person or governmental entity is required in connection with the execution or delivery of this Agreement by LMS or the consummation by LMS of the transactions contemplated hereby; and (iii) there are no actions, suits, proceedings, orders, grievance proceeding or claims pending or to LMS' knowledge, threatened against, it relating to this Agreement or the subject matter hereof and (iv) the Development Agreement will be enforceable against LMS by Universities in accordance with its terms (as amended hereby). 7. ACKNOWLEDGMENT AND AFFIRMATION. The Swiss Federal Institute of Technology (ETHZ) ("ETHZ") and the University of Zurich ("UNIZH") hereby acknowledge that the Development Agreement incorrectly listed an entity referred to as "Institute of Biomedical Engineering, ETH Zurich and University of Zurich" as a party instead of ETHZ and UNIZH and that the correct parties to the Development Agreement have always been Phairson Medical Limited, ETHZ and UNIZH. ETHZ and UNIZH affirm that the rights and obligations of "Institute of Biomedical Engineering, ETH Zurich and University of Zurich" are, and have always been, therights and obligations of, and have been and will be performed by, ETHZ and UNIZH. 8. FURTHER ASSURANCES. The parties hereto agree to timely execute such other agreements, assignments, consents, waivers or other documents reasonably necessary to further give effect to or evidence the agreements hereunder. 6

9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of Universities and LMS and their respective successors and assigns. 10. GOVERNING LAW. This Agreement shall be deemed to be a contract entered into pursuant to the laws Switzerland and shall in all respects be governed, construed, applied and enforced in accordance with the laws Switzerland (without reference to its rules as to conflicts of law). Exclusive place of jurisdiction shall be Zurich, Switzerland. 11. NOTICES. All notices and other communications hereunder and under the Development Agreement shall be in writing and shall be deemed given if delivered personally or upon sending a copy thereof by first class or express mail, postage prepaid, or by telegram (with messenger service specified), or reputable overnight courier services, charges prepaid, to such party's address (or to such party's telecopier): If to Universities, to: University of Zurich Unitectra Technology Transfer [UZ-04/201] Mohrlistrasse 23 CH-8006 Zurich Switzerland Telephone: +41 1 634 44 01 Facsimile: +41 1 634 44 09 Attention: Mr. Urs Dommann (Mr. Urs Dommann is Administrative Representative, see Development Agreement for contact information for Technical Representative) If to Phairson, to: Phairson Medical Limited Russell Bedford House, City Forum 250 City road London, United Kingdom EC1V 2QQ Telephone: +44 (0) 207 253 5573 Facsimile: +44 (0) 207 253 5512 If to LMS, to: Life Medical Sciences, Inc. PO Box 219 Little Silver, New Jersey 07739 Telephone/Facsimile: (732) 728-1769 Email: RPHICKEY@AOL.COM Attention: Robert P. Hickey, President 7

or to such other person or address as any of the foregoing may have designated for that purpose by notice to the others. 12. MISCELLANEOUS. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and may not be modified in any manner or terminated except by an instrument in writing executed by the parties hereto. Nothing in this Agreement shall constitute a waiver of, expansion of or limitation upon any of Phairson's or LMS' rights and remedies as between themselves under the Asset Purchase Agreement and, in the case of any such conflict between the terms of the Asset Purchase Agreement and this Agreement, the Asset Purchase Agreement shall control. If any term, covenant or condition of this Agreement is held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK] 8

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first set forth above. SWISS FEDERAL INSTITUTE OF TECHNOLOGY UNIVERSITY OF ZURICH By:_____________________________ Name: Jeffrey Hubbell Title: Professor, Director IBT By:_____________________________ Name: Alexander Borbely Title: Professor, Vice President Research University of Zurich By:_____________________________ Name: Ueli Suter Title: Professor, Vice President Research ETHZ PHAIRSON MEDICAL LIMITED By:_____________________________ Name: Title: LIFE MEDICAL SCIENCES, INC. By:_____________________________ Name: Title: 9

EXHIBIT A (Development Agreement) 10

CONTRACT Between PHAIRSON MEDICAL LIMITED and INSTITUTE OF BIOMEDICAL ENGINEERING, ETH ZURICH AND UNIVERSITY OF ZURICH THIS AGREEMENT, having an Effective Date of March 1st 1999 is made by and between Phairson Medical Limited, a corporation having its principal place of business at 602 The Chambers, Chelsea Harbour, London, SW10 OXF, U.K. (hereinafter referred to as "CONTRACTOR") and the ETH Zurich Institute of Biomedical Engineering, an academic laboratory located at Moussonstrasse 18, ETH and University of Zurich, CH-8044 Zurich, Switzerland (hereinafter referred to as "FOUNDATION"). WITNESSETH: WHEREAS, CONTRACTOR has identified and related specific tasks described under ARTICLE I; and WHEREAS, FOUNDATION is available and qualified to perform such tasks. NOW THEREFORE, in consideration of the promises and the mutual covenant's contained herein, the parties agree as follows: ARTICLE I - Scene of Work and Performance FOUNDATION agrees to USE ITS BEST EFFORTS to perform the work outlined in ATTACHMENT 1. FOUNDATION undertakes to report to CONTRACTOR at the dates set out below: FOUNDATION reporting dates: Date: May 1st 1999 Date: July 1st 1999 Date: September 1st 1999 Date: November 1st 1999 Date: January 1st 2000 Date: March 1st 2000 ARTICLE II - Period of Performance The period of performance shall commence on Effective Date and shall terminate on March 1st 2000 unless extended by written mutual agreement of the parties hereto or terminated in accordance with the provisions of Article XIII. FOUNDATION shall notify CONTRACTOR, as soon as possible, of my reason that might contribute to its failure to perform, within the specified performance period, even if such reason is beyond its control and without fault or negligence of the FOUNDATION. ARTICLE III - Consideration, Records and Billing Instructions 1. FOUNDATION shall be reimbursed by CONTRACTOR for all costs incurred in connection with the Scope of Work in the amount of (SFr 158,000 ). A total budget is presented below, with a distribution between cost categories shown approximately: Salary: see attached Expendable supplies: see attached NMR, see attached

Etc. 2. Payments shall be made to FOUNDATION by CONTRACTOR upon presentation of invoices in accordance with the following schedule: Date: March 1st, 1999 SFr 39,500 Date: June 1st, 1999 SFr 39,500 Date: September 1st, 1999 SFr 39,500 Date: December 1st, 1999 SFr 39,500

3. Payment of any additional amounts must be agreed upon by CONTRACTOR and FOUNDATION if the Research Project is extended in scope or duration. Whenever a payment becomes 60 days past due, FOUNDATION reserves the right to stop work until payment is received. Wire payments shall be made to the following account: BANK DETAILS NEEDED FOR WIRE INSTRUCTION ARTICLE IV - Designated Representatives
1. Technical Representative For FOUNDATION: Name: Prof. Jeffrey Hubbell Address: Institute for Biomedical Engineering ETH and University of Zurich Moussonstrasse 18 CH-8044 Switzerland Telephone: +41 1 632 4575 Fax: +41 1 632 1214 Email: hubbell@biomed.mat.ethz.ch

For CONTRACTOR: Name: Didier Cowling Address: 602 The Chambers Chelsea Harbour London SW10 OXF U.K.

Telephone: +44 171 349 3100 Fax: +44 171 349 3101 Email: didier.cowling@phairson.com 2. Administrative Representative For CONTRACTOR: Name: Patrick Banks Address: 602 The Chambers Chelsea Harbour London SW10 OXF U.K.

For FOUNDATION: Name: Dr. Ulrich Steiner Address: Office of the Vice President for Research Technology Licensing ETH Zentrum Ramistrasse 101, HG E 49 CH-8092 Switzerland Telephone: +41 1 632 2082 Fax: 41 1 632 1184

Telephone: +44 171 349 3100 Fax: +44 171 349 3101 Email: patrick.banks@phairson.com

ARTICLE V - Reports FOUNDATION will submit in a timely manner those reports described in the Scope of Work (Article I). Such reports shall be in the format agreed to by the Designated Technical Representatives. ARTICLE VI - Patents and Inventions 1. All rights and title to all inventions, improvements and/or discoveries, including software, know-how, patent and other intellectual or industrial property conceived and/or made by one or more employees or students of FOUNDATION in the performance of the agreement, shall belong to the FOUNDATION. All rights and title to all inventions, improvements and/or discoveries, including software, know-how, patent and other intellectual or industrial property conceived and/or made jointly by one or more employees or students of FOUNDATION and one or more employees of CONTRACTOR in the performance of the agreement, shall belong jointly to the FOUNDATION and CONTRACTOR. 2. FOUNDATION shall promptly notify CONTRACTOR of any inventions, improvements, discoveries, software and the like conceived and/or made during the performance of this agreement (hereafter "Inventions"). Disclosures submitted by FOUNDATION to CONTRACTOR shall be identified as confidential.

3. The filing, prosecution and maintenance of patent applications and patents covering Inventions shall be carried out by the CONTRACTOR at its sole discretion and expense. In the event the CONTRACTOR elects not to apply for any such patents, the foundation shall have the option, at its sole expense, to apply for the patents. The CONTRACTOR shall confirm its intention not to apply for any such patents in writing. FOUNDATION and CONTRACTOR shall co-operate in the filing, prosecution and maintenance of inventions. 4. At the sole discretion of the CONTRACTOR, the FOUNDATION shall license all rights to inventions, improvements and/or discoveries, including software, know-how, patent and other intellectual or industrial property resulting from the sponsored work to the CONTRACTOR or to a party designated by the CONTRACTOR. The license will be world-wide and exclusive. CONTRACTOR will pay FOUNDATION one tenth of one percent of revenues received from third parties for sub-licences or of any direct product sales for products developed subject to the license. If CONTRACTOR does not carry out any development work on any particular application of said inventions, improvements and/or discoveries resulting from the sponsored work for a period of two years or more, FOUNDATION will have the right to enter into good faith negotiations with CONTRACTOR to license and develop said inventions, improvements and/or discoveries. ARTICLE VII- Proprietary or Confidential Information Should proprietary or confidential information or materials be exchanged under this agreement, each party agrees, absent any special provisions to the contrary, to: 1. use its best efforts to receive and maintain in confidence any and all confidential or proprietary information or materials delivered by one party hereto to the other party; 2. use confidential information or proprietary materials solely for the purpose or purposes for which it was disclosed and for no other purpose whatsoever; 3. disclose confidential information and share proprietary materials with its employees, officers, agents, and representatives only on a need to know basis; 4. identify in writing all confidential or proprietary information or materials as such at the time of disclosure or within 60 days of disclosure in the case of oral communication; 5. not release confidential or proprietary information or materials to any third parties; and 6. dispose of or return proprietary or confidential information or materials to the disclosing party when requested or upon expiration or termination of this contract. The period of protection of confidential information shall be 5 years from the effective date of this contract. Confidential information does not include any information which 1. is already in the public domain or which becomes available to the public through no breach of confidentiality by the recipient; 2. was, as between recipient and discloser, lawfully in recipient's possession on a non-confidential basis prior to receipt from the discloser; 3. is received by recipient independently on a non-confidential basis from a third party free to lawfully disclose such information to the recipient; or 4. is independently developed by recipient without use of the discloser's confidential information: The release of confidential information by the receiving party to satisfy the requirements of federal, state or local laws shall not be a breach of this agreement. ARTICLE VIII- Publication Subject to the limitations of ARTICLES VI and VII, FOUNDATION shall have the right to publish any

information or material resulting from the conduct of the Scope of Work. FOUNDATION shall furnish the CONTRACTOR with a copy of any proposed publication 30 days in advance of the proposed submission. CONTRACTOR may request FOUNDATION to delay publication for a maximum of an additional 120 days in Order to pursue a patent on any Invention described in the manuscript.

ARTICLE IX - Changes and Modifications Any changes to this contract must be made in writing and must be executed by both parties to indicate acceptance of the modification. Any change that might impact cost, price, or delivery must be agreed to in writing prior to initiation of any work associated with the proposed change. ARTICLE X- Assignment and Subcontracts Neither performance, nor payment, involving the whole or any part of the research effort described under Article I may be assigned, subcontracted, transferred, or otherwise given or imposed on any other party by FOUNDATION without the prior written consent of the CONTRACTOR. ARTICLE XI - Mutual Responsibilities 1. Each party will comply with all applicable governmental laws, ordinances, rules and regulations in the performance of this contract. 2. Without affecting or limiting any other provisions of this contract, it is agreed each party's obligation under Article VII shall survive the expiration of this contract. 3. Each party to this contract is an independent contractor with each party solely responsible for its own business expenses and employees including but not limited to salaries, benefits, insurances, withholding, and worker compensation and taxes. Employees of either party shall not be deemed agents, employees or representatives of the other party. 4. In the execution to this contract, the person whose signatures are set forth are duly authorized to execute the contract and bind the parties. ARTICLE XII- Use of Names CONTRACTOR shall not use the name of FOUNDATION and FOUNDATION shall not use the name of CONTRACTOR in any news release, advertising or other publication without the express written permission from the other party. Such permission shall not be unreasonably withheld. ARTICLE XIII - Termination Either party may terminate this contract at any time if: 1. The other party materially breaches the terms of this contract; provided that the non-breaching party shall have given the breaching party written notice of such breach and the breaching party shall have failed to cure the same within 30 days after receipt of such notice. 2. There is the loss or departure of key personnel that would jeopardize both the quality and time of performance or would make performance impractical with respect to the budget contemplated for this contract, and a mutually acceptable replacement cannot be found. 3. performance of any part of this contract by a party is prevented or delayed by reason of Force Majoure and cannot be overcome by reasonable diligence to the satisfaction of the other party; or 4. The other party ceases, discontinues or indefinitely suspends its business activities related to the services to be provided under this contract, or the other party voluntarily or involuntarily files for bankruptcy. In the event of termination, immediate notice shall be given by the party requesting termination which should specify both the reason and the effective date of termination. This Agreement may be terminated by the CONTRACTOR by written notice to FOUNDATION to that effect if, at any stage after expiration of an initial 3 month period from the commencement date, and after a review of the Research which shall have been completed as at that date, in the reasonable opinion of CONTRACTOR it is

decided that continuation of the research is not likely to produce results that will be of sufficient commercial interest to CONTRACTOR. Upon any termination except for breach of contract by CONTRACTOR, FOUNDATION shall deliver to CONTRACTOR in the state they exist as of the date of termination, all work, product, materials, including confidential information and property belonging to CONTRACTOR. CONTRACTOR shall, within 30 days after termination, pay FOUNDATION all payments due as of the effective date of termination. For the avoidance of doubt, Article VI and VII shall survive termination.

ARTICLE XIV - Applicable Law This contract shall be governed by the laws of Switzerland and the place of jurisdiction shall be Zurich. ARTICLE XIV - Entire Agreement This contract is intended by the parties as a final written expression of their agreement and supersedes and replaces any prior oral or written agreement. Any terms or conditions inconsistent with or in addition to terms and conditions herein contained shall be void and of no effect unless specifically agreed to in writing and signed by both parties. IN WITNESS WHEREOF, the parties hereto have caused their authorized officials to execute this Subcontract as of the date(s) set forth below:
CONTRACTOR /s/ Richard Franklin Dr Richard Franklin CEO Date 23 February 1999 Date 26 Feb 1999 agreed, Zurich, March 2, 1999 /s/ Albert Waldvogel Prof. Dr. Albert Waldvogel Vice President for Research FOUNDATION /s/ Jeffrey J A Hubbell

AMENDMENT TO RESEARCH AGREEMENT Effective June 1, 1999 (the "Amendment Effective Date"), Institute of Biomedical Engineering, ETH Zurich and University of Zurich with offices at Moussonstrasse 18, CH-8044 Zurich, Switzerland ("Foundation") and Phairson Medical Ltd., a corporation organized under the laws of England, with offices at 602 The Chambers, Chelsea Harbour, London SW10 OXF ("Contractor") agree as follows: ARTICLE I - BACKGROUND SECTION 1.1 Foundation and Contractor are parties to a certain Research Agreement (the "Agreement") made effective March 1, 1999 under which Foundation and Contractor have entered into a research agreement (as defined therein). SECTION 1.2 The parties desire to amend the Research Agreement to change the dates Contractor pays to Foundation all costs incurred in connection with the scope of work. SECTION 1.3 Initially - and fully - capitalized terms shall have the same meaning as in the Research Agreement. ARTICLE II - AMENDMENT AND AGREEMENT SECTION 2.1 Amendment to Article III, subsection 2 of the Research Agreement. Article III, subsection 2 of the Research Agreement is hereby amended by changing the dates of payment and replacing them with the following: Article III, subsection 2. Payment shall be made to Foundation by Contractor upon presentation of invoices in accordance with the following schedule:
Date: Date: Date: Date: April 1st, 1999 July 1st, 1999 October 1st, 1999 January 1st, 1999 SFr SFr SFr SFr 39,500 39,500 39,500 39,500

SECTION 2.2 Continued Effect. The Research Agreement shall continue in force and effect unchanged, except as specifically set forth in this document.

IN WITNESS WHEREOF, the parties have each caused a duly authorized officer to sign this Amendment Agreement on the date(s) indicated below, to be effective the Amendment Effective Date.
Phairson Medical Ltd. By: _________________________________ Dr. Richard Franklin Chief Executive Date: _________________________________ Institute of Biomedical Engineering, ETH Zurich and University of Zurich By: _________________________________ Prof. Dr. Albert Waldvogel Vice President of Research Date: _______________________________

EXHIBIT 10.42 CONTRACT between PHAIRSON MEDICAL LIMITED and PROFESSOR J A HUBBELL THIS AGREEMENT, having an Effective Date of 1st December 1998 is made by and between Phairson Medical Limited, a corporation having its principal place of business at 602 The Chambers, Chelsea Harbour, London, SW10 OXF (hereinafter referred to as "PHAIRSON") and Professor J A Hubbell, principal investigator ("PI") whose place of business is the Institute for Biomedical Engineering and Department of Materials, Swiss Federal Institute of Technology ETH and University of Zurich, Moussonstrasse 18, CH8044, Zurich, Switzerland. WHEREAS, PHAIRSON has identified and related specific tasks described under ARTICLE 1; and WHEREAS, PI is available and qualified to perform such tasks. NOW THEREFORE, in consideration of the promises and the mutual covenant's contained herein, the parties agree as follows: ARTICLE I - Scope of Work PI agrees to use its best efforts to perform the work outlined in ATTACHMENT 1. ARTICLE II - Period of Performance The period of performance shall commence on the last date of signature of this Agreement and SHALL TERMINATE ON 28th February 1999 unless extended by written mutual agreement of the parties or terminated in accordance with the provisions of Article XI. PI shall notify PHAIRSON, as soon as possible, of any reason that might contribute to PI's failure to perform within the specified performance period, even if such reason is beyond the control and without fault or negligence of PI. ARTICLE III Fees and ROYALTY FEES PHAIRSON will pay PI monthly fees according to the following schedule: For the services provided under Part A of ATTACHMENT 1, PHAIRSON will pay a monthly fee ("Fees") of $1000. The payment of these Fees may be terminated by PHAIRSON subject to the conditions in Article XI. 1

ROYALTY If any of the materials designed under Part A of ATTACHMENT 1 are developed for commercial sale by PHAIRSON, PHAIRSON will, in addition to the Fees, pay to PI a royalty ("Royalty") as follows: (a) a sum equal to 1% (one percent) of Net Sales Value (as defined in Part B of ATTACHMENT 1). The above Royalty will be paid by PHAIRSON to PI on a calendar quarterly basis within 90 (ninety) days of the expiration of the calendar quarter. (b) a sum equal to 2% (two percent) of all payments (including up-front payments, milestone payments and royalties) received by PHAIRSON from any commercial relationship with a third party relating to the Product (as that term is defined in Part A of ATTACHMENT 1 hereof). The above Royalty will be paid to PI within 30 (thirty) days of its receipt by PHAIRSON from the party with whom PHAIRSON has established the commercial relationship. This fee will be paid on all money received by PHAIRSON with the exception of development funding which is to be spent on the Product and with the exception of purchases of PHAIRSON shares by the third party. (c) If the material developed for commercial sale by PHAIRSON is specified by the embodiment in Appendix A, PHAIRSON will, in addition to the Fees, pay to PI the Royalty given in (a) and (b) above, except that all the rates given therein will be reduced by 50%. (d) If the material developed for commercial sale by PHAIRSON is an existing commercially available carbomer, for example the carbomer known under the trade name Carbopol 971P, PHAIRSON will, in addition to the Fees, pay to PI the Royalty given in (a) and (b) above, except that all the rates therein will be reduced by 90%. The total sum received by PI in this instance will not exceed $100,000. ARTICLE IV - Designated REPRESENTATIVES FOR PHAIRSON:
Name: Address: Telephone: Fax: Didier Cowling 602 The Chambers, Chelsea Harbour, London, SW10 OXF, UK +44 171 349 3100 +44 171 349 3101

2

For PI: Name: Address: Professor Jeffrey A Hubbell Institute for Biomedical Engineering & Dep't of Materials Swiss Federal Institute of Technology ETH and University of Zurich, Moussonstrasse 18, CH-8044 Zurich, Switzerland +41 1 632 4575 +41 1 632 1214

Telephone: Fax:

ARTICLE V - Reports PI will submit in a timely manner those reports described in the Scope of Work as described in ATTACHMENT 1. ARTICLE VI - Patents and Inventions 1. ALL RIGHTS AND TITLE TO ALL INVENTIONS, improvements and/or discoveries, including software, know-how, patent and other intellectual or industrial property conceived and/or made by PI in the performance of this agreement and any extension or revision thereof, shall belong to PHAIRSON. 2. PI shall promptly notify PHAIRSON of any inventions, improvements, discoveries, software and the like conceived and/or made during the performance of this agreement (hereafter "Inventions"). Disclosures submitted by PI to PHAIRSON shall be made in writing and identified as confidential. 3. The filing, prosecution, and maintenance of patent applications and patents covering Inventions shall be carried out by PHAIRSON, at PHAIRSON's sole discretion and expense. In the event that PHAIRSON elects not to apply for any such patents, then PI shall have the option, at its sole expense, to apply for the patents. ARTICLE VII - Proprietary or Confidential Information Should proprietary or confidential information be exchanged under this agreement, each party agrees, absent any special provisions to the contrary: 1. to use its best efforts to receive and maintain in confidence any and all confidential or proprietary information delivered by one party hereto to the other party; 2. to use confidential information solely for the purpose or purposes for which it was disclosed and for no other purpose whatsoever; 3. as a receiving party, to disclose confidential information to its employees, officers, agents, and representatives only on a need to know basis; 3

4. to identify in writing all confidential or proprietary information as such at the time of disclosure; 5. not to release confidential or proprietary information to any third parties; and 6. to dispose of or return proprietary or confidential information to the disclosing party when requested or upon expiration or termination of this agreement. The period of protection of confidential information shall be 7 (seven) years from the effective date of this agreement. Confidential information does not include any information which: 1. is already in the public domain or which becomes available to the public through no breach of confidentiality by the recipient; 2. was, as between recipient and discloser, lawfully in recipient's possession on a non-confidential basis prior to receipt from the discloser; 3. is received by recipient independently on a non-confidential basis from a third party free to lawfully disclose such information to the recipient; or 4. is independently developed by recipient without use of the discloser's confidential information; The release of confidential information by the receiving party to satisfy the requirements of national laws shall not be a breach of this agreement. ARTICLE VIII - Changes and Modifications Any changes to this contract must be made in writing and must be executed by both parties to indicate acceptance of the modification. Any change that might impact cost, price, or delivery must be agreed to in writing prior to initiation of any work associated with the proposed change. ARTICLE IX - Assignment and Subcontracts Neither performance nor payment involving the whole or any part of the research effort described under Article I may be assigned, subcontracted, transferred, or otherwise given or imposed on any other party by PI without the prior written consent of PHAIRSON. ARTICLE X - Mutual Responsibilities 1. Each party will comply with all applicable governmental laws, ordinances, rules and regulations in the performance of this contract. 2. Without affecting or limiting any other provisions of this contract, it is agreed each 4

party's obligations under Articles III, VI and VII shall survive the expiration of this contract. 3. Each party to this contract is an independent party, with each party solely responsible for its own business expenses and employees including but not limited to salaries, benefits, insurances, withholding, worker compensation and taxes. Employees of either party shall not be deemed agents, employees or representatives of the other party. 4. In the execution of this contract, the person whose signatures are set forth are duly authorised to execute the contract and bind the parties. ARTICLE XI - Termination Either party may terminate this contract at any time if1. The other party materially breaches the terms of this contract; provided that the non-breaching party shall have given the breaching party written notice of such breach and the breaching party shall have failed to remedy the same within (30) days of receipt of such notice. 2. Performance of any part of this contract by a party is prevented or delayed by reason of Force Majeure and cannot be overcome by reasonable diligence to the satisfaction of both parties; or 3. The other party ceases, discontinues or indefinitely suspends its business activities related to the services to be provided under this contract, or the other party voluntarily or involuntarily files for bankruptcy. In the event of termination, immediate notice shall be given by the party requesting termination which should specify both the reason and the effective date of termination. PHAIRSON may terminate the agreement at any time upon 30 days written notice. Upon any termination except for material breach of this agreement on the part of PHAIRSON, PI shall deliver to PHAIRSON in the state they exist, as of the date of termination, all work product, materials, including confidential information and property belonging to PHAIRSON. PHAIRSON shall within (30) days after termination, pay PI all Fees due as of the effective date of termination. For the avoidance of doubt, Fees and Royalty payments due under Article III hereof remain unaffected except in the event of material breach on the part of PI. ARTICLE XII - Applicable Law This contract shall be governed by the laws of England. 5

ARTICLE XIII - Entire Agreement This contract is intended by the parties as a final written expression of their agreement and supersedes and replaces any prior oral or written agreement. The parties acknowledge that they are not relying on any representation, agreement, term or condition which is not set out in this Agreement. ARTICLE XIV - Primary Employer It is recognised that PI is employed by a primary employer, namely the Institute for Biomedical Engineering and Department of Materials, Swiss Federal Institute of Technology ETH and University of Zurich, and that the primary employer may have certain rights over the Intellectual Property upon which the PI is inventor that relate directly to work performed in the laboratory of the primary employer. The contract between PI and PHAIRSON addresses the consulting activities of PI, separate from his academic activities under the domain of this primary employer. IN WITNESS WHEREOF, the parties hereto have caused their authorised officials to execute this contract as of the date(s) set forth below:
PHAIRSON /s/ Didier Cowling ----------------------------------------Didier Cowling DIRECTOR OF BUSINESS DEVELOPMENT 1st December 1998 ----------------------------------------Date: /s/ Richard Franklin ----------------------------------------Dr Richard Franklin CHIEF EXECUTIVE OFFICER 22/12/98 ----------------------------------------PI /s/ Jeffrey J A Hubbell -----------------------------------Professor Jeffrey J A Hubbell

5 January 1999 -----------------------------------Date:

Date: 6

January 14, 2002 Phairson Medical Limited Russell Bedford House City Forum 250 City Road London, EC1V 2QQ United Kingdom Attn: Richard Franklin Life Medical Sciences, Inc. PO Box 219 Little Silver, New Jersey 07739 Attn: Robert P. Hickey Gentlemen: I am writing concerning the Contract dated 1 December 1998 (the "Contract") between myself and Phairson Medical Limited, a United Kingdom company ("Phairson"). Though the Contract expired 28 February 1999 by its terms, pursuant to Article X thereof, our mutual responsibilities under Articles III, VI and VII survive expiration of the Contract. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Contract. Except for possible future Royalties under Article III, no amounts are owed to me under the Contract. Since no materials were designed under Part A of Attachment 1 of the Contract during its term, I am not entitled to Royalties under paragraphs (a) or (b) of Article III of the Contract. Notwithstanding anything to the contrary contained in the Contract, I acknowledge that I am only entitled to Royalties in respect of Products incorporating technology covered by one or more claims contained in Phairson's US patent application #256,484 which was filed on February 23, 1999 and its foreign equivalents; provided, however, that any such Royalties shall become payable and continue only so long as a valid issued patent exists and then only in respect of revenue generated in countries in which such patent(s) exist. My compensation in respect thereof would be covered by paragraph (c) or (d), as the case may be, of Article III of the Contract. I acknowledge that the primary employer, as contemplated by Article XIV of the Contract, has no claim to Phairson's US patent application #256,484 which was filed on February 23, 1999 or its foreign equivalents or the technology underlying such applications. I understand that Phairson is in the process of selling its polymer-related assets and technology to Life Medical Sciences, Inc., a Delaware corporation ("LMS"). This letter is being delivered in order to induce LMS to enter into such transaction and to assume Phairson's responsibilities under the Contract as contemplated below. To the extent any of the provisions of this letter differ from the terms of the Contract, the provisions of this letter shall control.

2 By your signatures below, Phairson assigns its rights and responsibilities under the Contract to LMS, and LMS assumes such rights and responsibilities. Upon my receipt of countersigned copies of this letter from each of Phairson and LMS, I hereby release Phairson of its responsibilities under the Contract. Professor J A Hubbell Phairson Medical Limited By:_____________________ Date: Life Medical Sciences, Inc. By:_____________________ Date:

EXHIBIT 10.43 ASSET PURCHASE AGREEMENT AGREEMENT dated as of March 18, 2003 between Life Medical Sciences, Inc., a Delaware corporation with an address at P.O. Box 219, Little Silver, New Jersey 07739 ("BUYER"), Phairson Medical Limited, a United Kingdom company, and Phairson Medical, Inc., a Delaware corporation, each with an address at Russell Bedford House, City Forum, 250 City Road, London EC1V 2QQ United Kingdom (Phairson Medical Limited and Phairson Medical, Inc. being collectively referred to herein as, "SELLER"). WHEREAS, the Seller wishes to sell to the Buyer all of the assets of the Seller related to the Seller's polymerbased technology and related activities (the "Business") on the terms set forth in this Agreement and the Buyer wishes to buy such assets on the terms set forth in this Agreement. NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements herein contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.01. DEFINITIONS. The following terms, as used herein, have the following meanings: "AFFILIATE" means, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with such other Person. "CONVEYANCE DOCUMENTS" means (i) an assignment of the Patent Applications in the form attached hereto on EXHIBIT A, (ii) a Bill of Sale, in the form attached hereto as EXHIBIT B, conveying, among other things, the Intellectual Property Rights from Seller to Buyer and (iii) an assignment and amendment agreement in the form attached hereto as EXHIBIT C, relating to the License Agreement. "CLOSING" means the transaction in which the title to the Purchased Assets is transferred from Seller to Buyer and the Purchase Price is paid by Buyer to Seller. "CLOSING DATE" means the date of the Closing. "GOVERNMENTAL AUTHORITY" means any government, court, regulatory or administrative agency or commission, or other governmental authority, agency or instrumentality, whether federal, state or local (domestic or foreign), including, without limitation, the U.S. Patent and Trademark Office (the "PTO") and the U.S. National Institutes of Health. "INTELLECTUAL PROPERTY RIGHTS" means patents, trademarks, tradenames, service marks, service mark registrations, service names, copyrights, applications for any of the foregoing rights, inventions, know-how, licenses, trade secrets or other intellectual property rights of Seller, whether now owned by or licensed to the Seller, or otherwise acquired by the Seller prior to the Closing Date, and relating to the Business or which may be used to commercialize the rights claimed by a Patent or Patent Application. "LICENSE AGREEMENT" means the license agreement listed on Schedule 1.01(b) hereto. "LIEN" means any mortgage, lien, pledge, charge, security interest or encumbrance of any kind. "MATERIAL ADVERSE EFFECT" means, with respect to any Person, a material adverse effect on the business, financial condition or results of operations of such Person.

"PATENT OR PATENT APPLICATION" means the patent applications listed on Schedule 1.01(a) hereto, and any and all patent applications or continuation, continuation-in-part, or divisional applications which claim priority thereto, and any patents issuing from any of the foregoing, and any extensions, reissues, re-examinations, renewals, substitutions related to any of the foregoing (including without limitation remedies against infringements thereof and rights of protection of an interest therein under the laws of all jurisdictions) and any and all foreign counterparts of any of the foregoing, and all documentation, notes or other materials of Seller with respect to the foregoing (the "PATENT DOCUMENTATION"). "PERSON" means an individual, corporation, partnership, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "PURCHASED ASSETS" means the Intellectual Property Rights including without limitation the Patents and Patent Applications and the License Agreement, as well as all books, records, files and data of the Seller relating to the Business. "SHARES" shall mean those shares of common stock, par value $.001 per share, of the Buyer to be issued by Buyer to Seller pursuant to the term and conditions of this Agreement. "VALID CLAIM" means a claim included in a Patent or Patent Application which is actively being prosecuted or which is included in an unexpired United States or foreign patent which issues from a Patent Application and which shall not have been withdrawn, canceled or disclaimed, nor held invalid by a court of competent jurisdiction in an unappealed or unappealable decision. ARTICLE II PURCHASE AND SALE 2.01. PURCHASE AND SALE. Upon the terms and subject to the conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell, transfer, assign and deliver, or cause to be sold, transferred, assigned and delivered, to Buyer at Closing, free and clear of all Liens, all of Seller's right, title and interest throughout the world, in and to the Purchased Assets. 2.02. PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for the Purchased Assets is six million eight hundred and ninety five thousand five hundred and sixty one (6,895,561) Shares (as the same may be adjusted for any stock-splits, stock dividends and the like after the date hereof up to the Closing Date). At the Closing, Buyer shall deliver to the Seller certificates evidencing the Shares in such allocation among the Seller parties as they shall request. 2.03. CLOSING. The Closing of the purchase and sale of the Purchased Assets hereunder shall take place at a mutually agreeable location as soon as reasonably practicable following satisfaction of all of the conditions set forth in Sections 2.04 and 2.05 hereof, or at such other time as Buyer and Seller may agree. At the Closing, (a) Buyer shall pay the Purchase Price to Seller in accordance with the terms of Section 2.02 hereof. (b) Buyer and Seller shall execute and deliver the Conveyance Documents to which each is a party. (c) Buyer and Seller shall cause to be delivered and addressed to the other an opinion of their respective counsel as to such matters as the parties shall mutually agree. -2-

(d) Buyer and Seller shall execute and deliver all such other instruments, documents and certificates as may be requested by the other party that are reasonably necessary for the consummation at the Closing of the transactions contemplated by this Agreement. 2.04. BUYER CLOSING CONDITIONS. The Buyer's obligation to close shall be subject to the following conditions, any one or more of which may be waived by the Buyer: (a) Seller shall have executed and delivered the documents referred to in Section 2.03 hereof and (b) the representations and warranties made by the Seller shall be accurate as of the date hereof and the Closing Date and the undertakings of the Seller to be fulfilled prior to the Closing shall have been fulfilled. 2.05. SELLER CLOSING CONDITIONS. Seller's obligation to close shall be subject to the following conditions, any one or more of which may be waived by the Seller: (a) Buyer shall have executed and delivered the documents referred to in Section 2.03 hereof and (b) the representations and warranties made by the Buyer shall be accurate as of the date hereof and the Closing Date and the undertakings of the Buyer to be fulfilled prior to the Closing shall have been fulfilled. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller hereby jointly and severally represents and warrants to the Buyer, as of the date hereof and as of the Closing Date, that: 3.01. ORGANIZATION. Phairson Medical Limited is duly incorporated and validly existing under the laws of the jurisdiction of England and Wales and Phairson Medical, Inc. is duly incorporated and validly existing in good standing under the laws of the state of Delaware. The Seller has full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and is registered or qualified to do business and in good standing in each jurisdiction in which it owns or leases property or transacts business and where the failure to be so qualified is reasonably likely to result in a Material Adverse Effect on the Seller, and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification. Seller is wholly-owned by Phairson Ltd, a company organized under the laws of England and Wales ("Parent"). Parent owns no assets or rights other than the stock of Phairson Medical Limited and Phairson Medical, Inc. and Parent is not party to any license or other agreement pertaining to the Business or Purchased Assets or related technology or otherwise. 3.02. CORPORATE AUTHORIZATION. The execution, delivery and performance by Seller of this Agreement and each of the Conveyance Documents to which it is a party and the consummation by Seller of the transactions contemplated hereby and thereby are within the powers of Seller and have been duly authorized by all necessary action on the part of Seller. This Agreement has been duly executed and delivered by the Seller and constitutes a valid and binding agreement of Seller. 3.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance by Seller of this Agreement and each of the Conveyance Documents to which it is a party does not require any action by or in respect of, or filing with, any Governmental Authority (other than the filing of patent assignments with the PTO). 3.04. NON-CONTRAVENTION. The execution and delivery of this Agreement and the fulfillment of the terms of this Agreement and the consummation of the transactions contemplated hereby will not (A) conflict with or constitute a violation of, or default (with the passage of time or otherwise) under, (i) any bond, debenture, note or other evidence of indebtedness, or any lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Seller is a party or by which it or its property is bound, where such conflict, violation or default is reasonably likely to result in a material adverse effect on the -3-

Purchased Assets or their intended use, (ii) the charter, by-laws or other organizational documents of the Seller, or (iii) any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority binding upon the Seller or the Purchased Assets, where such conflict, violation or default is reasonably likely to result in a material adverse effect on the Purchased Assets or their intended use, or (B) result in the creation or imposition of any Lien upon any Purchased Asset or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or any indenture, mortgage, deed of trust or any other agreement or instrument to which the Seller is a party or by which it is bound or to which any of the Purchased Assets is subject, where such Lien is reasonably likely to result in a material adverse effect on the Purchased Assets or their intended use. No consent, approval, authorization or order of, or registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body in the United States or other country, and no such consent, approval or authorization of any third party, is required for the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, other than such as have been made or obtained. 3.05. TITLE TO PURCHASED ASSETS. Upon consummation of the transactions contemplated hereby, Buyer will have acquired good and marketable title in and to each of the Purchased Assets, free and clear of all Liens. The Purchased Assets will collectively constitute all of the assets and intellectual property and other rights, contractual or otherwise, owned, licensed or otherwise held by the Seller, as of the date hereof and as of the Closing Date, which relate to the Business. 3.06. LITIGATION. There is no action, suit, investigation or proceeding (or any basis therefor), of which Seller has received written notice, pending or, to the knowledge of Seller, threatened, before any governmental authority or arbitrator that has or could materially affect any Purchased Asset. Seller has not received written notice of any claims made by any Person with respect to, or any actions, suits or other proceedings relating to, any Purchased Assets which could have a material adverse effect on the proposed or intended use of the Purchased Assets. 3.07. INTELLECTUAL PROPERTY. (a) Except as set forth on Schedule 1.01(a), there are no licenses, sublicenses or other agreements relating to a Patent or Patent Application or Intellectual Property Right, and the Patent(s) and Patent Application(s) set forth on such Schedule constitute all of the patents and patent applications of the Seller related to the Business. (b) Seller has clear title to an undivided joint interest in each Patent or Patent Application listed on Schedule 1.01 (a) hereto and has an exclusive license to each Patent or Patent Application from ETHZ, which holds all remaining undivided joint interests in the same. To its knowledge, Seller and each inventor listed in any Patent or Patent Application and the attorneys of record thereto have complied with the PTO duty of candor and good faith in dealing with the PTO, including the duty to disclose to the PTO all information known to be material to the patentability of each of the Patent Applications. Seller has delivered to Buyer all necessary Patent Documentation underlying the specifications or claims in the Patent Applications and all claims thereunder. All assignments from inventors to Seller reflecting Phairson's ownership interest in the Patents or Patent Applications have been executed and either recorded with the PTO or submitted to the PTO for filing. (c) Seller believes it has taken all steps required in accordance with sound business practice and business judgment to establish and preserve its ownership of each Patent or Patent Application and all Intellectual Property Rights. Set forth on Schedule 1.01(a) is a complete and accurate summary of the status of each Patent or Patent Application. Seller has complied with all filing deadlines and has paid all fees necessary for the valid prosecution of all Patents and Patent Applications listed on Schedule 1.01(a). (d) To the knowledge of the Seller, the present business, activities and products of the Seller related to the Business do not infringe any intellectual property of any other Person. No proceeding charging the -4-

Seller with infringement of any adversely-held intellectual property rights has been filed. To the knowledge of the Seller, the Seller is not making unauthorized use in connection with the Business of any confidential information or trade secrets of any person. To the knowledge of the Seller, no person is infringing upon the claims contained in any Patent or Patent Application. Neither the Seller nor, to the knowledge of the Seller, any of its employees, has any agreements or arrangements with any persons other than the Seller related to confidential information or trade secrets of such persons, other than such agreements that would not materially restrict the Buyer from conducting the Business as currently conducted or intended to be conducted. 3.08. LICENSE AGREEMENT. The License Agreement listed on Schedule 1.01(b) is in full force and effect and neither the Seller nor, to the Seller's knowledge, any party thereto, is in breach or default under such contract. Neither the entering into of this Agreement, nor the consummation of the transactions contemplated hereby, will result in a breach of or a default under the License Agreement. 3.09. INVESTMENT. Seller represents and warrants to Buyer that it is acquiring the Shares for investment purposes only, and not with a view to the sale, assignment, transfer or other distribution thereof, other than in compliance with the registration requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"). Seller recognizes that the Shares have not been registered under the Securities Act, and agrees that it will not sell, assign, transfer, or otherwise distribute the Shares in violation of the Securities Act. 3.10. RISK. The Seller recognizes that its purchase of Shares involves a high degree of risk in that: (i) the Buyer has incurred losses since inception; at September 30, 2002, the Buyer had an accumulated deficit of approximately $38,217,000; and the Buyer requires substantial funds to continue its plan of operations; (ii) an investment in the Buyer is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Buyer and the Shares; (iii) the Seller may not be able to liquidate the Seller's investment; and (iv) transferability of the Shares is extremely limited. The Seller has read the Risk Factors section of the Buyer's Annual Report on Form 10-K for the year ended December 31, 2001, as amended (the "10-K"). 3.11. [Intentionally omitted] 3.12. INVESTMENT EXPERIENCE. The Seller acknowledges that the Seller has prior investment experience, including investment in non-listed and non-registered securities, or the Seller has employed the services of an investment advisor to evaluate the merits and risks of an investment in the Shares on the Seller's behalf, and that the Seller recognizes the highly speculative nature of the Seller's investment. 3.13. DILIGENCE. The Seller acknowledges receipt and careful review of the 10-K, the Buyer's quarterly reports on Form 10-QSB for the quarters ended March 31, June 30, and September 30, 2002 filed with the SEC, as amended (the "10-QSBs"), and the definitive proxy statement filed by the Buyer with the SEC in connection with the Buyer's 2002 Annual Meeting of Stockholders (collectively, the "SEC Documents"). The Seller hereby represents that the Seller has been furnished by the Buyer during the course of this transaction with all information regarding the Buyer which the Seller had requested or desired to know, that all documents which could be reasonably provided have been made available for the Seller's inspection and review, and that such information and documents have, in the Seller's opinion, afforded the Seller with substantially all of the same information that would be provided the Seller in a registration statement filed under the Securities Act; and that the Seller has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Buyer concerning any information which the Seller had requested. The Seller hereby represents that, except as set forth in this Agreement, no representations or warranties have been made to the Seller by the Buyer or any agent, employee or affiliate of the Buyer and in entering into this transaction, the Seller is not relying on any information, other than (i) information contained in the SEC Documents, (ii) the representations made by the Buyer herein and (iii) the results of independent investigation by the Seller. -5-

3.14. UNREGISTERED OFFERING. The Seller hereby acknowledges that the sale of the Shares has not been registered under the Securities Act because of the Buyer's intention that this be a nonpublic offering pursuant to Sections 4(2) or 3(b) of the Securities Act. The Seller represents that the Shares are being purchased for the Seller's own account, for investment and not for distribution or resale to others. The Seller agrees that the Seller will not sell or otherwise transfer the Shares, unless they are registered under the Securities Act or unless an exemption from such registration is available. The Seller understands that the Shares have not been registered under the Securities Act by reason of an exemption under the provisions of the Securities Act that may depend, in part, upon the accuracy of the Seller's representations contained herein. 3.15. RULE 144. The Seller understands that Rule 144 ("Rule 144") promulgated under the Securities Act requires, among other conditions, a one-year holding period as a condition to the reseller not being deemed to be an underwriter in any resale of "restricted" securities (as defined in Rule 144). The Seller consents that the Buyer may, if it desires, permit the transfer of the Shares out of the Seller's name only when the Seller's request for transfer is accompanied by an opinion of counsel reasonably satisfactory to the Buyer that the sale is made in compliance with Rule 144 or that an exemption from registration is otherwise available. The Seller agrees to hold the Buyer and its directors, officers and controlling persons and their respective heirs, representatives, successors and assigns harmless and to indemnify them against all liabilities, costs and expenses incurred by them as a result of any misrepresentation made by the Seller contained herein or any sale or distribution by the Seller in violation of the Securities Act. 3.16. LEGENDS. The Seller consents to the placement of the following legend on any certificate or other document evidencing the Shares being purchased by it: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES OR "BLUE SKY" LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE ACT, PURSUANT TO A REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ASSET PURCHASE AGREEMENT DATEDMARCH 7, 2003 UNDER WHICH THESE SECURITIES WERE ORIGINALLY PURCHASED FROM THE ISSUER." 3.17. ADDRESS. The Seller hereby represents that the address of Seller furnished by the Seller on the signature page of this Agreement is the Seller's principal business address. 3.18. FOREIGN BUYER. If Seller is subject to the laws of a foreign jurisdiction with respect to any aspect of the transactions contemplated by this Agreement, Seller hereby represents that Seller is satisfied as to the full observance by Seller of the laws of Seller's jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (i) the legal requirements of Seller's jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, which may be relevant to the purchase, holding, sale, or transfer of the Shares. Seller's subscription and payment for, and Seller's continued beneficial ownership of, the Shares will not violate any applicable securities or other laws of Seller's jurisdiction 3.19. FINDERS' FEES. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Seller who might be entitled to any fee -6-

or commission from Buyer or any of its Affiliates upon consummation of the transactions contemplated by this Agreement. 3.20. OTHER INFORMATION. Neither this Article III of this Agreement nor either of the exhibits appended hereto contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to the Seller that: 4.01. ORGANIZATION. The Buyer is duly incorporated and validly existing in good standing under the laws of the State of Delaware. The Buyer has full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and is registered or qualified to do business and in good standing in each jurisdiction in which it owns or leases property or transacts business and where the failure to be so qualified is reasonably likely to have a Material Adverse Effect upon the Buyer, and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification. 4.02. CORPORATE AUTHORIZATION. The execution, delivery and performance by Buyer of this Agreement and each of the Conveyance Documents to which it is a party and the consummation by Buyer of the transactions contemplated hereby and thereby are within the powers of Buyer and have been duly authorized by all necessary action on the part of Buyer. This Agreement has been duly executed and delivered by the Buyer and constitutes a valid and binding agreement of Buyer. 4.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance by Buyer of this Agreement and each of the Conveyance Documents to which it is a party does not require any action by or in respect of, or filing with, any Governmental Authority (other than the filing of patent assignments with the PTO). 4.04. NON-CONTRAVENTION. The execution and delivery of this Agreement and the fulfillment of the terms of this Agreement and the consummation of the transactions contemplated hereby will not (A) conflict with or constitute a violation of, or default (with the passage of time or otherwise) under, (i) any bond, debenture, note or other evidence of indebtedness, or any lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Buyer is a party or by which it or its property is bound, where such conflict, violation or default is reasonably likely to result in a Material Adverse Effect on the Buyer, (ii) the charter, by-laws or other organizational documents of the Buyer, or (iii) any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority binding upon the Buyer or its property, where such conflict, violation or default is reasonably likely to result in a Material Adverse Effect on the Buyer, or (B) result in the creation or imposition of any Lien upon any of the properties or assets of the Buyer or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or any indenture, mortgage, deed of trust or any other agreement or instrument to which the Buyer is a party or by which it is bound or to which any of the property or assets of the Buyer is subject, where such Lien is reasonably likely to result in a Material Adverse Effect on the Buyer. No consent, approval, authorization or order of, or registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body in the United States is required for the execution and delivery of this Agreement by the Buyer and the consummation of the transactions contemplated hereby, including the valid issuance and sale of the Shares, other than such as have been made or obtained. -7-

4.05. CAPITALIZATION. (a) The capitalization of the Buyer is described in the 10-K. The Shares to be sold pursuant to this Agreement have been duly authorized, and when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable, free of all Liens (other than liens and encumbrances resulting from any of Seller's legal obligations). The outstanding shares of capital stock of the Buyer have been duly and validly issued and are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and were not issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. (b) Attached hereto as Schedule 4.05(b) is a schedule of all outstanding options, warrants, and other instruments convertible directly or indirectly into Common Stock, which schedule includes the exercise price of each such instrument and any applicable vesting restrictions. Except as set forth on such Schedule, there are no outstanding rights (including, without limitation, preemptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any unissued shares of capital stock or other equity interest in the Buyer, or any contract, commitment, agreement, understanding or arrangement of any kind to which the Buyer is a party and relating to the issuance or sale of any capital stock of the Buyer, any such convertible or exchangeable securities or any such rights, warrants or options. (c) No preemptive right, co-sale right, registration right, right of first refusal or other similar right exists with respect to the issuance and sale of the Shares. (d) The Buyer does not own any securities of any other entity. The Buyer is not subject to any obligation, contingent or otherwise, to repurchase or otherwise acquire or retire any of its securities or any options, warrants, or other rights to acquire any of its securities. (e) Except as set forth in Schedule 4.05(e), no stock plan, stock purchase, stock option or other agreement or understanding between the Buyer and any holder of any equity securities of the Buyer or rights to purchase equity securities of the Buyer provides for acceleration or other changes in the vesting provisions or other terms of such securities, as the result of any merger, sale of stock or assets, change in control or other similar transaction by the Buyer. The Buyer covenants that to the extent any such acceleration may be effected at the option of the Buyer or its Board of Directors, no such acceleration shall be effected in connection with this Agreement. Except as disclosed in the SEC Documents, the Buyer is not a party or otherwise subject to any agreement or understanding, and there is not, to the Buyer's knowledge, any agreement or understanding between any persons or entities, that affects or relates to the voting or giving of written consents with respect to any security of the Buyer, or the voting by or for a director of the Buyer, including without limitation voting trusts or agreements, stockholders' agreements, pledge agreements, buy-sell agreements, rights of first refusal or proxies relating to capital stock of the Buyer. (f) The transactions contemplated hereby will not alter the terms of any of the Buyer's securities, including without limitation, terms relating to conversion or exercise prices and amounts. 4.06. LEGAL PROCEEDINGS. There is no legal or governmental proceeding pending to which the Buyer is a party or of which the business or property of the Buyer is subject, except as disclosed in the SEC Documents. 4.07. NO VIOLATIONS. The Buyer is not in violation of its charter, bylaws or other organizational document, or in violation of any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Buyer, which violation, individually or in the aggregate, is reasonably likely to result in a Material Adverse Effect on the Buyer nor is the Buyer in default (and there exists no condition which, with the passage of time or otherwise, would constitute a default) in the performance of any bond, debenture, note or any other evidence of indebtedness in any indenture, mortgage, deed of -8-

trust or any other agreement or instrument to which the Buyer is a party or by which the Buyer is bound or by which the property of the Buyer is bound, which is reasonably likely to result in a Material Adverse Effect on the Buyer. 4.08. GOVERNMENTAL PERMITS, ETC. The Buyer has all necessary franchises, licenses, certificates and other authorizations from any foreign, federal, state or local government or governmental agency, department or body that are currently necessary for the operation of the business of the Buyer as currently conducted except where the failure to currently possess is not reasonably likely to result in a Material Adverse Effect on the Buyer. 4.09. OFFERING. Subject in part to the accuracy of the representations in Article III hereof and the covenant contained in Section 5.05 hereof, the offer, sale and issuance of the Shares hereunder in conformity with the terms of this Agreement constitute transactions exempt from the registration requirements of the Securities Act and from all applicable state securities or "blue sky" laws, or transactions not subject to the registration requirements of the Securities Act by virtue of Regulation S. 4.10. INTELLECTUAL PROPERTY. (a) The Buyer has ownership or license or legal right to use all patent, copyright, trade secret, trademark, customer lists, designs, manufacturing or other processes, computer software, systems, data compilation, research results or other proprietary rights used in the business of the Buyer as currently conducted and as currently proposed to be conducted. All of such patents, trademarks and registered copyrights owned by the Buyer have been duly registered in, filed in or issued by the United States Patent and Trademark Office, the United States Register of Copyrights or the corresponding offices of other jurisdictions and have been maintained and renewed in accordance with all applicable provisions of law and administrative regulations in the United States and all such jurisdictions, except where the failure to do so is not reasonably likely to result in a Material Adverse Effect on the Buyer. Schedule 4.10(a) contains a complete list of all patents, patent applications, trademarks, service marks and copyrights of the Buyer, whether registered or unregistered, and applications therefor pending or under preparation and registrations, renewals, extensions and the like thereof (collectively, "Buyer's Intellectual Property"). (b) All material licenses or other material agreements under which (i) the Buyer is granted rights in Buyer's Intellectual Property (other than Buyer's Intellectual Property generally available on commercial terms from other sources) and (ii) the Buyer has granted rights to others in Buyer's Intellectual Property, are, to the knowledge of the Buyer, after due investigation, in full force and effect and, to the knowledge of the Buyer, there is no material default by any party thereunder. (c) The Buyer believes it has taken all steps required in accordance with sound business practice and business judgment to establish and preserve its ownership of all material copyright, trade secret and other proprietary rights with respect to its products and technology. (d) To the knowledge of the Buyer, the present business, activities and products of the Buyer do not infringe any intellectual property of any other person, except where such infringement is not reasonably likely to result in a Material Adverse Effect on the Buyer. No proceeding charging the Buyer with infringement of any adversely held Intellectual Property has been filed. To the knowledge of the Buyer, the Buyer is not making unauthorized use of any confidential information or trade secrets of any person. To the knowledge of the Buyer, no person is infringing upon the Buyer's Intellectual Property. Neither the Buyer nor, to the knowledge of the Buyer, any of its employees, has any agreements or arrangements with any persons other than the Buyer related to confidential information or trade secrets of such persons, other than such agreements that would not materially restrict the Buyer from conducting its business as currently conducted. (e) No proceedings (whether private or governmental) have been instituted or are pending which challenge the rights of the Buyer to use Buyer's Intellectual Property. The Buyer has the right to use, free and clear of material claims or rights of other persons, all of Buyer's Intellectual Property, subject to the rights of any -9-

licensor thereof. No order, holding or judgment has been rendered by any governmental or judicial authority that limits the Buyer's use of Buyer's Intellectual Property. 4.11. FINANCIAL STATEMENTS. The financial statements of the Buyer and the related notes contained in the SEC Documents present fairly, in accordance with generally accepted accounting principles, the financial position of the Buyer as of the dates indicated, and the results of its operations and cash flows for the periods therein specified. Such financial statements (including the related notes) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods therein specified. The Buyer does not have any material liabilities that are not disclosed in the SEC Documents. 4.12. NO MATERIAL ADVERSE CHANGE. Except as disclosed in the 10-K or 10-QSB's, since December 31, 2001 there has not been (i) any Material Adverse Effect affecting the Buyer, (ii) any obligation, direct or contingent, that is material to the Buyer, incurred by the Buyer, (iii) any dividend or distribution of any kind declared, paid or made on the capital stock of the Buyer, or (iv) any loss or damage (whether or not insured) to the physical property of the Buyer which has been sustained which is reasonably likely to result in a Material Adverse Effect on the Buyer. 4.13. REPORTING STATUS. The Buyer has filed in a timely manner all documents that the Buyer was required to file under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), during the 12 months preceding the date of this Agreement. The SEC Documents complied in all material respects with the SEC's requirements as of their respective filing dates, and the information contained therein as of the date thereof did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made not misleading. 4.14. FOREIGN CORRUPT PRACTICES. Neither the Buyer nor, to the knowledge of the Buyer, any agent or other person acting on behalf of the Buyer, have (i) directly or indirectly, used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by the Buyer or made by any person acting on its behalf and of which the Buyer is aware in violation of law; or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended. 4.15. NO MANIPULATION OF STOCK. The Buyer has not taken and will not, in violation of applicable law, take, any action designed to or that might reasonably be expected to cause or result in unlawful manipulation of the price of the Common Stock. 4.16. TRANSFER TAXES. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold hereunder will be, or will have been, fully paid or provided for by the Buyer and all laws imposing such taxes will be or will have been fully complied with. 4.17. INVESTMENT COMPANY. The Buyer is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended. 4.18. REGISTRATION RIGHTS. No persons have the right to require the Buyer to include securities in a registration statement filed by the Buyer with the SEC, other than with respect to the Buyer's June 28, 1999 private placement of 1,505,003 shares of Common Stock, holders of 5,000,000 shares of Common Stock issued upon conversion of the Buyer's Series A Preferred Stock and holders of the Buyer's Series B Preferred Stock and related warrants. -10-

4.19. FINDERS' FEES. The Buyer has agreed to pay Dr. Gere S. diZerega a finder's fee in the form of an option grant to purchase up to 100,000 shares of the Buyer's common stock at an exercise price of $0.09 per share upon consummation of the transactions contemplated by this Agreement. 4.20. OTHER INFORMATION. Neither this Article IV nor any of the exhibits appended hereto contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. ARTICLE V COVENANTS OF SELLER 5.01. CONFIDENTIALITY. Seller will hold, and will use reasonable commercial efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning Buyer, which information shall be identified in writing as confidential or, if delivered orally, confirmed in writing as confidential within 30 days after delivery. 5.02. ATTORNEY OF RECORD. At the Buyer's discretion upon the consummation of the transactions contemplated in this Agreement, Seller shall take all necessary actions to name Henry Coleman, Ph.D. of Coleman Sudol Sapone, P.C., as attorney of record for the Patent Applications, provided that Buyer, at Buyer's expense, prepares and submits to Seller for execution the documents appropriate to effect the foregoing. 5.03. PATENT FILINGS AND DOCUMENTATION. Seller shall cause to be filed, prior to the scheduled March 23, 2003 deadline, national patent filings in Australia, New Zealand, Canada and Europe (Germany, France, United Kingdom, Spain, Italy, Belgium, The Netherlands, Sweden, Finland, Denmark and Portugal) relating to Patent Applications numbered PCT/US00/23072 and PCT/US00/23104. Seller agrees to pay all costs (including, without limitation, legal and filing fees) associated with these National Phase filings, as well as all costs associated with the recent national patent filings in Brazil and Japan relating to the same PCT applications ( but not any subsequent fees related to prosecution or similar events). Upon request of Buyer, Seller shall promptly deliver to Buyer a copy of all Patent Documentation. 5.04. DEVELOPMENTS. Seller will promptly and fully disclose to the Buyer any and all inventions, discoveries, trade secrets and improvements, whether or not patentable, in which Seller acquires rights prior to the Closing Date and which relate to the Business (collectively, "Developments"). All such Developments shall be included in the term Intellectual Property Rights and transferred to the Buyer as part of the Purchased Assets at the Closing. 5.05. OFFSHORE SALE COVENANT. Seller acknowledges and agrees that the Shares may only be sold offshore in compliance with Regulation S or pursuant to an effective registration statement under the Securities Act or another exemption from such registration, if available. In connection with any resale of the Shares pursuant to Regulation S, Seller acknowledges that the Buyer will not register a transfer not made in accordance with Regulation S, pursuant to an effective registration statement under the Securities Act or in accordance with another exemption from the Securities Act. 5.06. HEDGING RESTRICTIONS. For so long as Seller owns any of the Shares, Seller will not engage in any short sale or transaction having a similar effect with respect to common stock of the Buyer; provided, however, that for the avoidance of doubt, Buyer shall not be restricted in any way as to the disposition (by short sale or otherwise) with respect to shares of common stock of the Buyer acquired by Seller other than the Shares acquired under this Agreement. -11-

ARTICLE VI COVENANTS OF BUYER 6.01. LISTING. The Buyer agrees to take all action required to list the Shares on any stock exchange or quotation system on which the Buyer's Common Stock may be listed or quoted. 6.02. RULE 144. With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Shares to the public without registration, the Buyer agrees to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144; (b) File with the SEC in a timely manner all reports and other documents required of the Buyer under the Securities Act and the Exchange Act; and (c) So long as Seller owns any Shares, furnish to the Seller forthwith upon request a written statement by the Buyer as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Buyer, and such other reports and documents of the Buyer as the Seller may reasonably request in availing itself of any rule or regulation of the SEC allowing the Seller to sell any such securities without registration. ARTICLE VII COVENANTS OF BUYER AND SELLER 7.01. EFFORTS; FURTHER ASSURANCES; ACCESS. (a) Subject to the terms and conditions of this Agreement, each party will use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or appropriate to perform its obligations hereunder, to satisfy the conditions to the Closing, to consummate the transactions contemplated by this Agreement and to comply with all applicable laws and regulations in connection therewith; Seller and Buyer agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary in order to consummate or implement expeditiously the transactions contemplated by this Agreement and to vest in Buyer good and marketable title to the Purchased Assets. (b) Without limiting the foregoing, Seller further agrees for itself and its successors and assigns to execute upon request any other lawful documents and likewise to perform any other lawful acts which may be necessary or desirable to secure fully for Buyer all right, title and interest in and to each of the Purchased Assets, including, but not limited to, the execution of substitution, reissue, divisional or continuation patent applications; and the giving of any preliminary or other statement or the giving of testimony in any interference or other proceeding in which the Purchased Assets or any applications or patent directed thereto or derived therefrom may be involved. Seller agrees (i) to provide such reasonable assistance to Buyer as Buyer may request in connection with the prosecution of the Patent Applications and any action against third parties claiming infringement of any of the Purchased Assets and (ii) never to contest or assist any third party in contesting the validity or enforceability of any Valid Claim. However, Seller and its Affiliates may comply with any and all court orders (if requested) and provide testimony relating to any and all matters relating to the Purchased Assets in any proceeding, deposition, or trial, which testimony is believed to be factually correct by Seller or its Affiliates, without in any way being held to "contest or assist any third party in contesting the validity or enforceability of any Valid Claim." -12-

(c) Seller hereby constitutes and appoints, effective as of the Closing upon payment of the Purchase Price, Buyer and its successors and assigns as the true and lawful attorney of such Seller with full power of substitution in the name of Buyer or in the name of such Seller, but for the benefit of Buyer (i) to collect for the account of Buyer any items of Purchased Assets and (ii) to prosecute all proceedings which Buyer may in its sole discretion deem proper in order to assert or enforce any right, title or interest in, to or under the Purchased Assets, and to defend or compromise any and all actions, suits or proceedings in respect of the Purchased Assets, whether based on a claim arising prior to or after the Closing Date. Buyer shall be entitled to retain for its account any amounts collected pursuant to the foregoing powers, including any amounts payable as interest in respect thereof. (d) From the date of this Agreement until the Closing Date, Seller shall (i) give to Buyer and its representatives reasonable access during normal business hours and upon reasonable notice to Seller's properties, books and records relating to the Purchased Assets and (ii) furnish to Buyer such documents and information relating to the Purchased Assets as Buyer from time to time may reasonably request. 7.02. CONFIDENTIALITY. Buyer and Seller agree not to disclose the terms of any agreement between them or directly or indirectly identify the other parties in a press release, news letter, electronic communication, shareholder letter or other public disclosure without prior permission except to the extent that the information is in the public domain or the disclosure is required by law or government agency. Notwithstanding the foregoing, the parties acknowledge that Buyer may issue a press release announcing the transactions contemplated by this Agreement after execution of this Agreement and may, in its sole discretion, effect such filings with the SEC as it deems necessary or appropriate. ARTICLE VIII SURVIVAL; INDEMNIFICATION 8.01. SURVIVAL. The representations and warranties of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing for a period of two years. 8.02. INDEMNIFICATION. (a) Subject to the limitations set forth in Section 8.03, each Seller hereby jointly and severally indemnifies Buyer and Buyer's Affiliates against and agrees to hold each of them harmless from any and all damage, loss, liability and expense (including, without limitation, reasonable expenses of investigation and reasonable attorneys' fees and expenses) (collectively, "LOSS") incurred or suffered by Buyer or any of its Affiliates arising out of any misrepresentation or breach of warranty, covenant or agreement made or to be performed by Seller pursuant to this Agreement. (b) Subject to the terms herein, Buyer hereby indemnifies Seller and Seller's Affiliates against and agrees to hold each of them harmless from any and all Loss incurred or suffered by Seller or any of Seller's Affiliates arising out of any misrepresentation or breach of warranty, covenant or agreement made or to be performed by Buyer pursuant to this Agreement. (c) Notwithstanding anything to the contrary contained herein, the obligations of Seller and Buyer under Sections 8.02(a) and 8.02(b) above, respectively, shall cease and be of no further force or effect with respect to any and all claims that would otherwise be barred by applicable statutes of limitations. 8.03. PROCEDURES; NO WAIVER; EXCLUSIVITY. The party seeking indemnification under Section 8.02 (the "INDEMNIFIED PARTY") agrees to give prompt notice to the party against whom indemnity is sought (the "INDEMNIFYING PARTY") of the assertion of any claim, or the commencement of any suit, action or proceeding in respect of which indemnity may be sought under such Section; PROVIDED that the failure to give -13-

such notice shall not affect the Indemnified Party's rights hereunder except to the extent the Indemnifying Party is materially prejudiced by such failure. In the event the Indemnified Party has available to it one or more legal defenses which are different from or in addition to those available to the Indemnifying Party, the Indemnified Party shall be entitled to retain separate counsel and the reasonable expenses of which shall be borne by the Indemnifying Party. The Indemnifying Party may, and at the request of the Indemnified Party shall, participate in and control the defense of any such third party suit, action or proceeding at its own expense. The Indemnifying Party shall not be liable under Section 8.02 for any settlement effected without its prior written consent of any claim, litigation or proceeding in respect of which indemnity may be sought hereunder; PROVIDED that such written consent may not be unreasonably withheld. 8.04. LIMITATIONS OF LIABILITY. EXCEPT IN THE EVENT OF FRAUD, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR ANY LOSS OF PROFITS OR SPECIAL, CONSEQUENTIAL OR INDIRECT DAMAGES OF ANY KIND WHATSOEVER. 8.05. FORCE MAJEURE. No party shall be liable for failure or delay in performing any of its obligations hereunder if such failure or delay is occasioned by compliance with any governmental regulation, request or order, or by circumstances beyond the reasonable control of the party so failing or delaying, including, without limitation, Acts of God, war, insurrection, fire, flood, accident, labor strikes, work stoppage or slowdown (whether or not such labor event is within the reasonable control of the parties), or inability to obtain raw materials, supplies, power or equipment necessary to enable such party to perform its obligations hereunder. Each party shall (a) promptly notify the other party in writing of any such event of force majeure, the expected duration thereof and its anticipated effect on the ability of such party to perform its obligations hereunder, and (b) make reasonable efforts to remedy any such event of force majeure. ARTICLE IX TERMINATION 9.01. TERMINATION. This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing: (a) by mutual consent of Buyer and Seller; or (b) by either of the parties if the Closing shall not have occurred by March 31, 2003, other than through the intentional failure or refusal of the electing party to fulfill its obligations hereunder. 9.02. EFFECT OF TERMINATION. Upon termination of this Agreement, the undertakings of the parties set forth herein shall forthwith be and become of no further force and effect; provided, however, that Article VIII, this Section 9.02, Article X and rights and remedies for any breaches of this Agreement prior to its termination shall survive any such termination. ARTICLE X MISCELLANEOUS 10.01. NOTICES. All notices, requests and other communications to either party hereunder shall be in writing (including telex, facsimile or similar writing with confirmed receipt of transmission) and shall be given, -14-

(a) if to Buyer, to: Life Medical Sciences, Inc. P.O. Box 219 Little Silver, New Jersey 07739 Attention: Robert P. Hickey Facsimile: (732) 728-1769 with a copy to: Ehrenreich Eilenberg & Krauss LLP 11 E. 44th Street, 17th Floor New York, New York 10017 Attention: Keith M. Moskowitz, Esq. Facsimile: (212) 986-2399 (b) if to Seller, to: Phairson, Ltd. Russel Bedford House, City Forum 250 City Road London EC1V2QQ United Kingdom Attention: Richard L. Franklin Facsimile: 44 (0) 207 253 5512 or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall only be effective upon receipt. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by fax prior to 4:00 p.m. EST or on the date five business days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 10.01. 10.02. AMENDMENTS; NO WAIVERS. (a) Any provisions of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Buyer and Seller, or in the case of a waiver, by the party against whom the waiver is to be effective. (b) No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Except to the extent expressly provided otherwise in this Agreement, the rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 10.03. EXPENSES. All costs and expenses incurred in connection with the negotiation, preparation, execution or delivery of this Agreement shall be paid by the party incurring such cost or expense. 10.04. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. No party to this Agreement shall assign any rights under this Agreement to any party without the written consent of the other parties hereto except that nothing herein shall prohibit or restrict Buyer from assigning its rights and obligations hereunder to any successor or Affiliate of Buyer. -15-

10.05. GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS. This Agreement shall be construed in accordance with and governed by the law of the State of New York (without reference to its rules as to conflicts of law). (a) Each party irrevocably agrees that any legal action, suit or proceeding against either of them arising out of or in connection with this Agreement or the transactions contemplated hereby or disputes relating thereto (whether for breach of contract, tortuous conduct or otherwise) shall be brought exclusively in the United States District Court for the Southern District of New York or, if such court does not have jurisdiction, the state courts of New York located within New York county, and hereby irrevocably accepts and submits to the exclusive jurisdiction of the aforesaid courts in personam, with respect to any such action, suit or proceeding. Each of the parties hereto waives to the fullest extent permitted by law claim that such action, suit or proceeding brought in the venue specified in this Section is brought in an inconvenient forum or that such venue is otherwise improper, and any right to trial by jury in any action, suit or proceeding brought to enforce, defend or interpret any rights or remedies under, or arising in connection with or relating to, this Agreement. Each of the parties hereto irrevocably consents to the service of any and all legal process, summonses, notices and other documents which may be served in any action, suit or proceeding in the United States District Court for the Southern District of New York or the state courts of New York located in New York County, which service may be made by mailing a copy of such process by certified or registered mail, postage prepaid, to the party to be served at its address as provided in Section 10.01 hereof, with such service to be effective upon receipt. 10.06. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective on the date of signature of the last party to sign this Agreement. 10.07. ENTIRE AGREEMENT. This Agreement, the Schedules and the Conveyance Documents constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter of this Agreement. No representation, inducement, promise, understanding, condition or warranty not set forth or referred to herein has been made or relied upon by either party hereto. Neither of this Agreement, nor any provision hereof, is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder. 10.08. CAPTIONS. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. 10.09. SEVERABILITY. If any provision of this Agreement shall be held to be illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not contained herein. [SIGNATURE PAGE FOLLOWS] -16-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
EXECUTED as a deed by PHAIRSON MEDICAL LIMITED

acting by ------------------------------Director

------------------------------Director/Secretary

PHAIRSON MEDICAL, INC. By: Name:

Title: Date: LIFE MEDICAL SCIENCES, INC.
By: ----------------------------------------Name: Robert P. Hickey Title: Chairman, President & CEO

Date: -17-

EXHIBIT A PATENT ASSIGNMENT This Patent Assignment ("Assignment") is made this 7th day of March, 2003, by Phairson Medical, Inc., a Delaware corporation ("Assignor"), in favor of Life Medical Sciences, Inc., a Delaware corporation ("Assignee"). Assignor and Assignee are parties to an Asset Purchase Agreement dated as of March 18, 2003. For good and valuable consideration, as stated in the Asset Purchase Agreement, the receipt and sufficiency of which are hereby acknowledged, Assignor hereby agrees as follows: 1. Assignor hereby sells, assigns and transfers to Assignee, absolutely and unconditionally, the full and exclusive right, title, and interest in and to each of the patents and pending patent applications as set forth on Attachment A hereto, as well as to all inventions represented thereby, and any renewals, extensions, reissues or reexaminations of those patents and any divisions, renewals, extensions, continuations or continuations-in-part, of those applications and all patents resulting from any of the foregoing ("Patent Rights"), and further including, in all countries, the right to claim priority based on the applications, the Patent Rights to be held and enjoyed by Assignee to the full end of the term for which those patents are granted, as fully and entirely as they could have been held and enjoyed by Assignor if this Assignment had not been made, together with all rights of actions for past infringement thereof including the right to recover damages for said infringement; 2. Assignor hereby authorizes and requests the Commissioner of Patents and Trademarks of the United States, and any Official of any country or countries foreign to the United States whose duty it is to issue patents on applications as aforesaid, to record this Assignment, and to issue all Letters Patent for the Patent Rights to Assignee, its successors, legal representatives and assigns, in accordance with the terms of this Assignment; 3. Assignor hereby represents and warrants that Assignor has the full right to convey the entire interest herein assigned without conflict with the rights of others, and that Assignor has not executed, and will not execute, any agreement, assignment, sale or encumbrance in conflict herewith; and 4. Assignor hereby further covenants and agrees that Assignor will communicate to Assignee, its successors, legal representatives and assigns, any facts and documents known to Assignor respecting the Patent Rights, and will testify in any legal proceeding, sign all lawful papers, execute all divisional, continuing and reissue applications, make all rightful oaths and generally do everything possible to aid Assignee, its successors, legal representatives and assigns, to obtain and enforce proper patent protection for the Patent Rights in all countries. 5. In the event of any inconsistency between this Assignment and the terms of the Asset Purchase Agreement, dated as of the date hereof (the "Asset Purchase Agreement"), between Assignor, Assignee, and Phairson Medical Limited, the terms of the Asset Purchase Agreement shall be controlling. 6. This Assignment shall be construed in accordance with and governed by the law of the State of New York (without reference to its rules as to conflicts of law). -18-

7. Assignor irrevocably agrees that any legal action, suit or proceeding against it arising out of or in connection with this Assignment or the transactions contemplated hereby or disputes relating thereto (whether for breach of contract, tortuous conduct or otherwise) shall be brought exclusively in the United States District Court for the Southern District of New York or, if such court does not have jurisdiction, the state courts of New York located within New York county, and hereby irrevocably accepts and submits to the exclusive jurisdiction of the aforesaid courts in personam, with respect to any such action, suit or proceeding. Assignor waives to the fullest extent permitted by law claim that such action, suit or proceeding brought in the venue specified herein is brought in an inconvenient forum or that such venue is otherwise improper, and any right to trial by jury in any action, suit or proceeding brought to enforce, defend or interpret any rights or remedies under, or arising in connection with or relating to, this Assignment. Assignor irrevocably consents to the service of any and all legal process, summonses, notices and other documents which may be served in any action, suit or proceeding in the United States District Court for the Southern District of New York or the state courts of New York located in New York County, which service may be made by mailing a copy of such process by certified or registered mail, postage prepaid, to the Assignor at its address as provided in Section 10.01 of the Asset Purchase Agreement, with such service to be effective upon receipt. IN WITNESS WHEREOF, ASSIGNOR has caused this Assignment to be executed by its duly authorized officer. PHAIRSON MEDICAL, INC. By: Date:
STATE OF ____________ COUNTY OF ____________ ) ) s.s.: )

On this _____ day of March, in the year 2003, before me appeared ________________ to me personally known, who being by me duly sworn did say that he is the authorized officer of the ASSIGNOR named in the foregoing instrument of Assignment and he signed this instrument of Assignment in my presence. Notary Public -19-

ATTACHMENT A INFORMATION OMITTED -20-

EXHIBIT B BILL OF SALE KNOW ALL MEN BY THESE PRESENTS, that Phairson Medical, Inc., a Delaware corporation ( the, "Seller"), for good and valuable consideration paid to it by Life Medical Sciences, Inc., a Delaware corporation ("Buyer"), the receipt and sufficiency of which is hereby acknowledged, does hereby sell, assign, transfer and convey to Buyer, its successors and assigns, all of the Seller's right, title and interest in and to the Purchased Assets, as such term is defined in that certain Asset Purchase Agreement dated as of March 7, 2003, by and among Buyer, Seller and Phairson Medical Limited (the "Purchase Agreement"). All initially capitalized terms used but not defined herein shall have the meanings attributed to them in the Purchase Agreement. This Bill of Sale is further documentation of the transfers, conveyances and assignments contemplated by the Purchase Agreement and is subject to all of the terms, provisions and conditions thereof. Nothing in this Bill of Sale shall constitute a waiver of, expansion of or limitation upon any of Seller's or Buyer's rights and remedies under the Purchase Agreement and, in the case of any conflict between the terms of the Purchase Agreement and this Bill of Sale, the Purchase Agreement shall govern. Seller shall, from time to time, from and after the date hereof, upon request of Buyer, execute such further documents of transfer, conveyance and assignment as Buyer reasonably deems necessary or desirable to carry our the transactions contemplated by this Bill of Sale. This Bill of Sale shall be binding upon and shall inure solely to the benefit of Buyer and Seller and their respective successors and assigns. This Bill of Sale shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to any applicable principles of conflicts of law. IN WITNESS WHEREOF, Seller has executed this Bill of Sale on March 7, 2003. PHAIRSON MEDICAL, INC. By:______________________ Name: Title: BILL OF SALE KNOW ALL MEN BY THESE PRESENTS, that Phairson Medical Limited, a company organized under the laws of England and Wales ( the "Seller"), for good and valuable consideration paid to it by Life Medical Sciences, Inc., a Delaware corporation ("Buyer"), the receipt and sufficiency of which is hereby acknowledged, does hereby sell, assign, transfer and convey to Buyer, its successors and assigns, all of the Seller's right, title and -21-

interest in and to the Purchased Assets, as such term is defined in that certain Asset Purchase Agreement dated as of March 7, 2003, by and among Buyer, Seller, and Phairson Medical, Inc. (the "Purchase Agreement"). All initially capitalized terms used but not defined herein shall have the meanings attributed to them in the Purchase Agreement. This Bill of Sale is further documentation of the transfers, conveyances and assignments contemplated by the Purchase Agreement and is subject to all of the terms, provisions and conditions thereof. Nothing in this Bill of Sale shall constitute a waiver of, expansion of or limitation upon any of Seller's or Buyer's rights and remedies under the Purchase Agreement and, in the case of any conflict between the terms of the Purchase Agreement and this Bill of Sale, the Purchase Agreement shall govern. Seller shall, from time to time, from and after the date hereof, upon request of Buyer, execute such further documents of transfer, conveyance and assignment as Buyer reasonably deems necessary or desirable to carry our the transactions contemplated by this Bill of Sale. This Bill of Sale shall be binding upon and shall inure solely to the benefit of Buyer and Seller and their respective successors and assigns. This Bill of Sale shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to any applicable principles of conflicts of law. IN WITNESS WHEREOF, Seller has executed this Bill of Sale on March 7, 2003. PHAIRSON MEDICAL LIMITED By:______________________ Name: Title: -22-

EXHIBIT C ASSIGNMENT AND AMENDMENT AGREEMENT This ASSIGNMENT AND AMENDMENT AGREEMENT, dated as of March 18, 2003 (this "Agreement"), by and among Swiss Federal Institute of Technology (ETHZ), having an address at Raemistrasse 101, CH-8092 Zurich, Switzerland and University of Zurich, having an address at Raemistrasse 91 CH-8006 Zurich, Switzerland (collectively, "Universities"), Phairson Medical Limited, a United Kingdom company ("Phairson"), and Life Medical Sciences, Inc., a Delaware corporation ("LMS"). References to Universities, Phairson and LMS hereunder shall include each of their respective agents, nominees, designees, successors, assigns, heirs or other successors-in-interest. All representations, warranties and covenants of the Universities hereunder shall be joint and several. W I T N E S S E T H: WHEREAS, Phairson has agreed to sell LMS all of its assets related to its polymer-based technology business, pursuant to an Asset Purchase Agreement, dated as of the date hereof, by and between Phairson, an affiliate of Phairson and LMS (the "Asset Purchase Agreement"); WHEREAS, among the assets to be sold to LMS pursuant to the Asset Purchase Agreement are all of Phairson's rights under the contract, dated as of March 1, 1999, between Phairson and Universities, as amended pursuant to an amendment effective June 1, 1999 (the "Development Agreement"); WHEREAS, Universities agree to the assignment of the Development Agreement and the amendment thereof, all subject to and in accordance with the provisions of this Agreement. NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Consent by Universities to Assignment. Subject to the provisions of this Agreement, and in order to induce the other parties hereto to enter into the Asset Purchase Agreement and to consummate the transactions contemplated thereby, Universities hereby consent to the assignment of the Development Agreement from Phairson to LMS effective as of the closing of the Asset Purchase Agreement (which date shall not be later than March 15, 2003, the "Closing") and agree that, notwithstanding any provision of the Development Agreement to the contrary, Phairson shall not be liable for obligations arising under the Development Agreement from and after the Closing. 2. Assignment and Assumption of Development Agreement. Effective as of the Closing, (i) Phairson hereby sells, assigns, conveys and transfers to LMS all of Phairson's right, title and interest in, to and arising under or relating to the Development Agreement and all intellectual property and other rights of Phairson obtained or arising thereunder, but excluding the Patent Rights (which shall be transferred to LMS pursuant to separate instrument (s)) and (ii) LMS hereby assumes and shall be solely responsible for all of the obligations and liabilities of Phairson arising under the Development Agreement from and after such date. 3. Amendment of Development Agreement. LMS and Universities agree that, effective as of the Closing, the Development Agreement shall be amended as follows: -23-

(a) to change all references therein from "Phairson" to "LMS"; to change all references therein from "Foundation" to "Universities"; and to change all references therein from "ETH Zurich Institute of Biomedical Engineering...ETH" to "Swiss Federal Institute of Technology (ETHZ)". (b) to substitute the LMS address and contact information set forth in Section 10 hereof for the address and contact information of the Phairson technical and administrative representatives in Article IV-Designated Representatives of the Development Agreement, and to further add the other provisions of Section 10 hereof (exclusive of the contact information) to the provisions of Article IV-Designated Representatives of the Development Agreement and to substitute the Universities' address and contact information set forth in Section 10 hereof for the address and contact information of the Foundation technical and administrative representatives in Article IV-Designated Representatives of the Development Agreement to substitute the following for Section 4 of Article VI: 10.10. "4. (a) Universities hereby grant Contractor an exclusive, worldwide, perpetual license under their Proprietary Rights in the Technology, without limitation or restriction as to use or field of use (the "License"). The License includes the right to sublicense. With respect to sublicenses granted by Contractor, Contractor shall promptly provide Universities with a copy of each sublicense issued; and collect payment of all payments due, directly or indirectly, to Universities from Sublicensees and summarize and deliver all reports due, directly or indirectly, to Universities from Sublicensees. Universities reserve the right to use Proprietary Rights in the Technology solely for internal educational and research purposes. In consideration for the License, Contractor agrees to pay Universities, in the aggregate, one tenth of one percent of any and all Net Sales and Sublicense Fees actually received by it. If, prior to receipt by Contractor of Net Sales or Sublicense Fees, Contractor fails to perform any Development Work with respect to the Technology for a period of two years or more, Universities shall have the right to enter into good faith negotiations with Contractor to terminate the License and develop the Technology. (b) For the purposes of this section, the following terms shall have the following meanings: 'Development Work' means any technical or business activity relating to the development, manufacture, marketing or commercialization of a Product or Products or efforts to secure intellectual property rights with respect thereto. 'Products' means products incorporating the Technology. 'Proprietary Rights' means patent rights, copyrights, mask work rights, trademark rights, trade secret rights and any and all other intellectual property or similar rights. 'Net Sales' of a party means all revenues actually received by that party or its affiliate(s) with respect to sale of Products in any and all countries in which a valid patent included in the licensed Proprietary Rights then exists, less any allowances for returns, shipping and insurance costs, discounts and promotional allowances, sales, use, value-added and similar taxes and duties and similar governmental assessments. 'Sublicense Fees' means any and all revenue received by Contractor in respect of sublicenses of the Proprietary Rights licensed under this Agreement. For the avoidance of doubt, -24-

as used in the foregoing sentence the term "revenue" includes the value, as determined in accordance with United States generally acceptable accounting principles, attributable to property, if any, other than cash received by Contractor in respect of sublicenses of the Proprietary Rights under this Agreement." 'Technology' means inventions, improvements, discoveries, know-how and the like made or conceived as a result of or in connection with the sponsored work under this Agreement. (c) Beginning January 1, 2004 and ending on the date of first commercial sale of a Product, Contractor shall submit to Universities annual progress reports covering Contractor's (and Sublicensee's) activities to develop and test all Products and obtain governmental approvals necessary for marketing the same. Such reports shall include a summary of work completed; summary of work in progress; current schedule of anticipated events or milestones and market plans for introduction of Products. Contractor shall also report to Universities, in its immediately subsequent progress report, the date of first commercial sale of a Product. After the first commercial sale of a Product anywhere in the world, Contractor shall submit to Universities annually royalty reports on or before each February 28. Each royalty report shall cover Contractor's (and Sublicensee's) most recently completed calendar year and shall show (i) the gross sales and Net Sales during the most recently completed calendar year and the royalties, in U.S. Dollars, payable with respect thereto; (ii) the number of each type of Product sold; (iii) sublicense fees and royalties received during the most recently completed calendar year in US dollars, payable with respect thereto; (iv) the method used to calculate the royalties; and (v) the exchange rates used. If no sale of Products has been made and no sublicense revenue has been received by Contractor during any reporting period, Contractor shall so report. (d) All fees and royalties due Universities shall be paid in United States dollars and all checks shall be made payable to "The University of Zurich", referencing "Unitectra Technology Transfer UZ-04/201". When Products are sold in currencies other than United States dollars, Contractor shall first determine the earned royalty in the currency of the country in which Products were sold and then convert the amount into equivalent United States funds, using the exchange rate quoted in the Wall Street Journal on the last business day of the applicable reporting period. Royalties shall accrue when Products are invoiced, or if not invoiced, when delivered to a third party. Contractor shall pay earned royalties on or before February 28. Each such payment shall be for earned royalties accrued within Contractor's most recently completed calendar year. Royalties earned on sales occurring or under sublicense granted pursuant to this Agreement in any country shall not be reduced by Contractor for any taxes, fees, or other charges imposed by the government of such country on the payment of royalty income, except that all payments made by Contractor in fulfillment of Universities' tax liability in any particular country may be credited against earned royalties or fees due Universities for that country. Contractor shall pay all bank charges resulting from the transfer of such royalty payments. In the event royalty, reimbursement and/or fee payments are not received by Universities when due, Contractor shall pay to Universities interest charges at a rate of ten percent (10%) per year. Such interest shall be calculated from the date payment was due until actually received by Universities. (e) To substitute the following for Section 3 of Article VI. At its sole discretion and expense, Contractor shall diligently prosecute and maintain the patent applications and patents relating to Proprietary Rights using counsel of its choice. Contractor or its counsel shall, upon request, provide Universities with copies of all relevant documentation relating to such prosecution including, but not limited to, draft patent applications, office actions and responses thereto, and appropriate correspondence with counsel and agents. All patents and patent applications relating to Proprietary Rights shall be assigned jointly to Contractor and -25-

Universities (ie. "Swiss Federal Institute of Technology(ETHZ)" and "University of Zurich"). Contractor shall, at its sole discretion and expense, apply for an extension of the term of any patent in Patent Rights if appropriate. Contractor shall prepare all documents for such application, and Universities shall execute such documents and take any other additional action as Contractor reasonably requests in connection therewith. (F) The license granted is provided "AS IS" and without WARRANTY OF MERCHANTABILITY or WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE or any other warranty, express or implied. UNIVERSITIES make no representation or warranty that the Product(s) or the use of Proprietary Rights or Technology will not infringe any other patent or other proprietary rights. Contractor shall indemnify, hold harmless and defend UNIVERSITIES, its officers, employees, and agents and the Inventors of the patents and patent applications in Proprietary Rights and their employers (collectively, the "Indemnified Parties") against any and all claims, suits, losses, damage, costs, fees and expenses resulting from or arising out of any theory of product liability relating to the Product(s). Notwithstanding the foregoing, Contractor shall have no obligation pursuant to this paragraph with respect to any claim resulting from or arising out of any negligent or wrongful action or inaction of any of the Indemnified Parties or which has been settled by an Indemnified Party without the prior consent of Contractor (which consent shall not be unreasonably withheld). Contractor shall have the right to direct the defense of any action brought against an Indemnified Party with respect to the subject of indemnity contained herein, and to retain counsel of its choosing in connection therewith (subject to the reasonable approval of the Indemnified Parties). All other provisions of the Development Agreement shall remain in full force and effect. 4. Representations and Warranties of Universities. Universities hereby represent and warrant to LMS and Phairson, as of the date hereof, that: (i) this Agreement has been duly authorized by Universities, and the execution, delivery and performance of this Agreement by Universities and the consummation of the transactions contemplated hereby do not and will not constitute a breach of any agreement to which it is a party or violate any provision of any law to which it is subject; (ii) no consent of any person or governmental entity is required in connection with the execution or delivery of this Agreement by Universities or the consummation by Universities of the transactions contemplated hereby; (iii) there are no actions, suits, proceedings, orders, grievance proceeding or claims pending or, to Universities' knowledge, threatened against them relating to the Development Agreement or this Agreement, or the subject matter thereof and hereof; (iv) there is no default, or event which with the passage of time would constitute a default, under the Development Agreement by either Universities or, to Universities' knowledge, by Phairson; (v) Universities have delivered to Phairson complete written disclosures with respect to all Inventions under the Development Agreement and Universities acknowledge that all of the Inventions were conceived and/or made jointly by Universities and Phairson (vi) upon consummation of the transactions contemplated by this Agreement, there will be no amounts owed Universities by Phairson or Phairson by Universities; and (vii) the Development Agreement, a true and complete copy of which is attached as Exhibit A hereto, has not been amended other than the amendment effective June 1, 1999 (a form of which is included as part of Exhibit A), is in full force and effect and is enforceable in accordance with its terms, and, upon consummation of the transactions contemplated by this Agreement, will be enforceable against Universities by LMS in accordance with its terms (as amended hereby); and (viii) the Universities have no objection to the Contract dated 1 December 1998 between Phairson and Professor J. A. Hubbell. 5. Representations and Warranties of Phairson. Phairson hereby represents and warrants to Universities and LMS, as of the date hereof, that: (i) this Agreement has been duly authorized by Phairson, and the execution, delivery and performance of this Agreement by Phairson and the consummation of the transactions contemplated hereby do not and will not constitute a breach of the organizational or constituent documents of Phairson or any agreement to which Phairson is a party or violate any provision of any law to which it is subject; (ii) no consent of any person or governmental entity is required in connection with the execution or delivery of this Agreement by Phairson or the consummation by Phairson of the transactions contemplated hereby; (iii) there are no actions, suits, -26-

proceedings, orders, grievance proceeding or claims pending or, to Phairson's knowledge, threatened against it relating to the Development Agreement or this Agreement, or the subject matter thereof and hereof; (iv) there is no default, or event which with the passage of time would constitute a default, under the Development Agreement by either Phairson, or to Phairson's knowledge, by Universities; (v) upon consummation of the transactions contemplated by this Agreement, there will be no amounts owed Universities by Phairson or Phairson by Universities; and (vi) the Development Agreement, a true and complete copy of which is attached as Exhibit A hereto, has not been amended other than the amendment effective June 1, 1999 (a form of which is included as part of Exhibit A) and, upon consummation of the transactions contemplated by this Agreement, will be enforceable by each party against the other in accordance with its terms (as amended hereby). 6. Representations and Warranties of LMS. LMS hereby represents and warrants to Universities and Phairson, as of the date hereof, that: (i) this Agreement has been duly authorized by LMS, and the execution, delivery and performance of this Agreement by LMS and the consummation of the transactions contemplated hereby do not and will not constitute a breach of the Certificate of Incorporation or By-laws of LMS or any agreement to which LMS is a party or violate any provision of any law to which it is subject; (ii) no consent of any person or governmental entity is required in connection with the execution or delivery of this Agreement by LMS or the consummation by LMS of the transactions contemplated hereby; and (iii) there are no actions, suits, proceedings, orders, grievance proceeding or claims pending or to LMS' knowledge, threatened against, it relating to this Agreement or the subject matter hereof and (iv) the Development Agreement will be enforceable against LMS by Universities in accordance with its terms (as amended hereby). 7. Acknowledgment and Affirmation. The Swiss Federal Institute of Technology (ETHZ) ("ETHZ") and the University of Zurich ("UNIZH") hereby acknowledge that the Development Agreement incorrectly listed an entity referred to as "Institute of Biomedical Engineering, ETH Zurich and University of Zurich" as a party instead of ETHZ and UNIZH and that the correct parties to the Development Agreement have always been Phairson Medical Limited, ETHZ and UNIZH. ETHZ and UNIZH affirm that the rights and obligations of "Institute of Biomedical Engineering, ETH Zurich and University of Zurich" are, and have always been, therights and obligations of, and have been and will be performed by, ETHZ and UNIZH. 8. Further Assurances. The parties hereto agree to timely execute such other agreements, assignments, consents, waivers or other documents reasonably necessary to further give effect to or evidence the agreements hereunder. 9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Universities and LMS and their respective successors and assigns. 10. Governing Law. This Agreement shall be deemed to be a contract entered into pursuant to the laws Switzerland and shall in all respects be governed, construed, applied and enforced in accordance with the laws Switzerland (without reference to its rules as to conflicts of law). Exclusive place of jurisdiction shall be Zurich, Switzerland. 11. Notices. All notices and other communications hereunder and under the Development Agreement shall be in writing and shall be deemed given if delivered personally or upon sending a copy thereof by first class or express mail, postage prepaid, or by telegram (with messenger service specified), or reputable overnight courier services, charges prepaid, to such party's address (or to such party's telecopier): If to Universities, to: University of Zurich Unitectra Technology Transfer [UZ-04/201] Mohrlistrasse 23 (1) CH-8006 Zurich -27-

Switzerland Telephone: +41 1 634 44 01 Facsimile: +41 1 634 44 09 Attention: Mr. Urs Dommann (Mr. Urs Dommann is Administrative Representative, see Development Agreement for contact information for Technical Representative) If to Phairson, to: Phairson Medical Limited Russell Bedford House, City Forum 250 City road London, United Kingdom EC1V 2QQ Telephone: +44 (0) 207 253 5573 Facsimile: +44 (0) 207 253 5512 If to LMS, to: Life Medical Sciences, Inc. PO Box 219 Little Silver, New Jersey 07739 Telephone/Facsimile: (732) 728-1769 Email: rphickey@aol.com Attention: Robert P. Hickey, President or to such other person or address as any of the foregoing may have designated for that purpose by notice to the others. 12. Miscellaneous. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and may not be modified in any manner or terminated except by an instrument in writing executed by the parties hereto. Nothing in this Agreement shall constitute a waiver of, expansion of or limitation upon any of Phairson's or LMS' rights and remedies as between themselves under the Asset Purchase Agreement and, in the case of any such conflict between the terms of the Asset Purchase Agreement and this Agreement, the Asset Purchase Agreement shall control. If any term, covenant or condition of this Agreement is held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. [Remainder of page left intentionally blank] -28-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first set forth above. Swiss Federal Institute of Technology University of Zurich By:_____________________________ Name: Jeffrey Hubbell Title: Professor, Director IBT By:_____________________________ Name: Alexander Borbely Title: Professor, Vice President Research University of Zurich By:_____________________________ Name: Ueli Suter Title: Professor, Vice President Research ETHZ Phairson Medical Limited By:_____________________________ Name: Title: Life Medical Sciences, Inc. By:_____________________________ Name: Title: -29-

Schedule 1.01 (a) Phairson entities' Patents and Patent Applications INFORMATION OMITTED -30-

Schedule 1.01 (b) Phairson Medical Linited--License Agreement Contract between PHAIRSON MEDICAL LIMITED and INSTITUTE OF BIOMEDICAL ENGINEERING, ETH ZURICH AND UNIVERSITY OF ZURICH Effective Date: March 1, 1999 [See Exhibit A to Exhibit C of this Asset Purchase Agreement] -31-

Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the registration statements on Form S-8 (Registration Nos. 3360580, 333-03895, 333-95127 and 333-95129) and Form S-3 (Registration No. 333-19195) of our report dated March 14, 2003 (March 27, 2003 with respect to Note L) on our audit of the financial statements included in the 2002 annual report on Form 10-KSB of Life Medical Sciences, Inc. We also consent to the reference to our firm in the "Experts" section of the Form S-3. Eisner LLP (formerly Richard A. Eisner and Company, LLP) New York, New York March 27, 2003

EXIBIT 99.1: CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 1350 In connection with the accompanying Annual Report on Form 10-KSB of Life Medical Sciences, Inc. for the year ended December 31, 2002, the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that: (1) such Annual Report on Form 10-KSB for the year ended December 31, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in such Annual Report on Form 10-KSB for the year ended December 31, 2002 fairly presents, in all material respects, the financial condition and results of operations of Life Medical Sciences, Inc.
March 27, 2003 /s/ Robert P. Hickey -------------------Name: Robert P. Hickey Title: Chief Executive Officer and Chief Financial Officer


				
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