ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT



THIS AGREEMENT made as of the 30th day of April, 2004 (the "EFFECTIVE DATE").



BETWEEN:



               HEMOSOL INC., a corporation incorporated pursuant to the laws of

               the Province of Ontario



               (the "ASSIGNOR")



                                                               OF THE FIRST PART



               - AND -



               HEMOSOL LP, a limited partnership constated pursuant to the laws

               of the Province of Ontario



               (the "ASSIGNEE")



                                                              OF THE SECOND PART



               - AND -



               MDS INC., a corporation incorporated pursuant to the laws of

               Canada



               (the "GUARANTOR")



                                                               OF THE THIRD PART



               - AND -



               THE BANK OF NOVA SCOTIA



               ("BNS")



                                                              OF THE FOURTH PART



WHEREAS pursuant to the terms of a commitment letter dated October 25, 2002, as

amended and supplemented by a supplemental agreement dated as of November 22,

2002 and as further amended by amending agreements dated April 29, 2003 and

December 29, 2003 (collectively, the "COMMITMENT LETTER"), BNS agreed to extend

to the Assignor the credit facilities specifically described therein (the

"CREDIT FACILITIES") including that credit facility designated as Credit No: 01

in the principal amount of $20,000,000 (the "$20,000,000 CREDIT FACILITY");



AND WHEREAS in accordance with the terms of the Commitment Letter, the Assignor

issued to BNS a promissory note in the principal amount of $20,000,000 dated

November 22, 2002



{PAGE}



evidencing the indebtedness under the $20,000,000 Credit Facility (the

"PROMISSORY NOTE") and the security and other instruments in support of the

Credit Facilities listed in Schedule "A" hereto (collectively, the "EXISTING

SECURITY");



AND WHEREAS the Guarantor issued to BNS a guarantee in support of the

$20,000,000 Credit Facility dated November 22, 2002, amended by way of letter

agreement dated December 29, 2003 (collectively, the "GUARANTEE");



AND WHEREAS pursuant to the contribution agreement (the "CONTRIBUTION

AGREEMENT") dated the "Effective Date" as defined in the Arrangement Agreement

made as of the 11th day of February, 2004 between the Assignor and the Assignee,

the Assignor has agreed to transfer to the Assignee all of the Purchased Assets

and the Assumed Liabilities (each as defined in the Contribution Agreement) and

the Assignor has agreed to assign to the Assignee, and the Assignee has agreed

to assume, each of the Assumed Contracts (as defined in the Contribution

Agreement).



AND WHEREAS BNS has approved the assignment of the Credit Facilities to the

Assignee and the assumption of the Credit Facilities by the Assignee on the

terms and conditions contained herein;



AND WHEREAS BNS has agreed to release the Assignor from all liability and

obligations in connection with the Credit Facilities on the terms and conditions

contained herein;



AND WHEREAS the Guarantor and BNS desire that the Guarantee remain in place in

support of the $20,000,000 Credit Facility subsequent to the completion of the

transactions referred to and provided for herein;



AND WHEREAS the parties hereto have agreed to execute this Agreement.



NOW THEREFORE IN CONSIDERATION of $10.00, the mutual covenants contained herein

and other good and valuable consideration (the receipt and adequacy whereof are

hereby acknowledged), the parties hereto covenant, agree and acknowledge as

follows:



1.   Each of the parties severally acknowledges to and agrees with each other

     party that the recitals contained herein to the extent they relate to it

     and each agreement to which it is party are true and correct as of the

     Effective Date and form part of this Agreement.



2.   Each of the Assignor and the Assignee represents and warrants to BNS that

     the Contribution Agreement in the form attached hereto as Schedule "B"

     constitutes the entire Contribution Agreement as of the Effective Date and

     that the Contribution Agreement has not been otherwise amended or

     supplemented.



3.   The Assignor hereby sells, transfers and assigns unto the Assignee, and the

     Assignee hereby agrees to assume, all of the Assignor's right, title and

     interest in, as well as its corresponding responsibilities and obligations

     in connection with, the Credit Facilities, the indebtedness and obligations

     arising thereunder regardless of whether such indebtedness and obligations

     arose prior or subsequent to the date hereof (collectively, the

     "INDEBTEDNESS"), the Commitment Letter and the Existing Security.



                                      -2-

{PAGE}



4.   The Assignee hereby accepts the assignment of the Credit Facilities, the

     Indebtedness, the Commitment Letter and the Existing Security upon the

     terms set out herein and assumes, and agrees to observe, perform, fulfill

     and be bound by all terms, covenants, conditions, obligations and

     responsibilities relating to the Credit Facilities, the Indebtedness, the

     Commitment Letter and the Existing Security which are to be observed,

     performed and fulfilled by the Assignor pursuant to the said instruments in

     the same manner and to the same extent as if the Assignee were the borrower

     named therein.



5.   The Assignee acknowledges that the Purchased Assets assigned to it pursuant

     to the Contribution Agreement are subject to the terms, conditions,

     security interests, charges and provisions of the Existing Security. The

     Assignee agrees to be bound by the Existing Security to the same extent as

     if the Assignee was named as the entity issuing the security therein and

     acknowledges receipt of same. The Assignee acknowledges and agrees that the

     Existing Security is in full force and effect, that the security interests

     created thereunder have remained continuously attached at all times before,

     at the time of and subsequent to the sale, transfer and assignment referred

     to herein and that the Existing Security creates a security interest in

     property and assets the Assignee acquires an interest in subsequent to the

     sale, transfer and assignment referred to herein.



6.   The Guarantor acknowledges having received a copy of the Contribution

     Agreement and agrees the Assignee shall be substituted for the Assignor as

     "Customer" under the Guarantee such that subsequent to the Effective Date

     the Assignee shall be the "Customer" under the Guarantee. The Guarantor

     agrees with BNS that the Guarantee remains in full force and effect, is

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