<SUBMISSION>
<ACCESSION-NUMBER>0000950134-04-019337
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20050131
<FILING-DATE>20041215
<DATE-OF-FILING-DATE-CHANGE>20041215
<EFFECTIVENESS-DATE>20041215
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>SURMODICS INC
<CIK>0000924717
<ASSIGNED-SIC>6794
<IRS-NUMBER>411356149
<STATE-OF-INCORPORATION>MN
<FISCAL-YEAR-END>0930
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>000-23837
<FILM-NUMBER>041205016
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>9924 W 74TH ST
<CITY>EDEN PRAIRIE
<STATE>MN
<ZIP>55344
<PHONE>6128292700
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>9924 WEST 74TH ST
<CITY>EDEN PRAIRIE
<STATE>MN
<ZIP>55344
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>BSI CORP
<DATE-CHANGED>19970506
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>c90474def14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>def14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="70%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="13%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="15%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" nowrap align="center"><FONT size="2">OMB APPROVAL</FONT></TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
OMB Number:
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="top"><FONT size="2">3235-0059</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Expires:
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>

<TD nowrap align="right" valign="top"><FONT size="2">July&nbsp;31, 2004</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="2" nowrap align="left" valign="top"><FONT size="2">Estimated average burden<br>hours per

response</FONT></TD>

        <TD align="right" valign="bottom"><FONT size="2">14.73</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><font size="2"><B>UNITED STATES<BR>SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B>
</font>

<P align="center"><FONT size="2"><B>SCHEDULE 14A</B>
</FONT>


<P align="center"><FONT size="2">Proxy Statement Pursuant to Section 14(a) of the Securities<BR>
Exchange Act of 1934 (Amendment No.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;)
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">Filed by the Registrant &nbsp;&nbsp;<FONT face="wingdings">&#120;</FONT></FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">Filed by a Party other than the Registrant &nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT></FONT></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">Check the appropriate box:</FONT></TD>
</TR>
</TABLE>
<p>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Preliminary Proxy Statement</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;
<B>Confidential, for Use of the Commission Only (as permitted by
Rule&nbsp;14a-6(e)(2))</B></FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp; Definitive Proxy Statement</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Definitive Additional Materials</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;
Soliciting Material Pursuant to &#167;240.14a-11(c) or &#167;240.14a-12</FONT></TD>
</TR>
</TABLE>


<P align="center">
Surmodics, Inc.<HR size="1">
<P align="center"><FONT size="2">(Name of Registrant as Specified In Its Charter)
</FONT>
<p>
<HR size="1">
<P align="center"><FONT size="2">(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of Filing Fee (Check the appropriate box):
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp; No fee required.</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(4) and
0-11.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1)&nbsp;Title of each class of securities to which transaction applies:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2)&nbsp;Aggregate number of securities to which transaction applies:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3)&nbsp;Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule&nbsp;0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4)&nbsp;Proposed maximum aggregate value of transaction:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5)&nbsp;Total fee paid:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Fee paid previously with preliminary materials.</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Check box if any part of the fee is offset as provided by Exchange Act
Rule&nbsp;0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1)&nbsp;Amount Previously Paid:</FONT></TD>
</TR>
</TABLE>
<HR size="1">


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2)&nbsp;Form, Schedule or Registration Statement No.:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3)&nbsp;Filing Party:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4)&nbsp;Date Filed:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<p>
<center>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="20%"></TD>
        <TD width="80%"></TD>
</TR>
<TR valign="top">
        <TD valign="bottom"><font size="2">SEC 1913 (11-01)</font></TD>
        <TD><font size="2"><b>Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number.</b></font></TD>
</TR>
</TABLE>
</center>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>SURMODICS, INC.</B>



<P align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="20%">



<P align="center" style="font-size: 10pt"><B>NOTICE OF ANNUAL MEETING OF SHAREHOLDERS</B>



<P align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="20%">



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Annual Meeting of Shareholders of SurModics, Inc. will be held on
January&nbsp;31, 2005, at 4:00 p.m. (Minneapolis time), at the Hotel Sofitel, 5601
West 78th Street, Bloomington, Minnesota, for the following purposes:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To set the number of directors at nine (9).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To elect Class&nbsp;III directors.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To approve the amendment of the Company&#146;s 2003 Equity
Incentive Plan to increase the shares available for issuance under
the Plan by 1,800,000.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To consider and act upon such other matters as may properly
come before the meeting or any adjournment or postponement of the
meeting.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Only shareholders of record at the close of business on December&nbsp;10, 2004
are entitled to notice of and to vote at the meeting or any adjournment
thereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your vote is important. We ask that you complete, sign, date and return
the enclosed Proxy in the envelope provided for your convenience. The prompt
return of Proxies will save the Company the expense of further requests for
Proxies.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BY ORDER OF THE BOARD OF DIRECTORS</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dale R. Olseth</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman and Chief Executive Officer</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">Eden Prairie, Minnesota<BR>
December&nbsp;17, 2004


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000"> OUTSTANDING SHARES AND VOTING RIGHTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001"> PRINCIPAL SHAREHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002"> MANAGEMENT SHAREHOLDINGS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003"> ELECTION OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004"> CORPORATE GOVERNANCE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005"> EXECUTIVE COMPENSATION AND OTHER INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES RESERVED</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007"> SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008"> AUDIT COMMITTEE REPORT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009"> INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010"> OTHER BUSINESS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011"> SHAREHOLDER PROPOSALS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012"> ANNUAL REPORT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013"> EXHIBITS TO FORM 10-K</A></TD></TR>
<TR><TD colspan="9"><A HREF="#014"> Appendix&nbsp;A</A></TD></TR>
<TR><TD colspan="9"><A HREF="#015"> Appendix&nbsp;B</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>





<P align="center" style="font-size: 10pt"><B>SURMODICS, INC.</B>



<P align="center" style="font-size: 10pt"><B>Annual Meeting of Shareholders<BR>
January&nbsp;31, 2005</B>



<P align="center" style="font-size: 10pt"><B>PROXY STATEMENT</B>



<P align="center" style="font-size: 10pt"><B>INTRODUCTION</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your Proxy is solicited by the Board of Directors of SurModics, Inc. (&#147;the
Company&#148;) for use at the Annual Meeting of Shareholders to be held on January
31, 2005, at the location and for the purposes set forth in the notice of
meeting, and at any adjournment or postponement thereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of soliciting Proxies, including the preparation, assembly and
mailing of the Proxies and soliciting material, as well as the cost of
forwarding such material to beneficial owners of stock, will be borne by the
Company. Directors, officers and regular employees of the Company may, without
compensation other than their regular remuneration, solicit Proxies personally
or by telephone.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any shareholder giving a Proxy may revoke it at any time prior to its use
at the meeting by giving written notice of such revocation to the Secretary of
the Company, by filing a new written Proxy with an officer of the Company or by
voting at the meeting. Personal attendance at the meeting is not, by itself,
sufficient to revoke a Proxy unless written notice of the revocation or a
subsequent Proxy is delivered to an officer before the revoked or superseded
Proxy is used at the meeting. Proxies not revoked will be voted in accordance
with the choices specified by shareholders by means of the ballot provided on
the Proxy for that purpose. Proxies that are signed but which lack any such
specification will, subject to the following, be voted in favor of the proposal
set forth in the Notice of Meeting and in favor of the slate of directors
proposed by the Board of Directors and listed herein. If a shareholder
abstains from voting as to any matter, then the shares held by such shareholder
shall be deemed present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such matter, but shall not
be deemed to have been voted in favor of such matter. Abstentions, therefore,
as to any proposal will have the same effect as votes against such proposal.
If a broker returns a &#147;non-vote&#148; Proxy, indicating a lack of voting
instructions by the beneficial holder of the shares and a lack of discretionary
authority on the part of the broker to vote on a particular matter, then the
shares covered by such non-vote Proxy shall be deemed present at the meeting
for purposes of determining a quorum but shall not be deemed to be represented
at the meeting for purposes of calculating the vote required for approval of
such matter.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The mailing address of the principal executive office of the Company is
9924 West 74th Street, Eden Prairie, Minnesota 55344. The Company expects that
this Proxy Statement, the related Proxy and notice of meeting will first be
mailed to shareholders on or about December&nbsp;17, 2004.


<P align="center" style="font-size: 10pt">- 1 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 " OUTSTANDING SHARES AND VOTING RIGHTS" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center" style="font-size: 10pt"><B>OUTSTANDING SHARES AND VOTING RIGHTS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors of the Company has fixed December&nbsp;10, 2004, as the
record date for determining shareholders entitled to vote at the Annual
Meeting. Persons who were not shareholders on such date will not be allowed to
vote at the Annual Meeting. At the close of business on December&nbsp;10, 2004,
17,605,796 shares of the Company&#146;s Common Stock were issued and outstanding.
Common Stock is the only outstanding class of capital stock of the Company
entitled to vote at the meeting. Each share of Common Stock is entitled to one
vote on each matter to be voted upon at the meeting. Holders of Common Stock
are not entitled to cumulative voting rights.

<!-- link1 " PRINCIPAL SHAREHOLDERS" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="center" style="font-size: 10pt"><B>PRINCIPAL SHAREHOLDERS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information concerning persons known to the
Company to be the beneficial owners of more than 5% of the Company&#146;s
outstanding Common Stock as of December&nbsp;10, 2004. Unless otherwise indicated,
the shareholders listed in the table have sole voting and investment power with
respect to the shares indicated.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name and Address of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percent of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Beneficial Owner</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Beneficially Owned</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Class (1)</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Dale R. Olseth</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1,359,300</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.7</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">9924 West 74th Street</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Eden Prairie, MN 55344</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">David A. Koch</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1,061,820</TD>
    <TD nowrap>(3)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">9924 West 74th Street</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Eden Prairie, MN 55344</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Shares not outstanding but deemed beneficially owned by virtue of the
right of a person to acquire them as of December&nbsp;10, 2004, or within sixty
days of such date are treated as outstanding only when determining the
percent owned by such individual and when determining the percent owned by
a group of which such individual is a member.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(2)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Includes 5,000 shares held by Mr.&nbsp;Olseth&#146;s wife, 65,300 shares that may
be acquired upon exercise of stock options which are exercisable as of
December&nbsp;10, 2004 or within 60&nbsp;days of such date.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(3)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Includes 53,600 shares which may be acquired by Mr.&nbsp;Koch upon exercise of
stock options that are exercisable as of December&nbsp;10, 2004 or within 60
days of such date, 62,000 shares held by the Greycoach Foundation, over
which Mr.&nbsp;Koch has shared voting and investment power, and 172,000 shares
held by a Trust for the benefit of Mr.&nbsp;Koch&#146;s wife and children, over
which Mr.&nbsp;Koch has shared voting and investment power.</TD>
</TR>

</TABLE>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>

<P align="center" style="font-size: 10pt">- 2 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>

<!-- link1 " MANAGEMENT SHAREHOLDINGS" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="center" style="font-size: 10pt"><B>MANAGEMENT SHAREHOLDINGS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the number of shares of Common Stock
beneficially owned as of December&nbsp;10, 2004, by each executive officer of the
Company named in the Summary Compensation table, by each current director and
nominee for director of the Company and by all directors and executive officers
(including the named executive officers) as a group. Unless otherwise
indicated, the shareholders listed in the table have sole voting and investment
power with respect to the shares indicated.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Aggregate</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Common</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name of Beneficial Owner</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Current</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Acquirable</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Beneficially</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percent of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>or Identity of Group</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Holdings</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>within 60 days</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>class (1)</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Dale R. Olseth</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1,294,000 </TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,359,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.7</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">David A. Koch</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1,008,200 </TD>
    <TD nowrap>(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,061,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Kendrick B. Melrose</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">254,764 </TD>
    <TD nowrap>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">308,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Lise W. Duran, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">41,191 </TD>
    <TD nowrap>(5)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,944</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Bruce J Barclay</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">John A. Meslow</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Kenneth H. Keller, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Steven J. Keough</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Gerald B. Fischer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Philip D. Ankeny</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Jose H. Bedoya</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">John W. Benson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">All officers and
directors as a group
(18 persons)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,786,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">342,524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,128,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">17.4</TD>
    <TD nowrap>%</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="right">*</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Less than 1%</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">See footnote (1)&nbsp;to preceding table.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(2)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">See footnote (2)&nbsp;to preceding table.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(3)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">See footnote (3)&nbsp;to preceding table.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(4)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Includes 29,893 shares held by the Kendrick B. Melrose Family Foundation,
over which Mr.&nbsp;Melrose has shared voting and investment power, and 272
shares held in accounts for his minor grandchildren for which accounts he
is the custodian and has sole voting and investment power over such
shares.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(5)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Represents shares owned jointly by Dr.&nbsp;Duran and her husband.</TD>
</TR>

</TABLE>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>

<P align="center" style="font-size: 10pt">- 3 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>

<!-- link1 " ELECTION OF DIRECTORS" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="center" style="font-size: 10pt"><B>ELECTION OF DIRECTORS<BR>
(Proposals #1 and #2)</B>



<P align="left" style="font-size: 10pt"><B>General Information</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bylaws of the Company provide that the number of directors, which
shall not be less than three, shall be determined by the shareholders. The
Company&#146;s Nominating Committee and Board of Directors have recommended that the
number of directors continue to be set at nine (9). The Bylaws also provide
for the election of three classes of directors with terms staggered so as to
require the election of only one class of directors each year. Only directors
who are members of Class&nbsp;III will be elected at the Annual Meeting. The Class
III directors will be elected to a three-year term and, therefore, will hold
office until the Company&#146;s 2008 Annual Meeting of Shareholders and until their
successors have been duly elected and qualified. The terms of Class&nbsp;I and II
directors continue until 2006 and 2007, respectively.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating Committee recommended and the Board of Directors selected
Dale R. Olseth, Kenneth H. Keller, and David A. Koch as the Board&#146;s nominees
for re-election as Class&nbsp;III directors. Each Proxy will be voted for each of
such nominees unless the Proxy withholds a vote for one or more nominees. If,
prior to the meeting, it should become known that any of the nominees will be
unable to serve as a director after the meeting by reason of death, incapacity
or other unexpected occurrence, the Proxies will be voted for such substitute
nominee as is recommended or selected by the Nominating Committee and the Board
of Directors or, alternatively, not voted for any nominee. The Board of
Directors has no reason to believe that any nominee will be unable to serve.
Under applicable Minnesota law, approval of the proposal to set the number of
directors at nine (9)&nbsp;requires the affirmative vote of the holders of a
majority of the voting power of the shares represented in person or by Proxy at
the Annual Meeting with authority to vote on such matter, but not less than the
affirmative vote of 4,401,450 shares, and the election of each Class&nbsp;III
director requires the affirmative vote by a plurality of the voting power of
the shares present and entitled to vote on the election of directors at the
Annual Meeting at which a quorum is present.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following information is provided with respect to each director
nominee as well as each director whose term continues after the Annual Meeting:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="46%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Age</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Position with Company</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dale R. Olseth
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">74</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman and Chief Executive Officer</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Bruce J Barclay
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Chief Operating Officer</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">John W. Benson (1)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">60</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jose H. Bedoya (1)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Gerald B. Fischer (2)(3)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">61</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kenneth H. Keller, Ph.D. (1)(2)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">David A. Koch (1)(2)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">74</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kendrick B. Melrose
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">64</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">John A. Meslow (1)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">65</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">- 4 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Member of the Organization and Compensation Committee, for which Mr.
Meslow is the Chairman.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(2)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Member of the Audit Committee, for which Mr.&nbsp;Fischer is the Chairman.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(3)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">The Board of Directors has determined that Mr.&nbsp;Gerald B. Fischer
qualifies as an &#147;audit committee financial expert&#148; under federal
securities laws.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(4)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Member of the Nominating Committee, for which Mr.&nbsp;Keller is the Chairman.</TD>
</TR>

</TABLE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Dale R. Olseth </I></B>(Class&nbsp;III) joined the Company in 1986 as its President
(which position he held until 1998), Chief Executive Officer and a director,
and has served as Chairman of the Board since 1988. Mr.&nbsp;Olseth also serves on
the Board of Directors of The Toro Company, and the Boards of Otologics LLC and
the University of Minnesota Foundation. He served as Chairman or President and
Chief Executive Officer of Medtronic, Inc. from 1976 to 1986.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Bruce J Barclay </I></B>(Class&nbsp;I) joined the Company as its President and Chief
Operating Officer in December&nbsp;2003 and became a director of the Company in July
2004. Prior to joining SurModics, he served as President and Chief Executive
Officer of Vascular Architects, Inc., from 2000 to 2003. Prior to Vascular
Architects, he served at Guidant Corporation, most recently as an officer and
Senior Vice President from 1998 to 2000. Mr.&nbsp;Barclay also has considerable
experience in the pharmaceutical area serving in several positions at Eli Lilly
and Company. Mr.&nbsp;Barclay also serves on the Board of Directors of Cardiac
Science, Inc. Mr.&nbsp;Barclay received a B.S. in chemistry and a B.A. in biology
from Purdue University in 1980 and a J.D. from the Indiana University School of
Law in 1984. He is also a registered patent attorney.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>John W. Benson </I></B>(Class&nbsp;II) has been a director since May&nbsp;22, 2003. Benson
retired from 3M Company in February&nbsp;2003 where he served in various capacities
for 35&nbsp;years. Prior to his retirement, he served as Executive Vice President,
Health Care Markets. Mr.&nbsp;Benson currently serves on the Board of Regents at
St. Olaf College.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Jose H. Bedoya </I></B>(Class&nbsp;I) has been a director of the Company since 2002.
Mr.&nbsp;Bedoya is President of Otologics LLC, a Colorado-based technology company
he founded in 1996 to develop implantable devices to assist the severely
hearing-impaired. From 1986 to 1996, Mr.&nbsp;Bedoya held a number of positions at
Storz Instrument Company, then a division of American Cyanamid and later a
division of American Home Products, including Director of Operations, Director
of Research and Director of Commercial Development. Prior to that, he served
as Vice President of Research and Development for Bausch &#038; Lomb&#146;s surgical
division.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Gerald B. Fischer </I></B>(Class&nbsp;II) has been a director of the Company since
2002. He is President and Chief Executive Officer of the University of
Minnesota Foundation, a position he has held since 1990. From 1985 to 1989,
Mr.&nbsp;Fischer was with First Bank System, now U.S. Bancorp, serving as Executive
Vice President, Chief Financial Officer and Treasurer. Previous to that he
spent 18&nbsp;years in various finance positions at Ford Motor Company and its
affiliates.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Kenneth H. Keller, Ph.D. </I></B>(Class&nbsp;III) has been a director of the Company
since 1997. He has served as Professor of Science and Technology Policy in the
Hubert H. Humphrey Institute of Public Affairs at the University of Minnesota
since 1996. Dr.&nbsp;Keller joined the Chemical Engineering and Materials Science
faculty of the University of Minnesota in 1964, and through the years assumed
increasing administrative responsibilities, including serving as the President
of


<P align="center" style="font-size: 10pt">- 5 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">the University from 1985 to 1988. Dr.&nbsp;Keller was a Senior Fellow at the
Council on Foreign Relations from 1989 to 1997.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>David A. Koch </I></B>(Class&nbsp;III) has been a director of the Company since 1988.
He has served as the Chairman Emeritus of Graco Inc. since May&nbsp;2001, Chairman
from 1985 to 2001, as its Chief Executive Officer from 1985 to 1996 and as its
President and Chief Executive Officer from 1962 to 1985. He has served as
Chairman of SoftPac Industries Inc. since 2000.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Kendrick B. Melrose </I></B>(Class&nbsp;II) has been a director of the Company since
1988. He has served as Chairman of the Board and Chief Executive Officer of
The Toro Company since 1987, as its Chief Executive Officer from 1983 to 1987
and as its President from 1981 to 1983. Mr.&nbsp;Melrose is also a director of
Donaldson Company, Inc.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>John A. Meslow </I></B>(Class&nbsp;I) has been a director of the Company since 2000.
He served as Senior Vice President and President &#151; Neurological Business of
Medtronic, Inc. from 1985 until his retirement in 2000.

<!-- link1 " CORPORATE GOVERNANCE" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="center" style="font-size: 10pt"><B>CORPORATE GOVERNANCE</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s business affairs are conducted under the direction of the
Board of Directors in accordance with the Minnesota Business Corporation Act
and the Company&#146;s Articles of Incorporation and Bylaws. Members of the Board
of Directors are informed of the Company&#146;s business through discussions with
management, by reviewing materials provided to them and by participating in
meetings of the Board of Directors and its committees. Certain corporate
governance practices that the Company follows are summarized below.


<P align="left" style="font-size: 10pt"><B>Code of Ethics and Business Conduct</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have adopted the SurModics Code of Ethics and Business Conduct (the
&#147;Code of Conduct&#148;), a code of conduct that applies to our directors, officers
and employees. The Code of Conduct is publicly available on our website at
www.surmodics.com. If we make any substantive amendments to the Code of
Conduct or grant any waiver, including any implicit waiver from a provision of
the Code of Conduct to our directors or executive officers, we will disclose
the nature of such amendment or waiver on our website or in a report on Form
8-K.


<P align="left" style="font-size: 10pt"><B>Majority of Independent Directors; Committees of Independent Directors</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors has determined that Messrs.&nbsp;Benson, Bedoya,
Fischer, Keller, Koch and Meslow, constituting a majority the Board of
Directors, are independent directors in accordance with rules of the NASD since
none of them are believed to have any relationships that, in the opinion of the
Board of Directors, would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director. Messrs.&nbsp;Olseth and Barclay
are precluded from being considered independent by NASD rules since they
currently serve as executive officers of the Company. Mr.&nbsp;Melrose is also
precluded from being considered independent by NASD rules since he serves as an
executive officer of an entity at which one of the Company&#146;s executive officers
served as a member of the compensation committee within the past three years.


<P align="center" style="font-size: 10pt">- 6 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each member of the Company&#146;s Audit Committee, Organization and
Compensation Committee and Nominating Committee has been determined, in the
opinion of the Board of Directors, to be independent in accordance with NASD
rules.


<P align="left" style="font-size: 10pt"><B>Committee and Board Meetings</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Board of Directors has three standing committees &#151; the Audit
Committee, the Organization and Compensation Committee and the Nominating
Committee. During fiscal 2004, the Board of Directors held 7 formal meetings
and the standing committees had the number of formal meeting noted below. Each
incumbent director attended 75% or more of the total number of meetings of the
Board and of Committee(s) of which he was a member in fiscal year 2004.


<P align="left" style="font-size: 10pt"><B><I>Audit Committee</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee is responsible for reviewing the Company&#146;s internal
control procedures and the quarterly and annual financial statements of the
Company, and reviewing with the Company&#146;s independent public accountants the
results of the annual audit. The Audit Committee held four formal meetings
during fiscal 2004. Attached as Appendix&nbsp;A is the revised Audit Committee
Charter as approved by the Audit Committee on October&nbsp;25, 2004.


<P align="left" style="font-size: 10pt"><B><I>Organization and Compensation Committee</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Organization and Compensation Committee recommends to the Board of
Directors from time to time the salaries and incentive compensation to be paid
to executive officers, key employees and directors of the Company and
organizational planning and changes at the executive level. The Organization
and Compensation Committee held four formal meetings during fiscal 2004.


<P align="left" style="font-size: 10pt"><B><I>Nominating Committee; Procedures and Policy</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating Committee is responsible for evaluating and nominating or
recommending candidates for the Company&#146;s Board of Directors. Attached as
Appendix&nbsp;B is the Nominating Committee Charter as approved by the Nominating
Committee. The Nominating Committee held two formal meetings during fiscal
year 2004. The Nominating Committee&#146;s nominating policy provides for the
consideration of candidates recommended by shareholders, directors, third
parties, search firms and others. In evaluating director nominees, the
Nominating Committee considers the following factors and qualifications:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the appropriate size and the diversity of the Company&#146;s Board of
Directors;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the needs of the Board with respect to the particular talents and
experience of its directors;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the knowledge, skills and experience of nominees, including
experience in the industry in which the Company operates, business,
finance, management or public service, in light of prevailing business
conditions and the knowledge, skills and experience already possessed
by other members of the Board;</TD>
</TR>



</TABLE>

<P align="center" style="font-size: 10pt">- 7 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>familiarity with domestic and international business matters;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>age and legal and regulatory requirements;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>experience with accounting rules and practices;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>appreciation of the relationship of the Company&#146;s business to the
changing needs of society; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the desire to balance the considerable benefit of continuity with
the periodic injection of the fresh perspective provided by new
members.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating Committee will consider the attributes of the candidates
and the needs of the Board and will review all candidates in the same manner,
regardless of the source of the recommendation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A shareholder who wishes to recommend one or more directors must provide a
written recommendation to the Secretary of the Company at the address below.
Notice of a recommendation must include:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;with respect to the shareholder:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>name, address, the class and number of shares such shareholder owns;</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;with respect to the nominee:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>name, age, business address, residence address,</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>current principal occupation,</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>five year employment history with employer names and a
description of the employer&#146;s business,</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of shares beneficially owned by the nominee,</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether such nominee can read and understand basic financial statements, and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Board membership, if any.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The recommendation must be accompanied by a written consent of the nominee
to stand for election if nominated by the Board of Directors and to serve if
elected by the shareholders. The Company may require any nominee to furnish
additional information that may be needed to determine the eligibility of the
nominee. Such recommendation must be submitted to the Secretary of the Company
no later than 120&nbsp;days prior to the mailing of the proxy statement for the next
Annual Meeting of Shareholders.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating Committee believes that candidates for directors should
have certain minimum qualifications, including being able to read and
understand basic financial statements, having familiarity with the Company&#146;s
business and industry, having high moral character and mature judgment, being
able to work collegially with others, and not currently serving on more than
four Boards of public companies. The Nominating Committee may modify these
minimum qualifications from time to time.


<P align="center" style="font-size: 10pt">- 8 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Procedures for Shareholder Communications to Directors</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders may communicate directly with the Board of Directors. All
communications should be directed to our Corporate Secretary at the address
below and should prominently indicate on the outside of the envelope that it is
intended for the Board of Directors or for non-management directors. If no
director is specified, the communication will be forwarded to the entire Board.
Shareholder communications to the Board should be sent to:


<P align="center" style="font-size: 10pt">Corporate Secretary<BR>
Attention: Board of Directors<BR>
SurModics, Inc.<BR>
9924 West 74th Street<BR>
Eden Prairie, MN 55344-3523



<P align="left" style="font-size: 10pt"><B>Director Attendance Policy</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors&#146; attendance at our annual meetings of shareholders can provide
our shareholders with an opportunity to communicate with directors about issues
affecting the Company. Accordingly, all directors are expected and encouraged
to attend annual meetings of shareholders. All of the Company&#146;s directors
attended the last annual meeting of shareholders, which was held in January
2004.


<P align="left" style="font-size: 10pt"><B>Directors Fees</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors are not currently paid fees for attending Board or Committee
meetings. Non-employee directors are generally compensated with nonqualified
stock options as recommended by the Organization and Compensation Committee and
determined by the Board of Directors from time to time. The non-employee
directors currently hold nonqualified stock options to purchase an aggregate of
221,000 shares of Common Stock. All such options have an exercise price equal
to the fair market value of a share of Common Stock on the date of grant and
expire ten years after the date of grant. Such options are exercisable as to
20% commencing on the date of grant and become exercisable for an additional
20% on each of the next four anniversaries of the date of grant. In addition,
all directors are reimbursed for their travel-related expenses incurred in
attending meetings of the Board of Directors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board&#146;s Organization and Compensation Committee has recommended to the
Board of Directors certain changes in compensation for its non-employee
directors. The Committee has recommended that, beginning for calendar year
2005, each director who is not an employee of the Company will receive $10,000
as an annual retainer and $1,000 for each Board meeting attended. Further,
each committee member will receive $500 for each committee meeting attended and
each committee chair will receive $2,000 as an annual retainer fee. Such fees
may be paid in cash or Company stock options granted under the 2003 Equity
Incentive Plan in amounts to be established. In addition, each non-employee
director will be granted an option under the 2003 Equity Incentive Plan to
purchase 10,000 shares of Company&#146;s Common Stock upon his or her first election
to the Board of Directors, and each non-employee director will be granted
annually an option under such Plan to purchase 5,000 shares of Company Common
Stock. The Company expects that the Board of Directors will adopt the above
recommendations in connection with the Board meeting to be held on the day of
the 2005 Annual Meeting.


<P align="center" style="font-size: 10pt">- 9 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 " EXECUTIVE COMPENSATION AND OTHER INFORMATION" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="center" style="font-size: 10pt"><B>EXECUTIVE COMPENSATION AND OTHER INFORMATION</B>



<P align="center" style="font-size: 10pt"><B>Organization and Compensation Committee Report on Executive Compensation</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Compensation Committee Interlocks and Insider Participation</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Organization and Compensation Committee (&#147;Committee&#148;) of the Board of
Directors of the Company is currently composed of five of the Company&#146;s outside
directors. None of the members of the Committee is an employee or executive
officer of the Company. Dale R. Olseth, the Company&#146;s Chief Executive Officer,
served until March&nbsp;2003 as a member of the compensation committee of The Toro
Company. Kendrick B. Melrose, who was a member of the Company&#146;s Organization
and Compensation Committee until May&nbsp;2003, serves as the Chief Executive
Officer of The Toro Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Compensation Philosophy</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee&#146;s executive compensation policies are designed to enhance
the financial performance of the Company, and thus shareholder value, by
aligning the financial interests of executive officers and employees with those
of shareholders. The executive compensation program is viewed in total
considering all of the component parts: base salary, annual performance
incentives, benefits and long-term incentive opportunities in the form of stock
options, restricted stock grants and stock ownership. The Committee&#146;s position
is that stock ownership by executive officers and employees is beneficial in
aligning management&#146;s and shareholders&#146; interests in the enhancement of
shareholder value.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Base Salary</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Base salaries for executive officers of the Company are reviewed by the
Committee. The Committee assesses the executive officer&#146;s level of
responsibility, experience, individual performance, and accountabilities
relative to other Company executive officers and external market practices.
The Company&#146;s annual base salaries for its executive officers are generally
conservative when compared to base salaries offered by comparable companies.
However, the Committee believes that executive officers&#146; base salaries, when
combined with incentive plans based on the Company&#146;s financial performance, are
generally competitive with compensation levels at comparable companies. The
Company&#146;s pay-for-performance philosophy places a substantial portion of
executive officers&#146; total compensation &#147;at risk&#148; while providing compensation
opportunities which are comparable to the market levels.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Incentives</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company may grant some executive officers long-term awards, including
performance awards, stock options, and restricted stock. The purposes of the
awards are to:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;focus executives on the achievement of performance objectives that
enhance shareholder value;


<P align="center" style="font-size: 10pt">- 10 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;emphasize the importance of balancing present business needs and
long-term goals critical to the future success of the Company; and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;attract and retain executive officers of superior ability.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Annual Incentive Plan. </I>The Company has annually established a cash bonus
plan that enables the Company&#146;s employees, including its executive officers, to
earn a bonus, calculated as a percentage of their annual base salary, based on
the achievement of certain financial goals by the Company. The actual
percentage award for all employees is determined based on the achievement of
certain revenue and operating income goals for the fiscal year, and at times
the particular year&#146;s plan has contained higher threshold financial goals for
executive officers. The Company did not meet the threshold financial goals set
forth for officers in the bonus plan for FY 2004. Accordingly, no executive
officers received any bonus under such plan for FY 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>2003 Equity Incentive Plan. </I>Under the Company&#146;s current 2003 Equity
Incentive Plan, 600,000 shares of Common Stock were reserved for issuance to
executive officers, directors, consultants and employees. On November&nbsp;15, 2004,
the Board of Directors amended the plan, subject to shareholder approval
thereof, to increase the shares reserved under the Plan from 600,000 to
2,400,000 shares. Shareholders will take action with respect to the amendment
at the Annual Meeting. Options granted under the plan may be either
&#147;incentive&#148; stock options within the meaning of Section&nbsp;422 of the Internal
Revenue Code or &#147;nonqualified&#148; stock options that do not qualify for special
tax treatment under Section&nbsp;422 of the Internal Revenue Code. The options are
granted at 100% of the fair market value of the Common Stock on the date of
grant. Options typically expire seven to ten years from the date of grant or
upon termination of employment, and are exercisable at a rate of 20% per year
from the date of grant or 20% per year commencing one year after the date of
grant. The 2003 Plan also allows the grant of stock awards, with or without
forfeiture restrictions.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders approved the 2003 Equity Incentive Plan at the 2003 Annual
Meeting of Shareholders. Following the approval of the 2003 Plan, no further
options or stock awards will be granted from the <I>1997 Incentive Stock Option
Plan, </I>the <I>Nonqualified Stock Option Plan, </I>or the <I>Restricted Stock Plan</I>
described below.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>1997 Incentive Stock Option Plan. </I>Under the Company&#146;s 1997 Incentive
Stock Option Plan, 1.2&nbsp;million shares of Common Stock were reserved for
issuance to executive officers and employees. The 1997 Plan requires that the
option price per share must be at least 100% of the fair market value of the
Common Stock on the date of the option grant. Options typically expire seven
years from the date of grant or upon termination of employment, and are
exercisable at a rate of 20% per year commencing one year after the date of
grant. There are approximately 550,743 shares of Common Stock to be issued
upon the exercise of outstanding options, but no further options will be
granted from the <I>1997 Incentive Stock Option Plan.</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Nonqualified Stock Option Plan. </I>Under the Company&#146;s Nonqualified Stock
Option Plan, 1,944,480 shares of Common Stock were reserved for issuance to
outside directors, executive officers and employees. The options are granted
at 100% of the fair market value. Options expire seven to ten years from the
date of grant, and are exercisable at a rate of 20% per year


<P align="center" style="font-size: 10pt">- 11 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">from the date of grant or 20% per year commencing two years after the date
of grant. There are approximately 163,400 shares of Common Stock to be issued
upon the exercise of outstanding options, but no further options will be
granted from the <I>Nonqualified Stock Option Plan.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restricted Stock Plan. </I>Under the Company&#146;s Restricted Stock Plan, 200,000
shares of Common Stock were reserved for issuance to executive officers and key
employees. Under the Restricted Stock Plan, grants of restricted stock vest in
full five years from the date of grant. No further stock awards will be granted
from the <I>Restricted Stock Plan.</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company provides medical and insurance benefits to its executive
officers which are generally available to all Company employees. The Company
also maintains a 401(k) savings plan in which all qualified employees,
including the executive officers, may participate. The Company provides
matching contributions to the savings plan for all participating employees,
allowing such employees to earn up to an additional 3% of their annual base
salary. In addition, the Company maintains a Stock Purchase Plan that permits
qualified employees, including executive officers, to purchase stock of the
Company at favorable prices. The amount of perquisites allowed to executive
officers, as determined in accordance with rules of the Securities and Exchange
Commission, did not exceed 10% of salary in fiscal 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Chief Executive Officer Compensation</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dale R. Olseth served as the Company&#146;s Chief Executive Officer in fiscal
2004. His annual base salary and eligibility for annual incentives, set forth
in the following tables, were determined in accordance with the policies
described above as applicable to all executive officers.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;162(m) of the Internal Revenue Code of 1986, as amended (the
&#147;Code&#148;), limits the deductibility of certain compensation paid to the chief
executive officer and each of the four other most highly compensated executives
of a publicly-held corporation to $1&nbsp;million per executive. In fiscal 2004,
the Company did not pay &#147;compensation&#148; within the meaning of Section 162(m) to
any of such executive officers in excess of $1&nbsp;million and does not believe it
will do so in the near future. Therefore, the Company does not have a policy at
this time regarding qualifying compensation paid to its executive officers for
deductibility under Section&nbsp;162(m), but will formulate such a policy if
compensation levels for any executive ever approach $1&nbsp;million.


<P align="left" style="font-size: 10pt; margin-left: 50%"><B>Members of the Committee:</B><BR>
John A. Meslow, Chairman<BR>
Jose H. Bedoya<BR>
John W. Benson<BR>
Kenneth H. Keller, Ph.D.<BR>
David A. Koch


<P align="center" style="font-size: 10pt">- 12 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Summary Compensation Table</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information regarding compensation
paid during each of the Company&#146;s last three fiscal years to the Chief
Executive Officer and each of the four most highly compensated executive
officers of the Company (the &#147;Named Executive Officers&#148;) who received total
salary and bonus compensation in excess of $100,000 for fiscal 2004.


<P align="center" style="font-size: 10pt"><B>Summary Compensation Table</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>Annual Compensation</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Long Term Compensation</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Restricted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name and Principal</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Fiscal</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Salary</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Bonus</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Stock Award(s)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Underlying Options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>All Other</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Position</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)(1)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($) (2)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(# of shares)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation (3)</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Dale R. Olseth,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">192,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,954</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Chairman and Chief Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">182,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">57,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,618</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">171,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">37,794</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,681</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Bruce J Barclay,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">189,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">315,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">149,643</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">President and Chief Operating Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Philip D. Ankeny,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">149,004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,470</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Chief Financial Officer and Vice</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">54,940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">980</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">President, Business Development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Steven J. Keough,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">139,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">106,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Vice President and Chief</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Intellectual Property Counsel</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Lise W. Duran, Ph.D.,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">121,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,650</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Vice President and General Manager,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">114,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">36,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,440</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Regenerative Technologies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">111,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">24,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,307</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Represents amounts earned in 2003 and 2002 under a bonus plan for the
Company&#146;s officers enabling them to receive a payout of up to 32% of their
base salary. The amount of the bonus is determined based on the
achievement of certain revenue and profit goals for the year. The Company
did not achieve the goals set for officer for the 2004 plan, and therefore
no officer received a bonus in 2004 under the plan.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Represents the dollar value of the restricted stock award calculated by
multiplying the number of shares awarded by the closing market price on
the date of the grant. Mr.&nbsp;Barclay&#146;s award was for 15,000 shares and will
cliff vest five years after the date of grant. Mr.&nbsp;Keough&#146;s award was for
5,000 shares and will cliff vest five years after the date of grant. The
holder of a restricted stock award is entitled to receive all dividends
attributable to the shares.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Represents contributions made by the Company under its 401(k) plan. Mr.
Barclay&#146;s 2004 All Other Compensation included a one-time $90,000
relocation payment and a $56,250 payment related to his acceptance of
employment.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>Option/SAR Grants During 2004 Fiscal Year</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information regarding stock options granted
to Named Executive Officers during the fiscal year ended September&nbsp;30, 2004.
The Company has not granted stock appreciation rights.



<P align="center" style="font-size: 10pt">- 13 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Potential Realizable</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Value At Assumed</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Annual Rates Of Stock</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options/SARs</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Price Appreciation</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options/SARs<BR>Granted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Granted to<BR>Employees in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise or<BR>Base Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Expiration</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>For Option Term</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(#) (1)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Fiscal Year</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($/Sh)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Date</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>5% ($)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>10% ($)</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Dale R. Olseth</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/26/11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">217,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">506,750</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Bruce J Barclay</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">16.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12/1/10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">427,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">996,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Philip D. Ankeny</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/26/11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">130,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">304,050</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Steven J. Keough</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/26/11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">304,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">709,450</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Lise W. Duran, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/26/11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">43,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">101,350</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Such options vest annually as to 20% of the total number of shares
commencing one year after the date of grant.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>Aggregated Option/SAR Exercises during 2004 Fiscal Year and Fiscal Year End
Option/SAR Values</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information related to the exercise of stock
options during fiscal 2004 by the Named Executive Officers and the number and
value of options held at fiscal year end by such persons:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Number of Unexercised</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Securities Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Value of Unexercised In-the-</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares<BR>Acquired</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Value</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Options at 9/30/04</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Money Options at 9/30/04<SUP>(1)</SUP></B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>on Exercise</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Realized<SUP>(2)</SUP></B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercisable</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Unexercisable</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercisable</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Unexercisable</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Dale R. Olseth</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">NA</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">NA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">868,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">59,750</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Bruce J Barclay</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">NA</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">NA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">137,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Philip D. Ankeny</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">NA</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">NA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">35,850</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Steven J. Keough</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">NA</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">NA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">83,650</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Lise W. Duran, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">99,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,944</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">251,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11,950</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Value of exercisable/unexercisable in-the-money options is equal to the
difference between the market price of the Common Stock at fiscal year end
and the option exercise price per share multiplied by the number of shares
subject to options. The closing sale price as of September&nbsp;30, 2004 on
the Nasdaq National Market was $23.75.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Value is equal to the difference between the closing price as quoted on
the Nasdaq National Market on the date of exercise and the option exercise
price per share multiplied by the number of shares to which the exercise
relates.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">- 14 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Equity Compensation Plan Information</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information related to the Company&#146;s equity
compensation plans in effect as of September&nbsp;30, 2004.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(b)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(c)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of securities to</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted-average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of securities remaining</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>be issued upon exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>exercise price of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>available for future issuance under</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of outstanding options,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>outstanding options,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity compensation plans (excluding</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Plan category</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>warrants and rights</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>warrants and rights</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>securities reflected in column (a))</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Equity
compensation plans approved by shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">984,163</TD>
    <TD nowrap><SUP>(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">22.36</TD>
    <TD nowrap><SUP>(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">270,920</TD>
    <TD nowrap><SUP>(2)</SUP></TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Equity compensation
plans not approved
by shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">TOTAL</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,147,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">20.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">270,920</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Excludes shares that may be issued under the Company&#146;s 1999 Employee
Stock Purchase Plan.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes 141,580 shares available for future issuance under the 2003
Equity Incentive Plan and 129,340 shares available under the 1999 Employee
Stock Purchase Plan.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Nonqualified Stock Option Plan. </I>The Nonqualified Stock Option Plan was
adopted by the Board of Directors prior to the Company&#146;s initial public
offering in March&nbsp;1998 and it was not approved by shareholders. Under the
Company&#146;s Nonqualified Stock Option Plan, 1,944,480 shares of Common Stock were
reserved for issuance to outside directors, executive officers and employees.
The options were granted at 100% of the fair market value. Options expire
seven to ten years from the date of grant, and are exercisable at a rate of 20%
per year from the date of grant or 20% per year commencing one year after the
date of grant. There are approximately 163,400 shares of Common Stock to be
issued upon the exercise of outstanding options, but no further options will be
granted from the <I>Nonqualified Stock Option Plan.</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restricted Stock Plan. </I>The Restricted Stock Plan was adopted by the Board
of Directors prior to the Company&#146;s initial public offering in March&nbsp;1998, and
it has not been approved by shareholders. Under the Company&#146;s Restricted Stock
Plan, 200,000 shares of Common Stock were reserved for issuance to executive
officers and key employees. Under the Restricted Stock Plan, grants of
restricted stock vest in full five years from the date of grant. No further
stock awards will be granted from the <I>Restricted Stock Plan.</I>


<P align="left" style="font-size: 10pt"><B>Stock Performance Chart</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following chart compares the cumulative total shareholder return on
the Company&#146;s Common Stock with the cumulative total return on the Nasdaq Stock
Market and the Nasdaq Medical Industry Index (Medical Devices, Instruments and
Supplies). The comparison assumes $100 was invested on September&nbsp;30, 1999 and
assumes reinvestment of dividends.


<P align="center" style="font-size: 10pt">- 15 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>Comparison of Cumulative Total Return Among SurModics,<BR>
the Nasdaq Stock Market (U.S.) and the Nasdaq Medical Industry Index<BR>
(Medical Devices, Instruments and Supplies)</B>



<P align="center" style="font-size: 10pt"><IMG src="c90474c9047400.gif" alt="(LINE GRAPH)">


<!-- link1 "APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES RESERVED" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="center" style="font-size: 10pt"><B>APPROVAL OF AN INCREASE
IN THE NUMBER OF SHARES RESERVED</B>
<DIV align="center" style="font-size: 10pt"><B>UNDER THE COMPANY&#146;S 2003 EQUITY INCENTIVE PLAN<BR>
(Proposal #3)</B>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;15, 2004, the Board of Directors amended, subject to
shareholder approval, the Company&#146;s 2003 Equity Incentive Plan (the &#147;Plan&#148;) to
increase the shares reserved under the Plan by 1,800,000 shares (the
&#147;Amendment&#148;). As of December&nbsp;10, 2004, the Company has issued under the Plan
restricted stock awards for a total of 82,000 shares and has outstanding
incentive and nonqualified options granted under the Plan for the purchase of
an aggregate of 456,600 shares of the Company&#146;s Common Stock with an average
exercise price of $28.09 per share and exercise prices ranging from $21.00 to
$35.61 per share. No options granted under the Plan have been exercised as of
December&nbsp;10, 2004. The increase of shares under the Plan is necessary to
provide sufficient shares for future options and stock awards. The Board
believes that granting fair-priced stock options and stock awards to employees,
officers, consultants and directors is an effective means to promote the future
growth and development of the Company. Such options and awards, among other
things, increase these individuals&#146; proprietary interest in the Company&#146;s
success and enables the Company to attract and retain qualified personnel. The
Board therefore recommends that all shareholders vote in favor of increasing
the number of shares reserved under the Plan from 600,000 to 2,400,000 shares.


<P align="center" style="font-size: 10pt">- 16 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Summary of 2003 Equity Incentive Plan</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A general description of the material features of the Plan follows, but
this description is qualified in its entirety by reference to the full text of
the Plan, a copy of which may be obtained without charge upon request to Philip
D. Ankeny, the Company&#146;s Chief Financial Officer.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General. </I>Shareholders approved the 2003 Equity Incentive Plan at the 2003
Annual Meeting of Shareholders. Under the Plan, the Board, the Organization and
Compensation Committee or, as noted below for certain Awards, a committee of
directors authorized by the Board (collectively the &#147;Grantor&#148;) may award
nonqualified or incentive stock options and stock awards, with or without
forfeiture restrictions, (collectively referred to as an &#147;Award&#148; or &#147;Awards&#148;)
to those officers, directors, consultants and employees (the &#147;Participants&#148;) of
the Company (including its subsidiaries and affiliates) whose performance, in
the judgment of the Grantor, can have a significant effect on the success of
the Company. The Board has authorized a committee consisting of Dale R. Olseth
and Bruce J Barclay to grant Awards from time to time under the Plan to persons
who are not directors or executive officers after review and consultation with
the Chairman of the Organization and Compensation Committee. The actual
number of individuals who will receive Awards under the Plan cannot be
determined in advance because of the discretion in selecting Participants.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Shares Available. </I>When the Plan was adopted in 2003, 600,000 shares of
the Company&#146;s Common Stock were reserved for grants of Awards to Participants
under the Plan. If the amendment to increase the number of shares reserved
under the Plan is approved by the shareholders, the total cumulative number of
shares of the Company&#146;s Common Stock reserved for grants of Awards under the
Plan will be Two Million Four Hundred Thousand (2,400,000) shares. If any
Awards granted under the Plan expire or terminate prior to exercise or
otherwise lapse, the shares subject to such portion of the Award are available
for subsequent grants of Awards.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The total number of shares and the exercise price per share of Common
Stock that may be issued pursuant to outstanding Awards are subject to
adjustment by the Board of Directors upon the occurrence of stock dividends,
stock splits or other recapitalizations, or because of mergers, consolidations,
reorganizations or similar transactions in which the Company receives no
consideration. The Board may also provide for the protection of Participants in
the event of a merger, liquidation, reorganization, divestiture (including a
spin-off) or similar transaction.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Administration and Types of Awards. </I>The Plan may be administered by the
Board or by a committee of the Board of Directors (hereinafter referred to as
the &#147;Administrator&#148;). Any committee appointed by the Board to administer the
Plan with respect to Awards to directors or executive officers shall consist of
at least two &#147;non-employee&#148; directors (as defined in Rule&nbsp;16b-3, or any
successor provision, of the General Rules and Regulations under the Securities
Exchange Act of 1934). The Administrator has broad powers to administer and
interpret the Plan, including the authority: (i)&nbsp;to establish rules for the
administration of the Plan; (ii)&nbsp;to select the Participants in the Plan; (iii)
to determine the types of Awards to be granted and the number of shares covered
by such Awards; and (iv)&nbsp;to set the terms and conditions of such Awards. All
determinations and interpretations of the Administrator are binding on all
interested parties.


<P align="center" style="font-size: 10pt">- 17 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Options. </I>Options granted under the Plan may be either &#147;incentive&#148; stock
options within the meaning of Section&nbsp;422 of the Internal Revenue Code
(&#147;I.R.C.&#148;) or &#147;nonqualified&#148; stock options that do not qualify for special tax
treatment under Section&nbsp;422 or similar provisions of the I.R.C. No incentive
stock option may be granted with a per share exercise price less than the fair
market value of a share of the underlying Common Stock on the date the
incentive stock option is granted. Unless otherwise determined by the Grantor,
the per share exercise price for nonqualified stock options granted under the
Plan also will not be less than the fair market value of a share of the
Company&#146;s Common Stock on the date the nonqualified stock option is granted.
The closing sale price of the Company&#146;s Common Stock was $30.22 on December&nbsp;10,
2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The period during which an option may be exercised and whether the option
will be exercisable immediately, in stages, or otherwise is set by the Grantor.
An incentive stock option may not be exercisable more than ten (10)&nbsp;years from
the date of grant. Participants generally must pay for shares upon exercise of
options with cash, certified check or Common Stock of the Company valued at the
stock&#146;s then &#147;fair market value&#148; as defined in the Plan. Each incentive option
granted under the Plan is nontransferable during the lifetime of the
Participant. A nonqualified stock option may, if permitted by the Grantor, be
transferred to certain family members, family limited partnerships and family
trusts.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Grantor may, in its discretion, modify or impose additional
restrictions on the term or exercisability of an option. The Grantor may also
determine the effect that a Participant&#146;s termination of employment with the
Company or a subsidiary may have on the exercisability of such option. The
grants of stock options under the Plan are subject to the Grantor&#146;s discretion.
Consequently, future grants to eligible Participants cannot be determined at
this time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Awards. </I>The Plan also authorizes the grant of awards of stock, with
or without forfeiture restrictions. Each stock award granted under the Plan
shall be for a number of shares as determined by the Grantor, and the Grantor,
in its discretion, may also establish continued employment, vesting or other
conditions that must be satisfied for the restrictions, if any, on the
transferability of the shares and the risks of forfeiture, if any, to lapse.
Because future grants of stock awards are subject to the discretion of the
Grantor, future awards to eligible Participants cannot be determined at this
time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendment. </I>The Board of Directors may terminate or amend the Plan, except
that the terms of Award agreements then outstanding may not be adversely
affected without the consent of the Participant. The Board of Directors may not
amend the Plan to materially increase the total number of shares of Common
Stock available for issuance under the Plan, materially increase the benefits
accruing to any individual or materially modify the requirements for
eligibility to participate in the Plan without the approval of the Company&#146;s
shareholders if such approval is required to comply with the I.R.C. or other
applicable laws or regulations.


<P align="left" style="font-size: 10pt"><B>Federal Income Tax Matters</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Options. </I>&#147;Incentive&#148; stock options granted pursuant to the Plan are
intended to qualify for favorable tax treatment to the Participant under Code
Section&nbsp;422. Under Code Section&nbsp;422, a Participant realizes no taxable income
when the incentive stock option is granted. If the Participant has been an
employee of the Company or any subsidiary at all times from the date of


<P align="center" style="font-size: 10pt">- 18 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">grant until three months before the date of exercise, the Participant will
realize no taxable income when the option is exercised. If the Participant does
not dispose of shares acquired upon exercise for a period of two years from the
granting of the incentive stock option and one year after receipt of the
shares, the Participant may sell the shares and report any gain as capital
gain. The Company will not be entitled to a tax deduction in connection with
either the grant or exercise of an incentive stock option, but may be required
to comply with applicable withholding requirements. If the Participant should
dispose of the shares prior to the expiration of the two-year or one-year
periods described above, the Participant will be deemed to have received
compensation taxable as ordinary income in the year of the early sale in an
amount equal to the lesser of (i)&nbsp;the difference between the fair market value
of the Company&#146;s Common Stock on the date of exercise and the option price of
the shares, or (ii)&nbsp;the difference between the sale price of the shares and the
option price of shares. In the event of such an early sale, the Company will be
entitled to a tax deduction equal to the amount recognized by the Participant
as ordinary income. The foregoing discussion ignores the impact of the
alternative minimum tax, which may particularly be applicable to the year in
which an incentive stock option is exercised.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Nonqualified&#148; stock options granted under the Plan are not intended to
and do not qualify for favorable tax treatment available to &#147;incentive&#148; stock
options under I.R.C. Section&nbsp;422. Generally, no income is taxable to the
Participant (and the Company is not entitled to any deduction) upon the grant
of a nonqualified stock option. When a nonqualified stock option is exercised,
the Participant generally must recognize compensation taxable as ordinary
income equal to the difference between the option price and the fair market
value of the shares on the date of exercise. The Company normally will receive
a deduction equal to the amount of compensation the Participant is required to
recognize as ordinary income and must comply with applicable tax withholding
requirements.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Awards. </I>Generally, no income is taxable to the Participant in the
year a restricted stock award is granted. Instead, the Participant will
recognize compensation taxable as ordinary income equal to the fair market
value of the shares in the year in which the transfer restrictions lapse.
Alternatively, if the Participant makes a &#147;Section&nbsp;83(b)&#148; election, the
Participant will, in the year that the restricted stock award is granted,
recognize compensation taxable as ordinary income equal to the fair market
value of the shares on the date the restricted stock award is granted.
Generally, in the case of stock awards granted without any risk of forfeiture
or transferability restrictions, income equal to the fair market value of the
shares on the date the award is granted is taxable to the Participant in the
year such stock award is granted. The Company normally will receive a
deduction equal to the amount of compensation the Participant is required to
recognize as ordinary taxable income, and must comply with applicable tax
withholding requirements.


<P align="left" style="font-size: 10pt"><B>Plan Benefits</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below shows the total number of shares of Awards that have been
granted under the Plan as of December&nbsp;17, 2004 to the named executive officers
and the groups set forth, without taking into account exercises or
cancellations, and also shows Awards that are anticipated to be granted to the
executive officers on or about the date of the 2005 Annual Meeting. Future
grants of Awards under the Plan are subject to the discretion of the Grantor.


<P align="center" style="font-size: 10pt">- 19 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">Accordingly, the future benefits that may be received by these individuals and
groups under the Plan cannot be determined at this time.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total Number of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Restricted Stock</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name and Position/Group</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options Received</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards Received</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Dale R. Olseth</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Chairman and Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,000<SUP>1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Philip D. Ankeny</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Chief Financial Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,000<SUP>2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Bruce J. Barclay</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">President and Chief Operating Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,000<SUP>3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Lise W. Duran</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Vice President and General Manager,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Regenerative Technologies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,000<SUP>4</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Steve J. Keough</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Vice President and Chief</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Intellectual Property Counsel</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,000<SUP>5</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">All Current Executive Officers as a Group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">(11 persons)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">662,500<SUP>6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">All Current Directors who are not Executive</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Officers as a Group (7 persons)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Each other person who received or is to</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">receive 5% of such Awards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:10px; text-indent:-10px">All Employees who are not Executive</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Officers as a Group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P align="left" style="font-size: 10pt"><HR align="left" size="1" noshade width="18%">



<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><SUP>1</SUP> Includes 50,000 shares to be granted under the 2003 Equity Incentive Plan
subject to Board approval. The Organization and Compensation Committee has
recommended that Mr.&nbsp;Olseth be granted an option to purchase 50,000 shares of
the Company Common Stock and anticipates that the Board will approve such
recommendation in connection with the Board meeting to be held on the day of
the Annual Meeting.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><SUP>2</SUP> Includes 60,000 shares to be granted under the 2003 Equity Incentive Plan
subject to Board approval. The Organization and Compensation Committee has
recommended that Mr.&nbsp;Ankeny be granted an option to purchase 60,000 shares of
the Company Common Stock and anticipate that the Board will approve such
recommendation in connection with the Board meeting to be held on the day of
the Annual Meeting.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><SUP>3</SUP> Includes 75,000 shares to be granted under the 2003 Equity Incentive Plan
subject to Board approval. The Organization and Compensation Committee has
recommended that Mr.&nbsp;Barclay be granted an option to purchase 75,000 shares of
the Company Common Stock and anticipates that the Board will approve such
recommendation in connection with the Board meeting to be held on the day of
the Annual Meeting.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><SUP>4</SUP> Includes 25,000 shares to be granted under the 2003 Equity Incentive Plan
subject to Board approval. The Organization and Compensation Committee has
recommended that Dr.&nbsp;Duran be granted an option to purchase 25,000 shares of
the Company Common Stock and anticipate that the Board will approve such
recommendation in connection with the Board meeting to be held on the day of
the Annual Meeting.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><SUP>5</SUP> Includes 53,000 shares to be granted under the 2003 Equity Incentive Plan
subject to Board approval. The Organization and Compensation Committee has
recommended that Mr.&nbsp;Keough be granted an option to purchase 53,000 shares of
the Company Common Stock and anticipates that the Board will approve such
recommendation in connection with the Board meeting to be held on the day of
the Annual Meeting.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><SUP>6</SUP> Include 403,000 shares to be granted under the 2003 Equity Incentive Plan to
be approved in connection with the Board meeting to be held on the day of the
Annual Meeting.


<P align="center" style="font-size: 10pt">- 20 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Vote Required</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors recommends that the shareholders approve the
1,800,000-share increase in the number of shares reserved under the Plan. Under
applicable Minnesota law, approval of the increase requires the affirmative
vote of the holders of a majority of the voting power of the shares represented
in person or by proxy at the Annual Meeting with authority to vote on such
matter, but not less than the affirmative vote of 4,401,450 shares.

<!-- link1 " SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="center" style="font-size: 10pt"><B>SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16(a) of the Securities Exchange Act of 1934 requires the
Company&#146;s executive officers, directors and persons who own more than 10
percent of the Company&#146;s Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors
and greater than 10% shareholders (&#147;Insiders&#148;) are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the Company&#146;s knowledge, based on a review of the copies of such
reports furnished to the Company, during the fiscal year ended September&nbsp;30,
2004, all Section 16(a) filing requirements applicable to Insiders were
complied with, except that Mr.&nbsp;Barclay filed one Form&nbsp;4 reporting two
transactions one day late due to a filing delay by issuer&#146;s counsel, and Mr.
Keough filed one Form&nbsp;4 reporting two transactions two days late.

<!-- link1 " AUDIT COMMITTEE REPORT" -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="center" style="font-size: 10pt"><B>AUDIT COMMITTEE REPORT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors maintains an Audit Committee comprised of three of
the Company&#146;s outside directors. The Board of Directors and the Audit
Committee believe that the Audit Committee&#146;s current member composition
satisfies the rule of the National Association of Securities Dealers, Inc.
(&#147;NASD&#148;) that governs audit committee composition, including the requirement
that audit committee members all be &#147;independent directors&#148; as that term is
defined by NASD rules.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the written charter adopted by the Board of Directors,
the Audit Committee assists the Board of Directors with fulfilling its
oversight responsibility regarding the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. In discharging its
oversight responsibilities regarding the audit process, the Audit Committee:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewed and discussed the audited financial statements with
management;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>discussed with the independent auditors the material required
to be discussed by Statement on Auditing Standards No.&nbsp;61; and</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt">- 21 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewed the written disclosures and the letter from the
independent auditors required by the Independence Standards Board&#146;s
Standard No.&nbsp;1, and discussed with the independent auditors any
relationships that may impact their objectivity and independence.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company&#146;s Annual Report on Form 10-K for the
fiscal year ended September&nbsp;30, 2004, as filed with the Securities and Exchange
Commission.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" align="right" nowrap><B>Members of the Audit Committee:</B></TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Gerald B. Fischer, Chairman</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Kenneth H. Keller, Ph.D.</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">David A. Koch</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<!-- link1 " INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="center" style="font-size: 10pt"><B>INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deloitte &#038; Touche LLP has acted as the Company&#146;s independent auditors for
the past two fiscal years ended September&nbsp;30, 2003 and September&nbsp;30, 2004, and
it is expected that at an Audit Committee meeting to be held prior to the
Annual Meeting, such firm will be formally selected by the Audit Committee to
serve as the Company&#146;s independent auditors for the current fiscal year ending
September&nbsp;30, 2005. Representatives of Deloitte &#038; Touche LLP are expected to
be present at the meeting, will be given an opportunity to make a statement
regarding financial and accounting matters of the Company if they so desire,
and will be available to respond to appropriate questions from the Company&#146;s
shareholders.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Audit Fees. </B>The aggregate fees billed by Deloitte &#038; Touche LLP for
professional services rendered in connection with the audit of the Company&#146;s
annual financial statements and reviews of the financial statements included in
the Company&#146;s Forms 10-Q for fiscal years 2004 an 2003 were $110,914 and
$87,000, respectively.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Audit-Related fees</B>. The aggregate fees billed by Deloitte &#038; Touche LLP for
audit-related services rendered to the Company during fiscal 2004 and 2003 were
$8,750 and $8,645, respectively. The fees in both years were associated with
the audit of the financial statements of the SurModics, Inc. 401(k) Plan and
Trust.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Tax Fees. </B>The aggregate fees billed by Deloitte &#038; Touche LLP for
tax-related services (tax compliance, tax planning, and tax advice) in fiscal
2004 and 2003 were $104,100 and $95,599, respectively.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>All Other Fees. </B>Deloitte &#038; Touche LLP did not bill any other fees in
fiscal 2004 or fiscal 2003.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Audit Committee pre-approved all of the services described
in each of the items above. In addition the Audit Committee considered whether
provision of the above non-audit


<P align="center" style="font-size: 10pt">- 22 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">services was compatible with maintaining Deloitte &#038; Touche LLP&#146;s independence
and determined that such services did not adversely affect Deloitte &#038; Touche
LLP&#146;s independence. However, the Audit Committee approved the appointment of
PricewaterhouseCoopers LLC to provide tax-related services in fiscal 2005 to
avoid any questions of independence in the future.



<P align="left" style="font-size: 10pt"><B>Pre-Approval Policies and Procedures</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to its written charter, the Audit Committee is required to
pre-approve the audit and non-audit services performed by the Company&#146;s
independent auditors in order to assure that the provision of such services
does not impair the auditor&#146;s independence. A pre-approval policy was approved
by the Audit Committee on October&nbsp;25, 2004. Unless a particular service has
received general pre-approval by the Audit Committee, each service provided
must be specifically pre-approved. Any proposed services exceeding
pre-approved costs levels will require specific pre-approval by the Audit
Committee or the Chairman of the Audit Committee. The Audit Committee may
delegate pre-approval authority to the Chairman of the Audit Committee, who
will then report any pre-approval decisions to the Audit Committee at its next
scheduled meeting<B>.</B>

<!-- link1 " OTHER BUSINESS" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="center" style="font-size: 10pt"><B>OTHER BUSINESS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management knows of no other matters to be presented at the meeting. If
any other matter properly comes before the meeting, the appointees named in the
Proxies will vote the Proxies in accordance with their best judgment.

<!-- link1 " SHAREHOLDER PROPOSALS" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="center" style="font-size: 10pt"><B>SHAREHOLDER PROPOSALS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 2006 annual meeting of shareholders must be
received by the Company by August&nbsp;19, 2005, to be considered for inclusion in
the Company&#146;s Proxy Statement and related Proxy for the 2006 annual meeting.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also, if a shareholder proposal intended to be presented at the 2006
Annual Meeting but not included in the Company&#146;s Proxy Statement and Proxy is
received by the Company after October&nbsp;28, 2005, then management named in the
Company&#146;s Proxy for the 2006 Annual Meeting will have discretionary authority
to vote shares represented by such Proxies on the shareholder proposal, if
presented at the meeting, without including information about the proposal in
the Company&#146;s proxy materials.

<!-- link1 " ANNUAL REPORT" -->
<DIV align="left"><A NAME="012"></A></DIV>

<P align="center" style="font-size: 10pt"><B>ANNUAL REPORT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A copy of the Company&#146;s Annual Report to Shareholders, including its
Annual Report on Form 10-K containing financial statements for the fiscal year
ended September&nbsp;30, 2004, accompanies this Notice of Meeting and Proxy
Statement. No part of the Annual Report, including any portion of the Annual
Report on Form 10-K, is incorporated herein and no part thereof is to be
considered proxy soliciting material.


<P align="center" style="font-size: 10pt">- 23 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 " EXHIBITS TO FORM 10-K" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="center" style="font-size: 10pt"><B>EXHIBITS TO FORM 10-K</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The Company will furnish to each person whose Proxy is being solicited,
upon written request of any such person, a copy of any exhibit described in the
exhibit list accompanying the </B><B>Form 10-K</B><B>, upon the payment, in advance, of
reasonable fees related to the Company&#146;s furnishing such exhibit(s). Requests
for copies of such report and/or exhibit(s) should be directed to Mr.&nbsp;Philip D.
Ankeny, Chief Financial Officer, at the Company&#146;s principal address.</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BY ORDER OF THE BOARD OF DIRECTORS</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dale R. Olseth</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman and Chief Executive Officer</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Dated: December&nbsp;17, 2004</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eden Prairie, Minnesota</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">- 24 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 " Appendix&nbsp;A" -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="right" style="font-size: 10pt"><B>Appendix&nbsp;A</B>



<P align="center" style="font-size: 10pt"><B>SurModics, Inc.<BR>
Audit Committee Charter<BR>
Approved December&nbsp;10, 2002<BR>
Amended October&nbsp;25, 2004</B>



<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><B>Organization</B>


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">The Board of Directors of SurModics, Inc. has established an Audit Committee.
The Committee shall be comprised of three or more directors who are independent
as such standard is set forth by The Nasdaq Stock Market, Inc. (&#147;Nasdaq&#148;) and
federal securities laws. Committee members shall serve until the next annual
organizational meeting of the Board, or until their successors are duly elected
and qualified. The Chair of the Committee shall be elected by the Board. In
the absence of the election of a Chair by the Board, the members of the
Committee shall elect a Chair by majority vote of the Committee membership. In
addition, no member of the Audit Committee shall receive any compensation
whatsoever from the Company other than compensation paid to such member as a
director of the Company and member of one or more committee of the Company&#146;s
Board of Directors.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">All Committee members shall have a working familiarity with basic finance and
accounting practices and shall be able to read and understand fundamental
financial statements, including the Company&#146;s balance sheet, income statement,
and cash flow statement at the time of their appointment to the Committee. At
least one member of the Committee shall be an &#147;audit committee financial
expert&#148;, as such term is defined in applicable regulations of the Securities
and Exchange Commission and Nasdaq.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><B>Statement of Policy</B>


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">The Audit Committee shall provide assistance to the corporate directors in
fulfilling their responsibility to shareholders, potential shareholders, and
the investment community relating to accounting, reporting practices, and the
quality and integrity of the financial reports of the


<P align="center" style="font-size: 10pt">A-1
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">Company. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors,
independent public accountants, internal auditors (if any), outside legal
counsel, and financial management of the Company.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><B>Responsibilities</B>


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><I>Documents/Reports Review</I>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Meet with the independent public accountants and financial management of the
Company to review the proposed scope, fees, and procedures to be utilized in the
audit of the financial statements for the current fiscal year.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the conclusion of the audit, review the results thereof, including any
comments or recommendations of the independent public accountants.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Establish regular and separate systems of reporting to the Committee by
management, the independent accountants and the internal auditors (if any)
regarding any significant judgments made in management&#146;s preparation of the
financial statements and the view of each as to appropriateness of such
judgments.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review and approve, if appropriate, any major changes in the Company&#146;s auditing
and accounting principles that occurred during the period.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Inquire about the existence and substance of any significant accounting
accruals, reserves, contingencies and estimates made by management that have a
material impact on the financial statements and determine the independent public
accountants&#146; opinions regarding the quality of all such items.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review the Company&#146;s annual financial statements and any reports or other
financial information submitted to any governmental body, or the public,
including any certification, report, opinion or review rendered by the
independent accountants or management.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Discuss with financial management and the independent public accountants any
changes in accounting standards or rules promulgated by the Financial Accounting
Standards Board, Securities and Exchange Commission or other regulatory bodies,
that are expected to have an impact on the financial statements.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">A-2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on the foregoing, indicate to the Board whether the Committee recommends
that the audited financial statements be included in the Company&#146;s Annual Report
on Form 10-K.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company&#146;s annual proxy statement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review with management and the independent public accountants the Company&#146;s Form
10-Q or Form 10-K prior to the earlier of its filing or the release of earnings.
This review may be conducted through a designated representative member of the
Committee.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><I>Independent Accountants</I>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Appoint, compensate and oversee the Company&#146;s independent auditors.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company&#146;s independent auditors shall report directly to the Committee. On
an annual basis, the Committee should review and discuss with the accountants
all significant relationships the accountants have with the Company to determine
the accountants&#146; independence.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review the performance of the independent accountants and discharge the
independent accountants when circumstances warrant.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-approve all audit services and non-audit services that can be legally
performed by the Company&#146;s independent auditors in accordance with any
pre-approval policies and procedures by the Committee.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Annually ensure the receipt from the independent public accountants of a formal
written statement delineating all relationships between the independent public
accountants and the Company, as required by Independence Standards Board 1.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Periodically consult with the internal auditor (if any) and independent public
accountants, without members of management present, regarding the adequacy of
internal controls and the fullness and accuracy of the Company&#146;s financial
statements.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><I>Other</I>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review and approve all related-party transactions to which the Company may be a
party prior to their implementation to assess whether such transactions meet
applicable legal requirements.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">A-3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review with the independent public accountants, internal auditors (if any), and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Company. Elicit internal control
reports, including any recommendations for the improvement of such internal
control procedures or particular areas where new or more detailed controls or
procedures are desirable. Monitor management&#146;s response to such reports.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Meet, as necessary, with the outside legal counsel to discuss any legal matters
that may have a material impact on the financial statements.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consider the adequacy of the financial and accounting staff.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review the following items on a periodic basis:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company&#146;s risk management program;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company&#146;s investor relations program;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the status of the Company&#146;s information systems hardware, software,
processing procedures, and controls regarding accounting, internal
accounting controls and auditing;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any other area deemed to be significant to the Company&#146;s financial
statements (<I>i.e. </I>investments).</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review periodically the Company&#146;s code of ethical conduct for senior
financial officers and management&#146;s enforcement of the code as it
relates to the Company&#146;s financial reporting process and internal
control system.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review the adequacy of this charter on at least an annual basis.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Establish and maintain procedures for the receipt, retention, and
treatment of complaints received by the Company regarding accounting,
internal accounting controls and auditing. At a minimum, these
procedures shall allow employees to submit concerns regarding
questionable accounting and auditing matters on a confidential,
anonymous basis.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Perform any other activities consistent with this Charter, the
Company&#146;s Bylaws and governing law, as the Committee or the Board
deems necessary or appropriate.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>Meetings</B>



<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">The Audit Committee shall meet at least four times annually, or more frequently
as circumstances dictate. A majority of members will constitute a quorum and
will be able to


<P align="center" style="font-size: 10pt">A-4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">conduct the business of the Committee. The Committee should meet at least
annually with management and the head of the internal audit department (if any)
in separate executive sessions to discuss any matters that the Committee or
each of these groups believe should be discussed privately. The Committee
should meet with the independent accountants and management quarterly to review
the Company&#146;s financials consistent with this Charter. Minutes of all meetings
shall be recorded and maintained by the Committee and submitted to the Board.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><B>Authority</B>


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">The Audit Committee shall have the authority as and when it shall determine to
be necessary or appropriate to the functions of the Audit Committee, to:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Appoint, discharge and authorize compensation of the Company&#146;s independent auditors;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the expense of the Company, to retain and compensate such consultants and advisors, as it determines necessary, to
assist it with its functions;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To request from the Chief Executive Officer, the Chief Financial Officer and such other members of Company management as
the Committee shall deem appropriate advice and information, orally or in writing, concerning the Company&#146;s business
operations and financial condition relevant to the functions of the Committee.</TD>
</TR>

</TABLE>


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">Management of the Company is requested to cooperate with the Audit Committee,
and to render assistance to the Audit Committee as it shall request in carrying
out its functions.


<P align="center" style="font-size: 10pt">A-5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 " Appendix&nbsp;B" -->
<DIV align="left"><A NAME="015"></A></DIV>

<P align="right" style="font-size: 10pt"><B>Appendix&nbsp;B</B>



<P align="center" style="font-size: 10pt"><B>CHARTER FOR THE NOMINATING<BR>
COMMITTEE OF THE BOARD OF DIRECTORS<BR>
OF<BR>
SURMODICS, INC.</B>



<P align="left" style="font-size: 10pt"><B>I. PURPOSE</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating Committee shall be responsible for matters relating to the
selection of candidates for the Board of Directors of SurModics, Inc. (the
&#147;Company&#148;).


<P align="left" style="font-size: 10pt"><B>II. MEMBERSHIP</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating Committee shall consist of two or more directors elected by
the Board, each of whom shall be independent (as such term is defined by
applicable laws and regulations and the Company&#146;s governance policies, if any).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Chair of the Nominating Committee shall be elected by the Board or, if
not elected by the Board, then by the majority of the members of the Committee.


<P align="left" style="font-size: 10pt"><B>III. RESPONSIBILITIES</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Periodically reviewing the composition of the Board and its
committees and their respective members&#146; skills and characteristics,
and reporting to the Board regarding suggested changes in size or
composition of the Board or any committee and any succession planning
for the Board chairperson and other Board members.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Meeting as necessary to identify and consider the screening and
nomination of Board member candidates, and to select, or to recommend
to the Board, nominees to be voted upon at shareholder meetings and/or
to fill vacancies.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluating the performance of Board members eligible for
reelection; and selecting, or recommending to the Board, members for
reelection.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>IV. AUTHORITY</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating Committee shall have the authority, as and when it shall
determine to be necessary or appropriate to the functions of the Nominating
Committee,


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to retain, at the expense of the Company and not at the
expense of the members thereof, counsel (which may be, but need not
be, the regular corporate counsel to the Company), employ one or
more recruiting firms to assist in the identification and
recruitment of director candidates and other advisors to assist it
in connection with its functions; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to request from the Chief Executive Officer, the Chief
Financial Officer, and such other members of the Company&#146;s
management as the Committee shall deem</TD>
</TR>



</TABLE>

<P align="center" style="font-size: 10pt">B-1
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>appropriate, advice and information, orally or in writing, concerning
the Company&#146;s business operations and financial condition relevant to
the functions of the Committee.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>V. MEETING/MINUTES</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating Committee will maintain written minutes of its meetings.
Such minutes shall be promptly made available to the members of the Board of
Directors, and filed with the minutes of the meetings of the Board of
Directors.


<P align="left" style="font-size: 10pt"><B>VI. COOPERATION OF MANAGEMENT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All members of management of the Company are requested to cooperate with
the Nominating Committee, and to render assistance to it as it shall request in
carrying out its functions.



<P align="center" style="font-size: 10pt">B-2
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>SURMODICS, INC.<BR>
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS<BR>
To Be Held On<BR>
January&nbsp;31, 2005</B>



<P align="center" style="font-size: 10pt">THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby appoints DALE R. OLSETH and PHILIP D. ANKENY, and
each of them, with full power of substitution, as Proxies to represent and
vote, as designated below, all shares of Common Stock of SurModics, Inc.
registered in the name of the undersigned at the Annual Meeting of Shareholders
of the Company to be held at the Hotel Sofitel, 5601 West 78th Street,
Bloomington, Minnesota, at 4:00 p.m. (Minneapolis time) on January&nbsp;31, 2005,
and at any adjournment thereof, and the undersigned hereby revokes all Proxies
previously given with respect to the meeting.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.


<P align="center" style="font-size: 10pt">DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED



<P align="center" style="font-size: 10pt">SURMODICS, INC. 2005 ANNUAL MEETING<BR>
The Board of Directors recommends that you vote FOR each proposal below.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">1. Set the number of directors at nine (9).</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FOR&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;AGAINST</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ABSTAIN</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2. Elect Class&nbsp;III directors:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1 &#150; Dale R. Olseth</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FOR all nomi-
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">WITHHOLD AUTHORITY</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 &#150; Kenneth H. Keller</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-0px">nees listed to the
left (except as
specified below).</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-0px">to vote for all nominees
listed to the left.</DIV></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3 &#150; David A. Koch
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Instructions: To withhold authority to vote for any indicated
nominee, write
the name(s) of the nominee(s) in the box provided to the right).</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&#091;</TD>
    <TD align="left" valign="bottom" colspan="5"><HR size="1" noshade></TD>
    <TD align="left" valign="bottom">&#093;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">3. Approve amendment of the Company&#146;s 2003 Equity Incentive
Plan to increase the shares available for issuance under the
Plan by 1,800,000:</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FOR&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;AGAINST</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ABSTAIN</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Proxy also authorizes the Proxies to vote in their discretion upon
such other business as may properly come before the Annual Meeting or any
adjournment thereof.


<P align="left" style="font-size: 10pt">Check appropriate box.<BR>
Indicate changes below:<BR>
Address Change? <FONT face="Wingdings">&#111;</FONT>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name
Change? <FONT face="Wingdings">&#111;</FONT>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Date<U>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
&nbsp;</U>&nbsp;&nbsp;NO. OF SHARES

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="75%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>

</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attending Meeting? <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD align="right">&#091;</TD>
    <TD align="left" valign="bottom"><HR size="1" noshade></TD>
    <TD>&#093;</TD>

</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature(s) in Box</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PLEASE DATE AND SIGN ABOVE<BR>
exactly as name appears at the left indicating, where appropriate, official position
or representative capacity. For stock held in
joint tenancy, each joint tenant should sign.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">
</DIV>

</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>2
<FILENAME>c90474c9047400.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 c90474c9047400.gif
M1TE&.#EA;P*+`?<``````(````"``("`````@(``@`"`@,#`P,#<P*;*\`0$
M!`@("`P,#!$1$186%AP<'"(B(BDI*55554U-34)"0CDY.?]\@/]04-8`D\SL
M_^_6QN?GUJVID#,``&8``)D``,P````S`#,S`&8S`)DS`,PS`/\S``!F`#-F
M`&9F`)EF`,QF`/]F``"9`#.9`&:9`)F9`,R9`/^9``#,`#/,`&;,`)G,`,S,
M`/_,`&;_`)G_`,S_````,S,`,V8`,YD`,\P`,_\`,P`S,S,S,V8S,YDS,\PS
M,_\S,P!F,S-F,V9F,YEF,\QF,_]F,P"9,S.9,V:9,YF9,\R9,_^9,P#,,S/,
M,V;,,YG,,\S,,__,,S/_,V;_,YG_,\S_,___,P``9C,`9F8`9ID`9LP`9O\`
M9@`S9C,S9F8S9IDS9LPS9O\S9@!F9C-F9F9F9IEF9LQF9@"99C.99F:99IF9
M9LR99O^99@#,9C/,9IG,9LS,9O_,9@#_9C/_9IG_9LS_9O\`S,P`_P"9F9DS
MF9D`F<P`F0``F3,SF68`F<PSF?\`F0!FF3-FF68SF9EFF<QFF?\SF3.9F6:9
MF9F9F<R9F?^9F0#,F3/,F6;,9IG,F<S,F?_,F0#_F3/_F6;,F9G_F<S_F?__
MF0``S#,`F68`S)D`S,P`S``SF3,SS&8SS)DSS,PSS/\SS`!FS#-FS&9FF9EF
MS,QFS/]FF0"9S#.9S&:9S)F9S,R9S/^9S`#,S#/,S&;,S)G,S,S,S/_,S`#_
MS#/_S&;_F9G_S,S_S/__S#,`S&8`_YD`_P`SS#,S_V8S_YDS_\PS__\S_P!F
M_S-F_V9FS)EF_\QF__]FS`"9_S.9_V:9_YF9_\R9__^9_P#,_S/,_V;,_YG,
M_\S,___,_S/__V;_S)G__\S___]F9F;_9O__9F9F__]F_V;__Z4`(5]?7W=W
M=X:&AI:6ELO+R[*RLM?7U]W=W>/CX^KJZO'Q\?CX^/_[\*"@I("`@/\```#_
M`/__````__\`_P#______RP`````;P*+`0`(_@#_"1Q(L*#!@P@3*ES(L*'#
MAQ`C2IQ(L:+%BQ@S:MS(L:/'CR!#BAQ)LJ3)DRA3JES)LJ7+ES!CRIQ)LZ;-
MFSASZMS)LZ?/GT"#"AU*M*C1HTB3*EW*M*G3DPJB2IU*M:K5JUBS:MW*M:O7
MKV##BAU+MJS9LVC3JEW+MJW;MW#CBDVHX*G=NWCSZMUKLBY"OWP#"QY,N/!3
MP`81&U[,N+'CQRD5$Y0,N;+ERY@S#Z0LD+/FSZ!#BU;JV?/HTZA3JX99>K7K
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M6/71BWJ=D=I?,QGVM?3U7-S28@,9X=UX(VCK_H'!YNWWWX`W^/;)$P9H]HEG
M)T[GTR!%W?9'5#.-=-ETPZUXFXR+Y/CC&T5>=U$RDEKYAH0OESE)FW/.X^!,
MR3CZU5KSR;9)LZNNY<$X/R<WV4*"6'IOM9\4O.UWLM[4J;_G=CI+J1-?/.YH
MF[SG\BXU[WSL;I=LZN+"ZF3]];G/]C-FR==&_4S?@_]Y1Q$W5CYLP],4__6>
M6^YOF?/7E+_J];]OL)?GVTGZ;->_2WTI@#T9X.,*B"PK(?`G"I0:`Q-VI`<&
M)8(LFR#,<K0_H73081I,5Y$^.!02LBN$TC.2!9."P7FA<'LC[!YA6MBM%[:*
M@S(T#`V'9</[`2R'_HS9(:UZR#$6F=`N1TP5$?NDHB3>Q8F:6B+YF@A$S-`,
MBG.2XF7\!YD5+F99VZJA\2@8'R\V9EQF')06J>2Q*IX&C=1:(ZSV@\7"P)%9
M<LP3'=/817GA<8P;U`X?+8-&-X8JC_!ZSR`)6<A%>@F1$E.D(>$GLWP=$I`B
MS(XC56-)24%R)SX;3W)XYCORU'$UG234)W,2.N/@)VOCN\TI*2E$%JT2)R5R
MY=50U+3?;)(WJ633+4?F'N^\#GN^G&2'@OE(3`)(:=0Y9BQC\TOL,--)P\2E
M@/S"S</5+7#@7,O>PDG.OTFKG.B$D#.[$\WO2%-[MIFE>:ZIHW6"SD)5_MGE
MY>Q'S6KVAYX<RF9-6NE.;_+SH*[Q)Q5KZ1N!#G1(HNP=0[C(%(7^D*&X<>A`
MLR=+948*H-K1:&`HRD*/;DU9^Q&I?^)I43*!M*'V]"%J+B;/.;TTHS$MXAO7
MU=)!W911.67B:.[8MI].*JA3'*H?;0?0GFX*J5O<:1C!ETJC)I)?\)1I:(BJ
M/IY.-9/BRRJ<(+I2J6*T8(UT:NN@2AR[D11L9JUIN0H92(_@B9NYS%5JSLJR
M1H(5<M,<4#<'\U8!FE1]`TFK7*T&O7T:*$"%?9L5#XO8@:'4LDN-9&,E9Z/!
M$G:GE97(Z>BZ&)7J531J#2UI1\K6];%VJY0-_JU&5OO4S;HV?(2)K$U2*]N$
MT+9=',4M7?+Y6=#PMK<-^>T];8O0R1`W4,:-+7*%Q]6@F%8ONI7)<:=K$>7J
M!)'/?6UFMLO=M577(<?-HU5RJQGREK<CWBV(52FB7NMD-[B5<>][0Z+<S`*6
MN4VRSVV;=1G][K<D=/6O75L;S5">EI$'SHMBG0I>718WO]*-\%'B&R(&7_4Q
M!M9P];X:5JSV$H8@SK"(-TSB_YI8N(]=[T-YMSOBD!7&,U3QBHTRW]N].'I_
MPLI&"5HC7N)8,"'>\4O2ZV%06J[(^[PO2I*LY++^V+$/>[(^.8ME">NXRF1T
M\9&M"]&Y&91TCJ$R_IBQ"]6LC(RL4.:RG/FBYC7G18MN;MFUXOS-="IHG'X.
MM*`'3>C`-?F[)CHS[`+KE#K;^<Z'9B4^%6UD(-/YRX_^ZX+%&F0'QT2BI+1Q
M*>V(Z4RG\,IS3DQX9X(\4IL:2PR&YH4#X^A7UQ;5`P:7E$M,ZU+;^H:X;JZH
M/0UI)/OZUUH-R;MVQMY>(ULYURWV7FK];`('>]=ZGO:QJZW3:QM0V]S^C1Q7
M+5Z\4#O<QV/K50J#[:YM&]U)]?9$U]-N]GD9WN)N,Z>MC<1WXYN-`&X(9^K-
M$8(+S=__GJ.\.[ON63?EW`D'KK)CF6?H/@7B$:=7P!OX<(1G_,,3WW=4_AOM
M\8]K=N%UY7')3>Z^2)>VXRSO3;3Q8O#DKCSF+]]XF(N"<9PS%N6:+N'-?2X?
MEQ>]I$3GS<QOS>*D@TGG*0=*SYV^7*"?FN=#IWJSK8YBHDQ=ZT19.K&:#O;;
MB)W?'LQZV2W.];C1^.VBGBC6UXY3J+.3R%N^;<T3JW:ZESOD)[[GP/-^T+U;
MUN]F-[J>!__.P!L6\8FW^S-3U/@Q[[;OD'\P?KO\L#*_<M'.+;14`"WZTIO^
M]*C_F^*)6:#*6SHG7\^\=5=/DU:B")8B1Q_F9<]FR5?(F%@#O>,OS_O(MQUT
MVV3V*-TJ]P3NOOC2WGRJ1R1]XD/?-F>OEO.O_H]]VK,=]L_G/M,!;WF`@U_\
MW?<]L&\2>_3_)/OI/K_[@:K^9,LO_/-'.Z]?WVW]X3__VE=__:=[`%@;\+=6
MUE>`2=$/#-B`#EA]]I9["D>`"J@4#GB!_0"!!<=H(`<3[5>!$(&!#TA^),AY
M>D2!(+B`(LB`&M@Y''AR,?&!*>@0*\B")2AF_"=4'OA_-+B",X@0-9B!-[AI
MPZ>#(Z83-0B`(V@006B#^_>$TS=R2\:##Y&$^;>$!=&$0@B%1%A^$]@2[6>%
MB(>%!$&&62B&.,B%PO:%*Q%[35A>0<@1%Q@2<3B$$5B$\<8\5-B#6HA<=1@1
M3EB&9OAS$&AX17.$_CNAA8/H/'_(AUMH987X;7H($P](`)9XB9=8@P2P$(LH
M,HWX#YUX=,<W@%.VAP-1B9AHB0*!AD#8@)SSB:'(;M[W=]1E$K'8$*FXB1AQ
MBXM"AI]H?VD8A>97BB<Q@I@X$:E($,<8@JY(*[[(BL#8A3F8A[4HAX\HB,MH
M$9>($-OHB+CRC#X8=!LH@2=(C!N!A<G8$;J8$-UH$;RX(N]XBM!(BL&8:\.(
M8!F&CNU8$_LH$?&H'?^8'0<H<2/A10Z8BZJ8$_T(B-<HC_`1D-@QD'WA>7$7
M:C8"$K^X$`B)D#RQD+O8C(Z(@9<!DE8BD:NB'F2C:,ATCO,(D:&!A1G)_A/S
MZ(^!^"0FR2]TXWHFR(SAF(HN"1HP.9.)&(X709(V.8N?MF?V@GMX2!%!N)'K
MB!V_:)0U(92"V)!T<I-,`F=+*7RD!!=/B8FIAQ:IF"!!6!4-B!5I>15KB99M
M*18UJ`!O.99T>2!(:3-#DI*(DVJ<$I..D8YT"(U4*8]8N8HU29B%&9(/.)B@
MHI4X^2@Z*8PT292:`9@=X9<LL8AO^$<"N"2P%)GV.)DB.!JY>)E6F1.GV9AW
M^1)X]WF5MI-5F)J6X9'N*)LV89N>M)JL29$6R7P721)1"8>4B2N.V8*K0W6X
M&2G%&79M0IL*N)S45R8<*2G!:135J8;CV)3W_D@FI:DHS@D4W^F"G4F-S6F9
MY1F>.S&==IB=7EB.?-*=;**>,0&5V0B5QODB+]ARD8*>16*?!D&?V:B,`)J0
M!S&@N@B@ZRF>VLF&OG*=Y6&@"PFA!6J@&>&?V*F@[=F!N,*?R@&A#MJ1\'FA
M'4:.&AHJ"6F>MB&?&AFB0H&BTJB&AM@2,>H:"`H;$OH0+AH4''J<HVB$KT*?
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M6>NZH*!*KO(ZKOJZKW88JBUBJRNY+^R$K_DJL`/;HX?Z//!JL/%:L`[[L'>8
MH9JU?+<J</]*8[%#L0'[@D*R)1K+:%72L6+RL?::)2([5L36GB8K-T1"_K(E
M>[$VMK$1&ZYL])HTZZVBA*R\8K,F&"4IJ9>=PK-7ZK-[:3]`BU`!]B%%VQI"
MZZTAN[24AV5)BR90RZX^)K$M1QGUX588:Q_;!"0QFVBB(V>>%7J"93<\(UA?
MFWS=Q'A<5K9A*V!SL[9FQK)Y-2!D*SEUZ[5IFQ][&[=:=K1CJVH_.TI[2[>`
MZ[:?<[=;JWQTB[A]>[>)UCY*:[6,@5>0J4O.FK9MV[8GHK6>%1QY^;EX*ZR&
MX[<6)F!1N[AMM2NJ"WQGV[FEB[8H:QKA`;2OVTZQ>[:3"[:JEK,HF[F^^[6[
MB[J]>V/$JV6^"[S)E[.GF[N%&V3`:Z]2TJLY_J>YAMNZ7#M8ZL&U_-2]Z,*V
MIYLTR<&]]K4SHDML2H-7P_&S7ZF[W4MN2"*X50-9[;N7Z%M0A7N_NT&_2\F^
MR2N^L!N_Y7LH_CLC`!RZ"0R_IEO`_9NWTCJJ><4[7=E.[GLYX'MBN73!LN:Y
M%L:ZPJ6UQ82_Q^+!8CMXTQO"LI8T)3R[&VS`$&Q0$64LYGO!<Y;!T3/!K=O!
M+CS"#[P^S(IH.8F]KEO#)JS#/3Q6W@2]SJN_F#N[V'+`94O`I<O!O(N2+W/`
M.KN\3&RZ3MS#99/$EC+$PQNZ#+RV1>NZ6TQI\_O$5FR\\2LK.'RS%D&Y.;=\
MC:NZ:%O#7)R\9MNW_DK9FW];QN:+3^PK-HXKN'`7N67,R!;<QQ-LN)L;Q7,K
MNX1<4(8,N(0;MH&,Q\X*68[LN2P+-R?;P:4,MFR+R22"L:0\RH&,L*U:L4EY
MLX6UPLUWK+2<;9Q7R[D<K'1<O99[O;=L,U[(R[N\4;WLR\>LS*%IS+!YM;\,
M@P<[S=1<S1`;G;"\G0Q[S6/*K]O,S2-*O=+<L-U,SMALS>",G\$LBMZ<SH`:
MJ^C,G!%<HO+<SN[\SO9<S_.Z<SY6RMQ:QR^2EZD,R.',(Z[L,Y0"*/[,RNPI
M)0?MR@7MT`P=2@EMK/F,)F9LPXUB)WI)P6*LSCP:Q^Y4T1BAT5Z,L\-,_E]0
M:](8JM)@7,3=.K//?+GXF=%5V]+'Z=&]B].K8]*2"]`;R-)7:K$N*-0H+;-:
MPM(_#<S9S*`N[=-#G=(YK;USS*,=)M0D7=0W?=1(K;18O=%!7;5+[=)-/:I,
M+<GB*]-G3=5K;-4EW<0I'-%3_=%9_=8G[<-R#<Q0G:X*N\]11[5H8\L@;=4Z
M7=5`#=)8'=.5>]=:?-@AO=5\+<MK#<8NR]1^+8Z`O=>1+=G07-AM[=B.G=AJ
M?;5*+:)$#=<[G=>+S=@SW=6JO=DT'<X+K=AWXLF'3-"#+=$#3;M<[=H"A]9Q
M6]EDK=NWS=LI.]ST!=RX7=?]6JKQ7,[??,\9_@//S<UQS]VF"VO.XGK1/-W;
M['S=VPW>V"W>^'S95T?>]TJP^JS=X4VJULW>C$K=Z#W=ZMW=L"W,\]VNV1W=
MT"W=EAW-M;VM`C[@!%[@!AXA2>JOXHQH^[W>^<W@#=[0K<W9W#W>\!W?\NW?
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M[+I6YVT^MG`+Z;ZNU4L,[>N,Z2DLW%,>TYRBTPT\:6O>R!]]ZI8^O8C^X@"M
M'\QN[N?.-+^>[)+.;)0N[SV-Z8U=Z'Q>ZC#>[U*-[<@4P(\,NUS\P0;?['>N
MLT9M[VE>\.<+\/[N.F)-V\;.Z/ZNX]+.VMZ-ZQEOYG%=Z>CZ[9=>Q9/V_O`C
MG>T<_UA'SLD(/V]+KNJ9[NM9#O%CGNO+GKT4;^2`C-"S3NH$[>4];]\BOV7/
MJ\H[_,3(SO")'AFOCJ0Q/^K=CA*"\CY3SQJ`+LBA4\A,#GPG^_3EC>,JON)`
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MHL"/$3=V),F1I,>+)D.>/&F2)<.5%!6Z?`FS)L25*F^VW/DPI$Z0/7$*Y6F3
MJ-&?(!547*HT95.",3G&/-JP:M2I5H-:O(J1Z%*N&YEV]5H5K%*H5+O2_`I5
M9D.V1^/N/(O5(=BY/?/>/(LWZ%^R90,#GCGX;U*+8Z,"3IM5J]NK>WF&3:PU
M,MFD(BW+-4PUK6'!_IPSCQPL^>7'L(0OEUY\N&Y@TU]]@KZ[%>W=VHS]$G;L
M=+79E)9S8B:>N_!FV:Q5XHW-LOEDNT!A*P].FKCRU*&3@T9N?3I"U)N'/Q7O
M7;5>X..#9]\N>S3Y\^B+OZW.>KYC]L#7RJP<OWWZUNA[KB3NS#-PM;%P@^\S
MK'SC#:,!C9(+LJG<>NVW";.KZT+.8+.00MI*@^RI"#LJT:</F3IQ*`]Q4S'$
M`OW3+CG\?FJ,/(D\>VTW_7J,D44,?SSN.R$36G&V(H?<+\D#.V12QNLTLZ_`
M(^EZ,L8JKT12R\ZXY"Y++XT,<THJMR3R2RW!'+.[->5KT\<W_XN3KSF=_BQ3
MPC/KE%-/Y_BTTD\Z`0U4T*((+?1.*?,T]-!%46I4(S7;C%321R&MU-(?XYJ4
MS4OQ[%3)3YL,==,Q2>72U%.%U!3&4(%L5=1.44WSU41IE?7*6V4T-==4:87U
M4EZ3#%987SD=554SHRSV5V"7G3%69Z%LUEE>5^TR6F,_'3;3:+=%=EEOL?RV
MUB6Q?7;:8L-%%%QJNQT7U'*Q51=-=MMUMUY\UQ7S6G/!O+#"%Y5M2\.FF(MW
M8._^531#N*1;F"\0&Y;X8+TBMHY#.^DE%T%F.T8N+[42S3*\`/L[MT\`<[PX
MVYK\?<O"QR:5F3_A=DW909/5'/GEY1@3F%5X_A',+UF/%"/:S)USMFKH/T6S
M3<I(75;:MIGG\YF^AT];3R2F6P;PZ:>[]II;3Y?,;,<;`RY8++C0:MM&M3V&
MU.*I@Q1JQYG$'MLLNH7+NF+C:K.9[]Y&TIM1P!,&CV6MR=Y8/\26;KLUQ4`,
MK[^UE2[</;_!CMIJMHRS^^[Z*/L;/1??^QGU[E34>3_32?S<\:`A#WO#P!N&
M67+4_*K,)=_EMC1V`5=G/;20]SR^=,8;GTXG@\GD7#6:7K^,,AZE=5Y?X5$6
MO+[BX8.09NE(]GMS*]6K&T[613>9XO29OQI^TLU'?W2OU1M?>\3IU/^PYO5/
M>MTK2H*<4KG<X(XT_M^[7?$4=#^(%0YM52/<QQADO`@FS&+XNUN*]C5`NM!M
M-Q@C705;-S'Z96UP-0)/VMZV&/RXQH`N>B$$!^6EV?6*@T4BU;Q.1J`P62^(
M[_K@Z=A'1%O9*U_I4B(3:5=$#*:0>Z_R(0A;545^^0J+1CPB_VYXKR52$8QA
MO.(8-5:[C#51BVI,HAG%R,8L0G$MS*%C'>UX1SSF48][Y&,?_?A'0`92D(,D
M9"$->4A$)E*1BV1D(QU92!X>S5R3I&0E+7E)3$:R;)GD9"<]^4E05M):H21E
M*4UY2E12:I.I9&4K7?E*6*[RA[&D92UM>4LG/@Z7N^1E+WVIIU'^4IC#_B1F
M,:?H16,F4YG+5&8PF?E,:$93F,Z49C6M><U44A.;V^1F-RFI36^&4YSC?!0X
MR7E.=*9SB+)49SO=^4X5PE.>\Z1G"74)N$?F4Y_[Y&<__?E/@`94H`,EZ#Z?
M2$!,U5.A"_UDKLSI)H9&5**3=*@D[3E1C&;TC<><I0`U^E&0^JFB[&Q:2$UZ
MTCF-])XE[5;V7,4XT2W382C;GNRV6*F9>M11<CQ.<WIXT`#2U(R2&=&(5EK,
M#0J543&]::.2JE.<]&RG2MTA!S?5U($\X0D9(ZI47\I*`C@-F3Q-*``1^JA^
MI%6M:5U>B=SJ58M^M8L8O&J<M'K7K4)T9>23_ER#7D@BL6`U1@0@[/0`BT(8
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MTG/U:F#Z>NYJQ5UQ_JBTZZ;1R#>X`Z8M]6RK7AS;=U_2Y?&(P=8Y\=Y7BE:U
MHI9<S%(82WC')J9N)K%[40:)>,I9UC%Y?WQ;B')YQKZ=;7S[*N0H7S"*3.8B
MDT2;H<EJ.;AQ#ER<.=G:B^)(LA_2<]Z6@V!G;1C*?_7K;0B]V+VV$&!UKM!P
MU^S9)J/T3=LMIZ2/JBV@<M9$EGZFA9M)T4QW%(B<_C2I:^S44"/7U*MF]:/3
M>.JRMEK6L][;&<F:9UKG6M?[?;6F8[UK8`-;I6C$9T&-?6QD)UO9RV9VLYW-
MSU0'6]K3AA:OJ7UM;.N0V-GF=K<U>>)GAUO<XR9WN<U];G2GNX[>9G>[$-W]
0;GC'6][SIG>][5W/@```.S\_
`
end

</TEXT>
</DOCUMENT>
</SUBMISSION>
