AGREEMENT OF MERGER

EXHIBIT 2.1

AGREEMENT OF MERGER

DATED JANUARY 18, 2005

AMONG

SURMODICS, INC.,

SIRX, INC.,

INNORX, INC.,

THE STOCKHOLDERS OF INNORX, INC.

AND

DR. EUGENE DE JUAN, JR.,

AS STOCKHOLDERS’ REPRESENTATIVE

TABLE OF CONTENTS

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Exhibit A — Listing of Percentage Equity Interests (excluding shares of SurModics)
Exhibit B — Registration Rights Agreement
Exhibit C — Escrow Agreement
Exhibit D – Form of Press Release
Exhibit E – Stockholders’ Representative Agreement

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AGREEMENT OF MERGER

      THIS AGREEMENT OF MERGER , dated as of January 18 , 2005 (this “ Agreement ”), is entered into by and among SurModics, Inc., a Minnesota corporation (“ SurModics ”), SIRx, Inc., a Delaware corporation and a wholly-owned subsidiary of SurModics (“ Merger Sub ”), InnoRx, Inc., a Delaware corporation (“ InnoRx ”), all of the stockholders of InnoRx other than SurModics (the “ Stockholders ”) and Dr. Eugene de Juan, Jr., as Stockholders’ Representative (the “ Stockholders’ Representative ”).

RECITALS

      WHEREAS , 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;

      WHEREAS , 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 “ Merger ”) and where InnoRx, as the surviving corporation of the Merger, shall shortly after the Merger merge with and into SurModics (the “ Second Merger ” and, together with the Merger and other transactions contemplated by this Agreement, the “ Contemplated Transactions ”);

      WHEREAS , 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 “ Code ”); and

      WHEREAS , the Closing (defined below) shall not occur unless and until, among other events, all of the Stockholders have signed this Agreement.

      NOW, THEREFORE , in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below, the parties agree as follows:

ARTICLE I.

THE MERGER

      1.1 Closing . Subject to, and in accordance with, the terms and conditions of this Agreement, the closing of the Merger (the “ Closing ”) will take place at the offices of Fredrikson & Byron, P.A., 200 South Sixth Street, Suite 4000, Minneapolis, Minnesota, at 10:00 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 “ Closing Date ”).

      1.2 Effective Time of the Merger . 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 (“ DGCL ”) 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 “ Effective Time ”).

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      1.3 Effects of the Merger .

      1.4 Directors and Officers . 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.

      1.5 Second Merger . 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 “plan of reorganization” within the meaning of section 1.368-2(g) of the regulations promulgated under the Code.

ARTICLE II.

CONVERSION OF SECURITIES

      2.1 Conversion of Capital Stock . 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:

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     (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 2.1(b)), cash equal to $10.2241 as follows:

     (A) $9.9767 of such $10.2241 per share cash amount shall be paid to each Stockholder at the Closing; and

     (B) Per the direction and agreement of each such Stockholder as set forth in the Stockholders’ Representative Agreement and the Escrow Agreement, $ 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’ Representative Agreement and the Escrow Agreement.

     (ii) Subject to Section 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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     (iii) On the Closing Date, SurModics shall issue to the Stockholders in accordance with the terms and conditions of this Agreement: (A) the cash portion of the Merger Consideration in accordance with Section 2.1(d)(i)(A); (B) the shares of SurModics Common Stock issuable as Merger Consideration pursuant to Section 2.1(d)(ii); and (C) cash in an amount sufficient to permit payment of cash in lieu of fractional shares pursuant to Section 2.2 and shall deposit into the Stockholder Expense Account the cash in accordance with Section 2.1(d)(i)(B).

      2.2 No Fractional Shares . 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).

      2.3 Milestone Payments .

     (i) Milestone 1: 60,007 shares of SurModics Common Stock upon the approval of an investigational new drug (“ IND ”) application with the United States Food & Drug Administration (“ FDA ”).

     (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.

     (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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     (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.

     (v) Milestone 5: 120,015 shares of SurModics Common Stock upon the filing of a new drug application (“ NDA ”) with the FDA in a form expected, in good faith, to result in FDA approval of the NDA.

     (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.

     (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 million.

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     (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’ Development Funds obligation;

     (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;

     (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’ sole discretion;

     (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 2.3(e) to the same extent as if expended directly by SurModics;

     (v) SurModics’ obligation to expend the Development Funds as described above represents SurModics’ 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 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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     (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’ 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 2.3(e) only, “ Material Adverse Effect ” 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’ 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.

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      2.4 Closing Documents . At the Closing:

     (i) the Escrow Agreement (defined below), executed by the Stockholders’ Representative and by the Stockholders, or on their behalf by the Stockholders’ Representative;

     (ii) the Registration Rights Agreement (defined below), executed by the Stockholders and the Stockholders’ Representative;

     (iii) letters of transmittal (“ Letters of Transmittal ”), executed by each of the Stockholders, together with such Stockholders’ InnoRx share certificates;

     (iv) the opinion of Oppenheimer Wolff & Donnelly LLP dated as of the Closing Date, in the form previously approved by SurModics;

     (v) a copy of the signed written consent resolutions of the Stockholders and InnoRx’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;

     (vi) the resignations of all of the members of InnoRx’s Board of Directors and all of InnoRx’s officers and employees;

     (vii) certificates of good standing from the Secretaries of the States of Delaware and Alabama dated no earlier than three (3) business days prior to the Closing Date;

     (viii) consulting agreements (in the form previously approved by SurModics), executed on behalf of Dr. Eugene de Juan, Jr. and K.W. Michael Chambers;

     (ix) a copy of each consent identified in Section 3.2(c) of the InnoRx Disclosure Schedule;

     (x) a certificate executed by Dr. 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) is the holder or the beneficial owner of any stock of InnoRx (other than the ownership amounts of InnoRx’s existing Stockholders as set forth in Section 3.3 of the InnoRx Disclosure Schedule), (b) 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) is entitled to all or any portion of the Merger Consideration;

     (xi) a copy of the addenda executed by The Johns Hopkins University (“ JHU ”), in substantially the form previously approved by SurModics;

     (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;

     (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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     (xiv) all requisite paperwork and certifications necessary or appropriate to remove as of the Closing Date any and all authorized signors on InnoRx’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;

     (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 3.4 of this Agreement;

     (xvi) a copy of the Development and Manufacturing Agreement executed by Peregrine Surgical, Ltd. and InnoRx, in substantially the form previously approved by SurModics;

     (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. 2 to Employment Agreement dated July 28, 2004, between K.W. Michael Chambers and InnoRx, which payment amount Mr. Chambers shall acknowledge in writing as satisfying in full all InnoRx obligations thereunder;

     (xviii) such other documents as SurModics may reasonably request for the purpose of (A) evidencing the accuracy of any representation or warranty of Stockholders or InnoRx, (B) 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) otherwise facilitating the consummation of any of the Contemplated Transactions.

     (i) cash payable in accordance with Section 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 2.1(d)(ii) and, if any milestones are achieved before Closing, Section 2.3(d) (with respect to Milestone Payments);

     (ii) cash in an amount sufficient to permit payment of cash in lieu of fractional shares pursuant to Section 2.2;

     (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 2.1(d)(i)(B);

     (iv) to the Stockholders’ Representative, the Registration Rights Agreement, executed on behalf of SurModics;

     (v) to the other party thereto, the Consulting Agreements, executed on behalf of SurModics;

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     (vi) to the Stockholders’ Representative, the Escrow Agreement, executed on behalf of SurModics;

     (vii) an opinion of Fredrikson & Byron, P.A. dated the Closing Date, in the form previously approved by InnoRx; and

     (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) 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) otherwise facilitating the consummation of any of the Contemplated Transactions.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE

STOCKHOLDERS

     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’ equity interest) as reflected on Exhibit A , represents and warrants to SurModics and Merger Sub that the statements contained in this Article 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 “ InnoRx Disclosure Schedule ”). The InnoRx Disclosure Schedule shall be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article III ( provided, however, 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 “to InnoRx’s knowledge,” “InnoRx is not aware” or a similar expression appears in any representation or warranty in this Article III, it means either to the actual knowledge of Dr. 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 “InnoRx has received no notice” or like expression appears in any representation or warranty in this Article III, it means that neither Dr. 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.

     Except as otherwise indicated, as used herein, the term “ InnoRx Material Adverse Effect ” shall mean any event, change, circumstance, condition or effect that has or is reasonably likely to have a materially adverse effect on: (i) 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) 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) 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.

      3.1 Organization and Good Standing .

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      3.2 Authority; No Conflict .

     (i) contravene, conflict with, or result in a violation of (A) any provision of the Organizational Documents of InnoRx, or (B) any resolution adopted by the board of directors or the stockholders of InnoRx;

     (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. “ Legal Requirement ” 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. “ Order ” 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. “ Governmental Body ” 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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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 “ Person ” shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, other entity or Governmental Body;

     (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;

     (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

     (v) result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by InnoRx. “ Encumbrance ” 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.

      3.3 Capitalization . 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 A Convertible Preferred Stock, of which 67,830 shares are issued and outstanding and constitute all of the Series A Stock (all of which Series A Stock are owned by SurModics and are cancelled in the Merger in accordance with Section 2.1(b)), and of which 2,728,000 are undesignated preferred stock. Section 3.3 of the InnoRx Disclosure Schedule contains a true and correct copy of the list of Stockholders and holders of Series 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 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 “ Securities Act ”), 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 26, 2004 between InnoRx, SurModics and the Stockholders.

      3.4 Financial Statements . InnoRx has delivered to SurModics: (a) unaudited balance sheets of InnoRx as of December 31 in each of the years 2000 through 2003, and the related unaudited

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statements of income and cash flow for each of the fiscal years then ended; and (b) the unaudited balance sheet of InnoRx as of December 31, 2004 (the “ Balance Sheet ”) 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 3.4 of the InnoRx Disclosure Schedule, such financial statements fairly present the financial condition and the results of operations, changes in stockholders’ 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 (“ GAAP ”) , and the financial statements referred to in this Section 3.4 reflect the consistent application of such accounting principles throughout the periods involved. To InnoRx’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.

      3.5 Books And Records . 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.

      3.6 Title To Properties; Encumbrances . InnoRx owns no real property. Section 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 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 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 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) 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) 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) liens for current taxes not yet due, and (d) immaterial or technical Encumbrances that would not, either individually or in the aggregate, have an InnoRx Material Adverse Effect.

     As used herein, an action taken by a Person will be deemed to have been taken in the “ Ordinary Course of Business ” only if (a) 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).

      3.7 No Undisclosed Liabilities . Except as set forth in Section 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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      3.8 Taxes .

      3.9 No Material Adverse Effect . Since November 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.

      3.10 Employee Benefits .

     “ InnoRx Other Benefit Obligation ” means an Other Benefit Obligation owed, adopted, or followed by InnoRx.

     “ InnoRx Plan ” 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.

     “ Other Benefit Obligations ” means all obligations, arrangements, or customary practices, whether or not legally enforceable, to provide benefits, other than salary, as

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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 §132.

     “ Plan ” has the meaning given in ERISA §3(3).

     “ Plan Sponsor ” has the meaning given in ERISA §3(16)(B).

     “ Qualified Plan ” means any Plan that meets or purports to meet the requirements of Code §401(a).

     (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.

     (ii) To InnoRx’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.

     (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 3.10, except for such non-compliance as would not have an InnoRx Material Adverse Effect.

     (iv) Each InnoRx Plan can be terminated within thirty (30) days, without payment of any additional contribution or amount and without the vesting or acceleration of any benefits promised by such InnoRx Plan.

     (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.

     (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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      3.11 Compliance With Legal Requirements; Governmental Authorizations .

     (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;

     (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) 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

     (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’s knowledge, remain true and ac