<SUBMISSION>
<ACCESSION-NUMBER>0000950134-05-001204
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20050118
<ITEMS>1.01
<ITEMS>2.01
<ITEMS>3.02
<ITEMS>9.01
<FILING-DATE>20050124
<DATE-OF-FILING-DATE-CHANGE>20050124
<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>8-K
<ACT>34
<FILE-NUMBER>000-23837
<FILM-NUMBER>05545005
</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>8-K
<SEQUENCE>1
<FILENAME>c91377e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">



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<P align="center" style="font-size: 14pt"><B>SECURITIES AND EXCHANGE COMMISSION</B>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<P align="center" style="font-size: 18pt"><B>FORM 8-K</B>


<P align="center" style="font-size: 12pt"><B>CURRENT REPORT</B>


<P align="center" style="font-size: 12pt"><B>Pursuant to Section&nbsp;13 or 15(d) of the<BR>
Securities Exchange Act of 1934</B>


<P align="center" style="font-size: 10pt">Date of Report (Date of earliest event reported): <B>January&nbsp;18, 2005</B>


<P align="center" style="font-size: 24pt"><B>SurModics, Inc.</B>


<DIV align="center" style="font-size: 10pt">(Exact name of Registrant as Specified in its Charter)</DIV>



<P align="center" style="font-size: 10pt"><B>Minnesota</B><BR>
(State or Other Jurisdiction of Incorporation)


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    <TD width="47%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD align="center" valign="top"><B>0-23837</B><BR>
(Commission File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>41-1356149</B><BR>
(IRS Employer<BR>
Identification No.)</TD>
</TR>
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</DIV>


<P align="center" style="font-size: 10pt"><B>9924 West 74</B><B><SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Street<BR>
Eden Prairie, Minnesota 55344</B><BR>
(Address of Principal Executive Offices and Zip Code)



<P align="center" style="font-size: 10pt"><B>(952)&nbsp;829-2700</B><BR>
(Registrant&#146;s telephone number, including area code)



<P align="center" style="font-size: 10pt">Not Applicable<BR>
(Former Name or Former Address, if Changed Since Last Report)


<P align="left" style="font-size: 10pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:


<P align="left" style="font-size: 10pt"><FONT face="Wingdings">&#111;</FONT> Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)


<P align="left" style="font-size: 10pt"><FONT face="Wingdings">&#111;</FONT> Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)


<P align="left" style="font-size: 10pt"><FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


<P align="left" style="font-size: 10pt"><FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



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

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<TR><TD></TD><TD colspan="8"><A HREF="#000">Item&nbsp;1.01 Entry into a Material Definitive Agreement.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">Item&nbsp;2.01 Completion of Acquisition or Disposition of Assets.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">Item&nbsp;3.02 Unregistered Sales of Equity Securities.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">Item&nbsp;9.01 Financial Statements and Exhibits.</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="c91377exv2w1.htm">Agreement of Merger</A></TD></TR>
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<!-- link2 "Item&nbsp;1.01 Entry into a Material Definitive Agreement." -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;1.01 Entry into a Material Definitive Agreement.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;18, 2005, SurModics entered into an Agreement of Merger with SIRx, a Delaware
corporation and wholly owned subsidiary of SurModics, InnoRx, Inc, a Delaware corporation, and the
stockholders of InnoRx. See Item&nbsp;2.01 for a description of the Agreement of Merger, which is
attached as Exhibit&nbsp;2.1 to this Current Report on Form 8-K.

<!-- link2 "Item&nbsp;2.01 Completion of Acquisition or Disposition of Assets." -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;2.01 Completion of Acquisition or Disposition of Assets.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;18, 2005, SurModics entered into an Agreement of Merger with SIRx, a Delaware
corporation and wholly owned subsidiary of SurModics, InnoRx, Inc, a Delaware corporation, and the
stockholders of InnoRx, and completed the merger of InnoRx into SurModics on that date. InnoRx was
a development-stage company with no revenue and was focused on the development of drugs and drug
delivery systems for ocular disease. Through the Agreement of Merger, SurModics acquired all of
the assets of InnoRx, which consisted almost exclusively of in-process research and development
assets, by paying approximately $4.1&nbsp;million in cash and issuing 600,064 shares of SurModics common
stock to InnoRx stockholders (other than SurModics). Upon the successful completion of certain
development and commercial milestones involving InnoRx technology acquired by SurModics, SurModics
will be required to issue up to an additional 600,073 shares of its common stock to the
stockholders of InnoRx.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the time of the merger, SurModics announced that virtually all of the cash and stock
purchase price being paid and issued pursuant to the merger would be allocated to acquired
in-process research and development (&#147;IPRD&#148;), and that such IPRD would be written off as of the
effective date of the merger. The exact amount of such write-off has not yet been determined.
Also, if and when any milestones are achieved resulting in the issuance of additional shares of
SurModics stock pursuant to the merger, additional charges based on the value of such shares may
occur at such time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with SurModics&#146; acquisition of InnoRx&#146;s assets through the merger, SurModics
will establish a new ophthalmology business unit located in Southern California to continue
development of the technologies acquired from InnoRx. K.W. Michael Chambers, Ph.D., former
President of InnoRx, and Dr.&nbsp;Eugene de Juan, Jr., founder of InnoRx, will serve as consultants to
SurModics and assist in integration and development of InnoRx&#146;s technologies.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to entering into the Agreement of Merger, SurModics performed certain research and
development services for InnoRx, and had invested approximately $4.375&nbsp;million in InnoRx capital
stock. The Agreement of Merger is attached as Exhibit&nbsp;2.1 to this Current Report on Form 8-K.

<!-- link2 "Item&nbsp;3.02 Unregistered Sales of Equity Securities." -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;3.02 Unregistered Sales of Equity Securities.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reference is made to Items 1.01 and 2.01 for information concerning the issuance by SurModics
on January&nbsp;18, 2005 of 600,064 shares of its common stock to the stockholders of


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

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



<P align="left" style="font-size: 10pt">InnoRx pursuant to the merger transaction, which shares were not registered under the Securities
Act of 1933, as amended. Such shares were offered and issued only to the fifteen stockholders of
InnoRx, and exemption from registration therefor was claimed under Section&nbsp;4(2) of such Securities
Act.

<!-- link2 "Item&nbsp;9.01 Financial Statements and Exhibits." -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;9.01 Financial Statements and Exhibits.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>Financial statements:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>SurModics is not required to file financials statements of InnoRx, Inc. in
connection with SurModics&#146; purchase of InnoRx&#146;s assets through the Agreement of
Merger discussed in Item&nbsp;2.01. InnoRx was a development-stage company whose
activities were focused on the development, rather than the operation, of a business
as planned principal business operations had not yet commenced. Accordingly, the
transaction reflects the acquisition of assets and not a business.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>Pro forma financial information:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>SurModics is not required to file pro forma financial information for SurModics&#146;
purchase of InnoRx&#146;s assets through the Agreement of Merger discussed in Item&nbsp;2.01.
InnoRx was a development-stage company whose activities were focused on the
development, rather than the operation, of a business as planned principal business
operations had not yet commenced. Accordingly, the transaction reflects the
acquisition of assets and not a business.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(c)&nbsp;&nbsp;</TD>
    <TD>Exhibits:</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">2.1&nbsp;&nbsp;</TD>
    <TD>Agreement of Merger dated January&nbsp;18, 2005. Upon request of
the Commission, the Company agrees to furnish a copy of any of the exhibits and
schedules to the Agreement and Merger and identified therein.</TD>
</TR>

</TABLE>

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

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<DIV style="font-family: 'Times New Roman',Times,serif">
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<DIV align="left"><A NAME="004"></A></DIV>

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



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">SURMODICS, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">By /s/ Philip D. Ankeny
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: January 24, 2005&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Philip D. Ankeny&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


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

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



<P align="center" style="font-size: 10pt"><B>SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, DC 20549</B>



<P align="center" style="font-size: 10pt"><B>EXHIBIT INDEX<BR>
to<BR>
FORM 8-K</B>



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


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date of Report:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Commission File No.:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>January&nbsp;18, 2005</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>0-23837</B></TD>
</TR>
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</TABLE>
</DIV>

<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="60%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Exhibit No.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>ITEM</B></TD>
</TR>

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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Agreement of Merger dated January&nbsp;18, 2005.</TD>
</TR>
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</TABLE>
</DIV>



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<TYPE>EX-2.1
<SEQUENCE>2
<FILENAME>c91377exv2w1.htm
<DESCRIPTION>AGREEMENT OF MERGER
<TEXT>
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<P align="right" style="font-size: 10pt"><B>EXHIBIT 2.1</B>



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



<P align="center" style="font-size: 10pt"><B>DATED JANUARY 18, 2005</B>



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



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



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



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



<P align="center" style="font-size: 10pt"><B>THE STOCKHOLDERS OF INNORX, INC.</B>



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



<P align="center" style="font-size: 10pt"><B>DR. EUGENE DE JUAN, JR.,</B>



<P align="center" style="font-size: 10pt"><B>AS STOCKHOLDERS&#146; REPRESENTATIVE</B>




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

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<P align="center" style="font-size: 10pt"><U><B>TABLE OF CONTENTS</B></U>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Page</TD>
    <TD>&nbsp;</TD>
</TR>

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<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE I. THE MERGER</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1.1 Closing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1.2 Effective Time of the Merger</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1.3 Effects of the Merger</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1.4 Directors and Officers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1.5 Second Merger</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE II. CONVERSION OF SECURITIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.1 Conversion of Capital Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.2 No Fractional Shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.3 Milestone Payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.4 Closing Documents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.1 Organization and Good Standing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.2 Authority; No Conflict</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.3 Capitalization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.4 Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.5 Books And Records</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.6 Title To Properties; Encumbrances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.7 No Undisclosed Liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.8 Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.9 No Material Adverse Effect</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.10 Employee Benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.11 Compliance With Legal Requirements; Governmental Authorizations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.12 Legal Proceedings; Orders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.13 Absence Of Certain Changes And Events</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.14 Contracts; No Defaults</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.15 Insurance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.16 Environmental Matters</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.17 Employees and Consultants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.18 Intellectual Property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.19 Certain Payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.20 Brokers Or Finders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.21 Tax-Free Merger Certifications</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.22 Disclosure</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SURMODICS AND MERGER SUB</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.1 Organization And Good Standing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.2 Authority; No Conflict</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.3 Certain Proceedings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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



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

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<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.4 SurModics Subsidiaries; Merger Sub Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.5 SurModics SEC Filings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.6 No Undisclosed Liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.7 No Material Adverse Effect</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.8 Financing; Issuance of SurModics Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.9 Tax-Free Certifications</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.10 Disclosure</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.11 No Brokers Or Finders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE V. ADDITIONAL AGREEMENTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.1 Registration Statement; Disclosure Document</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.2 Termination of All Series&nbsp;A Investment Agreements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.3 Covenants as to Post-Closing Tax Matters</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VI. INDEMNIFICATION; REMEDIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.1 Survival; Right To Indemnification Not Affected By Knowledge</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.2 Indemnification by the Stockholders and Payment of Damages</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.3 Set-Off Procedures; Maximum Set-Off Amount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.4 Limitations On Amount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.5 Notice to Stockholders&#146; Representative and Escrow Agent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.6 Net Damages</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.7 Right of Stockholders&#146; Representative to Milestone Payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VII. GENERAL PROVISIONS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.1 Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.2 Public Announcements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.3 Notices</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.4 Jurisdiction; Service Of Process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.5 Stockholders&#146; Representative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.6 Further Assurances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.7 Waiver</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.8 Entire Agreement And Modification</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.9 Disclosure Schedule</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.10 Assignments, Successors, And No Third-Party Rights</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.11 Severability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.12 Section&nbsp;Headings, Construction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.13 Time Of Essence</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.14 Governing Law</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.15 Counterparts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.16 Joint Preparation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.17 Dispute Resolution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">Exhibit&nbsp;A &#151; Listing of Percentage Equity Interests (excluding shares of SurModics)<BR>
Exhibit&nbsp;B &#151; Registration Rights Agreement<BR>
Exhibit&nbsp;C &#151; Escrow Agreement<BR>
Exhibit&nbsp;D &#150; Form of Press Release<BR>
Exhibit&nbsp;E &#150; Stockholders&#146; Representative Agreement


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




<P align="center" style="font-size: 10pt">&nbsp;
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<P align="center" style="font-size: 10pt"><U><B>AGREEMENT OF MERGER</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>THIS AGREEMENT OF MERGER</B>, dated as of <B>January&nbsp;18</B>, 2005 (this &#147;<B>Agreement</B>&#148;), is entered into by
and among SurModics, Inc., a Minnesota corporation (&#147;<B>SurModics</B>&#148;), SIRx, Inc., a Delaware
corporation and a wholly-owned subsidiary of SurModics (&#147;<B>Merger Sub</B>&#148;), InnoRx, Inc., a Delaware
corporation (&#147;<B>InnoRx</B>&#148;), all of the stockholders of InnoRx other than SurModics (the &#147;<B>Stockholders</B>&#148;)
and Dr.&nbsp;Eugene de Juan, Jr., as Stockholders&#146; Representative (the &#147;<B>Stockholders&#146; Representative</B>&#148;).


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



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>, the Boards of Directors of SurModics, Merger Sub and InnoRx have determined, subject
to the satisfaction of certain conditions precedent, that it is advisable and in the best interests
of each corporation and their respective stockholders that SurModics and InnoRx combine in order to
advance the long-term business interests of SurModics and InnoRx;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>, the combination of SurModics and InnoRx will be effected by the terms of this
Agreement through a transaction in which Merger Sub will merge with and into InnoRx, and the
Stockholders will become stockholders of SurModics (the &#147;<B>Merger</B>&#148;) and where InnoRx, as the
surviving corporation of the Merger, shall shortly after the Merger merge with and into SurModics
(the &#147;<B>Second Merger</B>&#148; and, together with the Merger and other transactions contemplated by this
Agreement, the &#147;<B>Contemplated Transactions</B>&#148;);


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>, the Merger and Second Merger are together intended to qualify as a reorganization
under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
&#147;<B>Code</B>&#148;); and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>, the Closing (defined below) shall not occur unless and until, among other events, all
of the Stockholders have signed this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW, THEREFORE</B>, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth below, the parties agree as follows:


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


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



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.1 </B><U><B>Closing</B></U><B>. </B>Subject to, and in accordance with, the terms and conditions of this
Agreement, the closing of the Merger (the &#147;<B>Closing</B>&#148;) will take place at the offices of Fredrikson &#038;
Byron, P.A., 200 South Sixth Street, Suite&nbsp;4000, Minneapolis, Minnesota, at 10:00&nbsp;a.m., local time,
on the date of signing of this Agreement by the last party to sign, or at such other time and place
as SurModics, Merger Sub and InnoRx may agree (the &#147;<B>Closing Date</B>&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.2 </B><U><B>Effective Time of the Merger</B></U><B>. </B>Subject to the provisions of this Agreement, on the
Closing Date, InnoRx and Merger Sub shall duly execute and deliver for filing a Certificate of
Merger in a mutually acceptable form as required by the relevant provisions of the Delaware General
Corporation Law (&#147;<B>DGCL</B>&#148;) with the Secretary of State of the State of Delaware. The Merger shall
become effective upon the due and valid filing and acceptance of the Certificate of Merger with and
by the Secretary of State of the State of Delaware, or at such time thereafter as is provided in
Certificate of Merger (the &#147;<B>Effective Time</B>&#148;).


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

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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.3 </B><U><B>Effects of the Merger</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>At the Effective Time: (i)&nbsp;the separate existence of Merger Sub shall cease and Merger
Sub shall be merged with and into InnoRx (Merger Sub and InnoRx are sometimes referred to
herein as the &#147;<B>Constituent Corporations</B>&#148; and InnoRx following consummation of the Merger is
sometimes referred to herein as the &#147;<B>Surviving Corporation</B>&#148;), (ii)&nbsp;the Certificate of
Incorporation of InnoRx shall be the Certificate of Incorporation of the Surviving
Corporation and (iii)&nbsp;the Bylaws of InnoRx as in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>At the Effective Time, the effect of the Merger shall be as provided in the applicable
provisions of the DGCL. Without limiting the generality of the foregoing, at and after the
Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers
and franchises of a public as well as of a private nature, and be subject to all the
restrictions, disabilities and duties of each of the Constituent Corporations.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.4 </B><U><B>Directors and Officers</B></U><B>. </B>The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation, and the
officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly elected or
appointed.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.5 </B><U><B>Second Merger</B></U><B>. </B>As soon as practicable after the Effective Time, SurModics hereby
covenants and agrees that it shall adopt and shall cause the Surviving Corporation to adopt an
agreement and plan of merger and reorganization pursuant to which the Surviving Corporation shall
be merged with and into SurModics, with SurModics being the surviving entity of such merger. Upon
the effectiveness of the Second Merger, all of the property, rights, privileges, powers and
franchises of the Surviving Corporation (including, but not limited to, the net operating losses of
InnoRx) will vest in SurModics and all debts, liabilities, obligations, restrictions, disabilities
and duties of the Surviving Corporation will become the debts, liabilities, obligations,
restrictions, disabilities and duties of SurModics. It is intended that, absent a change in facts
or law subsequent to the date hereof, the Second Merger shall occur and that the Merger and the
Second Merger together qualify as a reorganization under the provisions of Section 368(a) of the
Code, and that this Agreement constitute a &#147;plan of reorganization&#148; within the meaning of section
1.368-2(g) of the regulations promulgated under the Code.


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


<DIV align="center" style="font-size: 10pt"><U><B>CONVERSION OF SECURITIES</B></U></DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.1 </B><U><B>Conversion of Capital Stock</B></U><B>. </B>At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any securities of InnoRx or Common Stock, $0.01 par
value, of Merger Sub:


<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="left">(a)&nbsp;&nbsp;</TD>
    <TD><U>Conversion of Merger Sub</U>. Each issued and outstanding share of the Common
Stock of Merger Sub shall remain outstanding but as one share of the Common Stock, $0.01
par value, of the Surviving Corporation.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD><U>Cancellation of SurModics-Owned and InnoRx-Owned Stock</U>. All shares of Common
Stock, $0.001 par value, of InnoRx (&#147;<B>InnoRx Common Stock</B>&#148;) and all shares of InnoRx Series
A Convertible Preferred Stock (&#147;<B>Series&nbsp;A Stock</B>&#148;) that are owned by SurModics, Merger Sub,
InnoRx or any other direct or indirect wholly-owned Subsidiary (as defined below) of
SurModics,
Merger Sub or InnoRx shall be canceled and retired and shall cease to exist. No Merger
Consideration (defined in Section&nbsp;2.1(d) below) shall be delivered in exchange for any
shares of
</TD>
</TR>
</TABLE>
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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

</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="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>InnoRx Common Stock or Series&nbsp;A Stock that are owned by SurModics, Merger Sub,
InnoRx or any other direct or indirect wholly-owned Subsidiary of SurModics, Merger Sub or
InnoRx. As used in this Agreement, the word &#147;<B>Subsidiary</B>&#148; means, with respect to any other
party, any corporation or other organization, whether incorporated or unincorporated, of
which (i)&nbsp;such party or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such party or any
Subsidiary of such party do not have a majority of the voting interest in such partnership)
or (ii)&nbsp;at least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization or a majority of
the profit interests in such other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such party and one
or more of its Subsidiaries.</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="left">(c)&nbsp;&nbsp;</TD>
    <TD><U>Conversion of InnoRx Stockholder Stock</U>. At the Effective Time, and other than
contemplated in Section&nbsp;2.1(b), each issued and outstanding share of InnoRx Common Stock
held by the Stockholders automatically shall be converted into the right to receive, upon
delivery of the InnoRx stock certificates, the Merger Consideration. All such shares of
InnoRx Common Stock, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any rights with respect
thereto, except the right to receive, upon delivery of the stock certificates, the Merger
Consideration in accordance with Section&nbsp;2.1(d).</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="left">(d)&nbsp;&nbsp;</TD>
    <TD><U>Merger Consideration; Initial Payment</U>. The aggregate maximum consideration
payable or issuable in connection with the Merger (the &#147;<B>Merger Consideration</B>&#148;) shall
consist of the cash payable at Closing as provided below (including cash in lieu of
fractional shares of SurModics Common Stock in accordance with Section&nbsp;2.2), the shares of
SurModics common stock, par value $0.01 (&#147;<B>SurModics Common Stock</B>&#148;) issuable at Closing as
provided below and the additional shares of SurModics Common Stock issuable according to
the terms of Section&nbsp;2.3. The Merger Consideration is pursuant to the Merger and the terms
of this Agreement and is subject to reduction if and as provided in Article&nbsp;VI below and
all references to the Merger Consideration shall be deemed to include and refer to such
Merger Consideration as and if so reduced by such Article&nbsp;VI. The allocation of the Merger
Consideration that is payable or issuable to the Stockholders at the Closing is as follows:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Stockholder shall be entitled to receive, for each share of InnoRx Common
Stock owned by such Stockholder immediately prior to Effective Time (excluding shares
cancelled in accordance with Section&nbsp;2.1(b)), cash equal to $10.2241 as follows:



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) $9.9767 of such $10.2241 per share cash amount shall be paid to each
Stockholder at the Closing; and



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Per the direction and agreement of each such Stockholder as set forth
in the Stockholders&#146; Representative Agreement and the Escrow Agreement, <B>$</B>0.2474
of such $10.2241 per share cash amount shall be deposited into the Stockholder
Expense Account (as defined in the Escrow Agreement) and paid or distributed
therefrom in accordance with the Stockholders&#146; Representative Agreement and the
Escrow Agreement.

<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Subject to Section&nbsp;2.2, each Stockholder shall additionally be entitled to
receive, for each share of InnoRx Common Stock owned by such Stockholder immediately
prior to the Effective Time (excluding shares cancelled in accordance with Section
2.1(b)), 1.484443 shares of SurModics common stock.


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<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) On the Closing Date, SurModics shall issue to the Stockholders in accordance
with the terms and conditions of this Agreement: (A)&nbsp;the cash portion of the Merger
Consideration in accordance with Section&nbsp;2.1(d)(i)(A); (B)&nbsp;the shares of SurModics
Common Stock issuable as Merger Consideration pursuant to Section&nbsp;2.1(d)(ii); and (C)
cash in an amount sufficient to permit payment of cash in lieu of fractional shares
pursuant to Section&nbsp;2.2 and shall deposit into the Stockholder Expense Account the cash
in accordance with Section&nbsp;2.1(d)(i)(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="1%" nowrap align="left">(e)&nbsp;&nbsp;</TD>
    <TD><U>InnoRx Stock Options</U>. At the Effective Time, all then outstanding options,
whether vested or unvested, (&#147;<B>InnoRx Options</B>&#148;) to purchase InnoRx Common Stock will
terminate and be of no further force or effect. Prior to the Effective Time, InnoRx gave
notice to the holders of InnoRx Options and gave them the opportunity to exercise their
InnoRx Options prior to the Effective Time.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.2 </B><U><B>No Fractional Shares</B></U><B>. </B>No certificate or scrip representing fractional shares of
SurModics Common Stock shall be issued, and such fractional share interests will not entitle the
owner thereof to vote or to any rights of a stockholder of SurModics. Notwithstanding any other
provision of this Agreement, each holder of shares of InnoRx Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share of SurModics Common
Stock shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional
part of a share of SurModics Common Stock multiplied by Twenty-Seven Dollars And Fifty-Five Cents
($27.55).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.3 </B><U><B>Milestone Payments</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>Subject to set-off pursuant to the indemnification provisions set forth in Article&nbsp;VI,
SurModics shall cause to be issued and delivered to the Stockholders shares of SurModics
Common Stock in an aggregate maximum amount equal to 600,073 shares (the &#147;<B>Milestone
Stock</B>&#148;), based upon the achievement of certain milestones as follows only if each such
milestone occurrence results from use or application, directly or indirectly, of InnoRx&#146;s
coil or sub-retinal drug delivery technology (each such issuance upon a milestone is
referred to as a &#147;<B>Milestone Payment</B>&#148;), it being expressly agreed that no development
activity or other occurrences related directly or indirectly to InnoRx&#146;s Genistein or
Retinoic technologies shall be, or satisfy all or any portion of, any of the milestone
occurrences set forth below:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Milestone 1: 60,007 shares of SurModics Common Stock upon the approval of an
investigational new drug (&#147;<B>IND</B>&#148;) application with the United States Food &#038; Drug
Administration (&#147;<B>FDA</B>&#148;).



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Milestone 2: 60,007 shares of SurModics Common Stock upon the implantation of
a device into the final patient (i.e., so that 100% of enrolled patients have been
implanted with a device) included in the Phase I clinical trial, as such study has been
approved by the FDA as a result of the approved IND.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Milestone 3: 60,007 shares of SurModics Common Stock upon the implantation
of a device into the final patient (i.e., so that 100% of enrolled patients have been
implanted
with a device) in the Phase II clinical trial, as such study has been approved by
the FDA as a result of the approved IND.


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<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Milestone 4: 60,007 shares of SurModics Common Stock upon the implantation of
a device into the final patient (i.e., so that 100% of enrolled patients have been
implanted with a device) in the Phase III clinical trial, as such study has been
approved by the FDA as a result of the approved IND.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Milestone 5: 120,015 shares of SurModics Common Stock upon the filing of a new
drug application (&#147;<B>NDA</B>&#148;) with the FDA in a form expected, in good faith, to result in
FDA approval of the NDA.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Milestone 6: 120,015 shares of SurModics Common Stock upon the receipt of FDA
approval of an NDA and the first bona fide commercial sale in the U.S. to an
unaffiliated party of any coil or subretinal drug delivery product subsequent to such
approval.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Milestone 7: 120,015 shares of SurModics Common Stock upon the bona fide
cumulative commercial sale in the U.S. of all coil and all subretinal drug delivery
devices to unaffiliated parties following NDA approval that results in cumulative net
revenues from all such bona fide end-user sales in the U.S. following NDA approval to
unaffiliated parties to equal or exceed $25&nbsp;million.


<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="left">(b)&nbsp;&nbsp;</TD>
    <TD>The maximum number of shares of SurModics Common Stock issuable with respect to a
particular Milestone Payment (the &#147;<B>Milestone Stock Number</B>&#148;) shall be the above stated
number of shares for such particular Milestone Payment. Within 30&nbsp;days of achievement of
each milestone, each Stockholder shall be entitled to receive, assuming prior delivery of
such Stockholder&#146;s InnoRx share certificates at the Closing, for each share of InnoRx
Common Stock owned by such Stockholder immediately prior to the Effective Time (excluding
shares cancelled in accordance with Section&nbsp;2.1(b)), the number of shares of SurModics
Common Stock (with respect to each milestone, the &#147;<B>Per Share Milestone Stock Number</B>&#148;) as
equals the amount obtained by dividing: (i)&nbsp;the applicable Milestone Stock Number that is
issuable to the Stockholders, less any shares of Milestone Stock that shall be issued into
the Escrow Account pursuant to Sections&nbsp;6.3 and 6.4 in accordance with the set-off
procedures (including the maximum set-off amounts) as provided therein, if any, by (ii)
404,241. The determination of whether a particular milestone has been achieved shall be
made independent of the status of all other milestones. Achieving multiple milestones
simultaneously will result in issuance of Milestone Stock to the Stockholders
simultaneously, subject to the indemnification rights of SurModics pursuant to Sections&nbsp;6.3
and 6.4. The specified amount of Merger Consideration for each milestone shall be payable
upon the achievement of each milestone independent of the status of all other milestones,
and each Milestone Payment will be payable only once and only upon the first achievement of
such milestone whether or not the occurrence set forth in such milestone also subsequently
occurs with respect to another product or technology.</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="left">(c)&nbsp;&nbsp;</TD>
    <TD>Subject to Section&nbsp;2.2, the aggregate number of shares of SurModics Common Stock
SurModics shall cause to be issued to each Stockholder upon the satisfaction of each
milestone shall equal the number of shares of InnoRx Common Stock owned by the Stockholder
immediately prior to the Effective Time (excluding shares cancelled in accordance with
Section&nbsp;2.1(b)) multiplied by the Per Share Milestone Stock Number for such milestone. Two
stock certificates totaling such aggregate number of shares of SurModics Common Stock shall
be issued to the Stockholder, one of which stock certificates shall be for such number of
shares as SurModics and the Stockholders&#146; Representative shall have determined in good
faith to constitute imputed interest.</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="left">(d)&nbsp;&nbsp;</TD>
    <TD>To the extent any milestones are achieved prior to Closing, the issuance of the Merger
Consideration in connection with each such milestone shall be made at the Closing.
SurModics and InnoRx agree that any and all milestones (so long as the milestone occurrence
results, directly
</TD>
</TR>
</TABLE>
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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

</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="left">&nbsp;&nbsp;</TD>
    <TD>or indirectly, from use of InnoRx&#146;s coil or sub-retinal drug delivery
technology) may be satisfied solely by InnoRx (or any successor to InnoRx), jointly by
InnoRx (or any successor to InnoRx) and development partners, including licensees of InnoRx
(or any successor to InnoRx), or solely by such development partners or licensees, or by
their respective successors. To the extent any milestone is achieved, all prior milestones
shall be deemed to also have been achieved and Milestone Payments will be made on such
prior milestones as well.</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="left">(e)&nbsp;&nbsp;</TD>
    <TD>From and after the Effective Time of the Merger, any and all decisions regarding
development efforts which SurModics or InnoRx shall cause to be expended with respect to
InnoRx technology or related matters directly or indirectly effecting the progress of
InnoRx or the achievement of Milestone Payments shall be in the sole and absolute
discretion of SurModics without any express or implied obligation or liability to any party
or Stockholder other than SurModics agrees, subject to the following, that it shall, within
the five-year period beginning on the Effective Time, expend or cause to be expended an
aggregate of Five Million Dollars ($5.0&nbsp;million) (&#147;<B>Development Funds</B>&#148;) on the continued
development of and commercialization efforts for InnoRx&#146;s coil and/or subretinal drug
delivery technology (the &#147;<B>Key Technology</B>&#148;), which efforts shall include expending a portion
of the Development Funds, the amount of such portion to be determined in the discretion of
SurModics, to provide beginning in 2005 a physical location in the Southern California area
to facilitate development efforts, funding for developmental activities for the Key
Technology, and management and personnel to administer the business of InnoRx. SurModics&#146;
obligation to so cause the Development Funds to be expended is subject to the following
terms and conditions:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) all internal and external amounts, costs and expenses which SurModics causes to
be expended with respect to the Key Technology, including in connection with research
and development efforts, animal and clinical studies, prototype development and
refinement, regulatory compliance and all other necessary and appropriate efforts to
develop and commercialize the Key Technology, whether performed internally or
externally, shall be applied toward the satisfaction of SurModics&#146; Development Funds
obligation;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) SurModics shall not be required to adjust its ordinary accounting methods or
restrict or limit its ability to allocate costs and expenses to projects, including the
projects involving Key Technology, as it would in the ordinary course of its business;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) SurModics may cause its Development Fund obligation to be satisfied in
installments of any amount without regard to minimum or maximum limits for any period
and from time to time at any time as determined in SurModics&#146; sole discretion;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) amounts, costs and expenses expended by development partners engaged by
SurModics or InnoRx with respect to development and commercialization efforts for Key
Technology shall be deemed to have been expended by SurModics for purposes of this
Section&nbsp;2.3(e) to the same extent as if expended directly by SurModics;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) SurModics&#146; obligation to expend the Development Funds as described above
represents SurModics&#146; only obligation to continue development efforts for the Key
Technology, and so long as SurModics so satisfies such obligation with respect to the
Development Funds (subject to the qualification of Section&nbsp;2.3(e)(vi) below), there
shall be no liability to any Stockholder with respect thereto, and the Stockholders
agree that they shall not assert any claim with respect thereto or use as a basis for
any claim that SurModics failed
to undertake reasonable and good faith efforts to pursue commercialization of the
Key Technology or acted in bad faith to frustrate the achievement of any milestones; and


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<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) notwithstanding the foregoing, if SurModics determines in good faith in its
sole discretion that a Material Adverse Effect (defined below) has occurred that makes
further development of or commercialization efforts for Key Technology not in the best
interests of SurModics or its stockholders, SurModics shall not be obligated to continue
expending funds for or allocating resources to the continued development of or
commercialization efforts for Key Technology regardless of the actual amount of
Development Funds theretofore expended and SurModics&#146; obligation to cause the
Development Funds to be expended shall terminate and have no further force or effect,
and all obligations to make any subsequent Milestone Payments shall thereupon cease and
terminate and be of no further force or effect. As used in this Section&nbsp;2.3(e) only,
&#147;<B>Material Adverse Effect</B>&#148; shall mean any event, change or effect that, when taken
individually or together with all other adverse changes and effects, is or is reasonably
likely in the good faith judgment of SurModics&#146; board of directors to have a materially
adverse impact on the likelihood that devices or related technology to be developed from
Key Technology will receive final regulatory approval or clearance from the FDA to
market or sell such devices in the United States, on the commercial viability of any
devices being developed from Key Technology or on projected financial results from sales
of devices being developed from Key Technology, including but not limited to adverse
results in clinical testing and data, injuries, side effects or other complications or
adverse reactions in administering or utilizing the product, unsatisfactory efficacy
levels, or similar occurrences of developments.


<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="left">(f)&nbsp;&nbsp;</TD>
    <TD>All references to &#147;InnoRx&#148; in this Section&nbsp;2.3 will include SurModics, any
unincorporated division, line of business, product line, business unit or subsidiary of
SurModics or a subsidiary or parent corporation of SurModics, whether or not such is
formally or legally organized as a separate entity, or other person or entity, that is a
successor to InnoRx.</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="left">(g)&nbsp;&nbsp;</TD>
    <TD>The parties acknowledge that each certificate representing a share of SurModics Common
Stock issued pursuant to the Merger will, pursuant to the Rights Agreement dated as of
April&nbsp;5, 1999, between SurModics and Firstar Bank Milwaukee, N.A. or any successor or
substitute agreement thereto (the &#147;<B>Rights Plan</B>&#148;), also represent the number of SurModics
preferred share purchase rights associated with one share of SurModics Common Stock as
provided in the Rights 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="left">(h)&nbsp;&nbsp;</TD>
    <TD>If after the date hereof and prior to the issuance of a Milestone Payment, the
outstanding shares of SurModics Common Stock have been changed into or exchanged for a
different number of shares, different securities or other property or consideration by
reason of any stock split, reverse split, stock dividend, recapitalization, reorganization,
combination, share exchange, merger or similar transaction (an &#147;<B>Adjusting Event</B>&#148;), all
amounts of Milestone Stock for each such Milestone Payment thereafter issuable (and all
references thereto in this Section&nbsp;2.3, Section&nbsp;6.3 and otherwise) shall be appropriately
adjusted to reflect such transaction and to thereafter reflect that which such originally
stated amount of Milestone Stock for such subsequent Milestone Payments would have received
or been changed into or exchanged for had such been outstanding prior to such Adjusting
Event. SurModics agrees that it shall be a condition precedent to any sale of all or
substantially all of the assets of SurModics or InnoRx (or its successor) other than a sale
of the assets of InnoRx to SurModics or to an entity controlled by SurModics that the third
party acquiring such assets fully assume all of SurModics&#146; obligations under this Section
2.3, and SurModics agrees that it shall be a condition precedent to any sale or transfer of
all or substantially all of the assets of the Key Technology (including any license that
transfers exclusive rights to substantially all of the assets of the Key Technology) by
SurModics or InnoRx
(or any affiliate of SurModics or InnoRx) other than a sale, transfer of license by InnoRx
to SurModics or to an entity controlled by SurModics that the third party acquiring such
assets of the Key Technology assume all of SurModics&#146; obligations under Section&nbsp;2.3(e).</TD>
</TR>


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


</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.4 </B><U><B>Closing Documents</B></U><B>. </B>At the Closing:


<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="left">(a)&nbsp;&nbsp;</TD>
    <TD>InnoRx will deliver to SurModics:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Escrow Agreement (defined below), executed by the Stockholders&#146;
Representative and by the Stockholders, or on their behalf by the Stockholders&#146;
Representative;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the Registration Rights Agreement (defined below), executed by the
Stockholders and the Stockholders&#146; Representative;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) letters of transmittal (&#147;<B>Letters of Transmittal</B>&#148;), executed by each of the
Stockholders, together with such Stockholders&#146; InnoRx share certificates;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the opinion of Oppenheimer Wolff &#038; Donnelly LLP dated as of the Closing Date,
in the form previously approved by SurModics;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) a copy of the signed written consent resolutions of the Stockholders and
InnoRx&#146;s Board of Directors certified by its Secretary, authorizing and approving the
execution, delivery and performance of this Agreement and the Contemplated Transactions
and the acts of the officers and employees of InnoRx in carrying out the terms and
provisions hereof;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) the resignations of all of the members of InnoRx&#146;s Board of Directors and all
of InnoRx&#146;s officers and employees;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) certificates of good standing from the Secretaries of the States of Delaware
and Alabama dated no earlier than three (3)&nbsp;business days prior to the Closing Date;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) consulting agreements (in the form previously approved by SurModics),
executed on behalf of Dr.&nbsp;Eugene de Juan, Jr. and K.W. Michael Chambers;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) a copy of each consent identified in Section&nbsp;3.2(c) of the InnoRx Disclosure
Schedule;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) a certificate executed by Dr.&nbsp;Eugene de Juan, Jr. and K.W. Michael Chambers
certifying that to their knowledge no Person has made or threatened to make any claim
asserting that such Person (a)&nbsp;is the holder or the beneficial owner of any stock of
InnoRx (other than the ownership amounts of InnoRx&#146;s existing Stockholders as set forth
in Section&nbsp;3.3 of the InnoRx Disclosure Schedule), (b)&nbsp;has the right to acquire or to
obtain beneficial ownership of, any stock of, or any other voting, equity, or ownership
interest in, InnoRx, or (c)&nbsp;is entitled to all or any portion of the Merger
Consideration;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) a copy of the addenda executed by The Johns Hopkins University (&#147;<B>JHU</B>&#148;), in
substantially the form previously approved by SurModics;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) a copy of the clarification or amendment entered into by InnoRx with the
Doheny Eye Institute to that certain Development and Payment Agreement between InnoRx
and Doheny Eye Institute, in substantially the form previously approved by SurModics;


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) a copy of the extension of the License Agreement between InnoRx and Protein
Technologies International, Inc. and a copy of the payment made and note executed in
connection with such extension, all in substantially the forms previously approved by
SurModics;


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<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) all requisite paperwork and certifications necessary or appropriate to remove
as of the Closing Date any and all authorized signors on InnoRx&#146;s financial accounts
(including any and all persons who may have discretionary authority over such accounts)
and to authorize such persons as have been designated by SurModics to be the authorized
signors on each such account;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) a copy of the most recent statements received from financial institutions for
each account held at financial institutions maintaining accounts on behalf of InnoRx,
together with account reconciliations necessary or appropriate to reconcile the balances
on such account statements to the most recent balance sheet of InnoRx identified in
Section&nbsp;3.4 of this Agreement;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) a copy of the Development and Manufacturing Agreement executed by Peregrine
Surgical, Ltd. and InnoRx, in substantially the form previously approved by SurModics;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) evidence of payment by InnoRx prior to the Effective Time of insurance
premiums, salary severance and payment in lieu of a 2005 contribution to the retirement
plan for K.W. Michael Chambers (in the aggregate amount of $161,811.20) pursuant to his
current Amendment No.&nbsp;2 to Employment Agreement dated July&nbsp;28, 2004, between K.W.
Michael Chambers and InnoRx, which payment amount Mr.&nbsp;Chambers shall acknowledge in
writing as satisfying in full all InnoRx obligations thereunder;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xviii) such other documents as SurModics may reasonably request for the purpose of
(A)&nbsp;evidencing the accuracy of any representation or warranty of Stockholders or InnoRx,
(B)&nbsp;evidencing the performance by Stockholders or InnoRx of, or the compliance by
Stockholders or InnoRx with, any covenant or obligation required to be performed or
complied with by Stockholders or InnoRx, or (C)&nbsp;otherwise facilitating the consummation
of any of the Contemplated Transactions.


<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="left">(b)&nbsp;&nbsp;</TD>
    <TD>SurModics will deliver to InnoRx, to the Stockholders, any certain Stockholder, the
Stockholder Representative or the Escrow Agent, as the case may be:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) cash payable in accordance with Section&nbsp;2.1(d)(i)(A) and certificates in the
name of each Stockholder evidencing that number of shares of SurModics Common Stock as
each Stockholder is entitled to receive in accordance with Section&nbsp;2.1(d)(ii) and, if
any milestones are achieved before Closing, Section&nbsp;2.3(d) (with respect to Milestone
Payments);



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) cash in an amount sufficient to permit payment of cash in lieu of fractional
shares pursuant to Section&nbsp;2.2;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) cash in an amount equal to One Hundred Thousand Nine Dollars and Twenty-two
Cents ($100,009.22) payable to the Escrow Agent in accordance with Section&nbsp;2.1(d)(i)(B);



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) to the Stockholders&#146; Representative, the Registration Rights Agreement,
executed on behalf of SurModics;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) to the other party thereto, the Consulting Agreements, executed on behalf of
SurModics;


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<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) to the Stockholders&#146; Representative, the Escrow Agreement, executed on behalf
of SurModics;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) an opinion of Fredrikson &#038; Byron, P.A. dated the Closing Date, in the form
previously approved by InnoRx; and



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) such other documents as InnoRx may reasonably request for the purpose of (A)
evidencing the accuracy of any representation or warranty of SurModics or Merger Sub,
(B)&nbsp;evidencing the performance by SurModics or Merger Sub of, or the compliance by
SurModics or Merger Sub with, any covenant or obligation required to be performed or
complied with by SurModics or Merger Sub, or (C)&nbsp;otherwise facilitating the
consummation of any of the Contemplated Transactions.


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


<DIV align="center" style="font-size: 10pt"><U><B>REPRESENTATIONS AND WARRANTIES OF THE</B></U></DIV>


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



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of the Stockholders, severally (not jointly) and on a pro rata basis in accordance with
their respective percentage equity interest in InnoRx (and excluding SurModics&#146; equity interest) as
reflected on <U><B><I>Exhibit&nbsp;A</I></B></U>, represents and warrants to SurModics and Merger Sub that the
statements contained in this Article&nbsp;III are true and correct as to the date of this Agreement and
as of the Closing Date, except as set forth in the disclosure schedule delivered by InnoRx to
SurModics on or before the date of this Agreement (the &#147;<B>InnoRx Disclosure Schedule</B>&#148;). The InnoRx
Disclosure Schedule shall be arranged in paragraphs corresponding to the numbered and lettered
paragraphs contained in this Article&nbsp;III (<I>provided, however, </I>that InnoRx and the Stockholders will
be deemed to have adequately disclosed with respect to any section or subsection any matters that
are clearly described elsewhere in such document if the applicability of such disclosure to such
non-referenced sections or subsections is clearly apparent). Whenever the term &#147;to InnoRx&#146;s
knowledge,&#148; &#147;InnoRx is not aware&#148; or a similar expression appears in any representation or warranty
in this Article&nbsp;III, it means either to the actual knowledge of Dr.&nbsp;Eugene de Juan, Jr. or K.W.
Michael Chambers or that which a prudent individual in the position of such persons should be
expected to discover or otherwise become aware of in the course of conducting a reasonable
investigation concerning the existence of such fact or other matter. Whenever the term &#147;InnoRx has
received no notice&#148; or like expression appears in any representation or warranty in this Article
III, it means that neither Dr.&nbsp;Eugene de Juan, Jr. nor K.W. Michael Chambers has received actual
oral or written notice of the matter to which such term is applied.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise indicated, as used herein, the term &#147;<B>InnoRx Material Adverse Effect</B>&#148; shall
mean any event, change, circumstance, condition or effect that has or is reasonably likely to have
a materially adverse effect on: (i)&nbsp;the business (including its current products or products
identified for development), operations, assets, properties, results of operations, or financial
condition of InnoRx considered as a whole; or (ii)&nbsp;the ability of the Surviving Corporation or
SurModics to conduct such business (as presently conducted or proposed to be conducted) following
the Effective Time; or (iii)&nbsp;the ability of SurModics to exercise full rights of ownership of
InnoRx or its assets or business; provided, however, any adverse event, change, circumstance,
condition or effect in the industries in which InnoRx operates, or in the economy generally, that
do not affect InnoRx disproportionately more than other companies, shall not be deemed to
constitute, and shall not be taken into account in determining whether there has been, or is
reasonably likely to be, an InnoRx Material Adverse Effect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.1 </B><U><B>Organization and Good Standing</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>InnoRx is a corporation duly organized, validly existing, and in good standing under
the laws of its jurisdiction of incorporation, with full corporate power and authority to
conduct its business as
</TD>
</TR>
</TABLE>
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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

</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="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>it is now being conducted, to own or use the properties and assets
that it purports to own or use. InnoRx is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the nature of
the activities conducted by it, requires such qualification, except where the failure to so
qualify would not have an InnoRx Material Adverse Effect. InnoRx does not have any
subsidiaries.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>InnoRx has delivered to SurModics true and complete copies of the Organizational
Documents of InnoRx, as currently in effect. &#147;<B>Organizational Documents</B>&#148; shall mean the
certificate of incorporation and the bylaws of a corporation and any amendment to the
foregoing.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.2 </B><U><B>Authority; No Conflict</B></U>.


<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="left">(a)&nbsp;&nbsp;</TD>
    <TD>InnoRx has the requisite right, power and authority to execute and deliver this
Agreement and perform its obligations hereunder, and this Agreement constitutes the legal,
valid, and binding obligations of InnoRx and the Stockholders, enforceable against InnoRx
and the Stockholders in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors generally. Upon the execution and delivery of the Escrow Agreement, the
Stockholders&#146; Representative Agreement and the Registration Rights Agreement by the
Stockholders&#146; Representative and by the Stockholders, or on their behalf by the
Stockholders&#146; Representative, (collectively, the &#147;<B>Stockholders&#146; Closing Documents</B>&#148;), the
Stockholders&#146; Closing Documents will constitute the legal, valid, and binding obligations
of the Stockholders, enforceable against the Stockholders in accordance with their
respective terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting creditors generally. Each
Stockholder has the absolute and unrestricted right, power, authority, and capacity to
execute and deliver this Agreement, the written consent resolutions approving this
Agreement, the Letters of Transmittal and the Stockholders&#146; Closing Documents and to
perform their obligations hereunder and thereunder.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;3.2 of the InnoRx Disclosure Schedule, neither the
execution and delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice or lapse of
time):</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) contravene, conflict with, or result in a violation of (A)&nbsp;any provision of the
Organizational Documents of InnoRx, or (B)&nbsp;any resolution adopted by the board of
directors or the stockholders of InnoRx;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) contravene, conflict with, or result in a violation of, or give any
Governmental Body (defined below) or other Person (defined below) the right to challenge
the Contemplated Transactions or to exercise any remedy or obtain any relief under, any
Legal Requirement (defined below) or any Order (defined below) to which InnoRx or any
Stockholder, or any of the assets owned or used by InnoRx, may be subject, except for
those that, individually or in the aggregate, would not have, or be reasonably likely to
have, an InnoRx Material Adverse Effect. &#147;<B>Legal Requirement</B>&#148; shall mean any federal,
state, local, municipal, foreign, international, multinational, or other administrative
order, constitution, law, ordinance, principle of common law, regulation, statute or
treaty. &#147;<B>Order</B>&#148; shall mean any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued,
made, or rendered by any court, administrative agency, or other Governmental Body
or by any arbitrator. &#147;<B>Governmental Body</B>&#148; shall mean any nation, state, county, city,
town, village, district, or other jurisdiction of any nature; federal, state, local,
municipal, foreign or other government; governmental or quasi-governmental authority of
any nature (including


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<P align="left" style="margin-left:3%; font-size: 10pt">any governmental agency, branch, department, official, or entity
and any court or other tribunal); multi-national organization or body; or body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature; and
&#147;<B>Person</B>&#148; shall mean any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated association, corporation, limited liability company, other entity
or Governmental Body;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) contravene, conflict with, or result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Governmental Authorization (defined below) that is
held by InnoRx or that otherwise relates to the business of, or any of the assets owned
or used by, InnoRx;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) contravene, conflict with, or result in a violation or breach of any provision
of, or give any Person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate, or modify, any
Contract (defined below); or



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) result in the imposition or creation of any Encumbrance upon or with respect to
any of the assets owned or used by InnoRx. &#147;<B>Encumbrance</B>&#148; shall mean any charge, claim,
community property interest, condition, equitable interest, lien, option, pledge,
security interest, right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of any other
attribute of ownership.


<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="left">(c)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;3.2 of the InnoRx Disclosure Schedule, neither InnoRx
nor any Stockholder is or will be required to give any notice to or obtain any consent from
any Person other than the written consent from the Stockholders and SurModics, as a
stockholder of InnoRx, in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.3 </B><U><B>Capitalization</B></U><B>. </B>The authorized equity securities of InnoRx consist of 15,000,000
shares of common stock, par value $0.001 per share, of which 421,199 shares are issued and
outstanding immediately prior to the Effective Time and constitute all of the InnoRx Common Stock
(16,958 of which are owned by SurModics and are cancelled in the Merger in accordance with Section
2.1(b)), and 3,000,000 shares of preferred stock, par value $0.001 per share, of which 272,000 are
designated Series&nbsp;A Convertible Preferred Stock, of which 67,830 shares are issued and outstanding
and constitute all of the Series&nbsp;A Stock (all of which Series&nbsp;A Stock are owned by SurModics and
are cancelled in the Merger in accordance with Section&nbsp;2.1(b)), and of which 2,728,000 are
undesignated preferred stock. Section&nbsp;3.3 of the InnoRx Disclosure Schedule contains a true and
correct copy of the list of Stockholders and holders of Series&nbsp;A Stock, including the number of
such securities held by each. All of the outstanding equity securities of InnoRx have been duly
authorized and validly issued and are fully paid and nonassessable. Other than the Series&nbsp;A Stock
and as contemplated by this Agreement, there are no options, warrants or other Contracts relating
to the issuance, sale, or transfer of any equity securities or other securities of InnoRx. None of
the outstanding equity securities or other securities of InnoRx was issued in violation of the
Securities Act of 1933, as amended (the &#147;<B>Securities Act</B>&#148;), or any other Legal Requirement. There
are no outstanding obligations of InnoRx to register under the Securities Act any shares of its
capital stock or to include in any registration of its capital stock shares held by others, other
than as set forth in that certain Registration Rights Agreement dated January&nbsp;26, 2004 between
InnoRx, SurModics and the Stockholders.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.4 </B><U><B>Financial Statements</B></U><B>. </B>InnoRx has delivered to SurModics: (a)&nbsp;unaudited balance
sheets of InnoRx as of December&nbsp;31 in each of the years 2000 through 2003, and the related
unaudited


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



<P align="left" style="font-size: 10pt">statements of income and cash flow for each of the fiscal years then ended; and (b)&nbsp;the
unaudited balance sheet of InnoRx as of December&nbsp;31, 2004 (the &#147;<B>Balance Sheet</B>&#148;) and statements of
income and cash flow for the fiscal year then ended. Except as otherwise disclosed in such
financial statements or as set forth in Section&nbsp;3.4 of the InnoRx Disclosure Schedule, such
financial statements fairly present the financial condition and the results of operations, changes
in stockholders&#146; equity, and cash flow of InnoRx as of the respective dates of and for the periods
referred to in such financial statements, all in accordance with generally accepted accounting
principles (&#147;<B>GAAP</B>&#148;)<B>, </B>and the financial statements referred to in this Section&nbsp;3.4 reflect the
consistent application of such accounting principles throughout the periods involved. To InnoRx&#146;s
knowledge, no financial statements of any Person other than InnoRx are required by GAAP to be
included in the consolidated financial statements of InnoRx.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.5 </B><U><B>Books And Records</B></U><B>. </B>The books of account, minute books, stock record books, and
other records of InnoRx, all of which have been made available to SurModics, are complete and
correct in all material respects. The minute books of InnoRx and its Subsidiaries contain in all
material respects accurate and complete records of all meetings held of, and corporate action taken
by, the stockholders, the Boards of Directors, and committees of the Boards of Directors of InnoRx,
and no meeting of any such stockholders, Board of Directors, or committee has been held for which
minutes have not been prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of InnoRx.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.6 </B><U><B>Title To Properties; Encumbrances</B></U><B>. </B>InnoRx owns no real property. Section&nbsp;3.6 of
the InnoRx Disclosure Schedule sets forth a complete and accurate list of all machinery, equipment,
tools, dies, furniture, fixtures, spare parts, vehicles, computers, product prototypes, devices,
inventory, drug samples, supplies and other similar personal property owned or leased by InnoRx and
indicates the location of each item so listed. Section&nbsp;3.6 of the InnoRx Disclosure Schedule also
indicates which, if any, property is leased by InnoRx. InnoRx owns all the properties and assets
(whether personal or mixed with real property and whether tangible or intangible) reflected as
owned in the books and records of InnoRx, including all of the assets reflected in Section&nbsp;3.6 of
the InnoRx Disclosure Schedule or in the Balance Sheet but excluding assets held under capitalized
leases and personal property purchased or sold since the date of the Balance Sheet in the Ordinary
Course of Business (as defined below). All assets reflected in the books and records of InnoRx,
Section&nbsp;3.6 of the InnoRx Disclosure Schedule and the Balance Sheet are free and clear of all
Encumbrances except, with respect to all such properties and assets, (a)&nbsp;security interests
securing specified liabilities or obligations shown on the Balance Sheet or the Balance Sheet, with
respect to which no default (or event that, with notice or lapse of time or both, would constitute
a default) exists, (b)&nbsp;security interests incurred in connection with the purchase of assets after
the date of the Balance Sheet (such security interests being limited to the assets so acquired),
with respect to which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (c)&nbsp;liens for current taxes not yet due, and (d)&nbsp;immaterial or
technical Encumbrances that would not, either individually or in the aggregate, have an InnoRx
Material Adverse Effect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used herein, an action taken by a Person will be deemed to have been taken in the &#147;<B>Ordinary
Course of Business</B>&#148; only if (a)&nbsp;such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such Person; and (b)
such action is not
required to be specifically authorized by the board of directors of such Person (or by any
Person or group of Persons exercising similar authority).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.7 </B><U><B>No Undisclosed Liabilities</B></U><B>. </B>Except as set forth in Section&nbsp;3.7 of the InnoRx
Disclosure Schedule, InnoRx has no material liabilities or obligations of any nature (whether known
or unknown and whether absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Balance Sheet and current liabilities incurred in
the Ordinary Course of Business since the date thereof.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.8 </B><U><B>Taxes</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>InnoRx has filed or caused to be filed (on a timely basis since 1999), or have timely
obtained extensions for filing, all Tax Returns (as defined below) that are or were
required to be filed by or with respect to it pursuant to applicable Legal Requirements.
InnoRx has made available to SurModics all Tax Returns filed by InnoRx since January&nbsp;1,
1999. InnoRx has paid, or made provision for the payment of, all taxes that have or may
have become due pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by InnoRx, except such taxes, if any, as are listed in Section&nbsp;3.8 of the InnoRx
Disclosure Schedule and are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP except that financial footnotes are not included) have
been provided in the Balance Sheet. Section&nbsp;3.8 of the InnoRx Disclosure Schedule sets
forth a complete and accurate list of all Tax Returns (other than Forms W-2 and 1099) filed
by InnoRx since January&nbsp;1, 1999. &#147;<B>Tax Return</B>&#148; shall mean any return (including any
information return), report, statement, schedule, notice, form, election, or other document
or information filed with or submitted to, or required to be filed with or submitted to,
any Governmental Body in connection with the determination, assessment, collection, or
payment of any tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any tax.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>Except as described in Section&nbsp;3.8 of the InnoRx Disclosure Schedule, InnoRx has not
given or been requested to give waivers or extensions (or is not or would not be subject to
a waiver or extension given by any other Person) of any statute of limitations relating to
the payment of taxes of InnoRx or for which InnoRx may be liable.</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="left">(c)&nbsp;&nbsp;</TD>
    <TD>The charges, accruals, and reserves with respect to taxes on the Balance Sheet are
adequate as determined in accordance with GAAP, except that financial footnotes are not
included. There exists no proposed tax assessment against InnoRx except as disclosed in
the Interim Balance Sheet or in Section&nbsp;3.8 of the InnoRx Disclosure Schedule. All taxes
that InnoRx is or was required by Legal Requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.</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="left">(d)&nbsp;&nbsp;</TD>
    <TD>All Tax Returns filed by (or that include on a consolidated basis) InnoRx are true,
correct, and complete in all material respects. There is no tax sharing agreement that will
require any payment by InnoRx after the date of this Agreement.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.9 </B><U><B>No Material Adverse Effect</B></U><B>. </B>Since November&nbsp;30, 2004, no event has occurred or
circumstance has arisen that has had, or that could reasonably be expected to have, an InnoRx
Material Adverse Effect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.10 </B><U><B>Employee Benefits</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>As used in this Section&nbsp;3.10, the following terms have the meanings set forth below.</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U><B>InnoRx Other Benefit Obligation</B></U>&#148; means an Other Benefit Obligation owed,
adopted, or followed by InnoRx.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U><B>InnoRx Plan</B></U>&#148; means all Plans of which InnoRx is or was a Plan Sponsor, or to
which InnoRx otherwise contributes or has contributed, or in which InnoRx otherwise
participates or has participated. All references to Plans are to InnoRx Plans unless the
context requires otherwise.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U><B>Other Benefit Obligations</B></U>&#148; means all obligations, arrangements, or customary
practices, whether or not legally enforceable, to provide benefits, other than salary, as


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<P align="left" style="margin-left:3%; font-size: 10pt">compensation for services rendered, to present or former directors, officers, employees, or
agents, other than obligations, arrangements, and practices that are Plans. Other Benefit
Obligations include consulting agreements under which the compensation paid does not depend
upon the amount of service rendered, sabbatical policies, severance payment policies, and
fringe benefits within the meaning of Code &#167;132.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U><B>Plan</B></U>&#148; has the meaning given in ERISA &#167;3(3).



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U><B>Plan Sponsor</B></U>&#148; has the meaning given in ERISA &#167;3(16)(B).



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U><B>Qualified Plan</B></U>&#148; means any Plan that meets or purports to meet the requirements
of Code &#167;401(a).


<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="left">(b)&nbsp;&nbsp;</TD>
    <TD>Section&nbsp;3.10(b) of the InnoRx Disclosure Schedule contains a complete and accurate list
of all InnoRx Plans and InnoRx Other Benefit Obligations, and identifies as such all InnoRx
Plans that are Qualified Plans.</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="left">(c)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;3.10(c) of the InnoRx Disclosure Schedule:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) InnoRx has performed all of its obligations under all InnoRx Plans and InnoRx
Other Benefit Obligations, except for such nonperformance as would not, individually or
in the aggregate, have an InnoRx Material Adverse Effect. InnoRx has made appropriate
entries in its financial records and statements for all obligations and liabilities
under such InnoRx Plans and InnoRx Other Benefit Obligations that have accrued but are
not due, except where the failure to do so would not have an InnoRx Material Adverse
Effect.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To InnoRx&#146;s knowledge, no statement, either written or oral, has been made by
InnoRx to any Person with regard to any InnoRx Plan or InnoRx Other Benefit Obligation
that was not in accordance with the InnoRx Plan or InnoRx Other Benefit Obligation and
that could have an adverse economic consequence to InnoRx or to SurModics.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) InnoRx, with respect to all InnoRx Plans and InnoRx Other Benefits
Obligations, is, and each InnoRx Plan and InnoRx Other Benefit Obligation is, in full
compliance with ERISA, the Code, and other applicable Laws including the provisions of
such Laws expressly mentioned in this Section&nbsp;3.10, except for such non-compliance as
would not have an InnoRx Material Adverse Effect.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Each InnoRx Plan can be terminated within thirty (30)&nbsp;days, without payment of
any additional contribution or amount and without the vesting or acceleration of any
benefits promised by such InnoRx Plan.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) No event has occurred or circumstance exists that is reasonably expected to
result in a material increase in premium costs of InnoRx Plans and InnoRx Other Benefit
Obligations that are insured, or a material increase in benefit costs of such Plans
and Obligations that are self-insured.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The consummation of the Contemplated Transactions will not result in the
payment, vesting, or acceleration of any benefit under any InnoRx Plan or Other Benefit
Obligation.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.11 </B><U><B>Compliance With Legal Requirements; Governmental Authorizations</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;3.11 of the InnoRx Disclosure Schedule:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) InnoRx is, and at all times has been, in compliance with each Legal Requirement
that is or was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets, except for such non-compliance as would not,
individually or in the aggregate, have an InnoRx Material Adverse Effect;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) InnoRx has not received, at any time, any notice or other communication
(whether oral or written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible, or potential violation of, or failure to comply with, any
Legal Requirement, or (B)&nbsp;any actual, alleged, possible, or potential obligation on the
part of InnoRx to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature, except for such remedial actions as would not, individually or in
the aggregate, have an InnoRx Material Adverse Effect; and



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) all documentation, correspondence, reports, data, analyses and certifications
relating to or regarding any product or proposed product of InnoRx filed with or
delivered by or on behalf of InnoRx to any Governmental Body were in all material
respects true and accurate when so filed or delivered, and, to InnoRx&#146;s knowledge,
remain true and accurate. Each study conducted by or on behalf of InnoRx with respect
to InnoRx current or proposed products has been conducted or is being conducted such
that the resulting data will be acceptable for use in InnoRx&#146;s regulatory filings, and
to InnoRx&#146;s knowledge, there is nothing included in such data currently in existence
that would cause any regulatory submission to be disallowed or delayed or that would
indicate that the relevant product will not perform as intended or be suitable for its
intended purposes and efficacy levels.


<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="left">(b)&nbsp;&nbsp;</TD>
    <TD>Section&nbsp;3.11 of the InnoRx Disclosure Schedule contains a complete and accurate list of
each Governmental Authorization (as defined below) that is held by InnoRx or that otherwise
relates to the business of, or to any of the assets owned or used by, InnoRx.
&#147;<B>Governmental Authorization</B>&#148; shall mean any approval, consent, license, permit, waiver, or
other permission or authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal Requirement. Each
Governmental Authorization listed or required to be listed in Section&nbsp;3.11 of the InnoRx
Disclosure Schedule is valid and in full force and effect. Except as set forth in Section
3.11 of the InnoRx Disclosure Schedule:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) InnoRx is, and at all times has been, in full compliance with all of the terms
and requirements of each Governmental Authorization identified or required to be
identified in Section&nbsp;3.11 of the InnoRx Disclosure Schedule, except for such
non-compliance as would not have an InnoRx Material Adverse Effect;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To InnoRx&#146;s knowledge, no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A)&nbsp;constitute or could reasonably be expected
to
result directly or indirectly in a violation of or a failure to comply with any
term or requirement of any Governmental Authorization listed or required to be listed in
Section&nbsp;3.11 of the InnoRx Disclosure Schedule, or (B)&nbsp;result directly or indirectly in
the revocation, withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization listed or required to be listed in
Section&nbsp;3.11 of the InnoRx Disclosure Schedule;


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<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) InnoRx has not received, at any time, any notice or other communication
(whether oral or written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible, or potential violation of or failure to comply with any
term or requirement of any Governmental Authorization, or (B)&nbsp;any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation, termination of,
or modification to any Governmental Authorization; and



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) all applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Section&nbsp;3.11 of the
InnoRx Disclosure Schedule have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with respect to
such Governmental Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.


<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="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Governmental Authorizations listed in Section&nbsp;3.11 of the InnoRx Disclosure Schedule
collectively constitute all of the Governmental Authorizations necessary to permit InnoRx to
lawfully conduct and operate its businesses in the manner it currently conducts and operates such
businesses and to permit InnoRx to own and use its assets in the manner in which it currently owns
and uses such assets, except for those the absence of which would not cause an InnoRx Material
Adverse Effect.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.12 </B><U><B>Legal Proceedings; Orders</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;3.12 of the InnoRx Disclosure Schedule, there is no
pending Proceeding (as defined below):</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) that has been commenced by or against InnoRx or that, to InnoRx&#146;s knowledge,
otherwise relates to or could reasonably be expected to materially adversely affect the
business of, or any of the assets owned or used by, InnoRx; or



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) that challenges, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions.


<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="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>To the knowledge of InnoRx, (1)&nbsp;no such Proceeding has been threatened, and (2)&nbsp;no event has
occurred or circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding. &#147;<B>Proceeding</B>&#148; shall mean any action, arbitration,
audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Body or arbitrator.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;3.12 of the InnoRx Disclosure Schedule:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) there is no Order to which InnoRx, or any of the assets owned or used by
InnoRx, is subject;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to the knowledge of InnoRx, no Stockholder is subject to any Order that
relates to the business of, or any of the assets owned or used by, InnoRx; and



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) no officer, director, agent, or employee of InnoRx is subject to any Order
that prohibits such officer, director, agent, or employee from engaging in or continuing
any conduct, activity, or practice relating to the business of InnoRx.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.13 </B><U><B>Absence Of Certain Changes And Events</B></U><B>. </B>Except as set forth in Section&nbsp;3.13 of
the InnoRx Disclosure Schedule, since November&nbsp;30, 2004 InnoRx has conducted its business only in
the Ordinary Course of Business and there has not been any:


<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="left">(a)&nbsp;&nbsp;</TD>
    <TD>change in InnoRx&#146;s authorized or issued capital stock; grant of any stock option or
right to purchase shares of capital stock of InnoRx; issuance of any security convertible
into such capital stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by InnoRx of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in respect of
shares of capital stock;</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">(b)&nbsp;amendment to the Organizational Documents of InnoRx;



<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="left">(c)&nbsp;&nbsp;</TD>
    <TD>payment or increase by InnoRx of any bonuses, salaries, or other compensation to any
stockholder, director, officer, employee or agent or entry into any employment, severance,
consulting or similar Contract with any director, officer, employee or agent;</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="left">(d)&nbsp;&nbsp;</TD>
    <TD>adoption of, or increase in the payments to or benefits under, any profit sharing,
bonus, deferred compensation, savings, insurance, pension, retirement, or other arrangement
or employee benefit plan for or with any directors, officers, employees or agents of
InnoRx;</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="left">(e)&nbsp;&nbsp;</TD>
    <TD>damage to or destruction or loss of any asset or property of InnoRx, whether or not
covered by insurance, which would have an InnoRx Material Adverse Effect;</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="left">(f)&nbsp;&nbsp;</TD>
    <TD>entry into, termination of, or receipt of notice of termination of (i)&nbsp;any license,
distributorship, dealer, sales representative, joint venture, credit, or similar agreement,
or (ii)&nbsp;any Contract or transaction involving a total remaining commitment by or to InnoRx
of at least $20,000;</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="left">(g)&nbsp;&nbsp;</TD>
    <TD>sale, lease, or other disposition of any asset or property of InnoRx or mortgage,
pledge, or imposition of any lien or other encumbrance on any material asset or property of
InnoRx, including the sale, lease, or other disposition of any of the Intellectual Property
Assets;</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="left">(h)&nbsp;&nbsp;</TD>
    <TD>cancellation or waiver of any claims or rights with a value to InnoRx in excess of
$20,000;</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="left">(i)&nbsp;&nbsp;</TD>
    <TD>material change in the accounting methods used by InnoRx; or</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="left">(j)&nbsp;&nbsp;</TD>
    <TD>agreement, whether oral or written, by InnoRx to do any of the foregoing.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.14 </B><U><B>Contracts; No Defaults</B></U>.


<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="left">(a)&nbsp;&nbsp;</TD>
    <TD>Section&nbsp;3.14(a) of the InnoRx Disclosure Schedule contains a complete and accurate
list, and InnoRx has made available to SurModics true and complete copies, of:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Contract that involves performance of services or delivery of goods or
materials of an amount or value in excess of $20,000;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Contract that involves performance of services or delivery of goods or
materials by InnoRx of an amount or value in excess of $20,000;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Contract that was not entered into in the Ordinary Course of Business and
that involves expenditures or receipts of one or more company in excess of $20,000;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) each lease, rental or occupancy agreement, license, installment and
conditional sale agreement, and other Contract affecting the ownership of, leasing of,
title to, use of, or


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<P align="left" style="margin-left:3%; font-size: 10pt">any leasehold or other interest in, any real or personal property
(except personal property leases and installment and conditional sales agreements having
a value per item or aggregate payments of less than $20,000 and with terms of less than
one year);



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) each licensing agreement or other Contract with respect to patents, trademarks,
copyrights, or other intellectual property, including agreements with current or former
employees, consultants, or contractors regarding the appropriation or the non-disclosure
of any of the Intellectual Property Assets;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) each Contract containing covenants that in any way purport to restrict the
business activity of InnoRx or any affiliate entity of InnoRx or limit the freedom of
InnoRx or any affiliate entity of InnoRx to engage in any line of business or to compete
with any Person;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) each Contract providing for payments to or by any Person based on sales,
purchases, or profits, other than direct payments for goods;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) each power of attorney given by or on behalf of InnoRx that is currently
effective and outstanding;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) each Contract for capital expenditures in excess of $20,000;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) each written warranty, guaranty, and or other similar undertaking with respect
to contractual performance extended by InnoRx;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) each mortgage, promissory note, evidence of indebtedness, loan or credit
agreement or other obligation or instrument for money borrowed or amounts owed, written
or otherwise; and



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) each amendment, supplement, and modification (whether oral or written) in
respect of any of the foregoing.


<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="left">(b)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;3.14(b) of the InnoRx Disclosure Schedule:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) To the knowledge of InnoRx, no Stockholder (and no Related Person of any
Stockholder, defined below) has or may acquire any rights under, and no Stockholder has
or may become subject to any obligation or liability under, any Contract that relates to
the business of, or any of the assets owned or used by, InnoRx. As used herein,
&#147;<B>Related Person</B>&#148; shall mean (a)&nbsp;each individual who is, or who has at any time been, an
officer or director of InnoRx; (b)&nbsp;each member of the immediate family of each of the
individuals referred to in clause &#147;(a)&#148; above; and (c)&nbsp;any entity (other than InnoRx) in
which any one of the individuals referred to in clauses &#147;(a)&#148; or &#147;(b&#148;) above holds or
held (or in which more than one of such individuals collectively hold or held),
beneficially or otherwise, at least ten percent (10%) of the voting stock or other
proprietary or equity interest in such entity.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To the knowledge of InnoRx, no officer, director, agent, employee, consultant,
or contractor of InnoRx is bound by any Contract that purports to limit the ability of
such officer, director, agent, employee, consultant, or contractor to (A)&nbsp;engage in or
continue any conduct, activity, or practice relating to the business of InnoRx, or (B)
assign to InnoRx or to any other Person any rights to any invention, improvement, or
discovery.


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<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="left">(c)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;3.14(c) of the InnoRx Disclosure Schedule, each Contract
identified or required to be identified in Section&nbsp;3.14(a) of the InnoRx Disclosure
Schedule is in full force and effect and is valid and enforceable in accordance with its
terms.</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="left">(d)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;3.14(d) of the InnoRx Disclosure Schedule:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) InnoRx is, and at all times has been, in full compliance with all applicable
terms and requirements of each Contract under which InnoRx has or had any obligation or
liability or by which InnoRx or any of the assets owned or used by InnoRx is or was
bound, except for such non-compliance as would not have an InnoRx Material Adverse
Effect;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Each other Person that has or had any obligation or liability under any
Contract under which InnoRx has or had any rights is, and at all times has been, in full
compliance with all applicable terms and requirements of such Contract, except for such
non-compliance as would not have an InnoRx Material Adverse Effect;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) To InnoRx&#146;s knowledge, no event has occurred or circumstance exists that
(with or without notice or lapse of time) may contravene, conflict with, or result in a
material violation or breach of, or give InnoRx or other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Contract; and



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) InnoRx has not given to or received from any other Person, at any time, any
notice or other communication (whether oral or written) regarding any actual, alleged,
possible, or potential violation or breach of, or default under, any Contract.


<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="left">(e)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;3.14(e) of the InnoRx Disclosure Schedule, there are no
renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate any
material amounts paid or payable to InnoRx under current or completed Contracts with any
Person and no such Person has made written demand for such renegotiation.</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="left">(f)&nbsp;&nbsp;</TD>
    <TD>The Contracts relating to the sale, design, manufacture, or provision of products or
services by InnoRx have been entered into in the Ordinary Course of Business and have been
entered into without the commission of any act alone or in concert with any other Person,
or any consideration having been paid or promised, that is or would be in material
violation of any Legal Requirement.</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="left">(g)&nbsp;&nbsp;</TD>
    <TD>InnoRx does not own or have any Contract to acquire any equity securities or other
securities of any Person or any direct or indirect equity or ownership interest in any
other business.</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="left">(h)&nbsp;&nbsp;</TD>
    <TD>&#147;<B>Contract</B>&#148; shall mean any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally binding.</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="left">(i)&nbsp;&nbsp;</TD>
    <TD>Set forth in Section&nbsp;3.14(i) of the InnoRx Disclosure Schedule is a listing of all
material discussions with third parties, which discussions have not been terminated and
still have pending potential, relating to any of the technologies of InnoRx, which list
shall also provide a brief description of the status and dates of the discussions and the
parties involved.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.15 </B><U><B>Insurance</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>Section&nbsp;3.15(a) of the InnoRx Disclosure Schedule contains a complete and accurate list
of, and InnoRx has made available to SurModics true and complete copies of:</TD>
</TR>

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


</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) all policies of insurance to which InnoRx is a party or under which InnoRx, or
any director of InnoRx, is or has been covered at any time within the five (5)&nbsp;years
preceding the date of this Agreement; and



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) of all pending applications for policies of insurance.


<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="left">(b)&nbsp;&nbsp;</TD>
    <TD>Section&nbsp;3.15(b) of the InnoRx Disclosure Schedule describes:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any self-insurance arrangement by or affecting InnoRx, including any reserves
established thereunder;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any contract or arrangement, other than a policy of insurance, for the
transfer or sharing of any risk by InnoRx; and



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) all obligations of InnoRx to third parties with respect to insurance
(including such obligations under leases and service agreements) and identifies the
policy under which such coverage is provided.


<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="left">(c)&nbsp;&nbsp;</TD>
    <TD>Except as set forth on Section&nbsp;3.15(c) of the InnoRx Disclosure Schedule:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) All policies to which InnoRx is a party or that provide coverage to InnoRx, or
any director or officer of InnoRx are sufficient for compliance with all Legal
Requirements and Contracts to which InnoRx is a party or by which it is bound and do not
provide for any retrospective premium adjustment or other experienced-based liability on
the part of InnoRx.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) InnoRx has not received (A)&nbsp;any refusal of coverage or any notice that a
defense will be afforded with reservation of rights, or (B)&nbsp;any notice of cancellation
or, to InnoRx&#146;s knowledge, any other indication that any insurance policy is no longer
in full force or effect or will not be renewed or that the issuer of any policy is not
willing or able to perform its obligations thereunder.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) InnoRx has paid all premiums due, and have otherwise performed all of their
respective obligations, under each policy to which InnoRx is a party or that provides
coverage to InnoRx or director thereof.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) InnoRx has given notice to the applicable insurer of all claims that may be
insured thereby and Section&nbsp;3.15(c) of the InnoRx Disclosure Schedule describes each
claim, including the amount thereof and the resolution thereof, made by InnoRx during
the period since September&nbsp;30, 2003.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.16 </B><U><B>Environmental Matters</B></U><B>. </B>Except as set forth in Section&nbsp;3.16 of the InnoRx
Disclosure Schedule, InnoRx is, and at all times has been, in compliance with, and InnoRx has not
been and is not in violation of or liable under, any Environmental Law (as defined below), except
for such non-compliance, violation or liability as, individually or in the aggregate, would not
have an InnoRx Material Adverse Effect. To InnoRx&#146;s knowledge, there is no basis to expect, nor
has InnoRx or any other Person for whose conduct InnoRx is or may be held to be responsible
received, any actual or threatened Order, notice, or other communication from any Governmental Body
or private
citizen acting in the public interest of any actual or potential violation or failure to
comply with any Environmental Law, or of any actual or threatened obligation to undertake or bear
the cost of any liability relating to Environmental Law (as defined below) with respect to any
properties or assets (whether real, personal, or mixed) in which InnoRx has or had an interest, or
with respect to any property or facility at or to which Hazardous Materials (as defined below) were
generated, manufactured, refined, transferred, imported, used, or


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<P align="left" style="font-size: 10pt">processed by InnoRx or any other
Person for whose conduct it is responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or received.
&#147;<B>Environmental Law</B>&#148; shall mean any legal requirement that requires or relates 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="left">(a)&nbsp;&nbsp;</TD>
    <TD>advising appropriate authorities, employees, and the public of intended or actual
releases of pollutants or hazardous substances or materials, violations of discharge
limits, or other prohibitions and of the commencements of activities, such as resource
extraction or construction, that could have significant impact on the environment;</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>preventing or reducing to acceptable levels the release of pollutants or hazardous
substances or materials into the Environment;</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="left">(c)&nbsp;&nbsp;</TD>
    <TD>reducing the quantities, preventing the release, or minimizing the hazardous
characteristics of wastes that are generated;</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="left">(d)&nbsp;&nbsp;</TD>
    <TD>assuring that products are designed, formulated, packages, and used so that they do not
present unreasonable risks to human health or the environment when used or disposed of;</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="left">(e)&nbsp;&nbsp;</TD>
    <TD>cleaning up pollutants that have been released, preventing the threat of release, or
paying the costs of such clean up or prevention; or</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="left">(f)&nbsp;&nbsp;</TD>
    <TD>making responsible parties pay private parties, or groups of them, for damages done to
their health or the environment, or permitting self-appointed representatives of the public
interest to recover for injuries done to public assets. &#147;<B>Hazardous Materials</B>&#148; shall mean
any waste or other substance that is listed, defined, designated, or classified as, or
otherwise determined to be, hazardous, radioactive, or toxic or a pollutant or a
contaminant under or pursuant to any Environmental Law, including any admixture or solution
thereof, and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefore and asbestos or asbestos-containing materials.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.17 </B><U><B>Employees and Consultants</B></U><B>. </B>To InnoRx&#146;s knowledge, no employee, director, agent
or consultant of InnoRx is a party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality, noncompetition, or proprietary rights agreement (collectively,
&#147;<B>Proprietary Rights Agreement</B>&#148;), between such employee, director, agent or consultant and any other
Person that in any way adversely affects or will adversely affect (i)&nbsp;the performance of his duties
as an employee, director, agent or consultant of InnoRx, or (ii)&nbsp;the ability of InnoRx to conduct
its business, including any Proprietary Rights Agreement between InnoRx and any such employee,
director, agent or consultant. Section&nbsp;3.17 of the InnoRx Disclosure Schedule contains a complete
and accurate list of the name, title, current salary or compensation rate or each director,
officer, employee or consultant of InnoRx together with a summary of the bonuses, additional
compensation and other benefits, if any, paid or payable to such persons as of the date hereof or
in the future. There are no persons who have been offered employment or consulting with InnoRx
except as indicated in Section&nbsp;3.17 of the InnoRx Disclosure Schedule and the material terms of any
such offer of employment or consulting are set forth in such Section.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.18 </B><U><B>Intellectual Property</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD><U>Intellectual Property Assets</U> &#150; The term &#147;<B>Intellectual Property Assets</B>&#148; means:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) all actual and fictional business names, trading names, registered and
unregistered trademarks, service marks, and applications owned, used, or licensed by
InnoRx as licensee or licensor (collectively, &#147;<B>Marks</B>&#148;);


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<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) all patents, patent applications, and inventions and discoveries that may be
patentable owned, used, or licensed by InnoRx as licensee or licensor (collectively,
&#147;<B>Patents</B>&#148;);



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) all copyrights in both published works and unpublished works owned, used, or
licensed by InnoRx as licensee or licensor (collectively, &#147;<B>Copyrights</B>&#148;); and



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) all know-how, trade secrets, confidential information, software, technical
information, data, process technology, plans, drawings, and blue prints owned, used, or
licensed by InnoRx as licensee or licensor (collectively, &#147;<B>Trade Secrets</B>&#148;).


<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="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>All of the above Intellectual Property Assets are subject to the Contracts set forth in
Section&nbsp;3.18(b) of the InnoRx Disclosure Schedule.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD><U>Agreements</U> &#150; Section&nbsp;3.18(b) of the InnoRx Disclosure Schedule contains a
complete and accurate list of all Contracts relating to the Intellectual Property Assets to
which InnoRx is a party or by which InnoRx is bound as licensee or licensor and a complete
and accurate list of payment amounts due now or in the future from InnoRx under such
Contracts, including any currently outstanding amounts not yet due. There are no
outstanding and, to InnoRx&#146;s and the Stockholders&#146; knowledge, no threatened disputes or
disagreements with respect to any such Contract.</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="left">(c)&nbsp;&nbsp;</TD>
    <TD><U>Know-How Necessary for the Business</U>.</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) To the knowledge of InnoRx, the Intellectual Property Assets are all those
necessary for the operation of InnoRx&#146;s businesses as they are currently conducted and
as currently proposed to be conducted and for the manufacture, marketing, distribution,
use or sale of any current or proposed product or service of InnoRx. InnoRx is the
owner of all right, title, and interest in and to each of the Intellectual Property
Assets, free and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims, and has the right to use without payment to a third
party all of the Intellectual Property Assets, except as set forth in Section&nbsp;3.18(b) of
the InnoRx Disclosure Schedule. To the knowledge of InnoRx, neither the use of the
Intellectual Property Assets by InnoRx in the present or proposed conduct of its
business nor the manufacture, marketing, distribution, use or sale of any current or
proposed product or service of InnoRx infringes on the intellectual property rights of
any person.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Except as set forth in Section&nbsp;3.18(c) of the InnoRx Disclosure Schedule, all
former and current employees and consultants of InnoRx have executed written Contracts
with InnoRx that assign to InnoRx all rights to any inventions, improvements,
discoveries, or information relating to the business of InnoRx. To the knowledge of
InnoRx, no employee of InnoRx has entered into any Contract that restricts or limits in
any way the scope or type of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information concerning his work to anyone
other than InnoRx.


<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="left">(d)&nbsp;&nbsp;</TD>
    <TD><U>Patents</U>.</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Section&nbsp;3.18(d) of the InnoRx Disclosure Schedule contains a complete and
accurate list and summary description of all Patents (including all issued patents,
patent applications, provisional or otherwise, and invention disclosures), which
description also indicates which are owned by InnoRx and which are licensed to InnoRx.


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


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To InnoRx&#146;s knowledge, all of the issued Patents are currently in compliance
with formal legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), to InnoRx&#146;s knowledge, are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions falling due
within ninety days after the Closing Date.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) No Patent has been or is now involved in any interference, reissue,
reexamination, or opposition proceeding. Except as set forth in Section&nbsp;3.18(d) of the
InnoRx Disclosure Schedule, to InnoRx&#146;s knowledge, there is no potentially interfering
patent or patent application of any third party. To InnoRx&#146;s knowledge, no Patent is
infringed or has been challenged or threatened in any way.


<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="left">(e)&nbsp;&nbsp;</TD>
    <TD><U>Trademarks</U>.</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Section&nbsp;3.18(e) of the InnoRx Disclosure Schedule contains a complete and
accurate list and summary description of all Marks, including but not limited to the
name &#147;InnoRx.&#148;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To InnoRx&#146;s Knowledge, all Marks that have been registered with the United
States Patent and Trademark Office are currently in compliance with all formal legal
requirements (including the timely post-registration filing of affidavits of use and
incontestability and renewal applications), to InnoRx&#146;s knowledge, are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions falling due
within ninety (90)&nbsp;days after the Closing Date.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) No Mark has been or is now involved in any opposition, invalidation, or
cancellation and, to InnoRx&#146;s knowledge, no such action is threatened with the respect
to any of the Marks. To InnoRx&#146;s knowledge, there is no potentially interfering
trademark or trademark application of any third party. To InnoRx&#146;s knowledge, no Mark
is infringed or has been challenged or threatened in any way.


<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="left">(f)&nbsp;&nbsp;</TD>
    <TD><U>Copyrights</U>.</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Section&nbsp;3.18(f) of the InnoRx Disclosure Schedule contains a complete and
accurate list and summary description of all registered Copyrights.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To InnoRx&#146;s knowledge, all such registered Copyrights are currently in
compliance with formal legal requirements, to InnoRx&#146;s knowledge, are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions falling due
within ninety days after the Closing Date. To InnoRx&#146;s knowledge, no Copyright is
infringed or has been challenged or threatened in any way.


<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="left">(g)&nbsp;&nbsp;</TD>
    <TD><U>Trade Secrets</U>.</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) With respect to each significant Trade Secret, the documentation relating to
such Trade Secret is current, accurate, and sufficient in detail and content to identify
and explain it and to allow its full and proper use without reliance on the knowledge or
memory of any individual, and a brief description of each such significant Trade Secret
is set forth in Section&nbsp;3.18(g) of the InnoRx Disclosure Schedule. To InnoRx&#146;s
knowledge, InnoRx has taken all reasonable precautions to protect the secrecy,
confidentiality, and value of its Trade Secrets.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.19 </B><U><B>Certain Payments</B></U><B>. </B>Neither InnoRx nor any director, officer, or, to InnoRx&#146;s
knowledge, agent, employee or other Person associated with or acting for or on behalf of InnoRx,
has directly or indirectly (a)&nbsp;made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless of form, whether
in money, property, or services (i)&nbsp;to obtain favorable treatment in securing business, (ii)&nbsp;to pay
for favorable treatment for business secured, (iii)&nbsp;to obtain special concessions or for special
concessions already obtained, for or in respect of InnoRx or any affiliate of InnoRx, or (iv)&nbsp;in
each case in violation of any Legal Requirement, or (b)&nbsp;established or maintained any fund or asset
that has not been recorded in the books and records of InnoRx.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.20 </B><U><B>Brokers Or Finders</B></U><B>. </B>Neither InnoRx nor any of its agents has incurred any
obligation or liability of InnoRx, contingent or otherwise, for brokerage or finders&#146; fees or
agents&#146; commissions or other similar payment in connection with this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.21 </B><U><B>Tax-Free Merger Certifications</B></U><B>. </B>Solely for purposes of furthering SurModics&#146; and
InnoRx&#146;s mutual intention that the Merger together with the Second Merger qualify as a tax-free
reorganization pursuant to Section&nbsp;368 of the Code, to the knowledge of InnoRx:


<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="left">(a)&nbsp;&nbsp;</TD>
    <TD>the fair market value of SurModics Common Stock and other consideration received by
each Stockholder in the Merger will be approximately equal to the fair market value of
InnoRx Common Stock surrendered in the exchange;</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>the liabilities of InnoRx assumed by SurModics and the liabilities to which the
transferred assets of InnoRx are subject were incurred by InnoRx in the ordinary course of
its business;</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="left">(c)&nbsp;&nbsp;</TD>
    <TD>there is no intercorporate indebtedness existing between InnoRx and SurModics that was
issued, acquired or will be settled at a discount;</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="left">(d)&nbsp;&nbsp;</TD>
    <TD>InnoRx is not an investment company, as defined in Section&nbsp;368(a)(2)(F)(iii) and (iv)
of the Code;</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="left">(e)&nbsp;&nbsp;</TD>
    <TD>the fair market value of the assets of InnoRx transferred to SurModics will equal or
exceed the sum of the liabilities assumed by SurModics plus the amount of liabilities, if
any, to which the transferred assets are subject; and</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="left">(f)&nbsp;&nbsp;</TD>
    <TD>None of the amounts received by any Stockholder in connection with any employment
agreement, any covenant not to compete, any lease, any license or any other agreement or
arrangement relating to the performance of services or transfer or use of property (other
than the transfer or conversion of shares of InnoRx stock pursuant to the Merger) will be
separate consideration for, or allocable to, the transfer or conversion of any of his or
her shares of InnoRx stock pursuant to the Merger; none of the shares of SurModics Common
Stock received by any such Stockholder pursuant to the Merger will be separate
consideration for, or allocable to, any
employment agreement, any covenant not to compete, any lease, any license or any other
agreement or arrangement relating to the performance of services or transfer or use of
property (other than the transfer or conversion of shares of InnoRx stock pursuant to the
Merger); and the amounts paid to any such Stockholder (other than payments constituting
Merger Consideration) will be for or with respect to services actually rendered or property
actually acquired or used and will be commensurate with amounts paid to third parties
bargaining at arm&#146;s length for similar services or property.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.22 </B><U><B>Disclosure</B></U><B>. </B>The representations and warranties of InnoRx contained in this
Article&nbsp;III do not contain any untrue statement of a material fact and do not omit to state any
material fact necessary to make such representations and warranties, in light of the circumstances
under which they were made, not misleading.


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

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


<DIV align="center" style="font-size: 10pt"><U><B>REPRESENTATIONS AND WARRANTIES OF SURMODICS AND MERGER SUB</B></U></DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SurModics and the Merger Sub represent and warrant to InnoRx that the statements contained in
this Article&nbsp;IV are true and correct, except as set forth in the disclosure schedule delivered by
SurModics to InnoRx on or before the date of this Agreement (the &#147;<B>SurModics Disclosure Schedule</B>&#148;).
SurModics Disclosure Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article&nbsp;IV. Disclosure in any paragraph of SurModics
Disclosure Schedule shall constitute disclosure for other sections of this Article&nbsp;IV where the
applicability of such disclosure to such other section is obvious. Whenever the term &#147;to
SurModics&#146; knowledge,&#148; &#147;SurModics is not aware&#148; or a similar expression appears in any
representation or warranty in this Article&nbsp;IV, it means either to the actual knowledge of Bruce J.
Barclay or Philip D. Ankeny or that which a prudent individual in the position of such persons
should be expected to discover or otherwise become aware of in the course of conducting a
reasonable investigation concerning the existence of such fact or other matter. Whenever the term
&#147;SurModics has received no notice&#148; or like expression appears in any representation or warranty in
this Article&nbsp;IV, it means that none of such persons has received actual oral or written notice of
the matter to which such term is applied. Unless otherwise expressly stated or indicated by the
context, when used here, the term &#147;<B>SurModics</B>&#148; refers to SurModics and its Subsidiaries on a
consolidated basis, and the term &#147;<B>SurModics Material Adverse Effect</B>&#148; shall mean any event, change,
circumstance, condition or effect that has or is reasonably likely to have a materially adverse
effect on the business, operations, assets, properties, results of operations or financial
condition of SurModics considered as a whole; provided, however, any adverse event, change,
circumstance, condition or effect in the industries in which SurModics operates, or in the economy
generally, that do not affect SurModics disproportionately more than other companies, and any that
result from the Contemplated Transactions, shall not be deemed to constitute, and shall not be
taken into account in determining whether there has been, or is reasonably likely to be, a
SurModics Material Adverse Effect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.1 </B><U><B>Organization And Good Standing</B></U><B>. </B>Each of SurModics and Merger Sub is a corporation
duly organized validly existing and in good standing under the laws of the state of jurisdiction of
incorporation, with full corporate power and authority to conduct its business as it is now being
conducted and to own or use the properties and assets that it purports to own or use, and is duly
qualified and in good standing under the laws of each state or other jurisdiction in which either
the ownership or use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except where the failure to so qualify would not have
a SurModics Material Adverse Effect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.2 </B><U><B>Authority; No Conflict</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>This Agreement constitutes the legal, valid, and binding obligation of SurModics,
enforceable against SurModics in accordance with its terms. Upon the execution and
delivery by SurModics of the Escrow Agreement, the Registration Rights Agreement and the
Consulting Agreements (collectively, the &#147;<B>SurModics&#146; Closing Documents</B>&#148;), SurModics&#146;
Closing Documents will constitute the legal, valid, and binding obligations of SurModics,
enforceable against SurModics in accordance with their respective terms except as
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting creditors generally. SurModics has the absolute
and unrestricted right, power, and authority to execute and deliver this Agreement and
SurModics&#146; Closing Documents and to perform its obligations under this Agreement and
SurModics&#146; Closing Documents. The execution and delivery by SurModics of this Agreement
and the SurModics&#146; Closing Documents and the consummation of the
</TD>
</TR>
</TABLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">

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

</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="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>transactions contemplated
hereby and thereby have been duly and validly authorized and approved by SurModics&#146; board
of directors and no other corporate proceedings on the part of SurModics are necessary to
authorize this Agreement and the SurModics&#146; Closing Documents or the transactions
contemplated hereby or thereby.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in Section&nbsp;4.2 of SurModics Disclosure Schedule, neither the
execution and delivery of this Agreement by SurModics nor the consummation or performance
of any of the Contemplated Transactions by SurModics will give any Person the right to
prevent, delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any provision of SurModics&#146; Organizational Documents;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any resolution adopted by the board of directors or the stockholders of
SurModics;



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) any Legal Requirement or Order to which SurModics may be subject except those
that, individually or in the aggregate, would not have, or be reasonably likely to have,
a SurModics Material Adverse Effect; or



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) any Contract to which SurModics is a party or by which SurModics may be bound.



<P align="left" style="margin-left:3%; font-size: 10pt">Except as set forth in Section&nbsp;4.2 of SurModics Disclosure Schedule, SurModics is not
and will not be required to obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of any of
the Contemplated Transactions.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.3 </B><U><B>Certain Proceedings</B></U><B>. </B>There is no pending Proceeding that has been commenced
against SurModics and that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions. To SurModics&#146;
knowledge, no such Proceeding has been threatened.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.4 </B><U><B>SurModics Subsidiaries; Merger Sub Common Stock</B></U><B>. </B>SurModics owns, beneficially and
of record, all of the issued and outstanding shares of Merger Sub, all of which are validly issued
and outstanding, fully paid and nonassessable, free and clear of all liens and encumbrances.
SurModics has taken all such actions as may be required in its capacity as the sole stockholder of
Merger Sub to authorize the Contemplated Transactions.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.5 </B><U><B>SurModics SEC Filings</B></U><B>. </B>SurModics has filed all forms, reports and documents
required to be filed by SurModics with the SEC or furnished by SurModics to the SEC since September
30, 2004, and has made available to InnoRx all such forms, reports and documents in the form filed
with or furnished to the SEC. All such required forms, reports and documents are referred to
herein as the &#147;<B>SurModics SEC Reports</B>.&#148; As of their respective dates, SurModics SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations thereunder, and (ii)&nbsp;did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial statements contained in
SurModics SEC Reports, together with the notes thereto, have been prepared in accordance with GAAP
consistently applied throughout the periods indicated (except as may be indicated in the notes
thereto, or, in the case of the unaudited financial statements, as permitted by Form 10-Q), and
present fairly the consolidated financial condition of SurModics at their respective dates and the
consolidated results of operations and cash flows of SurModics for the periods then ended. The


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<P align="left" style="font-size: 10pt">consolidated balance sheet of SurModics contained in SurModics&#146; Form 10-K for the year ended
September&nbsp;30, 2004, as included in SurModics SEC Reports, is herein referred to as the &#147;<B>SurModics
Balance Sheet</B>&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.6 </B><U><B>No Undisclosed Liabilities</B></U><B>. </B>Neither SurModics nor any of its Subsidiaries has
obligations or liabilities of any material nature (matured or unmatured, fixed or contingent) other
than (i)&nbsp;as disclosed in the SurModics SEC Reports or in the Disclosure Document (defined below)
referenced in Section&nbsp;5.1(b) or as set forth or adequately provided for in SurModics Balance Sheet,
(ii)&nbsp;those incurred in the Ordinary Course of Business and not required to be set forth in
SurModics Balance Sheet under GAAP, (iii)&nbsp;those incurred in the Ordinary Course of Business since
the date of SurModics Balance Sheet and consistent with past practice, (iv)&nbsp;those incurred in
connection with the execution of this Agreement, and (v)&nbsp;those, if not set forth or adequately
provided for in SurModics Balance Sheet, as would not have a SurModics Material Adverse Effect on
SurModics.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.7 </B><U><B>No Material Adverse Effect</B></U><B>. </B>Since the date of SurModics Balance Sheet, there has
been no SurModics Material Adverse Effect not disclosed in the SurModics SEC Reports or the
Disclosure Document (defined below).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.8 </B><U><B>Financing; Issuance of SurModics Common Stock</B></U><B>. </B>SurModics has a sufficient number
of shares of authorized but unissued shares of SurModics Common Stock to allow it to issue all
shares of SurModics Common Stock required to be issued or reserved for issuance pursuant to
Sections&nbsp;2.1 and 2.3, which upon issuance will be validly issued, fully paid and nonassessable.
SurModics has sufficient cash on hand or committed financing to make the cash payments required
pursuant to Section&nbsp;2.1.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.9 </B><U><B>Tax-Free Certifications</B></U><B>. </B>Solely for purposes of furthering SurModics&#146; and
InnoRx&#146;s mutual intention that the Merger together with the Second Merger qualify as a tax-free
reorganization pursuant to Section&nbsp;368 of the Code, to the knowledge of SurModics:


<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="left">(a)&nbsp;&nbsp;</TD>
    <TD>the fair market value of the SurModics Common Stock and other consideration received by
each Stockholder will be approximately equal to the fair market value of the InnoRx stock
surrendered in the exchange;</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>Neither SurModics nor any person related to SurModics (within the meaning of Treasury
regulation Section&nbsp;1.368-1(e)(3)) has a plan or intention to purchase, redeem or otherwise
acquire any of the SurModics Common Stock issued to the Stockholders in the Merger either
directly or through any transaction, agreement, or arrangement with any other person. For
purposes of this representation, (i)&nbsp;fractional share interests deemed issued and redeemed,
(ii)&nbsp;repurchases in the
ordinary course of business of unvested shares, if any, acquired from terminating employees
or consultants of SurModics or InnoRx, and (iii)&nbsp;repurchases in the open market pursuant to
an ongoing stock repurchase program which was not created or modified in connection with a
plan or intent formed subsequent to the initiation of negotiations concerning the Merger and
for which there is a reasonable business purpose, will be disregarded;</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="left">(c)&nbsp;&nbsp;</TD>
    <TD>SurModics has no plan or intention to sell or otherwise dispose of any of the assets of
InnoRx acquired in the transaction, except for dispositions made in the ordinary course of
business or transfers described in Section&nbsp;368(a)(2)(C) of the Code;</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="left">(d)&nbsp;&nbsp;</TD>
    <TD>Following the transaction, SurModics will continue the historic business of InnoRx or
use a significant portion of InnoRx&#146;s historic business assets in a business within the
meaning of Treasury Regulation&nbsp;Section&nbsp;1.368-1(d);</TD>
</TR>


</TABLE>
<P align="center" style="font-size: 10pt">-28-
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</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>

<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="left">(e)&nbsp;&nbsp;</TD>
    <TD>There is no intercorporate indebtedness existing between InnoRx and SurModics that was
issued, acquired or will be settled at a discount;</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="left">(f)&nbsp;&nbsp;</TD>
    <TD>SurModics is not an investment company, as defined in Section&nbsp;368(a)(2)(F)(iii) and
(iv)&nbsp;of the Code;</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="left">(g)&nbsp;&nbsp;</TD>
    <TD>the fair market value of the assets of InnoRx transferred to SurModics will equal or
exceed the sum of the liabilities assumed by SurModics plus the amount of liabilities, if
any, to which the transferred assets are subject;</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="left">(h)&nbsp;&nbsp;</TD>
    <TD>None of the amounts received by any Stockholder in connection with any employment
agreement, any covenant not to compete, any lease, any license or any other agreement or
arrangement relating to the performance of services or transfer or use of property (other
than the transfer or conversion of shares of InnoRx stock pursuant to the Merger) will be
separate consideration for, or allocable to, the transfer or conversion of any of his or
her shares of InnoRx stock pursuant to the Merger; none of the shares of SurModics Common
Stock received by any such Stockholder pursuant to the Merger will be separate
consideration for, or allocable to, any employment agreement, any covenant not to compete,
any lease, any license or any other agreement or arrangement relating to the performance of
services or transfer or use of property (other than the transfer or conversion of shares of
InnoRx stock pursuant to the Merger); and the amounts paid to any such Stockholder (other
than payments constituting Merger Consideration) will be for or with respect to services
actually rendered or property actually acquired or used and will be commensurate with
amounts paid to third parties bargaining at arm&#146;s length for similar services or property.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.10 </B><U><B>Disclosure</B></U><B>. </B>The representations and warranties of SurModics contained in this
Article&nbsp;IV do not contain any untrue statement of a material fact and do not omit to state any
material fact necessary to make such representations and warranties, in light of the circumstances
under which they were made, not misleading.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.11 </B><U><B>No Brokers Or Finders</B></U><B>. </B>Neither SurModics nor the Merger Sub nor any of their
respective employees or agents has incurred any obligation or liability of SurModics, contingent or
otherwise, for brokerage or finders&#146; fees or agents&#146; commissions or other similar payment in
connection with this Agreement, other than SurModic&#146;s obligation to Greene Holcomb &#038; Fisher, LLC.


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


<DIV align="center" style="font-size: 10pt"><U><B>ADDITIONAL AGREEMENTS</B></U></DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.1 </B><U><B>Registration Statement; Disclosure Document</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD><U>Registration Statement</U>. Within sixty (60)&nbsp;days of the Effective Time of the
Merger, SurModics will prepare and file with the SEC a registration statement on Form S-3
(&#147;<B>Registration Statement</B>&#148;) covering all shares of SurModics Common Stock issuable pursuant
to Sections&nbsp;2.1 and 2.3. SurModics will respond to any comments of the SEC and will use
its commercially reasonable efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing; provided, however,
that no Stockholders will be eligible to sell any securities based upon such Registration
Statement until 180&nbsp;days have passed since the Effective Time of the Merger. SurModics&#146;
and the Stockholders&#146; respective rights and obligations with respect to the Registration
Statement, including volume limitations on a Stockholder&#146;s sales pursuant to such
Registration Statement and SurModics&#146; right to suspend the use thereof from time to time,
are more fully set forth in the Registration Rights Agreement (&#147;<B>Registration Rights
Agreement</B>&#148;) included as <U><B><I>Exhibit&nbsp;B</I></B></U> to this Agreement.</TD>
</TR>


</TABLE>
<P align="center" style="font-size: 10pt">-29-
</DIV>

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


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


</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="left">(b)&nbsp;&nbsp;</TD>
    <TD><U>Disclosure Document</U>. SurModics and InnoRx shall prepare jointly a disclosure
document (the &#147;<B>Disclosure Document</B>&#148;) for delivery to the Stockholders containing or
incorporating by reference information with respect to InnoRx&#146;s business and operations,
SurModics&#146; business and operations, the Contemplated Transactions and the rights of the
DGCL. Such Disclosure Document will be provided to the Stockholders in connection with
obtaining their written consent of this Agreement and the Merger. Each party shall be
responsible for, and it shall be such party&#146;s obligation to ensure, the completeness and
accuracy of the information set forth or incorporated by reference in the Disclosure
Document only as to and with respect to information relating to such party and, in the case
of InnoRx, the rights of the Stockholders under the DGCL.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.2 </B><U><B>Termination of All Series&nbsp;A Investment Agreements</B></U><B>. </B>SurModics and InnoRx agree
that all agreements, certificates and written instruments of every kind delivered by the parties
that relates to the closing of the Series&nbsp;A Preferred Stock investment by SurModics and InnoRx,
including without limitation that certain Series&nbsp;A Stock Purchase Agreement dated as of January&nbsp;26,
2004 by and among InnoRx, Inc. and the Investors as defined therein, shall be cancelled and
terminated, and shall be of no further force and effect, from and after the Closing Date.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.3 </B><U><B>Covenants as to Post-Closing Tax Matters</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD><U>Tax Returns</U>. For any Tax Return of InnoRx due after the Closing Date,
SurModics shall timely prepare and file with the appropriate tax authorities all Tax
Returns required to be filed. All such Tax Returns shall be prepared on a basis consistent
with past practice unless otherwise required by applicable law.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD><U>Cooperation</U>. Each of the Stockholders, the Stockholders&#146; Representative and
SurModics shall reasonably cooperate, and shall cause their respective Affiliates,
officers, employees, agents, auditors and representatives reasonably to cooperate, in
preparing and filing all Tax Returns, including maintaining and making available to each
other all records necessary in connection with taxes, and in resolving all tax claims with
respect to all taxable periods.</TD>
</TR>

</TABLE>

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


<DIV align="center" style="font-size: 10pt"><U><B>INDEMNIFICATION; REMEDIES</B></U></DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.1 </B><U><B>Survival; Right To Indemnification Not Affected By Knowledge</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>Except as set forth in the next sentence, all representations and warranties of each
party shall survive the Closing and any investigation at any time made by or on behalf of
the other party for a period ending on the 30-month anniversary of the Effective Time (the
&#147;<B>Cutoff Date</B>&#148;). All such representations and warranties shall expire on the Cutoff Date,
except that (a)&nbsp;claims, if any, asserted in writing prior to such Cutoff Date, identified
in the case of a claim by SurModics as a claim for indemnification pursuant to this Article
VI shall survive until finally resolved and satisfied in full, and (b)&nbsp;claims, if any,
which are based upon fraud shall survive for the full period of the applicable statute of
limitations and, if timely asserted during such limitations period, until finally resolved
and satisfied in full. No claim, lawsuit or other proceeding arising out of or related to
the breach of any representation or warranty contained in this Agreement may be made by any
party unless notice of such claim, lawsuit or other proceeding is given to the other
parties prior to the Cutoff Date. Notwithstanding anything to the contrary, each of the
party&#146;s ability to assert fraud claims against the other or to assert claims to reduce or
recover any Merger Consideration based upon fraud as determined by a court or other
tribunal in accordance with Section&nbsp;7.17 of this Agreement is hereby authorized and agreed
to and such right shall not in any way be limited by any of the limitations, restrictions
or terms of this Agreement. All other covenants and agreements contained herein shall
survive until fully performed in accordance with their terms.</TD>
</TR>


</TABLE>
<P align="center" style="font-size: 10pt">-30-
</DIV>

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


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


</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>The right to indemnification or payment for Damages (as defined in Section&nbsp;6.2) or
other remedy based on such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution and delivery
of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant, or obligation. For purposes
of this Article&nbsp;VI, any limitation based on materiality or the realization of an InnoRx
Material Adverse Effect contained in any representation, warranty, covenant or obligation
shall be ignored as if such limitation were not included therein, it being the intent of
the parties that contingencies, liabilities, conditions, events or circumstances that would
be considered immaterial or without an InnoRx Material Adverse Effect for purposes of the
representation, warranty, covenant or obligation in question shall nevertheless be taken
into account for purposes of the calculation of the Threshold Amount and Deductible Amount
(each as defined in Section&nbsp;6.4<B>)</B>.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.2 </B><U><B>Indemnification by the Stockholders and Payment of Damages</B></U><B>. </B>Subject to the
provisions of this Article&nbsp;VI, solely through reduction of Milestone Payments as and to the maximum
extent set forth in Section&nbsp;6.3 and provided that an indemnification claim is properly asserted on
or before the Cutoff Date in accordance with Section&nbsp;6.1(a), SurModics, the Surviving Corporation,
and their respective successors, officers, directors, stockholders and affiliates (collectively,
the &#147;<B>SurModics Indemnitees</B>&#148;) shall be indemnified and held harmless from, against and in respect
of, any demand, loss, liability, claim, damage, expense, cost (including costs of investigation and
defense and reasonable attorneys&#146; fees), fine, action, suit, judgment or diminution of value,
whether or not involving a third-party claim, each to the extent incurred (collectively, &#147;<B>Damages</B>&#148;)
by a SurModics Indemnitee, arising, directly or indirectly, from:


<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="left">(a)&nbsp;&nbsp;</TD>
    <TD>any inaccuracy or breach of any representation or warranty made by InnoRx or any
Stockholder in this Agreement, the InnoRx Disclosure Schedule, the Letters of Transmittal,
or any other certificate or document delivered by InnoRx or any Stockholder pursuant to
this Agreement;</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>any breach by InnoRx or any Stockholder of any covenant or obligation of InnoRx or such
Stockholder in this Agreement, the Letters of Transmittal, or any agreement or document
delivered by InnoRx or any Stockholder in connection with this Agreement; or</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="left">(c)&nbsp;&nbsp;</TD>
    <TD>any action, suit, proceedings, claim or demand by any third party alleging any of the
foregoing.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Closing occurs, the remedies provided in this Section&nbsp;6.2 will be the exclusive
remedies that may be available to SurModics or the other SurModics Indemnitees, except with respect
to claims based upon fraud. To the extent any Stockholder is or may be entitled, under certificate
of incorporation, bylaws, contract or otherwise, to indemnification, contribution, advancement of
expenses, or similar payment (collectively, &#147;<B>Indemnification</B>&#148;) from InnoRx (or its successors) as a
result of any activities of such Stockholder occurring at or prior to the Effective Time, such
right to such Indemnification is hereby waived and shall have no further force or effect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.3 </B><U><B>Set-Off Procedures; Maximum Set-Off Amount</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>If, prior to the issuance of stock pursuant to a Milestone Payment, SurModics has
notified the Stockholders&#146; Representative in writing in accordance with Section&nbsp;6.5 of a
good faith indemnification claim for an amount of estimated Damages (based on a good faith
calculation of the value of such Damages), SurModics may, subject to Section&nbsp;6.3(b),
Section&nbsp;6.4 and Sections
</TD>
</TR>
</TABLE>
<P align="center" style="font-size: 10pt">-31-
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left"><FONT size="1">

</FONT></DIV>
<DIV align="left"><FONT size="1">

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

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

</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="left">&nbsp;&nbsp;</TD>
    <TD>6.5 and 6.6, cause to be issued to the escrow account (the
&#147;<B>Escrow</B>&#148; or the &#147;<B>Escrow Account</B>&#148;), subject to the terms of this Agreement and the escrow
agreement substantially in the form attached as <U><B><I>Exhibit&nbsp;C</I></B></U> (&#147;<B>Escrow Agreement</B>&#148;)
rather than to the Stockholders pursuant to the Milestone Payment, a number of shares of
SurModics Common Stock (the &#147;<B>Escrowed Shares</B>&#148;) with an aggregate value (using the Milestone
Date Stock Price (defined below) of such shares) equal to a good faith calculation of the
value of the aggregate Damages claimed in good faith (subject to the maximum set-off
amounts as provided in this Section&nbsp;6.3(b) and the limitations in Sections&nbsp;6.5 and 6.6)
less the Deductible Amount (if such Deductible Amount has not already been borne by
SurModics in connection with prior claims for Damages). The resolution of indemnification
claims for Damages from such Escrowed Shares and the resolution of any disputes concerning
the amount of SurModics Common Stock comprising a Milestone Payment that are to be properly
issued into Escrow will thereafter be made in accordance with the terms of Section&nbsp;7.17 of
this Agreement. The foregoing procedures shall be used with respect to subsequent claims
for Damages, provided that the Threshold Amount and Deductible Amount shall be given effect
on a cumulative basis and only on the first such instance of SurModics Common Stock being
issued into Escrow. Claims for Damages may only be satisfied from shares of SurModics
Common Stock that have been issued into Escrow pursuant to the Escrow Agreement.
&#147;<B>Milestone Date Stock Price</B>&#148; means the twenty (20)&nbsp;trading-day average closing price (such
closing price as reported by The Nasdaq Stock Market at the end of regular trading) of one
share of SurModics Common Stock calculated for the period ending on and including the sixth
business day after the date of achievement of the milestone against which a claim for
Damages is being made.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>The rights to indemnification or payment of Damages pursuant to Section&nbsp;6.2 shall be
limited to the amounts set forth below. SurModics&#146; right to issue SurModics Common Stock
into Escrow to cover a good faith indemnification claim for an amount of estimated Damages
(based on a good
faith calculation of the value of such Damages) pursuant to this Section&nbsp;6.3 of this
Agreement up to the applicable percentage as provided below of the Milestone Stock Number
applicable to a particular Milestone Payment that has not been paid prior to SurModics&#146;
assertion of its claim for Damages shall be limited by, and made in accordance with, the
following limitations:</TD>
</TR>

</TABLE>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="70%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&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="2"><B>Percentage of Milestone Stock</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Milestone</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number That May Be Subjected</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Milestone Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Stock Number</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>to Damage Claims</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">60,007 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</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:30px; text-indent:-15px">2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">60,007 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</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="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">60,007 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</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:30px; text-indent:-15px">4</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">60,007 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</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="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">120,015 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</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:30px; text-indent:-15px">6</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">120,015 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">61.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</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="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">120,015 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">61.5</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By way of example, if SurModics notifies the Stockholders&#146; Representative of
indemnification claims for aggregate Damages estimated to be Three Million Dollars ($3.0
million) after SurModics Common Stock for the achievement of the third milestone has been


<P align="center" style="font-size: 10pt">-32-
</DIV>

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


<P align="left" style="margin-left:3%; font-size: 10pt">issued but prior to the issuance required in connection with the achievement of the fourth
milestone, upon the achievement of the fourth milestone SurModics will be entitled to issue
into Escrow as Escrowed Shares pursuant to the Escrow Agreement rather than issuing such
number of shares to the Stockholders pursuant to the fourth milestone such number of
Escrowed Shares of SurModics Common Stock as equals $2.9 Million ($3.0 Million less the
Deductible Amount pursuant to Section&nbsp;6.4) divided by the Milestone Date Stock Price for the
fourth milestone. Up to 100% of the fourth milestone&#146;s Maximum Milestone Stock Number may
be issued into Escrow. If such 100% does not (using the Milestone Date Stock Price for the
fourth milestone) have a value of $2.9 Million, then SurModics can have any shortfall
covered by issuing into Escrow such number of shares from the fifth milestone, up to 90% of
such fifth milestone, or from any subsequent milestone (subject to the percentage limit
noted in the table above) as is equal to the shortfall divided by the Milestone Date Stock
Price for the fifth milestone (or the Milestone Date Stock Price for the subsequent
milestone if a subsequent milestone is used to satisfy such shortfall). Shares of SurModics
Common Stock issued into Escrow and made subject to the Escrow Agreement shall only be
available for the particular indemnification claims for Damages made prior to the
distribution of such Escrowed Shares from such escrow by SurModics pursuant to Sections&nbsp;6.2
and 6.3, and Escrowed Shares that have a fair market value in excess of the Damages actually
incurred upon resolution of a particular indemnification claim shall be released from the
Escrow Account in the manner provided in the Escrow Agreement.


<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="left">(c)&nbsp;&nbsp;</TD>
    <TD>The Stockholder Representative may dispute a claim by a SurModics Indemnitee for
Damages under this Article&nbsp;VI by providing written notice to SurModics within 30&nbsp;days after
the Stockholder Representative receives written notice of such claim from the SurModics
Indemnitee. In such event, SurModics and the Stockholder Representative will negotiate in
good faith to resolve such dispute for a period of 60&nbsp;days. If SurModics and the
Stockholder Representative
cannot resolve such dispute within such time period, then either party may submit the matter
to binding arbitration pursuant to Section&nbsp;7.17.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.4 </B><U><B>Limitations On Amount</B></U><B>. </B>For any claims for Damages made pursuant to Section&nbsp;6.2,
SurModics shall be entitled to set-off as provided in Section&nbsp;6.3 only in the event that the
aggregate cumulative amount of Damages under the current or past claims exceeds Two Hundred Fifty
Thousand Dollars ($250,000) (the &#147;<B>Threshold Amount</B>&#148;) and, once the Threshold Amount has been
reached or exceeded, SurModics shall be entitled to set-off as provided in Section&nbsp;6.3 only to the
extent that the aggregate cumulative amount of Damages under the current or past claims exceeds One
Hundred Thousand Dollars ($100,000) (the &#147;<B>Deductible Amount</B>&#148;). For clarification, it is understood
that the Threshold Amount and the Deductible Amount need be satisfied only on a cumulative basis as
measured against the cumulative Damages incurred and are not required to be satisfied on a per
claim basis or more than once on the cumulative basis.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.5 </B><U><B>Notice to Stockholders&#146; Representative and Escrow Agent</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>SurModics shall provide prompt written notice to the Stockholders&#146; Representative of
any claim, demand, assessment, action, suit or proceeding, whether oral or written,
specifying in reasonable detail the basis for claims for Damages, whether made by SurModics
or any third party that notifies SurModics of its claims; provided, however, that the
failure to promptly notify the Stockholders&#146; Representative of the commencement of such
indemnity claim will not affect SurModics&#146; rights under this Article&nbsp;VI except to the
extent that the Stockholders&#146; Representative is actually materially prejudiced by
SurModics&#146; failure to give such notice.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>The Stockholders&#146; Representative will have the exclusive right at the expense of the
Stockholders to assume the defense of claims for Damages, to settle such claims and to
otherwise fully perform
</TD>
</TR>
</TABLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">

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

</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="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>all obligations of the Stockholders&#146; Representative under and
pursuant to the Escrow Agreement; provided, however, that in connection with claims made by
third parties SurModics shall have the right to participate, at its own expense, with
respect to any such claim, action or proceeding and that no such claim, action or
proceeding shall be settled without the prior written consent of SurModics.</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="left">(c)&nbsp;&nbsp;</TD>
    <TD>Delivery by SurModics of SurModics Common Stock to the Escrow Account pursuant to the
Escrow Agreement in accordance with Section&nbsp;6.3 shall be deemed notice to the escrow agent,
of a claim for Damages in the amount of or exceeding the Escrowed Shares. The exercise of
such Section&nbsp;6.3 right of set-off by SurModics in good faith, whether or not ultimately
determined to be justified, will not constitute an event of default, nor shall it be deemed
a breach of any obligation of SurModics, under this Agreement. With respect to claims
based upon fraud or relating to title to any of InnoRx Common Stock, neither the exercise
of nor the failure to exercise such right of set-off will constitute an election of
remedies or limit SurModics in any manner in the enforcement of any other remedies that may
be available to it; nor will such claims be limited to the amount or extent of the Escrowed
Shares or the Milestone Payments.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.6 </B><U><B>Net Damages</B></U><B>. </B>All claims for indemnification of Damages incurred by any SurModics
Indemnitee will be decreased by (i)&nbsp;any proceeds of insurance actually received by such person with
respect to such claim and (ii)&nbsp;any tax benefit realized by such person resulting from the claim,
and will be increased by (i)&nbsp;any tax detriment suffered by such person resulting from the receipt
of any indemnification.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.7 </B><U><B>Right of Stockholders&#146; Representative to Milestone Payments.</B></U> Each of the parties
to this Agreement
understands, acknowledges and agrees that pursuant to the terms of the Stockholders&#146;
Representative Agreement and the Escrow Agreement, the Stockholders have authorized the creation of
a Stockholder Expense Account and the deposit by SurModics of $100,009.22 of the cash portion of
the Merger Consideration into the Stockholder Expense Account, which funds shall be used to satisfy
any indemnification rights of the Stockholders&#146; Representative pursuant to Section&nbsp;6 of the
Stockholders&#146; Representative Agreement and the payment of any expenses incurred by the
Stockholders&#146; Representative after the Effective Time pursuant to Section&nbsp;8 of Stockholders&#146;
Representative Agreement. If in the judgment of the Stockholders&#146; Representative there are at any
time insufficient funds in the Stockholder Expense Account for the satisfaction of all current and
reasonably foreseeable indemnification claims pursuant to Section&nbsp;6 of the Stockholders&#146;
Representative Agreement and expenses of the Stockholders&#146; Representative pursuant to Section&nbsp;8 of
the Stockholders&#146; Representative Agreement, the Stockholders&#146; Representative may direct, pursuant
to the terms and conditions of the Escrow Agreement, that Escrowed Shares be transferred into the
Stockholder Expense Account from the Escrow Account, to the extent that (a)&nbsp;the Escrow Account is
not then subject to any pending Claims (as such terms are defined in the Escrow Agreement), and (b)
funds remain available in the Escrow Account after satisfaction in full of any prior Claims (as
such terms are so defined) or may direct that all or a portion of any of the Milestone Payments to
be made by SurModics pursuant to this Agreement be transferred into the Stockholder Expense Account
to the extent that SurModics has not exercised its right to Escrow such Milestone Payment pursuant
to Section&nbsp;6.3 of this Agreement. The Stockholders will severally and not jointly, in proportion
to their respective ownership percentages reflected on Exhibit&nbsp;A hereto, indemnify and hold
harmless SurModics Indemnitees, without regard to or application of the Cutoff Date, the Threshold
Amount, the Deductible Amount, or any other restriction or limitation set forth in this Agreement
on such SurModics Indemnitees, against, and in respect of, any Damages, including claims by any
Stockholder or the Escrow Agent, arising out of or relating in any way to any actions or inactions
taken by the Stockholders&#146; Representative, any actions or inactions taken by SurModics at the
direction of the Stockholders&#146; Representative, or any expenses, charges, indemnifications or other
amounts claimed by the Escrow Agent relating to activities involving the Stockholder Expense
Account or the Stockholder Expense Fund.


<P align="center" style="font-size: 10pt">-34-
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<DIV style="font-family: 'Times New Roman',Times,serif">

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


<DIV align="center" style="font-size: 10pt"><U><B>GENERAL PROVISIONS</B></U></DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.1 </B><U><B>Expenses</B></U><B>. </B>Each party to this Agreement will bear its respective expenses incurred
in connection with the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of agents, representatives, counsel, and
accountants. SurModics will pay all such expenses of Merger Sub. InnoRx shall pay all such
expenses of InnoRx. In the event of termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from a breach of this
Agreement by another party.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.2 </B><U><B>Public Announcements</B></U><B>. </B>SurModics will use reasonable efforts to consult with
InnoRx prior to any public announcement or similar publicity with respect to this Agreement or the
Contemplated Transactions. Attached as <U><B><I>Exhibit&nbsp;D</I></B></U> is substantially the form of the press
release to be issued by SurModics announcing the consummation of the Merger. Unless consented to
by SurModics in advance or required by Legal Requirements, InnoRx shall keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any Person (other than
on a confidential basis to the Stockholders and any representatives of such Stockholders). InnoRx
and SurModics will consult with each other concerning the means by which InnoRx&#146;s employees,
customers, and suppliers and others having dealings with InnoRx will be informed of the
Contemplated Transactions, and SurModics will have the right to be present for any such
communication.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.3 </B><U><B>Notices</B></U><B>. </B>All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when received (or refused)
and (a)&nbsp;delivered by hand (with written confirmation of receipt), (b)&nbsp;sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by certified or registered mail,
postage prepaid and return receipt requested, or (c)&nbsp;if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a party may designate
by notice to the other parties):

<P><DIV style="position: relative; float: left; width: 15%">

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

</DIV>
<DIV style="position: relative; float: right; width: 84%">

<P align="left" style="font-size: 10pt">InnoRx:

<P align="left" style="font-size: 10pt; margin-left: 6%">InnoRx, Inc.<BR>
Attention: K.W. Michael Chambers<BR>
56 Joseph Street, Suite&nbsp;601<BR>
Mobile, AL 36602<BR>
Facsimile No.: 251-434-5768


<P align="left" style="font-size: 10pt">with a copy to:

<P align="left" style="font-size: 10pt; margin-left: 6%">Oppenheimer Wolff &#038; Donnelly LLP<BR>
Attention: Richard M. Bisanz, Esq.<BR>
Plaza VII, Suite&nbsp;3300<BR>
45 South Seventh Street<BR>
Minneapolis, MN 55402<BR>
Facsimile No.: 612-607-7100

</DIV>
<BR clear="all"><BR>

<P align="center" style="font-size: 10pt">-35-
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P><DIV style="position: relative; float: left; width: 15%">

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

</DIV>
<DIV style="position: relative; float: right; width: 84%">

<P align="left" style="font-size: 10pt">SurModics and Merger Sub:

<P align="left" style="font-size: 10pt; margin-left: 6%">SurModics, Inc.<BR>
Attention: Bruce J Barclay<BR>
9924 West 74<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Street<BR>
Eden Prairie, MN 55344<BR>
Facsimile No.: 952-829-2743


<P align="left" style="font-size: 10pt">with a copy to:

<P align="left" style="font-size: 10pt; margin-left: 6%">Fredrikson &#038; Byron, P.A.<BR>
Attention: David C. Grorud, Esq.<BR>
200 South Sixth Street, Suite&nbsp;4000<BR>
Minneapolis, MN 55402<BR>
Facsimile No.: 612-492-7077


<P align="left" style="font-size: 10pt">Stockholders&#146; Representative:

<P align="left" style="font-size: 10pt; margin-left: 6%">Dr.&nbsp;Eugene de Juan, Jr.<BR>
3707 Via Serrano<BR>
La Canada Flintridge, CA 91011-1859<BR>
Office Facsimile No.: 323-442-6519<BR>
Home Facsimile No.: 818-952-0939


<P align="left" style="font-size: 10pt">with a copy to:

<P align="left" style="font-size: 10pt; margin-left: 6%">Oppenheimer Wolff &#038; Donnelly LLP<BR>
Attention: Richard M. Bisanz, Esq.<BR>
Plaza VII, Suite&nbsp;3300<BR>
45 South Seventh Street<BR>
Minneapolis, MN 55402<BR>
Facsimile No.: 612-607-7100

</DIV>
<BR clear="all"><BR>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.4 </B><U><B>Jurisdiction; Service Of Process</B></U><B>. </B>It is expressly contemplated that the
provisions of Section&nbsp;7.17 shall be construed to limit and restrict the provisions of this Section
7.4, and that Section&nbsp;7.17 shall govern to the fullest extent appropriate to give full effect to
Section&nbsp;7.17 in the event of any conflicts between this Section&nbsp;7.4 and Section&nbsp;7.17. Subject to
the foregoing, any action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the parties in the courts of the State
of Minnesota, County of Hennepin, or, if it has or can acquire jurisdiction, in the United States
District Court for the District of Minnesota, and each of the parties consents to the non-exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the world. The
parties hereto irrevocably and unconditionally waive any objection to the laying of venue of any
action arising out of this Agreement or the Contemplated Transactions in (i)&nbsp;the Minnesota State
Courts or (ii)&nbsp;the United States District Court for the District of Minnesota, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any such court that any
such action brought in any such court has been brought in an inconvenient forum. Each of the
parties hereto irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort, or otherwise) arising out of or relating to this
Agreement, the Contemplated Transactions or the actions of the parties hereto in the negotiation,
administration, performance or enforcement hereof.


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

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.5 </B><U><B>Stockholders&#146; Representative</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>By adopting this Agreement and entering into the Stockholders&#146; Representative Agreement
in substantially the form of <B><I>Exhibit&nbsp;E </I></B>attached hereto (the &#147;<B>Stockholders&#146; Representative
Agreement</B>&#148;), the Stockholders hereby and thereby irrevocably constitute and appoint Dr.
Eugene de Juan, Jr. as the Stockholders&#146; Representative, effective as of the Effective
Time, for the purpose of performing and consummating the transactions contemplated by this
Agreement, the Escrow Agreement and the Registration Rights Agreement. The appointment of
such Stockholders&#146; Representative is coupled with an interest and all authority hereby
conferred shall be irrevocable and such Stockholders&#146; Representative is hereby authorized
and directed to perform and consummate all of the transactions contemplated to be performed
by the Stockholders by this Agreement, the Escrow Agreement and the Registration Rights
Agreement. Not by way of limiting the authority of the Stockholders&#146; Representative, each
and all of the Stockholders, by their adoption of this Agreement, for themselves and their
respective heirs, executors, administrators, successors and assigns hereby authorize the
Stockholders&#146; Representative to:</TD>
</TR>

</TABLE>


<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) effect any amendment to this Agreement, the Escrow Agreement or the
Registration Rights Agreement which the Stockholders&#146; Representative deems necessary or
desirable;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) execute and deliver on their behalf all documents and instruments which may be
executed and delivered pursuant to this Agreement, the Escrow Agreement or the
Registration Rights Agreement, except that the documents with respect to the transfer of
InnoRx Common Stock shall be personally executed by the Stockholders;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) make and receive notices and other communications pursuant to this Agreement,
the Escrow Agreement or the Registration Rights Agreement and service of process in any
legal action or other proceeding arising out of or related to this Agreement, the Escrow
Agreement or the Registration Rights Agreement or any of the transactions hereunder or
thereunder;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) defend, settle or compromise any dispute, claim, action, suit or proceeding
arising out of or related to this Agreement, the Escrow Agreement or the Registration
Rights Agreement or any of the transactions hereunder or thereunder, including, without
limitation, the calculation of the Merger Consideration or the defense, settlement or
compromise of any claim, action or proceeding for which SurModics has claimed that it is
entitled to indemnification or payment of Damages;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) pay expenses incurred or which may be incurred by or on behalf of the
Stockholders in connection with this Agreement, the Escrow Agreement or the Registration
Rights Agreement or any of the transactions hereunder or thereunder; and



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) take all action necessary or appropriate in connection with enforcing the
obligations of SurModics, Merger Sub and InnoRx to the Stockholders under this
Agreement, the Registration Rights Agreement and the Escrow Agreement and to take any
and all action necessary or appropriate in connection therewith.


<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="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of the death or disability of the Stockholders&#146; Representative, a majority
in interest of the remaining Stockholders shall promptly appoint a replacement. No person
serving as the Stockholders&#146; Representative under this Agreement shall have any personal
liability to any Stockholder or a Stockholder&#146;s permitted assigns or to SurModics, Merger
Sub or their affiliates,
</TD>
</TR>
</TABLE>
<P align="center" style="font-size: 10pt">-37-
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<DIV style="font-family: 'Times New Roman',Times,serif">

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

</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="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>with respect to any action taken, suffered or omitted by him
hereunder as a Stockholders&#146; Representative while acting in good faith and in the absence of
gross negligence or willful misconduct, and any act done, suffered or omitted pursuant to
the advice of counsel shall be deemed hereunder to have been done in good faith, except to
the extent that such person may have liability as a Stockholder hereunder. The other terms
and conditions of the appointment by the Stockholders of the Stockholders&#146; Representative
are set forth in the Stockholders&#146; Representative Agreement.</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>Any claim, action, suit, or other proceeding, whether through arbitration or through
court action and whether in law or equity, to enforce any right, benefit or remedy granted
to Stockholders under this Agreement or the Escrow Agreement or Registration Rights
Agreement shall be asserted, brought, prosecuted or maintained only by the Stockholders&#146;
Representative. The Stockholders shall be bound by any determination in favor of or
against the Stockholders&#146; Representative or the terms of any settlement or release to which
the Stockholders&#146; Representative shall become a party.</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="left">(c)&nbsp;&nbsp;</TD>
    <TD>Any notice given the Stockholders&#146; Representative will constitute notice to each and
all of the Stockholders at the time the notice is given to the Stockholders&#146;
Representative. Any action taken by, or instruction received from, the Stockholders&#146;
Representative will be deemed to be action be, or notice or instruction from, each and all
of the Stockholders. SurModics may, and
the Escrow Agent will, disregard any notice or instruction received directly from any of the
Stockholders other than the Stockholders&#146; Representative.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.6 </B><U><B>Further Assurances</B></U><B>. </B>The parties agree (a)&nbsp;to furnish upon request to each other
such further information, (b)&nbsp;to execute and deliver to each other such other documents, and (c)&nbsp;to
do such other acts and things, all as the other party may reasonably request for the purpose of
carrying out the intent of this Agreement and the documents referred to in this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.7 </B><U><B>Waiver</B></U><B>. </B>The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in exercising any right,
power, or privilege under this Agreement or the documents referred to in this Agreement will
operate as a waiver of such right, power, or privilege, and no single or partial exercise of any
such right, power, or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a)&nbsp;no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party; (b)&nbsp;no waiver that
may be given by a party will be applicable except in the specific instance for which it is given;
and (c)&nbsp;no notice to or demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.8 </B><U><B>Entire Agreement And Modification</B></U><B>. </B>This Agreement supersedes all prior agreements
between the parties with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not be amended except
by a written agreement executed by SurModics, InnoRx and the Stockholders&#146; Representative.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.9 </B><U><B>Disclosure Schedule</B></U><B>. </B>In the event of any inconsistency between the statements in
the body of this Agreement and those in the Disclosure Schedule (other than an exception expressly
set forth as such in the Disclosure Schedule with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement will control.


<P align="center" style="font-size: 10pt">-38-
</DIV>

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

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.10 </B><U><B>Assignments, Successors, And No Third-Party Rights</B></U><B>. </B>Neither SurModics nor InnoRx
may assign any of its rights under this Agreement without the prior consent of the other, except
that SurModics may assign all of its rights and obligations under this Agreement to any
wholly-owned subsidiary. This Agreement will apply to, be binding in all respects upon, and inure
to the benefit of the successors and assigns of the parties. Nothing expressed or referred to in
this Agreement will be construed to give any Person other than the parties to this Agreement any
legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. Except as expressly provided herein, this Agreement and all of its provisions
and conditions are for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns and it is not the intention of the parties hereto to confer third-party
beneficiary rights upon any other person. No person, other than the parties hereto, is entitled to
rely on any of the representations, warranties and agreements of the parties hereto contained in
this Agreement. The parties hereto assume no liability to any person, other than the parties
hereto, because of any reliance on the representations, warranties and agreements of the parties
contained in this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.11 </B><U><B>Severability</B></U><B>. </B>If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.12 </B><U><B>Section&nbsp;Headings, Construction</B></U><B>. </B>The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or interpretation. All
references to &#147;Section&#148; or &#147;Sections&#148; refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such gender or number as
the circumstances require. Unless otherwise expressly provided, the word &#147;including&#148; does not
limit the preceding words or terms.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.13 </B><U><B>Time Of Essence</B></U><B>. </B>With regard to all dates and time periods set forth or referred
to in this Agreement, time is of the essence.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.14 </B><U><B>Governing Law</B></U><B>. </B>This Agreement will be governed by the laws of the State of
Minnesota without regard to conflicts of laws principles.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.15 </B><U><B>Counterparts</B></U><B>. </B>This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.16 </B><U><B>Joint Preparation</B></U><B>. </B>This Agreement has been prepared and extensively negotiated
by parties hereto with the assistance and input of their respective attorneys, and therefore no
ambiguity herein shall be construed for or against any party based upon the identity of the author
of this Agreement or any portion hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.17 </B><U><B>Dispute Resolution</B></U><B>.</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="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>All disputes, claims, or controversies arising out of or relating to this Agreement, or
the negotiation, validity or performance hereof or the Contemplated Transactions, that are
not resolved by mutual agreement shall be resolved solely and exclusively by binding
arbitration to be conducted before the American Arbitration Association or its successor.
The parties understand and agree that this arbitration provision shall apply equally to
claims of fraud or fraud in the inducement. The arbitration shall be held in Minneapolis,
Minnesota, before a single arbitrator and shall be conducted in accordance with the rules
and regulations promulgated by American Arbitration Association unless specifically
modified herein.</TD>
</TR>


</TABLE>
<P align="center" style="font-size: 10pt">-39-
</DIV>

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


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


</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="left">(b)&nbsp;&nbsp;</TD>
    <TD>The parties covenant and agree that the arbitration shall commence within one hundred
twenty (120)&nbsp;days of the date on which a written demand for arbitration is filed by any
party hereto. In connection with the arbitration proceeding, the arbitrator shall have the
power to order the production of documents by each party and any third-party witnesses. In
addition, each party may take up to three (3)&nbsp;depositions as of right, and the arbitrator
may in his or her discretion allow additional depositions upon good cause shown by the
moving party. However, the arbitrator shall not have the power to order the answering of
interrogatories or the response to requests for admission. In connection with any
arbitration, each party shall provide to the other, no later than fourteen (14)&nbsp;business
days before the date of the arbitration, the identity of all persons that may testify at
the arbitration, a copy of all documents that may be introduced at the arbitration or
considered or used by a party&#146;s witness or expert, and a summary of the expert&#146;s opinions
and the basis for said opinions. The arbitrator&#146;s decision and award shall be made and
delivered within sixty (60)&nbsp;days of the conclusion of the arbitration. The arbitrator&#146;s
decision shall set forth a reasoned basis for any award of damages or finding of liability.
The arbitrator shall not have power to award damages in excess of actual compensatory
damages and shall not multiply actual damages or award punitive damages or any other
damages that are specifically
excluded under this Agreement, and each party hereby irrevocably waives any claim to such
damages.</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="left">(c)&nbsp;&nbsp;</TD>
    <TD>The parties covenant and agree that they will participate in the arbitration in good
faith. The parties shall bear their own attorneys&#146; fees, costs and expenses in connection
with the arbitration and share equally in the fees and expenses charged by the American
Arbitration Association; provided, however, that the arbitrator may in his or her
discretion assess costs and expenses (including the reasonable legal fees and expenses of
the prevailing party and the fees and expenses charged by the American Arbitration
Association) against any party to a proceeding. Any party unsuccessfully refusing to
comply with an order of the arbitrators shall be liable for costs and expenses, including
attorneys&#146; fees, incurred by the other party in enforcing the award. This Section&nbsp;7.17
applies equally to requests for temporary, preliminary or permanent injunctive relief,
except that in the case of temporary or preliminary injunctive relief any party may proceed
in court without prior arbitration for the limited purpose of avoiding immediate and
irreparable harm. Subject to Section&nbsp;7.4, the provisions of this Section&nbsp;7.17 shall be
enforceable in any court of competent jurisdiction.</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="left">(d)&nbsp;&nbsp;</TD>
    <TD>Each of the parties hereto irrevocably and unconditionally consents to the exclusive
jurisdiction of the American Arbitration Association to resolve all disputes, claims or
controversies arising out of or relating to this Agreement or any other agreement executed
and delivered pursuant to this Agreement or the negotiation, validity or performance hereof
and thereof or the transactions contemplated hereby and thereby and further consents to the
jurisdiction of the courts located in Minneapolis, Minnesota, for the purposes of enforcing
the arbitration provisions of this Section&nbsp;7.17. Each party further irrevocably waives any
objection to proceeding before the American Arbitration Association based upon lack of
personal jurisdiction or to the laying of venue and further irrevocably and unconditionally
waives and agrees not to make a claim in any court that arbitration before the American
Arbitration Association has been brought in an inconvenient forum. Each of the parties
hereto hereby consents to service of process by registered mail at the address to which
notices are to be given. Each of the parties hereto agrees that its or his submission to
jurisdiction and its or his consent to service of process by mail is made for the express
benefit of the other parties hereto.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><I>&#091;remainder of page intentionally blank&#093;</I>




<P align="center" style="font-size: 10pt">-40-
</DIV>


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



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF</B>, the parties have duly caused this Agreement to be executed as of the
date first set forth above.

<P><DIV style="position: relative; float: left; width: 35%">

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


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><B>By:</B>&nbsp;&nbsp;</TD>
    <TD>/s/ Bruce J Barclay<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><B>Its:</B>&nbsp;&nbsp;</TD>
    <TD>President<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>
</TABLE>


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


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><B>By:</B>&nbsp;&nbsp;</TD>
    <TD>/s/ K. W. Michael Chambers<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
K.W. Michael Chambers<BR>
President and Chief Executive Officer</TD>
</TR>
</TABLE>

</DIV>
<DIV style="position: relative; float: left; margin-left: 2%; width: 20%">

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

</DIV>
<DIV style="position: relative; float: right; width: 35%">

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


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Bruce J Barclay<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>Its:&nbsp;&nbsp;</TD>
    <TD>President<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>
</TABLE>


<P align="left" style="font-size: 10pt"><B>STOCKHOLDERS&#146; REPRESENTATIVE</B>


<P align="left" style="font-size: 10pt">/s/ Eugene de Juan, Jr.
<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>



<DIV align="left" style="font-size: 10pt">Dr.&nbsp;Eugene de Juan, Jr.</DIV>



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


<P align="left" style="font-size: 10pt">/s/ Eugene de Juan, Jr.<BR>
<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>


<DIV align="left" style="font-size: 10pt">Dr.&nbsp;Eugene de Juan, Jr.</DIV>



<P align="left" style="font-size: 10pt"><B>THE JOHNS HOPKINS UNIVERSITY</B>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ R. Keith Baker<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>Its:&nbsp;&nbsp;</TD>
    <TD>Director<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>
</TABLE>


<P align="left" style="font-size: 10pt"><B>ELENA VAUGHAN DE JUAN<BR>
2000 IRREVOCABLE TRUST</B>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Elizabeth Robison de Juan<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Elizabeth Robison de Juan<BR>
Its: Trustee</TD>
</TR>
</TABLE>

</DIV>
<BR clear="all"><BR>




<P align="center" style="font-size: 10pt">-41-
<P align="center" style="font-size: 10pt">Signature Page to Agreement of Merger
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<P><DIV style="position: relative; float: left; width: 65%">

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

</DIV>
<DIV style="position: relative; float: right; width: 35%">

<P align="left" style="font-size: 10pt"><B>ELIZABETH ANNA DE JUAN<BR>
2000 IRREVOCABLE TRUST</B>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Elizabeth Robison de Juan<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Elizabeth Robison de Juan<BR>
Its: Trustee</TD>
</TR>
</TABLE>


<P align="left" style="font-size: 10pt"><B>EUGENE DE JUAN, III<BR>
2000 IRREVOCABLE TRUST</B>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Elizabeth Robison de Juan<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Elizabeth Robison de Juan<BR>
Its:&nbsp;Trustee</TD>
</TR>
</TABLE>


<P align="left" style="font-size: 10pt"><B>EMILY ROSE DE JUAN<BR>
2000 IRREVOCABLE TRUST</B>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Elizabeth Robison de Juan<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Elizabeth Robison de Juan<BR>
Its:&nbsp;Trustee</TD>
</TR>
</TABLE>


<P align="left" style="font-size: 10pt">/s/ Elizabeth Robison de Juan
<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>



<DIV align="left" style="font-size: 10pt">Elizabeth Robison de Juan</DIV>



<P align="left" style="font-size: 10pt"><B>NANCY CARMEN OPPENHEIMER<BR>
2000 IRREVOCABLE TRUST</B>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Nancy Carmen de Juan Oppenheimer<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Nancy Carmen de Juan Oppenheimer<BR>
Its:&nbsp;Trustee</TD>
</TR>
</TABLE>

</DIV>
<BR clear="all"><BR>

<P align="center" style="font-size: 10pt">-42-
<P align="center" style="font-size: 10pt">Signature Page to Agreement of Merger
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<P><DIV style="position: relative; float: left; width: 65%">

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

</DIV>
<DIV style="position: relative; float: right; width: 35%">

<P align="left" style="font-size: 10pt"><B>JAMES HARRIS OPPENHEIMER<BR>
2000 IRREVOCABLE TRUST</B>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Nancy Carmen de Juan Oppenheimer<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Nancy Carmen de Juan Oppenheimer<BR>
Its:&nbsp;Trustee</TD>
</TR>
</TABLE>


<P align="left" style="font-size: 10pt"><B>RICHARD CANDLER DE JUAN<BR>
2000 IRREVOCABLE TRUST</B>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ M. Richard de Juan<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
M. Richard de Juan<BR>
Its:&nbsp;Trustee</TD>
</TR>
</TABLE>


<P align="left" style="font-size: 10pt">/s/ Rosemary de Juan Chambers
<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>



<DIV align="left" style="font-size: 10pt">Rosemary de Juan Chambers</DIV>



<P align="left" style="font-size: 10pt"><B>ANA CARMEN CHAMBERS<BR>
1996 IRREVOCABLE TRUST</B>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Rosemary de Juan Chambers<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Rosemary de Juan Chambers<BR>
Its:&nbsp;Trustee</TD>
</TR>
</TABLE>


<P align="left" style="font-size: 10pt"><B>SARAH CAMILLE CHAMBERS<BR>
1996 IRREVOCABLE TRUST</B>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Rosemary de Juan Chambers<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Rosemary de Juan Chambers<BR>
Its:&nbsp;Trustee</TD>
</TR>
</TABLE>

</DIV>
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<P align="center" style="font-size: 10pt">-43-
<P align="center" style="font-size: 10pt">Signature Page to Agreement of Merger
</DIV>

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

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<P align="left" style="font-size: 10pt"><B>OTTO J. SEMROW DECLARATION<BR>
OF TRUST</B>


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    <TD width="1%"></TD>
    <TD width="99%"></TD>
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<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Carol McCarthy<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Carol McCarthy<BR>
Its:&nbsp;Co-Trustee</TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
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<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Eileen Nash<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Eileen Nash<BR>
Its:&nbsp;Co-Trustee</TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
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<TR valign="top">
    <TD nowrap>By:&nbsp;&nbsp;</TD>
    <TD>/s/ Sherwin Leff<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
Sherwin Leff, Esq.<BR>
Its:&nbsp;Co-Trustee</TD>
</TR>
</TABLE>


<P align="left" style="font-size: 10pt">/s/ K. W. Michael Chambers
<DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>



<DIV align="left" style="font-size: 10pt">K.W. Michael Chambers</DIV>


</DIV>
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<P align="center" style="font-size: 10pt">-44-
<P align="center" style="font-size: 10pt">Signature Page to Agreement of Merger
</DIV>


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