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                                                                 EXHIBIT 10.20



                                              Confidential Treatment Requested
                                             for information omitted and filed
                                                      separately with the SEC.


                               OPERATING AGREEMENT

                                       of

                                   RENAGEL LLC

                            dated as of June 17, 1997



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                                TABLE OF CONTENTS


ARTICLE 1.  FORMATION AND MEMBERSHIP........................................  1
    SECTION 1.1  Formation..................................................  1
    SECTION 1.2  Member.....................................................  2
    SECTION 1.3  Management.................................................  2

ARTICLE 2.  OFFICES, NAME, ETC..............................................  2
    SECTION 2.1  Principal Office...........................................  2
    SECTION 2.2  Registered Office; Resident Agent..........................  2
    SECTION 2.3  Name.......................................................  3
    SECTION 2.4  Term.......................................................  3
    SECTION 2.5  Business Ventures..........................................  3

ARTICLE 3.  PURPOSES AND POWERS.............................................  3
    SECTION 3.1  Purpose....................................................  3
    SECTION 3.2  Powers.....................................................  4

ARTICLE 4.  MEMBERS AND THEIR CONTRIBUTIONS AND LOANS.......................  4
    SECTION 4.1  Contributions..............................................  4
    SECTION 4.2  Capital Accounts...........................................  5
    SECTION 4.3  Loans......................................................  6
    SECTION 4.4  Additional Members.........................................  6
    SECTION 4.5  Liability of Members.......................................  6
    SECTION 4.6  Withdrawal of Members......................................  7

ARTICLE 5.  ALLOCATIONS.....................................................  7
    SECTION 5.1  Certain Definitions........................................  7
    SECTION 5.2  Allocations of Profit and Loss............................. 10
    SECTION 5.3  Special Allocations........................................ 11

ARTICLE 6.  DISTRIBUTIONS................................................... 14
    SECTION 6.1  Distribution of Company Funds.............................. 14

ARTICLE 7.  INDEMNIFICATION................................................. 14
    SECTION 7.1  Indemnification of Members................................. 14

ARTICLE 8.  ASSIGNABILITY OF MEMBERSHIP INTERESTS........................... 16
    SECTION 8.1  Assignment................................................. 16
    SECTION 8.2  Substitute Members......................................... 17
    SECTION 8.3  Rights of Assignees........................................ 17
    SECTION 8.4  Other Restrictions......................................... 18

ARTICLE 9.  FISCAL YEAR, ACCOUNTING, INSPECTION OF BOOKS.................... 18
    SECTION 9.1  Fiscal Year and Accounting................................. 18



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    SECTION 9.2  Inspection of Books........................................ 18

ARTICLE 10.  DISSOLUTION.................................................... 18
    SECTION 10.1  Events of Dissolution..................................... 18
    SECTION 10.2  Consent to Continue Company............................... 19
    SECTION 10.3  Distribution Upon Dissolution............................. 19

ARTICLE 11.  GENERAL PROVISIONS............................................. 20
    SECTION 11.1  Complete Agreement; Modification.......................... 20
    SECTION 11.2  Governing Law; Severability............................... 21
    SECTION 11.3  Notice.................................................... 21
    SECTION 11.4  Pronouns.................................................. 21
    SECTION 11.5  Titles.................................................... 22
    SECTION 11.6  Successors and Assigns.................................... 22
    SECTION 11.7  Counterparts.............................................. 22




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                               OPERATING AGREEMENT

                                       OF

                                   RENAGEL LLC



        THIS OPERATING AGREEMENT (this "AGREEMENT") is made and adopted as of
June 17, 1997 by and among GelTex Pharmaceuticals, Inc., a Delaware corporation
having its principal place of business at 303 Bear Hill Road, Waltham,
Massachusetts 02154 ("GELTEX"), RenaGel, Inc., a Delaware corporation and a
wholly-owned subsidiary of GelTex having its principal place of business at 303
Bear Hill Road, Waltham, Massachusetts 02154 ("RENAGEL, INC."), Genzyme
Corporation, a Massachusetts corporation having its principal place of business
at One Kendall Square, Cambridge, Massachusetts 02139 ("GENZYME") and such other
persons who may become members of RenaGel LLC (the "COMPANY") in accordance with
law or the terms hereof (hereinafter collectively referred to as the "MEMBERS"
and individually as a "MEMBER"). GelTex and RenaGel, Inc. are hereinafter
collectively referred to as the "GELTEX COMPANIES." Capitalized terms used but
not defined herein shall be given the same meaning as provided in the
Collaboration Agreement of even date herewith among the Company, GelTex and
Genzyme ("COLLABORATION AGREEMENT").


                       ARTICLE 1. FORMATION AND MEMBERSHIP

        SECTION 1.1 FORMATION. The Company has been organized as a limited
liability company pursuant to the Delaware Limited Liability Company Act (the
"ACT"). The Act shall govern the rights and liabilities of the parties hereto
except as otherwise expressly stated herein.




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         SECTION 1.2 MEMBER. The sole initial Member of the Company was GelTex.
Following the execution and delivery of the Collaboration Agreement, GelTex
assigned one percent (1%) of its interest in the Company to RenaGel, Inc., and
RenaGel, Inc. was admitted as a Member of the Company. The Company elected under
Section 754 of the Internal Revenue Code of 1986, as amended ("IRC"), to apply
the provisions of Sections 734(b) and 743(b) of the IRC. Thereafter, effective
upon execution and delivery of the Purchase Agreement of even date herewith by
and between GelTex and Genzyme (the "PURCHASE AGREEMENT"), GelTex has sold and
assigned to Genzyme a fifty percent (50%) interest in the Company (subject to
adjustment as provided herein and in Section 4.2 of the Collaboration
Agreement). Upon execution and delivery of this Agreement, GelTex and RenaGel,
Inc. each hereby consent to the admission of Genzyme as a Member of the Company
and Genzyme is hereby admitted as a Member of the Company. Hence, the Members of
the Company are those persons listed on SCHEDULE A attached hereto, as amended
from time to time.

        SECTION 1.3 MANAGEMENT. The Company shall be managed by the Steering
Committee provided for in Section 8.2 of the Collaboration Agreement

                         ARTICLE 2. OFFICES, NAME, ETC.

        SECTION 2.1 PRINCIPAL OFFICE. The principal office of the Company shall
be located at 303 Bear Hill Road, Waltham, Massachusetts 02154 or such place
within the Commonwealth of Massachusetts as may be determined by the Members
from time to time. The Company shall maintain its records at such address.

        SECTION 2.2 REGISTERED OFFICE; RESIDENT AGENT. The name and address of
the Company's registered agent for service of process in the State of Delaware
shall be Corporation



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Service Company, 1013 Centre Road, Wilmington, Delaware 19805-1297. The name and
address of the Company's registered agent for service of process in the
Commonwealth of Massachusetts shall be GelTex Pharmaceuticals, Inc., 303 Bear
Hill Road, Waltham, Massachusetts 02154.

        SECTION 2.3 NAME. The business of the Company shall be conducted under
the name of "RenaGel LLC".

        SECTION 2.4 TERM. The term of the Company shall commence upon the filing
of the Certificate of Formation (the "EFFECTIVE DATE") and shall be perpetual
until it is terminated as hereinafter provided.

        SECTION 2.5 BUSINESS VENTURES. Any Member may engage independently or
with others in other business ventures of every nature and description, and
neither the Company nor any Member shall have any rights in and to such
independent ventures or the income or profits derived therefrom; provided,
however, that a Member's participation in such venture is subject to and
consistent with the provisions of Section 2.2 of the Collaboration Agreement.

                         ARTICLE 3. PURPOSES AND POWERS

        SECTION 3.1 PURPOSE. The purpose of the Company is to: (i) develop and
commercialize the Collaboration Products; (ii) act as a partner in limited
partnerships, general partnerships and limited liability partnerships, and as a
member of limited liability companies; and (iii) engage in any other business
permitted under the Act that the Members shall deem desirable or expedient.



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        SECTION 3.2 POWERS. The Company shall have all the powers necessary or
convenient to the conduct, promotion or attainment of the business, trade,
purposes or activities of the Company, including, without limitation, all the
powers of an individual, partnership, corporation or other entity.

              ARTICLE 4. MEMBERS AND THEIR CONTRIBUTIONS AND LOANS

        SECTION 4.1 CONTRIBUTIONS.
                    -------------

        (a)     Each Member has agreed to contribute the amounts and/or property
set forth in Sections 3.1, 3.3, 4.2 and 4.3 of the Collaboration Agreement. The
amount so contributed is hereinafter referred to as each Member's "CAPITAL
CONTRIBUTION". The cash and agreed value of any property contributed by each
Member as of the date hereof is set forth in SCHEDULE A attached hereto.

        (b)     Pursuant to the terms of the Collaboration Agreement, GelTex, on
behalf of the GelTex Companies, and Genzyme each has undertaken to make monthly
Capital Contributions to the Company in the amount equal to fifty percent (50%)
of all Program Costs (as defined in the Collaboration Agreement). If either
Genzyme or GelTex (on behalf of the GelTex Companies) fails to make all or any
portion of a monthly Capital Contribution, the other Member may elect to make
such Contribution (or a portion thereof). If either Genzyme or GelTex (on behalf
of the GelTex Companies) fails to make all or any portion of a monthly Capital
Contribution, the Percentage Interests (as defined below) shall be adjusted to
correspond to the percentage of cumulative Capital Contributions made by or on
behalf of each Member and subsequent monthly Capital Contributions shall be made
by the Members in proportion to their adjusted Percentage Interests.



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        (c)     No interest shall accrue on any Capital Contributions, and no
Member shall have the right to withdraw or to be repaid any capital it has
contributed, except as otherwise specifically provided in this Agreement.

        (d)     Each Member's percentage interest ("PERCENTAGE INTEREST") is as
set forth in SCHEDULE A hereto, subject to adjustment as provided in Section
4.1(b) of this Agreement.

        SECTION 4.2 CAPITAL ACCOUNTS. A separate account (a "CAPITAL ACCOUNT")
shall be maintained for each Member and adjusted in accordance with Treasury
Regulation Section 1.704-1(b) as follows:

        (a)     There shall be credited to each Member's Capital Account the
amount of such Member's Capital Contribution as of the date, and to the extent,
that such Capital Contribution has been paid, and such Member's allocable share
of Net Profits (and any items in the nature of income or gain separately
allocated to such Member); and there shall be charged against each Member's
Capital Account the amount of all distributions to such Member and such Member's
allocable share of Net Losses (and any items in the nature of losses or
deductions separately allocated to such Member). Capital Contributions made by
or on behalf of the GelTex Companies shall be credited to their Capital Accounts
in proportion to their relative Percentage Interests.

        (b)     If the Company at any time distributes any of its assets in kind
to any Member, the Capital Account of each Member shall be adjusted to account
for that Member's allocable share (as determined under Section 5.1 below) of the
Net Profits or Net Losses that would have been realized by the Company had it
sold the assets that were distributed at their respective fair market values
immediately prior to their distribution.



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        (c)     In the event any Member's interest is transferred in accordance
with the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred interest.

        SECTION 4.3 LOANS. The Members shall not make loans to the Company
unless the Members unanimously agree in writing to make such loans.

        SECTION 4.4 ADDITIONAL MEMBERS. Except as otherwise provided in Section
8.2 below with respect to Substitute Members, additional Members may only be
admitted with the prior written unanimous approval of the Members. Such
additional Members shall execute and acknowledge a counterpart to this Agreement
or shall otherwise evidence in writing their agreement to be bound by the terms
hereof in such manner as the Members shall determine.

        SECTION 4.5 LIABILITY OF MEMBERS.
                    --------------------

        (a)     No Member shall be liable for the obligations of the Company
solely by reason of being a Member.

        (b)     No Member shall be required to make any contributions to the
capital of the Company other than as provided in this Article 4.

        (c)     No Member shall be personally liable to the Company or its other
Members for monetary damages for breach of fiduciary duty as a Member to the
extent permitted by applicable law; provided, however, that this provision shall
not eliminate the liability of a Member (i) for any breach of the Member's duty
of loyalty to the Company or its other Members, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law or (iii) for any transaction from which the Member derived an improper
personal benefit. No amendment to or repeal of this Section 4.5(c) shall apply
to or have any effect on the liability



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or alleged liability of any Member for or with respect to any acts or omissions
of such Member occurring prior to such amendment or repeal.

        SECTION 4.6 WITHDRAWAL OF MEMBERS. No Member shall have the right to
withdraw from the Company or to demand a return of its capital interest at any
time except upon termination and dissolution of the Company, unless agreed to by
the unanimous written consent of the other Members.

                             ARTICLE 5. ALLOCATIONS

        SECTION 5.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings given them in this Article 5:

        (a)     "ADJUSTED CAPITAL ACCOUNT" for a Member means such Member's
                Capital Account (i) reduced by the net adjustments, allocations
                and distributions described in Treasury Regulation Sections
                1.704-1(b)(2)(ii)(d)(4), (5) and (6) which, as of the end of the
                Company's taxable year are reasonably expected to be made to
                such Member, and (ii) increased by the sum of (A) the amounts a
                Member is deemed obligated to restore pursuant to the
                penultimate sentences of Treasury Regulation Sections
                1.704-2(g)(1) and 2(i)(5), (B) the excess, if any, of such
                Member's Capital Contribution over such Member's actual paid-in
                capital contribution and (C) that portion of any indebtedness of
                the Company (other than "partner nonrecourse debt" as defined in
                Treasury Regulation Section 1.704-2(b)(4)) with respect to which
                the Member bears the economic risk of loss that such
                indebtedness would not be repaid out of the assets of the
                Company if all of the assets



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                of the Company were sold at their respective book values as of
                the end of the fiscal period and the proceeds from the sales
                together with any amounts described in clause (B) above, were
                used to pay the liabilities of the Company.

                (b)     "NET PROFITS" and "NET LOSSES" mean the taxable income
                        or loss, as the case may be, for a period (or from a
                        transaction) as determined in accordance with Section
                        703(a) of the IRC (for this purpose, all items of
                        income, gain, loss or deduction required to be
                        separately stated pursuant to IRC Section 703(a)(1)
                        shall be included in taxable income or loss) computed
                        with the following adjustments:

                                (i)     To the extent required by (and in the
                                        manner described in) Treasury Regulation
                                        1.704-1(b)(2), items of gain, loss and
                                        deduction shall be computed based upon
                                        the book values of the Company's assets
                                        rather than upon such assets' adjusted
                                        bases for federal income tax purposes
                                        (if different);

                                (ii)    Any tax-exempt income received by the
                                        Company shall be included as an item of
                                        gross income;

                                (iii)   The amount of any adjustments to the
                                        adjusted bases (or book values if clause
                                        (i) above applies) of any assets of the
                                        Company pursuant to IRC Section 743
                                        shall not be taken into account; and



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                                (iv)    Any expenditure of the Company described
                                        or treated as being described in IRC
                                        Section 705(a)(2)(B) shall be treated as
                                        a deductible expense.

                (c)     "MEMBER LOAN NONRECOURSE DEDUCTIONS" means any Company
                        deductions that would be Nonrecourse Deductions if they
                        were not attributable to a liability owed to or
                        guaranteed by a Member within the meaning and intent of
                        Treasury Regulation Section 1.704-2(i).

                (d)     "MEMBER LOAN MINIMUM GAIN" has the meaning set forth in
                        Treasury Regulation Section 1.704-2(i)(3).

                (e)     "MINIMUM GAIN" has the meaning set forth in Treasury
                        Regulation Section 1.704-2(d). Minimum Gain shall be
                        computed separately for each Member in a manner
                        consistent with the Treasury Regulations under IRC
                        Section 704(b).

                (f)     "NONRECOURSE DEDUCTIONS" has the meaning set forth in
                        Treasury Regulation Section 1.704-2(b)(1). The amount of
                        Nonrecourse Deductions for a taxable year of the Company
                        shall be determined according to the provisions of
                        Treasury Regulation Section 1.704-2(c).

                (g)     "NONRECOURSE LIABILITY" means any liability of the
                        Company with respect to which no Member has personal
                        liability, as determined in accordance with IRC Section
                        752 and the Treasury Regulations promulgated thereunder.




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        SECTION 5.2 ALLOCATIONS OF PROFIT AND LOSS. As of the end of each fiscal
year of the Company, or at the time any allocation is determined to be necessary
by the Members, Net Profits or Net Losses shall be allocated as follows:

        (a)     Except as provided in Sections 5.2(b) and 5.3, any allocation
required by this Section 5.2 to be made to the Members shall be allocated among
the Members in proportion to their respective Percentage Interests.

        (b)     After making the special allocations provided for in Section
5.3, there shall be allocated to the GelTex Companies items of gross income of
the Company in an amount equal to (i) the excess, if any, of the cumulative
************** All amounts allocated to the GelTex Companies shall be shared by
them in proportion to their relative Percentage Interests.

        (c)     With respect to the allocation of Net Losses or Net Profits
pursuant to this Section 5.2 among the Members for any fiscal year in which an
additional or substitute Member is admitted to the Company or there is an
adjustment to the Percentage Interests during such fiscal year, all Net Losses
or Net Profits so allocable shall be allocated in a manner which takes into
account the varying Percentage Interests during such fiscal year based on an
accounting convention chosen by the Members. In no event shall a retroactive
allocation of Net Losses be made pursuant to this Section 5.2.


*Confidential Treatment Requested for information omitted and filed separately
with the SEC.

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        SECTION 5.3 SPECIAL ALLOCATIONS. Notwithstanding the provisions of
Section 5.2 above, the following allocations of Net Profits and Net Losses and
items thereof shall be made:

        (a)     If, during any year a Member unexpectedly receives any
adjustment, allocation or distribution described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) and, as a result of such adjustment,
allocation or distribution, such Member's Adjusted Capital Account has a
negative balance (computed with the adjustments set forth in clauses (i) and
(ii) of Section 5.1(a)), then items of gross income for such year (and, if
necessary, subsequent years) shall first be allocated to such Member in the
amount necessary to eliminate such negative balance as quickly as possible. This
Section 5.3(a) is intended to constitute a "qualified income offset" provision
within the meaning of the above Treasury Regulations, and shall be so
interpreted.

        (b)     Nonrecourse Deductions for a taxable year or other period shall
be specially allocated among the Members in proportion to their Percentage
Interests.

        (c)     Any Member Loan Nonrecourse Deduction for any taxable year or
other period shall be specially allocated to the Member or Members who bear the
risk with respect to the loan to which the Member Loan Nonrecourse Deduction is
attributable in accordance with Treasury Regulation Section 1.704-2(b).

        (d)     In no event shall Net Losses of the Company be allocated to a
Member if such allocation would cause or increase a negative balance in such
Member's Adjusted Capital Account.

        (e)     Except as set forth in Treasury Regulation Section
1.704-2(f)(2), (3) and (4), if, during any taxable year, there is a net decrease
in Minimum Gain, each Member, prior to any other allocation pursuant to this
Article 5, shall be specially allocated items of gross income and



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gain for such taxable year (and, if necessary, subsequent taxable years) in an
amount equal to that Member's share of the net decrease in Minimum Gain,
computed in accordance with Treasury Regulation Section 1.704-2(g). Allocation
of gross income and gain pursuant to this Section 5.3(e) shall be made first
from gain recognized from the disposition of Company assets subject to
non-recourse liabilities (within the meaning of the Treasury Regulations
promulgated under IRC Section 752), to the extent of the Minimum Gain
attributable to those assets, and thereafter, from a pro rata portion of the
Company's other items of income and gain for the taxable year. It is the intent
of the parties hereto that any allocation pursuant to this Section 5.3(e) shall
constitute a "minimum gain chargeback" under Treasury Regulation Section
1.704-2(f). With respect to a net decrease in Member Loan Minimum Gain, items of
gross income shall be specially allocated consistent with the preceding
sentence, and Treasury Regulation Section 1.704-2(i)(4).

        (f)     In the event that Net Profits, Net Losses or items thereof are
allocated to one or more Members pursuant to paragraphs (a) or (d) above,
subsequent Net Profits and Net Losses will first be allocated (subject to the
provisions of paragraphs (a) through (d)) to the Members in a manner designed to
result in each Member having a Capital Account balance equal to what it would
have been had the original allocation of Net Profits, Net Losses or items
thereof pursuant to paragraphs (a) or (d) not occurred.

        (g)     The respective Percentage Interests in the Net Profits and Net
Losses or items thereof shall remain as set forth above (subject to adjustment
as provided in Section 4.1(b) and Article 5) unless changed by amendment to this
Agreement or by an assignment of an interest in the Company authorized by the
terms of this Agreement. Except as otherwise provided herein,



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for tax purposes, all items of income, gain, loss, deduction or credit shall be
allocated to the Members in the same manner as are Net Profits and Net Losses;
provided, however, that if, as a result of clause (i) of Section 5.1(b), the
book value of any property of the Company was used in computing Net Profits or
Net Losses, then items of income, gain, deduction or credit related to such
property for tax purposes shall be allocated among the Members so as to take
account of the variation between the adjusted basis of the property for tax
purposes and its book value in the manner provided for under IRC Section 704(c).

        (h)     If a Member's Percentage Interest is reduced (provided the
reduction does not result in a complete termination of the Member's interest in
the Company), the Member's share of the Company's "unrealized receivables" and
"substantially appreciated inventory" (within the meaning of IRC Section 751)
shall not be reduced, so that, notwithstanding any other provisions of this
Agreement to the contrary, that portion of the Net Profit otherwise allocable
upon a liquidation or dissolution of the Company pursuant to Article 5 hereof
which is taxable as ordinary income (recaptured) for federal income tax purposes
shall, to the extent possible without increasing the total gain to the Company
or to any Member, be specially allocated among the Members in proportion to the
deductions (or basis reductions treated as deductions) giving rise to such
recapture.

        (i)     In each taxable year of the Company, items of deduction and
credit attributable to Program Costs shall be allocated to the Members in
proportion to the Capital Contributions which funded the applicable expenditure.



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                            ARTICLE 6. DISTRIBUTIONS

        SECTION 6.1 DISTRIBUTION OF COMPANY FUNDS. The timing of distributions
by the Company (other than distributions in dissolution to which Section 10.3
applies) shall be determined in accordance with the provisions of Section 4.4 of
the Collaboration Agreement. Such distributions shall be made first one hundred
percent (100%) to the GelTex Companies until the GelTex Companies have received
distributions equal to the amount of items of gross income allocated to them
pursuant to Section 5.2(b) hereof and, thereafter, to the Members in proportion
to their positive Capital Accounts reduced by the amounts of their initial
Capital Contributions listed in SCHEDULE A hereto on the date hereof; provided,
however, that the amount of Net Profit distributable to the Members shall be
reduced by the amount required to fund the budgeted capital, working capital and
reserve requirements of the Company during the one hundred and eighty (180) day
period following the proposed distribution date and by such other amounts as the
Steering Committee reasonably determines to be necessary or appropriate for the
operation of the Company.

                           ARTICLE 7. INDEMNIFICATION

        SECTION 7.1 INDEMNIFICATION OF MEMBERS.
                    --------------------------

        (a)     The Company shall, to the fullest extent permitted by the Act,
as amended from time to time, indemnify each Member, each Member's Affiliates,
and the respective directors, officers, employees and agents of each Member and
its Affiliates (collectively, "INDEMNIFIED PERSONS") from and against all
expenses and liabilities (including counsel fees, judgments, fines, excise
taxes, penalties and amounts paid in settlements) reasonably incurred by or
imposed upon an Indemnified Person in connection with any threatened, pending or
completed action, suit or



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other proceeding, whether civil, criminal, administrative or investigative, in
which such Indemnified Person may become involved by reason of (i) any act
performed by such Indemnified Person in connection with the performance of and
within the scope of the authority conferred by the Collaboration Agreement or
(ii) such Indemnified Person's service as a director, officer, manager or member
of the Company or any of its subsidiaries or, if such service was undertaken at
the request of the Company, such Indemnified Person's service as a director,
officer or trustee of, or in a similar capacity with, another organization.

        (b)     Indemnification may include payment by the Company of expenses
in defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the Indemnified Person to
repay such payment if it is ultimately determined that such Indemnified Person
is not entitled to indemnification under this Article 7, which undertaking may
be accepted without reference to the financial ability of the Indemnified Person
to make such repayments.

        (c)     The Company shall not indemnify any Indemnified Person in
connection with a proceeding (or part thereof) initiated by such person unless
such Indemnified Person is successful on the merits, the proceeding was
authorized by the Members or the proceeding seeks a declaratory judgment
regarding such Indemnified Person's own conduct.

        (d)     The indemnification rights provided in this Article 7 (i) shall
not be deemed exclusive of any other rights to which Indemnified Persons may be
entitled under any law, agreement or vote of disinterested Members or otherwise
and (ii) shall inure to the benefit of the heirs, executors and administrators
of Indemnified Persons. The Company may, to the extent authorized from time to
time by its Members, grant indemnification rights to employees or agents



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of the Company or persons other than Indemnified Persons serving the Company and
such rights may be equivalent to, or greater or less than, those set forth in
this Article 7.

        (e)     No indemnification shall be provided for any Indemnified Person
with respect to (i) any matter as to which such Indemnified Person shall have
been finally adjudicated in any proceeding not to have acted in good faith in
the reasonable belief that such Indemnified Person's action was in the best
interests of the Company, (ii) any act which constitutes gross negligence or
wilful misconduct or (iii) any matter disposed of by a compromise payment by
such Indemnified Person, pursuant to a consent decree or otherwise, unless the
payment and indemnification thereof have been approved by the Members, which
approval shall not unreasonably be withheld, or by a court of competent
jurisdiction.

        (f)     Any amendment or repeal of the provisions of this Article 7
shall not adversely affect any right or protection of an Indemnified Person with
respect to any act or omission of such Indemnified Person occurring prior to
such amendment or repeal.

                ARTICLE 8. ASSIGNABILITY OF MEMBERSHIP INTERESTS

        SECTION 8.1 ASSIGNMENT.
                    ----------
 
        (a)     Except in accordance with Article 13 of the Collaboration
Agreement, a Member may not assign his or her interest in whole or in part to
any assignee which is not already a Member without the prior written consent of
all of the other Members who may or may not consent in their absolute
discretion.

        (b)     An assignment of a Member's interest does not of itself dissolve
the Company or permit the assignee to participate in the business and affairs of
the Company or to become a Member or exercise any rights or powers of a Member.



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        SECTION 8.2 SUBSTITUTE MEMBERS. No assignee of a Member's interest
(other than an assignee which is already a Member) shall have the right to be
admitted as a substitute member in place of the assignor (a "SUBSTITUTE MEMBER")
unless:

                (a)     the assignor shall designate in writing satisfactory to
        the other Members the intention that the assignee is to become a
        Substitute Member;

                (b)     the assignee shall agree in writing to be bound by all
        of the terms of this Agreement;

                (c)     all of the other Members consent in writing to the
        admission of the assignee as a Substitute Member, which consent may be
        withheld in their absolute discretion;

                (d)     the assignee shall execute and/or deliver such
        instruments, including without limitation, an opinion of counsel
        satisfactory to the Members, to the effect that such proposed assignment
        and substitution does not violate the registration requirements of state
        or federal securities laws, and such instrument as the Members deem
        necessary or desirable to effect such assignee's admission as a
        Substitute Member and to evidence the assignee's acceptance of the terms
        of this Agreement; and

                (e)     the assignee shall pay all reasonable expenses in
        connection with the assignee's admission as a Substitute Member.

        SECTION 8.3 RIGHTS OF ASSIGNEES. An assignee who does not become a
Substitute Member shall succeed only to the rights of the assignor to receive
allocations and distributions



                                       17


<PAGE>   21


from the Company as provided in Articles 5, 6 and 10 hereof, and shall not have
the right to become a Member or exercise any rights or powers of a Member.

        SECTION 8.4 OTHER RESTRICTIONS. A Member may not pledge, encumber or
hypothecate any of its interest without the consent of the other Members.

             ARTICLE 9. FISCAL YEAR, ACCOUNTING, INSPECTION OF BOOKS

        SECTION 9.1 FISCAL YEAR AND ACCOUNTING. Except as otherwise approved by
the Members, or required by law, the fiscal year of the Company shall be the
calendar year and the books of the Company shall be kept on the accrual method.

        SECTION 9.2 INSPECTION OF BOOKS. The books of the Company shall at all
times be available for inspection and audit by any Member at the Company's
principal place of business during business hours. The Company shall furnish
each Member with all necessary tax reporting information as to its interest in
the Company, with an annual balance sheet and profit and loss statement and with
a cash flow statement showing any distributions made to the Members, within
sixty (60) days after the close of each fiscal year.

                             ARTICLE 10. DISSOLUTION

        SECTION 10.1 EVENTS OF DISSOLUTION. The term of the Company shall
commence on the Effective Date and shall be in full force and effect until the
earliest of the following:

                (a)     the sale or disposition of all or substantially all of
the Company property;

                (b)     the dissolution of the Company by the unanimous written
consent of the Members;

                (c)     the bankruptcy or dissolution of a Member other than
RenaGel, Inc.; provided, however, that if there are at least two remaining
Members, the Members may consent



                                       18


<PAGE>   22


to the continuation of the business of the Company after the occurrence of such
an event, pursuant to Section 18-802 of the Act and Section 10.2 of this
Agreement;

                (d)     the entry of a decree of judicial dissolution under
Section 18-802 of the Act;

                (e)     the occurrence of any event, other than those referred
to in paragraph (d), which causes dissolution of a limited liability company
under the Act; or

                (f)     upon the occurrence of an event and at the time
specified in Article 13 of the Collaboration Agreement.

        Notwithstanding the dissolution of the Company, the business of the
Company shall continue to be governed by this Agreement until the winding up of
the Company occurs.

        SECTION 10.2 CONSENT TO CONTINUE COMPANY. The Members may vote to
continue the business of the Company within 90 days after the occurrence of an
event of dissolution set forth in Section 10.1(d) of this Agreement, pursuant to
and in accordance with Section 18-801(4) of the Act. The agreement of the
remaining Members holding a majority of the remaining Percentage Interests shall
constitute the consent of the Members to the continuation of the Company.

        SECTION 10.3 DISTRIBUTION UPON DISSOLUTION. (a) After payment of
liabilities owing to creditors, the Members or liquidator shall set up such
reserves as they deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company, including the expenses of
liquidation. Such reserves may be paid over by the Members or liquidator to a
bank, to be held in escrow for the purpose of paying any such contingent or
unforeseen liabilities or obligations and, at the expiration of such period as



                                       19


<PAGE>   23


the Members or liquidator may deem advisable, such reserves shall be distributed
to all of the Members or their assigns in the manner set forth in Section
10.3(b) below. In the event that any part of such net assets consists of
securities or other non-cash assets, the Members or liquidator may (but shall
not be required to) take whatever steps they deem appropriate to convert such
assets into cash or into any other form that would facilitate the distribution
thereof.

        (b)     After payment has been made pursuant to Section 10.3(a) above,
the Members or the liquidator shall cause the remaining net assets of the
Company to be distributed to and among the Members in proportion to and to the
extent of their positive Capital Account balances (after such balances have been
adjusted to reflect all allocations of Net Profits and Net Losses and the
payments made in Section 10.3(a) above). Cash and non-cash assets shall be
distributed to each Member on a pro rata basis, or in such other manner as the
Members may agree, with all noncash assets being distributed on the basis of
their fair market value.

        (c)     The Company shall terminate when all property has been
distributed among the Members. Upon such termination, the Members shall execute
and cause to be filed a certificate of cancellation of the Company, as provided
for in Section 18-203 of the Act, and any and all other documents necessary in
connection with the termination of the Company.


                         ARTICLE 11. GENERAL PROVISIONS

        SECTION 11.1 COMPLETE AGREEMENT; MODIFICATION. This Agreement, the
Collaboration Agreement and the Purchase Agreement together contain a complete
statement of all the agreements among the parties with respect to the Company.
There are no representations, agreements, arrangements or undertakings, oral or
written, between or among the parties to this Agreement relating to the subject
matter of this Agreement which are not fully expressed in this


                                       20


<PAGE>   24


Agreement. This Agreement may be amended or modified only with the unanimous
consent of the Members.

        SECTION 11.2 GOVERNING LAW; SEVERABILITY. All questions with respect to
the construction of this Agreement and the rights and liabilities of the parties
shall be determined in accordance with the applicable provisions of the laws of
the State of Delaware, and this Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations of such state. If any provision of this
Agreement, or the application thereof to any person or circumstances, shall, for
any reason and to any extent, be invalid or unenforceable, the remainder of this
Agreement and the application of that provision to other persons or
circumstances shall not be affected but rather be enforced to the extent
permitted by law.

        SECTION 11.3 NOTICE. All notices, requests, consents and statements
hereunder shall be deemed to have been properly given if mailed from within the
United States by prepaid certified mail, return receipt requested, or if sent by
prepaid telegram, or overnight delivery service, or if hand delivered, addressed
in each case if to the Company at its principal place of business and, if to any
Member, to the address set forth herein, or to such other address or addresses
as any such Member shall have theretofore designated in writing to the Company
in accordance with this Section 11.3.

        SECTION 11.4 PRONOUNS. Feminine or masculine pronouns shall be
substituted for the neuter pronouns, neuter pronouns for masculine or feminine
pronouns, plural for the singular and the singular for the plural, in any place
in this Agreement where the context may require such substitution.



                                       21


<PAGE>   25


        SECTION 11.5 TITLES. The titles of Articles and Sections are included
only for convenience and shall not be construed as a part of this Agreement or
in any respect affecting or modifying its provisions.

        SECTION 11.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of all parties hereto and their heirs, successors,
assigns and legal representatives.

        SECTION 11.7 COUNTERPARTS. This Agreement may be signed in one or more
counterparts and all counterparts so executed shall constitute one agreement
binding on all parties hereto, notwithstanding that all parties have not signed
the original or the same counterpart.




                                       22


<PAGE>   26


        IN WITNESS WHEREOF, we have affixed our signatures as of the day first
above written. 


MEMBERS:
--------


GELTEX PHARMACEUTICALS, INC.


By: /s/ Mark Skaletsky
    --------------------------------- 
Print Name:  Mark Skaletsky
Title: President and CEO


RENAGEL, INC.


By: /s/ Mark Skaletsky
    --------------------------------- 
Print Name:  Mark Skaletsky
Title: President 


GENZYME CORPORATION


By: /s/ Peter Wirth
    --------------------------------- 
Print Name: Peter Wirth
Title: Executive Vice President



                                       23


<PAGE>   27

                                   SCHEDULE A
                                   ----------

<TABLE>
<CAPTION>

MEMBERS                            CAPITAL CONTRIBUTION          PERCENTAGE INTEREST
-------                            --------------------          -------------------

<S>                                     <C>                             <C>   
GelTex Pharmaceuticals, Inc.            $24,500,000                     49.00%

RenaGel, Inc.                           $   500,000                      1.00%

Genzyme Corporation                     $25,000,000                     50.00%
                                        -----------                    ------ 

        TOTAL:                          $50,000,000                    100.00%


</TABLE>



                                       24