Limited Liability Company Agreement of T3 Therapeutics, LLC, Dated June 25, 2002

 ==================================================================================================== LIMITED LIABILITY COMPANY AGREEMENT of T3 THERAPEUTICS, LLC a Delaware Limited Liability Company Dated as of June 25, 2002 ====================================================================================================  TABLE OF CONTENTS PAGE ARTICLE I ORGANIZATION AND POWERS.................................................................2 1.01 Organization..............................................................................2 1.02 Powers....................................................................................3 ARTICLE II MANAGEMENT.............................................................................4 2.01 Managers..................................................................................4 2.02 Managers as Members.......................................................................7 2.03 Management of the Company.................................................................7 2.04 Duties of Care and Loyalty of Managers....................................................8 2.05 Contracts with Affiliated Persons.........................................................8 2.06 Compensation of Managers and Members......................................................9 2.07 Indemnification of Managers, Officers and Others..........................................9 2.08 Officers of the LLC.......................................................................9 ARTICLE III Members and Capital Contributions....................................................11 3.01 Capital Accounts.........................................................................11 3.02 Initial Members and Initial Capital Contributions........................................11 3.03 Additional Members.......................................................................13 3.04 No Withdrawal of or Interest on Capital..................................................13 3.05 Liability of Members.....................................................................13 3.06 Additional Capital Requirements..........................................................14 3.07 Third Party Liabilities..................................................................15 3.08 Class B Redemption Rights and Redemption on Certain Events...............................15 ARTICLE IV Distributions.........................................................................15 4.01 Distribution of Company Funds............................................................15 4.02 Distribution Upon Dissolution............................................................16 4.03 Distribution of Assets in Kind...........................................................16 4.04 Distributions to Cover Members' Tax Liability............................................16 ARTICLE V Allocation of Profits and Losses.......................................................17 5.01 Allocation of Profits and Losses.........................................................17 ARTICLE VI FISCAL MATTERS........................................................................18 6.01 Books and Records........................................................................18 6.02 Bank Accounts............................................................................18 6.03 Fiscal Year..............................................................................18 6.04 Tax Matters Partner......................................................................18 ARTICLE VII Transfers and Company Issuances......................................................19 7.01 Restrictions on Transfer.................................................................19 7.02 Right of Participation in Company Sales..................................................20 ARTICLE VIII Dissolution and Termination.........................................................22 8.01 Limitations..............................................................................22 8.02 Events Causing Dissolution...............................................................22 8.03 Procedures on Dissolution................................................................22 ARTICLE IX Tax Allocation Provisions.............................................................23 T-3 Opera i  TABLE OF CONTENTS PAGE 9.01 Required Regulatory Allocations..........................................................23 9.02 Curative Allocations.....................................................................24 9.03 Tax Allocations and Book Allocations.....................................................25 9.04 General Allocation and Distribution Rules................................................25 9.05 Tax Withholding..........................................................................26 ARTICLE X General Provisions.....................................................................26 10.01 Notices.................................................................................26 10.02 Word Meanings...........................................................................27 10.03 Binding Provisions......................................................................27 10.04 Applicable Law..........................................................................27 10.05 Counterparts............................................................................27 10.06 Separability of Provisions..............................................................27 10.07 Section Titles..........................................................................27 10.08 Amendments..............................................................................28 10.09 Entire Agreement........................................................................28 10.10 Waiver of Partition.....................................................................28 10.11 Survival of Certain Provisions..........................................................28 ARTICLE XI DEFINITIONS...........................................................................29 SCHEDULES ...........Schedule 1: Members and Managers ...........Schedule 2: Additional Terms and Conditions EXHIBITS ...........Exhibit A: Form of Option Agreement ...........Exhibit B: Form of Promissory Note ...........Exhibit C: Form of Purchase and Sale Agreement ...........Exhibit D: Form of Registration Rights Agreement T-3 Opera ii  T3 THERAPEUTICS, LLC LIMITED LIABILITY COMPANY AGREEMENT THIS LIMITED LIABILITY COMPANY AGREEMENT shall govern the business and operations of T3 Therapeutics, LLC, a Delaware limited liability company (the "COMPANY") and is entered into effective as of June 25, 2002 by and among the persons identified as Members and Managers in SCHEDULE I hereto. Capitalized terms used herein and otherwise undefined shall have the meanings given to them in Article XI. WHEREAS, T3 Therapeutics, Inc., a New York corporation (the "DEVELOPMENT CORPORATION"), has undertaken the preliminary design, development and research of products containing T3 (3,5,3' - Triiodo-L-Thyronine) or its derivatives as the active ingredient in compounds and applications for the treatment of diseases and medical conditions (the "PRODUCTS"); WHEREAS, Dr. Irwin L. Klein and Dr. Kaie Ojamaa, constitute all of the Directors and Stockholders of the Development Corporation and have transferred to the Development Corporation any and all of their intellectual property rights or other rights and know-how of all kinds that relate to the Products and by the premises hereof, do repeat, confirm and acknowledge such transfer; WHEREAS, in order to secure funding for the further development of the Products, the Development Corporation has agreed to contribute to the Company, irrevocably, completely and for all time all of its right, title and interest in and to the (i) Products, (ii) all technical data, information, material and other know-how currently owned by the Development Corporation that is necessary or useful to the development of the Products (collectively, the "PRODUCT KNOW-HOW"); and (iii) all intellectual property rights to the Products and Product Know-How including but not limited to a certain Patent License with the North Shore Hospital (collectively, the "PRODUCT RIGHTS"), in exchange for the Class A Interests set forth and described on SCHEDULE I hereto; and WHEREAS, to provide funding for such further development, The St. Lawrence Seaway Corporation, an Indiana corporation, has agreed to subscribe for the Class B Interests set forth on SCHEDULE I hereto. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: T-3 Opera  ARTICLE I ORGANIZATION AND POWERS 1.01 ORGANIZATION. (a) FORMATION. The rights and liabilities of the Members of the Company shall be as provided in the Act, except as otherwise expressly provided herein. In the event of any inconsistency between any terms and conditions contained in this Agreement and any nonmandatory provisions of the Act, the terms and conditions contained in this Agreement shall govern. (b) CERTIFICATE OF FORMATION; FILINGS. A Certificate of Formation (the "Certificate) has been executed and filed in the Office of the Delaware Secretary of State as required by the Act. With the Consent of the Members, the Board of Managers of the Company (the "BOARD") may execute and file any duly authorized amendments to the Certificate from time to time in a form prescribed by the Act. The Board shall also cause to be made, on behalf of the Company, such additional filings and recordings as the Board shall deem necessary or advisable. (c) BUSINESS PURPOSE. The Company is the successor to the business of owning, developing and exploiting the Products, the Product Know-How and the Product Rights. The Company shall engage solely in the business of developing, manufacturing, marketing, selling and licensing the Products. Any change to the business purpose of the Company shall require the approval of the Board and the written consent of (i) the Class A Members holding a majority of the Class A Units, voting as a single class and (ii) the Class B Members holding a majority of the Class B Units voting as a single class. (d) NAME. The name of the Company shall be T3 Therapeutics, LLC. The Company may also conduct business at the same time under one or more fictitious names if the Board determines that such is in the best interests of the Company. The Board may change the name of the Company, from time to time, in accordance with applicable law with the Consent of the Members. Tradenames will be filed and published when and if the Board determines it necessary. Any such tradenames shall be renewed as required by applicable law. (e) PRINCIPAL PLACE OF BUSINESS; OTHER PLACES OF BUSINESS. The principal place of business of the Company shall be at such place within or outside the State of Delaware as the Board may from time to time designate. By the approval of the Board, the Company may maintain offices and places of business at such other place or places within or outside the State of Delaware, as and when required by its business and in furtherance of the general character of its business described herein and in the Certificate, and may appoint agents for service of process in all jurisdictions in which the Company shall conduct business. The Company shall file such certificates and documents as are necessary under the laws of any jurisdictions in which the Company shall conduct business. T-3Opera 2  (f) DESIGNATED AGENT FOR SERVICE OF PROCESS. The Company shall continuously maintain a registered office and a designated and duly qualified agent for service of process on the Company in the State of Delaware. (g) TERM. The Company shall commence on the date that the Certificate is filed with the Office of the Delaware Secretary of State and shall continue until terminated pursuant to this Agreement. 1.02 POWERS. Subject to all other provisions of this Agreement and in furtherance of the conduct of the business described above and in the Certificate, the Company is hereby authorized to undertake those actions set forth below. (a) CONTRACTS. The Company may enter into, execute, modify, amend, supplement, acknowledge, deliver, perform, and carry out contracts of any kind, including agreements of limited liability companies, whether as a member or manager, contracts with Affiliated Persons, including guarantees and joint venture, limited and general partnership agreements and contracts establishing business arrangements or organizations, necessary to, in connection with, or incidental to the accomplishment of the permitted business of the Company, and to secure the same by mortgages, pledges or other liens. (b) INDEBTEDNESS. The Company may borrow money and issue evidences of indebtedness in furtherance of the permitted business of the Company and to secure the same by mortgages, pledges, or other liens. (c) PAYMENT OF EXPENSES. The Company may, to the extent that funds of the Company are available, pay all expenses, debts and obligations of the Company. (d) GENERAL. The Company may exercise all the powers and privileges granted by the Act or any other law or this Agreement, together with any powers incidental thereto, so far as such powers are necessary or convenient to the conduct, promotion, or attainment of the permitted business, trade, purposes, or activities of the Company. (e) OMNIBUS. The Company may take any other action not prohibited under the Act, this Agreement or other applicable law and in furtherance of the business purpose of the Company. T-3 Opera 3  ARTICLE II MANAGEMENT 2.01 MANAGERS. (a) NUMBER OF MANAGERS. The initial number of Managers shall be two (2) and shall be the Persons named in SCHEDULE I hereto. The number of Managers may be increased or decreased in accordance with the terms and conditions set forth in this Section 2.01; PROVIDED, that the number of Managers shall not be more than six (6) or less than two (2). (b) CLASS A MANAGERS. The Class A Members holding a majority of the Class A Units shall have the right at any time and from time to time to designate and elect up to five (5) Managers (the "CLASS A MANAGERS"); PROVIDED, that the Class A Members shall not have the right to designate more than two (2) Class A Managers until after the sooner to occur of the following: (i) a Control Release Event; or (ii) the written consent of the Class B Members holding a majority of the Class B Units; PROVIDED, FURTHER, that if one of the conditions set forth immediately above has been satisfied and the Class A Members desire to designate more than two (2) Class A Managers such additional Managers shall have significant experience in the Company's industry or related industries. Such designations and elections shall be effective upon the delivery of a writing executed by the Class A Members holding a majority of the Class A Units setting forth the names and brief biographies of such designees to the Board and to the Class B Members. (c) CLASS B MANAGER. The Class B Members holding a majority of the Class B Units shall have the right at any time and from time to time to designate and elect one (1) Manager (the "CLASS B MANAGER"). Such designation and election shall be effective upon the delivery of a writing executed by the Class B Members holding a majority of the Class B Units setting forth the name of such designee to the Board and to the Class A Members. (d) TERM; REMOVAL OR RESIGNATION. Each Manager shall hold office for a period of one (1) year or until such individual is removed by the Members which designated him or her, resigns or dies. In the event that any Manager dies, resigns or is unable or unwilling to serve as such, or is removed from office by the Members that designated him or her, the designating Members shall promptly elect a successor consistent with the provisions of this Section 2.01. (e) NUMBER OF MEETINGS; NOTICE; OBSERVATION RIGHTS. The Board shall hold at least four (4) meetings per year. At all times, the Class B Members shall be entitled to not less than two (2) business days advance written notice of any meeting of the Board or committee thereof (and included therewith an agenda of items to be discussed thereat), and shall be entitled to have a designated representative present at such meeting. In addition, the Class B Members shall at all times receive written notice of actions taken by the Board or committee thereof, and shall be entitled to any and all documents, reports or financial information prepared for, or used by, the Board or committee thereof which such documents, reports or financial information shall be delivered to the Class B Members no later than simultaneously with their delivery to the Board or committee thereof, as applicable. T-3 Opera 4  (f) REGULAR MEETINGS. Regular meetings of the Board may be held at such times and places as shall from time to time be fixed by resolution of the Board, and no notice need be given of regular meetings held at times and places so fixed; PROVIDED, HOWEVER, that any resolution relating to the holding of regular meetings shall remain in force only if at any meeting of the Board at which a resolution is adopted fixing the times or place or places for any regular meetings any Manager is absent, no meeting shall be held pursuant to such resolution without notice to or waiver by such absent Manager pursuant to Section 2.01(h). (g) SPECIAL MEETINGS. Special meetings of the Board may be called by the Chairman of the Board (if any), the President, or by any one or more Managers and shall be held at the place and on the date and hour designated in the call thereof. (h) NOTICES. Notices of any special meeting of the Board shall be given by the Secretary or an Assistant Secretary to each Manager, by mailing to him or her, postage prepaid, and addressed to him or her at his or her address as registered on the books of the corporation, or if not so registered at his or her last known home or business address, a written notice of such meeting, at least four days before the meeting, or by delivering such notice to him or her at least 48 hours before the meeting or by sending to him or her at least 48 hours before the meeting, by prepaid telegram addressed to him or her at such address or by facsimile transmission or e-mail at such address, notice of such meeting. In the absence of both such officers, such notice may be given by the officer or one of the Managers calling the meeting. Notice need not be given to any Manager who has waived notice (a) in writing executed by him or her before or after the meeting and filed with the records of the meeting, or (b) by attending the meeting except for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. (i) ACTIONS BY BOARD. Any action to be taken by the Board shall require the approval of a majority of the members of Board; PROVIDED, that with respect to any matter, agreement or claim involving the Company, on the one hand, and a Member, Manager or an Affiliated Person of a Member or Manager, on the other hand, the Board shall act solely with the approval of those Managers who are not Affiliated with the contracting party. In such instance the Board may take action by less than majority consent. In addition, at any meeting of the Board any number of Managers present at any meeting or at any adjourned meeting may adjourn such meeting; PROVIDED, that all absent Managers receive or waive notice pursuant to Section 2.01(h) of any such adjournment that exceeds four (4) business days. T-3 Opera 5  Notwithstanding anything contained herein to the contrary, the Company shall not, without the prior written consent of the Class B Manager (if such Manager has been designated in accordance with Section 2.01(c) above): (i) effect any sale, lease, assignment, transfer or other conveyance of all or substantially all of the Company's assets; (ii) effect any merger or acquisition; (iii) incur any indebtedness in excess of $100,000; (iv) enter into any material licensing, revenue sharing, development or partnership agreements other than (i) the North Shore Agreement, or (ii) a license and development agreement or a market agreement, both of which are of the type currently contemplated by the Development Plan to result in the commercialization of the Products by a nationally known pharmaceutical company; or (v) engage in any single capital expenditure in excess of $50,000, or engage in aggregate capital expenditures in excess of $100,000 in any single fiscal year. (j) ACTION BY WRITTEN CONSENT. Any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if a majority of the members of the Board or committee, as the case may be, consent thereto in writing or electronic transmission, and the writing or writings or electron transmission are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form (k) TELEPHONE MEETINGS. Members of the Board, or any committee thereof, may participate in a meeting of such Board or committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 2.01(k) shall constitute presence in person at such meeting. (l) PLACE OF MEETINGS. The Board may hold its meetings, and have an office or offices, within or without the State of Delaware. (m) COMMITTEES. (i) The Board may designate one or more committees, each committee to consist of one or more of the Managers. The Board may designate one or more Managers as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent permitted by the resolution of the Board or in this Agreement, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company, and may authorize the seal of the Company (if any) to be affixed to all papers which may require it. T-3 Opera 6  (ii) Notwithstanding anything contained herein to the contrary, no committee shall have the power or authority to approve or adopt, or recommend to the Members, any action or matter expressly required by the Act or this Agreement to be submitted to the Members for approval. (iii) Except as otherwise provided by statute, the Certificate, or this Agreement, the affirmative vote of at least a majority of the members of the committee shall be the act of the committee. (iv) Each committee, except as otherwise provided by resolution of the Board, shall fix the time and place of its meetings within or without the State of Delaware, shall adopt its own rules and procedures, and shall keep a record of its acts and proceedings and report the same from time to time to the Board. 2.02 MANAGERS AS MEMBERS. Any Manager may, but need not, hold an Interest in the Company as a Member, and such person's rights and interest as a Manager shall be distinct and separate from such person's rights and Interest as a Member. 2.03 MANAGEMENT OF THE COMPANY. The business affairs of the Company shall be managed by and under the direction of the Board. All management and other responsibilities not specifically reserved to the Members in this Agreement shall be vested in the Board, and the Members shall have no voting rights except as specifically provided in this Agreement. Each Manager shall devote, and if applicable, shall cause the Company's officers to devote, such time to the affairs of the Company as is reasonably necessary for performance by the Manager of his or her duties; PROVIDED, such Persons shall not be required to devote full time to such affairs. The Board shall have the right and power to manage, operate, and control the Company and to do all things which the Board may deem necessary or desirable for the Company or its permitted business including the appointment of officers and agents, and the granting of authority to such officers and agents to perform certain functions, and to enter into contracts, all as authorized and on the terms and subject to the limitations established by the Board. In the event of a vacancy in the Board, the remaining Managers (except as otherwise provided by law) may exercise the powers of the full Board until the vacancy is filled. T-3 Opera 7  2.04 DUTIES OF CARE AND LOYALTY OF MANAGERS. DUTY OF CARE. The Managers do not in any way guarantee the return of the Members' Capital Contributions or a profit for the Members from the operations of the Company. In discharging their duties, the Managers shall have the benefit of the "business judgment rule" (as established under Delaware corporate law) and, in addition thereto, may rely in good faith upon the records required to be maintained under this Agreement and upon such information, opinions, reports or statements by any of the Members, officers or their agents, or by any other Person as to matters the Managers reasonably believe are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the Company or any other facts pertinent to the existence and amount of Company property from which distributions might properly be paid. DUTY OF LOYALTY. The Managers shall have a duty of loyalty to the Company. This duty of loyalty owed by the Managers to the Company shall be identical to that of the duty of loyalty owed by the members of the board of directors of a Delaware corporation to such corporation as established under Delaware law. 2.05 CONTRACTS WITH AFFILIATED PERSONS. The Company may enter into one or more oral or written agreements, leases, contracts or other arrangements for the furnishing to or by the Company of goods, services or space with any Member, Manager or Affiliated Person thereof (including as an officer pursuant to Section 2.08 or as a non-officer employee), and may pay compensation thereunder for such goods, services or space if: (i) The material facts as to the contracting party's relationship or interest and as to the contract or transaction are disclosed or are known to the Board, and the Board in good faith authorizes the contract or transaction in accordance with Section 2.01(i); (ii) The material facts as to the contracting party's relationship or interest and as to the contract or transaction are disclosed or are known to the Members, and the contract or transaction is specifically approved in good faith by the written consent of a majority in interest of those Members who are not Affiliated with the contracting party; and (iii) The contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified by the Board and the Members. T-3 Opera 8  2.06 COMPENSATION OF MANAGERS AND MEMBERS. No payment shall be made by the Company to any Manager or Member for such Manager or Member's services as a Manager or Member except as expressly provided in this Agreement or as approved by the Board with the Consent of the Members. Each Manager shall be entitled to reimbursement from the Company for all expenses reasonably incurred by such Manager in managing and conducting the business and affairs of the Company. The Board shall determine which expenses, if any, are allocable to the Company in a manner that is fair and reasonable to the Managers and the Company, and if such allocation is made in good faith it shall be conclusive in the absence of manifest error. The foregoing shall not prohibit payments and reimbursements to any Manager or Member who is also an officer of the Company, in such Person's capacity as an officer, to the extent approved by the Board. 2.07 INDEMNIFICATION OF MANAGERS, OFFICERS AND OTHERS. Each Manager (including any Manager acting within the scope of his or her authority as an officer appointed under Section 2.08), and the officers, directors, and shareholders of any Manager which is a corporation, shall be entitled to indemnity from the Company for any liability incurred and/or for any act performed by them within the scope of the authority conferred on them by or pursuant to this Agreement, and/or for any act omitted to be performed, except for their gross negligence or willful misconduct, which indemnification shall include all reasonable expenses incurred, including reasonable legal and other professional fees and expenses. Upon the approval of the Board, the Company may make advancements of any such expenses. The doing of any act or failure to do any act by a Manager, the effect of which may cause or result in loss or damage to the Company, if done in good faith to promote the best interests of the Company, shall not subject the Manager to any liability to the Members except for gross negligence or willful misconduct. 2.08 OFFICERS OF THE LLC. (a) ENUMERATION. The officers of the Company shall be a President, a Secretary, a Treasurer and such Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers as the Board may from time to time determine and elect or appoint. The President, the Secretary, the Treasurer and nominees to any other offices created by the Board shall be elected by the Board. Two or more offices may be held by the same person. (b) TERM. Upon election, each of the officers of the Company shall hold office until their respective successors are elected and qualified or until their earlier resignation or removal. (c) VACANCIES. Any vacancy at any time existing in any office may be filled by the Board pursuant to subsection (a) above. T-3 Opera 9  (d) PRESIDENT. The President shall be the chief executive officer of the Company except as the Board may otherwise provide. It shall be his duty and he shall have the power to see that all orders and resolutions of the Board are carried into effect. He shall from time to time report to the Board all matters within his knowledge which the interests of the Company may require to be brought to its notice. The President shall perform such duties and have such powers additional to the foregoing as the Board shall designate. (e) VICE PRESIDENT. In the absence or disability of the President, his powers and duties shall be performed by the Vice President, if elected and if only one, or, if more than one, by the one designated for the purpose by the Board or, in the absence of such designation, the Vice President longest serving in such capacity as of date of such absence or disability. Each Vice President shall perform such duties and have such powers additional to the foregoing as the Board shall designate. (f) TREASURER. The Treasurer shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit or oversee the deposit of all monies and other valuable effects in the name and to the credit of the Company in such depositories as shall be designated by the Board or in the absence of such designation in such depositories as he shall from time to time deem proper. He shall disburse or oversee the disbursement of the funds of the Company as shall be ordered by the Board, taking proper vouchers for such disbursements. He shall promptly render to the President and to the Board such statements of his transactions and accounts as the President and Board may from time to time require. The Treasurer shall perform such duties and have such powers additional to the foregoing as the Board may designate. (g) ASSISTANT TREASURER. In the absence or disability of the Treasurer, his powers and duties shall be performed by the Assistant Treasurer, if elected and if only one, or if more than one, by the one designated for the purpose by the Board or, in the absence of such designation, the Assistant Treasurer longest serving as of the date of such absence or disability. Each Assistant Treasurer shall perform such duties and have such powers additional to the foregoing as the Board shall designate. (h) SECRETARY. The Secretary shall issue notices of all meetings of Members, of the Board and of committees thereof where notices of such meetings are required by law or this Agreement. He shall record the proceedings of the meetings of the Members and of the Board and shall be responsible for the custody thereof in a book to be kept for that purpose. He shall sign such instruments as require his signature. In his absence at any meeting, an Assistant Secretary or the Secretary pro tempore shall perform his or her duties thereat. He shall perform such duties and have such powers additional to the foregoing as the Board shall designate. T-3 Opera 10  (i) ASSISTANT SECRETARY. In the absence or disability of the Secretary, his powers and duties shall be performed by the Assistant Secretary, if elected and if only one, or, if more than one, by the one designated for the purpose by the Board or, in the absence of such designation, the Assistant Secretary longest serving as of the date of such absence or disability. Each Assistant Secretary shall perform such duties and have such powers additional to the foregoing as the Board shall designate. (j) REMOVAL. The Board may remove any officer, either with or without cause, at any time. (k) BOND. The Company may secure the fidelity of any or all of its officers or agents by bond or otherwise. (l) RESIGNATION. Any officer, agent or employee of the Company may resign at any time by giving written notice to the Board, to the President or to the Secretary of the Company. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, upon receipt thereof; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. ARTICLE III MEMBERS AND CAPITAL CONTRIBUTIONS 3.01 CAPITAL ACCOUNTS. A separate Capital Account shall be maintained for each Member, including any Member who shall hereafter acquire an Interest in the Company. Capital Accounts shall be maintained in accordance with the provisions of Section 704 of the Code and the Regulations thereunder, except as provided herein. 3.02 INITIAL MEMBERS AND INITIAL CAPITAL CONTRIBUTIONS. (a) INITIAL CONTRIBUTION BY DEVELOPMENT CORPORATION. The execution of this Agreement by the Development Corporation shall be deemed to constitute the full complete and irrevocable contribution by the Development Corporation (and in turn by the Stockholders thereof) of all its right, title and interest in and to the Products, the Product Know How and the Product Rights, and thereby shall constitute the making of the Capital Contribution required by the Class A Member for the issuance of the Class A Interest acquired herein and described on SCHEDULE I hereto. (b) INITIAL CONTRIBUTION BY ST. LAWRENCE. On the date of this Agreement St. Lawrence has contributed to the capital of the Company, the amount of cash or property having an agreed value, set forth opposite its name on SCHEDULE 1 hereto in consideration for the issuance to St. Lawrence of the Class B Interest described on SCHEDULE I hereto. T-3 Opera 11  (c) CLASS B OPTION. There is hereby authorized by the execution of this Agreement by the parties hereto, an option (the "CLASS B OPTION") to Edward B. Grier III (the "Option Holder") to purchase a Class B Interest that equals (at the time of issuance) an aggregate of 2.5% of the fully diluted Interest of the Company, which such option shall be in substantially in the form of EXHIBIT A attached hereto (the "OPTION AGREEMENT'). Upon the exercise of the Class B Option by the Option Holder in accordance with the Option Agreement, the Option Holder shall be admitted to the Company as a Class B Member. T-3 Opera 12  3.03 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company as Members, and additional Interests may be created and assigned and/or issued to those additional Persons and/or to existing Members, all on the terms and conditions approved by the Board at the time of admission, subject to the Company's receipt of such Capital Contribution (if any) as may be agreed upon between the Board and such Person. Notwithstanding anything contained in this Agreement to the contrary, the terms of admission or issuance may not create any class or series of Interests having rights, powers or duties senior to those of any existing Interests unless the Board has obtained the majority written consent of the Members holding the Interests in such junior class(es). The Board shall reflect the creation of additional Interests by amendment of SCHEDULE I hereto, and shall reflect the creation of any new class or series in an amendment to this Agreement indicating the different rights, powers and duties possessed by the several classes or series of Interests, either of which amendments need be executed only by the Board. 3.04 NO WITHDRAWAL OF OR INTEREST ON CAPITAL. Except as otherwise set forth herein no Member shall have the right to resign and receive any distribution from the Company as a result of resignation, and no Member shall have the right to receive the return of all or any part of his, her, or its Capital Contributions or Capital Account, or any other distribution, except as provided in Section 3.08, 4.01, 4.02 and 8.03. No Member shall have any right to demand and receive property of the Company in exchange for all or any portion of his, her, or its Capital Contributions or Capital Account, except as provided in Section 8.03 and 4.02 upon dissolution and liquidation of the Company, or as set forth in SCHEDULE I hereto. Other than as set forth in Section 3.08 and in the Additional Terms and Conditions, no interest or prior or preferred return shall accrue or be paid on any Capital Contribution or Capital Account except pursuant to Section 4.01 and 4.02, as the same may be hereafter amended. 3.05 LIABILITY OF MEMBERS. No Member or Manager shall be entitled, obligated or required to make any Capital Contribution in addition to his, her or its Capital Contribution made under Section 3.02 or to be made under Section 3.06(d), or any loan, to the Company. No Member, in his, her, or its capacity as a Member, shall have any liability to restore any negative balance in his, her, or its Capital Account or to contribute to, or in respect of, the liabilities or the obligations of the Company, or to restore any amounts distributed from the Company, except as may be required under the Act or other applicable law. In no event shall any Member, in his, her, or its capacity as a Member, be personally liable for any liabilities or obligations of the Company. T-3 Opera 13  3.06 ADDITIONAL CAPITAL REQUIREMENTS. (a) NEW INTERESTS. In the event that the Company requires additional funds to carry out its purposes, to conduct its business, or to meet its obligations, the Company may create and issue and /or assign additional Interests to such investors as the Board may determine, or may borrow funds from such lender(s) as the Board may determine, in each case including any one or more Managers or existing Members, all on such terms and conditions as are approved by the Board. (b) LOANS. No loan made to the Company by any Member or Manager shall constitute a Capital Contribution to the Company for any purpose. (c) DEFAULTS. No Member or Manager shall have any obligation to give notice of an existing or potential default of any obligation of the Company to any of the Members or Managers, nor shall any Member or Manager be obligated to make any Capital Contributions or loans to the Company, or otherwise supply or make available any funds to the Company, even if the failure to do so would result in a default of any of the Company's obligations or the loss or termination of all or any part of the Company's assets or business. (d) FOLLOW-ON CAPITAL CONTRIBUTION. The Class B Member shall be required to make additional Capital Contributions to the Company equal to $750,000 (the "FOLLOW-ON CAPITAL CONTRIBUTION"); PROVIDED, that such Follow-on Capital Contribution shall be required only if prior to the expiration of the twenty-four (24) month period following the date of this Agreement, the Company has secured an "IND" from the U.S. Department of Health and Human Services Food and Drug Administration, which "IND" shall be consistent with the description of the IND set forth in the Development Plan. Such Follow-on Capital Contribution shall be made within ten (10) days of the Class B Member's receipt of a written "Contribution Notice" given to the Class B Member by the Company attesting to the following: (i) the issuance of the IND described above; (ii) that all development or partnering agreements in effect, or contemplated, as of the date thereof, are in full force and effect, and remain adequate for the task anticipated; and (iii) a then current Development Status Report. The Company and the Class B Member may agree, in their respective sole discretion, to modify or waive any requirements set forth above. In the event that a Class B Member transfers all or a portion of its Class B Units, the transferee(s) thereof shall, if required by the transferor, pay that portion of the Follow-on Capital Contribution attributable to the transferred Class B Units on a pro rata basis. T-3 Opera 14  3.07 THIRD PARTY LIABILITIES. The provisions of this Article III are not intended to be for the benefit of any creditor or other Person (other than a Member in his, her, or its capacity as a Member) to whom any debts, liabilities, or obligations are owed by (or who otherwise has any claim against) the Company or any of the Members. Moreover, notwithstanding anything contained in this Agreement, including specifically but without limitation this Article III, no such creditor or other Person shall obtain any rights under this Agreement or shall, by reason of this Agreement, make any claim in respect of any debt, liability, or obligation (or otherwise) against the Company or any Member. 3.08 CLASS B REDEMPTION RIGHTS AND REDEMPTION ON CERTAIN EVENTS. (a) JANUARY 2, 2007. The Class B Member shall have the right on written notice to require the Company to redeem all or any portion of its Class B Units on or after January 2, 2007, at a redemption price equal to the Class B Member's Capital Contribution plus a cumulative preferred return of six percent (6%) per annum (the "CLASS B REDEMPTION PRICE"). Such Class B Redemption Price shall be payable in immediately available funds within one hundred twenty (120) days of the delivery of such Class B Member notice. (b) FAILURE TO MATERIALLY CONFORM WITH DEVELOPMENT PLAN. If at any time the Product development shall cease to proceed materially in conformance with the Development Plan for a period of one hundred and eight (180) days after the IND is obtained or the IND is not obtained by June 30, 2004, then in each case, the Class B Member shall be entitled to redeem all or any portion of the Class B Units upon written notice to the Company for an amount equal to its Capital Contribution, and if the Company does not have sufficient liquid assets to pay such redemption price, then it shall provide a demand note in substantially the form of EXHIBIT B attached hereto (the "Demand Note") for the unpaid portion thereof. The Demand Note shall be due and payable within one hundred twenty (120) days of demand thereon and shall be secured by a lien on all of the Company's assets. The Company and the Class B Member may agree, in their respective sole discretion, to modify or waive any requirements set forth above. ARTICLE IV DISTRIBUTIONS 4.01 DISTRIBUTION OF COMPANY FUNDS. Except as provided in Section 4.02, 4.04 and the Additional Terms and Conditions, all Company funds, which are determined by the Board to be available for distribution shall be distributed to the Members in proportion to their respective Percentage Interests. T-3 Opera 15  4.02 DISTRIBUTION UPON DISSOLUTION. Proceeds from a Terminating Capital Transaction and amounts available upon dissolution, and after payment of, or adequate provision for, the debts and obligations of the Company, and liquidation of any remaining assets of the Company, shall be distributed and applied in the following priority: (i) First, to fund reserves for liabilities not then due and owing and for contingent liabilities to the extent deemed reasonable by the Board; PROVIDED, that, upon the expiration of such period of time as the Board shall deem advisable, the balance of such reserves remaining after payment of such contingencies shall be distributed in the manner hereinafter set forth in this Section 4.02; and (ii) Second, to the Members, an amount sufficient to reduce the Members' Capital Accounts to zero, in proportion to the positive balances in such Capital Accounts (after reflecting in such Capital Accounts all adjustments thereto necessitated by (A) all other Company transactions (including distributions and allocations of Profits and Losses and items of income, gain, deduction, and loss) and (B) such Terminating Capital Transaction). Notwithstanding anything contained in this Agreement to the contrary, in the event of a Terminating Capital Transaction, as a condition to the consummation of such transaction, the Class B Member first shall be paid the higher of (a) the Class B Redemption Price immediately after the distribution or application of amounts to fund reserves for certain liabilities as provided for by Subsection (i) above, or (b) the Class B Members' proportionate share of the net value of the Company's assets. If the Class B Member is paid the Class B Redemption Price, then the Class B Member's Capital Account shall be reduced by an amount equal to the Class B Redemption Price before the Class B Member joins in any distributions provided for by subsection (ii) above. 4.03 DISTRIBUTION OF ASSETS IN KIND. No Member shall have the right to require any distribution of any assets of the Company in kind. If any assets of the Company are distributed in kind, such assets shall be distributed on the basis of their fair market value as determined by the Board. Any Member entitled to any interest in such assets shall, unless otherwise determined by the Board, receive separate assets of the Company and not an interest as tenant-in-common, with other Members so entitled, in each asset being distributed. 4.04 DISTRIBUTIONS TO COVER MEMBERS' TAX LIABILITY. T-3 Opera 16  Unless the Board shall determine that the Company does not have sufficient liquid assets to make the distribution contemplated by this Section 4.04 consistent with prudent business practice, the Board shall, at a minimum, distribute to Members, no less often than quarterly, amounts intended to cover the potential federal, state, or local tax obligations of such Members on account of the cumulative allocation to them of taxable income in excess of tax losses pursuant to this Agreement. For purposes of the foregoing, such federal, state, and local tax obligations of each Member shall be assumed to equal the highest effective combined federal and state income tax rate applicable to any Member multiplied by each Member's Percentage Interest multiplied by the cumulative allocation to all Members of taxable income in excess of tax losses determined as described in the definition of Profits and Losses without the adjustments listed therein, with the result reduced by the cumulative amount previously distributed pursuant to this Section 4.04. Partial distributions made to the Members pursuant to this Section 4.04 shall be made in proportion to their respective amounts calculated under the previous sentence. For purposes of applying Section 4.04 to subsequent distributions to the Members, distributions made pursuant to this Section 4.04 shall be disregarded and shall not be deemed to have been made pursuant to Section 4.01. ARTICLE V ALLOCATION OF PROFITS AND LOSSES 5.01 ALLOCATION OF PROFITS AND LOSSES. (a) After giving effect to the allocations set forth in Section 9.01 and 9.02, and subject to the other provisions of Article IX, Profits shall be allocated in the following order and priority: (i) First, in proportion to any deficit Capital Account balances, until such deficits are eliminated; and (ii) Second, to each Member until the balance in his, her, or its Capital Account is equal to the amount of such Member's Adjusted Capital Contributions; and (iii) Third, any remaining Profits shall be allocated among the Members in proportion to their respective Percentage Interests. (b) After giving effect to the allocations set forth in Section 9.01 and 9.02, and subject to the other provisions of Article IX, Losses shall be allocated in the following order and priority: (i) First, to each Member to reduce the balance in his, her, or its Capital Account to an amount equal to such Member's Adjusted Capital Contributions; and (ii) Second, to each Member to reduce the balance in his, her, or its Capital Account to zero; and (iii) Third, any remaining Losses shall be allocated among the Members in proportion to their respective Percentage Interests. T-3 Opera 17  ARTICLE VI FISCAL MATTERS 6.01 BOOKS AND RECORDS. The Board shall keep or cause to be kept complete and accurate books and records of the Company on the income tax method of reporting and otherwise in accordance with generally accepted accounting principles consistently applied. Such documents and information as are required to be furnished to the Members under the Act shall be made available at an office of the Company for examination and copying by any Member or Manager, or his, her, or its duly authorized representative, at his reasonable request and at his expense during ordinary business hours. 6.02 BANK ACCOUNTS. Bank accounts and/or other accounts of the Company shall be maintained in such banking and/or other financial institution(s) as shall be selected by the Board, and withdrawals shall be made and other activity conducted on such signature or signatures as shall be determined by the Board. 6.03 FISCAL YEAR. The fiscal year of the Company shall end on December 31 of each year. 6.04 TAX MATTERS PARTNER. The Tax Matters Partner shall be the Person so named in SCHEDULE I hereto. At any time and from time to time if there is no Tax Matters Partner, a Tax Matters Partner may be designated by the Approval of the Board. The Tax Matters Partner is hereby authorized to, and shall perform all duties of, a "tax matters partner" under the Code and shall serve as Tax Matters Partner until his, her, or its resignation or until the designation of his, her, or its successor, whichever occurs sooner. T-3 Opera 18  ARTICLE VII TRANSFERS AND COMPANY ISSUANCES 7.01 RESTRICTIONS ON TRANSFER. (a) No Member may Transfer all or any part of his, her, or its Units, or otherwise withdraw from the Company, except with the prior written approval of the Board (excluding a Manager who is the proposed transferor or an Affiliate of the proposed transferor, unless such Manager is the sole Manager of the Company), which may be withheld for any reason or for no reason. No transferee of a Transfer may be admitted as a Member except with the prior written approval of the Board and the Consent of the Members, which may be withheld for any reason or for no reason, and upon the satisfaction of the other requirements of this Agreement. Notwithstanding the foregoing to the contrary (i) the transfer of Class A Units by the Development Corporation to the Option Holder pursuant to a Purchase and Sale Agreement in substantially the form of EXHIBIT C attached hereto shall be expressly permitted hereby and upon such transfer the Option Holder shall be admitted to the Company as a Class A Member, subject only to the other provisions set forth in this Section 7.01 and (ii) the transfer of Class B Units by St. Lawrence to any of its Affiliates shall be expressly permitted hereby and upon such transfer any such Affiliate shall be admitted to the Company as a Class B Member, subject to the other provisions set forth in Section 7.01. (b) No Person who becomes the holder by operation of law of all or any portion of the Units may be admitted as a Member except with the prior written approval of the Board and the Consent of the Members, which may be withheld for any reason or for no reason, and upon satisfaction of the other requirements of this Agreement. (c) Every Transfer of a Unit permitted by this Article VII shall nevertheless be subject to the following: (i) No Transfer of any Units may be made if such Transfer would cause or result in a breach of any agreement binding upon the Company or of then applicable rules and regulations of any governmental authority having jurisdiction over such Transfer. The Board may require as a condition of any Transfer that the transferor assume all costs incurred by the Company in connection therewith and furnish an opinion of counsel, satisfactory to the Company both as to counsel and opinion, that the proposed Transfer complies with applicable law, including federal and state securities laws, and does not cause the Company to be an investment company as such term is defined in the Investment Company Act of 1940, as amended. (ii) Notwithstanding anything contained herein to the contrary, no Unit shall be transferred if, by reason of such Transfer, the classification of the Company as an Company for federal income tax purposes would be adversely affected or jeopardized, or if such Transfer would have any other substantial adverse effect for federal income tax purposes. T-3 Opera 19  (iii) In the event of any Transfer, there shall be filed with the Company a duly executed and acknowledged counterpart of the instrument effecting such Transfer. The transferee, if any, shall execute such additional instruments as shall be reasonably required by the Board. If and for so long as such instruments are not so executed and filed, the Company need not recognize any such Transfer for any purpose, and the transferee shall be entitled only to the rights which are required under the Act to be afforded to a transferee who does not become a Member. (iv) Upon the admission or withdrawal of a Member, this Agreement (including without limitation SCHEDULE I hereto) and/or the Certificate shall be amended appropriately by the Board to reflect the then existing names and addresses of the Members and their respective Percentage Interests and Units. (d) A transferor of a Unit shall, if the transferee is a Member hereunder or if the transferee becomes a Member pursuant to the provisions of this Agreement, be relieved of liability under this Agreement with respect to the transferred Unit arising or accruing on or after the effective date of the Transfer. (e) Any Person who acquires in any manner whatsoever a Unit, whether or not such Person has accepted and assumed in writing the terms and provisions of this Agreement or been admitted into the Company as a Member as provided in this Section 7.01, shall be deemed, by acceptance of the acquisition thereof, to have agreed to be subject to and bound by all of the obligations of this Agreement with respect to such Unit and shall be subject to the provisions of this Agreement with respect to any subsequent Transfer of such Unit. (f) Any Transfer in contravention of any of the provisions of this Agreement shall be null and void and ineffective to transfer any interest in the Company, and shall not bind, or be recognized by, or be recorded on the books of, the Company, and any transferee or assignee in such transaction shall not be or be treated as or deemed to be a Member for any purpose. In the event any Member shall at any time Transfer a Unit in contravention of any of the provisions of this Agreement, then each other Member shall, in addition to all rights and remedies at law and equity, be entitled to a decree or order restraining and enjoining such transaction, and the offending Member shall not plead in defense thereto that there would be an adequate remedy at law, it being expressly hereby acknowledged and agreed that damages at law would be an inadequate remedy for a breach or threatened breach of the violation of the provisions concerning such transactions set forth in this Agreement. 7.02 RIGHT OF PARTICIPATION IN COMPANY SALES. T-3 Opera 20  (a) RIGHT OF PARTICIPATION ON COMPANY ISSUANCES. The Company shall, prior to any proposed issuance by the Company of any of securities for cash (other than debt securities with no equity feature), first offer to each Class B Member by written notice the right, for a period of thirty (30) days, to purchase for cash at an amount equal to the price or other consideration for which such securities are to be issued, all such securities. Each purchasing Class B Member shall be entitled to purchase its pro rata share of such offered securities based upon the Percentage Interest of such purchasing Class B Member in relation to the aggregate Percentage Interests held by all purchasing Class B Members unless the purchasing Class B Members agree to a different allocation. (b) EXCEPTIONS TO RIGHT OF PARTICIPATION. The participation rights of each of the Class B Members pursuant to this Section 7.02 shall not apply to securities issued or issuable: (a) as an equity dividend or upon any subdivision of Units; PROVIDED, that the securities issued pursuant to such dividend or subdivision are limited to additional Units, (b) pursuant to subscriptions, warrants, options, convertible securities, or other rights which are outstanding or the date of this Agreement, (c) pursuant to a public offering, (d) pursuant to the grant or exercise of options or warrants to purchase Units granted in the future to directors, officers, employees or consultants of the Company and approved after the date of this Agreement by the Board, (e) in connection with any strategic partner alliance or joint venture where the parties to such venture are not financial investors, or (f) in connection with the acquisition by the Company of a business or other entity or operating assets of a business or other entity where the Company is the surviving entity and is not the target of such acquisition. (c) MECHANICS OF RIGHT OF PARTICIPATION. The Company's written notice to the Class B Members shall describe the securities proposed to be issued by the Company and specify the number, price and payment terms. Each of the Class B Members may accept the Company's offer as to the full number of securities offered to it or any lesser number, by written notice thereof given by it to the Company prior to the expiration of the aforesaid thirty (30) day period, in which event the Company shall sell and such party shall buy, upon the terms specified, the number of securities agreed to be purchased by such party at such time and commensurate with the sale by the Company of all of the remainder of such securities and as hereinafter provided. The Company shall be free at any time prior to one hundred and twenty (120) days after the date of its notice of offer to each of the Class B Members, to offer and sell to any third party or parties the remainder of such securities proposed to be issued by the Company (including but not limited to the securities not agreed by the Class B Members to be purchased by them), at a price and on payment terms no less favorable to the Company than those specified in such notice of offer to the Class B Members. However, if such third party sale or sales are not consummated within such 120-day period, the Company shall not sell such securities as shall not have been purchased within such period without again complying with this Section 7.02. T-3 Opera 21  (d) EXPIRATION OF PARTICIPATION RIGHTS. The participation rights set forth in this Section 7.02 shall expire on the two (2) year anniversary date of this Agreement; PROVIDED, that if the Company commences but does not consummate an offering prior to the above referenced expiration date the expiration date shall be extended until such offering closes. ARTICLE VIII DISSOLUTION AND TERMINATION 8.01 LIMITATIONS. The Company may be dissolved, liquidated, and terminated only pursuant to the provisions of this Article VIII, and the parties hereto do hereby irrevocably waive any and all other rights they may have to a dissolution of the Company or a sale or partition of any or all of the Company assets. 8.02 EVENTS CAUSING DISSOLUTION. Notwithstanding the Act, the Company shall be dissolved and its affairs wound up only upon the occurrence of any of the following events: (a) A Terminating Capital Transaction; PROVIDED, that no Terminating Capital Transaction may occur without the prior written approval of the Board, the Consent of the Members and the satisfaction of the conditions set forth in Section 4.02; (b) The election to dissolve the Company made in writing by the approval of the Board with the Consent of the Members; or (c) Any consolidation or merger of the Company with or into any entity in which the Company is not the resulting or surviving entity; PROVIDED, that no such consolidation or merger may occur without the prior written approval of the Board and the Consent of the Members; or (d) Any dissolution of the Company other than as provided in this Paragraph 8.02 shall be a dissolution in contravention of this Agreement. 8.03 PROCEDURES ON DISSOLUTION. Upon dissolution of the Company, the Board or if none, a liquidator elected by the Consent of the Members, shall liquidate the assets of the Company, apply and distribute the proceeds thereof under Section 4.02 of this Agreement, and cause the cancellation of the Certificate. The Company shall not terminate until the Certificate shall be canceled. T-3 Opera 22  ARTICLE IX TAX ALLOCATION PROVISIONS 9.01 REQUIRED REGULATORY ALLOCATIONS. (a) LIMITATION ON AND REALLOCATION OF LOSSES. At no time shall any allocations of Losses, or any item of loss or deduction, be made to a Member if and to the extent such allocation would cause such Member to have, or would increase, any Adjusted Capital Account Deficit of such Member at the end of any fiscal year. To the extent any Losses or items are not allocated to one or more Members pursuant to the preceding sentence, such Losses shall be allocated to the Members to which such losses or items may be allocated without violation of this Section 9.01(a). (b) MINIMUM GAIN CHARGE-BACK. If there is a net decrease in the Minimum Gain of the Company during any fiscal year, then items of income or gain of the Company for such fiscal year (and, if necessary, subsequent fiscal years) shall be allocated to each Member in an amount equal to such Member's share of the net decrease in the Minimum Gain, determined in accordance with Regulations Section 1.704-2(d)(1). A Member's share of the net decrease in the Minimum Gain of the Company shall be determined in accordance with Regulations Section 1.704-2(g). The items of income and gain to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f)(6) and 1.704-2(j)(2). (c) PARTNER MINIMUM GAIN CHARGE-BACK. Notwithstanding any contrary provisions of this Article IX, other than Section 9.01(b) above, if there is a net decrease in Partner Minimum Gain attributable to Partner Nonrecourse Debt during any fiscal year, then each Member who has a share of such Partner Minimum Gain, determined in accordance with Regulations Section 1.704-2(i), shall be allocated items of income and gain of the Company, determined in accordance with Regulations Section 1.704-2(j)(2)(ii), for such fiscal year (and, if necessary, subsequent fiscal years) in an amount equal to each such Member's share of the net decrease in such Partner Minimum Gain, determined in accordance with Regulations Section 1.704-(2)(i). (d) QUALIFIED INCOME OFFSET. If any Member unexpectedly receives an item described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of income and gain shall be allocated to each such Member in an amount and manner sufficient to eliminate, as quickly as possible and to the extent required by Regulations Section 1.704-1(b)(2)(ii)(d), the Adjusted Capital Account Deficit of such Member; PROVIDED, that an allocation pursuant to this Section 9.01(d) shall be made if and only to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article IX have been tentatively made as if this Section 9.01(d) were not in the Agreement. (e) GROSS INCOME ALLOCATION. In the event any Member has a Capital Account deficit at the end of any Company fiscal year which is in excess of the sum of the items to be credited to a T-3 Opera 23  Member's Capital Account under clause (a) of the definition of Adjusted Capital Account Deficit, then each such Member shall be allocated items of income and gain in the amount of such excess as quickly as possible; PROVIDED, that an allocation pursuant to this Section 9.01(e) shall be made if, and only to the extent that, such Member would have a Capital Account deficit in excess of such sum after all other allocations provided for in this Article IX have been tentatively made as if this Section 9.01(e) were not in this Agreement. As among Members having such excess, if there are not sufficient items of income and gain to eliminate all such excesses, such allocations shall be made in proportion to the amount of any such excess. (f) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any fiscal year or other period (not including any Partner Nonrecourse Deductions allocated pursuant to Section 9.01(g)) shall be allocated among the Members in proportion to their respective Percentage Interests. Solely for purposes of determining each Member's proportionate share of the "excess nonrecourse liabilities" of the Company, within the meaning of Regulations Section 1.752-3(a)(3), each Member's interest in Company profits shall be equal to his, her, or its Percentage Interest. The items of losses, deductions, and Code Section 705(a)(2)(b) expenditures to be so allocated shall be determined in accordance with Regulations Section 1.704-2(j)(1)(ii). (g) PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions for any fiscal year or other period shall be allocated to the Member who bears the economic risk of loss with respect to the nonrecourse liability (as determined and defined under Regulations Section 1.704-2(b)(4)) to which such Partner Nonrecourse Deductions are attributable, in accordance with Regulations Section 1.704-2(i)(1). The items of losses, deductions, and Code Section 705(a)(2)(b) expenditures to be so allocated shall be determined in accordance with Regulations Section 1.704-2(j)(1)(ii). (h) BASIS ADJUSTMENT. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to either of Code Section 734(b) or 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. 9.02 CURATIVE ALLOCATIONS. The allocations set forth in Section 9.01 are intended to comply with certain requirements of Regulations Section 1.704-1(b) and 1.704-2 and shall be interpreted consistently therewith. Such allocations may not be consistent with the manner in which the Members intend to divide Company distributions and to make Profit and Loss allocations. Accordingly, by Approval of the Board, other T-3 Opera 24  allocations of Profits, Losses, and items thereof shall be made among the Members so as to prevent the allocations in Section 9.01 from distorting the manner in which Company distributions will be made among the Members pursuant to Section 5.01 hereof. In general, the Members anticipate that this will be accomplished by specially allocating other Profits, Losses, and items of income, gain, loss, and deduction among the Members so that the net amount of allocations under Section 9.01, and allocations under this Section 9.02, to each such Member is zero. However, the Board shall have discretion to accomplish this result in any reasonable manner. 9.03 TAX ALLOCATIONS AND BOOK ALLOCATIONS. Except as otherwise provided in this Section 9.03, for federal income tax purposes, each item of income, gain, loss, and deduction shall, to the extent appropriate, be allocated among the Members in the same manner as its correlative item of "book" income, gain, loss, or deduction has been allocated pursuant to the other provisions of this Agreement. In accordance with Code Section 704(c) and the Regulations thereunder, depreciation, amortization, gain, and loss, as determined for tax purposes, with respect to any property whose Book Value differs from its adjusted basis for federal income tax purposes shall, for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its Book Value, such allocation to be made by Approval of the Board in any manner which is permissible under said Code Section 704(c) and the Regulations thereunder, and the Regulations under Code Section 704(b). In the event the Book Value of any property of the Company is subsequently adjusted, subsequent allocations of income, gain, loss, and deduction with respect to any such property shall take into account any variation between the adjusted basis of such property for federal income tax purposes and its Book Value in the manner provided under Section 704(c) of the Code and the Regulations thereunder. Allocations pursuant to this Section 9.03 are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member's Capital Account or share of Profits, Losses, other items, or distributions pursuant to any provision of this Agreement. 9.04 GENERAL ALLOCATION AND DISTRIBUTION RULES. (a) INTERIM ALLOCATIONS. For purposes of determining the Profits, Losses, or any other items allocable to any period, Profits, Losses, and any such other items shall be determined on a daily, monthly, or other basis, as determined by the Board using any permissible method under Code Section 706 and the Regulations thereunder. Except as otherwise provided in this Agreement, all items of income, gain, loss, and deduction shall be allocable among the Members in the same proportions as the Profits or Losses are allocated for the fiscal year in which such item is included. T-3 Opera 25  (b) NEW MEMBERS. Upon the admission of a new Member or the Transfer of an Interest, the new and old Members or the transferor and transferee shall be allocated shares of Profits and Losses and other allocations and shall receive distributions, if any, based on the portion of the fiscal year that the new or transferred Interest was held by the new and old Members, or the transferor and transferee, respectively. For the purpose of allocating Profits and Losses and other allocations and distributions, (i) such admission or Transfer shall be deemed to have occurred on the first day of the month in which it occurs, or if such date shall not be permitted for allocation purposes under the Code or the Regulations, on the nearest date otherwise permitted under the Code or the Regulations, and (ii) if required by the Code or the Regulations, the Company shall close its books on an interim basis on the last day of the previous calendar month. 9.05 TAX WITHHOLDING. If the Company incurs a withholding tax obligation with respect to the share of income allocated to any Member, (a) any amount which is (i) actually withheld from a distribution that would otherwise have been made to such Member and (ii) paid over in satisfaction of such withholding tax obligation shall be treated for all purposes under this Agreement as if such amount had been distributed to such Member, and (b) any amount which is so paid over by the Company, but which exceeds the amount, if any, actually withheld from a distribution which would otherwise have been made to such Member, shall be treated as an interest-free advance to such Member. Amounts treated as advanced to any Member pursuant to this Section 9.05 shall be repaid by such Member to the Company within 30 days after the Board gives notice to such Member making demand therefor. Any amounts so advanced and not timely repaid shall bear interest, commencing on the expiration of said 30 day period, compounded monthly on unpaid balances, at an annual rate equal to the Applicable Federal Rate as of such expiration date. The Company shall collect any unpaid amounts from any Company distributions that would otherwise be made to such Member. ARTICLE X GENERAL PROVISIONS 10.01 NOTICES. Any and all notices under this Agreement shall be effective (a) upon delivery, if delivered in hand, (b) on the third business day after being sent by registered or certified mail, return receipt requested, postage prepaid, or (c) on the first business day after being sent by express mail, telecopy, or commercial overnight delivery service providing a receipt for delivery. All such notices in order to be effective shall be in writing and addressed, if to the Company, at its registered office under the Act and, if to a Member, at the last address of record on the Company books. Copies of such notices shall also be sent to the last address for the recipient which is known to the sender, if different from the address so specified. T-3 Opera 26  10.02 WORD MEANINGS. Words such as "herein," "hereinafter," "hereof," and "hereunder" refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires. The singular shall include the plural, and the masculine gender shall include the feminine and neuter, and vice versa, unless the context otherwise requires. 10.03 BINDING PROVISIONS. Subject to the restrictions on transfer set forth herein, the covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the parties hereto, their heirs, Legal Representatives, and permitted successors and assigns, and any other Person who is issued or who is otherwise acquires any Interest at any time. 10.04 APPLICABLE LAW. This Agreement, including its existence, validity, construction, and operating effect, and the rights of each of the parties hereto, shall be governed by and construed in accordance with the laws of the State of Delaware without regard to otherwise governing principles of conflicts of law. 10.05 COUNTERPARTS. This Agreement may be executed in several counterparts and, as so executed, shall constitute one agreement binding on all parties hereto, notwithstanding that all of the parties have not signed the original or the same counterpart. 10.06 SEPARABILITY OF PROVISIONS. Each provision of this Agreement shall be considered separable. If, for any reason, any provision or provisions herein are determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those portions of this Agreement which are valid, and if for any reason any provision or provisions herein would cause the Members to be liable for or bound by the obligations of the Company, such provision or provisions shall be deemed void and of no effect. 10.07 SECTION TITLES. Section titles are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text. T-3 Opera 27  10.08 AMENDMENTS. Except as otherwise specifically provided herein, including without limitation in Section 7.01(c)(iv), this Agreement may be amended or modified only with the approval of the Board and the written consent of (i) the Class A Members holding majority of the Class A Units, voting as a single class and (ii) the Class B Members holding a majority of the Class B Units voting as a single class. Except as set forth in Section 7.02 hereof, no Member shall have any preemptive, preferential, or other right with respect to the issuance or sale of any Interests, or any warrants, subscriptions, options or other rights with respect thereto. 10.09 ENTIRE AGREEMENT. This Agreement together with SCHEDULES 1 and 2 attached hereto embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to such subject matter. 10.10 WAIVER OF PARTITION. Each Member agrees that irreparable damage would be done to the Company if any Member brought an action in court to dissolve the Company. Accordingly, unless otherwise expressly authorized in this Agreement, each Member agrees that he, she, or it shall not, either directly or indirectly, take any action to require partition or appraisement of the Company or of any of the assets or properties of the Company and, notwithstanding any provisions of this Agreement to the contrary, each Member (and his, her, or its successors and assigns) accepts the provisions of the Agreement as his, her, or its sole entitlement on termination, dissolution, and/or liquidation of the Company and hereby irrevocably waives any and all right to maintain any action for partition or to compel any sale or other liquidation with respect to his, her, or its interest, in or with respect to, any assets or properties of the Company; and each Member agrees that he, she, or it will not petition a court for the dissolution, termination or liquidation of the Company. 10.11 SURVIVAL OF CERTAIN PROVISIONS. The Members acknowledge and agree that this Agreement contains certain terms and conditions which are intended to survive the dissolution and termination of the Company, including, but without limitation, the provisions of Section 2.07 and 3.05. The Members agree that such provisions of this Agreement which by their terms require, given their context, that they survive the dissolution and termination of the Company, so as to effectuate the intended purposes and agreements of the Members, shall survive, notwithstanding that such provisions had not been specifically identified as surviving and notwithstanding the dissolution and termination of the Company or the execution of any document terminating this Agreement, unless such termination document specifically provides for nonsurvival by reference to this Section 10.11 and to specific nonsurviving provisions. T-3 Opera 28  ARTICLE XI DEFINITIONS The following defined terms used in this Agreement shall have the meanings specified below: "ACT" means the Delaware Limited Liability Company Act, in effect at the time of the initial filing of the Certificate with the office of the Secretary of the State of Delaware, and as thereafter amended from time to time. "ADDITIONAL TERMS AND CONDITIONS" shall mean those provisions set forth on Schedule 2 hereto. "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Member, the deficit balance, if any, in such Member's Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments: (a) credit to such Capital Account any amounts which such Member is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5); and (b) debit to such Capital Account the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. "ADJUSTED CAPITAL CONTRIBUTION" means a Member's initial and all additional Capital Contributions to the Company, reduced by all distributions made to such Member under Section 4.01(i). "AFFILIATED PERSON" or "AFFILIATE" means, with reference to a specified Person, (i) any Person who owns directly or indirectly 10% or more of the beneficial ownership in such Person; (ii) one or more Legal Representatives of such Person and/or any Persons referred to in the preceding clause (i); and (iii) any entity in which any one or more of such Person and/or the Persons referred to in the preceding clauses (i) and (ii) owns directly or indirectly 10% or more of the beneficial ownership. "AGREEMENT" means this Limited Liability Company Agreement as it may be amended, supplemented, or restated from time to time. T-3 Opera 29  "APPLICABLE FEDERAL RATE" means the Applicable Federal Rate as that term is defined in Code Section 7872, whether the short-term, mid-term or long-term rate, as the case may be, as published from time to time by the Secretary of the Treasury. "BOARD OF MANAGERS" or "BOARD" means the Board of Managers described in Article II of this Agreement. "BOOK VALUE" means, with respect to any asset of the Company, such asset's adjusted basis for federal income tax purposes, except that: (i) the initial Book Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset (not reduced for any liabilities to which it is subject or which the Company assumes), as such value is determined and for which credit is given to the contributing Member under this Agreement; (ii) the Book Values of all assets of the Company shall be adjusted to equal their respective gross fair market values, as determined by the Board, at and as of the following times: (a) the acquisition of an additional or new Interest by a new or existing Member in exchange for other than a de minimis capital contribution, or in exchange for services by such Member, if the Board reasonably determine that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members; (b) the distribution by the Company to a Member of more than a de minimis amount of any asset of the Company (including cash or cash equivalents) as consideration for all or any portion of the Member's Interest, if the Board reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members; (c) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and (iii) the Book Value of the assets of the Company shall be increased (or decreased) to reflect any adjustment to the adjusted basis of such assets pursuant to Section 734(b) or Section 743(b) of the Code, but only to the extent such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); PROVIDED, HOWEVER, that Book Value shall not be adjusted pursuant to this clause (iii) to the extent that the Board determines that an adjustment pursuant to clause (ii) hereof is necessary or appropriate in connection with the transaction that would otherwise result in an adjustment pursuant to this clause (iii). If the Book Value of an asset has been determined or adjusted pursuant to the preceding clauses (i), (ii), or (iii), such Book Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses, and the amount of the adjustment shall thereafter be taken into account as gain or loss from the distribution of such asset for purposes of computing Profits or Losses. T-3 Opera 30  "CAPITAL ACCOUNT" of any Member shall mean the Capital Account of such Member referred to in Section 3.01 hereof. "CAPITAL CONTRIBUTION" means the amount of cash and the value of any other property contributed to the Company by a Member with respect to such Member's Interest, net of liabilities relating to such contributed property that the Company assumes or to which the Company takes subject under Section 752 of the Code. Any non-cash property shall be valued by agreement of the Board and the contributing Member, which valuation shall be conclusive. "CERTIFICATE" means the Certificate of Formation creating the Company, as it may from time to time be amended in accordance with the Act. "CLASS B OPTION" has the meaning set forth in Section 3.02(c). "CLASS B REDEMPTION PRICE" has the meaning set forth in Section 3.08(a). "CODE" means the Internal Revenue Code of 1986, as amended from time to time, and any subsequent federal law of similar import. "COMPANY" means the limited liability company formed pursuant to the Certificate and this Agreement, as it may from time to time be constituted and amended. "CONSENT" means the written consent or approval of more than 50% in interest, based on Percentage Interests held as Members, of those Members entitled to participate in giving such Consent, and if more than one class of Members is so entitled then more than 50% shall be so required with respect to each such class. "CONTROL RELEASE EVENT" shall mean the earlier to occur of (i) the determination by the Class B Member not to make a Follow-on Capital Contribution, or the failure of the Class B Member to satisfy its Capital Contribution obligations hereunder, or (ii) any event, distribution or series of payments that result in the Class B Member having received cash distributions equal to the cash Capital Contributions made by it, or (iii) the Company obtaining cash Capital Contributions from parties other than the Class B Member in an amount which exceeds the Capital Contributions from the Class B Member. "DEPRECIATION" means, for each year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such year or other period, except that if the Book Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, T-3 Opera 31  Depreciation shall be an amount that bears the same relationship to the Book Value of such asset as the depreciation, amortization, or other cost recovery deduction computed for tax purposes with respect to such asset for such period bears to the adjusted tax basis for such asset or, if such asset has a zero adjusted tax basis, Depreciation shall be determined with reference to the initial Book Value of such asset using any reasonable method selected by the Board, but not less than depreciation allowable for tax purposes for such year. "DEVELOPMENT CORPORATION" means T3 Therapeutics, Inc., a New York corporation and the sole initial Class A Member. "DEVELOPMENT PLAN" means the development plan and funding schedule agreed to in writing by St. Lawrence and the Company. "FOLLOW-ON CAPITAL CONTRIBUTION" has the meaning set forth in Section 3.06(d). "INTEREST" means the entire equity interest (or "limited liability company interest" as such term is used in the Act) of a Member in the Company and all rights and liabilities associated therewith, including without limitation rights to distributions (liquidating or otherwise), allocations, information, and rights to consent or approve, which Interest shall be as set forth on SCHEDULE I in the name of the applicable Member. Interests shall be represented by Units and shall be designated as "Class A Interests" or "Class B Interests" as set forth on SCHEDULE I hereto. "LEGAL REPRESENTATIVE" means, with respect to any individual, a duly appointed executor, administrator, guardian, conservator, personal representative, or other legal representative appointed as a result of the death or incompetency of such individual. "LOSSES" shall have the meaning provided below under the heading "Profits and Losses." "MANAGERS" shall refer to the Person(s) named as Managers in this Agreement and any Person who becomes an additional, substitute, or replacement Manager as permitted by this Agreement, in each such Person's capacity as a Manager of the Company. Managers shall be designated as "Class A Managers" or "Class B Managers" as set forth in Section 2.01. "MEMBER" shall refer any Person named as a Member in this Agreement and any Person who becomes an additional, substitute, or replacement Member as permitted by this Agreement, in each such Person's capacity as a Member of the Company; and "Members" shall refer to all such Persons collectively. Members shall be designated as "Class A Members" or "Class B Members" as set forth on Schedule I hereto. "MINIMUM GAIN" shall have the meaning given in Regulations Section 1.704-2(d). T-3 Opera 32  "NONRECOURSE DEDUCTIONS" shall have the meaning given in Regulations Section 1.704-2(b)(1). "OPTION HOLDER" means Edward B. Grier III, the holder of the Class B Option. "PARTNER MINIMUM GAIN" shall mean an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a nonrecourse liability, determined in accordance with Regulations Section 1.704-2(i)(3). "PARTNER NONRECOURSE DEBT" shall have the meaning given in Regulations Section 1.704-2(b)(4). "PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning given in Regulations Section 1.704-2(i)(2). "PERCENTAGE INTEREST" means the relative Interest of a Member in proportion to all outstanding Interests, or of the class of Interest which the Member holds, as set forth on Schedule I, as such schedule may be amended from time to time. "PERSON" means any natural person, partnership (whether general or limited), limited liability company, trust, estate, association, or corporation. "PROFITS AND LOSSES" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (i) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this provision shall be added to such taxable income or loss; (ii) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-l(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this provision, shall be subtracted from such taxable income or loss; (iii) Gain or loss from a disposition of property of the Company with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Book Value of such property, rather than its adjusted tax basis; T-3 Opera 33  (iv) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing taxable income or loss, there shall be taken into account the Depreciation on the assets for such fiscal year or other period; and (v) Any items which are separately allocated pursuant to Section 9.01 and/or 9.02 which otherwise would have been taken into account in calculating Profits and Losses pursuant to the above provisions shall not be taken into account and, as the case may be, shall be added to or deducted from such amounts so as to be not part of the calculation of the Profits or Losses. If the Company's taxable income or loss for such year, as adjusted in the manner provided above, is a positive amount, such amount shall be the Company's Profits for such year; and if negative, such amount shall be the Company's Losses for such year. "REGULATIONS" means the Regulations promulgated under the Code, and any successor provisions to such Regulations, as such Regulations may be amended from time to time. "ST. LAWRENCE" means The St. Lawrence Seaway Corporation, an Indiana corporation and the sole initial Class B Member. "TAX MATTERS PARTNER" shall have the meaning given in Section 6.04 "TERMINATING CAPITAL TRANSACTION" means a sale or other disposition of all or substantially all of the assets of the Company, a merger or consolidation of the Company, a liquidation or dissolution of the Company or any other transaction which results in the cessation of the Company's business, operations or independent legal existence. "TRANSFER" and any grammatical variation thereof shall refer to any sale, exchange, issuance, redemption, assignment, distribution, encumbrance, hypothecation, gift, pledge, retirement, resignation, transfer, or other withdrawal, disposition, or alienation in any way as to any interest as a Member. Transfer shall specifically, without limitation of the above, include assignments and distributions resulting from death, incompetency, Bankruptcy, liquidation, and dissolution. "UNITS" means equal units representing the Interests of the several Members of the Company at any particular time, each of which Units shall have rights and duties the same as each other Unit unless this Agreement shall expressly provide differing rights, powers and duties with respect to separate classes or series of Units. Units shall be designated as "Class A Units" or "Class B Units" as set forth on SCHEDULE 1 hereto. The definitions set forth in the Act shall be applicable, to the extent not inconsistent herewith, to define terms not defined herein and to supplement definitions contained herein. * * * T-3 Opera 34  IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the day and year first above written. MANAGERS: MEMBERS: T3 THERAPEUTICS, INC. /s/ Dr. Irwin L. Klein By: /s/ Dr. Irwin L. Klein - ------------------------------------- ----------------------------------- Dr. Irwin L. Klein Dr. Irwin L. Klein, President ST. LAWRENCE SEAWAY CORP. /s/ Dr. Kaie Ojamaa By: /s/ Edward B. Grier III - ------------------------------------- ----------------------------------- Dr. Kaie Ojamaa Name: Edward B. Grier III Title: Vice President T-3 Opera 35  SCHEDULE I TO LIMITED LIABILITY COMPANY AGREEMENT OF T3 THERAPEUTICS, LLC AS OF JUNE 25, 2002 MANAGERS Dr. Irwin L. Klein Dr. Kaie Ojamaa TAX MATTERS PARTNER Dr. Irwin L.Klein T-3 Opera 36  MEMBERS - -------------------------------- ------------- --------------------- ------------------- ---------------------- NAME, ADDRESS CAPITAL CONTRIBUTION PERCENTAGE AND TAX I.D. NO. ISSUE DATE INTEREST UNITS - -------------------------------- ------------- --------------------- ------------------- ---------------------- T3 Therapeutics Inc. 6/25/2002 Product, Product 87.5% of the 750 Class A Units 23 Albin Street Know How and Interests, subject Glen Cove, NY 11542 Product Rights to adjustment as FIN:_______________ set forth in Additional Terms and Conditions. - -------------------------------- ------------- --------------------- ------------------- ---------------------- Name: St. Lawrence Seaway Corp. 6/25/2002 $750,000 of which 12.5% of the 107 Class B Units Indianapolis Indiana $40,000 shall be Interests, subject deemed to have to adjustment as FIN:_______________ heretofore been set forth in the made (and evidenced Additional Terms by the Class B and Conditions Members cancellation of a Promissory Note in such amount) - -------------------------------- ------------- --------------------- ------------------- ---------------------- T-3 Opera 37  SCHEDULE 2 ADDITIONAL TERMS AND CONDITIONS TO THE LIMITED LIABILITY COMPANY AGREEMENT OF T3 THERAPEUTICS, LLC 1. DEFINITIONS. Capitalized terms used and not otherwise defined herein or defined in the Agreement shall have the meanings assigned to them below: "ADJUSTED CLASS B PERCENTAGE INTEREST" means the Class B Percentage Interest as adjusted pursuant to Section 3 below. "ADJUSTMENT CALCULATION" means the formula described in Section 3 below and used to determine the adjustment to the Class B Percentage Interest. "BASE PERCENTAGE" initially means twelve and one-half percent (12.5%), and on and after the making of the Follow-on Contribution, shall mean up to twenty-five percent (25%). "DEVELOPMENT PARTNER" means any drug formulator, laboratory or pharmaceutical company contracted by the Company to formulate the Products. "FINAL SHARE PERCENTAGE" means (a) the Net Revenue Percentage less (b) the North Shore Percentage and LESS (c) such percentage of the license revenue received by the Company as shall be payable on account of any agreement with a Development Partner entered into prior to final FDA approval. By way of example only, if (i) the Company shall be entitled to a Net Revenue Percentage of 20% from Product sales as a license fee for the distribution and sale of the Products by a Marketing Partner, (ii) North Shore Hospital shall be entitled to the North Shore Percentage (i.e. 3% of net sales from Product sales) and (iii) the Development Partner shall be entitled to 18% of the net revenues payable to the Company (which is the equivalent of 3.6% of the net revenues from Product sales), then the Final Share Percentage would be 13.4%. "MARKETING PARTNER" means any development, marketing or licensing partner or joint venturer or licensor of the Company. "MINIMUM PERCENTAGE" means (i) with reference to one single-Product agreement, twenty percent (20%); (ii) with reference to a multi-Product agreement, the Net Revenue Percentage of such multi-Product agreement; and (iii) with reference to two single-Product agreements, the average of the Net Revenue Percentage of the agreements. T-3 Opera 38  "NET REVENUE PERCENTAGE" means the percentage of net revenue of any Marketing Partner derived from the sale the Products that shall be payable by the Marketing Partner to the Company; provided, that if within the two year period following the execution of the first single-product licensor/distributor agreement, the Company executes a second single-product licensor/distributor agreement, then the Net Revenue Percentage shall be the average of the two individual Net Revenue Percentages. "NORTH SHORE PERCENTAGE" means three percent (3%) of net sales (as such term is defined in the license agreement with North Shore Hospital). "PARTNER PAYMENT" shall mean all development fees, milestone payments, lump-sum initial license fees or similar fees or payment amounts received by the Company from any Marketing Partner, in each case net of costs, payments to development partners or other third parties and such amount of retained capital as Board shall determine to be necessary for operational purposes (including but not limited to any required reserves established by the Board). Amounts paid as an advance of license fees, for which the Marketing Partner receives a credit applicable to future license fees due on Product sale, shall not be deemed a Partner Payment. 2. DISTRIBUTION OF COMPANY FUNDS TO THE CLASS B MEMBER. Notwithstanding anything to the contrary in the Agreement, or in this SCHEDULE 2, and notwithstanding any increase in the Class B Percentage Interests that may result from Section 3 below, in the event that the Company shall receive any Partner Payment, then within thirty (30) days thereafter, the Class B Member shall be entitled to receive a distribution of such portion of the Partner Payment as equals the then current Base Percentage. The allocation of any Profits and/or Losses pursuant to Section 5.01 of the Agreement shall be adjusted as appropriate to accommodate for the distribution preference set forth above. 3. ADJUSTMENT OF CLASS B PERCENTAGE INTEREST. 3.1 ADJUSTMENT CALCULATION. The Class B Percentage Interest shall be adjusted, as follows: (x) there shall be a calculation of the amount by which the Net Revenue Percentage is less than twenty percent (20%); and (y) this difference shall be converted into a factor by dividing the Minimum Percentage by the Final Share Percentage; and (z) the Base Percentage shall then be multiplied by such factor, but in any case not by a factor that exceeds 2X; PROVIDED, HOWEVER, that if prior to the third T-3 Opera 39  anniversary of the Agreement (and prior the date of final FDA approval as defined by the Development Plan) the Class B Member receives aggregate distributions from Partner Payments in an amount equal to the Class B Member's total Capital Contributions as set forth on SCHEDULE 1, then the Class B Percentage Interest resulting from the calculations of (x), (y) and (z) above shall be reduced (i) by 1% for each $1,000,000 of distributions (or portion thereof, in increments of 1/10 of 1%) actually paid to the Class B Member and (ii) thereafter, by 2% for each $1,000,000 of distributions actually paid to the Class B Member (or portion thereof, in increments of 1/10 of 1%), but in no event shall the aggregate of such reductions result in an Adjusted Class B Percentage Interest below (i) 12.5% prior to the Follow-on Capital Contribution or (ii) 25% after the Follow-on Capital Contribution. By way of example only, if the Final Share Percentage were 13.4%, then the shortfall described in (x) shall be 6.6%, and the factor referred to in (y) shall be approximately 1.5X, and (z) shall result in the Base Percentage of 25% being multiplied by 1.5X, for a resulting Adjusted Class B Percentage Interest of approximately 38%. 3.2 NOTICE OF ADJUSTMENT TO CLASS B PERCENTAGE. Any adjustment to the Class B Percentage Interest shall be deemed to be made automatically and without action by the Company or the Class B Member. Upon any determination by the Company that the Class B Percentage Interest is to be adjusted, the Company shall immediately provide a written description of the reasons for such adjustment, and the details of the Adjustment Calculation. The Class B Member at any time shall be entitled to request an Adjustment Calculation, including details of all prior calculations, and the Company shall provide such Adjustment Calculation within three (3) days of such request. 3.4 ALLOCATION OF PROFITS AND LOSSES. The allocation of any Profits and/or Losses pursuant to Section 5.01 of the Agreement shall be adjusted as appropriate to accommodate for the adjustment of the Class B Percentage Interest. 3.5. CLASS B UNITS. To the extent that the Class B Percentage Interest is adjusted hereunder, the number of Class B Units shall be adjusted accordingly. Accordingly, if certificates representing the Class B Interests have been issued by the Company, the holders thereof shall submit such certificates for cancellation and new certificates representing the adjusted Class B Interests shall be issued to such holders. 3.6 VOTING AGREEMENT. If the aggregate Class B Percentage Interest increases to forty-seven and one-half percent (47.5%) of the total Percentage Interest, the Option Holder agrees to vote his Units as instructed by the Development Corporation until such time as St Lawrence's Percentage Interest is less than forty-five percent (45.0%), PROVIDED, that the Voting Agreement set forth herein shall not apply to actions requiring the Members to vote separately by class. T-3 Opera 40  4. ADDITIONAL INVESTMENTS AND ANTI-DILUTION PROTECTION In the event that Interests or equivalent ownership in the Company is issued to one or more third parties (other than to the Option Holder, any person or entity which is Member as of the date of the Agreement, or an Affiliate thereof) (a "NEW MEMBER"), then: (i) the Adjusted Class B Percentage Interest shall be diluted on the same proportionate basis as the existing Class A Members' Percentage Interests until such time as such New Member(s) shall hold an aggregate of 40% or more of the Company's Interests; and (ii) thereafter, dilution of the Class A and Class B Interests shall be borne 87.5% by the existing Class A Members and 12.5% by the Class B Member, until the sum of the Class A Members' Percentage Interests is equal to the Adjusted Class B Percentage Interest; and (iii) thereafter, the Class B Members and the Class A Members shall again be diluted equally, as in the preceding clause (i). 5. COMPANY USE OF PROCEEDS The Company shall at all times utilize the initial Capital Contribution and the Follow-on Capital Contribution of the Class B Member solely in pursuit of, and in conformance with the use of proceeds described in the Development Plan, and shall, within ten (10) days of any written request by the Class B Member (which request shall be not more frequent than four (4) times each calendar year) deliver a written certification by the Company, attested to by its Chief Executive Officer (a "DEVELOPMENT STATUS REPORT"), certifying that (a) such contributions have been expended for the continued operation and funding of development of the Products, (b) there is attached thereto a reasonably detailed accounting of the use of the initial Capital Contribution and the Follow-on Contribution through the date of the certification, and (c) that the Company's development of the Products and all uses of the Capital Contributions of the Class B Member are in conformity with the Development Plan (including but not limited to the funding schedule set forth therein). 6. MERGER WITH CLASS B MEMBER AND REGISTRATION RIGHTS. At any time after both (x) the Company has obtained final FDA approval (as set forth in the Development Plan), and (y) the Class B Member has received aggregate distributions equal to its Capital Contributions, then upon the request of the Class A Member, the Class B Member shall issue to the Class A Member (in exchange for all of their interest in the Company) such amount of common stock of the Class B Member as represents the relative value of the Class A Members interest of the T-3 Opera 41  combined entity on a basis and exchange ratio agreed upon by the Class B Manager and the Class A Manager based upon the relative fair market value of each of the Class B Member and the Company immediately prior to such exchange (the "TRANSACTION"). If the Class B Manager and the Class A Manager shall not agree on such relative values, then they shall promptly and in good faith select one or more appraisers to determine such relative values. Notwithstanding the foregoing to the contrary, no party shall be obligated to consummate the Transaction in the event it is reasonably likely that the Transaction will constitute a taxable event for such party. In such case, the parties will, in good faith, seek an alternative tax-free structure to the Transaction. As provided for in a separate registration rights agreement (the "REGISTRATION RIGHTS AGREEMENT") in substantially the form of EXHIBIT D attached hereto, the Class B Member will have two demand registration rights exercisable at any time and will also be entitled to Form S-3 and piggyback registration rights at any time, subject to underwriter's limitations. The Company shall bear the expenses of such registrations. The Company shall not grant new registration rights to any other Person that would be superior to the Class B Members' registration rights. T-3 Opera 42  EXHIBIT A OPTION AGREEMENT This Option Agreement, dated as of June 25, 2002 (the "GRANT DATE"), is by and between T3 Therapeutics, LLC, a Delaware limited liability company (the "COMPANY"), and Edward B. Grier, III (the "GRANTEE"). WHEREAS, St. Lawrence Corp., the sole holder of Class B membership units of the Company (the "CLASS B MEMBER"), has appointed the Grantee as its representative, invested with the authority to act on its behalf with respect to the business and affairs of the Company; WHEREAS, the Grantee has provided substantial assistance in connection with the Class B Member's investment in the Company; WHEREAS, the Company recognizes that it has benefited by such assistance and will continue to benefit by the Grantee's appointment as the Class B Member's representative; and WHEREAS, the Company, in recognition of such benefit desires to grant to the Grantee an option to purchase Class B membership units of the Company in accordance with the terms and conditions set forth herein. NOW THEREFORE, in consideration of the mutual agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1 DEFINITIONS. All capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Company's Limited Liability Company Agreement dated as of June 25, 2002 (as amended from time to time, the "OPERATING AGREEMENT"). 2. GRANT OF OPTION The Company hereby grants to the Grantee, as of the Grant Date, an option (the "Option") to purchase up to 25 Class B Units (the "OPTION UNITS") at a price per share of $6,000, both the price and the number of units being subject to adjustment as provided herein. The Option shall be exercisable in full on the Grant Date. The Option, to the extent it has not been exercised or sooner terminated, shall expire on the close of business on the day that is ten (10) years from the Grant Date (the "EXERCISE PERIOD"). Subject to the provisions of this Agreement, the Option may be exercised at any time and from time to time during the Exercise Period decreased in each case by the aggregate number of Option Units as to which it has previously been exercised. T-3 Opera 43  3. CESSATION OF GRANTEE'S RETENTION AS THE CLASS B REPRESENTATIVE 3.1 VOLUNTARY TERMINATION. If the Grantee ceases to serve as the representative of the Class B Member by reason of his voluntary resignation, or removal by the Class B Member without Cause (as defined below), prior to expiration of the Exercise Period, the Option shall be exercisable by him only during the one year following such cessation (but in no event after the expiration of the Exercise Period). 3.2 DEATH. If the Grantee ceases to serve as the representative of the Class B Member by reason of his death prior to expiration of the Exercise Period, the Option shall be exercisable by either his executor or administrator or, if not so exercised, by the legatees or the distributes of his estate, only during the six months following his death (but in no event after the expiration of the Exercise Period); PROVIDED, that his executor or administrator, or a legatee or distributee, can exercise such Option only if such person is the Grantee's spouse, issue or a trustee of a trust principally for the benefit of such spouse and/or any of such issue. 3.3 DISABILITY. If the Grantee ceases to serve as the representative of the Class B Member representative by reason of his permanent and total disability (as determined by the Class B Member in good faith) prior to the expiration of the Exercise Period, the Option shall be exercisable by him during the six months following such cessation (but in no event after the expiration of the Exercise Period). 3.4 TERMINATION FOR CAUSE. If the Grantee ceases to serve as the representative of the Class B Member by reason of his act or omission in breach of his fiduciary duty to the Class B Member ("CAUSE") prior to expiration of the Exercise Period, the Option shall be forfeited by him and the Exercise Period shall automatically terminate upon the date of such cessation. 4. EXERCISE OF OPTION. 4.1 NOTICE OF EXERCISE. The Grantee may exercise the Option with respect to all or any part of the number of Option Units by giving written notice of election, in the form of the Notice of Exercise, a copy of which is attached hereto as EXHIBIT A to the Company at the address specified in Section 10 below. Such notice shall specify the number of Option Units as to which the Option is exercised. 4.2 OPTION EXERCISE PRICE; PAYMENT. At the time the Option is exercised, the Grantee shall make full payment for the Option Units purchased, in cash or by certified or bank check or, to the extent permitted by the Board, or any Committee appointed by the Board to generally administer options issued by the Company, by delivery of Units, valued at their Fair Market Value (as defined below) on the date of delivery, or such other lawful consideration as the Board shall determine. The T-3 Opera 44  Board may permit a Grantee to elect to pay the exercise price upon the exercise of an Option by authorizing a third party to sell Option Units (or a sufficient portion thereof) and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise. The Grantee shall pay to the Company or make provision satisfactory to the Company for the payment of any taxes required by law to be withheld by the Company at the time of the exercise of the Option or the sale of the Option Units acquired upon such exercise. "FAIR MARKET VALUE" means, with respect to an Option Unit, the fair market thereof as of the relevant date of determination, as determined in accordance with a valuation methodology approved by the Board in good faith; provided, that if the Board does not adopt or employ any such valuation methodology and Series B Units are traded on an exchange or quoted on The Nasdaq National Market, fair market value shall mean, on the relevant date of determination, the closing price of a unit traded on the principal exchange for the units or, if the units are so traded, the closing or last price quoted on The Nasdaq National Market. 4.3. SECURITIES LAW COMPLIANCE. This Option and the Option Units issued upon exercise of this Option will be subject to all restrictions on transfer imposed by applicable state or federal securities laws. Notwithstanding anything to the contrary contained herein, the Option shall not be exercisable unless either (a) a registration statement under the Securities Act of 1933, as amended, with respect to the offer and sale of the Option Units by the Company shall have become, and continues to be, effective, or (b) the Company determines in its sole discretion that an exemption from registration under said Act is available with respect to the offer and sale of the Option Units by the Company. 5. LEGEND. Each certificate for Option Units acquired upon the exercise of the Option shall contain the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAW OF ANY STATE, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED OR PLEDGED UNLESS OR UNTIL THEY ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS CONTAINED IN THE COMPANY'S LIMITED LIABILITY COMPANY AGREEMENT, DATED AS OF JUNE 25, 2002. A COPY OF SUCH AGREEMENT WILL BE FURNISHED BY THE COMPANY TO ANY INTERESTED PARTY FREE OF CHARGE WRITTEN REQUEST. T-3 Opera 45  6. TRANSFERABILITY. This Option is not transferable by the Grantee other than by will or the laws of descent and distribution and, during the lifetime of the Grantee, may be exercised only by the Grantee. 7. ADJUSTMENTS. In the event the Company issues any Series B Units as a dividend upon or with respect to such units or in the event Series B Units shall be subdivided or combined into a greater or smaller number of units, or if, upon a merger or consolidation reorganization, split-up, liquidation, combination, recapitalization or the like of the Company, Class B Units shall be exchanged for other securities of the Company, securities of another entity, cash or other property, the Grantee upon the exercise of the Option shall be entitled to purchase such number of Class B Units, other securities of the company, securities of such other entity, cash or other property as the Grantee would have received if the Grantee had been the holder of the units with respect to which the Option is exercised at all times between the Grant Date and the date of its exercise, and appropriate adjustments shall be made in the purchase price per Option Unit. 8. Entire Agreement; Governing Law. This Agreement constitutes the entire agreement of the parties respecting the subject matter hereof and thereof and supersedes all prior agreements, understandings, promises, negotiations or representations concerning such subject matter. This Agreement shall be binding on, and inure to the benefit of, the parties hereto and their respective heirs, legal representatives, successors and assigns. The validity, construction, interpretation and effect of this instrument shall be governed by and determined in accordance with the law of the State of Delaware, without regard to conflicts of law principles. 9. SEVERABILITY. In the event that any court of competent jurisdiction shall finally determine that any provision, or any portion thereof, contained in this Agreement shall be void or unenforceable in any respect, then such provision shall be deemed limited to the extent that such court determines it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall determine any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement nevertheless shall remain in full force and effect. 10. NOTICES. All notices, requests, consents and other communications hereunder shall be in writing, addressed to the receiving party's address set forth below or to such other address as a party may designate by notice hereunder, and either (i) delivered by hand, (ii) made by facsimile transmission, (iii) sent by recognized overnight courier, or (iv) sent by the registered or certified mail, return receipt requested, postage prepaid. If to the Company at 8 Luguer Road, Manhasset, NY 11030, Attn. President and if the to the Grantee at the address specified below. T-3 Opera 46  All notices, requests, consents and other communications hereunder shall be deemed to have been property given (i) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if made by facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (iv) if sent by registered or certified mail, on the fifth business day following the day such mailing is made. 11. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 12. OBLIGATIONS OF GRANTEE. The Company acknowledges and agrees that the Grantee's obligations are solely to act in furtherance of the Class B Member's interests. 13. CONSTRUCTION. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK] T-3 Opera 47  IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement on the date first above written. T3 Therapeutics, LLC By:____________________________________________ Dr. Irwin L. Klein, Manager ____________________________________________ Edward B. Grier, III Address: 445 E. 80th Street Apt. 12K New York, NY 10021 T-3 Opera 48  Exhibit A NOTICE OF EXERCISE T3 Therapeutics, LLC Date:__________________ 8 Luguer Road Manhasset, NY 11030 Attn: Dr. Irwin Klein 1. All capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the T3 Therapeutics, LLC Limited Liability Agreement, dated as of June 25, 2002 (as such agreement may be amended from time to time, the "OPERATING AGREEMENT"). 2. The undersigned hereby irrevocably elects to purchase __________ Class B Units pursuant to provisions of the attached Option Agreement. The units to which this exercise relates are _______________. 3. The undersigned hereby confirms and acknowledges that the Class B Units are being acquired solely for the account of the undersigned and not as a nominee for any other party, and for investment, and that the undersigned will not offer, sell or otherwise dispose of any such Class B Units except under circumstances that will not result in a violation of the Securities Act of 1993, as amended, or any applicable state securities laws. 4. The undersigned, in order to become the holder of the Class B Units, hereby agrees to the following: (i) all of the Class B Units shall constitute Units with the benefits of and subject to and bound by the restrictions and conditions applicable to Units as set forth in the Operating Agreement and (ii) the undersigned shall by execution of this Exercise Notice become a Member of the Company and as such shall have the benefits of and be subject to and bound by the restrictions and conditions applicable to the Members, as all such benefits, obligations and restrictions are set forth in the Operating Agreement. The undersigned agrees to execute and delivery such instruments and to take such other actions as the Company may reasonably request, in connection with his purchase of the Class B Units and his admission as a Member of the Company. 5. Please issue a certificate representing said units in the name of the undersigned. Signature _________________________ Address 445 E. 80th Street Apt. 12K New York, NY 10021 $_____________________ Boston, Massachusetts ______________, 200_ T-3 Opera 49  EXHIBIT B DEMAND PROMISSORY NOTE FOR VALUE RECEIVED, the undersigned, T3 Therapeutics, LLC (the "MAKER") hereby promises to pay to the order of _______________ (the "HOLDER") and its assigns ON DEMAND the principal amount of _____________________________ DOLLARS ($______), together with interest, per annum, on the unpaid principal amount from time to time outstanding thereon. The interest rate shall be ____________ percent (______%) [THE LOWEST APPLICABLE FEDERAL RATE] per annum. Such interest shall be calculated on the basis of a 360-day year and the actual number of days elapsed. All amounts due and payable under this Note shall be paid by the Maker to the Holder no later than the 120th day following the date on which written demand therefore has been deemed received by the Maker pursuant to Section 9 below (the "PAYMENT DATE"). The Maker's obligations under this Note shall be secured by a lien on all of the Maker's assets pursuant to a Security Agreement, the terms and conditions of which shall be negotiated in good faith by the Maker and Holder. 1. PAYMENT. All payments hereunder shall be made in lawful money of the United States and shall be credited first against any costs and expenses then owed by the Maker to the Holder under this Note, next against interest, and then against the principal amount of this Note. All payments hereunder shall be delivered to the Holder at the following address: __________________. 2. PREPAYMENT. This Note may be prepaid without penalty, in whole or in part, at any time. 3. EVENTS OF DEFAULT. Notwithstanding anything contained herein to the contrary, this Note shall become immediately due and payable without notice or demand upon the occurrence at any time of any of the following events of default (each an "EVENT OF DEFAULT"): (A) default in the payment of all sums due and payable hereunder in full by the Payment Date; or T-3 Opera 50  (B) the appointment of a receiver, conservator or similar officer for all or substantially all of the property of, or the making of an assignment for the benefit of creditors, or composition with creditors or other arrangement of similar import by, or the commencement of any proceeding under any bankruptcy or insolvency law, now or hereafter enacted, which remains undismissed for a period of ninety (90) days, against the Maker, or the institution of any such proceeding voluntarily by the Maker. 4. DEFAULT CHARGES AND COSTS. Upon any Event of Default under this Note, and whether or not the Holder shall have exercised his rights hereunder to accelerate the maturity of this Note, the overdue amounts shall carry a default charge equal to twelve percent (12%) per annum or, if lower, the highest interest rate allowed by applicable law. The Maker agrees to pay on demand all costs of collection, including reasonable attorneys' fees, incurred by the Holder in enforcing the obligations created by this Note. Interest shall commence accruing on the date of the Event of Default and shall continue to accrue until all overdue amounts are paid in full. Interest shall be computed on the basis of a 360 day year and the actual number of days elapsed. 5. WAIVER. No delay or omission on the part of the Holder in exercising any right hereunder shall operate as a waiver of such right or any other right of the Holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar or waiver of the same or any other right on any future occasion. Except as otherwise set forth herein, the Maker and every endorser or guarantor of this Note regardless of the time, order or place of signing waives presentment, demand, protest and notices of every kind and assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person primarily or secondarily liable. 6. RIGHTS AND REMEDIES. The rights and remedies of the Holder hereunder shall be cumulative and concurrent and may be pursued singularly, successively or together at the sole discretion of the Holder and may be exercised as often as occasion therefore shall occur. The failure to exercise any such right or remedy shall in no event be construed as a waiver or release of the same or any other right or remedy. 7. SUCCESSORS AND ASSIGNS. The rights and obligations of the Maker and the Holder of this Note shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties. Notwithstanding the foregoing sentence to the contrary, neither this Note nor any rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part by the Maker without the prior written consent of the Holder. T-3 Opera 51  8. AMENDMENTS. None of the terms or provisions of this Note may be modified, or amended except by a written instrument duly executed by the Holder and the Maker expressly referring hereto and setting forth the provision so modified or amended. 9. NOTICES. All notices, requests, consents and other communications hereunder shall be in writing, addressed to the receiving party's address set forth below or to such other address as a party may designate by notice hereunder, and (i) delivered by hand, (ii) made by facsimile transmission, (iii) sent by recognized overnight courier, or (iv) sent by registered or certified mail, return receipt requested, postage prepaid. If to the Maker: T3 Therapeutics, Inc. 8 Luguer Road Manhasset, NY 11030 Attention: Dr. Irwin Klein Phone No.: 516 ###-###-#### Fax No.: 516 ###-###-#### If to the Holder: _________________________ _________________________ Phone No.:_______________ Fax No.:_________________ All notices, requests, consents and other communications hereunder shall be deemed to have been properly given (i) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if made by facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (iv) if sent by registered or certified mail, on the fifth business day following the day such mailing is made. 10. GOVERNING LAW; JURISDICTION. This Promissory Note shall be construed in accordance with the internal laws, without regard to its conflicts of law principles of interest principles, of the Commonwealth of Massachusetts. The Maker hereby absolutely and irrevocably consents and submits to the jurisdiction of the courts in The Commonwealth of Massachusetts and of any Federal court located in said Commonwealth in connection with any actions or proceedings brought against it arising out of or relating to this Agreement. The Maker hereby absolutely and irrevocably (i) waives any objection to jurisdiction or venue, (ii) waives personal service of any summons, complaint, declaration or other process, and (iii) agrees that the service thereof may be made by certified or registered first-class mail directed to such party, at its address set forth herein. T-3 Opera 52  11. INTERPRETATION. Nothing set forth herein shall limit, negate or otherwise alter the demand nature of this Note. The section and article headings contained in this Promissory Note are for reference purposes only and shall not affect the interpretation of this Promissory Note. This Promissory Note was negotiated by the Maker and the Holder with the benefit of legal representation, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against either of the Maker or the Holder shall not apply to any construction or interpretation hereof. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK] T-3 Opera 53  IN WITNESS WHEREOF, the undersigned has hereby executed this Promissory Note under seal as of ___________________, 200_. T3 THERAPEUTICS, LLC By:___________________________________ Name: Title: T-3 Opera 54  EXHIBIT C PURCHASE AND SALE AGREEMENT This Purchase and Sale Agreement, dated as of June 25, 2002, is by and between T3 Therapeutics, Inc., a New York corporation (the "SELLER") and Edward B. Grier III ("BUYER"). The Seller and the Buyer may be collectively referred to as the "PARTIES" and each individually as a "PARTY." WHEREAS, the Seller owns membership units in T3 Therapeutics, LLC, a Delaware limited liability company (the "COMPANY"); and WHEREAS, the Seller wishes to sell, and the Buyer wishes to purchase such units in accordance with the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual agreements set forth herein and other good and valuable consideration, the receipt and sufficiency which are hereby acknowledged, the Parties agree as follows: 1. DEFINITIONS. All capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Company's Limited Liability Company Agreement dated as of June 25, 2002 (as amended from time to time, the "OPERATING AGREEMENT"). 2. PURCHASE AND SALE. On the date hereof, the Seller hereby sells, transfers, assigns and conveys to the Buyer, and the Buyer hereby purchases from the Seller, an aggregate of 25 Class A Units of the Company (the "PURCHASED UNITS"). The aggregate purchase price for the Purchased Units shall be One Hundred Fifty Thousand Dollars ($150,000), payable in immediately available funds on the date hereof. The Seller agrees to execute and deliver such instruments and to take such other actions as the Buyer may reasonably request, in connection with the transfer of the Purchased Units to the Buyer. 3. MEMBER OF THE COMPANY. The Buyer, in order to become the holder of the Purchased Units, hereby agrees to the following: (i) all of the Purchased Units shall constitute Units with the benefits of and subject to and bound by the restrictions and conditions applicable to Units as set forth in the Operating Agreement and (ii) he shall by execution of this Agreement become a Member of the Company and as such shall have the benefits of and be subject to and bound by the restrictions and conditions applicable to the Members, as all such benefits, obligations and restrictions are set forth in the Operating Agreement. The Buyer agrees to execute and delivery such instruments and to take such other actions as the Company may reasonably request, in connection with his purchase of the Purchased Units and his admission as a Member of the Company. T-3 Opera 55  4. REPRESENTATIONS OF THE SELLER. The Seller represents and warrants to the Buyer as to the following: 4.1 OWNERSHIP OF PURCHASED UNITS. The Seller owns the Purchased Units free and clear of any claims, charges, liens, security interests, encumbrances or any other restrictions whatsoever (collectively, "LIENS"). Such units are not bound by or subject to any proxy, agreement, voting trust or other restriction regarding the transfer or voting thereof (other than as set forth in the Operating Agreement), and good and marketable title to such units shall be transferred to the Buyer as of the date hereof free and clear of any Liens. 4.2. AUTHORITY. The Seller has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of the Seller, and no other corporate proceedings on the part of the Seller are necessary to authorize this Agreement or to consummate the transactions so contemplated. 4.3 ENFORCEABILITY. This Agreement has been duly and validly executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller enforceable against it in accordance with its terms. 5. Miscellaneous Provisions. 5.1 ASSIGNMENT. This Agreement shall be binding on and inure to the benefit of the Parties and their successors and permitted assigns. 5.2 GOVERNING LAW. This Agreement shall be construed in accordance with the internal laws of the Commonwealth of Massachusetts without regard to its conflicts of law principles. 5.3 SEVERABILITY. In the event that any one or more of the provisions (or any part thereof) contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement; PROVIDED, HOWEVER, that if the deletion of any provision hereof frustrates an essential purpose of this Agreement or material rights of a Party, the Parties shall seek in good faith alternative provisions or arrangements to achieve the same purposes as the invalid, illegal or unenforceable provision. 5.4 COUNTERPARTS. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument. T-3 Opera 56  5.5 INTEGRATED DOCUMENT. This Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof, and all prior agreements shall be deemed merged into the provisions of and superseded by this Agreement. No amendment or supplement hereof shall be effective or binding on any Party unless reduced to writing and executed by the duly authorized representatives of all the Parties. 5.6 NOTICES. Any notice given in connection with this Agreement shall be in writing and shall be delivered (i) by certified first class mail, return receipt requested, (ii) by a nationally-recognized express courier delivery service, (iii) by hand, or (iv) by facsimile transmission, in each case addressed to the Parties as follows: (A) if to the Buyer at 445 E. 80th Street, New York, NY 10021; and (B) if to the Seller at 8 Luguer Road, Manhasset, NY 10030. Any such address may be changed by written notice given in accordance herewith. Any notice shall be deemed given as follows: (a) if given in the manner described in clause (i), five (5) days after being deposited with the U.S. Postal Service, (b) if given in the manner described in clause (ii), the next business day after being deposited for delivery with the courier; (c) if given in the manner described in clause (iii), when delivered; and (d) if given in the manner described in clause (iv), when transmitted (provided that the sender receives and retains electronic confirmation of the successful completion of such facsimile transmission). 5.7 CONSTRUCTION. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. [Remainder of Page Left Intentionally Blank] T-3 Opera 57  IN WITNESS WHEREOF, this Purchase and Sale Agreement has been executed under seal by the Parties as of the date first above written. SELLER: BUYER: T3 THERAPEUTICS, INC. By:__________________________ _____________________________ Name: Edward B. Grier III Title: T-3 Opera 58  EXHIBIT D REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement, dated as of June 25, 2002, is by and among T3 Therapeutics, LLC, a Delaware limited liability company (the "COMPANY"), and those investors set forth on Schedule A attached hereto (the "INVESTORS"). The Company and the Investors may be collectively referred to as the "PARTIES." WHEREAS, the Investors have agreed to purchase membership units of the Company; and WHEREAS, as a condition of such purchase the Investors have requested certain rights to require the Company to register their membership units for public distribution. NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the respective meanings set forth below: "CLASS B UNITS" shall mean up to 250 Units designated as Class B Units and issued to the Investors by the Company pursuant to the terms and conditions of the Limited Liability Company Agreement. "COMMISSION" shall mean the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and any similar federal statute successor thereto, and the rules and regulations of the Commission promulgated under the Exchange Act, as they each may, from time to time, be in effect. "FORM S-1" shall mean such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Commission that is provided for the initial public offering of equity securities by a domestic corporation. T-3 Opera 59  "FORM S-3" shall mean such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Commission that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission. "HOLDER" means the Investors and any persons or entities to whom the rights granted under this Agreement are transferred as permitted by Section 8.4 below. "INTEREST" means the entire equity interest (or "limited liability company interest" as such term is used in the Delaware Limited Liability Company Act) of a member in the Company and all rights and liabilities associated therewith, including without limitation rights to distributions (liquidating or otherwise), allocations, information, and rights to consent or approve. "LIMITED LIABILITY COMPANY AGREEMENT" means the Limited Liability Company Agreement of the Company, as it may be amended, supplemented or restated from time to time. "PERSON" shall mean any natural person, corporation, limited liability company, trust, partnership, joint venture, joint stock company, unincorporated organization, association, or any other entity. "REGISTER", "REGISTERED" and "REGISTRATION" shall refer to a registration effected by preparing and filing a Registration Statement in compliance with the Securities Act and the declaration or ordering of the effectiveness of such Registration Statement. "REGISTRABLE UNITS" shall mean (i) the Class B Units, (ii) any Units issued upon the exercise of preemptive rights or adjustment of the Class B Percentage Interest (as defined in the Limited Liability Company Agreement) under the Agreement; and (iii) any other equities of the Company issued in respect of such Units (because of equity dividends, equity splits, combinations, reorganizations, recapitalizations or similar events involving a change in the capital structure of the Company); PROVIDED, HOWEVER, that Registrable Units shall cease to be Registrable Units (x) upon any sale pursuant to a Registration Statement or Rule 144, (y) upon any sale in any manner to a Person which, by virtue of Section 8.4 of this Agreement, is not entitled to the registration rights provided by this Agreement or (z) with respect to any Holder, if the Registrable Units then held by such Holder may be sold to the public immediately without registration, including Units which may be sold within a period of 90 days under Rule 144. "REGISTRATION EXPENSES" shall mean expenses incurred by the Company in complying with the registration requirements of this Agreement including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including counsel fees) incurred in connection with complying with state securities or "blue sky" laws, fees of the National Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents and registrars, and reasonable fees and disbursements of one counsel for the Selling Holders (such fees and disbursements not to exceed [$50,000] per registration), but excluding any Selling Expenses. T-3 Opera 60  "REGISTRATION STATEMENT" shall mean a registration statement filed by the Company with the Commission pursuant to the Securities Act for a public offering and sale of securities of the Company; PROVIDED, that the definition of Registration Statement shall not include: (i) a registration statement on Form S-8 or Form S-4, or their successors, or any other form for a limited purpose or (ii) any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity. "RULE 144" means Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended, and any similar federal statute successor thereto, and the rules and regulations of the Commission promulgated under the Securities Act, as they each may, from time to time, be in effect. "SELLING EXPENSES" shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Units and the fees of more than one counsel to the Selling Holders. "SELLING HOLDER" shall mean any holder of Registrable Units exercising the registration rights set forth in Section 2 or 3 hereof. "UNITS" means equal units representing the Interests of the several members of the Company at any particular time, each of which Units shall have rights and duties the same as each other Unit unless the Limited Liability Company Agreement shall expressly provide differing rights, powers and duties with respect to separate classes or series of Units. 2. DEMAND REGISTRATION RIGHTS 2.1 REQUEST FOR REGISTRATION. On the date that is 6 months after the initial registered public offering of Units, a Holder may, by written notice (an "INITIAL DEMAND REGISTRATION NOTICE") to the Company request that the Company effect a registration under Section 5 of the Securities Act of a specified number of Registrable Units. The Initial Demand Registration Notice shall state the number of Registrable Units for which the notice applies and the expected aggregate proceeds of the offering (prior to underwriting discounts and commissions) as well as the intended method of distribution. If the Holder intends to distribute the Registrable Units by means of an underwriting, it shall so advise the Company in the Initial Demand Registration Request. T-3 Opera 61  2.2 FORM S-1 DEMAND REGISTRATION RIGHTS. If, at the time the Company receives an Initial Demand Registration Notice, the Company is not eligible to file a Registration Statement on Form S-3, the Company may effect the registration on Form S-1; PROVIDED, HOWEVER, that the Company shall have no obligation to effect such registration if the number of Registrable Units designated in the Initial Demand Registration Notice constitutes less than 50% of the Registrable Shares entitled to demand registration rights pursuant to this Agreement In connection with an underwritten public offering of the Registrable Units, the Selling Holders shall enter into an underwriting agreement in customary form with the Company and the underwriter or underwriters selected for such underwriting by the Selling Holders (which underwriter or underwriters shall be reasonably acceptable to the Company). Subject to the provisions, hereof, the Company shall use its best efforts to effect the registration, as expeditiously as possible, on Form S-1 of all Registrable Units which the Company has been requested so to register pursuant to this Section 2.2 and Section 2.4 below. 2.3 FORM S-3 DEMAND REGISTRATION RIGHTS. If, at the time the Company receives an Initial Demand Registration Notice, the Company is eligible to file a Registration Statement on Form S-3, the Company may effect the registration on Form S-3; PROVIDED, HOWEVER, that the Company shall have no obligation to effect such registration if (i) the number of Registrable Units designated in the Initial Demand Registration Notice constitutes less than 20% of the Registrable Units entitled to demand registration rights pursuant to this Agreement and (ii) the minimum market value of any offering and registration of Registrable Shares made pursuant to this Section 2.3 shall be estimated to be less than $1,000,000 (prior to deductions for underwriting discounts and commissions) at the time of filing such Registration Statement. Subject to the provisions hereof, the Company shall use its best efforts to effect the registration, as expeditiously as possible, on Form S-3 of all Registrable Units which the Company has been requested so to register pursuant to this Section 2.3 and Section 2.4 below. 2.4 NOTICE TO OTHER HOLDERS. Upon receipt of any Initial Demand Registration Notice, the Company shall promptly give written notice of such proposed registration to all Holders. Each Holder shall have the right, by giving written notice (an "ADDITIONAL DEMAND REGISTRATION NOTICE" and together with the Initial Demand Registration Notice, the "DEMAND REGISTRATION NOTICES") to the Company within 15 days after the Company provides its notice to elect to have included in such registration such of the Holder's Registrable Units as such Holder may request in such notice of election. A Holder's failure to deliver an Additional Demand Registration Notice during the above-referenced 15 day period shall be deemed a waiver by such Holder of its right to participate in such registration. 2.5 REGISTRATION OF LESS THAN ALL OF THE REGISTRABLE UNITS. Notwithstanding any other provision of this Section 2 to the contrary, if the managing underwriter of any underwritten T-3 Opera 62  offering advises the Company in writing (and the Company shall promptly so advise the Selling Holders in writing of same) that, in its opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in such offering within a price range acceptable to the Selling Holders holding a majority of the Registrable Units for which Demand Registration Notices have been delivered, then they may at their option within 10 days of the date on which such notice is delivered to the Selling Holders (i) agree to reduce the number of Registrable Units included in the underwriting (subject to the minimum percentage and market value requirements set forth in Sections 2.2 or 2.3, as the case may be) or (ii) withdraw the Demand Registration Notices. Any Registrable Units excluded or withdrawn from such underwriting shall be withdrawn from the registration. The determination of the Selling Holders referenced above shall be evidenced by a writing (the "WITHDRAWAL NOTICE") and delivered to the Company within the above-referenced 10-day period. Failure to deliver a Withdrawal Notice within the specified period shall result in the automatic withdrawal of the registration request. If the Selling Holders elect to withdraw a request for registration, the Registration Expenses incurred by the Company in connection with such withdrawn registration shall be reimbursed by such Selling Holders; PROVIDED, HOWEVER, that if such Selling Holders elect, (which such election shall be included with the Withdrawal Notice) in writing, to treat the withdrawn registration as a registration for the purposes of this Section 2, the Company shall pay such Registration Expenses. 2.6 LIMITS ON REGISTRATION RIGHTS. The registration rights set forth herein shall be subject to the following limitations: (i) The Company shall not be required to effect more than 2 Form S-1 registrations pursuant to this Section 2. (ii) The Company shall not be required to effect any registration on Form S-1 pursuant to this Section 2 within six (6) months after the effective date of any other Registration Statement of the Company. (iii) If at the time of any request to register Registrable Units pursuant to this Section 2, the Company is engaged or has fixed plans to engage within 180 days of the time of the request in a registered public offering as to which the Holders may include Registrable Units pursuant to Section 3 or is engaged in any other activity which, in the good faith determination of the Company's Board of Managers, would be adversely affected by the requested registration to the material detriment of the Company, then the Company may at its option direct that such request be delayed for a period not in excess of six months from the effective date of such offering or the date of commencement of such other material activity, as the case may be, such right to delay a request to be exercised by the Company not more than once in any 18 month period. T-3 Opera 63  For the purposes of Subsections (i) and (ii) above, a registration shall not count until it becomes effective. 2.7 PRIORITY ON DEMAND REGISTRATIONS. The Company shall be entitled to include in any Registration Statement referred to in this Section 2, for sale in accordance with the method of disposition specified by the Selling Holders, Units to be sold by the Company for its own account and for the account of other selling holders, except as and to the extent that, in the reasonable opinion of the managing underwriter (if such method of disposition shall be an underwritten public offering), or in the opinion of the Board of Managers (if such method of disposition shall not be an underwritten public offering), such inclusion would materially and adversely affect such public offering. A written copy of such opinion of the managing underwriter or Board of Managers shall be provided to any Selling Holder upon such holder's request. 3. PIGGY BACK REGISTRATION RIGHTS. 3.1 PIGGYBACK REGISTRATION RIGHTS. If, at any time (other than pursuant to Section 2), the Company determines to register any of its securities under the Securities Act for sale to the public, whether for its own account or for the account of other security holders or both (except with respect to registration statements on Form S-8 or its then equivalent, or in connection with a Rule 145 transaction or Form S-4 or its equivalent, or another form not available for registering the Registrable Units for sale to the public), each such time it will give prompt written notice to the Holders of its intention so to do and of the proposed method of distribution of such securities. Upon the written request of any such Holder, received by the Company within 10 days after the giving of any such notice by the Company, to include in the registration a designated number of its Registrable Units, the Company will cause such Registrable Units to be covered by the Registration Statement proposed to be filed by the Company, all to the extent and under the conditions such registration is permitted under the Securities Act. A Holder's failure to deliver such notice during the above-referenced 10 day period shall be deemed a waiver by such Holder of its right to participate in such registration. In connection with any offering involving an underwriting of shares of the Company's capital interests, the Company shall not be required under this Section 3 to include any of the Registrable Units in such underwriting unless the Selling Holders accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters) and enter into such underwriting agreement with an underwriter or underwriters selected by the Company. In connection with any such underwriting agreement, the Selling Holders shall not be required to make representations and warranties other than representations and warranties regarding their ownership and title to the Registrable Units being sold and the plan of distribution with respect to the Registrable Units. T-3 Opera 64  3.2 PRIORITY ON PRIMARY REGISTRATIONS. In the event that a registration pursuant to this Section 3 is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration would materially and adversely affect such public offering, the Company will include in such registration (A) FIRST, the securities the Company proposes to sell, (B) SECOND, the Registrable Units requested to be included in such registration which in such opinion of such underwriters can be sold, pro rata among the Selling Holders on the basis of the number of Registrable Units owned by such holders, with further successive pro rata allocations among the Selling Holders if any such holder had requested the registration of less than all such Registrable Units it is entitled to register, and (C) THIRD, other securities requested to be included in such registration. Notwithstanding the foregoing to the contrary, other securities requested to be included in such registration to the extent granted registration rights pari passu with the Registrable Units shall be treated on a pro rata basis with the Registrable Units for the purposes of this Section 3.2. 3.3 PRIORITY ON SECONDARY REGISTRATIONS. In the event that a registration pursuant to this Section 3 is an underwritten secondary registration on behalf of holders of the Company's securities (other than a demand registration under this Agreement) and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration would materially and adversely affect such public offering, the Company will include in such registration (x) FIRST, the securities requested to be included therein by the holders requesting such registration, (y) SECOND, the Registrable Units requested to be included in such registration which in such opinion of such underwriters can be sold, pro rata among the Selling Holders on the basis of the number of Registrable Units owned by such holders, with further successive pro rata allocations among the Selling Holders if any such holder has requested the registration of less than all such Registrable Units it is entitled to register, and (z) THIRD, other securities requested to be included in such registration. Notwithstanding the foregoing to the contrary, other securities requested to be included in such registration to the extent granted registration rights pari passu with the Registrable Units shall be treated on a pro rata basis with the Registrable Units for the purposes of this Section 3.3. 4. MARKET STAND-OFF. 4.1 RESTRICTIONS ON COMPANY OFFERINGS. The Company shall not effect any public sale or distribution of its Units or any securities convertible into or exchangeable or exercisable for Units, during the 7 days prior to and during the 60 day period beginning on the effective date of any underwritten registration pursuant to Section 2 (except as part of such underwritten registration or pursuant to registrations on Form S-4 or Form S-8 or any successor form or as part of any other issuance of Units in exchange for securities or assets of another corporation), unless the underwriters managing such registered public offering otherwise agree; PROVIDED, HOWEVER, that the restrictions pursuant to this Section 4.1 shall expire 60 days from the effective date of the second demand registration pursuant to Section 2. T-3 Opera 65  4.2 RESTRICTIONS ON OFFERINGS OF HOLDERS. Other than pursuant to Section 3, the holders of Registrable Units shall not effect any public sale or distribution of their Registrable Units, or any securities convertible into or exchangeable or exercisable for Registrable Units, during the 7 days prior to and during the 60 day period beginning on the effective date of any underwritten registration of Units initiated by the Company unless the underwriters managing such registered public offering otherwise agree. 5. REGISTRATION PROCEDURES. If and whenever the Company is required by the provisions of Section 2 or 3 to use its best efforts to effect the registration of any Registrable Units under the Securities Act, the Company will, at its cost and expense, as expeditiously as reasonably practicable: (a) prepare and file with the Commission a Registration Statement (which, in the case of an underwritten public offering pursuant to Section 2.2, shall be on Form S-1 or other form of general applicability satisfactory to the managing underwriter selected as therein provided) with respect to such securities and use it best efforts to cause such Registration Statement to become and remain effective for up to 3 months for a registration pursuant to Section 2.2 and up to 6 months for a registration pursuant to Section 2.3 or, if earlier until the distribution has been completed; (b) prepare and file as expeditiously as reasonably practicable and in any event within 90 days with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the period specified in Subsection (a) above and comply with the provisions of the Securities Act with respect to the disposition of all Registrable Units covered by such Registration Statement in accordance with the Selling Holders' intended method of disposition set forth in such Registration Statement for such period; (c) furnish to each Selling Holder and to each underwriter such number of copies of the Registration Statement and the prospectus included therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the public sale or other disposition of the Registrable Units covered by such Registration Statement; (d) use its best efforts to register or qualify the Registrable Units covered by such Registration Statement under the securities or "blue sky" laws of such jurisdictions as the Selling Holders or, in the case of an underwritten public offering, the managing underwriter reasonably shall request, provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction; T-3 Opera 66  (e) use its best efforts to list the Registrable Units covered by such Registration Statement with NASDAQ or any securities exchange on which the Units of the Company is then listed, or NASDAQ or such securities exchange as shall be selected by the Company; (f) promptly notify each Selling Holder and each underwriter under such Registration Statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (g) notify each Selling Holder under such Registration Statement of (i) the effectiveness of such Registration Statement, (ii) the filing of any post-effective amendments to such Registration Statement, or (iii) the filing of a supplement to such Registration Statement; (h) deliver to all Selling Holders as soon as reasonably possible after effectiveness of such Registration Statement an earning statement covering a period of at least twelve months beginning after the effective date of the Registration Statement as referred to in Section 11(a) of the Securities Act; and (i) make available for inspection upon reasonable notice during the Company's regular business hours by each Selling Holder, any underwriter participating in any distribution pursuant to such Registration Statement, and any attorney, accountant or other agent retained by such Selling Holder or underwriter, all material financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Selling Holder, underwriter, attorney, accountant or agent in connection with such Registration Statement. 6. OTHER MATTERS RELATING TO REGISTRATION. 6.1 INFORMATION FROM SELLING HOLDERS. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement with respect to the Registrable Units that the Selling Holders shall furnish to the Company such information regarding themselves, the Registrable Units held by them, and the intended method of disposition of such securities as shall be required to effect the registration of the Registrable Units or to comply with applicable state securities laws. In no way limiting the foregoing, the Selling Holders shall complete and execute all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of any such underwriting arrangements. T-3 Opera 67  6.2 PROSPECTUS DELIVERY. The Selling Holders acknowledge that there may be times (including without limitation the circumstances as described in Section 2.6 hereof) when, notwithstanding the Company's efforts described in Section 5, the Company must temporarily suspend the use of the prospectus forming a part of any such Registration Statement until such time as (i) the Company has filed an amendment to such Registration Statement and such amendment has been declared effective by the Commission, (ii) the Company has supplemented the relevant prospectus, or (iii) the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Company shall use its best efforts to promptly notify the Selling Holders, at any time when a prospectus relating to the Registrable Units covered by such Registration Statement is required to be delivered under the Securities Act or of the happening of an event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. During any period in which sales are suspended, the Selling Holders agree not to sell any such Registrable Units pursuant to any such prospectus. Subject only to the Company's right to give notice of a suspension period as permitted under Section 2.6, the Company shall promptly provide the Selling Holders with revised prospectuses and, following receipt of the revised prospectuses, the Selling Holders shall be free to resume making offers of the Registrable Units. 6.3. EXPENSES. The Company will pay all Registration Expenses in connection with each Registration Statement under the registration requirements of this Agreement. All Selling Expenses in connection with each Registration Statement under the registration requirements of this Agreement shall be borne by the Selling Holders in proportion to the number of Registrable Units sold by each, or by such Selling Holders other than the Company (except to the extent the Company shall be a seller) as they may agree. 6.4 LOCK-UP AGREEMENTS. Each Holder who, at the time of the proposed filing of the first Registration Statement for an underwritten offering by the Company or by a Selling Holder, beneficially owns 1% or more of the outstanding capital interest of the Company, on a fully-converted, fully-diluted basis, shall, agree, to be bound by such lock-up agreements as the managing underwriter of any such registration shall specify as a requirement to any such underwriting. 7. INDEMNIFICATION AND CONTRIBUTION. 7.1 COMPANY INDEMNIFICATION. In the event of a registration of any of the Registrable Units pursuant to this Agreement, the Company will indemnify and hold harmless each Selling Holder, each underwriter of such Registrable Units thereunder and each other person, if any, who controls such seller or underwriter within the meaning of the Securities Act (each a "SELLER INDEMNIFIED PARTY"), against any claims, damages, liabilities, losses, judgments, settlements and expenses, including T-3 Opera 68  without limitation, all reasonable fees and disbursements of counsel actually incurred incident to the investigation or defense of any claim or proceeding or threatened claim or proceeding, (collectively, the "DAMAGES"), to which such Seller Indemnified Party may become subject under the Securities Act or otherwise, insofar as such Damages arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Units were registered pursuant to this Agreement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) any violations of applicable securities law relating to such registration (collectively, the "VIOLATIONS"). The indemnification obligations of the Company set forth in this Section 7.1 shall not apply to the following: (a) amounts paid in settlement of any such Damages if such settlement is effected without the written consent of the Company (which consent shall not be unreasonably withheld or delayed); (b) Damages that arise out of or are based upon a Violation that occurs in reliance upon and in conformity with information furnished in writing expressly for use in connection with such registration by a Seller Indemnified Party; (c) Damages arising from the sale of Registrable Units to any Person by a Seller Indemnified Party that failed to send or give a copy of the prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) to that Person within the time required by the Securities Act, and if the prospectus (as so amended or supplemented) would have cured the defect giving rise to such Damages; and (d) Damages that are finally judicially determined to result primarily from actions taken or omitted to be taken by a Seller Indemnified Party due to such party's willful misconduct or gross negligence. 7.2 SELLING HOLDER INDEMNIFICATION. In the event of a registration of any of the Registrable Units pursuant to this Agreement, each Selling Holder thereunder, severally and not jointly, will indemnify and hold harmless the Company, each person, if any, who controls the Company within the meaning of the Securities Act, each officer of the Company who signs the registration statement, each director of the Company, each underwriter and each person who controls any underwriter within the meaning of the Securities Act (each a "COMPANY INDEMNIFIED PARTY"), against all Damages, to which a Company Indemnified Party may become subject under the Securities Act or otherwise, insofar as such Damages arise out of or are based upon any untrue statement or alleged T-3 Opera 69  untrue statement of any material fact contained in any Registration Statement under which such Registrable Units were registered pursuant to this Agreement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading. Notwithstanding the foregoing to the contrary, a Selling Holder will be liable hereunder if and only to the extent that any such Damages arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information furnished to the Company by such Selling Holder in writing specifically for use in the Registration Statement or prospectus; PROVIDED, that the liability of such Selling Holder hereunder shall be limited to the proportion of any such Damages that are equal to the proportion that the public offering price of the units sold by such Selling Holder under such Registration Statement bears to the total public offering price of all securities sold thereunder, but not in any event to exceed the net proceeds (after underwriting discounts and commissions) received by such Selling Holder in respect of shares sold by such Selling Holder. The indemnification obligations of each Selling Holder set forth in this Section 7.2 shall not apply to the following: (a) amounts paid in settlement of any such Damages if such settlement is effected without the written consent of those Selling Holders holding a majority of those Registrable Units sold or to be sold to the public (which consent shall not be unreasonably withheld or delayed); or (b) Damages that are finally judicially determined to result primarily from actions taken or omitted to be taken by a Company Indemnified Party due to such party's willful misconduct or gross negligence 7.3 INDEMNIFICATION PROCEDURE. The indemnified party shall promptly notify the indemnifying party in writing of any claim it may have for indemnification under this Section 7, including the institution of any legal action against the indemnified party specifying in reasonable detail the Damages and the nature of the claim. Failure of an indemnified party to promptly give such notice shall not relieve the indemnifying party of its obligation to indemnify hereunder, but as a result of such failure, the indemnifying party shall not be liable to the indemnified party for the amount of Damages caused by such failure. In case any action shall be brought against the indemnified party, notification shall be given to the indemnifying party of the commencement thereof. The indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof. After notice from the indemnifying party to the indemnified party of its election so to assume the defense thereof (with counsel reasonably acceptable to the indemnified party) and of its agreement to be fully responsible for all liability arising from such action, the indemnifying party shall not be liable to the indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by the indemnified party, in connection with the defense thereof. The indemnified party shall furnish at the indemnifying party's T-3 Opera 70  reasonable request and expense, information and assistance necessary for such defense. The indemnified party shall have the right to employ separate counsel in such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the indemnifying party unless the indemnified party reasonably concludes (based on the advice of counsel) that the indemnifying party and the indemnified party have conflicting interests or different defenses available with respect to such action in which case the reasonable fees and expenses of counsel to the indemnified party shall be considered "Damages" for purposes of this Section 7. The indemnifying party shall not settle or compromise a claim without prior written notice to and consent of the indemnified party, which consent shall not be unreasonably withheld or delayed. 7.4 CONTRIBUTION. If the indemnification provided for in this Section 7 is held by a court of competent jurisdiction (by the entry of a final judgment or decree and the expiration of time to appeal or the denial of the last right of appeal) to be unavailable to an indemnified party with respect to any Damages, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such Damages in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and of the indemnified party on the other, in connection with the statements or omissions that resulted in such Damages, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; PROVIDED, HOWEVER, that, in any such case (A) the Selling Holder will not be required to contribute any amount in excess of the net proceeds (after underwriting discounts and commissions) from the offering received by such Selling Holder, and (B) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of fraudulent misrepresentation. 7.4 SURVIVAL. The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive for such indemnified party and such officers, directors or controlling Persons of such indemnified party the transfer of securities. 8. MISCELLANEOUS 8.1 RULE 144 REPORTING AND RULE 144A INFORMATION. With a view to making available the benefits of certain rules and regulations of the Commission that may at any time permit the resale of the Registrable Shares without registration, the Company will at all times after 90 days after T-3 Opera 71  the initial registered public offering of the Company's Units or following registration under Section 12 of the Exchange Act: (a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; (b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) furnish to each Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of such Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any Registrable Units without registration. In addition, the Company shall, at the request of any Holder, make available to such Holder and to any prospective transferee of such Holder the information concerning the Company described in Rule 144A(d)(4) under the Securities Act. 8.2. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the date hereof, the Company shall not, without the prior written consent of the Holders holding no less than a majority of the Registrable Units enter into any agreement with any holder or prospective holder of any securities of the Company which would give such holder or prospective holder registration rights which are superior to those of the Holders hereunder. 8.3 TERMINATION OF REGISTRATION RIGHTS. Notwithstanding anything contained herein to the contrary, this Agreement and the registration rights set forth herein shall terminate and be of no further force or effect on the fifth anniversary of the consummation of the Company's initial registered public offering of Units. 8.4 ADDITIONAL PARTIES. If any Holder transfers any Registrable Units such Holder shall cause the execution by such transferee of a counterpart of this Agreement and an amendment adding such transferee's name as a signatory hereto. This Agreement shall thereafter be amended and restated to include such transferee without the necessity of procuring an amendment to this Agreement by the other Parties. Any such transferee acquiring Registrable Units from a Holder, shall be deemed a "Holder" hereunder. 8.5 CHANGES IN UNITS. If, and as often as, there is any change in the Class B Units by way of a equity split, equity dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to Class B Units as so changed. T-3 Opera 72  8.6 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. 8.7 DAMAGES. The Company recognizes and agrees that the Holders will not have an adequate remedy if the Company fails to comply with this Agreement and that damages may not be readily ascertainable, and the Company expressly agrees that, in the event of such failure, it shall not oppose an application by a Holder requiring specific performance of any and all provisions hereof or enjoining the Company from continuing to commit any such breach of this Agreement. 8.8 NOTICES. All notices under this Agreement shall be sent to the respective Parties at the address specified in the preamble hereof, in the case of the Company, and on the Schedules attached hereto, in the case of the other Parties, or such other address as each such Party may designate in writing. All notices, requests, consents and other communications hereunder shall be deemed to have been properly given (i) if by hand, at the time of the delivery thereof to the receiving Party at the address of such Party set forth above, (ii) if made by facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (iv) if sent by registered or certified mail, on the third business day following the day such mailing is made. 8.9 OTHER GENERAL PROVISIONS. This Agreement, along with all exhibits and schedules hereto, constitute the entire agreement of the Parties with regard to the subject matter hereof and supersede all prior and contemporaneous agreements and understandings, whether oral or written, of any of the Parties with respect thereto. If any provisions of this Agreement shall be determined to be illegal or unenforceable by any court of law, the remaining provisions shall be severable and enforceable to the maximum extent possible in accordance with their terms. This Agreement shall be binding upon and inure to the benefit of the Parties and their permitted successors and assigns, legal representatives and heirs. Neither this Agreement nor any provision hereof can be modified, amended, changed, discharged or terminated except by an instrument in writing, signed by the Company and the holders of no less than a majority of the Registrable Shares. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original (a facsimile shall be deemed an original), but all of which taken together shall constitute one and the same instrument. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed T-3 Opera 73  as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. [Remainder of Page Left Intentionally Blank] T-3 Opera 74  IN WITNESS WHEREOF, the undersigned have executed this Registration Rights Agreement as an instrument under seal as of the day and year first above written. T3 THERAPEUTICS, LLC By:____________________________________ Name: Title: T-3 Opera 75  INVESTOR ___________________________________ _________________________________ (Signature) (Print Name) Address:___________________________ ___________________________ If an entity: ___________________________________ (Name of entity) By: __________________________ Title: __________________________ Address:___________________________ ___________________________________ (IF THE INVESTOR IS OTHER THAN AN INDIVIDUAL, PLEASE INDICATE THE FULL LEGAL NAME OF THE ENTITY AND THE CAPACITY OR TITLE OF THE INDIVIDUAL SIGNING ON ITS BEHALF.) T-3 Opera 76  Schedule A Investors Investor: Number of Shares ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ Total T-3 Opera 77