ARTICLE II CERTIFICATE OF INCORPORATION AND BY-LAWS

AGREEMENT AND PLAN OF REORGANIZATION

DATED AS OF FEBRUARY 4, 1996

BY AND BETWEEN

X. X. XXXXX & CO.

AND

FRESENIUS AG

TABLE OF CONTENTS

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RECITALS

A. Defined Terms ........................................ 1
B. Newco ................................................ 1
C. The Contribution ..................................... 1
D. The Distribution ..................................... 1
E. The Recapitalization ................................. 1
F. The Mergers and the Recapitalization ................. 1
G. Financing ............................................ 2
H. Intention of the Parties ............................. 2
I. Approvals ............................................ 2

ARTICLE I

THE REORGANIZATION; CLOSING; EFFECTIVE TIME

Section 1.1. The Distribution, Newco and the
Contribution .............................. 2
Section 1.2. The Recapitalization and the Mergers ................. 3
Section 1.3. Effective Time ....................................... 3
Section 1.4. Closing .............................................. 3

ARTICLE II

CERTIFICATE OF INCORPORATION AND BY-LAWS

Section 2.1. Grace Certificate of Incorporation .................... 3
Section 2.2. Grace By-laws ......................................... 4
Section 2.3. Fresenius USA Articles of Organization ................ 4
Section 2.4. Fresenius USA By-laws ................................. 4

ARTICLE III

DIRECTORS AND OFFICERS

Section 3.1. Grace Directors ....................................... 4
Section 3.2. Grace Officers ........................................ 4
Section 3.3. Fresenius USA Directors ............................... 4
Section 3.4. Fresenius USA Officers ................................ 4

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ARTICLE IV

MERGER CONSIDERATION; CONTRIBUTION CONSIDERATION;
CONVERSION OR CANCELLATION OF SHARES IN THE MERGERS

Section 4.1. Grace Merger Consideration; Conversion or
Cancellation of Grace Capital Stock ................. 4
Section 4.2. Fresenius USA Merger Consideration; Conversion or
Cancellation of Fresenius USA Capital Stock ........ 5
Section 4.3. Fresenius AG Consideration ............................ 6
Section 4.4. Exchange of Old Certificates for New
Certificates ....................................... 6
(a) Appointment of Exchange Agent .......... 6
(b) Exchange Procedures .................... 6
(c) Fractional Shares ...................... 7
(d) Distributions with Respect to
Unexchanged Shares .................. 8
(e) No Transfers ........................... 8
(f) No Liability ........................... 8
(g) Withholding Rights ..................... 8
(h) Transfer Taxes ......................... 9
(i) Stock Options and Warrants ............. 9

Section 4.5. Dissenters' Rights .................................... 9

ARTICLE V

REPRESENTATIONS AND WARRANTIES

Section 5.1. Representations and Warranties of Grace ....... 10
(a) Capital Stock .......................... 10
(b) Corporate Organization and
Qualification ...................... 11
(c) Corporate Authority .................... 11
(d) Governmental Filings; No Violations .... 11
(e) SEC Documents; Financial Statements;
No Undisclosed Liabilities .......... 12
(f) Absence of Certain Events and Changes .. 13
(g) Compliance with Laws ................... 14
(h) Title to Assets ........................ 14
(i) Litigation ............................. 14
(j) Taxes .................................. 14
(k) Employee Benefits ...................... 15
(l) Environmental Matters .................. 17
(m) Rights Plan ............................ 17
(n) Takeover Statutes ...................... 17
(o) Brokers and Finders .................... 17
(p) Tax Matters ............................ 17
(q) Information in Disclosure Documents
and Registration Statements ......... 17
(r) Trademarks, Patents and Copyrights ..... 18

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(s) Assets 18
(t) Disclosure ............................. 18

Section 5.2. Representations and Warranties of Fresenius
USA ................................ 18
(a) Capital Stock .......................... 18
(b) Corporate Organization and
Qualification ...................... 19
(c) Corporate Authority .................... 20
(d) Governmental Filings; No Violations .... 20
(e) SEC Documents; Financial Statements;
No Undisclosed Liabilities .......... 21
(f) Absence of Certain Events and Changes .. 22
(g) Compliance with Laws ................... 22
(h) Title to Assets ........................ 22
(i) Litigation ............................. 23
(j) Taxes .................................. 23
(k) Employee Benefits ...................... 23
(l) Environmental Matters .................. 25
(m) Takeover Statutes ...................... 25
(n) Brokers and Finders .................... 25
(o) Information in Disclosure
Documents and Registration
Statements ....................... 25
(p) Trademarks, Patents and Copyrights ..... 26
(q) Disclosure ............................. 26

Section 5.3. Representations and Warranties of
Fresenius AG ............................ 26
(a) Corporation Organization and
Qualification ....................... 26
(b) Corporate Authority .................... 27
(c) Governmental Filings; No Violations .... 27
(d) Takeover Statutes ...................... 28
(e) Brokers and Finders .................... 28
(f) Contribution ........................... 28
(g) Tax Matters ............................ 28
(h) Information in Disclosure
Documents and
Registration Statements ............. 28
(i) Disclosure ............................. 29

Section 5.4. Representations and Warranties for the
FWD Business .............................. 29
(a) Corporate Organization and
Qualification ....................... 29
(b) Corporate Authority .................... 29
(c) Capitalization ......................... 29
(d) Financial Statements; No Undisclosed
Liabilities ......................... 30
(e) Absence of Certain Events and Changes .. 30
(f) Compliance with Laws ................... 30
(g) Title to Assets ........................ 31
(h) Litigation ............................. 31
(i) Taxes .................................. 31
(j) Environmental Matters .................. 32
(k) Governmental Filings; No Violations .... 32

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(l) Contracts and Commitments .............. 33
(m) Employee Benefit Plans ................. 33
(n) Lease 34
(o) Trademarks, Patents and Copyrights ..... 34
Section 5.5. Certain Definitions Relating to the
FWD Business .............................. 35
(a) FWD Business .............................. 35
(b) FWD Business Assets ....................... 35
(c) FWD Business Subsidiaries ................. 35
(d) Fresenius AG Restructuring ................ 35

ARTICLE VI

COVENANTS

Section 6.1. Interim Operations ............................ 35
Section 6.2. Newco Capital ................................. 37
Section 6.3. Acquisition Proposals ......................... 38
Section 6.4. Information Supplied .......................... 39
Section 6.5. Shareholder Approvals ......................... 39
Section 6.6. Filings; Other Actions ........................ 40
Section 6.7. Audited Financial Statements .................. 41
Section 6.8. Access ........................................ 43
Section 6.9. Notification of Certain Matters ............... 43
Section 6.10. Publicity ..................................... 43
Section 6.11. [Intentionally Omitted] ....................... 43
Section 6.12. Employee Benefits ............................. 43
Section 6.13. Expenses and Liquidated Damages ............... 44
Section 6.14. Grace Rights Agreement ........................ 45
Section 6.15. Antitakeover Statutes ......................... 45
Section 6.16. Securities Act Compliance ..................... 45
Section 6.17. Stock Exchange Listing ........................ 45
Section 6.18. Transaction Agreements ........................ 45
Section 6.19. Tax Matters ................................... 45

ARTICLE VII

CONDITIONS

Section 7.1. Conditions to Each Party's Obligation ......... 46
(a) Shareholder Approval ................... 46
(b) Governmental and Regulatory Consents ... 46
(c) Third-Party Consents ................... 46
(d) Litigation ............................. 46
(e) Grace Tax Opinion ...................... 46
(f) Registration Statements ................ 47
(g) Financing .............................. 47

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(h) The Distribution ....................... 47
(i) Stock Exchange Listing ................. 47
(j) Fresenius AG Debt ...................... 47
(k) Grace Debt ............................. 47
Section 7.2. Conditions to Obligation of Grace ............. 47
(a) Representations and Warranties ......... 47
(b) Performance of Obligations ............. 47
(c) Pooling Agreement Opinion............... 47
(d) Fresenius AG Tax Opinion ............... 48
Section 7.3. Conditions to Obligation
Concerning Fresenius USA ........... 48
(a) Representations and Warranties ......... 48
(b) Performance of Obligations ............. 48
(c) Pooling Agreement Opinion .............. 48
Section 7.4. Conditions to Obligation of Fresenius AG ...... 48
(a) Representations and Warranties ......... 48
(b) Performance of Obligations ............. 48

ARTICLE VIII

TERMINATION

Section 8.1. Termination by Mutual Consent ................. 49
Section 8.2. Termination by any Party Hereto ............... 49
Section 8.3. Termination by Grace .......................... 49
Section 8.4. Termination by Either Fresenius Party ......... 49
Section 8.5. Effect of Termination and Abandonment ......... 49

ARTICLE IX

MISCELLANEOUS AND GENERAL

Section 9.1. Survival ...................................... 50
Section 9.2. Modification or Amendment ..................... 50
Section 9.3. Waiver of Conditions .......................... 50
Section 9.4. Counterparts .................................. 50
Section 9.5. Governing Law ................................. 50
Section 9.6. Notices ....................................... 50
Section 9.7. Entire Agreement, etc. ........................ 51
Section 9.8. Definitions of "Subsidiary" and "Significant
Subsidiary" ................................ 51
Section 9.9. Captions ...................................... 52
Section 9.10. Specific Performance .......................... 52
Section 9.11. Severability .................................. 52
Section 9.12. No Third-Party Beneficiaries .................. 52
Section 9.13. Fresenius AG Covenant ......................... 52
Section 9.14. Further Assurances ............................ 52

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Annex A Defined Terms

Exhibit A Distribution Agreement
Exhibit B [Intentionally omitted]
Exhibit C Certain Terms of NY Preferred Shares
Exhibit D Certain Terms of Newco Pooling Agreement
Exhibit E Contribution Agreement
Exhibit F [Intentionally omitted]
Exhibit G Tax Matters Certificates
Exhibit H Form of Grace Tax Opinions
Exhibit I Form of Fresenius AG Tax Opinion

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AGREEMENT AND PLAN OF REORGANIZATION, dated as of February 4,
1996 (this "Agreement" or the "Reorganization Agreement"), by and between X. X.
XXXXX & CO., a New York corporation ("Grace"), and FRESENIUS AG, an
Aktiengesellschaft organized under the laws of the Federal Republic of Germany
("Fresenius AG").

RECITALS

A. Defined Terms. Certain capitalized terms used herein shall
have the meanings set forth in Annex A hereto.

B. Newco. Prior to the Effective Time, Fresenius AG intends
(a) to convert a wholly owned GmbH subsidiary into an Aktiengesellschaft
organized under the laws of the Federal Republic of Germany ("Newco"), having
charter documents (the "Newco Charter Documents") and other organizational
documents consistent with the terms set forth in Exhibit D hereto and subject to
the approval of each party hereto, and (b) to enter into a Pooling Agreement
consistent with the terms set forth in Exhibit D hereto and subject to the
approval of each party hereto (the "Newco Pooling Agreement").

C. The Contribution. Prior to the Effective Time, Fresenius AG
intends to contribute its worldwide dialysis business (including its shares of
capital stock of Fresenius USA) to Newco (the "Contribution") pursuant to the
Contribution Agreement attached hereto as Exhibit E (the " Contribution
Agreement"), and shall retain and lease to Newco its real property and buildings
in the Federal Republic of Germany to the extent used in connection with the FWD
Business pursuant to a lease (or leases) (the "Lease") consistent with the terms
set forth in Exhibit B to the Contribution Agreement, and subject to the
approval of each party hereto, and shall retain and license to Newco its name
and certain related marks pursuant to a license consistent with the terms set
forth in Exhibit C to the Contribution Agreement, and subject to the approval of
each party hereto.

D. The Distribution. Simultaneously herewith, X. X. Xxxxx &
Co.-Xxxx., a Connecticut corporation ("Grace-Conn."), are entering into the
Distribution Agreement attached hereto as Exhibit A (the "Distribution
Agreement") and, prior to the Effective Time, intend to consummate the
transactions contemplated thereby. Prior to the Effective Time, Grace intends to
transfer to (or retain in) Grace-Conn. all non-healthcare assets and
liabilities, its interests in the Amicon bioseparations business and GN
Holdings, Inc. and certain other assets, as contemplated by the Distribution
Agreement, and to effect a distribution to its common shareholders of all of its
equity interest in Grace-Conn. (the "Distribution").

E. The Recapitalization. Immediately prior to the Effective
Time, but following the Distribution, Grace shall be recapitalized (the
"Recapitalization") so that each holder of a Grace Common Share shall thereafter
hold one Grace Common Share and one one-hundredth of a NY Preferred Share.

F. The Mergers. At the Effective Time, the parties intend to
effect a merger of a wholly owned New York corporate subsidiary of Newco ("Grace
Merger Sub") with and into Grace, with Grace being the surviving corporation
(the "Grace Merger"), and that

the Certificate of Incorporation of Grace shall be amended (the "Grace
Amendment") to change the name of Grace to a name mutually acceptable to the
parties hereto. Also at the Effective Time, the parties intend to effect a
merger of a wholly owned Massachusetts corporate subsidiary of Newco ("Fresenius
USA Merger Sub") with and into Fresenius USA, Inc., a Massachusetts corporation
("Fresenius USA" and, together with Fresenius AG, the "Fresenius Parties"), with
Fresenius USA being the surviving corporation (the "Fresenius USA Merger" and,
together with the Grace Merger, the "Mergers"), and Fresenius AG has committed
to vote its shares of Fresenius USA in favor of the Fresenius USA Merger, as
provided herein.

G. Financing. It is the intention of the parties hereto that,
prior to the Distribution: (i) Grace and Grace-Conn. shall use reasonable
efforts to cause NMC to arrange new credit facilities so that the transactions
contemplated by the Transaction Agreements may be consummated; (ii) Fresenius AG
shall use reasonable efforts to arrange new credit facilities for the FWD
Business so that the transactions contemplated by the Transaction Agreements may
be consummated; and (iii) the parties shall cooperate with one another with
respect to the foregoing.

H. Intention of the Parties. It is the intention of the
parties to this Agreement that for United States federal income tax purposes (a)
the Contribution shall qualify as a tax-free exchange under the Code, (b) the
Distribution shall qualify as a tax-free distribution under the Code, (c) the
Recapitalization shall be tax-free to Grace under the Code and (d) each of the
Mergers shall qualify as a "reorganization" within the meaning of Section 368(a)
of the Code.

I. Approvals. The Board of Directors of each party hereto has
determined that this Agreement is in the best interests of such party and its
shareholders and has duly approved this Agreement and authorized its execution
and delivery.

NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:

ARTICLE I

THE REORGANIZATION; CLOSING; EFFECTIVE TIME

SECTION 1.1. The Distribution, Newco and the Contribution. (a)
Subject to the terms and conditions of the Distribution Agreement, prior to the
Effective Time, the parties thereto shall effect the various transactions
contemplated thereby including, immediately prior to the Effective Time, the
Distribution.

(b) Prior to the Effective Time, Fresenius AG shall cause
Newco to adopt the Newco Charter Documents (which shall be satisfactory to the
other parties hereto), shall cause Newco to adopt other organizational documents
as may be necessary or advisable (which shall be satisfactory to the other
parties hereto) and shall enter into, and shall cause Newco to enter into, the
Newco Pooling Agreement (which shall be satisfactory to the other parties
hereto).

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(c) Subject to the terms and conditions of the Contribution
Agreement, prior to the Effective Time, Fresenius AG shall effect the various
transactions contemplated by the Contribution Agreement including the
Contribution.

SECTION 1.2. The Recapitalization and the Mergers. (a) Subject
to the terms and conditions of this Agreement, immediately prior to the
Effective Time, but following the Distribution, Grace shall consummate the
Recapitalization.

(b) At the Effective Time, Grace and Grace Merger Sub shall
consummate the Grace Merger in which Grace Merger Sub shall be merged with and
into Grace and the separate corporate existence of Grace Merger Sub shall
thereupon cease. Grace shall be the surviving corporation of the Grace Merger
(the "Grace Surviving Corporation") and shall continue to be governed by the
laws of the State of New York.

(c) Subject to the terms and conditions of this Agreement, at
the Effective Time, Fresenius USA and Fresenius USA Merger Sub shall consummate
the Fresenius USA Merger in which Fresenius USA Merger Sub shall be merged with
and into Fresenius USA and the separate corporate existence of Fresenius USA
Merger Sub shall thereupon cease. Fresenius USA shall be the surviving
corporation of the Fresenius USA Merger (the "Fresenius USA Surviving
Corporation") and shall continue to be governed by the laws of the Commonwealth
of Massachusetts.

SECTION 1.3. Effective Time. Fresenius USA and Fresenius USA
Merger Sub shall cause a certificate of merger to be submitted to the Department
of State of the Commonwealth of Massachusetts as provided in the MBCL (the
"Massachusetts Certificate"). The Fresenius USA Merger shall become effective at
such time as the Massachusetts Certificate has been filed by the Department of
State of the Commonwealth of Massachusetts in accordance with the provisions of
the MBCL or at such other time as may be specified in the Massachusetts
Certificate in accordance with applicable law. The date and time when the
Fresenius USA Merger shall become effective is referred to herein as the
"Effective Time." Grace and Grace Merger Sub shall cause articles of merger to
be submitted to the Department of State of the State of New York as provided in
the NYBCL (the "New York Certificate "). The New York Certificate shall provide
that the Grace Merger shall become effective at the Effective Time in accordance
with applicable law.

SECTION 1.4. Closing. The closing of the Reorganization (the
"Closing") shall take place at the offices of Wachtell, Lipton, Xxxxx & Xxxx,
New York, New York, at 10:00 A.M. on the first business day on which all the
conditions set forth in Article VII can be fulfilled or are waived, or at such
other place and/or time as the parties hereto may agree. The date upon which the
Closing shall occur is herein called the "Closing Date."

ARTICLE II

CERTIFICATE OF INCORPORATION AND BY-LAWS

SECTION 2.1. Grace Certificate of Incorporation. The
certificate of incorporation of Grace, as in effect at the Effective Time and
taking into account the Grace Amendment, shall be the certificate of
incorporation of the Grace Surviving Corporation

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(the "Grace Certificate of Incorporation"), until duly amended in accordance
with the terms thereof and the NYBCL.

SECTION 2.2. Grace By-laws. The By-laws of Grace, as in effect
at the Effective Time, shall continue as the By-laws of the Grace Surviving
Corporation until duly amended in accordance with the terms thereof, the Grace
Certificate of Incorporation and the NYBCL.

SECTION 2.3. Fresenius USA Articles of Organization. The
articles of organization of Fresenius USA, as in effect at the Effective Time,
shall be the articles of organization of the Fresenius USA Surviving Corporation
(the "Fresenius USA Articles of Organization"), until duly amended in
accordance with the terms thereof and the MBCL.

SECTION 2.4. Fresenius USA By-laws. The By-laws of Fresenius
USA, as in effect at the Effective Time, shall continue as the By-laws of the
Fresenius USA Surviving Corporation, until duly amended in accordance with the
terms thereof, the Fresenius USA Articles of Organization and the MBCL.

ARTICLE III

DIRECTORS AND OFFICERS

SECTION 3.1. Grace Directors. Immediately after the Effective
Time, the directors of Grace Merger Sub shall be the directors of the Grace
Surviving Corporation.

SECTION 3.2. Grace Officers. Immediately after the Effective
Time, the officers of Grace Merger Sub shall be the officers of the Grace
Surviving Corporation.

SECTION 3.3. Fresenius USA Directors. Immediately after the
Effective Time, the directors of Fresenius USA Merger Sub shall be the directors
of the Fresenius USA Surviving Corporation.

SECTION 3.4. Fresenius USA Officers. Immediately after the
Effective Time, the officers of Fresenius USA Merger Sub shall be the officers
of the Fresenius USA Surviving Corporation.

ARTICLE IV

MERGER CONSIDERATION; CONTRIBUTION CONSIDERATION;
CONVERSION OR CANCELLATION OF SHARES IN THE MERGERS

SECTION 4.1. Grace Merger Consideration; Conversion or
Cancellation of Grace Capital Stock. At the Effective Time, by virtue of the
Grace Merger and without any action on the part of the holder of any capital
stock of Grace:

(a) Subject to Section 4.4(c), each Grace Common Share issued
and outstanding immediately prior to the Effective Time (other than any
Grace Common

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Share owned by Fresenius AG or its subsidiaries or
Fresenius USA or its subsidiaries or any Grace subsidiary or held in
Grace's treasury or any Grace Common Dissenting Share) shall be
converted at the Effective Time into the right to receive the Grace
Consideration Per Share.

(b) Each Grace Preferred Share and each NY Preferred Share
issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding and shall be unchanged by the Grace
Merger.

(c) All Grace Common Shares shall cease to be outstanding,
shall be cancelled and retired and shall cease to exist, and each
holder of an Old Grace Common Certificate (other than holders of Old
Grace Common Certificates representing Grace Common Dissenting Shares)
shall there after cease to have any rights with respect to such Old
Grace Common Certificates, except the right to receive, without
interest, upon exchange of such Old Grace Common Certificates in
accordance with Section 4.4, the Newco Ordinary Share Certificates and
payments to which such holder is entitled pursuant to this Article IV.

(d) Each Grace Common Share issued and outstanding immediately
prior to the Effective Time and owned by Fresenius AG or its
subsidiaries or Fresenius USA or its subsidiaries or any Grace
subsidiary or held in Grace's treasury shall cease to be outstanding,
shall be cancelled and retired without payment of any consideration
therefor and shall cease to exist.

(e) Each share of Grace Merger Sub common stock issued and
outstanding immediately prior to the Effective Time shall be converted
into and become one share of common stock of the Grace Surviving
Corporation.

SECTION 4.2. Fresenius USA Merger Consideration; Conversion or
Cancellation of Fresenius USA Capital Stock. At the Effective Time, by virtue of
the Fresenius USA Merger and without any action on the part of the holder of any
capital stock of Fresenius USA:

(a) Subject to Section 4.4(c), each Fresenius USA Common Share
issued and outstanding immediately prior to the Effective Time
(other than any Fresenius USA Common Share owned by
Fresenius AG or its subsidiaries or Grace or its subsidiaries or any
Fresenius USA subsidiary or held in Fresenius USA's treasury or any
Fresenius USA Common Dissenting Share) shall be converted at the
Effective Time into the right to receive the Fresenius USA
Consideration Per Share.

(b) All Fresenius USA Common Shares and Fresenius USA
Preferred Shares shall cease to be outstanding, shall be cancelled and
retired and shall cease to exist, and each holder of an Old Fresenius
USA Common Certificate (other than holders of Old Fresenius USA Common
Certificates representing Fresenius USA Common Dissenting Shares) shall
thereafter cease to have any rights with respect to such Old Fresenius
USA Common Certificates, except the right to receive, without interest,
upon exchange of such Old Fresenius USA Common Certificates in
accordance with Section 4.4, the Newco Ordinary Share Certificates and
payments to which such holder is entitled pursuant to this Article IV.

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(c) Each Fresenius USA Common Share issued and outstanding
immediately prior to the Effective Time and owned by Grace or its
subsidiaries or Fresenius AG or its subsidiaries or Newco or any
Fresenius USA subsidiary or held in Fresenius USA's treasury, and each
Fresenius USA Preferred Share, shall cease to be outstanding, shall be
cancelled and retired without payment of any consideration therefor
(except, as provided in Section 4.3) and shall cease to exist.

(d) Each share of Fresenius USA Merger Sub capital stock
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the Fresenius
USA Surviving Corporation.

(e) Prior to the vote of holders of Fresenius USA Common
Shares to be held with respect to the Fresenius USA Merger, Fresenius
AG shall advise Grace in writing as to the aggregate consideration to
be given to Fresenius USA shareholders (other than Fresenius AG and its
subsidiaries) in the Fresenius USA Merger (the "Aggregate Fresenius
USA Common Share Consideration"); provided that (i) to the extent that
the Aggregate Fresenius USA Common Share Consideration includes any
Newco Ordinary Shares, such shares shall be allocated to the holders of
Fresenius USA Common Share Equivalent (other than Fresenius AG and
its subsidiaries) in lieu of Newco Ordinary Shares which would
otherwise have been allocated to Fresenius AG under Section 4.3; (ii)
holders of Grace Common Share Equivalents shall be allocated in the
Reorganization, in the aggregate, 44.8% of Newco's equity securities
outstanding immediately following the Reorganization on a fully
diluted basis; (iii) Fresenius AG shall be allocated in the
Reorganization, in the aggregate, no less than 51%
of Newco's equity securities outstanding immediately following the Re
organization on a fully diluted basis; (iv) such transaction shall not
adversely affect the tax-free nature of the Distribution, the
Contribution or the Grace Merger; and (v) no additional costs or
expenses (including applicable taxes) shall be borne by Grace,
Fresenius USA or Newco as a result thereof, other than costs and
expenses for which Fresenius AG has agreed to reimburse Grace,
Fresenius USA or Newco, as applicable, at the Closing.

SECTION 4.3. Fresenius AG Consideration. At the Effective
Time, in consideration of the Contribution and the contribution to Newco of the
Fresenius USA Common Shares and the Fresenius USA Preferred Shares owned by
Fresenius AG and its subsidiaries (as provided in the Contribution Agreement),
and in consideration of the Fresenius USA Merger, Fresenius AG shall be
allocated 55.2% of the Newco Ordinary Shares that will be outstanding
immediately following consummation of the Reorganization on a fully diluted
basis.

SECTION 4.4. Exchange of Old Certificates for New
Certificates. (a) Appointment of Exchange Agent. From and after the Effective
Time until the end of the six-month period following the Effective Time, the
Surviving Corporations shall make available or cause to be made available to an
exchange agent appointed prior to the Effective Time by Newco with the approval
of each of Grace and Fresenius AG (the "Exchange Agent") Newco Ordinary Share
Certificates and cash in amounts sufficient to allow the Exchange Agent to make
all deliveries of Newco Ordinary Share Certificates and payments that may be
required in exchange for Old Certificates pursuant to this Article IV.

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(b) Exchange Procedures. Promptly after the Effective Time,
the Surviving Corporations shall cause the Exchange Agent to mail or deliver to
each person (other than any party hereto or its subsidiaries and any holder of
Dissenting Shares) who was, at the Effective Time, a holder of record of Grace
Common Shares or, if applicable, Fresenius USA Common Shares a form (the terms
of which shall be mutually agreed upon by the parties hereto prior to the
Effective Time) of letter of transmittal containing instructions for use in
effecting the surrender of the Old Certificates in exchange for ADRs or Newco
Ordinary Share Certificates and payments pursuant to this Article IV. Upon
surrender to the Exchange Agent of an Old Certificate for cancellation together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, the holder of such Old Certificate shall be entitled
to receive in exchange therefor ADRs or a Newco Ordinary Share Certificate
representing the Newco Ordinary Shares, and a check in the amount to which such
holder is entitled pursuant to this Article IV, and the Old Certificate so
surrendered shall forthwith be cancelled. No interest shall be paid or shall
accrue on the amount payable upon surrender of Old Certificates. If any ADR or
Newco Ordinary Share Certificate is to be issued in a name other than that in
which the Old Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the person requesting such exchange
shall pay any transfer or other taxes required by reason of the issuance of such
ADR or Newco Ordinary Share Certificate in a name other than that of the
registered holder of the Old Certificate surrendered, or shall establish to the
satisfaction of the applicable Surviving Corporation that any such taxes have
been paid or are not applicable. Six months after the Effective Time, each
Surviving Corporation shall be entitled to cause the Exchange Agent to deliver
to it any applicable ADRs or Newco Ordinary Share Certificates and cash
(including any interest thereon) made available to the Exchange Agent that are
unclaimed by the former shareholders of its constituent corporations. Any such
former shareholders who have not theretofore exchanged their Old Certificates
for ADRs or Newco Ordinary Share Certificates and cash pursuant to this Article
IV shall thereafter be entitled to look exclusively to the applicable Surviving
Corporation and only as general creditors thereof for the Newco Ordinary Shares
and cash to which they become entitled upon exchange of their Old Certificates
pursuant to this Article IV. Each Surviving Corporation shall pay all applicable
charges and expenses, including its applicable share of those of the Exchange
Agent, in connection with the exchange of ADRs or Newco Ordinary Share
Certificates and cash for Old Certificates as contemplated hereby.

(c) Fractional Shares. No fractional ADRs or Newco Ordinary
Shares shall be issued in the Reorganization. In lieu of any such fractional
shares, each person who would otherwise have been entitled to a fraction of an
ADR or Newco Ordinary Share upon surrender of an Old Certificate for exchange
pursuant to this Article IV shall be paid an amount in cash (without interest)
equal to such holder's proportionate interest in the net proceeds from the sale
or sales in the open market by the Exchange Agent, on behalf of all such
holders, of the aggregate fractional ADRs or Newco Ordinary Shares issued
pursuant to this Article IV. As soon as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (i) the number of full
ADRs or Newco Ordinary Shares delivered to the Exchange Agent over (ii) the
aggregate number of full ADRs or Newco Ordinary Shares to be distributed in
respect of Grace Common Shares or Fresenius USA Common Shares (such excess being
herein called the "Excess Shares"), and the Exchange Agent, as agent for the
former holders of such shares, shall sell the Excess Shares at the prevailing
prices on the open market. The sale of the Excess Shares by the Exchange Agent
shall be executed on a public exchange through one or more firms and shall be
executed in round lots to the extent practicable; and, at the discretion of the
Exchange Agent, the

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Excess Shares may be exchanged for ADRs pursuant to the ADR Facility and such
ADRs shall be sold on the Exchange as aforesaid in lieu of the Excess Shares.
Newco shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent, incurred in connection with such sale of Excess Shares. Until the net
proceeds of such sale or sales have been distributed, the Exchange Agent shall
hold such proceeds in trust for such former stockholders (the "Fractional
Securities Fund"). As soon as practicable after the determination of the amount
of cash to be paid in lieu of any fractional interests, the Exchange Agent shall
make available in accordance with this Agreement such amounts to such former
stockholders.

(d) Distributions with Respect to Unexchanged Shares.
Notwithstanding any other provisions of this Agreement, no dividends shall be
paid to any person holding an Old Certificate until such Old Certificate is
surrendered for exchange as provided herein. Subject to the effect of applicable
laws, following surrender of any such Old Certificate by any holder thereof
other than an Old Certificate representing Dissenting Shares, there shall be
paid to the holder of the Newco Ordinary Share Certificate issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to the Newco Ordinary Shares represented
thereby and not paid, less the amount of any withholding taxes which may be
required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to the time of such surrender and a payment date subsequent to the time of
such surrender payable with respect to the Newco Ordinary Shares represented
thereby, less the amount of any withholding taxes which may be required thereon.

(e) No Transfers. At or after the Effective Time, there shall
be no transfers on the stock transfer books of either Surviving Corporation of
Grace Common Shares, Fresenius USA Common Shares or Fresenius USA Preferred
Shares which were outstanding immediately prior to the Effective Time.

(f) No Liability. If any Old Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Old Certificate to be lost, stolen or destroyed and, if required
by the applicable Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the applicable Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such Old
Certificate, the applicable Surviving Corporation shall, in exchange for such
lost, stolen or destroyed Old Certificates, issue or cause to be issued the
Newco Ordinary Shares and pay or cause to be paid the amounts deliverable in
respect thereof pursuant to this Article IV. None of any party hereto, the
Exchange Agent, Newco or any Surviving Corporation shall be liable to any holder
of Grace Common Shares or Fresenius USA Common Shares for any cash from the
payment fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.

(g) Withholding Rights. The Surviving Corporations shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Grace Common Shares or Fresenius USA
Common Shares such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Code, or under any provision of
state, local or foreign tax law. To the extent that amounts are so withheld and
paid over to the appropriate taxing authority, such withheld

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amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Grace Common Shares or Fresenius USA Common Shares in
respect of which such deduction and withholding was made.

(h) Transfer Taxes. Except as provided above, Fresenius USA
and Grace shall pay or cause to be paid any transfer or gains tax (including,
without limitation, any real property gains or transfer tax), other than any
income tax, imposed in connection with or as a result of the Contribution or
Fresenius USA Merger, on the one hand, or the Distribution or Grace Merger, on
the other hand, respectively.

(i) Stock Options and Warrants. At the Effective Time, each
option, warrant or other security convertible into, exchangeable for or
exercisable for the purchase of Grace Common Shares, after taking into account
adjustments pursuant to the Distribution Agreement (each, a "Grace Option"), and
each option, warrant or other security convertible into, exchangeable for or
exercisable for the purchase of Fresenius USA Common Shares (each, a "Fresenius
USA Option") which is outstanding and unconverted, unexchanged or unexercised,
as the case may be, shall cease to represent a right to acquire Grace Common
Shares or Fresenius USA Common Shares, as the case may be, and shall be
converted automatically into an option, warrant or other security, as the case
may be, to purchase Newco Ordinary Shares in an amount and at an exercise price
determined as provided below:

(A) The number of Newco Ordinary Shares to be subject to the
new option, warrant or other security shall be equal to the product of
the number of shares subject to the original option, warrant or other
security and the Grace Exchange Ratio (in the case of a Grace Option)
or the Fresenius USA Exchange Ratio (in the case of a Fresenius USA
Option), rounded down to the nearest whole number of shares; and

(B) The exercise price per share of Newco Ordinary Shares
under the new option, warrant or other security shall be equal to the
exercise price per share of Grace Common Shares or Fresenius USA Common
Shares under the original Grace Option or Fresenius USA Option, as the
case may be, divided by the Grace Exchange Ratio (in the case of a
Grace Option) or the Fresenius USA Exchange Ratio (in the case of a
Fresenius USA Option), rounded up to the nearest whole cent.

The duration and other terms of the new option, warrant or
other security shall be the same as the remaining duration and other terms of
the original Grace Option or Fresenius USA Option, as the case may be, except
that all references to Grace or Fresenius USA shall be deemed to be references
to Newco. The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be, and
is intended to be, effected in a manner which is consistent with Section 424(a)
of the Code.

SECTION 4.5. Dissenters' Rights. If any holder of Grace Common
Shares or Fresenius USA Common Shares shall file written objection or provide
notice to Grace or Fresenius USA, respectively, in order to seek appraisal with
respect to such shares, pursuant to applicable statutory procedures, Grace or
Fresenius USA, as applicable, shall give the other notice thereof. If any such
holder of Grace Common Shares or Fresenius USA Common Shares shall fail to
perfect or shall have effectively withdrawn such objection or notice or lost the
right to appraisal with respect to such shares, such shares

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shall thereupon be treated as though such shares had been converted pursuant to
Section 4.1 or Section 4.2, as applicable.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

SECTION 5.1. Representations and Warranties of Grace. Grace
hereby represents and warrants to Fresenius AG that, except as set forth in a
letter (the "Grace Disclosure Letter") delivered to Fresenius AG simultaneously
with the execution and delivery of this Agreement (provided that, as used
herein, all references to Grace (and/or its Affiliates) shall be deemed to refer
to Grace and its Affiliates which conduct the NMC Business, consistent with
Section 9.8 hereof, except as otherwise specifically provided):

(a) Capital Stock. The authorized capital stock of Grace
consists of 300,000,000 Grace Common Shares, par value $1.00 per share,
of which 97,375,339 were outstanding as of December 31, 1995, and
5,130,000 Grace Preferred Shares, par value $1.00 per share (consisting
of 40,000 authorized Grace 6% Preferred Shares, 50,000 authorized Class
A Preferred Shares, 40,000 authorized Class B Preferred Shares and
5,000,000 authorized Class C Preferred Shares), of which 36,460 were
outstanding as Grace 6% Preferred Shares, 16,356 were outstanding as
Grace Class A Preferred Shares, 21,577 were outstanding as Grace Class
B Preferred Shares and none were outstanding as Grace Class C Preferred
Shares, in each case as of December 31, 1995. As of December 31, 1995,
53,153 Grace Common Shares were held by Grace and its subsidiaries
(other than any shares held in a fiduciary capacity and beneficially
owned by a third party) . As of December 31, 1995, there were
outstanding under the Grace 1994 Stock Incentive Plan, the Grace 1989
Stock Incentive Plan, the Grace 1986 Stock Incentive Plan, the Grace
1981 Stock Incentive Plan and the Grace 1994 Stock Retainer Plan for
Non-Employee Directors (collectively, the "Grace Stock Plans") options
to acquire an aggregate of 5,694,196 Grace Common Shares (subject to
adjustment on the terms set forth in the Grace Stock Plans). As of the
date of this Agreement, there are no Grace Common Shares reserved for
issuance, other than 105,083,951 Grace Common Shares reserved for
issuance in connection with the Grace Rights and 7,655,459 Grace Common
Shares reserved for issuance pursuant to the Grace Stock Plans. All
outstanding Grace Common Shares and
Grace Preferred Shares have been duly authorized and validly issued and
are fully paid and nonassessable. Except for the Grace Common Shares
and Grace Preferred Shares, Grace has outstanding no bonds, debentures,
notes or other obligations the holders of which have the right to vote
(or are convertible or exchangeable into or exercisable for securities
having the right to vote) with the shareholders of Grace on any matter.
Each of the outstanding shares of capital stock of each of Grace's
subsidiaries has been duly authorized and validly issued and is fully
paid and nonassessable and, except for an immaterial number of shares
held by officers and directors of Grace and its subsidiaries as
nominees and for the benefit of Grace or any of its subsidiaries, is
owned, either directly or indirectly, by Grace free and clear of all
liens, pledges, security interests, claims, proxies, preemptive or
subscriptive rights or other encumbrances or restrictions of any kind.
Except as set forth above and except for Grace Common Shares issued
after December 31, 1995 pursuant to the terms of options, securities

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or plans referred to above and except for certain preemptive rights of
certain Grace Preferred Shares as set forth in the Grace Certificate of
Incorporation, there are no shares of capital stock of Grace
authorized, issued or outstanding and there are no preemptive rights or
any outstanding subscriptions, options, puts, calls, warrants, rights,
convertible or exchangeable securities or other agreements or
commitments of Grace or any of its significant subsidiaries of any
character relating to the issued or unissued capital stock or other
securities of Grace or any of its subsidiaries (including, without
limitation, the issuance, sale, purchase, redemption, conversion,
exchange, redemption, voting or transfer thereof). Exhibit 21 to its
Annual Report on Form 10-K for the year ended December 31, 1994, as
filed with the SEC, is an accurate and correct statement of all of the
information required to be set forth therein by the regulations of the
SEC and is an accurate and correct list of all Grace subsidiaries as of
the date hereof having a book value as of December 31, 1995 or net
income for the fiscal year ended December 31, 1995 in excess of
$25,000,000. Except as set forth in such Exhibit, as of the date
hereof, Grace does not, directly or indirectly, own any capital stock
or other ownership interest in any corporation, partnership, joint
venture or other entity having a book value as of December 31, 1995 or
net income for the fiscal year ended December 31, 1995 in excess of
$25,000,000.

(b) Corporate Organization and Qualification. Each of Grace
and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its or such subsidiary's
jurisdiction of organization and is in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it or such subsidiary require
such qualification, except for any such failure so to qualify or be in
good standing which, when taken together with all other such failures,
is not reasonably likely to have a Material Adverse Effect with respect
to Grace. Each of Grace and its subsidiaries has the requisite
corporate power and authority to carry on its businesses as they are
now being conducted. Grace has made available to the other parties
hereto a complete and correct copy of its Certificate of Incorporation
and By-laws (or similar organizational documents), each as amended to
date and currently in full force and effect.

(c) Corporate Authority. Subject only to the receipt of the
requisite approval of its shareholders, Grace has the requisite
corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform each Transaction
Agreement to which it is a party and to consummate the transactions
contemplated hereby and thereby including, without limitation, the
approval of the Board of Directors of Grace and the resolution of the
Board of Directors of Grace to recommend the transactions contemplated
hereby and thereby for approval by Grace shareholders, subject to their
fiduciary duties. Each Transaction Agreement to which Grace is a party
is, or when executed and delivered shall be, a valid and binding
agreement of Grace enforceable in accordance with its terms.

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made by Grace or any subsidiary with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by it or any subsidiary from, any governmental or
regulatory authority, agency, court, commission or other entity,
domestic or foreign ("Governmental Entity"), in connection with the
execution, delivery or performance of each Transaction Agreement to
which it or any subsidiary is a party by it or any subsidiary and
the consummation by it of the transactions contemplated hereby and
thereby, the failure to make or obtain any or all of which,
individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect with respect to Grace or enable any person to
enjoin or prevent or materially delay consummation of the
transactions contemplated hereby and thereby.

(ii) The execution, delivery and performance by Grace or any
subsidiary of each Transaction Agreement to which it is a party does
not or will not, and the consummation by it of any of the transactions
contemplated hereby and thereby will not, constitute or result in (A) a
breach or violation of, or a default under, its Certificate of
Incorporation or By-laws, or the comparable governing instruments of
any of its subsidiaries, or (B) assuming receipt of any consents and
the occurrence of any events disclosed in the Grace Disclosure Letter
as contemplated in the last sentence of this paragraph, a breach or
violation of, or a default under, or the acceleration of or the
creation of a lien, pledge, security interest or other encumbrance on
assets of it, Newco or the Surviving Corporations or any of their
respective subsidiaries (with or without the giving of notice, the
lapse of time or both) pursuant to, any provision of any agreement,
lease, contract, note, mortgage, indenture, arrangement or other
obligation or commitment ("Contracts") of it or any of its subsidiaries
or any law, rule, ordinance or regulation or judgment, decree, order,
award or governmental or non-governmental permit or license to which it
or any of its subsidiaries is subject, or any change in the rights or
obligations of any party under, or give rise to any rights of
termination under, any of the Contracts, except, in the case of clause
(B) above, for such breaches, violations, defaults, accelerations or
changes that are disclosed in the Grace Disclosure Letter or,
individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect with respect to Grace. The Grace Disclosure
Letter sets forth a list of all consents required under any Contracts
to be obtained by it or any subsidiary or events required to occur
prior to consummation of the Reorganization (other than consents the
failure to obtain of which, individually and in the aggregate, is not
reasonably likely to have a Material Adverse Effect with respect to
Grace).

(e) SEC Documents; Financial Statements; No Undisclosed
Liabilities. (i) Grace has delivered to the other parties hereto each
SEC Document prepared and filed with the SEC by it or its subsidiaries
since December 31, 1994, including, without limitation, (A) its Annual
Report on
Form 10-K for the year ended December 31, 1994, and (B) its Quarterly
Reports on Form 10-Q for the periods ended March 31, June 30 and
September 30, 1995. As of its filing date, each such SEC Document
filed, and each SEC Document that will be filed by it or its
subsidiaries prior to the Effective Time, as amended or supplemented,
if applicable, pursuant to the Exchange Act (A) complied or will comply
in all material respects with the applicable requirements of the
Exchange Act and (B) did not or will not contain any untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each of
Grace's consolidated balance sheets

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included in or incorporated by
reference into its SEC Documents (including the related notes and
schedules) fairly presents in all material respects the consolidated
financial position of it and its subsidiaries as of its date and each
of the consolidated statements of income, cash flows and shareholders'
equity included in or incorporated by reference into its SEC Documents
(including any related notes and schedules) fairly presents in all
material respects the consolidated results of operations, retained
earnings and cash flows, as the case may be, of it and its subsidiaries
for the periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments), in each case in
accordance with US GAAP.

(ii) Each SEC Document which is a final registration statement
filed, and each final registration statement that will be filed by it
or any subsidiary prior to the Effective Time, as amended or
supplemented, if applicable, pursuant to the Securities Act, as of the
date such statement or amendment became or will become effective (A)
complied or will comply in all material respects with the applicable
requirements of the Securities Act and (B) did not or will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of any prospectus, in light of the
circumstances under which they were made).

(iii) Included in the Grace Disclosure Letter are a special
purpose consolidated balance sheet as of, and special purpose
consolidated statements of income, cash flows and shareholders' equity
for Grace for the year ended, December 31, 1995, for Grace, in each
case exclusive of the Grace-Conn. Business and the assets, liabilities,
income, cash flows and shareholders' equity thereof (such
financial statements, the "Grace Disclosure Letter Financial
Statements" and the balance sheet as of December 31, 1995 included
therein, the "Grace Disclosure Letter Balance Sheet"). The Grace
Disclosure Letter Balance Sheet (including any related notes and
schedules) fairly presents in all material respects, and the special
purpose consolidated balance sheet to be included in the Grace Audited
Financial Statements (including any related notes and schedules) shall
fairly present in all material respects, the consolidated financial
position of Grace and its included subsidiaries as of its date; and
each of the special purpose consolidated statements of income, cash
flows and shareholders' equity included in the Grace Disclosure Letter
Financial Statements (including any related notes and schedules) fairly
presents in all material respects, and each such statement to be
included in the Grace Audited Financial Statements (including any
related notes and schedules) shall fairly present in all material
respects, the consolidated re sults of operations, retained earnings
and cash flows, as the case may be, of Grace and its included
subsidiaries for the periods set forth therein, in each case in
accordance with US GAAP and in each case exclusive of the Grace-Conn.
Business and the assets, liabilities, income, cash flows and
shareholders' equity thereof.

(iv) Except as disclosed in the Grace Disclosure Letter
Balance Sheet or the notes thereto or in its SEC Documents filed with
the SEC prior to the date hereof, neither Grace nor its subsidiaries
has any liabilities, whether or not accrued, contingent or otherwise,
that, individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect with respect to Grace.

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21

(f) Absence of Certain Events and Changes. Except as disclosed
in its SEC Documents filed with the SEC prior to the date hereof, since
September 30, 1995, Grace and its subsidiaries have conducted their
respective businesses only in the ordinary and usual course of such
businesses and there has not been any change or development or
combination of changes or developments (including any worsening of any
condition currently existing) which, individually and in the aggregate,
is reasonably likely to result in a Material Adverse Effect with
respect to Grace.

(g) Compliance with Laws. Except as disclosed in its SEC
Documents filed with the SEC prior to the date hereof, Grace and its
subsidiaries have complied, in the conduct of their respective
businesses, with all applicable federal, state, local and foreign
statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto, except where the failure to comply is not reasonably likely,
individually and in the aggregate, to have a Material Adverse Effect
with respect to Grace. To the knowledge of its executive officers, each
of Grace and its subsidiaries has, and, immediately after the Grace
Merger, will have, all permits, licenses, certificates of authority,
orders, and approvals of, and has made all filings, applications, and
registrations with, federal, state, local, and foreign governmental or
regulatory bodies that are required in order to permit it or such
subsidiary to carry on its business as it is presently conducted,
except for such permits, licenses, certificates, orders, filings,
applications and registrations, the failure to have or make which,
individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect with respect to Grace.

(h) Title to Assets. Grace and its subsidiaries have and,
immediately after the Grace Merger, the NMC Group will have, good and,
with respect to real property, marketable title to its properties and
assets (other than property as to which it is lessee), except for those
defects in title which are not, individually and in the aggregate,
reasonably likely to have a Material Adverse Effect with respect to
Grace. Grace and its subsidiaries have, and immediately after the Grace
Merger, the NMC Group will either own or have adequate rights to use
(on the same basis as currently owned or used by Grace or such
subsidiaries), all assets predominantly used or useful in the NMC
Business as currently conducted and all assets reflected on the Grace
Disclosure Letter Balance Sheet, except for assets disposed of in
accordance with this Agreement and except for those failures to own or
have which are not, individually and in the aggregate, reasonably
likely to have a Material Adverse Effect with respect to Grace.

(i) Litigation. Except as disclosed in Grace's SEC Documents
filed with the SEC prior to the date hereof, there are no civil,
criminal or administrative actions, suits, claims, hearings or
proceedings pending or, to the knowledge of its executive officers,
threatened, or investigations pending, against it or any of its
subsidiaries that, individually or in the aggregate, are reasonably
likely to have a Material Adverse Effect with respect to Grace. There
are no judgments or outstanding orders, writs, injunctions, decrees,
stipulations or awards (whether rendered or issued by a court or
Governmental Entity, or by arbitration) against Grace or any of its
subsidiaries or their respective properties or businesses, which are
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect with respect to Grace.

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22

(j) Taxes. Except as disclosed in its SEC Documents filed with
the SEC prior to the date hereof, all material federal, state, local
and foreign tax returns required to be filed by or on behalf of Grace
or any of its subsidiaries have been timely filed or requests for
extensions have been timely filed and any such extension shall have
been granted and not have expired, and all such filed returns are
complete and accurate in all material respects. Except as disclosed in
its SEC Documents filed with the SEC prior to the date hereof, all
material taxes required to be shown on returns filed by Grace, as of
the date of such SEC Document, have been paid in full or have been
recorded as a liability on its consolidated balance sheet (in
accordance with US GAAP). Except as disclosed in its SEC Documents
filed with the SEC prior to the date hereof, there is no outstanding
audit examination, deficiency, or refund litigation with respect to any
taxes of Grace that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect with respect to Grace. Except
as disclosed in its SEC Documents filed with the SEC prior to the date
hereof, all material taxes, interest, additions, and penalties due with
respect to completed and settled examinations or concluded litigation
relating to Grace have been paid in full or have been recorded as a
liability on its balance sheet (in accordance with US GAAP). Except as
disclosed in its SEC Documents filed with the SEC prior to the date
hereof, neither Grace nor any of its subsidiaries is a party to a tax
sharing or similar agreement or any agreement pursuant to which it or
any of its subsidiaries has indemnified another party with respect to
taxes (other than the tax sharing agreement attached to the
Distribution Agreement), except for any such agreement under which the
liabilities of Grace and its subsidiaries would not be reasonably
likely to have a Material Adverse Effect with respect to Grace. Except
as set forth in SEC Documents filed prior to the date hereof, neither
Grace nor its subsidiaries have waived any applicable statute of
limitations with respect to federal income taxes or any material state
income taxes.

(k) Employee Benefits. (i) Grace's SEC Documents filed prior
to the date hereof disclose all material information required under the
applicable rules and regulations of the SEC with respect to Grace's
bonus, deferred compensation, pension, retirement, profit sharing,
thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock and stock option plans, all material employment or
severance Contracts, all other material employee benefit plans and all
applicable "change of control" or similar provisions in any material
plan, Contract or arrangement which covers employees or former
employees of Grace or its subsidiaries ("Grace Compensation Plans").
True and complete copies of the Grace Compensation Plans and all other
benefit plans, Contracts or arrangements (regardless of whether they
are funded or unfunded or foreign or domestic) covering employees or
former employees of Grace and its subsidiaries (the "Grace Employees"),
including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and all amendments thereto, have been
made available to each other party hereto.

(ii) All Grace Compensation Plans that are "employee benefit
plans", other than "multiemployer plans" within the meaning of Sections
3(37) or 4001(a)(3) of ERISA, covering Grace Employees (the "Grace
Plans"), to the extent subject to ERISA, are in substantial compliance
with ERISA, except where the failure to be so would not reasonably be
expected to have a Material Adverse Effect with respect to Grace. There
is no pending or, to the knowledge of executive officers, threatened

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23

litigation relating to any Grace Plan which is reasonably likely to
have a Material Adverse Effect with respect to Grace.

(iii) No material liability that has not previously been fully
satisfied under Subtitle C or D of Title IV of ERISA, under Section 412
of the Code or under Section 302 of ERISA has been or is expected to be
incurred by Grace or any of its subsidiaries with respect to any
"single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer
with it under Section 4001 of ERISA or Section 414 of the Code (a
"Grace ERISA Affiliate"). Grace and its subsidiaries and the Grace
ERISA Affiliates have not incurred and do not expect to incur any
material withdrawal liability with respect to a multiemployer plan
under Subtitle E of Title IV of ERISA. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA, for which the
30-day reporting requirement has not been waived, has been required to
be filed for any of the Grace Plans or by any of the Grace ERISA
Affiliates within the 12-month period ending on the date hereof.

(iv) As of January 1, 1995, the "full-funding limitation" (as
defined in Section 412(c)(9) of the Code) has been satisfied with
respect to each Grace Pension Plan which is a single-employer plan
(within the meaning of Section 4001(a)(15) of ERISA), and there has
been no change in the financial condition of any such Grace Pension
Plan since that date that is reasonably likely to have a Material
Adverse Effect with respect to Grace. The withdrawal liability of Grace
and its subsidiaries under each Grace Plan which is a multiemployer
plan to which Grace, its subsidiaries or its ERISA Affiliates has
contributed during the preceding 12 months, determined as if a
"complete withdrawal," within the meaning of Section 4203 of ERISA, had
occurred as of the date hereof, is not reasonably likely to have a
Material Adverse Effect with respect to Grace.

(v) Except as disclosed in its SEC Documents filed prior to
the date hereof, neither Grace nor its subsidiaries have any material
obligations for retiree health and life benefits under any Grace Plan.
Except as disclosed in its SEC Documents filed prior to the date
hereof, there are no restrictions on the right of Grace to amend or
terminate any Grace Plan that provides retiree health or life benefits
to Grace Employees without Grace incurring any material liability
thereunder as a result of such amendment or termination.

(vi) All Grace Compensation Plans covering foreign Employees
comply with applicable local law except when the failure to so comply,
individually and in the aggregate, would not have a Material Adverse
Effect with respect to Grace. Grace and its subsidiaries have no
unfunded liabilities with respect to any Grace Pension Plan which cover
foreign Employees in an amount which is reasonably likely to have a
Material Adverse Effect with respect to Grace.

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24

Grace Compensation Plan or payment of any severance or similar
compensation under any Grace Compensation Plan, and the amounts,
if any, payable under the Grace Compensation Plans and not
deductible by it by reason of Section 280G
of the Code will not exceed the maximum amount previously disclosed to
the other parties hereto. Except as disclosed in its SEC Documents
filed prior to the date hereof, Grace and its subsidiaries have not
entered into any change-of-control agreement under which Grace will be
obligated to make change-of-control payments following the Closing.

(l) Environmental Matters. Except as disclosed in its SEC
Documents filed prior to the date hereof and except for such matters
that, individually and in the aggregate, are not reasonably likely to
have a Material Adverse Effect with respect to Grace, to the knowledge
of its executive officers, (i) Grace and its subsidiaries are in
compliance with all applicable Environmental Laws; and (ii) neither
Grace nor any of its subsidiaries has any outstanding notices, demand
letters or requests for information from any Government Entity or any
third party that assert that Grace or any of its subsidiaries may be in
violation of, or liable under, any Environmental Law and none of Grace,
its subsidiaries or its properties are subject to any court order,
administrative order or decree arising under any Environmental Law.

(m) Rights Plan. After giving effect to any amendments that
will be made prior to the Effective Time, execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby will not cause or permit shareholders to exercise
rights under the Grace Rights Agreement or the Grace Rights issued
pursuant thereto and the Grace Rights will not become unredeemable or
exercisable as a result of the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated
hereby.

(n) Takeover Statutes. Execution, delivery and performance of
this Agreement and consummation of the transactions contemplated hereby
will not cause to be applicable to Grace any "fair price,"
"moratorium," "control share acquisition" or other similar antitakeover
statute or regulation enacted under state or federal laws in the United
States or any foreign jurisdiction (each a "Takeover Statute") (after
giving effect to any actions that will be taken prior to the Effective
Time).

(o) Brokers and Finders. Neither it nor any of its officers,
directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated herein except pursuant to
arrangements disclosed in writing to the other parties hereto prior to
the date hereof.

(p) Tax Matters. At the Effective Time, the representations
set forth in the numbered paragraphs of the form of Tax Matters
Certificate of Grace attached hereto as Exhibit G (the "Grace Tax
Matters Certificate") will be true and correct in all respects, and
such representations are hereby incorporated herein by reference with
the same effect as if set forth herein in their entirety.

(q) Information in Disclosure Documents and Registration
Statements. None of the information supplied or to be supplied by Grace
for inclusion or incorporation by reference in any Registration
Statement will, at the time such Registration

-17-

Statement becomes effective under the Securities Act and at
the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and the Grace Proxy Statement will not, at the date mailed
to Grace shareholders and at the time of the Grace Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. The Grace Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder, except that no representation is
made by Grace with respect to statements made therein based on
information supplied by Fresenius AG or Fresenius USA or their
respective subsidiaries.

(r) Trademarks, Patents and Copyrights. Grace and its
subsidiaries own or possess adequate licenses or other rights to use,
all patents, trademarks, trade names, service marks, copyrights,
licenses and product licenses or registrations (including applications
for any of the fore going), as are used or useful predominantly in
connection with the NMC Business (the "NMC Business Intellectual
Property") the lack of which would reasonably be expected to have a
Material Adverse Effect with respect to Grace; and none of Grace or any
of its subsidiaries has any knowledge of any conflict with the
proprietary intellectual property rights of any of Grace or its
subsidiary therein or any knowledge of any conflict by Grace or its
subsidiary with the rights of others therein which would have a
Material Adverse Effect with respect to Grace. Immediately after the
Grace Merger, Newco or its subsidiaries will own or possess adequate
licenses or other rights to use (on substantially the same basis as
currently owned or possessed by Grace and its subsidiaries) all of
the NMC Business Intellectual Property. There are no Contracts,
agreements and licenses pursuant to which Grace or any of its
subsidiaries which will not be subsidiaries of Newco after the
Grace Merger will retain rights or interests of any kind in or
affecting the NMC Business Intellectual Property.

(s) Assets. Except as contemplated herein, at the Effective
Time, the NMC Group will contain the worldwide health care business of
Grace and all assets and services predominantly used in the conduct of
Grace's worldwide health care business as presently conducted.

(t) Disclosure. Neither the representations and warranties of
Grace contained in this Agreement nor in any written instrument, list,
exhibit or certificate furnished or to be furnished by Grace to
Fresenius AG pursuant hereto or in connection herewith contains or will
contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary in order to make the statements not
misleading.

SECTION 5.2. Representations and Warranties of Fresenius USA.
Subject to Section 9.13, Fresenius AG hereby represents and warrants to
Grace that, except as set forth in a letter (the "Fresenius USA
Disclosure Letter") delivered to Grace simultaneously with the
execution and delivery of this Agreement:

-18-
26

(a) Capital Stock. The authorized capital stock of Fresenius
USA consists of 40,000,000 Fresenius USA Common Shares, par value $.01
per share, of which 21,464,874 were outstanding as of December 31,
1995, and 600,000 Fresenius USA Preferred Shares, par value $1.00 per
share, of which 200,000 were outstanding as Fresenius USA Series F
Preferred Shares as of such date. Fresenius USA Series F Preferred
Shares are convertible into an aggregate of 3,129,883 Fresenius USA
Common Shares. No Fresenius USA Common Shares were held by Fresenius
USA and its subsidiaries (other than any shares held in a fiduciary
capacity and beneficially owned by a third party) as of December 31,
1995. As of December 31, 1995, there were outstanding under the
Fresenius USA 1976 Stock Option Plan, the Fresenius USA 1985 Special
Stock Option Plan, the Fresenius USA 1987 Stock Option Plan, the
Fresenius USA 1989 Special Stock Option Plan and the Fresenius USA
Directors' Stock Option Plan (collectively, the "Fresenius USA Stock
Plans") options to acquire an aggregate of 2,146,395 Fresenius USA
Common Shares (subject to adjustment on the terms set forth in the
Fresenius USA Stock Plans). As of the date of this Agreement, there are
no Fresenius USA Common Shares reserved for issuance, other than
155,550 Fresenius USA Common Shares reserved for issuance upon exercise
of stock options, 4,512,500 Fresenius USA Common Shares reserved for
issu ance pursuant to outstanding warrants and 1,990,845 Fresenius USA
Common Shares reserved for issuance pursuant to the Fresenius USA Stock
Plans. All outstanding Fresenius USA Common Shares and Fresenius USA
Preferred Shares have been duly authorized and validly issued and are
fully paid and nonassessable. Except for the Fresenius USA Common
Shares and the Fresenius USA Preferred Shares, Fresenius USA has
outstanding no bonds, debentures, notes or other obligations the
holders of which have the right to vote (or are convertible or
exchangeable into or exercisable for securities having the right to
vote) with the shareholders of Fresenius USA on any matter. Each of the
outstanding shares of capital stock of each of Fresenius USA's
subsidiaries has been duly authorized and validly issued and is fully
paid and nonassessable and, except for an immaterial number of shares
held by officers and directors of Fresenius USA and its subsidiaries as
nominees and for the benefit of Fresenius USA or any of its
subsidiaries, is owned, either directly or indirectly, by Fresenius USA
free and clear of all liens, pledges, security interests, claims,
proxies, preemptive or subscriptive rights or other encumbrances or
restrictions of any kind. Except as set forth above and except for
Fresenius USA Common Shares issued after December 31, 1995 pursuant to
the terms of options, securities or plans referred to above, there are
no shares of capital stock of Fresenius USA authorized, issued or
outstanding and there are no preemptive rights or any outstanding
subscriptions, options, puts, calls, warrants, rights, convertible or
exchangeable securities or other agreements or commitments of Fresenius
USA or any of its subsidiar ies of any character relating to the issued
or unissued capital stock or other securities of Fresenius USA or any
of its subsidiaries (including, without limitation, the issuance, sale,
purchase, redemption, conversion, exchange, redemption, voting or
transfer thereof). Exhibit 21 to Fresenius USA's Annual Report on Form
10-K for the year ended December 31, 1994, as filed with the SEC,
contains an accurate and correct statement of all of the information
required to be set forth therein by the regulations of the SEC and is
an accurate and correct list of all Fresenius USA subsidiaries as of
the date hereof, other than subsidiaries not engaged in an active
business. Except as set forth in
such exhibit, as of the date hereof, Fresenius USA does not, directly
or indirectly, own any

-19-

capital stock or other ownership interest in any
corporation, partnership, joint venture or other entity, other than
subsidiaries not engaged in an active business.

(b) Corporate Organization and Qualification. Each of
Fresenius USA and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its or such
subsidiary's jurisdiction of organization and is in good standing as a
foreign corporation in each jurisdiction where the properties owned,
leased or operated, or the business conducted, by it or such subsidiary
require such qualification, except for any such failure so to qualify
or be in good standing which, when taken together with all other such
failures, is not reasonably likely to have a Material Adverse Effect
with respect to Fresenius USA. Each of Fresenius USA and its
subsidiaries has the requisite corporate power and authority to carry
on its businesses as they are now being conducted. Fresenius USA has
made available to the other parties hereto a complete and correct copy
of its Certificate of Incorporation and By-laws, each as amended to
date and currently in full force and effect.

(c) Corporate Authority. Except as contemplated by Section
9.13 hereof, Fresenius USA has the requisite corporate power and
authority and has taken all corporate action necessary in order to
execute, deliver and perform each Transaction Agreement to which it is
a party and to consummate the transactions contemplated hereby and
thereby. Each Transaction Agreement to which Fresenius USA is a party
is, or when executed and delivered shall be, a valid and binding
agreement of Fresenius USA enforceable in accordance with its terms.

(d) Governmental Filings; No Violations. (i) Other than the
filings provided for in the Transaction Agreements, and other than as
may be required under the HSR Act and similar statutes in other
countries, the Exchange Act, the Securities Act, and state securities
laws, no notices, reports or other filings are required to be made by
Fresenius USA or any subsidiary with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by it or any subsidiary from, any Governmental Entity in
connection with the execution, delivery or performance of each
Transaction Agreement to which it or any subsidiary is a party by it or
any subsidiary and the consummation by it or any subsidiary of the
transactions contemplated hereby and thereby, the failure
to make or obtain any or all of which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect with
respect to Fresenius USA or enable any person to enjoin or prevent or
materially delay consummation of the transactions contemplated hereby
and thereby.

(ii) The execution, delivery and performance by Fresenius USA
or any subsidiary of each Transaction Agreement to which it is a party
does not or will not, and the consummation by it of any of the
transactions contemplated hereby and thereby will not, constitute or
result in (A) a breach or violation of, or a default under, its
Certificate of Incorporation or By-laws, or the comparable governing
instruments of any of its subsidiaries, or (B) assuming receipt of any
consents and the occurrence of any events disclosed in the Fresenius
USA Disclosure Letter as contemplated in the last sentence of this
paragraph, a breach or violation of, or a default under, or the
acceleration of or the creation of a lien, pledge, security interest or
other encumbrance on assets of it, Newco or the Surviving Corporations
or any of their respective subsidiaries (with or without the giving of
notice, the lapse of

-20-

time or both) pursuant to, any provision of any
Contracts of it or any of its subsidiaries or any law, rule, ordinance
or regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its
subsidiaries is subject, or any change in the rights or obligations of
any party under, or give rise to any rights of termination under, any
of the Contracts, except, in the case of clause (B) above, for such
breaches, violations, defaults, accelerations or changes that are
disclosed in the Fresenius USA Disclosure Letter or, individually and
in the aggregate, are not reasonably likely to have a Material Adverse
Effect with respect to Fresenius USA. The Fresenius USA Disclosure
Letter sets forth a list of all consents required under any Contracts
to be obtained by it or events required to occur prior to consummation
of the Reorganization (other than consents the failure to obtain of
which, individually and in the aggregate, is not reasonably likely to
have a Material Adverse Effect with respect to Fresenius USA).

(e) SEC Documents; Financial Statements; No Undisclosed
Liabilities. (i) Fresenius USA has delivered to the other parties
hereto each SEC Document prepared and filed with the SEC by it or its
subsidiaries since December 31, 1994, including, without limitation,
(A) its Annual Report on Form 10-K for the year ended December 31,
1994, and (B) its Quarterly Reports on Form 10-Q for the periods ended
March 31, June 30 and September 30, 1995.

As of its filing date, each such SEC Document filed, and each SEC
Document that will be filed by Fresenius USA or its subsidiaries prior
to the Effective Time, as amended or supplemented, if applicable,
pursuant to the Exchange Act (A) complied or will comply in all
material respects with the applicable requirements of the Exchange Act
and (B) did not or will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading. Each of Fresenius USA's consolidated
balance sheets included in or incorporated by reference into its SEC
Documents fairly presents in all material respects the consolidated
financial position of it and its subsidiaries as of its date and each
of the consolidated statements of income, cash flows and shareholders'
equity included in or incorporated by reference into its SEC Documents
(including any related notes and schedules) fairly presents in all
material respects the consolidated results of operations, retained
earnings and cash flows, as the case may be, of Fresenius USA and its
subsidiaries for the periods set forth therein (subject, in the case
of unaudited statements, to normal year-end audit adjustments), in
each case in accordance with US GAAP.

(ii) Each SEC Document which is a final registration
statement filed, and each final registration statement that will be
filed by it or any subsidiary prior to the Effective Time, as amended
or supplemented, if applicable, pursuant to the Securities Act, as of
the date such statement or amendment became or will become effective
(A) complied or will comply in all material respects with the
applicable requirements of the Securities Act and (B) did not or will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of any prospectus,
in light of the circumstances under which they were made).

-21-

(iii) Included in the Fresenius USA Disclosure Letter are a
consolidated balance sheet as of, and consolidated statements of
income, cash flows and shareholders' equity for the year ended,
December 31, 1995 for Fresenius USA (such financial statements, the
"Fresenius USA Disclosure Letter Financial Statements"), and the
balance sheet as of December 31, 1995 included therein, (the
"Fresenius USA Disclosure Letter Balance Sheet"). The Fresenius USA
Disclosure Letter Balance Sheet (including any related notes and
schedules) fairly presents in all material respects, and the
consolidated balance sheet to be included in the
Fresenius USA Audited Financial Statements (including any related
notes and schedules) shall fairly present in all material respects,
the consolidated financial position of Fresenius USA and its
subsidiaries as of its date; and each of the consolidated statements
of income, cash flows and shareholders' equity included in the
Fresenius USA Disclosure Letter Financial Statements (including any
related notes and schedules) fairly presents in all material respects,
and each such statement to be included in the Fresenius USA Audited
Financial Statements (including any related notes and schedules) shall
fairly present in all material respects, the consolidated results of
operations, retained earnings and cash flows, as the case may be, of
Fresenius USA, and its subsidiaries for the periods set forth therein,
in each case in accordance with US GAAP.

(iv) Except as disclosed in the Fresenius USA Disclosure
Letter Balance Sheet or the notes thereto or in its SEC Documents
filed with the SEC prior to the date hereof, neither Fresenius USA nor
its subsidiaries has any liabilities, whether or not accrued,
contingent or otherwise, that, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect with respect to
Fresenius USA.

(f) Absence of Certain Events and Changes. Except as
disclosed in its SEC Documents filed with the SEC prior to the date
hereof, since September 30, 1995, Fresenius USA and its subsidiaries
have conducted their respective businesses only in the ordinary and
usual course of such businesses and there has not been any change or
development or combination of changes or developments (including any
worsening of any condition currently existing) which, individually and
in the aggregate, is reasonably likely to result in a Material Adverse
Effect.

(g) Compliance with Laws. Except as disclosed in its SEC
Documents filed with the SEC prior to the date hereof, Fresenius USA
and its subsidiaries have complied, in the conduct of their respective
businesses, with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto, except where the failure to comply is not
reasonably likely, individually and in the aggregate, to have a
Material Adverse Effect with respect to Fresenius USA. To the
knowledge of its executive officers, each of Fresenius USA and its
subsidiaries has, and, immediately after the Fresenius USA Merger,
will have, all permits, licenses, certificates of authority,
orders, and approvals of, and has made all filings, applications, and
registrations with, federal, state, local, and foreign governmental or
regulatory bodies that are required in order to permit it or such
subsidiary to carry on its business as it is presently conducted,
except for such permits, licenses, certificates, orders, filings,
applications and registrations, the failure to have or make which,
individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect with respect to Fresenius USA.

-22-
30

(h) Title to Assets. Fresenius USA or its subsidiaries have
and, immediately after the Fresenius USA Merger, will have, good and,
with respect to real property, marketable title to its properties and
assets (other than property as to which it is lessee), except for
those defects in title which are not, individually and in the
aggregate, reasonably likely to have a Material Adverse Effect with
respect to Fresenius USA. Fresenius USA and its subsidiaries have,
and immediately after the Fresenius USA Merger, will either own or
have adequate rights to use (on the same basis as currently owned or
used by Fresenius USA or such subsidiaries), all assets used or useful
in Fresenius USA's business as currently conducted and all assets
reflected on the Fresenius USA Disclosure Letter Balance Sheet, except
for assets disposed of in accordance with this Agreement and except
for those failures to own or have which are not, individually and in
the aggregate, reasonably likely to have a Material Adverse Effect
with respect to Fresenius USA.

(i) Litigation. Except as disclosed in Fresenius USA's SEC
Documents filed with the SEC prior to the date hereof, there are no
civil, criminal or administrative actions, suits, claims, hearings or
proceedings pending or, to the knowledge of its executive officers,
threatened, or investigations pending, against Fresenius USA or any of
its subsidiaries that, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect with respect to
Fresenius USA. There are no judgments or outstanding orders, writs,
injunctions, decrees, stipulations or awards (whether rendered or
issued by a court or Governmental Entity, or by arbitration) against
Fresenius USA or any of its subsidiaries or their respective
properties or businesses, which are reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect with respect to
Fresenius USA.

(j) Taxes. Except as disclosed in Fresenius USA's SEC
Documents filed with the SEC prior to the date hereof,
all material federal, state, local and foreign tax returns required to
be filed by or on behalf of Fresenius USA or any of its subsidiaries
have been timely filed or requests for extensions have been timely
filed and any such extension shall have been granted and not have
expired, and all such filed returns are complete and accurate in all
material respects. Except as disclosed in its SEC Documents filed
with the SEC prior to the date hereof, all material taxes required to
be shown on returns filed by Fresenius USA, as of the date of such SEC
Document, have been paid in full or have been recorded as a liability
on its consolidated balance sheet (in accordance with US GAAP).
Except as disclosed in its SEC Documents filed with the SEC prior to
the date hereof, there is no outstanding audit examination,
deficiency, or refund litigation with respect to any taxes of
Fresenius USA that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect with respect to Fresenius
USA. Except as disclosed in its SEC Documents filed with the SEC
prior to the date hereof, all material taxes, interest, additions, and
penalties due with respect to completed and settled examinations or
concluded litigation relating to Fresenius USA have been paid in full
or have been recorded as a liability on its balance sheet (in
accordance with US GAAP). Except as disclosed in its SEC Documents
filed with the SEC prior to the date hereof, neither Fresenius USA nor
any of its subsidiaries is a party to a tax sharing or similar
agreement or any agreement pursuant to which it or any of its
subsidiaries has indemnified another party with respect to taxes
(other than the tax sharing agreement attached to the Contribution
Agreement), except for any such agreement under which the liabilities
of Fresenius USA and its subsidiaries would not be

-23-

reasonably likely to have a Material Adverse Effect with respect to
Fresenius USA. Except as set forth in SEC Documents filed prior to
the date hereof, neither Fresenius USA nor its subsidiaries have
waived any applicable statute of limitations with respect to federal
income taxes or any material state income taxes.

(k) Employee Benefits. (i) Fresenius USA's SEC Documents
filed prior to the date hereof disclose all material information
required under the applicable rules and regulations of the SEC with
respect to Fresenius USA's bonus, deferred compensation, pension,
retirement, profit sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock and stock option plans,
all material employment or severance Contracts, all other material
employee benefit plans and all applicable "change of control" or
similar provisions in any material
plan, Contract or arrangement which covers employees or former
employees of Fresenius USA or its subsidiaries ("Fresenius USA
Compensation Plans"). True and complete copies of the Fresenius USA
Compensation Plans and all other benefit plans, Contracts or
arrangements (regardless of whether they are funded or unfunded or
foreign or domestic) covering employees or former employees of
Fresenius USA and its subsidiaries (the "Fresenius USA Employees"),
including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and all amendments thereto, have been
made available to each other party hereto.

(ii) All Fresenius USA Compensation Plans that are
"employee benefit plans", other than "multiemployer plans" within the
meaning of Sections 3(37) or 4001(a)(3) of ERISA, covering Fresenius
USA Employees (the "Fresenius USA Plans"), to the extent subject to
ERISA, are in substantial compliance with ERISA, except where the
failure to be so would not reasonably be expected to have a Material
Adverse Effect with respect to Fresenius USA. There is no pending or,
to the knowledge of executive officers, threatened litigation relating
to any Fresenius USA Plan which is reasonably likely to have a
Material Adverse Effect with respect to Fresenius USA.

(iii) No material liability that has not previously been
fully satisfied under Subtitle C or D of Title IV of ERISA, under
Section 412 of the Code or Section 302 of ERISA has been or is
expected to be incurred by Fresenius USA or any of its subsidiaries
with respect to any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered
one employer with it under Section 4001 of ERISA or Section 414 of the
Code (a "Fresenius USA ERISA Affiliate"). Fresenius USA and its
subsidiaries and the Fresenius USA ERISA Affiliates have not incurred
and do not expect to incur any material withdrawal liability with
respect to a multiemployer plan under Subtitle E of Title IV of ERISA.
No notice of a "reportable event," within the meaning of Section 4043
of ERISA, for which the 30-day reporting requirement has not been
waived, has been required to be filed for any of the Fresenius USA
Plans or by any of the Fresenius USA ERISA affiliates within the
12-month period ending on the date hereof.

(iv) As of January 1, 1995, the "full-funding limitation"
(as defined in Section 412(c)(9) of the Code) has been satisfied with
respect to each Fresenius USA Pension
Plan which is a single-employer plan (within the meaning of Section
4001(a)(15) of ERISA), and there has been no change in the financial
condition of

-24-

any such Fresenius USA Pension Plan since that date that
is reasonably likely to have a Material Adverse Effect with respect to
Fresenius USA. The withdrawal liability of Fresenius USA and its
subsidiaries under each Fresenius USA Plan which is a multiemployer
plan to which Fresenius USA, its subsidiaries or its ERISA Affiliates
has contributed during the preceding 12 months, determined as if a
"complete withdrawal," within the meaning of Section 4203 of ERISA,
had occurred as of the date hereof, is not reasonably likely to have a
Material Adverse Effect with respect to Fresenius USA.

(v) Except as disclosed in its SEC Documents filed prior
to the date hereof, neither Fresenius USA nor its subsidiaries have
any obligations for retiree health and life benefits under any
Fresenius USA Plan. Except as disclosed in its SEC Documents filed
prior to the date hereof, there are no restrictions on the right of
Fresenius USA to amend or terminate any Fresenius USA Plan that
provides retiree health or life benefits to Fresenius USA Employees
without Fresenius USA incurring any material liability thereunder as a
result of such amendment or termination.

(vi) All Fresenius USA Compensation Plans covering foreign
Employees comply with applicable local law except when the failure to
so comply, individually and in the aggregate, would not have a
Material Adverse Effect with respect to Fresenius USA. Fresenius
USA's and its subsidiaries have no unfunded liabilities with respect
to any Fresenius USA Pension Plan which cover foreign Employees in an
amount which is reasonably likely to have a Material Adverse Effect
with respect to Fresenius USA.

(vii) Except as disclosed in its SEC Documents filed prior
to the date hereof or as provided in this Agreement, the transactions
contemplated by this Agreement will not result in the vesting or
acceleration of any material amounts under any Fresenius USA
Compensation Plan, any material increase in benefits under any
Fresenius USA Compensation Plan or payment of any severance or similar
compensation under any Fresenius USA Compensation Plan, and the
amounts, if any, payable under the Fresenius USA Compensation Plans
and not deductible by it by reason of Section 280G of the Code will
not exceed the maximum amount previously disclosed to the other
parties hereto. Except as disclosed in its SEC Documents filed prior
to the date hereof, Fresenius USA and its subsidiaries have not
entered into any change-of-control agreement under which Fresenius USA
will be obligated to make change-of-control payments following the
Closing.

(l) Environmental Matters. Except as disclosed in its SEC
Documents filed prior to the date hereof and except for such matters
that, individually and in the aggregate, are not reasonably likely to
have a Material Adverse Effect with respect to Fresenius USA, to the
knowledge of its executive officers, (A) Fresenius USA and its
subsidiaries are in compliance with all applicable Environmental Laws;
and (B) neither Fresenius USA nor any of its subsidiaries has any
outstanding notices, demand letters or requests for information from
any Government Entity or any third party that assert that Fresenius
USA or any of its subsidiaries may be in violation of, or liable
under, any Environmental Law and none of Fresenius USA, its
subsidiaries or its properties are subject to any court order,
administrative order or decree arising under any Environmental Law.

-25-
33

(m) Takeover Statutes. Execution, delivery and performance
of this Agreement and consummation of the transactions contemplated
hereby will not cause to be applicable to Fresenius USA any Takeover
Statute (after giving effect to any actions that will be taken prior
to the Effective Time).

(n) Brokers and Finders. Neither it nor any of its officers,
directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated herein except pursuant
to arrangements disclosed in writing to the other parties hereto prior
to the date hereof.

(o) Information in Disclosure Documents and Registration
Statements. None of the information supplied or to be supplied by
Fresenius USA for inclusion or incorporation by reference in any
Registration Statement will, at the time such Registration Statement
becomes effective under the Securities Act and at the Effective Time,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading; and the Fresenius USA Proxy Statement will
not, at the date mailed to Fresenius USA shareholders and at the time
of the meeting of Fresenius USA shareholders to be held in
connection with the Fresenius USA Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading. The Fresenius USA Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder, except that no representation is
made by Fresenius USA with respect to statements made therein based on
information supplied by Grace or its subsidiaries.

(p) Trademarks, Patents and Copyrights. Fresenius USA and
its subsidiaries own or possess adequate licenses or other rights to
use, all patents, trademarks, trade names, service marks, copyrights,
licenses and product licenses or registrations (including applications
for any of the foregoing), as are used or useful in connection with
its business (the "Fresenius USA Intellectual Property") the lack of
which would reasonably be expected to have a Material Adverse Effect
with respect to Fresenius USA; and none of Fresenius USA or any of its
subsidiaries has any knowledge of any conflict with the proprietary
intellectual property rights of any of Fresenius USA or its subsidiary
therein or any knowledge of any conflict by Fresenius USA or its
subsidiary with the rights of others therein which would have a
Material Adverse Effect with respect to Fresenius USA. Immediately
after the Fresenius USA Merger, Newco and its subsidiaries will own or
possess adequate licenses or other rights to use (on substantially the
same basis as currently owned or possessed by Fresenius USA and its
subsidiaries) all of the Fresenius USA Intellectual Property. Except
as disclosed in its SEC Documents filed with the SEC prior to the date
hereof, there are no Contracts, agreements and licenses pursuant to
which Fresenius USA or any subsidiaries of Fresenius USA which will
not be subsidiaries of Newco after the Fresenius USA Merger will
retain rights or interests of any kind in or affecting the Fresenius
USA Intellectual Property.

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(q) Disclosure. Neither the representations and warranties
of Fresenius USA or Fresenius AG contained in this Agreement nor in
any written instrument, list, exhibit or certificate furnished or to
be furnished by Fresenius USA or Fresenius AG to Grace pursuant hereto
or in connection herewith contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements not misleading.

SECTION 5.3. Representations and Warranties of Fresenius AG.
Fresenius AG hereby represents and warrants to Grace that, except as set forth
in a letter (the "Fresenius AG Disclosure Letter") delivered to Grace
simultaneously with the execution and delivery of this Agreement:

(a) Corporate Organization and Qualification. Fresenius AG
is an Aktiengesellschaft duly organized, validly existing and in good
standing under the laws of the Federal Republic of Germany and is in
good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it
require such qualification, except for any such failure so to qualify
or be in good standing which, when taken together with all other such
failures, is not reasonably likely to have a Material Adverse Effect
with respect to the FWD Business. Fresenius AG has the requisite
corporate power and authority to carry on its businesses as they are
now being conducted. Fresenius AG has made available to the other
parties hereto a complete and correct copy of its Certificate of
Incorporation and By-laws (or similar organizational documents), each
as amended to date and currently in full force and effect.

(b) Corporate Authority. Subject only to the receipt of the
requisite approval of its shareholders (and, with respect to Fresenius
USA, as contemplated by Section 9.13 hereof), Fresenius AG and its
subsidiaries have the requisite corporate power and authority and have
taken all corporate action necessary in order to execute, deliver and
perform each Transaction Agreement to which any of them are a party
and to consummate the transactions contemplated hereby and thereby
including, without limitation, the approval of the Fresenius AG
Supervisory Board and the affirmative vote of all shareholder
representatives thereon. Each Transaction Agreement to which
Fresenius AG or its subsidiary is a party is, or when executed and
delivered shall be, a valid and binding agreement of Fresenius AG or
such subsidiary enforceable in accordance with its terms. Fresenius
AG is the legal and beneficial owner of 18,673,324 Fresenius USA
Common Shares (13,793,441 of which are owned beneficially and of
record by Fresenius AG or its subsidiaries, 3,129,883 of which are
issuable upon conversion of Fresenius USA Series F Preferred Shares
and 1,750,000 of which are issuable upon the exercise of currently
exercisable warrants) and 200,000 Fresenius USA Series F Preferred
Shares.

(c) Governmental Filings; No Violations. (i) Other than the
filings provided for in the Transaction Agreements, and other than as
may be required under the HSR Act and similar statutes in other
countries, the Exchange Act, the Securities Act, and state securities
laws, except as set forth in the Fresenius AG Disclosure Letter, no
notices, reports or other filings are required to be made by Fresenius
AG or any subsidiary with, nor are any consents, registrations,
approvals, permits or

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35

authorizations required to be obtained by it or
any subsidiary from, any Governmental Entity in connection with the
execution, delivery or performance of each Transaction Agreement to
which it is a party by it or any subsidiary and the consummation by it
or any subsidiary of the transactions contemplated hereby and thereby,
the failure to make or obtain any or all of which, individually or in
the aggregate, is reasonably likely to have a Material Adverse Effect
with respect to the FWD Business or enable any person to enjoin or
prevent or materially delay consummation of the transactions
contemplated hereby and thereby.

(ii) The execution, delivery and performance by Fresenius
AG or any subsidiary of each Transaction Agreement to which it is a
party does not or will not, and the consummation by it of any of the
transactions contemplated thereby will not, constitute or result in
(A) a breach or violation of, or a default under, its Certificate of
Incorporation or By-laws, or the comparable governing instruments of
any of its subsidiaries, or (B) assuming receipt of any consents and
the occurrence of any events disclosed in the Fresenius AG Disclosure
Letter as contemplated in the last sentence of this paragraph (ii), a
breach or violation of, or a default under, or the acceleration of or
the creation of a lien, pledge, security interest or other encumbrance
on assets of it, Newco or the Surviving Corporations or any of their
respective subsidiaries (with or without the giving of notice, the
lapse of time or both) pursuant to, any provision of any Contract of
it or any of its subsidiaries or any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its
subsidiaries is subject, or any change in the rights or obligations of
any party under, or give rise to any rights of termination under, any
of the Contracts, except, in the case of clause (B) above, for such
breaches, violations, defaults, accelerations or changes that are
disclosed in the Fresenius AG Disclosure Letter or, individually and
in the aggregate, are not reasonably likely to have a Material Adverse
Effect with respect to the FWD Business. The Fresenius AG Disclosure
Letter sets forth a list of all consents required under any Contracts
to be obtained by it or any subsidiary or events required to occur
prior to consummation of the Reorganization (other than consents the
failure to obtain of which, individually and in the aggregate, is not
reasonably likely to have a Material Adverse Effect with respect to
the FWD Business).

(d) Takeover Statutes. Execution, delivery and performance
of this Agreement and consummation of the transactions contemplated
hereby will not cause to be applicable to Fresenius AG any Takeover
Statute (after giving effect to any actions that will be taken prior
to the Effective Time).

(e) Brokers and Finders. Neither it nor any of its officers,
directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated herein except pursuant
to arrangements disclosed in writing to the other parties hereto prior
to the date hereof.

(f) Contribution. Except for the shares of capital stock of
Fresenius USA, the FWD Business Assets, which are to be contributed
pursuant to the Contribution, represent the worldwide dialysis
business of Fresenius AG and all assets and services

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predominantly used in the conduct of Fresenius AG's worldwide
dialysis business as presently conducted.

(g) Tax Matters. At the Effective time, the representations
set forth in the numbered paragraphs of the form of Tax Matters
Certificate of Fresenius AG attached hereto as Exhibit G (the
"Fresenius AG Tax Matters Certificate") will be true and correct in all
respects, and such representations are hereby incorporated herein by
reference with the same effect as if set forth herein in their
entirety.

(h) Information in Disclosure Documents and Registration
Statements. None of the information supplied or to be supplied by
Fresenius AG for inclusion or incorporation by reference in any
Registration Statement will, at the time such Registration Statement
becomes effective under the Securities Act and at the Effective Time,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading;
and the Fresenius USA Proxy Statement will not, at the date mailed to
Fresenius USA shareholders and at the time of the Fresenius USA
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Fresenius USA Proxy
Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by Fresenius AG with
respect to statements made therein based on information supplies by
Grace or its subsidiaries.

(i) Disclosure. Neither the representations and warranties
of Fresenius USA or Fresenius AG contained in this Agreement nor in
any written instrument, list, exhibit or certificate furnished or to
be furnished by Fresenius USA or Fresenius AG to Grace pursuant hereto
or in connection herewith contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements not misleading.

(j) Assets. Except as contemplated herein, at the Effective
Time, the FWD Business Group will contain the worldwide dialysis
business of Fresenius AG and all assets and services predominantly
used in the conduct of Fresenius AG's worldwide dialysis business as
presently conducted.

SECTION 5.4. Representations and Warranties for the FWD
Business. Fresenius AG hereby represents and warrants to Grace that, except as
set forth in a letter (the "FWD Business Disclosure Letter") delivered to Grace
simultaneously with the execution and delivery of this Agreement:

(a) Corporate Organization and Qualification. A true and
complete list of all FWD Business Subsidiaries, together with the
jurisdiction of organization of each such FWD Business Subsidiary, is
set forth in the FWD Business Disclosure Letter. Each FWD Business
Subsidiary is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and is in good
standing (if recognized in such jurisdiction, or, if not, duly
qualified) as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business

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conducted, by such FWD Business Subsidiary require such qualification,
except for any such failure so to qualify or be in good standing
which, when taken together with all other such failures, is not
reasonably likely to have a Material Adverse Effect with respect
to the FWD Business. Each FWD Business Subsidiary has the requisite
corporate power and authority to carry on its business as now being
conducted. Fresenius AG has made available to the other parties
hereto a complete and correct copy of the Certificate of
Incorporation and By-laws (or similar organizational documents) of
each FWD Business Subsidiary, each as amended to date and currently
in full force and effect.

(b) Corporate Authority. Each FWD Business Subsidiary has
the requisite corporate power and authority and has taken all
corporate action necessary in order to consummate the transactions
contemplated hereby and by the other Transaction Agreements.

(c) Capitalization. The authorized capital stock, and the
number of shares of such capital stock issued and outstanding, of each
FWD Business Subsidiary is set forth in the FWD Business Disclosure
Letter, and all such issued and outstanding shares of capital stock
are owned of record and beneficially by Fresenius AG or another FWD
Business Subsidiary, free and clear of all liens, pledges, security
interests, claims, proxies, preemptive or subscriptive rights or other
encumbrances or restrictions of any kind. There are no options,
warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of any
FWD Business Subsidiary or obligating any FWD Business Subsidiary to
issue or sell any shares of capital stock of, or other equity
interests in, any FWD Business Subsidiary. There are no outstanding
contractual obligations of any FWD Business Subsidiary to repurchase,
redeem or otherwise acquire any capital stock of any FWD Business
Subsidiary or to provide funds to make any investment (in the form of
a loan, capital contribution or otherwise) in any FWD Business
Subsidiary or any other entity. Each of the outstanding shares of
capital stock of each FWD Business Subsidiary is duly authorized,
validly issued, fully paid and nonassessable.

(d) Financial Statements; No Undisclosed Liabilities. (i)
Included in the FWD Business Disclosure Letter are a consolidated
balance sheet as of December 31, 1995, and consolidated statements of
income, cash flows and shareholders' equity for the years ended
December 31, 1995 for the FWD Business (such financial statements, the
"FWD Business Disclosure Letter Financial Statements," and the
balance sheet as of December 31, 1995 included therein,
the "FWD Business Disclosure Letter Balance Sheet"). The FWD Business
Disclosure Letter Balance Sheet (including any related notes and
schedules) fairly presents in all material respects, and the
consolidated balance sheet to be included in the FWD Business Audited
Financial Statements (including any related notes and schedules) shall
fairly present in all material respects, the consolidated financial
position of the FWD Business as of its date; and each of the
consolidated statements of income, cash flows and shareholders' equity
included in the FWD Business Disclosure Letter Financial Statements
(including any related notes and schedules) fairly presents in all
material respects, and each such statement to be included in the FWD
Business Audited Financial Statements (including any related notes and
schedules) shall fairly present in all material respects, the
consolidated results of operations, retained earnings and

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cash flows, as the case may be, of the FWD Business for the periods
set forth therein, in each case in accordance with US GAAP.

(ii) Except as disclosed on the FWD Business
Disclosure Letter Balance Sheet or the notes thereto, neither the FWD
Business nor any FWD Business Subsidiary has any liabilities, whether
or not accrued, contingent or otherwise, that, individually or in the
aggregate are reasonably likely to have a Material Adverse Effect with
respect to the FWD Business.

(e) Absence of Certain Events and Changes. Except as
disclosed in the FWD Business Disclosure Letter, since September 30,
1995, Fresenius AG, with respect to the FWD Business, and the FWD
Business Subsidiaries, have conducted their respective businesses only
in the ordinary and usual course of such businesses and there has not
been any change or development or combination of changes or
developments (including any worsening of any condition currently
existing) which, individually and in the aggregate, is reasonably
likely to result in a Material Adverse Effect with respect to the FWD
Business.

(f) Compliance with Laws. Fresenius AG has complied, in the
conduct of the FWD Business, and each FWD Business Subsidiary has
complied, in the conduct of its respective business, with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees
applicable thereto, except where the failure to comply is not
reasonably likely, individually and in the aggregate, to have a
Material Adverse Effect with respect to the FWD Business. To the
knowledge of the executive officers of Fresenius AG,
Fresenius AG has, with respect to the FWD Business, each FWD Business
Subsidiary has, and, immediately after the Contribution, an FWD
Business Subsidiary will have, all permits, licenses, certificates of
authority, orders, and approvals of, and has made all filings,
applications, and registrations with, federal, state, local, and
foreign governmental or regulatory bodies that are required in order
to permit such party to carry on its business as it is presently
conducted, except for such permits, licenses, certificates, orders,
filings, applications and registrations, the failure to have or make
which, individually and in the aggregate, are not reasonably likely to
have a Material Adverse Effect with respect to the FWD Business.

(g) Title to Assets. Fresenius AG and the FWD Business
Subsidiaries have and, immediately after the Contribution, the FWD
Business Subsidiaries will have, good and, with respect to real
property, marketable title to its properties and assets (other than
property as to which it is lessee), except for those defects in title
which are not, individually and in the aggregate, reasonably likely to
have a Material Adverse Effect with respect to the FWD Business.
Fresenius AG and the FWD Business Subsidiaries have, and immediately
after the Contribution, the FWD Business Subsidiaries will either own
or have adequate rights to use (on the same basis as currently owned
or used by the FWD Business), all assets predominantly used or useful
in the FWD Business as currently conducted and all assets reflected on
the FWD Business Balance Sheet, except for those properties subject to
the Lease and assets disposed of in accordance with this Agreement and
except for those failures to own or have which are not, individually
and in the aggregate, reasonably likely to have a Material Adverse
Effect with respect to the FWD Business.

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(h) Litigation. There are no civil, criminal or
administrative actions, suits, claims, hearings or proceedings pending
or, to the knowledge of its executive officers, threatened, or
investigations pending, against Fresenius AG or its subsidiaries
(other than Fresenius USA) with respect to the FWD Business, or any
FWD Business Subsidiary that, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect with respect to
the FWD Business. There are no judgments or outstanding orders,
writs, injunctions, decrees, stipulations or awards (whether rendered
or issued by a court or Governmental Entity, or by arbitration)
against Fresenius AG or its subsidiaries (other than Fresenius USA)
with respect to the FWD Business, or any FWD Business Subsidiary, or
any of their respective properties or businesses, which are reasonably
likely, individually or in the aggregate, to have a Material Adverse
Effect with respect to the FWD Business.

(i) Taxes. All material federal, state, local and foreign
tax returns required to be filed with respect to the FWD Business or
any FWD Business Subsidiary have been timely filed or requests for
extensions have been timely filed and any such extension shall have
been granted and not have expired, and all such filed returns are
complete and accurate in all material respects. All material taxes
required to be shown on returns filed with respect to the FWD Business
or any FWD Business Subsidiary, have been paid in full or have been
recorded as a liability on the FWD Business Disclosure Letter Balance
Sheet. There is no outstanding audit examination, deficiency, or
refund litigation with respect to any taxes with respect to the FWD
Business or any FWD Business Subsidiary that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect with
respect to the FWD Business. All material taxes, interest, additions,
and penalties due with respect to completed and settled examinations
or concluded litigation relating to the FWD Business or any FWD
Business Subsidiary have been paid in full or have been recorded as a
liability on the FWD Business Balance Sheet (in accordance with US
GAAP). Neither Fresenius AG nor any FWD Business Subsidiary is a
party to a tax sharing or similar agreement or any agreement with
respect to the FWD Business or any FWD Business Subsidiary, except for
any such agreement under which the liabilities of FWD Business and its
subsidiaries would not be reasonably likely to have a Material Adverse
Effect with respect to FWD Business. Neither Fresenius AG (with
respect to the FWD Business) nor the FWD Business Subsidiaries have
waived any applicable statute of limitations with respect to German
tax or any material German state income taxes.

(j) Environmental Matters. Except for such matters that,
individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect with respect to the FWD Business, to the
knowledge of its executive officers (i) Fresenius AG, with respect to
the FWD Business, and the FWD Business Subsidiaries are in compliance
with all applicable Environmental Laws; and (ii) neither Fresenius AG
with respect to the FWD Business, nor any of the FWD Business
Subsidiaries has any outstanding notices,
demand letters or requests for information from any Government Entity
or any third party that assert that Fresenius AG, with respect to the
FWD Business, or any of the FWD Business Subsidiaries may be in
violation of, or liable under, any Environmental Law and none of
Fresenius AG with respect to the FWD Business, the FWD Business
Subsidiaries or its properties are subject to any court order,
administrative order or decree arising under any Environmental Law.

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(k) Governmental Filings; No Violations. (i) Other than the
filings provided for in the Transaction Agreements, and other than as
may be required under the HSR Act and similar statutes in other
countries, the Exchange Act, the Securities Act, and state securities
laws, no notices, reports or other filings are required to be made by
any FWD Business Subsidiaries with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by it from, any Governmental Entity, in connection with the
execution, delivery or performance of each Transaction Agreement to
which Fresenius AG is a party by it and the consummation by it of the
transactions contemplated hereby and thereby, the failure to make or
obtain any or all of which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect with respect to
the FWD Business or enable any person to enjoin or prevent or
materially delay consummation of the transactions contemplated hereby
and thereby.

(ii) The execution, delivery and performance by each FWD
Business Subsidiary of each Transaction Agreement to which Fresenius
AG is a party does not or will not, and the consummation by it of any
of the transactions contemplated hereby and thereby will not,
constitute or result in (A) a breach or violation of, or a default
under, its Certificate of Incorporation or By-laws (or similar
organizational document), or the comparable governing instruments of
any of its subsidiaries, or (B) assuming receipt of any consents and
the occurrence of any events disclosed in the FWD Business Disclosure
Letter as contemplated in the last sentence of this paragraph, a
breach or violation of, or a default under, or the acceleration of or
the creation of a lien, pledge, security interest or other encumbrance
on assets of it, Newco or the Surviving Corporations or any of their
respective subsidiaries (with or without the giving of notice, the
lapse of time or both) pursuant to, any provision of any Contract of
it or any of its subsidiaries or any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its
subsidiaries is subject, or any change in the rights or obligations of
any party under, or give rise to any rights of termination under, any
of the Contracts, except, in the case of clause (B) above, for such
breaches, violations, defaults, accelerations or changes that are
disclosed in the FWD Business Disclosure Letter or, individually and
in the aggregate, are not reasonably likely to have a Material Adverse
Effect with respect to the FWD Business. The FWD Business Disclosure
Letter sets forth a list of all consents required under any Contracts
to be obtained by any FWD Business Subsidiary or events required to
occur prior to consummation of the Reorganization (other than consents
the failure to obtain of which, individually and in the aggregate, is
not reasonably likely to have a Material Adverse Effect with respect
to the FWD Business).

(l) Contracts and Commitments. Except as set forth in the
FWD Business Disclosure Letter, none of Fresenius AG or any of its
subsidiaries, with respect to the FWD Business, nor any FWD Business
Subsidiary is a party to any Contract that would be required to be
filed as an exhibit to a registration statement for the FWD Business
and Fresenius USA, taken as a whole, under the Exchange Act.

(m) Employee Benefit Plans. (i) The FWD Business Disclosure
Letter lists each material employee benefit plan, program, policy,
practice and arrangement and all material bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance

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or other benefit plans, programs or arrangements, and all material
employment, termination, severance or other contracts or agreements,
whether legally enforceable or not, to which Fresenius AG, its
subsidiaries or any of the FWD Business Subsidiaries is a party, with
respect to which Fresenius AG, its subsidiaries or any of the FWD
Business Subsidiaries has or could incur any obligation or
which are maintained, contributed to or sponsored by Fresenius AG,
its subsidiaries or any of the FWD
Business Subsidiaries for the benefit of any current or former
employee, officer or director of Fresenius AG, its subsidiaries or any
of the FWD Business Subsidiaries, (collectively, the "Fresenius AG
Plans"). With respect to each Fresenius AG Plan, Fresenius AG has
caused to be made available to the other parties hereto a true,
correct and complete copy of: (A) each writing constituting a part of
such Fresenius AG Plan, including without limitation all plan
documents, benefit schedules, participant agreements, trust
agreements, and insurance contracts and other funding vehicles; (B)
the current summary plan description, if any; (C) the
most recent annual financial report and actuarial valuations, if any;
and (D) the most recent determination letter from the relevant
governmental authority, if any. All financial statements and
actuarial reports for each Fresenius AG Plan have been prepared in
accordance with applicable accounting principles and actuarial
principles, applied on a uniform and consistent basis.

(ii) In all material respects, each Fresenius AG Plan
complies with, and has been managed in accordance with, all applicable
laws, regulations and requirements. Each Fresenius AG Plan required
to be registered has been registered and has been maintained in good
standing with applicable legal and regulatory authorities. Where
Fresenius AG Plans are funded or insured, all contributions and other
amounts due to or in respect of them or any state pension arrangements
by Fresenius AG, its subsidiaries or any of the FWD Business
Subsidiaries have been fully paid at the Effective Time. The fair
market value of the assets of each such funded Fresenius AG Plan, or
the liability of each insurer for any Fresenius AG Plan funded through
insurance or the book reserve established for any such Fresenius AG
Plan on the FWD Business Balance Sheet, together with any accrued
contributions, is sufficient to procure or provide for the accrued
benefit obligations, as of the Closing Date, with respect to all
current and former participants in such Fresenius AG Plan according to
the actuarial assumptions utilized in the actuary's report described
in Section 5.4(m)(i) above, and no transaction contemplated by this
Agreement shall cause such assets, book reserves or insurance
obligations to be less than such benefit obligations, and nothing has
happened since the date of that information which would have a
Material Adverse Effect on the funding position of the Fresenius AG
Plans. Where Fresenius AG Plans are unfunded or underfunded,
appropriate reserves are established therefore on the FWD Business
Balance Sheet. Fresenius AG, its subsidiaries and the FWD Business
Subsidiaries have not by any act or omission, direct or indirect,
materially increased their liabilities or obligations to the Fresenius
AG Plans since the date of the last actuary's report described in
Section 5.4(m)(i) above.

(iii) There is no dispute about the entitlements or
benefits payable under the Fresenius AG Plans, no claim by or against
the managers or administrators of the Fresenius AG Plans, Fresenius
AG, its subsidiaries or any of the FWD Business Subsidiaries has been
made or threatened, and there are no circumstances which

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might give rise to any such claim except where any such event could
not have, individually and in the aggregate, a Material Adverse
Effect with respect to the FWD Business. Except as set forth in the
FWD Business Disclosure Letter Balance Sheet, there exists no
liability (contingent or otherwise), and no event has occurred, with
respect to any Fresenius AG Plan which could reasonably be expected
to have a Material Adverse Effect with respect to the FWD Business.

(n) Lease. The Lease, pursuant to which Newco (or its
subsidiary) shall lease certain real property in Germany from
Fresenius AG, as provided therein, when executed and delivered, shall
be a valid and binding agreement of Fresenius AG, enforceable in
accordance with the terms thereof; and the total rental to be paid
pursuant to such Lease of the equivalent of $12,000,000 per year
beginning January 1, 1997 (subject to adjustment, as provided therein)
is a fair market rental for such property.

(o) Trademarks, Patents and Copyrights. Fresenius AG or a
FWD Business Subsidiary owns or possesses adequate licenses or other
rights to use, all patents, trademarks, trade names, service marks,
copyrights, licenses and product licenses or registrations (including
applications for any of the foregoing), technology, know-how, tangible
or intangible proprietary intellectual property rights, information or
material (whether conceived, reduced to practice or under
development), formulae, inventions and new and investigational
applications (including all options or other rights to acquire any of
the foregoing) as are necessary, used or useful in connection with the
FWD Business (the "FWD Business Intellectual Property"), the lack of
which would reasonably be expected to have a Material Adverse Effect
with respect to the FWD Business; and none of Fresenius AG or any of
its subsidiaries has any knowledge of any conflict with the
proprietary intellectual property rights of any of Fresenius AG or any
FWD Business Subsidiary therein or any knowledge of any conflict by
Fresenius AG or any FWD Business Subsidiary with the rights of others
therein which would have a Material Adverse Effect with respect to the
FWD Business. Immediately after the Contribution, Newco or its
Subsidiary will own or possess adequate licenses or other rights to
use (on substantially the same basis as currently owned or possessed
by the FWD Business) all of the FWD Business Intellectual Property.
There are no Contracts, agreements and licenses pursuant to which
Fresenius AG or any subsidiaries of Fresenius AG which are not FWD
Business Subsidiaries will retain rights or interests of any kind in
or affecting the FWD Business Intellectual Property.

SECTION 5.5. Certain Definitions Relating to the FWD
Business. (a) "FWD Business" means the dialysis and renal medical products
business conducted worldwide by Fresenius AG (including, without limitation,
the FWD Business Subsidiaries), other than the dialysis business of Fresenius
USA.

(b) "FWD Business Assets" means all the property and assets
(including intangible assets, goodwill and leaseholds) of the FWD Business
which are reflected on the FWD Business Balance Sheet or otherwise
predominately relating to or predominately used or useful in the business and
operations of the FWD Business (other than the property subject to the Lease),
plus (i) all property and assets which have been or will be acquired in the
ordinary course of business since the date of the FWD Business Balance Sheet,
less (ii) any property and assets which have been or will be disposed of or
consumed in the ordinary

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course of business since the date of the FWD Business Balance Sheet consistent
with the terms hereof.

(c) "FWD Business Subsidiaries" means all subsidiaries of
Fresenius AG and all other entities in which Fresenius AG holds any direct or
indirect equity interest, other than Fresenius USA and its subsidiaries, which
conduct any of the FWD Business (it being agreed and understood that (i) as of
the date hereof, the FWD Business is conducted, and the FWD Business Assets are
held, by Fresenius AG and certain of its subsidiaries (all such entities, the
"Current Subsidiaries"), (ii) as of the Contribution, by virtue of the
Fresenius AG Restructuring, the FWD Business will be conducted, and the FWD
Business Assets will be held, by certain Fresenius AG subsidiaries which may
include the Current Subsidiaries as well as other subsidiaries (all such
entities, the "Closing Subsidiaries", and (iii) all references herein to FWD
Business Subsidiaries shall be deemed to refer to the Current Subsidiaries as
of the date hereof and to the Closing Subsidiaries as of the Contribution).

(d) "Fresenius AG Restructuring" means the actions taken and
proposed to be taken by Fresenius AG and its subsidiaries to restructure the
FWD Business so that, at or prior to Contribution, the FWD Business
Subsidiaries shall own all FWD Business Assets.

ARTICLE VI

COVENANTS

SECTION 6.1. Interim Operations. Each of Grace and Fresenius
AG (for itself and on behalf of Fresenius AG) covenants and agrees as to itself
and its subsidiaries that, from and after the date hereof until the Effective
Time, except insofar as the other parties shall otherwise consent or except as
otherwise contemplated by this Agreement, the Contribution Agreement, the
Distribution Agreement or its Disclosure Letter (provided that, as used herein,
all references to Grace (and/or its Affiliates) shall be deemed to refer to
Grace and its Affiliates which conduct the NMC Business, consistent with
Section 9.8 hereof, except as otherwise specifically provided):

(a) To the extent reasonably practicable, taking into account
any operational matters that may arise that are primarily attributable
to the pendency of the Reorganization, the business of it and its
subsidiaries will be conducted only in the ordinary and usual course
consistent with past practice and existing business plans previously
disclosed to the other parties and, to the extent consistent
therewith, it and its subsidiaries will use all reasonable efforts to
preserve their business organization intact and maintain their
existing relations with customers, suppliers, employees and business
associates.

(b) It will not (i) sell or pledge or agree to sell or pledge
any stock owned by it in any of its subsidiaries or, in the case of
Fresenius AG, any FWD Business Subsidiary; (ii) amend its Certificate
of Incorporation or By-laws (or similar organizational document);
(iii) split, combine or reclassify any outstanding capital stock; or
(iv) declare, set aside or pay any dividend payable in stock or
property with respect to any of its capital stock.

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(c) Neither Grace, Fresenius USA, nor any of their respective
subsidiaries or, Fresenius AG, solely with respect to any FWD Business
Subsidiary, will issue, sell, pledge, dispose of or encumber, or
authorize or propose the issuance, sale, pledge, disposition or
encumbrance of, any shares of, or securities convertible or
exchangeable for, or options, puts, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any
class other than common shares issuable pursuant to options, warrants
and other convertible securities outstanding on the date hereof and
disclosed in its Disclosure Letter, and employee stock options
granted after the date hereof in the ordinary course of business.

(d) None of Grace, Fresenius USA or Fresenius AG, with
respect to the FWD Business, will (i) transfer, lease, license,
guarantee, sell, mortgage, pledge or dispose of any property or assets
encumber any property or assets other than in the ordinary and usual
course of business; (ii) authorize or make capital expenditures; (iii)
make any acquisition of, or investment in, assets, stock or other
securities of any other person or entity other than its wholly owned
subsidiaries or (iv) make any divestiture.

(e) Except as required by agreements or arrangements
disclosed in its SEC Documents or its Disclosure Letter, neither it
nor any of its subsidiaries or, in the case of Fresenius AG, any FWD
Business Subsidiary, will grant any severance or termination pay to,
or enter into, extend or amend any employment, consulting, severance
or other compensation agreement with, any director, officer or other
of its employees, except to other employees in the ordinary course in
a manner consistent with past practice, which would bind Newco (or its
subsidiary) after the Reorganization.

(f) Except as may be required to satisfy contractual
obligations existing as of the date hereof (and disclosed to the other
parties hereto) and the requirements of applicable law, and except in
the ordinary course of business, neither it nor any of its
subsidiaries or, in the case of Fresenius AG, any FWD Business
Subsidiary, will establish, adopt, enter into, make, amend or make any
elections under any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, employee stock ownership, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any directors, officers
or employees which would affect Newco (or its subsidiary), except in a
manner consistent with past practice.

(g) It will not implement any change in its accounting
principles, practices or methods, other than as may be required by
German GAAP, in the case of Fresenius AG, or US GAAP, in the case of
Grace and Fresenius USA, other than as may be necessary or advisable
in connection with the Distribution.

(h) Neither it nor any of its subsidiaries will authorize or
enter into an agreement to take any of the actions referred to in
paragraphs (a) through (g) above.

SECTION 6.2. Certain Transactions. (a) Prior to the
Distribution: (i) Grace and Grace-Conn. shall use reasonable efforts to cause
NMC to arrange new credit facilities so that the transactions contemplated by
the Transaction Agreements may be consummated; (ii) Fresenius AG shall use
reasonable efforts to arrange new credit facilities

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for the FWD Business so that the transactions contemplated by the Transaction
Agreements may be consummated; and (iii) the parties hereto shall cooperate with
respect to the foregoing.

(b) Prior to or concurrent with the Reorganization, the
parties hereto shall use reasonable efforts to satisfy the conditions set forth
in Sections 7.1(j) and 7.1(k).

(c) It is understood and agreed by the parties hereto that,
at the time of the Reorganization, none of Grace, Fresenius USA and the FWD
Business shall have cash or marketable securities, it being contemplated that,
in connection with the Reorganization, such cash and marketable securities
shall be provided to Grace-Conn. and Fresenius AG, respectively, and that new
working capital facilities to finance working capital needs shall be obtained.

(d) It is the intention of the parties hereto that (i) Newco
shall pay dividends to the holders of its outstanding ordinary shares in the
amounts set forth in the business plan previously disclosed to the parties
hereto beginning in January 1997, subject to the declaration of such dividends
by the Newco Board, and (ii) Newco (or its subsidiary) shall lease real
property and buildings in Germany from Fresenius AG, for a total rental of the
equivalent $12 million per year beginning January 1997 pursuant to the Lease to
be consistent with the terms set forth in Exhibit D to the Contribution
Agreement.

(e) It is the intention of the parties hereto that, following
the Reorganization, Newco shall seek to refinance up to $700 million of credit
facilities through the sale of preferred securities which will be primarily
"mezzanine" capital, which could be classified as equity under German generally
accepted accounting principles and whose interest stream would be tax
deductible. The sale (or commitments for sale) of such preferred securities
shall not be a condition to the consummation of the Reorganization.

(f) It is the intention of the parties hereto that, to the
extent that it is not possible to obtain the credit facilities and/or arrange
for the sale of the preferred securities contemplated by paragraphs (a) and (e)
above on terms which will permit the payment of cash pursuant to the lease and
dividends pursuant to paragraph (d) above, prior to the Effective Time, the
parties shall endeavor to restructure the transactions contemplated hereby so
that, commencing in January 1997, Fresenius AG shall receive cash flow from
Newco in the amount that otherwise would have been received pursuant to
paragraph (d) above.

SECTION 6.3. Acquisition Proposals. Each party hereto agrees
that neither it nor any of its subsidiaries nor any of its respective officers
and directors or the officers and directors of its subsidiaries shall, and it
shall each direct and use its best efforts to cause its employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its subsidiaries) not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, it or any of its
subsidiaries (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal; provided, however, that the Grace
Board may furnish or

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cause to be furnished information (pursuant to confidentiality arrangements) and
may participate in such discussions and negotiations directly or through its
representatives if (i) the failure to provide such information or participate in
such negotiations and discussions could, in the opinion of its outside counsel,
reasonably be deemed to cause the members of the Grace Board to breach their
fiduciary duties under applicable law or (ii) another corporation, partnership,
person or other entity or group makes a written offer or written proposal which,
based upon the identity of the person or entity making such offer or proposal
and the terms thereof, and the availability of adequate financing therefor, the
Grace Board believes, in the good faith exercise of its business judgment and
based upon advice of its outside legal and financial advisors, could reasonably
be expected to be consummated and represents a transaction more favorable to its
shareholders than the Reorganization (a "Higher Offer"); provided further,
however, that the foregoing restriction shall not apply to an Acquisition
Proposal exclusively involving all or part of the stock or assets of
Grace-Conn. Grace shall notify the other parties hereto as soon as practicable
if any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with it.

SECTION 6.4. Information Supplied. Each of parties hereto
agrees that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in any Registration Statement, Proxy
Statement or Schedule 14A, or any amendment or supplement thereto, will, in the
case of a Registration Statement, at the time such Registration Statement and
each amendment and supplement thereto becomes effective under the Securities
Act, or, in the case of a Proxy Statement or Schedule 14A, at the time such
Proxy Statement or Schedule 14A and each amendment and supplement thereto is
filed in definitive form with the SEC or mailed to shareholders and at the time
of the applicable Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading.

SECTION 6.5. Shareholder Approvals. (a) Each of Grace and
Fresenius AG (on behalf of Fresenius USA) agrees to take, in accordance with
applicable law and its Certificate of Incorporation and By-laws, all action
necessary to convene a meeting of holders of Grace Common Shares and Grace
Preferred Shares and Fresenius USA Common Shares and Fresenius USA Preferred
Shares, respectively, as promptly as practicable after the Newco Registration
Statement and the ADR Registration Statement are declared effective (and, in
the case of Grace, the NY Preferred Registration Statement and the Grace-Conn.
Registration Statement are declared effective), and its Proxy Statement is
cleared, by the SEC, to consider and vote upon the approval of the transactions
contemplated by the Transaction Agreements (including, without limitation, the
Grace Amendment). Subject to the remainder of this Section 6.5, each of the
Grace Board and the Fresenius USA Board shall recommend such adoption and
approval and shall take all lawful action to solicit such approval by
shareholders. The Grace Board may fail to make such a recommendation, or
withdraw, modify, or change any such recommendation, or recommend any other
offer or proposal, if the Grace Board, based on the opinion of its outside
counsel, determines that making such recommendation, or the failure to
recommend any other offer or proposal, or the failure to so withdraw, modify,
or change its recommendation, or the failure to recommend any other offer or
proposal, could reasonably be deemed to cause the members of the Grace Board to
breach their fiduciary duties under applicable law in connection with a Higher
Offer. In such event, notwithstanding anything contained in this Agreement to
the contrary, any such failure to recommend, withdrawal, modification, or change
of

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recommendation or recommendation of such other offer or proposal, or the
entering by Grace into an agreement with respect to a Higher Offer (provided
that Grace shall have provided Fresenius AG with at least 72 hours notice of its
intention to so enter and the identity of the other party thereto), shall not
constitute a breach of this Agreement by Grace.

(b) Fresenius AG agrees to take, in accordance with
applicable law and its organizational documents, all action necessary to
convene a meeting of Fresenius AG shareholders as promptly as practicable after
the date hereof to consider and vote upon the approval of the transactions
contemplated hereby. The Fresenius AG Management Board shall recommend such
adoption and approval and shall take all lawful action to solicit such approval
by Fresenius AG shareholders.

SECTION 6.6. Filings; Other Actions. (a) Subject to the
obligations of consultation contained herein, Grace shall promptly prepare for
filing with the SEC the Grace Proxy Statement, the Grace Schedule 14A and the
Grace-Conn. Registration Statement, Fresenius USA shall promptly prepare for
filing with the SEC the Fresenius USA Proxy Statement and Fresenius USA
Schedule 14A, and the parties hereto shall cooperate to promptly prepare for
filing with the SEC the Newco Registration Statement, the NY Preferred
Registration Statement and the ADR Registration Statement (including all
required financial statements). In connection with the foregoing, Fresenius AG
shall prepare audited financial statements prepared in accordance with US GAAP
for the FWD Business and such financial statement shall be included in the
Newco Registration Statement (and in such other Registration Statements and
Proxy Statements as may be appropriate). Each party hereto shall use its
reasonable efforts, after consultation with the other parties hereto, to
respond promptly to any comments made by the SEC with respect to such filings,
to have such filings declared effective or cleared, as the case may be, and
cause such filings to be mailed at the earliest reasonably practicable time.
Each party hereto and its counsel shall be given a reasonable opportunity to
review and comment on each version of such filings prior to the filing thereof
with the SEC. Each party hereto also shall use its reasonable efforts to
obtain all necessary state securities law or blue sky permits and approvals
required to carry out the transactions contemplated hereby and shall furnish
all information as may be reasonably requested in connection with any such
action.

(b) Each party hereto shall cooperate with the other parties
hereto, subject to the terms and conditions set forth herein, use its
reasonable efforts promptly to prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings and other
documents, and to obtain as promptly as reasonably practicable all necessary
permits, consents, orders, approvals and authorizations of, or any exemption by,
all third parties and Governmental Entities necessary or advisable to consummate
the transactions contemplated hereby. Each party hereto shall consult with the
other parties hereto with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated hereby and
each party shall keep the other parties hereto apprised of the status of matters
relating to completion of the transactions contemplated hereby.

(c) Each party hereto shall, upon reasonable request and
except as otherwise may be required by applicable law, furnish the other
parties hereto with all information concerning itself, its subsidiaries,
directors, officers and shareholders and other Affiliates and such other
matters as may be reasonably necessary or advisable in connection any
statement, filing, notice or application made by or on behalf of such other
party or any of

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its Affiliates to any Governmental Entity in connection with any transactions
contemplated by this Agreement.

(d) Each party hereto shall, subject to applicable laws
relating to the disclosure and exchange of information, promptly furnish the
other parties hereto with copies of written communications received by each
such party or any of its subsidiaries, from, or delivered by any of the
foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.

(e) Each party hereto shall cooperate with each other party
hereto and promptly take or cause to be taken all actions and do or cause to be
done all things necessary, proper or advisable to obtain favorable review of
the proposed transaction under the HSR Act and any foreign antitrust or
competition laws, which efforts shall include, without limitation, undertaking
litigation and/or agreeing to hold aside or divest, or enter into any conduct
restriction with respect to, any asset or business to be part of Newco after
the Effective Time (all such decisions to be made by the parties in
consultation with one another taking into consideration the effect on Newco);
provided, however, that the foregoing shall not require that any action be
taken with respect to (or by) Grace-Conn. or its business; provided further,
however, that Grace shall not be required to commit to any action that is to be
taken prior to the Effective Time.

SECTION 6.7. Audited Financial Statements. (a) Not later
than March 31, 1996, Grace shall deliver to the other parties hereto an audited
special purpose consolidated balance sheet as of, and audited special purpose
consolidated statements of income, cash flows and shareholders' equity for the
year ended December 31, 1995, in each case for Grace and exclusive of the
Grace- Conn. Business and the assets, liabilities, income cash flows and
shareholders' equity thereof (such financial statements, the "Grace Audited
Financial Statements"), together with the unqualified opinion of Grace's
independent accountants thereon to the effect that such special purpose
consolidated balance sheet fairly presents in all material respects the
consolidated financial position of Grace and its included subsidiaries as of
its date and such special purpose consolidated statements of income, cash flows
and shareholders' equity fairly present in all material respects the
consolidated results of operations, retained earnings and cash flows, as the
case may be, of Grace and its included subsidiaries for the periods set forth
therein, in each case in accordance with US GAAP and exclusive of the
Grace-Conn. Business and the assets, liabilities, income, cash flows and
shareholders' equity thereof.

(b) Not later than March 31, 1996, Fresenius USA shall
deliver to the other parties hereto an audited consolidated balance sheet as
of, and audited consolidated statements of income, cash flows and shareholders'
equity for Fresenius USA for the year ended December 31, 1995 (such financial
statements, the "Fresenius USA Audited Financial Statements"), together with
the unqualified opinion of Fresenius USA's independent accountants thereon to
the effect that such consolidated balance sheet fairly presents in all material
respects the consolidated financial position of Fresenius USA and its
subsidiaries as of its date and such consolidated statements of income, cash
flows and shareholders' equity fairly present in all material respects the
consolidated results of operations, retained earnings and cash flows, as the
case may be, of Fresenius USA and its subsidiaries for the periods set forth
therein, in each case in accordance with US GAAP.

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(c) Not later than March 31, 1996, Fresenius AG shall deliver
to the other parties hereto: (i) an audited consolidated balance sheet as of,
and audited consolidated statements of income, cash flows and shareholders'
equity for the FWD Business for the years ended December 31, 1994 and December
31, 1995 showing consolidating adjustments made in connection with the
consolidation of Fresenius USA with the FWD Business (such financial
statements, the "FWD Business Audited Financial Statements"), together with the
unqualified opinion of Fresenius AG's independent accountants thereon to the
effect that such consolidated balance sheet fairly presents in all material
respects the consolidated financial position of the FWD Business as of its date
and such consolidated statements of income, cash flows and shareholders' equity
fairly presents in all material respects the consolidated results of operations,
retained earnings and cash flows, as the case may be, of the FWD Business for
the periods set forth therein, in each case in accordance with US GAAP, (ii) an
audited consolidated balance sheet as of, and audited consolidated statements of
income, cash flows and shareholders' equity for Fresenius AG for the year ended
December 31, 1994 and December 31, 1995 (such financial statements, the
"Fresenius AG Audited Financial Statements"), together with the unqualified
opinion of Fresenius AG's independent accountants thereon to the effect that
such consolidated balance sheet fairly presents in all material respects the
consolidated financial position of Fresenius AG as of its date and such
consolidated statements of income, cash flows and shareholders' equity fairly
presents in all material respects the consolidated results of operations,
retained earnings and cash flows, as the case may be, of Fresenius AG for the
periods set forth therein, in each case in accordance with German GAAP, and
(iii) a reconciliation showing, with such level of detail provided to support
each of the adjustments made to the 1995 Fresenius AG Audited Financial
Statements to derive the 1995 FWD Business Audited Financial Statements.

(d) If (i) there exists any material difference between the
Grace Audited Financial Statements, the Fresenius USA Audited Financial
Statements or the FWD Business Audited Financial Statements, on the one hand,
and the Grace Disclosure Letter Financial Statements, the Fresenius USA
Disclosure Letter Financial Statements or the FWD Business Disclosure Letter
Financial Statements, respectively, on the other hand, and such material
difference adversely affects a party hereto (other than the party the financial
statements of which contain such material difference, and treating, for
purposes of this parenthetical, Fresenius AG and Fresenius USA as a single
party) (such party, the "Affected Party"), and such Affected Party notifies the
other parties hereto of such difference within 10 days following receipt of the
applicable Audited Financial Statements, or (ii) if Grace believes in good
faith that the Fresenius USA Audited Financial Statements and the FWD Business
Audited Financial Statements, or if Fresenius AG believes in good faith that
the Grace Audited Financial Statements, reflect a material adverse change in
the prospects of the business of Fresenius USA and the FWD Business or Grace,
as the case may be, from the business plans previously disclosed by the parties
hereto and not otherwise disclosed in connection with this Agreement (a party
so believing being a "Change Party"), and such Change Party notifies the other
parties hereto of such change within 10 days following receipt of the applicable
Audited Financial Statements, then the parties hereto shall negotiate in good
faith to adjust the relative economics of the transactions contemplated hereby,
in consultation with financial and accounting advisors, in light of the
foregoing. If the parties do not reach agreement on such an adjustment within
14 days of notice, this Agreement shall be terminable by an Affected Party or a
Change Party.

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(e) After delivery of the Audited Financial Statements as
contemplated by this Section 6.7 (if there is no material difference or
material adverse change as contemplated by the immediately preceding paragraph)
or after the reaching of agreement as contemplated by the immediately preceding
paragraph (if there is a material difference or material adverse change as
contemplated by the immediately preceding paragraph), all references herein to
the Disclosure Letter Financial Statements shall be deemed to refer to the
Audited Financial Statements.

(f) Each party hereto shall use all reasonable efforts to
cause to be delivered to the other party is, as appropriate, and its directors
a letter of its independent accountants, dated (i) the date on which each
Registration Statement shall become effective and (ii) a date shortly prior to
the Effective Date, and addressed to such other party and its directors, in
form and substance customary for "comfort" letters delivered by independent
accountants in connection with registration statements.

(g) Time shall be of the essence with respect to the delivery
of the Audited Financial Statements.

SECTION 6.8. Access. Upon reasonable notice, and except as
may otherwise be required by applicable law, each party hereto shall afford
each other party's Representatives access, during normal business hours
throughout the period until the Effective Time to its properties, books,
Contracts and records and, during such period, shall (and shall cause each of
its subsidiaries to) furnish promptly to the other party all information
concerning its business, properties and personnel as may reasonably be
requested; provided that no investigation pursuant to this Section 6.8 shall
affect or be deemed to modify any representation or warranty made by the party
furnishing such information; provided further that with respect to the work
papers of independent accountants, the provision of access shall be subject to
the permission of such independent accountants, and each party hereto shall use
reasonable best efforts to secure such permission for the other. Each party
hereto shall not, and shall cause its respective Representatives not to, use
any information obtained pursuant to this Section for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement. All
information obtained pursuant to this paragraph shall be subject to the
provisions of the written confidentiality arrangements existing among the
parties hereto.

SECTION 6.9. Notification of Certain Matters. Each party
shall give prompt notice to the other party of any change that is reasonably
likely to result in any Material Adverse Effect to the knowledge of the
executive officers.

SECTION 6.10. Publicity. The initial press release relating
hereto shall be a joint press release and, thereafter, each party hereto shall
consult with each other party hereto prior to issuing any press releases or
otherwise making public statements with respect to the transactions
contemplated hereby and prior to making any filings with any Governmental
Entity or stock exchange with respect thereto; provided that if a party shall
be advised by counsel that any such press release, statement or filing is
required by applicable law and it shall not be practicable to consult with the
other parties prior to the time such press release, statement or filing is
required, a party may make such press release, statement or filing and shall
promptly notify the other parties thereof.

SECTION 6.11. [Intentionally omitted.]

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SECTION 6.12. Employee Benefits. (i) All Grace Employees
who are actively employed by Grace or its subsidiaries on the Effective Time
(including any Grace Employees who are receiving long term disability as of the
Effective Time) shall be provided with compensation and benefits (including,
without limitation, severance benefits and retiree benefits) substantially the
same as those benefits provided to Grace Employees as of the date hereof. In
addition, Grace Employees shall be given service credit for all periods of
employment with Grace or its Affiliates prior to the Effective Date for
purposes of eligibility and vesting (but not for benefit accrual) under any
plan adopted by Newco or any of their respective subsidiaries or Affiliates
with respect to Grace Employees to provide retirement or welfare benefits.
Following the Effective Time, NMC and Grace, and not Grace- Conn., shall bear
any costs and expenses associated with the termination of employees involved in
the NMC Business. It is the intention of Fresenius AG to consider the adoption
by Newco of a broad based equity incentive program for employees in the United
States.

(ii) Upon the request of Fresenius AG, prior to the
Effective Time, Grace shall amend or cause to be amended each Grace Pension
Plan which is a single-employer plan within the meaning of Section 4001(a)(15)
of ERISA (and which covers employees in the NMC Business) to delete any
provision that would become applicable on or after a Change of Control (as
defined in such Pension Plan), requiring (i) that Grace fund the Pension Plan
on a termination basis, and/or (ii) that benefit accruals under the Plan become
nonforfeitable as of the date of a Change of Control.

SECTION 6.13. Expenses and Liquidated Damages. (a) Except
as set forth in paragraph (b) below, whether or not the Reorganization is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expense; provided, however, that the costs and expenses of printing and
mailing the Grace Proxy Statement, Fresenius USA Proxy Statement, the NY
Preferred Registration Statement and the Newco Registration Statement, and all
filing and other fees paid to the SEC or antitrust authorities in connection
with the Reorganization, shall be borne by Newco.

(b) In the event that:

(A) (1) this Agreement shall be terminated pursuant to either
Section 8.3(ii) or Section 8.3(iii) or (2) this Agreement shall be
terminated pursuant to Section 8.2(ii) (due to a failure to obtain
Grace shareholder approval) and, at the time of the meeting called for
the approval of Grace shareholders referred to in Section 7.1(a), the
Grace Board shall have failed to recommend to its shareholders the
approval of the transactions contemplated hereby, or shall have
withdrawn, modified or changed such recommendation, or (3) this
Agreement shall be terminated pursuant to Section 8.2(ii) (due to a
failure to obtain Grace shareholder approval) and, at the time of the
meeting called for the approval of Grace shareholders referred to in
Section 7.1(a), there shall have been made an Acquisition Proposal
that has become public and, within six months following such
termination, Grace shall enter into a definitive agreement with
respect to the sale of Grace's healthcare business; and

and (B), at the time of such termination, neither Fresenius
Party shall be in material breach of its covenants or agreements
contained in this Agreement;

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then, Grace shall pay to Fresenius AG, as liquidated damages, in exchange for a
complete release of any liabilities of Grace hereunder, the amount of $35
million plus actual out of pocket expenses incurred to third parties in
connection with the transactions contemplated hereby after the date of this
Agreement, payable by wire transfer of immediately available funds within 24
hours to the account specified by Fresenius AG in writing; provided that, if the
approval of the transactions contemplated hereby by the shareholders of
Fresenius AG, as contemplated by Section 6.5, or an irrevocable written
commitment to vote in favor of such transactions from the holder of an amount of
Fresenius AG capital stock sufficient under applicable law to give such
approval, shall have been obtained, the amount of liquidated damages payable
pursuant to this Section 6.13 shall be $75 million plus actual out of pocket
expenses incurred to third parties in connection with the transactions
contemplated hereby after the date of this Agreement.

SECTION 6.14. Grace Rights Agreement. The Grace Board shall
take all requisite action in order to render the Grace Rights inapplicable to
the Grace Merger and the other transactions contemplated by this Agreement and
the Distribution Agreement and to extinguish the Grace Rights in connection
with the Reorganization.

SECTION 6.15. Antitakeover Statutes. If any Takeover Statute
is or may become applicable to the transactions contemplated hereby, each of
the parties hereto and the members of its Board of Directors shall grant such
approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of any Takeover Statute on any of the transactions contemplated by this
Agreement.

SECTION 6.16. Securities Act Compliance. As soon as
practicable after the date of the Meetings, each party hereto shall identify to
Newco all persons who were, at the time of the Meetings, possible Affiliates,
shall use its reasonable efforts to obtain a written agreement in the usual and
customary form from each person who is so identified as a possible Affiliate
and shall deliver such written agreements to Newco as soon as practicable after
the Meetings.

SECTION 6.17. Stock Exchange Listing. Prior to the Effective
Time, Fresenius AG shall use reasonable efforts to cause the ADR Facility and
the listing of the ADRs on the Exchange to become effective.

SECTION 6.18. Transaction Agreements. (a) Prior to the
Effective Time, the parties shall consummate any transactions to be consummated
prior to the Effective Time pursuant to the Distribution Agreement or the
Contribution Agreement.

(b) The parties shall not waive or amend any terms of the
Distribution Agreement or the Contribution Agreement without the consent of the
other parties hereto, which consent shall not be unreasonably withheld.

(c) The parties hereto acknowledge that the indemnities of
Grace-Conn. and of Fresenius AG contained in the Distribution Agreement and the
Contribution Agreement, respectively, shall inure to the benefit of each other
and to the benefit of Newco.

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SECTION 6.19. Tax Matters. Each party agrees to report the
Distribution as a tax-free distribution under the Code and the Grace Merger as
a tax-free reorganization under the Code on all tax returns and other filings,
and take no position inconsistent therewith, except where, in the opinion of
nationally recognized tax counsel to such party, there is not "substantial
authority," as defined in Section 6662 of the Code, to support such a position.

ARTICLE VII

CONDITIONS

SECTION 7.1. Conditions to Each Party's Obligation. The
respective obligation of each party hereto to consummate the Reorganization is
subject to the fulfillment of each of the following conditions:

(a) Shareholder Approval. To the extent required by law or
stock exchange regulations, the transactions contemplated by the
Transaction Agreements shall have been duly approved by the holders of
Grace Common Shares and Grace Preferred Shares in accordance with the
NYBCL, other applicable law and the Certificate of Incorporation and
By-laws of Grace, and by the shareholders of Fresenius AG in
accordance with applicable law.

(b) Governmental and Regulatory Consents. The waiting
periods applicable to the consummation of the transactions
contemplated by the Transaction Agreements under the HSR Act shall
have expired or been terminated; and all filings required to be made
prior to the Closing by any party hereto or any of its respective
subsidiaries with,
and all consents, approvals and authorizations required to be obtained
prior to the Closing by any party hereto or any of its respective
subsidiaries from, any Governmental Entity in connection with the
execution and delivery of the Transactions Agreements and the
consummation of the transactions contemplated by the Transaction
Agreements shall have been made or obtained, except where the failure
to obtain such consents is not reasonably likely to have a Material
Adverse Effect and could not reasonably be expected to subject the
parties hereto or their Affiliates or any directors or officers of any
of the foregoing to the risk of criminal liability.

(c) Third-Party Consents. All consents or approvals of all
persons (other than Governmental Entities) required for or in
connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by the
Transaction Agreements shall have been obtained and shall be in full
force and effect, except for those the failure to obtain of which
would not have a Material Adverse Effect with respect to all parties
and Newco.

(d) Litigation. No United States or state court or other
Governmental Entity of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by the Transaction
Agreements.

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54

(e) Grace Tax Opinion. Grace shall have received opinions of
Wachtell, Lipton, Xxxxx & Xxxx and of Xxxxxx & Xxxxxxxxx, Chartered,
dated the Effective Date, substantially in the form of Exhibit H
hereto. In rendering such opinions, such firms may receive and rely
upon representations contained in certificates of the Grace, Fresenius
AG, Newco and others, including, without limitation, the Grace Tax
Matters Certificate and the Fresenius AG Tax Matters Certificate.

(f) Registration Statements. The Registration Statements
shall have become effective under the Securities Act or Exchange Act
(as applicable), and no stop order suspending the effectiveness of any
Registration Statement shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the SEC.

(g) Financing. The parties hereto shall have obtained the
financing necessary to consummate the transactions contemplated by the
Transaction Agreements on terms satisfactory to the parties.

(h) The Distribution. The Distribution shall have been
consummated.

(i) Stock Exchange Listing. The ADR Facility and the listing
of the ADRs on the Exchange shall have become effective; provided,
however, that the foregoing shall not apply to obligations of
Fresenius USA and Fresenius AG unless Fresenius AG has satisfied the
obligations contained in Section 6.18 hereof.

(j) Fresenius AG Debt. As of the Effective Time, Fresenius
USA and the FWD Business and their respective subsidiaries (taken
together, on a consolidated basis) shall have no Debt other than Debt
not in excess of an aggregate amount of $170 million.

(k) Grace Debt. As of the Effective Time, Grace and its
subsidiaries (on a consolidated basis) shall have no Debt, other than
Debt not in excess of an aggregate amount of (i) $2.263 billion plus
(ii) any amounts incurred to finance capital expenditures or
acquisitions permitted to be made hereunder.

SECTION 7.2. Conditions to Obligation of Grace. The
obligation of Grace to consummate the Reorganization is also subject to the
fulfillment or waiver by Grace prior to the Closing of each of the following
conditions:

(a) Representations and Warranties. The representations and
warranties of each Fresenius Party set forth in this Agreement shall
be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date (except that representations and warranties that by their
terms speak as of the date of this Agreement or some other date shall
be true and correct as of such date), and Grace shall have received
certificates signed on behalf of each Fresenius Party by an officer to
such effect.

(b) Performance of Obligations. Each Fresenius Party shall
have performed in all material respects all obligations required to be
performed by it under this Agreement or the Contribution Agreement at
or prior to the Closing Date, and

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Grace shall have received a certificate signed on behalf of each
Fresenius Party by an officer to such effect.

(c) Pooling Agreement. Fresenius AG and Newco shall have
entered into the Newco Pooling Agreement; and Grace shall have
received an opinion of nationally recognized counsel, dated the
Closing Date, to the effect that the Newco Pooling Agreement is a
valid and binding agreement, enforceable against Newco and Fresenius
AG in accordance with the terms thereof, under the laws of the Federal
Republic of Germany, respectively. Such opinion shall be reasonably
acceptable to the other parties hereto.

(d) Fresenius AG Tax Opinion. Grace shall have received the
opinion of nationally recognized tax counsel (which may be, for
purposes of this provision, KPMG Deutsche Treuhand Gesellschaft AG
and/or KPMG Peat Marwick LLP), dated the Closing Date, substantially
in the form of Exhibit I hereto, to the effect that Newco shall have
no liability with respect to the Fresenius AG Restructuring and the
Contribution under the relevant provisions of the Code and applicable
law of the Federal Republic of Germany.

SECTION 7.3. Conditions to Obligation Concerning Fresenius
USA. The obligation of Fresenius AG to cause Fresenius USA to consummate the
Reorganization is also subject to the fulfillment or waiver by Fresenius USA
prior to the Closing Date of each of the following conditions:

(a) Representations and Warranties. The representations and
warranties of Grace set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date
(except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be true and
correct as of such date) and Fresenius USA shall have received a
certificate signed on behalf of Grace by an officer to such effect.

(b) Performance of Obligations. Grace shall have performed
in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Fresenius
USA shall have received a certificate signed on behalf of Grace by an
officer to such effect.

(c) Pooling Agreement Opinion. Fresenius AG and Newco shall
have entered into the Newco Pooling Agreement;
and Fresenius USA shall have received an opinion of nationally
recognized counsel, dated the Closing Date, to the effect that the
Newco Pooling Agreement is a valid and binding agreement, enforceable
against Newco and Fresenius AG in accordance with the terms thereof,
under the laws of the Federal Republic of Germany, respectively. Such
opinion shall be reasonably acceptable to the other parties hereto.

SECTION 7.4. Conditions to Obligation of Fresenius AG. The
obligation of Fresenius AG to consummate the Reorganization is also subject to
the fulfillment or waiver by Fresenius AG prior to the Closing of each of the
following conditions:

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56

(a) Representations and Warranties. The representations and
warranties of Grace set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date
(except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be true and
correct as of such date) and Fresenius AG shall have received a
certificate signed on behalf of Grace by an officer to such effect.

(b) Performance of Obligations. Grace shall have performed
in all material respects all obligations required to be performed by
it under this Agreement or the Distribution Agreement at or prior to
the Closing Date, and Fresenius AG shall have received a certificate
signed on behalf of Grace by an officer to such effect.

ARTICLE VIII

TERMINATION

SECTION 8.1. Termination by Mutual Consent. This Agreement
may be terminated, and the Reorganization may be abandoned, at any time prior
to the Effective Time, before or after the approval by the shareholders of
Grace, Fresenius AG and/or Fresenius USA, by the mutual consent of each party
hereto, which consent shall be effected by action of its Board of Directors.

SECTION 8.2. Termination by any Party Hereto. This Agreement
may be terminated, and the Reorganization may be abandoned, by action of the
Board of Directors of any party hereto, if (i) the Reorganization shall not have
been consummated by September 1, 1996 or (ii) at the Grace Meeting or at any
adjournment thereof, the approval of Grace's shareholders, or, at a meeting of
Fresenius AG shareholders or any adjournment thereof, the approval of Fresenius
AG's shareholders, each as referred to in Section 7.1(a), shall not have been
obtained or (iii) pursuant to Section 6.7.

SECTION 8.3. Termination by Grace. This Agreement may be
terminated and the Reorganization may be abandoned at any time prior to the
Effective Time, before or after the adoption and approval by shareholders of
Grace referred to in Section 7.1(a), by action of the Grace Board, if (i)
either Fresenius Party shall have failed to comply in any material respect with
any of the covenants or agreements contained herein to be performed by such
Fresenius Party at or prior to the time of termination, which failure is not
cured or capable of being cured within 30 days after notice thereof, or (ii)
the Grace Board shall have failed to recommend to its shareholders the approval
of the transactions contemplated hereby, or shall have withdrawn, modified or
changed such recommendation, in a manner permitted by Section 6.5, or (iii)
Grace shall have entered into an agreement respect to a Higher Offer in a
manner permitted by Section 6.5.

SECTION 8.4. Termination by Fresenius AG. This Agreement may
be terminated and the Reorganization may be abandoned at any time prior to the
Effective Time by action of the Board of Directors of Fresenius AG, if (i)
Grace shall have failed to comply in any material respect with any of the
covenants or agreements contained herein to be performed by it at or prior to
the time of termination, which failure is not cured or capable of being cured
within 30 days after notice thereof, or (ii) the Grace Board shall

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57

have failed to recommend to its shareholders the approval of the transactions
contemplated hereby or shall have withdrawn, modified or changed in a manner
materially adverse to such Fresenius Party its approval or recommendation of
this Agreement.

SECTION 8.5. Effect of Termination and Abandonment. In the
event of termination of this Agreement and the abandonment of the
Reorganization pursuant to this Article VIII, other than as set forth in
Section 6.13, no party hereto (or any of its directors or officers) shall have
any liability or further obligation to any other party, except that nothing
herein will relieve any party from liability for any material and willful
breach of any covenant contained herein.

ARTICLE IX

MISCELLANEOUS AND GENERAL

SECTION 9.1. Survival. Only those agreements and covenants
of the parties which by their express terms apply in whole or in part after the
Effective Time shall survive the Effective Time. All other representations,
warranties, agreements and covenants shall be deemed only to be conditions of
the Reorganization and shall not survive the Effective Time.

SECTION 9.2. Modification or Amendment. Subject to the
applicable provisions of the NYBCL and the MBCL, at any time prior to the
Effective Time, the parties hereto may modify or amend this Agreement, by
written agreement executed and delivered by duly authorized officers of the
respective parties.

SECTION 9.3. Waiver of Conditions. The conditions to each
party's obligation to consummate the Reorganization are for the sole benefit of
such party and may be waived by such party in whole or in part to the extent
permitted by applicable law.

SECTION 9.4. Counterparts. For the convenience of the
parties hereto, this Agreement may be executed in any number of separate
counterparts signed by one or more of the parties hereto, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.

SECTION 9.5. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.

SECTION 9.6. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telegram, telex or other standard form of telecommunications, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

(a) If to Grace and Grace-Conn.:

X. X. Xxxxx & Co.
Xxx Xxxx Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000-0000

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Attention: Secretary
Fax: (000) 000-0000

with copies to:

Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000

(b) If to Fresenius AG:

Fresenius AG
Borkenberg 14
61440 Xxxxxxxxx
00000 Xxx Xxxxxxx
Xxxxxxx
Attention: Xx. Xxx Xxxxx
Fax: 000-00-0000-00-0000

with copies to:

O'Melveny & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xx. Xxxxxx Xxxxxx
Fax: (000) 000-0000

or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section.

SECTION 9.7. Entire Agreement, etc. This Agreement (and the
Exhibits and Disclosure Letters hereto) (a) constitute the entire agreement,
and supersede all other prior agreements, understandings, representations and
warranties, both written and oral, among the parties, with respect to the
subject matter hereof other than the written confidentiality arrangements
existing among the parties hereto, which shall survive, and (b) shall not be
assignable by operation of law or otherwise.

SECTION 9.8. Definitions of "Subsidiary" and "Significant
Subsidiary." (a) When a reference is made in this Agreement to a subsidiary
of a party, the term "subsidiary" means any corporation or other organization
whether incorporated or unincorporated of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its subsidiaries, or by such party and one or more of its subsidiaries;
provided, however, that except in the context of references herein to financial
statements of Grace and its subsidiaries or as otherwise specified herein, (i)
no member of the Grace-Conn. Group shall be deemed to be

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00

x xxxxxxxxxx xx Xxxxx, (xx) each member of the Grace-Conn. Group (other than
Grace-Conn.) shall be deemed to be a subsidiary of Grace-Conn., (iii) no member
of the NMC Group shall be deemed to be a subsidiary of Grace-Conn. and (iv) each
member of the NMC Group (other than Grace) shall be deemed to be a subsidiary of
Grace.

(b) When a reference is made in this Agreement to a
significant subsidiary of a party, the term "significant subsidiary" shall mean
a subsidiary of such party meeting the standards specified in clause (1) or (2)
of the definition of such term in Rule 1-02 of the SEC's Regulation S-X.

SECTION 9.9. Captions. The Article, Section and paragraph
captions herein are for convenience of reference only, do not constitute part
of this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof.

SECTION 9.10. Specific Performance. In the event of any
actual or threatened default in, or breach of, any of the terms, conditions and
provisions of this Agreement, the party or parties who are or are to be thereby
aggrieved shall have the right of specific performance and injunctive relief
giving effect to its or their rights under this Agreement, in addition to any
and all other rights and remedies at law or in equity, and all such rights and
remedies shall be cumulative. The parties agree that the remedies at law for
any breach or threatened breach, including monetary damages, are inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.

SECTION 9.11. Severability. If any provision of this
Agreement or the application thereof to any person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it has been
held invalid or unenforceable, shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereby, so long as the economic
or legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party.

SECTION 9.12. No Third-Party Beneficiaries. Nothing
contained in this Agreement, expressed or implied, is intended to confer upon
any person or entity other than the parties hereto and Grace-Conn., any
benefit, right or remedies, other than the provisions of Section 6.11 hereof.

SECTION 9.13. Fresenius AG Covenant. (i) As between
Fresenius AG and Grace, prior to the Effective Time, Fresenius AG shall cause
the Fresenius USA Board to adopt, approve and ratify this Agreement and the
other Transaction Agreements and to submit the Fresenius USA Merger to a vote
of Fresenius USA shareholders. As a result of the foregoing, without limiting
any obligations of Fresenius AG with respect to Fresenius USA hereunder,
Fresenius USA will undertake the obligations contained herein as a "party"
hereto and make the representations and warranties contained herein with
respect to itself directly to Grace. Fresenius AG will vote its shares of
Fresenius USA in favor of the Fresenius USA Merger.

(ii) All obligations of Fresenius USA herein shall also be
obligations of Fresenius AG.

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(iii) Notwithstanding the foregoing, nothing in this
provision shall be construed to prevent the Special Committee of the Board of
Directors of Fresenius USA or any similar committee evaluating the Fresenius
USA Merger from making a determination with respect to the adequacy of the
Aggregate Fresenius USA Common Share Consideration and the entire fairness of
the transaction to the shareholders of Fresenius USA consistent with their
fiduciary duties.

SECTION 9.14. Further Assurances. In addition to the actions
specifically provided for elsewhere in this Agreement, but subject to Section
9.1 hereof, each of the parties hereto shall use reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws, regulations
and agreements to consummate and make effective the transactions contemplated
by this Agreement. Without limiting the foregoing the parties will as promptly
as practicable (and in the case of this Agreement and the Contribution
Agreement within one week after the signing hereof in Germany or Switzerland)
apply for any notarial or similar registrations with respect to the
transactions contemplated hereby in foreign jurisdictions.

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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.

X. X. XXXXX & CO.

By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name:
Title:

FRESENIUS AG

By: /s/ Xxxx Xxxxx
-----------------------------------
Name:
Title:

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ANNEX A

DEFINED TERMS

Acquisition Proposal: as defined in Section 6.3 hereof.

ADR: an American depositary receipt for Newco Ordinary Shares
issued pursuant to the ADR Facility.

ADR Facility: a facility for exchanging Newco Ordinary Shares
for American depositary receipts suitable for listing on the Exchange in form
and substance satisfactory to Grace and Fresenius AG.

ADR Registration Statement: the registration statement filed
in connection with the ADR Facility.

Affected Party: as defined in Section 6.7(d) hereof.

Affiliate: as defined in Rule 12b-2 under the Exchange Act.

Aggregate Fresenius USA Common Share Consideration: as defined
in Section 4.2(e).

Aggregate Grace Common Share Consideration: Newco Ordinary
Shares in an amount that represents 44.8% of the number of Newco Ordinary Shares
that will be outstanding immediately following consummation of the
Reorganization on a fully diluted basis.

Agreement: as defined in the Preamble hereof.

Audited Financial Statements: the Grace Audited Financial
Statements, the Fresenius USA Audited Financial Statements and the FWD Business
Audited Financial Statements.

Change Party: as defined in Section 6.7(d) hereof.

Closing: as defined in Section 1.4 hereof.

Closing Date: as defined in Section 1.4 hereof.

Closing Subsidiaries: as defined in Section 5.5(c) (ii)
hereof.

Code: the Internal Revenue Code of 1986, as amended.

Contracts: as defined in Section 5.1(d)(ii).

Contribution: as defined in Recital C hereof.

Contribution Agreement: as defined in Recital C hereof.

Current Subsidiaries: as defined in Section 5.5(c)(ii) hereof.

X-0

Xxxx: (a) all obligations for borrowed money, whether or not
represented by a note, bond or debenture, (b) off balance sheet financing
including, without limitation, off balance sheet receivables financings at NMC,
(c) any obligation created or arising under any conditional sale agreement or
other title retention agreement that is treated as a liability under a balance
sheet prepared in accordance with US GAAP, (d) the portion of the obligations
with respect to capital leases that is properly classified as a liability on a
balance sheet in accordance with US GAAP, (e) a reasonable estimate, to be
agreed by Fresenius and Grace, of the amounts payable in respect of Dissenting
Shares of Fresenius USA or Grace, as the case may be, (f) any obligation owed in
respect of the deferred purchase price of property (excluding any obligations
incurred in the ordinary course of business), and (g) the liquidation preference
of, and accrued dividends on, preferred stock outstanding at the Effective Time
(other than NY Preferred Shares).

Disclosure Letters: the Fresenius AG Disclosure Letter, the
Fresenius USA Disclosure Letter and the Grace Disclosure Letter.

Disclosure Letter Financial Statements: the Grace Disclosure
Letter Financial Statements, the Fresenius USA Disclosure Letter Financial
Statements and the FWD Business Disclosure Letter Financial Statements.

Dissenting Shares: Grace Common Dissenting Shares and
Fresenius USA Common Dissenting Shares.

Distribution: as defined in Recital D hereof.

Distribution Agreement: as defined in Recital D hereof.

Effective Time: as defined in Section 1.3 hereof.

Employees: the Grace Employees and the Fresenius USA
Employees.

Environmental Law: any federal, state, foreign or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, common law, legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any governmental entity, (a) relating
to the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, or (b) the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Substances, in
each case as amended and as now in effect.

ERISA: the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.

ERISA Affiliates: the Grace ERISA Affiliates and the Fresenius
USA ERISA Affiliates.

Excess Shares: as defined in Section 4.4(c) (ii) hereof.

A-2

Exchange: the New York Stock Exchange, Inc. or the NASDAQ
Stock Market.

Exchange Act: the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

Exchange Agent: as defined in Section 4.4(a) hereof.

Fractional Securities Fund: as defined in Section 4.4(c) (ii)
hereof.

Fresenius AG: as defined in the Preamble hereof.

Fresenius AG Disclosure Letter: as defined in Section 5.3
hereof.

Fresenius AG Plans: as defined in Section 5.4(m)(i) hereof.

Fresenius AG Restructuring: as defined in Section 5.5(d)
hereof.

Fresenius AG Tax Matters Certificate: as defined in Section
5.3(g) hereof.

Fresenius Parties: as defined in Recital F hereof.

Fresenius USA: as defined in Recital F hereof.

Fresenius USA Articles of Organization: as defined in Section
2.3 hereof.

Fresenius USA Audited Financial Statements: as defined in
Section 6.7(b) hereof.

Fresenius USA Board: the Board of Directors of
Fresenius USA.

Fresenius USA Common Dissenting Shares: Fresenius USA Common
Shares as to which rights of appraisal have been perfected pursuant to the MBCL.

Fresenius USA Common Share Equivalents: at any time, (i) the
aggregate number of Fresenius USA Common Shares outstanding at such time (other
than any Fresenius USA Common Share owned by Fresenius AG or its subsidiaries or
Newco or Fresenius USA or its subsidiaries or any Fresenius USA subsidiary or
held in Fresenius USA's treasury or any Fresenius USA Common Dissenting Share)
plus (ii) the aggregate number of Fresenius USA Options (other than any
Fresenius USA Option on an outstanding Fresenius USA Common Share).

Fresenius USA Common Shares: shares of common stock, par value
$.01 per share, of Fresenius USA.

Fresenius USA Compensation Plans: as defined in Section
5.2(k)(i).

Fresenius USA Consideration Per Share: the amount into which
each Fresenius USA Common Share will be converted in the Fresenius USA Merger,
to be calculated as the quotient of the Aggregate Fresenius USA Common Share
Consideration

A-3

divided by the number of Fresenius USA Common Share Equivalents outstanding
immediately prior to the Fresenius USA Merger.

Fresenius USA Disclosure Letter: as defined in Section 5.2
hereof.

Fresenius USA Disclosure Letter Balance Sheet: as defined in
Section 5.2(e)(iii) hereof.

Fresenius USA Disclosure Letter Financial Statements: as
defined in Section 5.2(e)(iii) hereof.

Fresenius USA Employees: as defined in Section 5.2(k)(i)
hereof.

Fresenius USA ERISA Affiliate: as defined in Section
5.2(k)(iii) hereof.

Fresenius USA Exchange Ratio: the Fresenius USA Consideration
Per Share, expressed as the numerical ratio of Newco Ordinary Shares per
Fresenius USA Common Share.

Fresenius USA Intellectual Property: as defined in Section
5.2(p) hereof.

Fresenius USA Meeting: a duly convened meeting of holders of
Fresenius USA Common Shares and Fresenius USA Preferred Shares called to vote on
and approve the transactions contemplated hereby.

Fresenius USA Merger: as defined in Recital F hereof.

Fresenius USA Merger Sub: as defined in Recital F hereof.

Fresenius USA Option: as defined in Section 4.4(i) hereof.

Fresenius USA Plans: as defined in Section 5.2(k)(ii) hereof.

Fresenius USA Preferred Shares: shares of preferred stock, par
value $1.00 per share, of Fresenius USA.

Fresenius USA Proxy Statement: the proxy statement (including
all proxy solicitation materials constituting a part thereof) to be mailed to
the holders of Fresenius USA Common Shares and Fresenius USA Preferred Shares in
connection with the Fresenius USA Meeting.

Fresenius USA Schedule 14A: the Schedule 14A filed by
Fresenius USA with the SEC including the Fresenius USA Proxy Statement.

Fresenius USA Series F Preferred Shares: Fresenius USA
Preferred Shares designated as Series F Series Convertible Preferred Stock.

Fresenius USA Stock Plans: as defined in Section 5.2(a)
hereof.

Fresenius USA Surviving Corporation: as defined in Section
1.2(c) hereof.

A-4

FWD Business: as defined in Section 5.5(a) hereof.

FWD Business Assets: as defined in Section 5.5(b) hereof.

FWD Business Audited Financial Statements: as defined in
Section 6.7(c) hereof.

FWD Business Disclosure Letter: as defined in Section 5.4
hereof.

FWD Business Disclosure Letter Balance Sheet: as disclosed in
Section 5.4(d)(i) hereof.

FWD Business Disclosure Letter Financial Statements: as
defined in Section 5.4(d)(i) hereof.

FWD Business Intellectual Property: as defined in Section
5.4(o) hereof.

FWD Business Subsidiary: as defined in Section 5.5(c) hereof.

German GAAP: German generally accepted accounting principles
consistently applied.

Governmental Entity: as defined in Section 5.1(d)(i) hereof.

Grace: as defined in the Preamble hereof.

Grace Amendment: as defined in Recital F hereof.

Grace Audited Financial Statements: as defined in Section
6.7(a) hereof.

Grace Board: the Board of Directors of Grace.

Grace Certificate of Incorporation: as defined in Section 2.1
hereof.

Grace Class A Preferred Shares: Grace Preferred Shares
designated as Class A.

Grace Class B Preferred Shares: Grace Preferred Shares
designated as Class X.

Xxxxx Class C Preferred Shares: Grace Preferred Shares
designated as Class X.

Xxxxx Common Dissenting Shares: Grace Common Shares as to
which rights of appraisal have been perfected pursuant to the NYBCL.

Grace Common Share Equivalents: at any time, (i) the aggregate
number of Grace Common Shares outstanding at such time (other than any Grace
Common Share owned by Fresenius AG or its subsidiaries or Fresenius USA or its
subsidiaries or any Grace subsidiary or held in Grace's treasury or any Grace
Common Dissenting Share) plus

A-5

(ii) the aggregate number of Grace Options (other than any Grace Option on an
outstanding Grace Common Share).

Grace Common Shares: shares of common stock, par value $1.00
per share, of Grace (including the associated Grace Rights).

Grace Compensation Plans: as defined in Section 5.1(k)(i)
hereof.

Grace-Conn.: as defined in Recital D hereof.

Grace-Conn. Business: as defined in the Distribution
Agreement.

Grace-Conn. Group: as defined in the Distribution Agreement.

Grace-Conn. Registration Statement: the registration statement
filed by Grace-Conn. with the SEC in connection with the Distribution.

Grace Consideration Per Share: Newco Ordinary Shares in the
amount into which each Grace Common Share (and associated Grace Right) will be
converted in the Grace Merger, to be calculated as the quotient of the Aggregate
Grace Common Share Consideration divided by the number of Grace Common Share
Equivalents outstanding immediately prior to the Grace Merger after giving
effect to the Distribution.

Grace Disclosure Letter: as defined in Section 5.1 hereof.

Grace Disclosure Letter Balance Sheet: as defined in Section
5.1(e)(iii) hereof.

Grace Disclosure Letter Financial Statements: as defined in
Section 5.1(e)(iii) hereof.

Grace Employees: as defined in Section 5.1(k)(i) hereof.

Grace ERISA Affiliate: as defined in Section 5.1(k)(iii)
hereof.

Grace Exchange Ratio: the Grace Consideration Per Share,
expressed as the numerical ratio of Newco Ordinary Shares per Grace Common
Share.

Grace Meeting: a duly convened meeting of holders of Grace
Common Shares and Grace Preferred Shares called to vote on and approve the
transactions contemplated hereby.

Grace Merger: as defined in Recital F hereof.

Grace Merger Sub: as defined in Recital F hereof.

Grace Option: as defined in Section 4.4(i) hereof.

Grace Preferred Shares: shares of preferred stock, par value
$1.00 per share, of Grace (other than NY Preferred Shares).

A-6

Grace Proxy Statement: the proxy statement (including all
proxy solicitation materials constituting a part thereof) to be mailed to the
holders of Grace Common Shares and Grace Preferred Shares in connection with
the Grace Meeting.

Grace Rights: the common stock purchase rights of Grace issued
pursuant to the Rights Agreement.

Grace Rights Agreement: the Amended and Restated Rights
Agreement, dated as of June 7, 1990, between Grace and Manufacturers Hanover
Trust Company, as supplemented and amended.

Grace Schedule 14A: the Schedule 14A filed by Grace with the
SEC including the Grace Proxy Statement.

Grace 6% Preferred Shares: Grace Preferred Shares designated
as 6%.

Grace Stock Plans: as defined in Section 5.1(a) hereof.

Grace Surviving Corporation: as defined in Section 1.2(b)
hereof.

Grace Tax Matters Certificate: as defined in Section 5.1(p)
hereof.

Hazardous Substance: any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any substance containing any such substance as a component.

Higher Offer: as defined in Section 6.3 hereof.

HSR Act: the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.

IRS: the United States Internal Revenue Service.

Lease: as defined in Recital D hereof.

knowledge of executive officers: shall mean, in the case of
Grace, the knowledge of each officer of Grace subject to Section 16 of the
Exchange Act pursuant to Rule 16a-2 under the Exchange Act.

Massachusetts Certificate: as defined in Section 1.3 hereof.

material: with respect to any party, material to such party
and its subsidiaries, taken as a whole; provided, however, that when determining
materiality with respect to Grace, only that property, business, financial
condition, results of operations or prospects which are included in or
exclusively related to the NMC Business shall be included.

Material Adverse Effect: with respect to any party, an effect
which would be materially adverse to the properties, business, financial
condition, results of operations or prospects of such party and its subsidiaries
taken as a whole; provided, however, that when

A-7
69

determining Material Adverse Effect with respect to Grace, only that property,
business, financial condition, results of operations or prospects which are
included in or exclusively relate to the NMC Business shall be included.

MBCL: the Massachusetts Business Corporation Law.

Meetings: the Grace Meeting and the Fresenius USA Meeting.

Mergers: as defined in Recital F hereof.

NMC: National Medical Care, Inc., a Delaware corporation and
an indirect wholly owned subsidiary of Grace.

NMC Business: as defined in the Distribution Agreement.

NMC Business Intellectual Property: as defined in Section
5.1(r) hereof.

NMC Group: as defined in the Distribution Agreement.

Newco Board: the Supervisory Board of Newco.

Newco Charter Documents: as defined in Recital B hereof.

Newco Ordinary Share Certificate: certificates for Newco
Ordinary Shares.

Newco Ordinary Shares: ordinary shares in the capital of
Newco.

Newco Pooling Agreement: as defined in Recital B hereof.

Newco Registration Statement: the registration statement filed
with the SEC in connection with the issuance of Newco Ordinary Shares in the
Mergers.

New York Certificate: as defined in Section 1.3 hereof.

NYBCL: the New York Business Corporation Law.

NY Preferred Registration Statement: the registration
statement filed with the SEC in connection with the issuance of NY Preferred
Shares in the Recapitalization.

NY Preferred Shares: shares of a new series of preferred stock
of Grace to be issued in the Recapitalization having the terms set forth in
Exhibit C hereto.

Old Certificates: Old Grace Certificates and Old Fresenius USA
Certificates.

Old Fresenius USA Certificate: a certificate for Fresenius USA
Common Shares or Fresenius USA Preferred Shares.

Old Grace Certificate: a certificate for Grace Common Shares.

A-8
70

Other Agreements: (i) as defined in the Contribution Agreement
plus (ii) as defined in the Distribution Agreement.

Proxy Statements: the Fresenius USA Proxy Statement and the
Grace Proxy Statement.

Recapitalization: as defined in Recital E hereof.

Registration Statements: the Newco Registration Statement, the
Grace-Conn. Registration Statement, the NY Preferred Registration Statement and
the ADR Registration Statement.

Reorganization: the Contribution, the Recapitalization, the
Distribution and the Mergers.

Reorganization Agreement: as defined in the Preamble hereof.

Representatives: with respect to any party, such party's
officers, employees, counsel, accountants and other authorized representatives.

Schedules 14A: the Grace Schedule 14A and the Fresenius USA
Schedule 14A.

SEC: the Securities and Exchange Commission.

SEC Documents: with respect to any party, all filings made by
such party or its Subsidiaries with the SEC since December 31, 1994, including
notes, schedules, amendments and exhibits thereto.

Securities Act: the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

significant subsidiary: as defined in Section 9.9(b) hereof.

subsidiary: as defined in Section 9.9(a) hereof.

Surviving Corporations: the Grace Surviving Corporation and
the Fresenius USA Surviving Corporation.

Takeover Statute: as defined in Section 5.1(n) hereof.

Transaction Agreements: the Reorganization Agreement, the
Newco Pooling Agreement, the Distribution Agreement, the Contribution Agreement
and the Other Agreements.

US GAAP: United States generally accepted accounting
principles consistently applied.

A-9

71
Exhibit A

FINAL COPY

DISTRIBUTION AGREEMENT

BY AND AMONG

X. X. XXXXX & CO.,

X. X. XXXXX & CO.-CONN.,

AND

FRESENIUS AG

DATED AS OF FEBRUARY 4, 1996
72

TABLE OF CONTENTS
PAGE
----

I. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1.01 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 References to Time . . . . . . . . . . . . . . . . . . . . . . 7

II. Certain Transactions Prior to the
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2.01 Certificate of Incorporation;
By-laws; Rights Plan . . . . . . . . . . . . . . . . . . . . 7
2.02 Issuance of Stock . . . . . . . . . . . . . . . . . . . . . . . 7
2.03 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . 7
2.04 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . 7
2.05 Registration and Listing . . . . . . . . . . . . . . . . . . . 8
2.06 Grace-Conn. Board . . . . . . . . . . . . . . . . . . . . . . . 8
2.07 Mergers and Transfers . . . . . . . . . . . . . . . . . . . . . 8
2.08 Intercompany Accounts and
Distribution Payments . . . . . . . . . . . . . . . . . . . . 9

III. The Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.01 Record Date and Distribution Date . . . . . . . . . . . . . . . 9
3.02 The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.03 Delivery of Share Certificates to the
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.04 The Distribution . . . . . . . . . . . . . . . . . . . . . . . 9

IV. Survival and Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 9

4.01 Survival of Agreements . . . . . . . . . . . . . . . . . . . . 9
4.02 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 9
4.03 Procedures for Indemnification for
Third-Party Claims . . . . . . . . . . . . . . . . . . . . . 11
4.04 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . 12
4.05 Compromise of Investigations . . . . . . . . . . . . . . . . . 12

V. Certain Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 12

5.01 Notices to Third Parties . . . . . . . . . . . . . . . . . . . 12
5.02 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . 12
5.03 Intercompany Agreements . . . . . . . . . . . . . . . . . . . . 12
5.04 Guarantee Obligations . . . . . . . . . . . . . . . . . . . . . 13
5.05 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 14
5.06 Representations and Warranties
of Grace-Conn. . . . . . . . . . . . . . . . . . . . . . . . 14

TABLE OF CONTENTS (Continued)

VI. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

6.01 Provision of Corporate Records . . . . . . . . . . . . . . . . 14
6.02 Access to Information . . . . . . . . . . . . . . . . . . . . . 15
6.03 Production of Witnesses . . . . . . . . . . . . . . . . . . . . 16
6.04 Retention of Records . . . . . . . . . . . . . . . . . . . . . 16
6.05 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 17
6.06 Cooperation with Respect to
Government Reports and Filings . . . . . . . . . . . . . . . 17

VII. No Representations or Warranties . . . . . . . . . . . . . . . . . . . . . . . 17

7.01 No Representations or Warranties . . . . . . . . . . . . . . . 17

VIII. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

8.01 Conditions to Obligations . . . . . . . . . . . . . . . . . . . 18
8.02 Use of Grace Name and Xxxx . . . . . . . . . . . . . . . . . . 19
8.03 Complete Agreement . . . . . . . . . . . . . . . . . . . . . . 19
8.04 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.05 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.07 Amendment and Modification . . . . . . . . . . . . . . . . . . 20
8.08 Successors and Assigns; No Third-Party
Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . 20
8.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 21
8.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.12 References; Construction . . . . . . . . . . . . . . . . . . . 21
8.13 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 21

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

EXHIBIT A Tax Sharing Agreement

Schedule 2.08 Certain Intercompany Account Transactions
74
DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT (this "Agreement"), dated
February 4, 1996, by and between X. X. Xxxxx & Co., a New York corporation
("Grace"), and X. X. Xxxxx & Co.-Xxxx., a Connecticut corporation and a
wholly owned subsidiary of Grace ("Grace- Conn."), and Fresenius
AG, an Aktiengesellschaft organized under the laws of the Federal Republic of
Germany ("Fresenius AG").

RECITALS

A. The Reorganization Agreement. Simultaneously herewith, Grace
and Fresenius AG are entering into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") and, prior to the Effective Time, intend to
consummate the transactions contemplated hereby.

B. The Contribution. Prior to the Effective Time, Fresenius AG
intends to contribute its worldwide dialysis business to SP, as provided in the
Contribution Agreement, and to retain and lease to SP certain real property and
buildings in the Federal Republic of Germany pursuant to a lease consistent with
the terms set forth in Exhibit B to the Contribution Agreement and to retain and
license to Newco its name and certain derived marks pursuant to a license
consistent with the terms set forth in Exhibit C to the Contribution Agreement.

C. Newco. In connection with the Contribution, Fresenius AG
intends that SP shall convert to an Aktiengesellschaft, pursuant to German law,
and to become "Newco," consistent with the terms of the Reorganization
Agreement.

D. The Distribution. Immediately prior to the Effective Time,
Grace intends to transfer to (or retain in) Grace- Conn. all non-healthcare
assets and liabilities, its interests in the Amicon bioseparations business and
GN Holdings, Inc. and certain other assets, as contemplated by this Agreement,
and to effect a distribution to its common shareholders of all of its equity
interest in Grace-Conn.

E. The Recapitalization. Following the Distribution and
immediately prior to the Effective Time, Grace intends to consummate the
Recapitalization in which each holder of a Grace Common Share shall hold,
immediately thereafter, a Grace Common Share and one one-hundredth of a
NY Preferred Share.

F. The Mergers. At the Effective Time, the parties intend to
effect a merger of a wholly owned New York corporate subsidiary of Newco with
and into Grace, with Grace being the surviving corporation. Also at the
Effective Time, the parties intend to effect a merger of a wholly owned
Massachusetts corporate subsidiary of Newco with and into Fresenius USA, with
Fresenius USA being the surviving corporation.

Agreements may be consummated; and (iii) the parties shall cooperate with one
another with respect to the foregoing.

H. Intention of the Parties. It is the intention of the parties
to the Reorganization Agreement that for United States federal income tax
purposes (a) the Distribution shall qualify as a tax-free distribution under the
Code, (b) each of the Mergers shall qualify as a "reorganization" within the
meaning of Section 368(a) of the Code, (c) the Contribution shall qualify as a
tax-free exchange under the Code and (d) the Recapitalization shall be tax-free
to Grace under the Code.

NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01 GENERAL. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

Affiliate: with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person; provided,
however, that for purposes of this Agreement, no member of either Group shall
be deemed to be an Affiliate of any member of the other Group.

Agent: the distribution agent to be appointed by Grace to
distribute the shares of Grace-Conn. Common Stock pursuant to the Distribution.

Agreement: as defined in the preamble hereof.

Asset: any and all assets and properties, tangible or
intangible, including, without limitation, the following: (i) cash, notes and
accounts and notes receivable (whether current or non-current); (ii)
certificates of deposit, banker's acceptances, stock, debentures, evidences of
indebtedness, certificates of interest or participation in profit-sharing
agreements, collateral-trust certificates, preorganization certificates or
subscriptions, transferable shares, investment contracts, voting-trust
certificates, fractional undivided interests in oil, gas or other mineral
rights, puts, calls, straddles, options and other securities of any kind; (iii)
intangible property rights, inventions, discoveries, know-how, U.S. and foreign
patents and patent applications, trade secrets, confidential information,
registered and unregistered trademarks, service marks, service names, trade
styles and trade names and associated goodwill; statutory, common law and
registered copyrights; applications for any of the foregoing, rights to use the
foregoing and other rights in, to and under the foregoing; (iv) rights under
leases, contracts, licenses, permits, distribution arrangements, sales and
purchase agreements, other agreements and business arrangements;

-2-

(v) real estate and buildings and other improvements thereon; (vi) leasehold
improvements, fixtures, trade fixtures, machinery, equipment (including
transportation and office equipment), tools, dies and furniture; (vii) office
supplies, production supplies, spare parts, other miscellaneous supplies and
other tangible property of any kind; (viii) computer equipment and software;
(ix) raw materials, work-in-process, finished goods, consigned goods and other
inventories; (x) prepayments or prepaid expenses; (xi) claims, causes of
action, choses in action, rights under express or implied warranties, rights of
recovery and rights of setoff of any kind; (xii) the right to receive mail,
payments on accounts receivable and other communications; (xiii) lists of
customers, records pertaining to customers and accounts, personnel records,
lists and records pertaining to customers, suppliers and agents, and books,
ledgers, files and business records of every kind; (xiv) advertising materials
and other printed or written materials; (xv) goodwill as a going concern
and other intangible properties; (xvi) employee contracts, including any rights
thereunder to restrict an employee from competing in certain respects; and
(xvii) licenses and authorizations issued by any governmental authority.

Business: the Grace-Conn. Business or the NMC Business.

Code: the Internal Revenue Code of 1986, as amended, or any
successor legislation.

Contribution: as defined in the Reorganization Agreement.

Contribution Agreement: as defined in the Reorganization
Agreement.

Debt: as defined in the Reorganization Agreement.

Distribution: the distribution of Grace-Conn. Common Stock to
holders of shares of Grace Common Stock to be effected pursuant to Article III
on the basis of one share of Grace-Conn. Common Stock for each share of Grace
Common Stock held of record as of the Record Date.

Distribution Date: the date as of which the Distribution shall
be effected, to be determined by the Board of Directors of Grace consistent with
the Reorganization Agreement.

Effective Time: as defined in the Reorganization Agreement.

Environmental Law: as defined in the Reorganization Agreement.

Exchange Act: the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.

Foreign Exchange Rate: with respect to any currency other than
United States dollars as of any date, the rate on such date at which such
currency may be exchanged for United States dollars as quoted in The Wall Street
Journal.

Fresenius: each of Fresenius AG and Fresenius USA.

Fresenius AG: as defined in the preamble to this Agreement.

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Fresenius USA: as defined in the Reorganization Agreement.

FWD Business: as defined in the Reorganization Agreement.

Grace: as defined in the preamble to this Agreement.

Grace Common Stock: the common stock, par value $1.00 per
share, of Grace.

Grace-Conn.: as defined in the preamble to this Agreement.

Grace-Conn. Assets: all of the Assets owned by Grace or its
Subsidiaries immediately prior to the Distribution Date, other than any NMC
Assets.

Grace-Conn. Business: all of the businesses and operations
conducted by Grace and its Subsidiaries at any time, whether prior to, on or
after the Distribution Date, other than the NMC Business.

Grace-Conn. Common Stock: the common stock of Grace-Conn.,
together with the Grace-Conn. Rights.

Grace-Conn. Group: Grace-Conn. and the Grace-Conn.
Subsidiaries.

Grace-Conn. Indemnitees: Grace-Conn., each Affiliate of
Grace-Conn. and each of their respective Representatives and each of the heirs,
executors, successors and assigns of any of the foregoing.

Grace-Conn. Rights: stock purchase rights of Grace-Conn.

Grace-Conn. Subsidiaries: all direct and indirect Subsidiaries
of Grace, other than NMC and any NMC Subsidiary, and all Transferred Companies.

Grace Tax Sharing Agreement: a tax sharing agreement between
Grace and Grace-Conn. substantially in the form attached hereto as Exhibit B,
with such changes as may be mutually satisfactory to Grace, Grace-Conn. and
Fresenius.

Group: the NMC Group or the Grace-Conn. Group.

Indemnifiable Losses: all losses, Liabilities, damages, claims,
demands, judgments or settlements of any nature or kind, known or unknown,
fixed, accrued, absolute or contingent, liquidated or unliquidated, including
all reasonable costs and expenses (legal, accounting or otherwise as such
costs are incurred) relating thereto, suffered (and not actually reimbursed by
insurance proceeds) by an Indemnitee, including any reasonable costs or
expenses of enforcing any indemnity hereunder.

Indemnifying Party: a Person who or which is obligated under
this Agreement to provide indemnification.

Indemnitee: a Person who or which may seek indemnification
under this Agreement.

-4-

Indemnity Payment: an amount that an Indemnifying Party is
required to pay to or in respect of an Indemnitee pursuant to Article IV.

Information: all records, books, contracts, instruments,
computer data and other data and information.

Information Statement: the information statement to be included
in the Registration Statement and sent to Grace shareholders in connection with
the Distribution.

Liabilities: all debts, liabilities and obligations, whether
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, and whether or not the
same would properly be reflected on a balance sheet.

Litigation Matters: actual, threatened or future litigations,
investigations, claims or other legal matters that have been or may be asserted
against, or otherwise adversely affect, NMC and/or Grace-Conn. (or members of
either Group).

Material Adverse Effect: as defined in the Reorganization
Agreement.

NMC: National Medical Care, Inc., a Delaware corporation and an
indirect wholly owned subsidiary of Grace.

NMC Assets: (i) all of the Assets owned by Grace or its
Subsidiaries immediately prior to the Distribution Date and predominantly used
or useful in or predominantly relating to the NMC Business, excluding items to
be retained by or transferred to any member of the Grace-Conn. Group pursuant to
the Reorganization Agreement or any Other Agreement, and (ii) all Assets that
have been or are to be transferred to any member of the NMC Group pursuant to
the Reorganization Agreement or any Other Agreement; provided that all cash
and marketable securities held by any member of the NMC Group prior to the
Distribution shall be Grace-Conn. Assets.

NMC Business: all of the worldwide health care businesses and
operations conducted by Grace and its Subsidiaries at any time, whether prior
to, on or after the Distribution Date, other than the Transferred Operations.

NMC Group: Grace, NMC and the NMC Subsidiaries.

NMC Indemnitees: Newco, Grace, NMC, each Affiliate of NMC and
each of their respective Representatives and each of the heirs, executors,
successors and assigns of any of the foregoing.

NMC Subsidiaries: all direct and indirect Subsidiaries of Grace
through which Grace conducts the NMC business, other than Transferred Companies.

Newco: as defined in the Reorganization Agreement.

NY Preferred Registration Statement: as defined in the
Reorganization Agreement.

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NY Preferred Share: as defined in the Reorganization Agreement.

Other Agreements: an employee benefits agreement, restructuring
agreements, an insurance procedures agreement, the Grace Tax Sharing Agreement
and the other agreements entered into or to be entered into in connection with
the Distribution as contemplated by Section 2.03.

Person: an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.

Privileged Information: with respect to either Group,
Information regarding a member of such Group, or any of its operations, Assets
or Liabilities (whether in documents or stored in any other form or known to its
employees or agents) that is or may be protected from disclosure pursuant to the
attorney-client privilege, the work product doctrine or other applicable
privileges, that a member of the other Group may come into possession of or
obtain access to pursuant to this Agreement or otherwise.

Proxy Statement: the Grace proxy statement provided for in the
Reorganization Agreement.

Recapitalization: as defined in the Reorganization Agreement.

Record Date: the moment immediately prior to the close of
business on the date to be determined by the Board of Directors of Grace
consistent with the Reorganization Agreement as the record date for determining
shareholders of Grace entitled to receive the Distribution.

Registration Statement: a registration statement on Form 10 to
effect the registration of the Grace-Conn. Common Stock pursuant to the Exchange
Act.

Reorganization Agreement: as defined in the recitals to this
Agreement.

Representative: with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.

SEC: the Securities and Exchange Commission.

Securities Act: the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.

SP: as defined in the Contribution Agreement.

Subsidiary: with respect to any specified Person, (i) any
corporation or other legal entity of which such Person or any of its
subsidiaries controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of members to
the board of directors or similar governing body and (ii) any corporation,
partnership or other business entity, in which such Person has owned or shall

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own any equity interest or other investment and which predominantly relates to
the business and operations conducted by such Person's Group.

Tax: as defined in the Grace Tax Sharing Agreement.

Third-Party Claim: any claim, suit, derivative suit,
arbitration, inquiry, proceeding or investigation by or before any court, any
governmental or other regulatory or administrative agency or commission or any
arbitration tribunal asserted by a Person who or which is neither a party hereto
nor an Affiliate of a party hereto.

Transferred Companies: Amicon, Inc., GN Holdings, Inc. and its
Subsidiaries and the other Subsidiaries of Grace which conduct the business of
Amicon.

Transferred Operations: the businesses, operations, Assets and
Liabilities of the Transferred Companies.

SECTION 1.02 REFERENCES TO TIME. All references in this
Agreement to times of the day shall be to New York City time.

ARTICLE II

CERTAIN TRANSACTIONS PRIOR TO THE DISTRIBUTION DATE

SECTION 2.01 CERTIFICATE OF INCORPORATION; BY-LAWS; RIGHTS
PLAN. Prior to the Distribution Date, Grace-Conn. may be reorganized (through
merger, asset transfer or other reorganization transaction) such that
Grace-Conn. shall be a Delaware corporation or a subsidiary of a Delaware
holding company or its Assets transferred in their entirety to a Delaware
corporation, in which case all references to Grace-Conn. herein shall include
any such successor corporation or holding company. In addition, prior to the
Distribution Date, the parties hereto shall take all action necessary so that,
at the Distribution Date, Grace-Conn.'s name shall be "X. X. Xxxxx & Co."; the
Certificate of Incorporation and By-laws of Grace-Conn. shall be amended as
specified by Grace prior to the Distribution Date; and Grace-Conn. shall adopt a
rights plan in the form as specified by Grace prior to the Distribution Date.

SECTION 2.02 ISSUANCE OF STOCK. Prior to the Distribution Date,
the parties hereto shall take all steps necessary so that, prior to the
Distribution, the number of shares of Grace-Conn. Common Stock outstanding and
held by Grace shall equal the number of shares of Grace Common Stock outstanding
on the Record Date.

SECTION 2.03 OTHER AGREEMENTS. Each of Grace and Grace-Conn.
shall enter into, or cause the appropriate members of the Group of which it is a
member to enter into, the Tax Sharing Agreement and Other Agreements as may be
advisable in connection with the Distribution including, without limitation,
agreements with respect to employee benefits, restructuring, insurance
procedures and other matters, all such Other Agreements to be on terms
acceptable to Grace and Fresenius prior to the Distribution Date.

SECTION 2.04 CAPITAL STRUCTURE. (a) It is intended that, prior
to the Distribution, each of Grace and/or the NMC Group, on the one hand, and
the Grace-Conn.

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Group, on the other hand, shall obtain new credit facilities or issue new debt
instruments or securities on terms satisfactory to Grace, and to the extent
necessary to permit and enable the Distribution and the other transactions
contemplated hereby, including, without limitation, the transactions
contemplated by this Section and Section 2.08 below, to be consummated
consistent with the Reorganization Agreement; and each of the parties hereto
agrees that it shall use reasonable efforts, and shall cooperate with the other
party's efforts, to effect the foregoing.

(b) Prior to or concurrent with the Distribution, Grace and/or
NMC shall take all action including, without limitation, the incurrence of
additional debt to be arranged in connection with the Reorganization and the
payment of cash, as provided in Section 2.08, so that, upon and giving effect to
the consummation of the Distribution, Grace's consolidated Debt shall be of an
aggregate amount consistent with the Reorganization Agreement.

SECTION 2.05 REGISTRATION AND LISTING. Prior to the
Distribution Date:

(a) The parties shall take such efforts regarding the
Registration Statement and the Proxy Statement, as is provided in the
Reorganization Agreement. After the Registration Statement becomes effective,
Grace shall cause the Information Statement to be delivered to all holders of
record of Grace Common Stock as of the Record Date.

(b) The parties hereto shall use reasonable efforts to take all
such action as may be necessary or appropriate under state securities and blue
sky laws in connection with the transactions contemplated by this Agreement.

(c) Grace-Conn. shall prepare, and Grace-Conn. shall file and
seek to make effective, an application for the listing of the Grace-Conn. Common
Stock on the NYSE, subject to official notice of issuance, or for the inclusion
of quotations for the Grace-Conn. Common Stock on the Nasdaq Stock Market.

(d) The parties hereto shall cooperate in preparing, filing
with the SEC and causing to become effective any registration statements or
amendments thereto which are necessary or appropriate in order to effect the
transactions contemplated hereby or to reflect the establishment of, or
amendments to, any employee benefit plans contemplated hereby or by the
Employee Benefits Agreement requiring registration under the Securities Act.

SECTION 2.06 GRACE-CONN. BOARD. Prior to the Distribution Date,
the parties hereto shall take all steps necessary so that, effective immediately
after the Distribution, the Board of Directors of Grace-Conn. shall be comprised
of those individuals so named in the Information Statement.

SECTION 2.07 MERGERS AND TRANSFERS. Prior to or as of the
Distribution Date, Grace and Grace-Conn. shall cause to be consummated the
transactions that are to take place prior to or as of the Distribution Date
pursuant to the Other Agreements and internal reorganization transactions as may
be necessary or advisable, and consistent with the Reorganization Agreement, in
connection with the Distribution (including, without limitation, the transfer to
Grace-Conn. of the Grace-Conn. Preferred Stock currently held by Grace) so that,
at the Effective Time, all NMC Assets and the NMC Business are owned by the NMC
Group.

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SECTION 2.08 INTERCOMPANY ACCOUNTS AND DISTRIBUTION PAYMENTS.
Prior to or as of the Distribution Date, the parties shall pay or otherwise
settle intercompany accounts between members of the Grace-Conn. Group and
members of the NMC Group, and Grace or its Subsidiary shall make a cash payment
to Grace-Conn., all as more specifically provided in Schedule 2.08.

ARTICLE III

THE DISTRIBUTION

SECTION 3.01 RECORD DATE AND DISTRIBUTION DATE. Subject to the
satisfaction of the conditions set forth in Section 8.01(a), the Board of
Directors of Grace, in its sole discretion and consistent with the
Reorganization Agreement, shall establish the Record Date and the Distribution
Date and any appropriate procedures in connection with the Distribution.

SECTION 3.02 THE AGENT. Prior to the Distribution Date, Grace
shall enter into an agreement with the Agent providing for, among other things,
the payment of the Distribution to the holders of Grace Common Stock in
accordance with this Article III.

SECTION 3.03 DELIVERY OF SHARE CERTIFICATES TO THE AGENT. Prior
to the Distribution Date, Grace shall deliver to the Agent a share certificate
representing all of the outstanding shares of Grace-Conn. Common Stock to be
distributed in connection with the payment of the Distribution. After the
Distribution Date, upon the request of the Agent, Grace-Conn. shall provide all
certificates for shares of Grace-Conn. Common Stock that the Agent shall
require in order to effect the Distribution.

SECTION 3.04 THE DISTRIBUTION. Subject to the terms and
conditions of this Agreement, Grace shall instruct the Agent to distribute, as
of the Distribution Date, one share of Grace-Conn. Common Stock in respect of
each share of Grace Common Stock held by holders of record of Grace Common Stock
on the Record Date.

ARTICLE IV

SURVIVAL AND INDEMNIFICATION

SECTION 4.01 SURVIVAL OF AGREEMENTS. All covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Distribution Date.

SECTION 4.02 INDEMNIFICATION. (a) Except as specifically
otherwise provided in the Other Agreements, Grace-Conn. shall indemnify, defend
and hold harmless the NMC Indemnitees from and against (1) all Indemnifiable
Losses of Grace (including, without limitation, Indemnifiable Losses of the
Grace-Conn. Group), whether such Indemnifiable Losses relate to events,
occurrences or circumstances occurring or existing, or whether such
Indemnifiable Losses are asserted, before or after the Distribution Date,
including, without limitation, Indemnifiable Losses relating to the manufacture
or sale of asbestos-containing materials by any Grace-Conn. Business or relating
to any liability of the Grace-Conn. Business under Environmental Law, other than
those Indemnifiable Losses

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arising from or relating to the NMC Business; (2) all Indemnifiable Losses
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact, or omission or alleged omission to state a material fact
required to be stated, in the Registration Statement, the NY Preferred
Registration Statement or the Proxy Statement or any preliminary or final form
thereof or any amendment thereto, or necessary to make the statements therein
not misleading, except that such indemnifications shall not apply to any
Indemnifiable Losses that arise out of or are based upon any statement or
omission, or alleged statement or omission, in any of the portions of the
Registration Statement, the NY Preferred Registration Statement or the Proxy
Statement, or any preliminary or final form thereof or any amendment
thereto, that are supplied by Fresenius; (3) all Indemnifiable Losses arising
from or relating to all existing litigation brought by pre-Reorganization
shareholders of Grace acting in such capacity and all litigation to be brought
by pre-Reorganization shareholders of Grace acting in such capacity and relating
to the Reorganization; and (4) all Indemnifiable Losses arising out of or
relating to the new credit facilities, debt instruments and securities of the
Grace-Conn. Group referred to in Section 2.04 above.

(b) Except as specifically otherwise provided in the Other
Agreements, Grace shall indemnify, defend and hold harmless the Grace-Conn.
Indemnitees from and against (1) all Indemnifiable Losses arising from or
relating to the NMC Business, whether such Indemnifiable Losses relate to
events, occurrences or circumstances occurring or existing, or whether such
Indemnifiable Losses are asserted, before or after the Distribution Date,
including, without limitation, all Indemnifiable Losses relating to compliance
or non-compliance with United States food and drug law, medical and medicare
billing and reimbursement law and other health care matters and all
Indemnifiable Losses arising from or relating to all aspects of any ongoing
investigations of the NMC Business by the Office of the Inspector General of
the United States Department of Health and Human Services (and the various
United States Attorneys' Offices), by the United States Attorney's Office for
the District of New Jersey, by the United States Attorney's Office for the
District of Virginia and by the United States Food and Drug Administration; (2)
all Indemnifiable Losses arising out of or based upon any untrue statement or
alleged untrue statement of a material fact, or omission or alleged omission to
state a material fact required to be stated, in any portion of the Registration
Statement, the NY Preferred Registration Statement or the Proxy Statement
supplied by Fresenius, or any preliminary or final form thereof or any
amendment thereto, or necessary to make the statements therein not misleading;
and (3) all Indemnifiable Losses arising out of or relating to the new credit
facilities, debt instruments and securities of Grace and the NMC Group referred
to in Section 2.04 above.

(c) If any Indemnity Payment required to be made hereunder or
under any Other Agreement is denominated in a currency other than United States
dollars, such payment shall be made in United States dollars and the amount
thereof shall be computed using the Foreign Exchange Rate for such currency
determined as of the date that notice of the claim with respect which to such
Indemnity Payment is made is given by or on behalf of the Indemnitee to Grace or
Grace-Conn., as the case may be.

(d) Notwithstanding anything to the contrary set forth herein,
indemnification relating to any arrangements between any member of the NMC Group
and any member of the Grace-Conn. Group (or any unit of the Grace-Conn.
Business) for the provision after the Distribution of goods and services in the
ordinary course shall be governed by the terms of such arrangements and not by
this Section.

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SECTION 4.03 PROCEDURES FOR INDEMNIFICATION FOR THIRD-PARTY
CLAIMS. (a) Grace-Conn. shall, and shall cause the other Grace-Conn. Indemnitees
to, notify Grace in writing promptly after learning of any Third-Party Claim for
which any Grace-Conn. Indemnitee intends to seek indemnification from Grace
under this Agreement. Grace shall, and shall cause the other NMC Indemnitees to,
notify Grace-Conn. in writing promptly after learning of any Third-Party Claim
for which any NMC Indemnitee intends to seek indemnification from Grace-Conn.
under this Agreement. The failure of any Indemnitee to give such notice shall
not relieve any Indemnifying Party of its obligations under this Article except
to the extent that such Indemnifying Party or its Affiliate is actually
prejudiced by such failure to give notice. Such notice shall describe such
Third-Party Claim in reasonable detail considering the Information provided to
the Indemnitee.

(b) Except as otherwise provided in subsection (c) of this
Section, an Indemnifying Party may, by notice to the Indemnitee and to
Grace-Conn., if Grace is the Indemnifying Party, or to the Indemnitee and Grace,
if Grace-Conn. is the Indemnifying Party, at any time after receipt by such
Indemnifying Party of such Indemnitee's notice of a Third-Party Claim, undertake
(itself or through another member of the Group of which the Indemnifying Party
is a member) the defense or settlement of such Third-Party Claim. If an
Indemnifying Party undertakes the defense of any Third-Party Claim, such
Indemnifying Party shall thereby admit its obligation to indemnify the
Indemnitee against such Third-Party Claim, and such Indemnifying Party shall
control the investigation and defense or settlement thereof, and the Indemnitee
may not settle or compromise such Third-Party Claim, except that such
Indemnifying Party shall not require any Indemnitee, without its prior written
consent, to take or refrain from taking any action in connection with such
Third-Party Claim, or make any public statement, which such Indemnitee
reasonably considers to be against its interests, nor shall the Indemnifying
Party, without the prior written consent of the Indemnitee and of Grace-Conn.,
if the Indemnitee is a Grace-Conn. Indemnitee, or the Indemnitee and of Grace,
if the Indemnitee is a NMC Indemnitee, consent to any settlement that does not
include as a part thereof an unconditional release of the Indemnitees from
liability with respect to such Third-Party Claim or that requires the Indemnitee
or any of its Representatives or Affiliates to make any payment that is not
fully indemnified under this Agreement or to submit to any non-monetary remedy;
and subject to the Indemnifying Party's control rights, as specified herein, the
Indemnitees may participate in such investigation and defense, at their own
expense. Following the provision of notices to the Indemnifying Party, until
such time as an Indemnifying Party has undertaken the defense of any Third-Party
Claim as provided herein, such Indemnified Party shall control the investigation
and defense or settlement thereof, without prejudice to its right to seek
indemnification hereunder.

(c) If an Indemnitee reasonably determines that there may be
legal defenses available to it that are different from or in addition to those
available to its Indemnifying Party which make it inappropriate for the
Indemnifying Party to undertake the defense or settlement thereof, then such
Indemnifying Party shall not be entitled to undertake the defense or settlement
of such Third-Party Claim; and counsel for the Indemnifying Party shall be
entitled to conduct the defense of such Indemnifying Party and counsel for the
Indemnified Party shall be entitled to conduct the defense of such Indemnitee,
it being understood that both such counsel shall cooperate with each other to
conduct the defense or settlement of such action as efficiently as possible.

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(d) In no event shall an Indemnifying Party be liable for the
fees and expenses of more than one counsel for all Indemnitees in connection
with any one action, or separate but similar or related actions, in the same
jurisdiction arising out of the same general allegations or circumstances.

(e) Grace-Conn. shall, and shall cause the other Grace-Conn.
Indemnitees to, and Grace shall, and shall cause the other NMC Indemnitees to,
make available to each other, their counsel and other Representatives, all
information and documents reasonably available to them which relate to any
Third-Party Claim, and otherwise cooperate as may reasonably be required in
connection with the investigation, defense and settlement thereof. Any joint
defense agreement entered into by Grace-Conn. or Grace with any third party
relating to any Third-Party Claim shall provide that Grace-Conn. or Grace may,
if requested, provide information obtained through any such agreement to the
Grace-Conn. Indemnitees or the Grace Indemnitees.

SECTION 4.04 REMEDIES CUMULATIVE. The remedies provided in this
Article IV shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any other remedies against any
Indemnifying Party. However, the procedures set forth in Section 4.03 shall be
the exclusive procedures governing any indemnity action brought under this
Agreement or otherwise and relating to a Third-Party Claim, except as otherwise
specifically provided in any of the Other Agreements.

SECTION 4.05 COMPROMISE OF INVESTIGATIONS. NMC and the members
of the NMC Group shall not settle or compromise any of the matters referred to
in Section 4.02(b)(1) above on terms that do not include as a part thereof an
unconditional release of the members of the Grace-Conn. Group from all liability
with respect thereto.

ARTICLE V

CERTAIN ADDITIONAL COVENANTS

SECTION 5.01 NOTICES TO THIRD PARTIES. In addition to the
actions described in Section 5.02, the members of the NMC Group and the members
of the Grace-Conn. Group shall cooperate to make all other filings and give
notice to and obtain consents from all third parties that may reasonably be
required to consummate the transactions contemplated by this Agreement and the
Other Agreements.

SECTION 5.02 LICENSES AND PERMITS. Each party hereto shall
cause the appropriate members of its Group to prepare and file with the
appropriate licensing and permitting authorities applications for the transfer
or issuance, as may be necessary or advisable in connection with the
Distribution, to its Group of all material governmental licenses and permits
required for the members of its Group to operate its Business after the
Distribution. The members of the Grace-Conn. Group and the members of the NMC
Group shall cooperate and use all reasonable efforts to secure the transfer or
issuance of the licenses and permits.

SECTION 5.03 INTERCOMPANY AGREEMENTS. All contracts, licenses,
agreements, commitments or other arrangements, formal or informal, between any
member of

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the NMC Group, on the one hand, and any member of the Grace-Conn. Group, on the
other, in existence as of the Distribution Date, pursuant to which any member
of either Group provides to any member of the other Group services (including,
without limitation, management, administrative, legal, financial, accounting,
data processing, insurance, or technical support), or the use of any Assets of
any member of the other Group, or the secondment of any employee, or pursuant
to which rights, privileges or benefits are afforded to members of either Group
as Affiliates of the other Group, shall terminate as of the close of business
on the day prior to the Distribution Date, except as specifically provided
herein or in the Other Agreements. From and after the Distribution Date, no
member of either Group shall have any rights under any such contract, license,
agreement, commitment or arrangement with any member of the other Group, except
as specifically provided herein or in the Other Agreements.

SECTION 5.04 GUARANTEE OBLIGATIONS. (a) Grace and Grace-Conn.
shall cooperate, and shall cause their respective Groups to cooperate, to
terminate, or to cause a member of the NMC Group to be substituted in all
respects for any member of the Grace-Conn. Group in respect of, all obligations
of any member of the Grace-Conn. Group under any loan, financing, lease,
contract, or other obligation in existence as of the Distribution Date
pertaining to the NMC Business for which such member of the Grace-Conn. Group
may be liable, as guarantor, original tenant, primary obligor or otherwise. If
such a termination or substitution is not effected by the Distribution Date, (1)
Grace shall indemnify and hold harmless the Grace-Conn. Indemnitees for any
Indemnifiable Loss arising from or relating thereto, and (2) without the prior
written consent of the Chief Financial Officer, Treasurer or any Assistant
Treasurer of Grace-Conn., from and after the Distribution Date, Grace shall not,
and shall not permit any member of the NMC Group or any of its Affiliates to,
renew or extend the term of, increase its obligations under, or transfer to a
third party, any loan, lease, contract or other obligation for which any member
of the Grace-Conn. Group is or may be liable unless all obligations of the
Grace-Conn. Group with respect thereto are thereupon terminated by documentation
reasonably satisfactory in form and substance to the Chief Financial Officer,
Treasurer or any Assistant Treasurer of Grace-Conn.

(b) Grace and Grace-Conn. shall cooperate, and shall cause
their respective Groups to cooperate, to terminate, or to cause a member of the
Grace-Conn. Group to be substituted in all respects for any member of the NMC
Group in respect of, all obligations of any member of the NMC Group under any
loan, financing, lease, contract or other obligation in existence as of the
Distribution Date pertaining to the Grace-Conn. Business for which such member
of the NMC Group may be liable, as guarantor, original tenant, primary obligor
or otherwise. If such a termination or substitution is not effected by the
Distribution Date, (1) Grace-Conn. shall indemnify and hold harmless the NMC
Indemnitees for any Indemnifiable Loss arising from or relating thereto, and
(2) without the prior written consent of the Chief Financial Officer, Treasurer
or any Assistant Treasurer of NMC, from and after the Distribution Date,
Grace-Conn. shall not, and shall not permit any member of the Grace-Conn. Group
to, renew or extend the term of, increase its obligations under, or transfer to
a third party, any loan, lease, contract or other obligation for which any
member of the NMC Group is or may be liable unless all obligations of the NMC
Group with respect thereto are thereupon terminated by documentation reasonably
satisfactory in form and substance to the Chief Financial Officer, Treasurer or
any Assistant Treasurer of NMC.

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SECTION 5.05 FURTHER ASSURANCES. In addition to the actions
specifically provided for elsewhere in this Agreement, each of the parties
hereto shall use reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things reasonably necessary, proper or
advisable under applicable laws, regulations and agreements to consummate and
make effective the transactions contemplated by this Agreement including,
without limitation, Asset transfers and debt and cash balances of the other
party contemplated thereby. Without limiting the foregoing, each party hereto
shall cooperate with the other party, and execute and deliver, or use reasonable
efforts to cause to be executed and delivered, all instruments, and to make all
filings with, and to obtain all consents, approvals or authorizations of, any
governmental or regulatory authority or any other Person under any permit,
license, agreement, indenture or other instrument, and take all such other
actions as such party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this Agreement and the
Other Agreements, in order to effectuate the provisions and purposes of this
Agreement.

SECTION 5.06 REPRESENTATIONS AND WARRANTIES OF GRACE-CONN.
Grace-Conn. hereby represents and warrants to Fresenius AG that:

(a) Corporate Organization and Qualification. Grace-Conn. is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization and is in good standing as
a foreign corporation in each jurisdiction where the properties owned,
leased or operated, or the business conducted, by it requires such
qualification, except for any such failure so to qualify or be in good
standing which, when taken together with all other such failures, is
not reasonably likely to have a Material Adverse Effect with respect to
Grace-Conn.

Grace-Conn. has the requisite corporate power and authority to carry on
its business as it is now being conducted.

(b) Corporate Authority. Grace-Conn. has the requisite
corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. This Agreement is
a valid and binding agreement of Grace-Conn. enforceable in accordance
with its terms.

(c) No Violations. The execution, delivery and performance by
Grace-Conn. of this Agreement does not or will not, and the
consummation by it of any of the transactions contemplated hereby will
not, constitute or result in a breach or violation of, or a default
under, its Certificate of Incorporation or By-laws.

ARTICLE VI

ACCESS TO INFORMATION

SECTION 6.01 PROVISION OF CORPORATE RECORDS. Prior to or as
promptly as practicable after the Distribution Date, Grace shall deliver to
Grace-Conn. all corporate books and records of the Grace-Conn. Group in its
possession and copies of the relevant portions of all corporate books and
records of the NMC Group relating directly and

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primarily to the Grace-Conn. Assets, the Grace-Conn. Business, or the
Liabilities of the Grace-Conn. Group, including, in each case, all active
agreements, active litigation files and government filings. From and after the
Distribution Date, all such books, records and copies shall be the property of
Grace-Conn. Prior to or as promptly as practicable after the Distribution Date,
Grace-Conn. shall deliver to Grace all corporate books and records of the NMC
Group in its possession and copies of the relevant portions of all corporate
books and records of the Grace-Conn. Group relating directly and primarily to
the NMC Assets, the NMC Business, or the Liabilities of the NMC Group,
including, in each case, all active agreements, active litigation files and
government filings. From and after the Distribution Date, all such books,
records and copies shall be the property of Grace.

SECTION 6.02 ACCESS TO INFORMATION. From and after the
Distribution Date, each of Grace and Grace-Conn. shall afford to the other and
to the other's Representatives reasonable access and duplicating rights during
normal business hours to all Information within the possession or control of
such party's Group relating to the other party's Group's pre-Distribution
business, Assets or Liabilities or relating to or arising in connection with
the relationship between the Groups on or prior to the Distribution Date,
insofar as such access is reasonably required for a reasonable purpose, subject
to the provisions below regarding Privileged Information. Without limiting the
foregoing, Information may be requested under this Section 6.02 for audit,
accounting, claims, litigation and Tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations.

In furtherance of the foregoing:

(a) Each party hereto acknowledges that: (i) Each of Grace and
Grace-Conn. (and the members of the NMC Group and the Grace-Conn.
Group, respectively) has or may obtain Privileged Information; (ii)
there are a number of Litigation Matters affecting each or both of
Grace and Grace-Conn.; (iii) both Grace and Grace-Conn. have a common
legal interest in Litigation Matters, in the Privileged Information,
and in the preservation of the confidential status of the Privileged
Information, in each case relating to pre-Distribution business of the
NMC Group or the Grace-Conn. Group or relating to or arising in
connection with the relationship between the Groups on or prior to the
Distribution Date; and (iv) both Grace and Grace-Conn. intend that the
transactions contemplated hereby and by the Reorganization Agreement
and the Other Agreements and any transfer of Privileged Information in
connection therewith shall not operate as a waiver of any potentially
applicable privilege.

(b) Each of Grace and Grace-Conn. agrees, on behalf of itself
and each member of the Group of which it is a member, not to disclose
or otherwise waive any privilege attaching to any Privileged
Information relating to pre-Distribution business of the Grace-Conn.
Group or the NMC Group, respectively, or relating to or arising in
connection with the relationship between the Groups on or prior to the
Distribution Date, without providing prompt written notice to and
obtaining the prior written consent of the other, which consent shall
not be unreasonably withheld and shall not be withheld if the other
party certifies that such disclosure is to be made in response to a
likely threat of suspension or debarment or similar action; provided,
however, that Grace and Grace-Conn. may make such disclosure or waiver
with respect to Privileged Information if such Privileged Information
relates solely to the pre-Distribution business of the NMC Group in the
case of Grace or the

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Grace-Conn. Group in the case of Grace-Conn. In the event of a
disagreement between any member of the NMC Group and any
member of the Grace-Conn. Group concerning the reasonableness of
withholding such consent, no disclosure shall be made prior to a
resolution of such disagreement by a court of competent jurisdiction.

(c) Upon any member of the NMC Group or any member of the
Grace-Conn. Group receiving any subpoena or other compulsory disclosure
notice from a court, other governmental agency or otherwise which
requests disclosure of Privileged Information, in each case relating to
pre-Distribution business of the Grace-Conn. Group or the NMC Group,
respectively, or relating to or arising in connection with the
relationship between the Groups on or prior to the Distribution Date,
the recipient of the notice shall promptly provide to the other Group
(following the notice provisions set forth herein) a copy of such
notice, the intended response, and all materials or information
relating to the other Group that might be disclosed. In the event of a
disagreement as to the intended response or disclosure, unless and
until the disagreement is resolved as provided in subsection (b), the
parties shall cooperate to assert all defenses to disclosure claimed by
either party's Group, and shall not disclose any disputed documents or
information until all legal defenses and claims of privilege have been
finally determined.

SECTION 6.03 PRODUCTION OF WITNESSES. Subject to Section 6.02,
after the Distribution Date, each of Grace and Grace-Conn. shall, and shall
cause each member of the NMC Group and the Grace-Conn. Group, respectively, to,
make available to Grace or Grace-Conn. or any member of the NMC Group or of the
Grace-Conn. Group, as the case may be, upon written request, such Group's
directors, officers, employees and agents as witnesses to the extent that any
such Person may reasonably be required in connection with any Litigation
Matters, administrative or other proceedings in which the requesting party may
from time to time be involved and relating to the pre-Distribution business of
the NMC Group or the Grace-Conn. Group or relating to or in connection with the
relationship between the Groups on or prior to the Distribution Date.

SECTION 6.04 RETENTION OF RECORDS. Except as otherwise agreed
in writing, or as otherwise provided in the Other Agreements, each of Grace and
Grace-Conn. shall, and shall cause the members of the Group of which it is a
member to, retain all Information in such party's Group's possession or under
its control relating directly and primarily to the pre-Distribution business,
Assets or Liabilities of the other party's Group that is less than ten years
old until such Information is at least ten years old except that if, prior to
the expiration of such period, any member of either party's Group wishes to
destroy or dispose of any such Information that is at least three years old,
prior to destroying or disposing of any of such Information, (1) the party
whose Group is proposing to dispose of or destroy any such Information shall
provide no less than 30 days' prior written notice to the other party,
specifying the Information proposed to be destroyed or disposed of, and (2) if,
prior to the scheduled date for such destruction or disposal, the other party
requests in writing that any of the Information proposed to be destroyed or
disposed of be delivered to such other party, the party whose Group is
proposing to dispose of or destroy such Information promptly shall arrange for
the delivery of the requested Information to a location specified by, and at
the expense of, the requesting party.

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SECTION 6.05 CONFIDENTIALITY. Subject to Section 6.02, which
shall govern Privileged Information, from and after the Distribution Date, each
of Grace and Grace-Conn. shall hold, and shall use reasonable efforts to cause
its Affiliates and Representatives to hold, in strict confidence all Information
concerning the other party's Group obtained by it prior to the Distribution Date
or furnished to it by such other party's Group pursuant to this Agreement or the
Other Agreements and shall not release or disclose such Information to any other
Person, except its Affiliates and Representatives, who shall be bound by the
provisions of this Section 6.05, and each party shall be responsible for a
breach by any of its Affiliates or Representatives; provided, however, that any
member of the NMC Group or the Grace-Conn. Group may disclose such Information
to the extent that (a) disclosure is compelled by judicial or administrative
process or, in the opinion of such Person's counsel, by other requirements of
law, or (b) such party can show that such Information was (i) available to such
Person on a nonconfidential basis (other than from a member of the other party's
Group) prior to its disclosure by the other party's Group, (ii) in the public
domain through no fault of such Person or (iii) lawfully acquired by such Person
from another source after the time that it was furnished to such Person by the
other party's Group, and not acquired from such source subject to any
confidentiality obligation on the part of such source, or on the part of the
acquiror, known to the acquiror. Notwithstanding the foregoing, each of Grace
and Grace-Conn. shall be deemed to have satisfied its obligations under this
Section 6.05 with respect to any Information (other than Privileged Information)
if it exercises the same care with regard to such Information as it takes to
preserve confidentiality for its own similar Information.

SECTION 6.06 COOPERATION WITH RESPECT TO GOVERNMENT REPORTS
AND FILINGS. Grace, on behalf of itself and each member of the NMC Group, agrees
to provide any member of the Grace-Conn. Group, and Grace-Conn., on behalf of
itself and each member of the Grace-Conn. Group, agrees to provide any member of
the NMC Group, with such cooperation and Information as may be reasonably
requested by the other in connection with the preparation or filing of any
government report or other government filing contemplated by this Agreement or
in conducting any other government proceeding relating to pre-Distribution
business of the NMC Group or the Grace-Conn. Group, Assets or Liabilities of
either Group or relating to or in connection with the relationship between the
Groups on or prior to the Distribution Date. Such cooperation and Information
shall include, without limitation, promptly forwarding copies of appropriate
notices and forms or other communications received from or sent to any
government authority which relate to the NMC Group, in the case of the
Grace-Conn. Group, or the Grace-Conn. Group, in the case of the NMC Group. Each
party shall make its employees and facilities available during normal business
hours and on reasonable prior notice to provide explanation of any documents or
Information provided hereunder.

ARTICLE VII

NO REPRESENTATIONS OR WARRANTIES

SECTION 7.01 NO REPRESENTATIONS OR WARRANTIES. Grace-Conn.
acknowledges that, prior to the date of this Agreement, it has had primary
responsibility for the operation and management of the Grace-Conn. Business
(other than with respect to CCHP, as to which NMC has had responsibility for the
management of the investment therein and the exercise of any rights attendant
thereto, and the "Amicon" membrane

-17-

filtrations system and chromatography equipment business, for the operation and
management of which NMC has had primary responsibility since 1992); and Grace
acknowledges that, prior to the date of this Agreement, NMC has had primary
responsibility for the operation and management of the NMC Business.
Grace-Conn. understands and agrees that no member of the NMC Group is, in this
Agreement or in any other agreement or document, representing or warranting to
Grace-Conn. or any member of the Grace-Conn. Group in any way as to the
Grace-Conn. Assets, the Grace-Conn. Business or the Liabilities of the
Grace-Conn. Group or as to any consents or approvals required in connection
with the consummation of the transactions contemplated by this Agreement, it
being agreed and understood that Grace-Conn. and each member of the Grace-Conn.
Group shall take all of the Grace-Conn. Assets "as is, where is." Grace-Conn.
and each member of the Grace-Conn. Group shall bear the economic and legal risk
that conveyances of the Grace-Conn. Assets shall prove to be insufficient, that
the title of any member of the Grace-Conn. Group to any Grace-Conn. Assets,
Grace-Conn. Transferred Companies or Grace-Conn. Transferred Operations shall
be other than good and marketable and free from encumbrances or that results
from the failure of Grace-Conn. or any member of the Grace-Conn. Group to
obtain any consents or approvals relating to the Grace-Conn. Business required
in connection with the consummation of the transactions contemplated by this
Agreement. Grace understands and agrees that no member of the Grace-Conn. Group
is, in this Agreement or in any other agreement or document, representing or
warranting to Grace or any member of the NMC Group in any way as to the NMC
Assets, the NMC Business or the Liabilities of the NMC Group or as to any
consents or approvals required in connection with the consummation of the
transactions contemplated by this Agreement or the Reorganization Agreement, it
being agreed and understood that Grace, NMC and each other member of the NMC
Group shall take all of the NMC Assets "as is, where is." Grace and each member
of the NMC Group shall bear the economic and legal risk that conveyances of the
NMC Assets shall prove to be insufficient, that the title of any member of the
NMC Group to any NMC Assets or NMC Transferred Operations shall be other than
good and marketable and free from encumbrances, or that results from the
failure of Grace or any member of the NMC Group to obtain any consents or
approvals relating to the NMC Business required in connection with the
consummation of the transactions contemplated by this Agreement. The foregoing
shall be without prejudice to any rights under Section 4.02 or Section 5.05 of
this Agreement.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01 CONDITIONS TO OBLIGATIONS. (a) The obligations of
the parties hereto to consummate the payment of the Distribution are subject to
the satisfaction of each of the following conditions:

(i) To the extent required by applicable law and stock
exchange regulations, the transactions contemplated hereby shall have
been duly approved by Grace shareholders;

(ii) All conditions to the Reorganization set forth in the
Reorganization Agreement shall have been satisfied or waived
contemporaneously with the Effective Time; and

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(iii) The transactions contemplated hereby shall be in
compliance with all applicable federal and state securities laws.

(b) Any determination made by the Board of Directors of Grace
on behalf of either party hereto prior to the Distribution Date concerning the
satisfaction or waiver of any or all of the conditions set forth in this Section
shall be conclusive.

SECTION 8.02 USE OF GRACE NAME AND XXXX. Xxxxx acknowledges
that Grace-Conn. shall own all rights in the "Grace" name and logo and related
tradenames and marks. Effective at the Distribution Date, Grace shall change its
name to a name that does not use the word "Grace" or any variation thereof and
shall itself, and shall cause each member of the NMC Group to, cease all use of
the "Grace" name as part of any corporate name. Within 90 days after the
Distribution Date, Grace shall, and shall cause each member of the NMC Group to,
cease all other use of the "Grace" name and logo and related tradenames and
marks. Grace shall cause the NMC Group to use such names, logos and marks during
such 90-day period only to the extent that it is not practical to change or
replace any existing signs, letterheads, business cards, invoices or other
business forms, telephone directory listings or promotional material, and shall
cause the NMC Group to maintain the same standards of quality with respect to
such names, logos and marks as previously exercised.

SECTION 8.03 COMPLETE AGREEMENT. This Agreement, the Exhibits
and Schedules hereto and the agreements and other documents referred to herein
shall constitute the entire agreement between the parties hereto with respect to
the subject matter hereof (other than the Reorganization Agreement and the
Schedules and Exhibits thereto) and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.

SECTION 8.04 EXPENSES. Grace-Conn. shall bear all costs with
respect to the transactions contemplated hereby and by the Other Agreements,
except as otherwise specifically provided in the Reorganization Agreement or the
Other Agreements.

SECTION 8.05 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York (other
than the laws regarding choice of laws and conflicts of laws that would apply
the substantive laws of any other jurisdiction) as to all matters, including
matters of validity, construction, effect, performance and remedies.

SECTION 8.06 NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telegram, telex or other standard form of telecommunications, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

If to Grace or any member of the NMC Group:

X. X. Xxxxx & Co.
c/o National Medical Care, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxx Place

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Waltham, MA 02154
Attention: Chief Financial Officer
Fax: (000) 000-0000

with a copy to:

Fresenius AG
Borkenberg 14
61440 Xxxxxxxxx
00000 Xxx Xxxxxxx
Xxxxxxx
Attention: Xx. Xxx Xxxxx
Fax: 000-00-0000-00-0000

and

O'Melveny & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xx. Xxxxxx Xxxxxx
Fax: (000) 000-0000

If to Grace-Conn. or any member of the Grace-Conn. Group:

X. X. Xxxxx & Co.-Xxxx.
Xxx Xxxx Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Secretary
Fax: (000) 000-0000

with a copy to:

Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000

or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section.

SECTION 8.07 AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified or supplemented only by a written agreement signed by all of
the parties hereto.

SECTION 8.08 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY
BENEFICIARIES. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
and obligations hereunder shall be assigned by

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any party hereto without the prior written consent of the other party. Except
for the provisions of Sections 4.02 and 4.03 relating to indemnities, which are
also for the benefit of the Indemnitees, this Agreement is solely for the
benefit of the parties hereto and their Subsidiaries and Affiliates and is not
intended to confer upon any other Persons any rights or remedies hereunder.

SECTION 8.09 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.

SECTION 8.10 INTERPRETATION. (a) The Article and Section
headings contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties hereto and shall not in any way
affect the meaning or interpretation of this Agreement.

(b) The parties hereto intend that the Distribution shall be a
distribution pursuant to the provisions of Section 355 of the Code, so that no
gain or loss shall be recognized for federal income tax purposes as a result of
such transaction, and all provisions of this Agreement shall be so interpreted.
The parties hereto do not intend to submit the Distribution to the Internal
Revenue Service for a private letter ruling with respect to such nonrecognition,
and any ultimate ruling or decision that any gain or loss should be recognized
for federal income Tax purposes shall not permit a rescission or reformation
of this Agreement or transactions contemplated hereby.

SECTION 8.11 SEVERABILITY. If any provision of this Agreement
or the application thereof to any person or circumstance is determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party.

SECTION 8.12 REFERENCES; CONSTRUCTION. References to any
"Article," "Exhibit," "Schedule" or "Section," without more, are to Articles,
Exhibits, Schedules and Sections to or of this Agreement. Unless otherwise
expressly stated, clauses beginning with the term "including" set forth examples
only and in no way limit the generality of the matters thus exemplified.

SECTION 8.13 TERMINATION. Notwithstanding any provision
hereof, following termination of the Reorganization Agreement, this Agreement
may be terminated and the Distribution abandoned at any time prior to the
Distribution Date by and in the sole discretion of the Board of Directors of
Grace without the approval of any other party hereto or of Grace's shareholders.
In the event of such termination, no party hereto or to any Other Agreement
shall have any Liability to any Person by reason of this Agreement or any Other
Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.

X. X. XXXXX & CO.

By: /s/Xxxxxx X. Xxxxxxxx
---------------------------------
Name:
Title:

X. X. XXXXX & CO.-XXXX.

By: /s/Xxxxxx X. Xxxxxxxx
---------------------------------
Name:
Title:

FRESENIUS AG

By: /s/Xxxx Xxxxx
---------------------------------
Name:
Title:

96
EXHIBIT A

TAX SHARING AND INDEMNIFICATION AGREEMENT

This TAX SHARING AND INDEMNIFICATION AGREEMENT (this
"Agreement"), dated [as of the Closing Date], by and among X.X. Xxxxx & Co., a
New York corporation ("Grace"), X.X. Xxxxx & Co.-Xxxx., a Connecticut
corporation and a wholly owned subsidiary of Grace ("Grace-Conn."), and
Fresenius AG, an Aktiengesellschaft organized under the laws of the Federal
Republic of Germany ("Fresenius AG").

RECITALS

WHEREAS, Grace, Fresenius USA and Fresenius AG have entered
into an Agreement and Plan of Reorganization (the "Reorganization Agreement");

WHEREAS, Grace and Grace-Conn. have entered into the
Distribution Agreement;

AND WHEREAS, Grace, on behalf of itself and the NMC Group and
Grace-Conn., on behalf of itself and the Grace-Conn. Group, wish to provide
for the allocation between the NMC Group and the Grace-Conn. Group of all
responsibilities, liabilities and benefits relating to or affecting Taxes (as
hereinafter defined) paid or payable by either of them for all taxable periods,
whether beginning before, on or after the Distribution Date (as hereinafter
defined) and to provide for certain other matters.

NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Distribution Agreement or the
Reorganization Agreement. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and the plural forms of the terms defined):

"Adjusted NMC Group" means NMC and the NMC Subsidiaries.

"Grace-Conn. Tax Item" shall mean a Tax Item solely
attributable to the Grace-Conn. Group, but including, for this purpose, any Tax
Item solely attributable to Grace and arising with respect to a Pre-Merger
Taxable Period or that portion of a Straddle Period ending on the Distribution
Date, any item of income or gain, including any deferred item restored to
income, any of the forgoing of which is associated with Grace's indirect
interest in Grace Cocoa Associates L.P., and any Tax Item attributable solely
to NMC arising with respect to the recapitalization of Grace immediately prior
to the Grace Merger.
97

"Code" means the Internal Revenue Code of 1986, as amended,
and shall include corresponding provisions of any subsequently enacted federal
tax laws.

"Distribution Date" means the date on which the Distribution
occurs or is deemed to occur for federal income tax purposes. For purposes of
this Agreement, the Distribution shall be deemed effective as of the close of
business on the Distribution Date.

"Final Determination" shall mean the final resolution of
liability for any Tax for a taxable period, (i) by IRS Form 870 or 870-AD (or
any successor forms thereto), on the date of acceptance by or on behalf of the
taxpayer, or by a comparable form under the laws of other jurisdictions; except
that a Form 870 or 870-AD or comparable form that reserves (whether by its
terms or by operation of law) the right of the taxpayer to file a claim for
refund and/or the right of the taxing authority to assert a further deficiency
shall not constitute a Final Determination; (ii) by a decision, judgment,
decree, or other order by a court of competent jurisdiction, which has become
final and unappealable; (iii) by a closing agreement or accepted offer in
compromise under Section 7121 or 7122 of the Code, or comparable agreements
under the laws of other jurisdictions; (iv) by any allowance of a refund or
credit in respect of an overpayment of Tax, but only after the expiration of
all periods during which such refund may be recovered (including by way of
offset) by the Tax imposing jurisdiction; or (v) by any other final
disposition, including by reason of the expiration of the applicable statute of
limitations or by mutual agreement of the parties.

"IRS" means the Internal Revenue Service.

"Joint Tax Return" shall mean any Tax Return that includes a
member of the NMC Group and a member of the Grace-Conn. Group.

"Grace Tax Item" shall mean a Tax Item solely attributable to
the NMC Group and that is not a Grace-Conn. Tax Item.

"Short Period" means the period commencing on January 1, 1996
and ending on the Distribution Date.

"Straddle Period" means a taxable period that includes but
does not end on the Distribution Date.

"Tax" means any of the Taxes.

"Tax Deficiency" shall mean an assessment of Taxes, as a
result of a Final Determination.

"Tax Detriment" means any item of income, gain, recapture of
credit or any other Tax Item which increases Taxes paid or payable.

"Tax Item" means any item of income, gain, loss, deduction,
credit, provisions for reserves, recapture of credit or any other item which
increases or decreases Taxes paid or payable, including an adjustment under
Code Section 481 resulting from a change in accounting method.

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98

"Tax Refund" shall mean a refund of Taxes as the result of a
Final Determination.

"Tax Return" means any return, filing, questionnaire,
information return or other document required to be filed, including requests
for extensions of time, filings made with estimated tax payments, claims for
refund and amended returns that may be filed, for any period with any taxing
authority (whether domestic or foreign) in connection with any Tax or Taxes
(whether or not a payment is required to be made with respect to such filing).

"Taxes" means all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed by
a local, municipal, governmental, state, foreign, federation or other body, and
without limiting the generality of the foregoing, shall include income, sales,
use, ad valorem, gross receipts, license, value added, franchise, transfer,
recording, withholding, payroll, employment, excise, occupation, unemployment
insurance, social security, business license, business organization, stamp,
environmental, premium and property taxes, together with any related interest,
penalties and additions to any such tax, or additional amounts imposed by any
taxing authority (domestic or foreign) upon the NMC Group, the Grace-Conn.
Group or any of their respective members or divisions or branches.

ARTICLE II

FILING OF TAX RETURNS

Section 2.01 Manner of Filing. All Tax Returns filed after
the Distribution Date shall be prepared on a basis which is consistent with the
consummation of the transactions as set forth in the Distribution Agreement,
the Grace Tax Matters Certificate, the Fresenius AG Tax Matters Certificate and
the Grace Tax Opinions (in the absence of a controlling change in law or
circumstances) and shall be filed on a timely basis (including extensions) by
the party responsible for such filing under this Agreement. In the absence of
a controlling change in law or circumstances, all Tax Returns filed after the
date of this Agreement shall be prepared on a basis consistent with the
elections, accounting methods, conventions, and principles of taxation used for
the most recent taxable periods for which Tax Returns involving similar Tax
Items have been filed, to the extent that a failure to do so would result in a
Tax Detriment to the other party hereto or a member of its Group. Subject to
the provisions of this Agreement, all decisions relating to the preparation of
Tax Returns shall be made in the sole discretion of the party responsible under
this Agreement for such preparation. Grace-Conn. will provide Grace with
copies of all Tax Returns (or appropriate portions thereof) filed after the
Distribution Date to the extent such returns relate to the NMC Group.

Section 2.02 Pre-Merger Tax Returns.

(a) Consolidated Returns. The Grace consolidated federal
income Tax Returns required to be filed for all taxable periods ending on or
before the Distribution Date ("Pre-Merger Taxable Periods"), and for all
Straddle Periods" shall be prepared and filed by Grace-Conn., and Grace hereby
irrevocably designates, and agrees to cause each of its subsidiaries to so
designate, Grace-Conn. as its agent to take any and all actions necessary or
incidental to the preparation and filing of such Returns. Grace-Conn. agrees
to

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99
cooperate in good faith with Grace to determine the appropriate amount of Tax
Items attributable to the NMC Group to be reflected on Grace's consolidated
federal income Tax Return for Pre-Merger Taxable Periods and Straddle Periods.
Grace-Conn. further agrees to provide Grace with a copy of each such Tax Return
two weeks before it is filed, and to consider in good faith any comments
thereon provided in writing by Grace.

(b) Combined, Consolidated and Unitary Returns. All state
and local combined, consolidated and unitary corporate income Joint Tax Returns
which are required to be filed for all Pre-Merger Taxable Periods and Straddle
Periods, which have not been previously filed shall be prepared and filed by
Grace-Conn., and Grace hereby irrevocably designates, and agrees to cause each
of its subsidiaries to so designate, Grace-Conn. as its agent to take any and
all actions necessary or incidental to the preparation and filing of such Joint
Tax Returns. Grace-Conn. agrees to cooperate in good faith with Grace to
determine the appropriate amount of Tax Items attributable to the NMC Group to
be reflected on combined, consolidated and unitary corporate Joint Tax Returns
for Pre-Merger Taxable Periods and Straddle Periods.

(c) Other Returns. All other Tax Returns not described
elsewhere in this Section 2.02 that are required to be filed for all Pre-Merger
Taxable Periods and Straddle Periods shall be prepared and filed by the party
which prepared and filed such Return for the most recent period for which such
Return was filed or if no such Return was filed in such period, the party
responsible under the appropriate law of the taxing jurisdiction, provided,
however, that any other Tax Returns which, but for this proviso, would be
prepared and filed by Grace shall be prepared and filed by Grace-Conn., and
Grace hereby irrevocably designates Grace-Conn. as its agent to take any and
all actions necessary or incidental to the preparation and filing of such other
Tax Returns. Grace-Conn. agrees to cooperate in good faith with Grace to
determine the appropriate amount of Tax Items attributable to the NMC Business
to be reflected on such Returns for Pre-Merger Taxable Periods and Straddle
Periods.

Section 2.03 Post-Merger Tax Returns. All Tax Returns for
periods beginning after the Distribution Date ("Post-Merger Taxable Periods")
shall be the responsibility of the Grace-Conn. Group if such Tax Returns relate
solely to a member or members of the Grace-Conn. Group or their respective
assets or businesses, and shall be the responsibility of the NMC Group if such
Tax Returns relate solely to a member or members of the NMC Group or their
respective assets or businesses.

ARTICLE III

PAYMENT OF TAXES

Section 3.01 Allocation of Tax Liabilities With Respect to
Unfiled Returns.

(a) Consolidated Federal Income Tax Liabilities. Except as
otherwise provided in this Agreement, Grace-Conn. shall pay, on a timely
basis, all Taxes due with respect to the consolidated federal income tax
liability for all Pre-Merger Taxable Periods and Straddle Periods of the
affiliated group of which Grace is the common parent (the "Affiliated Group").
Grace and NMC on behalf of the NMC Group hereby assume and

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100

agree to pay directly to Grace-Conn. (i) the Adjusted NMC Group's allocable
share of those Taxes for all Pre-Merger Taxable Periods and Straddle Periods
and (ii) Grace's allocable share of those Taxes for the portion of any Straddle
Period commencing on the day after the Distribution Date.

The NMC Group's allocable share of the Affiliated Group's
consolidated federal income tax liability for Pre-Merger Taxable Periods and
Straddle Periods and Grace's allocable share of such tax liability for the
portion of any Straddle Period beginning on the day after the Distribution Date
(calculated by treating the day after the Distribution Date as the first date
of a taxable period) shall be determined in accordance with the Grace Financial
Accounting Policy Statements on Income Taxes (Policy 409) a copy of which is
attached hereto as Exhibit I (in effect as of the date hereof, the "Prior
Arrangement").

After the Distribution Date, Grace and/or NMC shall timely pay
all amounts payable by Grace and the NMC Group in respect of quarterly
estimated federal income tax payments for the year ended December 31, 1996 in
accordance with past practice and the Prior Arrangement, such payments to be
made directly to Grace-Conn. which will, to the extent Tax is owed by the
consolidated group, forward such payments to the IRS.

If the calculations made pursuant to this Section 3.01(a) as
compared to the amount shown as due on the appropriate Tax Return indicate that
the NMC Group has either overpaid or underpaid its share of the consolidated
federal income tax liability for the year ended December 31, 1995 and for the
year ended December 31, 1996, respectively, within 30 days of the filing of
Grace's consolidated federal income tax return for the year ended December 31,
1995, and the year ending December 31, 1996, respectively, Grace-Conn. shall
pay Grace and/or NMC the amount of any such overpayment or Grace and/or NMC
shall pay Grace-Conn. the amount of any such underpayment.

All calculations and determinations required to be made
pursuant to this Section 3.01(a) shall be made by Grace-Conn. on a basis
reasonably consistent with prior years, whose good faith determination shall be
binding upon the parties hereto in the absence of mathematical error.

(b) Combined, Consolidated and Unitary Corporate Income
Taxes. Except as otherwise provided in this Agreement, Grace-Conn. or a member
of the Grace-Conn. Group shall pay, on a timely basis, all Taxes due with
respect to any combined, consolidated or unitary state, local and foreign
corporate income tax liability for all Pre-Merger Taxable Periods and Straddle
Periods with respect to Joint Tax Returns ("Combined Taxes"). Grace and NMC on
behalf of the NMC Group hereby assume and agree to pay directly to Grace-Conn.
(i) the Adjusted NMC Group's allocable share of those Taxes for all Pre-Merger
Taxable Periods and Straddle Periods and (ii) Grace's allocable share of those
Taxes for the portion of any Straddle Period commencing on the day after the
Distribution Date.

The NMC Group's allocable share of the Affiliated Group's
combined, consolidated and unitary income tax liability (other than federal
income taxes) for Pre-Merger Taxable Periods and Straddle Periods and Grace's
allocable share of such tax liability for the portion of any Straddle Period
beginning on the day after the Distribution Date (calculated by treating the
day after the Distribution Date as the first date of a taxable period) shall be
determined in accordance with the Prior Arrangement.

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101

After the Distribution Date, Grace and/or NMC shall timely pay
all amounts payable by Grace and the NMC Group in respect of quarterly
estimated income tax payments for the year ended December 31, 1996 in
accordance with past practice and the Prior Arrangement, such payments to be
made directly to Grace-Conn. which will, to the extent Tax is owed by the
combined, unitary or consolidated group, forward such payments to the
appropriate Taxing authority.

If the calculations made pursuant to this Section 3.01(b) as
compared to the amount shown as due on the appropriate Tax Return indicate that
Grace and/or NMC has either overpaid or underpaid its share of its Combined Tax
liability within 30 days after the filing of the relevant return, Grace-Conn.
shall pay Grace the amount of any such overpayment or Grace shall pay
Grace-Conn. the amount of any such underpayment. All calculations and
determinations required to be made pursuant to this Section 3.01(b) shall be
made by Grace-Conn. on a basis reasonably consistent with prior years, whose
good faith determination shall be binding upon the parties hereto in the
absence of mathematical error.

(c) All other Taxes for periods beginning before the
Distribution Date shall be paid by the party responsible under this Agreement
for filing the Tax Return pursuant to which such Taxes are due, provided that,
in the case of other Taxes due with respect to Tax Returns of Grace for
Straddle Periods ("Grace Straddle Returns"), Grace shall reimburse Grace-Conn.
as follows:

1. The "Hypothetical Pre-Distribution Tax" shall mean
the Tax that would have been due for the taxable
period ending on the Distribution Date if the
Distribution Date were the last day of the taxable
period. Such Tax shall be computed by determining
the items of income, expense, deduction, loss or
credit on a "closing of the books" basis as of the
Distribution Date.

2. Thirty days prior to the relevant due date (including
extensions) of any Grace Straddle Return, Grace-Conn.
shall present Grace with a schedule detailing the
computation of the Hypothetical Pre-Distribution Tax
attributable to Grace for such Straddle Period and
the total Tax due with respect to the relevant Tax
Return (the "Return Amount").

3. Ten days after Grace-Conn. presents Grace with the
schedule described in clause 2 above, (x) Grace shall
pay Grace-Conn. the amount by which the Return Amount
exceeds the sum of (i) the Hypothetical
Pre-Distribution Tax plus (ii) the sum of any
estimated payments, deposits or credits made or
applied after the Distribution Date with respect to
such Tax for the Straddle Period (which shall be made
in accordance with past practice and the Prior
Arrangement, such payments to be made directly to
Grace-Conn. which will forward such payments to the
appropriate taxing authority), or (y) Grace-Conn.
shall pay Grace the amount by which the sum of (i)
the Hypothetical Pre-Distribution Tax plus (ii) the
sum of any estimated payments, deposits or credits
made or applied after the Distribution Date with
respect to such Tax for the Straddle Period exceeds
the Return Amount.

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4. In the event Grace disputes Grace-Conn.'s computation
of the Hypothetical Pre-Distribution Tax, the Return
Amount or any of the payments, deposits or credits
described in clause 1 above, Grace, or Grace-Conn.,
as the case may be, shall nevertheless pay to the
other party any amounts that would be due under
clause 3 pending adjustment after the resolution of
such dispute, which shall be resolved by a "big six"
accounting firm that does not have an engagement
relationship with Grace, NMC or Grace-Conn. and that
is mutually agreed upon by Grace and Grace-Conn..
The accounting firm shall resolve such dispute as
expeditiously as possible and shall do so applying
the applicable law and the provisions of this
Agreement, with due regard for the positions of the
parties. The costs, expenses and fees of the
accounting firm shall be borne equally by Grace and
Grace-Conn..

5. Where the Hypothetical Pre-Distribution Tax system is
not feasible in calculating the portion of any Tax
for a Straddle Period that Grace is responsible for
under this Section 3.01(c), the amount of such Tax
for which Grace is responsible shall be determined by
prorating the actual tax due for the Straddle Period
on a daily proration basis. The amount of such Tax
borne by Grace-Conn. shall be the amount allocated to
the portion of the Straddle Period through the
Distribution Date. The principles of clauses 1, 2, 3
and 4 shall be used to provide for payment and
reimbursement of such Tax between the parties.

6. In implementing this Section 3.01(c), the parties
shall make any adjustments that are necessary to
insure that, with respect to all Taxes for Straddle
Periods, payment and reimbursement between the
parties reflects the principle that Grace is to bear
responsibility for Taxes for Grace (and any
Affiliates) that are attributable to the portion of
Straddle Periods after the Distribution Date.

(d) Notwithstanding anything to the contrary, in determining
the NMC Group's allocable share of any Tax liability, any increase in the Tax
liability resulting from any act or omission not in the ordinary course of
business (other than transactions contemplated by this Agreement, the
Distribution Agreement, the Reorganization Agreement or the Employee Benefits
Agreement) on the part of any member of the NMC Group occurring on the
Distribution Date after the Effective Time shall be deemed to arise in a
taxable period which begins after the Distribution Date.

(e) Anything in Section 3.01(a) or (b) to the contrary
notwithstanding, whenever Grace-Conn. is required to make any of the
calculations or determinations referred to therein, Grace-Conn. shall provide
Grace with (i) copies of any material calculations or determinations as soon as
is practicable after such calculations or determinations have been made, and
prior to the applicable Tax Returns' being filed, sufficient to enable Grace to
verify mathematical accuracy and (ii) if requested by Grace, access during
reasonable business hours to copies of any Returns, reports or other statements
sufficient to enable Grace to verify reasonably consistent treatment with prior
years.

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Section 3.02 Redetermined Tax Liabilities.

(a) Joint Tax Returns. In the case of any Final
Determination regarding a Joint Tax Return, any Tax Deficiency shall be paid to
the appropriate taxing authority by, and any Tax Refund received from the
appropriate taxing authority shall be paid to, Grace-Conn., and Grace shall
forward any such Tax Refund to Grace-Conn. within ten days after receipt
thereof; provided, however, that whether or not there is a Tax Deficiency or
Tax Refund or whether or not a payment is required to or from the appropriate
taxing authority, Grace shall make payments to Grace-Conn. or receive payments
from Grace-Conn. based upon the following principles:

(i) Grace shall make a payment to Grace-Conn. in
an amount equal to any increase in the NMC Group's allocable share of Tax
(including any applicable interest or penalties, which is or has been imposed
by any taxing authority with respect to any additional Taxes resulting from
such adjustments, or any such interest that would have been imposed but for any
offsetting Grace-Conn. Tax Items) with respect to such Return resulting from
any adjustments to Grace Tax Items, less any payments previously made by Grace
to Grace-Conn. (or directly to the appropriate taxing authority). For this
purpose, the NMC Group's allocable share of Tax shall be determined in
accordance with the Prior Arrangement.

(ii) Grace-Conn. shall pay to Grace, to the extent
not previously paid to Grace by the appropriate taxing authority or by
Grace-Conn., the amount of any decrease in the NMC Group's allocable share of
Tax with respect to such Tax Return resulting from adjustments to Grace Tax
Items, as determined in accordance with the Prior Arrangement and, in addition,
Grace-Conn. shall pay to Grace, to the extent not previously paid to Grace by
the applicable taxing authority or by Grace-Conn., any applicable interest that
is or has been paid by the taxing authority with respect to the reduction in
Taxes resulting from such adjustments or such interest that would have been
payable but for any offsetting Grace-Conn. Tax Items. For this purpose, the
NMC Group's allocable share of Taxes shall be determined in accordance with the
Prior Arrangement.

(iii) Payments made pursuant to subsections (i) and
(ii) above, shall be adjusted to take into account the amounts of any
offsetting adjustments that would result in an increase or decrease in the NMC
Group's allocable share of Taxes with respect to any Joint Tax Return for
another period (as determined under the above principles), resulting from
adjustments to Grace Tax Items in such Final Determination whether or not the
offsetting adjustments are contained in a Final Determination with respect to
such other Joint Tax Return. In the event such other Joint Tax Return has been
or subsequently becomes, the subject of a Final Determination, this Section
3.02 shall be applied in a manner that avoids any duplications of payments.

(b) Separate Returns. Grace-Conn. shall be liable for and
shall indemnify, defend and hold harmless the Grace Indemnitees from and
against all Taxes for Pre-Merger Taxable Periods and Straddle Periods with
respect to Tax Returns that include only members of the Grace-Conn. Group and
Grace and for Post-Merger Taxable Periods that include only members of the
Grace-Conn. Group, and Grace shall be liable for and shall indemnify, defend
and hold harmless the Grace-Conn. Indemnitees from and against all Taxes for
Pre-Merger Taxable Periods and Straddle Periods that include only NMC and the
NMC Subsidiaries and for Post-Merger Taxable Periods that include only members
of the NMC

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Group. Grace-Conn. shall be entitled to receive and retain all refunds of
Taxes for Pre-Merger Taxable Periods and Straddle Periods with respect to Tax
Returns that include only members of the Grace-Conn. Group or Grace and for
Post-Merger Taxable Periods with respect to Tax Returns that include only
members of the Grace-Conn. Group. Grace shall be entitled to receive and
retain all refunds of Taxes for Pre-Merger Taxable Periods and Straddle Periods
with respect to Tax Returns that include only NMC and the NMC Subsidiaries and
for Post-Merger Taxable Periods with respect to Tax Returns that include only
members of the NMC Group.

(c) Calculation and Payment of Amounts. Except in the case
of Tax Returns that include only NMC and the NMC Subsidiaries, all calculations
and determinations required to be made pursuant to this Section 3.02 shall be
made by Grace-Conn. in good faith and on a basis reasonably consistent with
prior years. Any payments made by the parties hereunder to each other shall be
treated by each of the parties as satisfaction of liabilities of such paying
party and shall not be subject to any gross-up or additional payment.

(d) Other Tax Liabilities and Refunds. Any Tax Liability or
Refund with respect to a Joint Tax Return not arising from an adjustment to, or
change in, a Tax Item (e.g., change in applicable law) shall be allocated by
Grace-Conn. between Grace-Conn. and Grace in a manner consistent with the Prior
Arrangement.

(e) The provisions of Section 3.01(e) shall apply with
respect to the calculations and allocations to be made by Grace-Conn. pursuant
to Sections 3.02(c) and (d) hereof.

Section 3.03 Liability for Taxes with Respect to
Post-Distribution Periods. Unless otherwise provided in this Agreement, the
Grace-Conn. Group shall pay all Taxes and shall be entitled to receive and
retain all refunds of Taxes with respect to periods beginning after the
Distribution Date which are attributable to the Grace-Conn. Business. Unless
otherwise provided in this Agreement, the NMC Group shall pay all Taxes and
shall be entitled to receive and retain all refunds of Taxes with respect to
periods beginning after the Distribution Date which are attributable to the NMC
Business.

Section 3.04 Carrybacks. Any Tax Refund resulting from the
carryback by Grace-Conn. of any Tax Item arising after the Distribution Date to
a Pre-Merger Taxable Period or a Straddle Period shall be for the account of
Grace-Conn., and Grace shall promptly pay over to Grace-Conn. any such Tax
Refund that it receives. To the extent that the carryback by Grace-Conn. of
any Tax Item does not result in a Tax Refund (or would not result in a refund
if a claim were filed) solely as the result of an offsetting Grace Tax Item,
Grace shall remit to Grace-Conn. the amount of any decrease in the Grace-Conn.
Group's allocable share of Tax that would otherwise have resulted from such
carryback as determined under the principles contained in Section 3.02(a).

Grace-Conn. shall be permitted to file, and Grace shall fully
cooperate with Grace-Conn. in connection with, any refund claim. To the extent
that such refund claims do not result in a Tax Refund (or would not result in a
refund if a claim were filed) solely as the result of an offsetting Grace Tax
Item, Grace shall remit to Grace-Conn. an amount equal to the decrease in the
Grace-Conn. Group's allocable share of Tax that would otherwise have resulted
from such refund claim as determined under the principles contained in Section
3.02(a).

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ARTICLE IV

INDEMNITY: COOPERATION AND EXCHANGE OF INFORMATION

Section 4.01 Breach. Grace-Conn. shall be liable for and
shall indemnify, defend and hold harmless the Grace Indemnitees from and
against, and Grace shall be liable for and shall indemnify, defend and hold
harmless the Grace-Conn. Indemnitees from and against any payment required to
be made as a result of the breach by a member of the Grace-Conn. Group or the
NMC Group, as the case may be, of any obligation under this Agreement. If
Grace or any member of the NMC Group fails to comply in any respect whatsoever
with any of its responsibilities under the Agreement relating to promptly
forwarding to Grace-Conn. any communications with and refunds received from any
taxing authority ("Forwarding Responsibilities"), then:

(a) If such failure relates to a communication
other than a refund, Grace and NMC shall be liable for and shall indemnify and
hold Grace-Conn. and the Grace-Conn. Group harmless from and against any costs
or expenses (including, without limitation, Taxes and lawyers' and accountants'
fees) ("Indemnified Amount") incurred by or imposed upon Grace-Conn. or any
member of the Grace-Conn. Group arising out of, in connection with or relating
to such communication, regardless of whether Grace-Conn. or any member of the
Grace-Conn. Group is harmed as a result of such failure, provided, that the
liability of Grace and NMC under this paragraph (a) with respect to any one
such failure shall be equal to the greater of X or Y; where "X" equals the
lesser of (A) $10 million or (B) the Indemnified Amount; and "Y" equals that
portion of the Indemnified Amount that Grace-Conn. demonstrates is caused
(directly or indirectly) by such failure; and

(b) If such failure relates to a refund, then
Grace and NMC shall be liable to Grace-Conn. and the Grace-Conn. Group for the
full amount of such refund, plus interest accruing as of the date such
communication is received by Grace or any member of the NMC Group at a rate of
5% above the prime rate as published in the Wall Street Journal, plus any costs
or expenses (including, without limitation, lawyers' and accountants' fees)
incurred by or imposed upon Grace-Conn. or any member of the Grace-Conn. Group
in connection with obtaining such refund.

Section 4.02 Notice of Indemnity. Whenever a party hereto
(hereinafter an "Indemnitee") becomes aware of the existence of an issue which
could increase the liability for any Tax of the other party hereto or any
member of its Group or require a payment hereunder (hereinafter an "Indemnity
Issue"), the Indemnitee shall in good faith promptly give notice to such other
party (hereinafter the "Indemnitor") of such Indemnity Issue. The failure of
any Indemnitee to give such notice shall not relieve any Indemnitor of its
obligations under this Agreement except to the extent such Indemnitor or its
affiliate is actually materially prejudiced by such failure to give notice.
The Indemnitor and its representatives, at the Indemnitor's expense, shall be
entitled to participate (i) in all conferences, meetings or proceedings with
any taxing authority, the subject matter of which is or includes an Indemnity
Issue and (ii) in all appearances before any court, the subject matter of which
is or includes an Indemnity Issue. The party who has responsibility for filing
the Tax Return under this Agreement (the "Responsible Party") with respect to
which there is an increase in liability for any Tax or with respect to which a
payment is required hereunder shall have the right to decide as between the
parties hereto how such matter is to be dealt with and finally resolved with
the appropriate taxing authority and shall control all audits

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and similar proceedings. The Responsible Party agrees to cooperate in the
settlement of any Indemnity issue with the other party and to take such other
party's interests into account. If the Indemnitor is not the Responsible
Party, such cooperation may include permitting the Indemnitor, at the
Indemnitor's sole expense, to litigate or otherwise resolve any Indemnity
Issue.

Section 4.03 Cooperation and Exchange of Information. (a)
Grace shall, and shall cause each appropriate member of the NMC Group to,
prepare and submit to Grace-Conn., at Grace's expense, no later than July 1,
1996, all information as Grace-Conn. shall reasonably request to enable
Grace-Conn. to file the Grace consolidated federal income tax return for the
taxable year ending December 31, 1995, no later than July 1, 1997 for all
information as Grace-Conn. shall reasonably request to enable Grace-Conn. to
file the Grace consolidated federal income tax return for the taxable year
ending December 31, 1996, no later than August 1, 1996 for all information that
Grace-Conn. shall reasonably request to enable Grace-Conn. to file any state
and local combined or unitary corporate income tax returns for the taxable year
ending December 31, 1995, and no later than August 1, 1997 for all information
that Grace-Conn. shall reasonably request to enable Grace-Conn. to file any
state and local combined or unitary corporate income tax returns for the
taxable year ending December 31, 1996. Grace-Conn. shall be entitled to
require Grace to engage a "Big Six" public accounting firm reasonably
acceptable to Grace-Conn. to review the information which Grace is required to
provide under this Section 4.03(a). The expenses of such "Big Six" public
accounting firm shall be borne by Grace. Grace shall furnish to Grace-Conn. by
January 31, 1997, an estimate of the Affiliated Group Taxable income or loss
for the taxable year ending December 31, 1996, for use in determining the
payment due with respect to the Affiliated Group on March 15, 1997, together
with IRS Form 7004, "Application for Automatic Extension of Time to File
Corporation Income Tax Return."

(b) Grace, on behalf of itself and each member of the NMC
Group, agrees to provide the Grace-Conn. Group, with such cooperation and
information as Grace-Conn. shall reasonably request in connection with the
preparation or filing of any Tax Return or claim for refund not inconsistent
with this Agreement or in conducting any audit or other proceeding in respect
to Taxes. Such cooperation and information shall include without limitation
designation of an officer of Grace-Conn. as an officer of Grace and NMC for the
purpose of signing Tax Returns, cashing refund checks and defending audits as
well as promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any taxing authority which relate to
the Affiliated Group or the NMC Businesses and providing copies of all relevant
Tax Returns, together with accompanying schedules and related workpapers,
documents relating to rulings or other determinations by taxing authorities,
including without limitation, foreign taxing authorities, and records
concerning the ownership and Tax basis of property, which either party may
possess. It is expressly the intention of the parties to this Agreement to
take all actions necessary to establish Grace-Conn. as the sole agent for tax
purposes of each member of the Affiliated Group with respect to all combined,
consolidated and unitary Tax Returns of the Affiliated Group for Pre-Merger
Taxable Periods and Straddle Periods as if Grace-Conn. were the common parent
of the Affiliated Group, and as the sole agent for tax purposes of Grace for
all Tax Returns of Grace for Pre-Merger Taxable Periods and Straddle Periods.
Grace and NMC shall make, or shall cause the members of the NMC Group to make,
their employees and facilities available on a mutually convenient basis to
provide explanation of any documents or information provided hereunder.

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(c) Grace and Grace-Conn. agree to retain all Tax Returns,
related schedules and workpapers, and all material records and other documents
as required under Section 6001 of the Code and the regulations promulgated
thereunder relating thereto existing on the date hereof or created through the
Distribution Date, until the expiration of the statute of limitations
(including extensions) of the taxable years to which such Tax Returns and other
documents relate and until the Final Determination of any payments which may be
required in respect of such years under this Agreement. Grace-Conn. and Grace
agree to advise each other promptly of any such Final Determination. Any
information obtained under this Section shall be kept confidential, except as
may be otherwise necessary in connection with the filing of Tax Returns or
claims for refund or in conducting any audit or other proceeding.

(d) If any member of the Grace-Conn. Group or the NMC Group,
as the case may be, fails to provide any information requested pursuant to this
Section 4.03 by (i) the dates, specified in subsection (a) hereof or, (ii) with
respect to information not requested pursuant to subsection (a) hereof, within
a reasonable period, as determined in good faith by the party requesting
information, then the requesting party shall have the right to engage a "Big
Six" public accounting firm of its choice to gather such information. Grace
and Grace-Conn., as the case may be, agree upon 24 hours' notice, in the case
of a failure to provide information pursuant to subsection (a) hereof, and
otherwise upon 30 days' notice after the expiration of such reasonable period,
to permit any such "Big Six" public accounting firm full access to all
appropriate records or other information in the possession of any member of the
Grace-Conn. Group or the NMC Group, as the case may be, during reasonable
business hours, and promptly to reimburse or pay directly all costs and
expenses in connection with the engagement of such public accountants.

(e) If any member of the Grace-Conn. Group or the NMC Group,
as the case may be, supplies information to a member of the other Group
pursuant to this Section 4.03 and an officer of the requesting party signs a
statement or other document under penalties of perjury in reliance upon the
accuracy of such information, then a duly authorized officer of the party
supplying such information shall certify, under penalties of perjury, the
accuracy and completeness of the information so supplied. Grace-Conn. agrees
to indemnify and hold harmless each member of the NMC Group and its directors,
officers and employees, and Grace agrees to indemnify and hold harmless each
member of the Grace-Conn. Group and its directors, officers and employees from
and against any cost, fine, penalty or other expense of any kind attributable
to the negligence or willful misconduct of a member of the Grace-Conn. Group
or the NMC Group, as the case may be, in supplying a member of the other Group
with inaccurate or incomplete information.

Section 4.04 Certain Post-Distribution Transactions.
Grace-Conn. shall, and shall cause each Grace-Conn. Group member to, comply
with and take no action inconsistent with the Grace Representation Letter.
Fresenius AG and Grace shall, and shall cause each NMC Group member to, comply
with and take no action inconsistent with the Grace Representation Letter.
Grace further agrees that except as specifically set forth in the Opinions or
in the Grace Representation Letter, during the two-year period following the
Distribution Date, neither it nor NMC shall cease to engage in the active trade
or business described in the Grace Representation Letter unless pursuant to a
favorable ruling letter obtained from the IRS and satisfactory to Grace-Conn.
or in the opinion of Wachtell, Lipton, Xxxxx & Xxxx or other nationally
recognized counsel to Grace, which opinion and

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which counsel shall be satisfactory to Grace-Conn., such act or omission would
not adversely affect the federal income tax consequences of the Distribution to
any of Grace, Grace-Conn. or the stockholders of Grace-Conn., as set forth in
the Opinions. In addition, Fresenius AG, Grace and NMC agree to indemnify and
hold the Grace-Conn. Indemnitees harmless from and against the results of any
Action which causes the Distribution to fail to qualify under Section 355 of
the Code or the Grace Merger to fail to qualify as a reorganization under
Sections 367 and 368 of the Code. An "Action" shall mean (x) any transaction
in the stock or assets, or any combination thereof, of Grace, its subsidiaries,
NMC or a NMC Affiliate occurring after the Distribution Date which is
inconsistent with the Grace Representation Letter or (y) any transaction or
action on the part of any of Fresenius AG, Newco, or any of their respective
subsidiaries or affiliates, whether occurring before or after the Distribution
Date (but excluding any transaction or action on the part of any member of the
NMC Group), which is inconsistent with the Fresenius AG Representation Letter.
Notwithstanding the foregoing, an Action shall not include any transaction or
action specifically disclosed or specifically described in the Representation
Letters, the Distribution Agreement or the Reorganization Agreement (or any
agreement or document included as an exhibit thereto) or of which Grace or
Grace-Conn. has actual knowledge as of the date of this Agreement. An Action
shall not include any action on the part of Grace-Conn. or a Grace-Conn.
Affiliate. Grace-Conn. agrees to indemnify and hold the Grace Indemnitees
harmless from and against any Tax liability and Indemnifiable Losses resulting
from the failure of the Distribution to qualify under Section 355 of the Code
or the Grace Merger to fail to qualify as a reorganization under Sections 367
and 368 of the Code, except where such failure is attributable to an Action.

Section 4.05 Injunction. The parties hereto agree that the
payment of monetary compensation would not be an adequate remedy to a breach of
the obligations contained in Section 4.04 hereof, and each party consents to
the issuance and entry of an injunction against the taking of any action by it
or a member of its Group described in the preceding section; provided, however,
that the foregoing shall be without prejudice to and shall not constitute a
waiver of any other remedy either party may be entitled to at law or at equity
hereunder.

ARTICLE V

MISCELLANEOUS

Section 5.01 Expenses. Unless otherwise expressly provided
in this Agreement or in the Distribution Agreement, each party shall bear any
and all expenses that arise from their respective obligations under this
Agreement.

Section 5.02 Amendment. This Agreement may not be amended
except by an agreement in writing, signed by the parties hereto. Anything in
this Agreement or the Distribution Agreement to the contrary notwithstanding,
in the event and to the extent that there shall be a conflict between the
provisions of this Agreement and the Distribution Agreement, the provisions of
this Agreement shall control.

Section 5.03 Notices. All notices and other communications
hereunder shall be in writing and shall be delivered by hand including
overnight business courier or mailed

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by registered or certified mail (return receipt requested) to the parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and shall be deemed given on the date on which such
notice is received:

To Grace-Conn. or any member of the Grace-Conn. Group:

X.X. Xxxxx & Co.-Xxxx.
Xxx Xxxx Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Secretary
Fax: (000) 000-0000

With a copy to:

Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000

To Grace or any member of the NMC Group:

NMC
0000 Xxxxxxx Xxxx
Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel

Section 5.04 Resolution of Disputes. Any disputes between
the parties with respect to this Agreement shall be resolved by a "Big Six"
public accounting firm or a law firm satisfactory to Grace-Conn. and Grace,
whose fees and expenses shall be shared equally by Grace-Conn. and Grace.

Section 5.05 Application to Present and Future Subsidiaries.
This Agreement is being entered into by Grace-Conn. and Grace on behalf of
themselves and each member of the Grace-Conn. Group and NMC Group,
respectively. This Agreement shall constitute a direct obligation of each such
member and shall be deemed to have been readopted and affirmed on behalf of any
corporation which becomes a member of the Grace-Conn. Group or NMC Group in the
future. Grace-Conn. and Grace hereby guarantee the performance of all actions,
agreements and obligations provided for under this Agreement of each member of
the Grace-Conn. Group and the NMC Group, respectively. Grace-Conn. and Grace
shall, upon the written request of the other, cause any of their respective
group members formally to execute this Agreement. This Agreement shall be
binding upon, and shall inure to the benefit of, the successors, assigns and
persons controlling any of the corporations bound hereby for so long as such
successors, assigns or controlling persons are members of the Grace-Conn. Group
or the NMC Group or their successors and assigns.

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Section 5.06 Term. This Agreement shall commence on the date
of execution indicated below and shall continue in effect until otherwise
agreed to in writing by Grace-Conn. and Grace, or their successors.

Section 5.07 Titles and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part or to affect the meaning or interpretation of this
Agreement.

Section 5.08 Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. Without
prejudice to any rights or remedies otherwise available to any party hereto,
each party hereto acknowledges that damages would be an inadequate remedy for
any breach of the provisions of this Agreement and agrees that the obligations
of the parties hereunder shall be specifically enforceable.

Section 5.09 Governing Law. This Agreement shall be governed
by the laws of the State of New York.

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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the ____ day of ________, 1996.

X.X. XXXXX & CO.-XXXX.

By:
-------------------------------
Name:
Title:

X.X. XXXXX & CO.

By:
-------------------------------
Name:
Title:

FRESENIUS AG

By:
-------------------------------
Name:
Title:

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EXHIBIT C

TERMS OF THE NY PREFERRED SHARES

1. In the Recapitalization each Grace Common Share shall be converted into
a Grace Common Share plus 1/100 of a share of NY Preferred which may be
issued in the form of a depository receipt.

2. Each NY Preferred Share shall have a liquidation preference of $10.

2.a The "Target Face Amount" of the NY Preferred Shares shall be $200
million in the aggregate.

3. The NY Preferred Shares shall not pay dividends except for the special
dividend described below and shall have no dividend preference except
with respect to the special dividend.

4. The NY Preferred Shares shall have no class voting rights except as
provided by law and as provided in paragraph 5 below, but shall vote as
one class with the other series of Grace Preferred Shares and with the
Grace Common Shares on all matters subject to a general vote of
shareholders. The NY Preferred Shares together with the other series of
Grace Preferred Shares shall have one-sixth of the total vote of the
Grace Common Shares, the Grace Preferred Shares and the NY Preferred
Shares on all matters subject to a general vote of shareholders.

5. The holders of the NY Preferred Shares shall be entitled to receive,
when, as and if declared by the Board of Directors of Grace out of
funds legally available for the purpose, an aggregate Special Dividend
payment equal to the "Special Dividend Amount," as determined pursuant
to the formula set forth below. The Special Dividend shall be payable
in cash in annual installments on October 1, 2002 and the same
anniversary of such date in each of the following years, if applicable,
and be equal to the lesser of (i) $100 million or (ii) the amount of
the Special Dividend Amount then unpaid pursuant to the provisions
hereof.

The Special Dividend Amount shall be equal to the Target Face
Amount less the "Special Differential." The Special Differential shall
be equal to $200 million less the "Applicable Percentage" of the total
of the cumulative actual "Adjusted Cash Flow" for the five year period
beginning on January 1, 1997 and ending on December 31, 2001 minus $3.7
billion. The Adjusted Cash Flow shall be equal to net income to common
shareholders plus depreciation and amortization, less any after tax
cash expenses or losses in connection with the OIG investigation not
reflected in net income to common shareholders, plus non-cash
restructuring charges, provisions for impairment in the value of
long-term assets, and similar recorded reserves as of
December 31, 2001, as reflected on Newco's audited financial
statements prepared in accordance with U.S. GAAP. The
Applicable Percentage shall be 44.8%, which percentage shall be
adjusted proportionately to reflect issuances or repurchase of NY
Preferred Shares following the Reorganization.
113

The Board of Directors of Newco, with the concurrence of the
Independent Directors, may make appropriate adjustments to the
foregoing to preserve its intended economic effect, in the light of
unanticipated changes in capitalization, accounting policy and
extraordinary transactions.

In the event that the Grace Common Shares are listed on the
NYSE or the NASDAQ Stock Market, Grace may pay the Special Dividend or
any installment thereof in Grace Common Shares based upon market price.
In the event that the Special Dividend is payable but is not declared,
Grace shall not pay any other dividends on its common shares as the
case may be until the Special Dividend is declared and the NY Preferred
voting as a class shall have a right to elect 2 directors to the Grace
Board.

6. The NY Preferred may be redeemed by Grace at any time commencing five
years after the Reorganization for the greater of the liquidation
preference thereof or any unpaid Special Dividend Amount. In the event
the Grace Common Shares are listed on the NYSE or the NASDAQ Stock
Market, the redemption amount may be paid in Grace Common Shares based
upon market price.
114
EXHIBIT D

CERTAIN TERMS TO BE PROVIDED FOR IN OR AS
A RESULT OF NEWCO'S ORGANIZATIONAL
DOCUMENTS AND/OR SHAREHOLDER "POOLING" AGREEMENT

ARTICLE 1.
DEFINITIONS

1933 Act: the Securities Act of 1933, as amended.

1934 Act: the Securities Exchange Act of 1934, as amended.

ADR: as defined in the Reorganization Agreement.

ADR Facility: as defined in the Reorganization Agreement.

Affiliate: as defined in Rule 12b-2 promulgated under the 1934
Act.

Beneficially Own: with respect to any security, having direct
or indirect (including through any Affiliate) "beneficial ownership" of such
security, as determined pursuant to Rule 13d-3 under the 1934 Act, including
pursuant to any agreement, arrangement or understanding, whether or not in
writing.

Code: the Internal Revenue Code of 1986, as amended, and any
successor thereto, including all of the rules and regulations promulgated
thereunder.

Controlled Affiliate: with respect to any person, an Affiliate
of such person over which such person has control.

Effective Time: as defined in the Reorganization Agreement.

Exchange: either the New York Stock Exchange, Inc. or the
Nasdaq Stock Market.

Extraordinary Transaction: (a) any merger, consolidation, sale
of all or substantially all assets, recapitalization, other business
combination, liquidation, or other similar action out of the ordinary course of
business of Newco, (b) any issuance of Newco Voting Securities representing more
than 10% of the total Newco Voting Securities outstanding on a fully diluted
basis, or (c) any amendment to the organizational documents of Newco which
adversely affects any holder of Newco Ordinary Shares.

Grace: as defined in the preamble hereof.

Independent Director: a Newco Director without a substantial
business or professional relationship with either Newco, the Shareholder or any
Affiliate of either of the foregoing.

115

Interested Transaction: any transaction between the Shareholder
or its Affiliate, on the one hand, and Newco or its Affiliate, on the other
hand.

Newco Board: the supervisory board of Newco.

Newco Ordinary Shares: Ordinary shares of Newco.

Newco Director: a member of Newco Board.

Newco Securities: all securities and debt obligations of Newco.

Newco Voting Securities: at any time, any Newco Securities
which are then entitled to vote generally in the election of Newco Directors.

Non-Employee Director: a Newco Director other than a Director
representing employees pursuant to German co-determination laws.

Person: any individual, corporation, partnership, limited
liability company, joint venture, trust, group, unincorporated organization,
other form of business or legal entity or government authority.

Required Period: the period from the consummation of the
Reorganization until (x) the acquisition of all Newco Voting Securities by
Fresenius AG or its Affiliate consistent with the terms hereof, (y) the
reduction of the Shareholders' interest in the Company to less than 25% of Newco
Voting Securities outstanding on a fully diluted basis or (z) Newco no longer
meeting the minimum thresholds for obligatory registration of the Newco Ordinary
Shares under the 1934 Act.

Securities Filings: as defined in Section 3.1(a)(ii).

Shareholder: Fresenius AG.

Standstill Period: the three-year period following the
consummation of the Reorganization.

Transfer: any sale, assignment, transfer or disposition.

US GAAP: as defined in the Reorganization Agreement.

ARTICLE 2.

INDEPENDENT DIRECTORS; REQUIRED APPROVALS

SECTION 2.1. Independent Directors. During the Required Period,
the ratio of Independent Directors to Non-Employee Directors shall not be less
than one-third; and there shall be at least two Independent Directors at all
times. Each Independent Director shall be afforded all rights of information,
access and participation with respect to the business and affairs of Newco as
are afforded any other Newco Director and shall be

116
afforded contemporaneous English translations as may be advisable or
requested in connection with the performance of their duties.

SECTION 2.2. Compliance with Laws. During the Required Period,
Newco and its Affiliates, on the one hand, and the Shareholder and its
Affiliates, on the other hand, shall comply with all provisions of German law
relating to Interested Transactions and Extraordinary Transactions.

SECTION 2.3. Position in Newco Shares. (a) During the
Standstill Period, the Shareholder and its Affiliates shall not Transfer any
Newco Voting Securities, except (i) to Controlled Affiliates (other than Newco)
of the Shareholder or (ii) pursuant to a sale in which all holders of Newco
Ordinary Shares are offered the opportunity to participate with the Shareholder
and its Affiliates on a pro rata basis, at the same price and on substantially
the same terms as the Shareholder and its Affiliates. Notwithstanding the
foregoing, during the Standstill Period, for so long as the Shareholder
Beneficially Owns any Newco Voting Securities, the Shareholder shall not effect
any Transfer which would result in the Shareholder Beneficially Owning less than
51% of all Newco Voting Securities outstanding on a fully diluted basis.

(b) During the Standstill Period, the Shareholder and its
Affiliates shall not Beneficially Own Newco Voting Securities representing more
than 57% of all Newco Voting Securities outstanding on a fully diluted basis,
except pursuant to an Extraordinary Transaction approved by a majority of the
Independent Directors and pursuant to which all outstanding Newco Voting
Securities are acquired at the same price and other terms and pursuant to
procedures (including applicable disclosures) in compliance with the 1934 Act.

(c) After the Standstill Period, during the Required Period,
the Shareholder and its Affiliates shall not effect any acquisitions of Newco
Voting Securities over any 90-day period representing more than 5% of the
outstanding Newco Voting Securities on a fully diluted basis unless the
Shareholder shall have announced its intention to effect such acquisitions at
least two days prior to the commencement of such 90-day period and reports the
result of such acquisitions promptly following such 90-day period.

(d) After the Standstill Period, during the Required Period,
the Shareholder and its Affiliates shall not effect any acquisitions of Newco
Voting Securities over any 90-day period representing more than 15% of the
outstanding Newco Voting Securities on a fully diluted basis except pursuant to
a tender offer for all Newco Voting Securities (subject to proration) made in
compliance with the 1933 Act and the 1934 Act.

(e) After the Standstill Period, during the Required Period,
the Shareholder and its Affiliates shall not effect any Transfer of Newco Voting
Securities representing more than 50% of the outstanding Newco Voting Securities
other than to a Controlled Affiliate of Shareholder or pursuant to a public
offering without offering all other holders of Newco Voting Securities the
opportunity to participate on a pro rata basis on the same terms and conditions.

SECTION 2.4 Organizational Documents. Newco's organizational
documents shall contain as much of the terms contemplated hereby as is customary
and appropriate under German law and shall provide for additional matters
requiring

117
shareholder approval or Supervisory Board approval (including
supermajority approvals), as is customary for large German public companies.

ARTICLE 3.

STATUS; INFORMATION RIGHTS

SECTION 3.1. Operating Statements; Public Newco Status. (a)
During the Required Period, Newco shall:

(i) use best efforts to maintain the effectiveness of
the ADR Facility as available immediately
following the Reorganization (or similar facility) and to
assure that Newco Ordinary Shares and/or the ADRs are listed
on the Exchange;

(ii) file all reports required by the Exchange, the
1933 Act, the 1934 Act and all applicable state and federal
securities laws (collectively, the "Securities
Filings"); and

(iii) prepare all financial statements required for any
Securities Filings in accordance with US GAAP and, on an annual
basis, prepare audited consolidated financial statements
including, without limitation, a balance sheet, a statement of
income and retained earnings, and a statement of changes in
financial position and all appropriate notes, all in
accordance with US GAAP.

ARTICLE 4.

MISCELLANEOUS

SECTION 4.1. Enforcement. The Pooling Agreement shall be made
for the benefit of, and shall be enforceable by, any holder of Newco Ordinary
Shares (including Beneficial Owners of such securities and including holders of
ADRs) and by the Independent Directors as the agents thereof.

SECTION 4.2. Other. Insurance and indemnity provisions for
Directors to be agreed.

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Exhibit E

FINAL COPY

CONTRIBUTION AGREEMENT

BY AND AMONG

FRESENIUS AG,

STERIL PHARMA GMBH

AND

X. X. XXXXX & CO.-XXXX.

DATED FEBRUARY 4, 1996
119
TABLE OF CONTENTS

PAGE
----

I. Definitions......................................................................... 2

1.01 General............................................................. 2

II. Certain Transactions Prior to the
Contribution Date................................................................. 6

2.01 Certain Transfers................................................... 6
2.02 Termination of Agreements........................................... 7
2.03 Other Agreements.................................................... 7

III. [Intentionally Omitted]............................................................. 7

IV. Survival and Indemnification........................................................ 8

4.01 Survival of Agreements.............................................. 8
4.02 Indemnification..................................................... 8
4.03 Procedures for Indemnification for
Third-Party Claims................................................ 8
4.04 Remedies Cumulative................................................. 10

V. Certain Additional Covenants........................................................ 10

5.01 Notices to Third Parties............................................ 10
5.02 Licenses and Permits................................................ 10
5.03 Intercompany Agreements............................................. 10
5.04 Guarantee Obligations............................................... 11
5.05 Further Assurances.................................................. 11

VI. Access to Information............................................................... 12

6.01 Provision of Corporate Records...................................... 12
6.02 Access to Information............................................... 12
6.03 Production of Witnesses............................................. 14
6.04 Retention of Records................................................ 14
6.05 Confidentiality..................................................... 14
6.06 Cooperation with Respect to
Government Reports and Filings.................................... 15

VII. No Representations or Warranties.................................................... 15

7.01 No Representations or Warranties.................................... 15

120
TABLE OF CONTENTS (CONTINUED)

PAGE
----

VIII. Miscellaneous....................................................................... 16

8.01 Use of Fresenius AG Name and Xxxx................................... 16
8.02 Complete Agreement.................................................. 16
8.03 Expenses............................................................ 16
8.04 Jurisdiction and Forum.............................................. 16
8.05 Notices............................................................. 17
8.06 Amendment and Modification.......................................... 18
8.07 Successors and Assigns; No Third-Party
Beneficiaries..................................................... 18
8.08 Counterparts........................................................ 18
8.09 Interpretation...................................................... 18
8.10 Severability........................................................ 18
8.11 References; Construction............................................ 18

SIGNATURES ...................................................................................... 19

EXHIBIT A Tax Indemnification Agreement
EXHIBIT B Terms of Lease
EXHIBIT C Terms of License

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CONTRIBUTION AGREEMENT

This CONTRIBUTION AGREEMENT (this "Agreement"), dated February
4, 1996, by and between Fresenius AG, an Aktiengesellschaft organized under the
laws of the Federal Republic of Germany ("Fresenius AG"), Steril Pharma GmbH, a
wholly owned Gesellschaft mit beschrankter Haftung of Fresenius AG ("GmbH" or
"SP"), and X. X. Xxxxx & Co.-Xxxx., a Connecticut corporation ("Grace-Conn.").

W I T N E S S E T H:

A. The Reorganization Agreement. Simultaneously herewith,
Grace and Fresenius AG are entering into an Agreement and Plan of Reorganization
(the "Reorganization Agreement") and, prior to the Effective Time, intend to
consummate the transactions contemplated hereby.

B. The Contribution. Prior to the Effective Time, Fresenius
AG intends to contribute its worldwide dialysis business to SP, as provided
herein, and to retain and lease to Newco certain real property and buildings in
the Federal Republic of Germany pursuant to a lease consistent with the terms
set forth in Exhibit B hereto and to retain and license to Newco its name and
certain derived marks pursuant to a license consistent with the terms set forth
in Exhibit C hereto.

D. The Distribution. Immediately prior to the Effective
Time, Grace intends to transfer to (or retain in) Grace-Conn. all non-healthcare
assets and liabilities, its interests in the Amicon bioseparations business and
GN Holdings, Inc. and certain other assets, as contemplated by this Agreement,
and to effect a distribution to its common shareholders of all of its equity
interest in Grace-Conn.

G. Financing. It is the intention of the parties hereto
that, prior to the Distribution: (i) Grace and Grace-Conn. shall use reasonable
efforts to cause NMC to arrange new credit facilities so that the transactions
contemplated by the Transaction Agreements may be consummated; (ii) Fresenius AG
shall use reasonable efforts to
122
arrange new credit facilities for the FWD Business so that the transactions
contemplated by the Transaction Agreements may be consummated; and (iii) the
parties shall cooperate with one another with respect to the foregoing.

H. Intention of the Parties. It is the intention of the
parties to the Reorganization Agreement that for United States federal income
tax purposes (a) the Distribution shall qualify as a tax-free distribution under
the Code, (b) each of the Mergers shall qualify as a "reorganization" under the
Code, (c) the Contribution shall qualify as a tax-free exchange under the Code
and (d) the Recapitalization shall be tax-free to Grace under the Code.

NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Affiliate: with respect to any specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person; provided,
however, that for purposes of this Agreement, no member of either Group shall be
deemed to be an Affiliate of any member of the other Group.

Agreement: as defined in the preamble to this Agreement.

Asset: any and all assets and properties, tangible or
intangible, including, without limitation, the following: (i) cash, notes and
accounts and notes receivable (whether current or non-current); (ii)
certificates of deposit, banker's acceptances, stock, debentures, evidences of
indebtedness, certificates of interest or participation in profit-sharing
agreements, collateral-trust certificates, preorganization certificates or
subscriptions, transferable shares, investment contracts, voting-trust
certificates, fractional undivided interests in oil, gas or other mineral
rights, puts, calls, straddles, options and other securities of any kind; (iii)
intangible property rights, inventions, discoveries, know-how, patents and
patent applications, trade secrets, confidential information, registered and
unregistered trademarks, service marks, service names, trade styles and trade
names and associated goodwill; statutory, common law and registered copyrights;
applications for any of the foregoing, rights to use the foregoing and other
rights in, to and under the foregoing; (iv) rights under leases, contracts,
licenses, permits, distribution arrangements, sales and purchase agreements,
other agreements and business arrangements; (v) real estate and buildings and
other improvements thereon; (vi) leasehold improvements, fixtures, trade
fixtures, machinery, equipment (including transportation and office equipment),
tools, dies and furniture; (vii) office supplies, production supplies, spare
parts, other miscellaneous supplies and other tangible property of any kind;
(viii) computer

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equipment and software; (ix) raw materials, work-in-process, finished goods,
consigned goods and other inventories; (x) prepayments or prepaid expenses; (xi)
claims, causes of action, choses in action, rights under express or implied
warranties, rights of recovery and rights of set-off of any kind; (xii) the
right to receive mail, payments on accounts receivable and other communications;
(xiii) lists of customers, records pertaining to customers and accounts,
personnel records, lists and records pertaining to customers, suppliers and
agents, and books, ledgers, files and business records of every kind; (xiv)
advertising materials and other printed or written materials; (xv) goodwill as a
going concern and other intangible properties; (xvi) employee contracts,
including any rights thereunder to restrict an employee from competing in
certain respects; and (xvii) licenses and authorizations issued by any
governmental authority.

Business: the Fresenius AG Business or the FWD Business.

Contribution: as defined in the Reorganization Agreement.

Contribution Date: the date on which the Effective Time
occurs.

CTC-DE: as defined in Section 8.04(b) of this Agreement.

CTC-NY: as defined in Section 8.04(b) of this Agreement.

Debt: as defined in the Reorganization Agreement.

Effective Time: as defined in the recitals to this Agreement.

Foreign Exchange Rate: with respect to any currency other
than United States dollars as of any date, the rate on such date at which such
currency may be exchanged for United States dollars as quoted in The Wall Street
Journal.

Fresenius AG: as defined in the preamble to this Agreement.

Fresenius AG Assets: all Assets owned by any member of the
Fresenius AG Group immediately prior to the Contribution Date, other than FWD
Business Assets and other than any stock or assets of Fresenius USA.

Fresenius AG Business: all of the business and operations
conducted at any time, whether prior to, on or after the Contribution Date, by
any member of the Fresenius AG Group, other than the FWD Business.

Fresenius AG Group: Fresenius AG and the Fresenius AG
Subsidiaries, other than any member of the FWD Business Group.

Fresenius AG Indemnitees: Fresenius AG, each Affiliate of
Fresenius AG and each of their respective Representatives and each of the heirs,
executors, successors and assigns of any of the foregoing.

Fresenius AG Subsidiaries: all direct and indirect
Subsidiaries of Fresenius AG, other than FWD Business Subsidiaries and other
than Fresenius USA and its

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Subsidiaries; provided, however, that for purposes of this Agreement, GmbH and
the FWD Business Subsidiaries shall not be deemed to be Subsidiaries of
Fresenius AG.

Fresenius Tax Indemnification Agreement: a tax sharing
agreement between Fresenius AG and GmbH substantially in the form attached
hereto as Exhibit B, with such changes as may be mutually satisfactory to
Fresenius AG, GmbH, and Grace-Conn.

Fresenius USA: Fresenius USA, Inc., a Massachusetts
Corporation.

Fresenius USA Merger: as defined in the Reorganization
Agreement.

FWD Business: as defined in the Reorganization Agreement,
but including all business and operations of Fresenius USA.

FWD Business Assets: as defined in the Reorganization
Agreement, but including all Assets of Fresenius USA.

FWD Business Group: GmbH and each other FWD Business
Subsidiary.

FWD Business Indemnitees: Grace-Conn., Newco, GmbH, each
Affiliate of GmbH and each of their respective Representatives and each of the
heirs, executors, successors and assigns of any of the foregoing.

FWD Business Subsidiary: (i) all FWD Business Subsidiaries
(as defined in the Reorganization Agreement), (ii) Fresenius USA and (iii) all
corporations, partnerships or other business entities in which any member of the
FWD Business Group has owned or will own any equity interest or other investment
and which predominantly relates to the FWD Business.

FWD Indemnitor: as defined in Section 2.01 of this Agreement.

GmbH: as defined in the preamble to this Agreement.

G-GmbH: as defined in Section 2.01 of this Agreement.

Grace: as defined in the Reorganization Agreement.

Grace-Conn.: as defined in the preamble to this Agreement.

Group: the Fresenius AG Group or the FWD Business Group.

Indemnifiable Losses: all losses, Liabilities, damages,
claims, demands, judgments or settlements of any nature or kind, known or
unknown, fixed, accrued, absolute or contingent, liquidated or unliquidated,
including all reasonable costs and expenses (legal, accounting or otherwise as
such costs are incurred) relating thereto, suffered (and not actually reimbursed
by insurance proceeds) by an Indemnitee, including any reasonable costs or
expenses of enforcing any indemnity hereunder.

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Indemnifying Party: a Person who or which is obligated under
this Agreement to provide indemnification.

Indemnitee: a Person who or which may seek indemnification
under this Agreement.

Indemnity Payment: an amount that an Indemnifying Party is
required to pay to or in respect of an Indemnitee pursuant to Article IV.

Information: all records, books, contracts, instruments,
computer data and other data and information.

Litigation Matters: actual, threatened or future litigations,
investigations, claims or other legal matters that have been or may be asserted
against, or otherwise adversely affect, Fresenius AG and/or GmbH (or members of
either Group).

NMC: National Medical Care, Inc., a Delaware corporation and
an indirect wholly owned subsidiary of Grace.

Newco: as defined in the Reorganization Agreement.

NY Preferred Registration Statement: as defined in the
Reorganization Agreement.

Other Agreements: an employee benefits agreement,
restructuring agreements, an insurance procedures agreement, a lease consistent
with the terms set forth in Exhibit B hereto, a license consistent with the
terms set forth in Exhibit C hereto, the Fresenius Tax Indemnification Agreement
and the other agreements entered into or to be entered into in connection with
the Contribution referred to in any of the foregoing as contemplated by Section
2.03.

Person: an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.

Privileged Information: with respect to either Group,
Information regarding a member of such Group, or any of its operations, Assets
or Liabilities (whether in documents or stored in any other form or known to
employees or agents) that is or may be protected from disclosure pursuant to the
attorney-client privilege, the work product doctrine or other applicable
privileges, that a member of the other Group may come into possession of or
obtain access to pursuant to this Agreement or otherwise.

Recapitalization: as defined in the Reorganization Agreement.

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Registration Statement: a registration statement to effect
the registration of the Newco capital stock (or depositary receipts therefor) to
be issued pursuant to the Reorganization Agreement under the Securities Act.

Reorganization Agreement: as defined in the recitals to this
Agreement.

Representative: with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.

Securities Act: the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.

SP: as defined in the preamble to this Agreement.

Subsidiary: with respect to any specified Person, (i) any
corporation or other legal entity of which such Person or any of its
subsidiaries controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of members to
the board of directors or similar governing body, and (ii) any corporation,
partnership or other business entity, in which such person has owned or shall
own any equity interest or other investment and which predominantly relates to
the business and operations conducted by such person's Group.

Tax: as defined in the Fresenius Tax Indemnification
Agreement.

ARTICLE II

CERTAIN TRANSACTIONS PRIOR TO THE CONTRIBUTION DATE

SECTION 2.01 CERTAIN TRANSFERS. As promptly as practicable
following the date hereof (and in any event prior to the Contribution Date),
Fresenius AG shall contribute the FWD Business and all FWD Business Assets to
Newco. In furtherance of the foregoing:

(a) Fresenius AG shall identify all existing Subsidiaries
engaged solely in the FWD Business and contribute the capital stock of
such Subsidiaries to SP.

(b) Fresenius AG shall identify all German FWD Business Assets
(other than any capital stock, which is to be contributed pursuant to
(a) above) and shall contribute such assets to a newly formed GmbH
("G-GmbH").

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127
(d) Fresenius AG shall use reasonable best efforts to cause
each remaining Subsidiary which conducts part of the FWD Business to
divest itself of all Assets which are not FWD Business Assets; and,
immediately thereafter, Fresenius AG shall contribute the capital stock
of each such Subsidiary to SP; provided, however, that in no event
shall Fresenius AG take any action which causes any representation set
forth in the Fresenius AG Tax Matters Certificate to be untrue.

(e) To the extent that any FWD Business Assets remain in
Fresenius AG Subsidiaries other than SP (or its direct Subsidiaries)
and G-GmbH, Fresenius AG shall cause each such Subsidiary to divest
itself of such FWD Business Assets and then shall cause such FWD
Business Assets to be contributed to other Subsidiaries, which may be
newly formed, and shall then contribute all of the capital stock of
such Subsidiaries to SP.

(f) Fresenius AG shall contribute all capital stock of
Fresenius USA held by it to SP.

(g) The Subsidiaries contributed to SP shall collectively be
"FWD Indemnitor," on a joint and several basis, and none of such
Subsidiaries shall be a direct or indirect parent of Grace.

(h) Fresenius AG shall undertake such transactions as may be
necessary for SP to become Newco, consistent with the terms of the
Reorganization Agreement.

(i) The foregoing shall be effectuated pursuant to transfer
documents and agreements acceptable to Grace-Conn.

SECTION 2.02 TERMINATION OF AGREEMENTS. Except as agreed by
Grace in writing prior to the Contribution Date, Fresenius AG shall terminate
all agreements between any member of the Fresenius AG Group and any member of
the FWD Business Group except as specifically provided herein or in the Other
Agreements.

SECTION 2.03 OTHER AGREEMENTS. Each of Fresenius AG and GmbH
shall enter into, or cause the appropriate members of the Group of which it is a
member, to enter into, the Tax Indemnification Agreement and Other Agreements as
may be advisable in connection with the Distribution including, without
limitation, agreements with respect to employee benefits, restructuring,
insurance procedures and other matters, all such other agreements to be on terms
acceptable to Grace-Conn. prior to the Distribution Date.

ARTICLE III

[Intentionally Omitted.]

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128
ARTICLE IV

SURVIVAL AND INDEMNIFICATION

SECTION 4.01 SURVIVAL OF AGREEMENTS. All covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Contribution Date.

SECTION 4.02 INDEMNIFICATION. (a) Except as specifically
otherwise provided in the Other Agreements, FWD Indemnitor shall indemnify,
defend and hold harmless the Fresenius AG Indemnitees from and against (1) all
Indemnifiable Losses arising from or relating to the FWD Business or the FWD
Business Assets, whether such Indemnifiable Losses relate to events, occurrences
or circumstances occurring or existing, or whether such Indemnifiable Losses are
asserted, before or after the Contribution Date; and (2) all Indemnifiable
Losses arising out of or based upon any untrue statement or alleged untrue
statement of a material fact, or omission or alleged omission to state a
material fact required to be stated, in the Registration Statement, NY Preferred
Registration Statement or the Proxy Statement supplied by Grace or its
subsidiaries or any preliminary or final form thereof or any amendment thereto,
or necessary to make the statements therein not misleading.

(b) Except as specifically otherwise provided in the Other
Agreements, Fresenius AG shall indemnify, defend and hold harmless the FWD
Business Indemnitees from and against (1) all Indemnifiable Losses of or
relating to the Fresenius AG Group (including, without limitation, relating to
Fresenius USA or its shareholders or the Fresenius AG Business), whether such
Indemnifiable Losses relate to events, occurrences or circumstances occurring or
existing, or whether such Indemnifiable Losses are asserted, before or after the
Contribution Date, other than those Indemnifiable Losses arising from the FWD
Business; (2) all Indemnifiable Losses arising from or relating to all
litigation brought by Fresenius USA shareholders acting in such capacity
relating to the Reorganization; and (3) all Indemnifiable Losses arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact, or omission or alleged omission to state a material fact required to be
stated, in the Registration Statement, NY Preferred Registration Statement or
the Proxy Statement or any preliminary or final form thereof or any amendment
thereto, or necessary to make the statements therein not misleading, except that
such indemnifications shall not apply to any Indemnifiable Losses that arise out
of or are based upon any statement or omission, or alleged statement or
omission, in any portion of the Registration Statement, NY Preferred
Registration Statement or the Proxy Statement, or any preliminary or final form
thereof or any amendment thereto, supplied by Grace or its Subsidiaries.

(c) Notwithstanding anything to the contrary set forth herein,
indemnification relating to any arrangements between any member of the Fresenius
AG Group and any member of the FWD Business Group for the provision after the
Contribution of goods and services in the ordinary course shall be governed by
the terms of such arrangements and not by this Section 4.02.

SECTION 4.03 PROCEDURES FOR INDEMNIFICATION FOR THIRD-PARTY
CLAIMS. (a) GmbH shall, and shall cause the other FWD Business Indemnitees to,
notify Fresenius AG in writing promptly after learning of any Third-Party Claim
for which any FWD Business Indemnitee intends to seek indemnification from
Fresenius AG

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under this Agreement. Fresenius AG shall, and shall cause the other Fresenius AG
Indemnitees to, notify GmbH in writing promptly after learning of any
Third-Party Claim for which any Fresenius AG Indemnitee intends to seek
indemnification from FWD Indemnitor under this Agreement. The failure of any
Indemnitee to give such notice shall not relieve any Indemnifying Party of its
obligations under this Article except to the extent that such Indemnifying Party
or its Affiliate is actually prejudiced by such failure to give notice. Such
notice shall describe such Third-Party Claim in reasonable detail considering
the information provided to the Indemnitee.

(b) Except as otherwise provided in subsection (c) of this
Section 4.03, an Indemnifying Party may, by notice to the Indemnitee and to FWD
Indemnitor, if Fresenius AG is the Indemnifying Party, or to the indemnitees and
Fresenius AG, if FWD Indemnitor is the Indemnifying Party, at any time after
receipt by such Indemnifying Party of such Indemnitee's notice of a Third-Party
Claim, undertake (itself or through another member of the Group of which the
Indemnifying Party is a member) the defense or settlement of such Third-Party
Claim. If an Indemnifying Party undertakes the defense of any Third-Party Claim,
such Indemnifying Party shall thereby admit its obligation to indemnify the
Indemnitee against such Third-Party Claim, and such Indemnifying Party shall
control the investigation and defense or settlement thereof, and the Indemnitee
may not settle or compromise such Third-Party Claim, except that such
Indemnifying Party shall not require any Indemnitee, without its prior written
consent, to take or refrain from taking any action in connection with such
Third-Party Claim, or make any public statement, which such Indemnitee
reasonably considers to be against its interests, nor shall the Indemnifying
Party, without the prior written consent of the Indemnitee and of FWD
Indemnitor, if the Indemnitee is a FWD Business Indemnitee, or of the Indemnitee
and of Fresenius AG, if the Indemnitee is a Fresenius AG Indemnitee, consent to
any settlement that does not include as a part thereof an unconditional release
of the Indemnitees from liability with respect to such Third-Party Claim or that
requires the Indemnitee or any of its Representatives or Affiliates to make any
payment that is not fully indemnified under this Agreement or to submit to any
non-monetary remedy; and subject to the Indemnifying Party's control rights, as
specified herein, the Indemnitees may participate in such investigation and
defense, at their own expense. Following the provision of notice to the
Indemnifying Party, until such time as an Indemnifying Party has undertaken the
defense of any Third-Party Claim, as provided herein, such Indemnified Party
shall control the investigation and defense or settlement thereof, without
prejudice to its right to seek indemnification hereunder.

(c) If an Indemnitee reasonably determines that there may be
legal defenses available to it that are different from or in addition to those
available to its Indemnifying Party which make it inappropriate for the
Indemnifying Party to undertake the defense or settlement thereof, then such
Indemnifying Party shall not be entitled to assume undertake the defense or
settlement of such Third-Party Claim; and counsel for the Indemnifying Party
shall be entitled to conduct the defense of such Indemnifying Party and counsel
for the Indemnitee shall be entitled to conduct the defense of such Indemnitee,
it being understood that both such counsel shall cooperate with each other to
conduct the defense or settlement of such action as efficiently as possible.

(d) In no event shall an Indemnifying Party be liable for the
fees and expenses of more than one counsel for all Indemnitees in connection
with any one action,

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or separate but similar or related actions, in the same jurisdiction arising out
of the same general allegations or circumstances.

(e) FWD Indemnitor shall, and shall cause the other FWD
Business Indemnitees to, and Fresenius AG shall, and shall cause the other
Fresenius AG Indemnitees to, make available to each other, their counsel and
other Representatives, all information and documents reasonably available to
them which relate to any Third-Party Claim, and otherwise cooperate as may
reasonably be required in connection with the investigation, defense and
settlement thereof. Any joint defense agreement entered into by Fresenius AG or
FWD Indemnitor with any third party relating to any Third-Party Claim shall
provide that Fresenius AG or FWD Indemnitor may, if requested, provide
information obtained through any such agreement to the Fresenius AG Indemnitees
or the FWD Business Indemnitees.

SECTION 4.04 REMEDIES CUMULATIVE. The remedies provided in
this Article IV shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any other remedies against any
Indemnifying Party. However, the procedures set forth in Section 4.03 shall be
the exclusive procedures governing any indemnity action brought under this
Agreement or otherwise and relating to a Third-Party Claim, except as otherwise
specifically provided in any of the Other Agreements.

ARTICLE V

CERTAIN ADDITIONAL COVENANTS

SECTION 5.01 NOTICES TO THIRD PARTIES. In addition to the
actions described in Section 5.02, the members of the Fresenius AG Group and the
members of the FWD Business Group shall cooperate to make all other filings and
give notice to and obtain consents from all third parties that may reasonably be
required to consummate the transactions contemplated by this Agreement and the
Other Agreements.

SECTION 5.02 LICENSES AND PERMITS. Each party hereto shall
cause the appropriate members of its Group to prepare and file with the
appropriate licensing and permitting authorities applications for the transfer
or issuance as may be necessary or advisable in connection with the Contribution
to its Group of all material governmental licenses and permits required for the
members of its Group to operate its Business after the Contribution. The members
of the Fresenius AG Group and the members of the FWD Business Group shall
cooperate and use all reasonable efforts to secure the transfer or issuance of
the licenses and permits.

SECTION 5.03 INTERCOMPANY AGREEMENTS. All contracts, licenses,
agreements, commitments or other arrangements, formal or informal, between any
member of the Fresenius AG Group, on the one hand, and any member of the FWD
Business Group (or any unit of the FWD Business), on the other hand, in
existence as of the Contribution Date, pursuant to which any member of either
Group provides to any member of the other Group services (including, without
limitation, management, administrative, legal, financial, accounting, data
processing, insurance, or technical support), or the use of any Assets of any
member of the other Group, or the secondment of any employee, or

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pursuant to which rights, privileges or benefits are afforded to members of
either Group as Affiliates of the other Group, shall terminate as of the close
of business on the day prior to the Contribution Date, except as specifically
provided herein or in the Other Agreements. From and after the Contribution
Date, no member of either Group shall have any rights under any such contract,
license, agreement, commitment or arrangement with any member of the other
Group, except as specifically provided herein or in the Other Agreements.

SECTION 5.04 GUARANTEE OBLIGATIONS. (a) Fresenius AG and FWD
Indemnitor shall cooperate, and shall cause their respective Groups to
cooperate, to terminate, or to cause a member of the FWD Business Group to be
substituted in all respects for any member of the Fresenius AG Group in respect
of, all obligations of any member of the Fresenius AG Group under any loan,
financing, lease, contract, or other obligation in existence as of the
Contribution Date pertaining to the FWD Business for which such member of the
Fresenius AG Group may be liable, as guarantor, original tenant, primary obligor
or otherwise. If such a termination or substitution is not effected by the
Contribution Date, (1) FWD Indemnitor shall indemnify and hold harmless the
Fresenius AG Indemnitees for any Indemnifiable Loss arising from or relating
thereto, and (2) without the prior written consent of the Chief Financial
Officer, Treasurer or any Assistant Treasurer of Fresenius AG, from and after
the Contribution Date, FWD Indemnitor shall not, and shall not permit any member
of the FWD Business Group or any of its Affiliates to, renew or extend the term
of, increase its obligations under, or transfer to a third party, any loan,
lease, contract or other obligation for which any member of the Fresenius AG
Group is or may be liable unless all obligations of the Fresenius AG Group with
respect thereto are thereupon terminated by documentation reasonably
satisfactory in form and substance to the Chief Financial Officer, Treasurer or
any Assistant Treasurer of Fresenius AG.

(b) Fresenius AG and FWD Indemnitor shall cooperate, and shall
cause their respective Groups to cooperate, to terminate, or to cause a member
of the Fresenius AG Group to be substituted in all respects for any member of
the FWD Business Group in respect of, all obligations of any member of the FWD
Business Group under any loan, financing, lease, contract or other obligation in
existence as of the Contribution Date pertaining to the Fresenius AG Business
for which such member of the FWD Business Group may be liable, as guarantor,
original tenant, primary obligor or otherwise. If such a termination or
substitution is not effected by the Contribution Date, (1) Fresenius AG shall
indemnify and hold harmless the FWD Business Indemnitees for any Indemnifiable
Loss arising from or relating thereto, and (2) without the prior written consent
of the Chief Financial Officer, Treasurer or any Assistant Treasurer of FWD
Indemnitor, from and after the Contribution Date, Fresenius AG shall not, and
shall not permit any member of the Fresenius AG Group to, renew or extend the
term of, increase its obligations under, or transfer to a third party, any loan,
lease, contract or other obligation for which any member of the FWD Business
Group is or may be liable unless all obligations of the FWD Business Group with
respect thereto are thereupon terminated by documentation reasonably
satisfactory in form and substance to the Chief Financial Officer, Treasurer or
any Assistant Treasurer of FWD Indemnitor.

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done, all things reasonably necessary, proper or advisable under applicable
laws, regulations and agreements to consummate and make effective the
transactions contemplated by this Agreement including, without limitation, the
Asset transfers and debt and cash balances of the other party contemplated
thereby following the Contribution. Without limiting the foregoing, each party
hereto shall cooperate with the other party, and execute and deliver, or use
reasonable efforts to cause to be executed and delivered, all instruments, and
to make all filings with, and to obtain all consents, approvals or
authorizations of, any governmental or regulatory authority or any other Person
under any permit, license, agreement, indenture or other instrument, and take
all such other actions as such party may reasonably be requested to take by any
other party hereto from time to time, consistent with the terms of this
Agreement and the Other Agreements, in order to effectuate the provisions and
purposes of this Agreement. Without limiting the foregoing the parties will as
promptly as practicable (and in the case of this Agreement and the
Reorganization Agreement within one week after the signing hereof in Germany or
Switzerland) apply for any notarial or similar registrations with respect to the
transactions contemplated hereby in foreign jurisdictions.

ARTICLE VI

ACCESS TO INFORMATION

SECTION 6.01 PROVISION OF CORPORATE RECORDS. Prior to or as
promptly as practicable after the Contribution Date, Fresenius AG shall deliver
to GmbH all corporate books and records of the FWD Business Group in its
possession and copies of the relevant portions of all corporate books and
records of the Fresenius AG Group relating directly and primarily to the FWD
Business Assets, the FWD Business, or the Liabilities of the FWD Business Group,
including, in each case, all active agreements, active litigation files and
government filings. From and after the Contribution Date, all such books,
records and copies shall be the property of GmbH. Prior to or as promptly as
practicable after the Contribution Date, GmbH shall deliver to Fresenius AG all
corporate books and records of the Fresenius AG Group in its possession and
copies of the relevant portions of all corporate books and records of the
Fresenius AG Group relating directly and primarily to the Fresenius AG Assets,
the Fresenius AG Business, or the Liabilities of the Fresenius AG Group,
including, in each case, all active agreements, active litigation files and
government filings. From and after the Contribution Date, all such books,
records and copies shall be the property of Fresenius AG.

SECTION 6.02 ACCESS TO INFORMATION. From and after the
Contribution Date, each of Fresenius AG and GmbH shall afford to the other and
to the other's Representatives reasonable access and duplicating rights during
normal business hours to all Information within the possession or control of
such party's Group relating to the other party's Group's pre-Contribution
business, Assets or Liabilities or relating to or arising in connection with the
relationship between the Groups on or prior to the Contribution Date, insofar as
such access is reasonably required for a reasonable purpose, subject to the
provisions below regarding Privileged Information. Without limiting the
foregoing, Information may be requested under this Section 6.02 for audit,
accounting, claims, litigation and Tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations.

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In furtherance of the foregoing:

(a) Each party hereto acknowledges that: (1) Each of Fresenius
AG and GmbH (and the members of the Fresenius AG Group and the FWD
Business Group, respectively) has or may obtain Privileged Information;
(2) there are a number of Litigation Matters affecting each or both of
Fresenius AG and GmbH; (3) both Fresenius AG and GmbH have a common
legal interest in Litigation Matters, in the Privileged Information,
and in the preservation of the confidential status of the Privileged
Information, in each case relating to pre-Contribution business of the
Fresenius AG Group or the FWD Business Group or relating to or arising
in connection with the relationship between the Groups on or prior to
the Contribution Date; and (4) both Fresenius AG and GmbH intend that
the transactions contemplated hereby and by the Reorganization
Agreement and the Other Agreements and any transfer of Privileged
Information in connection therewith shall not operate as a waiver of
any potentially applicable privilege.

(b) Each of Fresenius AG and GmbH agrees, on behalf of itself
and each member of the Group of which it is a member, not to disclose
or otherwise waive any privilege attaching to any Privileged
Information relating to pre-Contribution business of the FWD Business
Group or the Fresenius AG Group, respectively, or relating to or
arising in connection with the relationship between the Groups on or
prior to the Contribution Date, without providing prompt written notice
to and obtaining the prior written consent of the other, which consent
shall not be unreasonably withheld and shall not be withheld if the
other party certifies that such disclosure is to be made in response to
a likely threat of suspension or debarment or similar action; provided,
however, that Fresenius AG and GmbH may make such disclosure or waiver
with respect to Privileged Information if such Privileged Information
relates solely to the pre-Contribution business of the Fresenius AG
Group in the case of Fresenius AG or the FWD Business Group in the case
of GmbH. In the event of a disagreement between any member of the
Fresenius AG Group and any member of the FWD Business Group concerning
the reasonableness of withholding such consent, no disclosure shall be
made prior to a resolution of such disagreement by a court of competent
jurisdiction.

(c) Upon any member of the Fresenius AG Group or any member of
the FWD Business Group receiving any subpoena or other compulsory
disclosure notice from a court, other governmental agency or otherwise
which requests disclosure of Privileged Information, in each case
relating to pre-Contribution business of the FWD Business Group or the
Fresenius AG Group, respectively, or relating to or arising in
connection with the relationship between the Groups on or prior to the
Contribution Date, the recipient of the notice shall promptly provide
to the other Group (following the notice provisions set forth herein) a
copy of such notice, the intended response, and all materials or
information relating to the other Group that might be disclosed. In the
event of a disagreement as to the intended response or disclosure,
unless and until the disagreement is resolved as provided in subsection
(b), the parties shall cooperate to assert all defenses to disclosure
claimed by either party's Group, and shall not disclose any disputed
documents or information until all legal defenses and claims of
privilege have been finally determined.

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SECTION 6.03 PRODUCTION OF WITNESSES. Subject to Section 6.02,
after the Contribution Date, each of Fresenius AG and GmbH shall, and shall
cause each member of the Fresenius AG Group and the FWD Business Group,
respectively, to, make available to Fresenius AG or GmbH or any member of the
Fresenius AG Group or of the FWD Business Group, as the case may be, upon
written request, such Group's directors, officers, employees and agents as
witnesses to the extent that any such Person may reasonably be required in
connection with any Litigation Matters, administrative or other proceedings in
which the requesting party may from time to time be involved and relating to
pre-Contribution business of the Fresenius AG Group or the FWD Business Group or
relating to or in connection with the relationship between the Groups on or
prior to the Contribution Date.

SECTION 6.04 RETENTION OF RECORDS. Except as otherwise agreed
in writing, or as otherwise provided in the Other Agreements, each of Fresenius
AG and GmbH shall, and shall cause the members of the Group of which it is a
member to, retain all Information in such party's Group's possession or under
its control relating directly and primarily to the pre-Contribution business,
Assets or Liabilities of the other party's Group that is less than ten years old
until such Information is at least ten years old except that if, prior to the
expiration of such period, any member of either party's Group wishes to destroy
or dispose of any such Information that is at least three years old, prior to
destroying or disposing of any of such Information, (1) the party whose Group is
proposing to dispose of or destroy any such Information shall provide no less
than 30-days' prior written notice to the other party, specifying the
Information proposed to be destroyed or disposed of, and (2) if, prior to the
scheduled date for such destruction or disposal, the other party requests in
writing that any of the Information proposed to be destroyed or disposed of be
delivered to such other party, the party whose Group is proposing to dispose of
or destroy such Information promptly shall arrange for the delivery of the
requested Information to a location specified by, and at the expense of, the
requesting party.

SECTION 6.05 CONFIDENTIALITY. Subject to Section 6.02, which
shall govern Privileged Information, from and after the Contribution Date, each
of Fresenius AG and GmbH shall hold, and shall use its reasonable efforts to
cause its Affiliates and Representatives to hold, in strict confidence all
Information concerning the other party's Group obtained by it prior to the
Contribution Date or furnished to it by such other party's Group pursuant to
this Agreement or the Other Agreements and shall not release or disclose such
Information to any other Person, except its Affiliates and Representatives, who
shall be bound by the provisions of this Section 6.05, and each party shall be
responsible for a breach by any of its Affiliates or Representatives; provided,
however, that any member of the Fresenius AG Group or the FWD Business Group
may disclose such Information to the extent that (a) disclosure is compelled by
judicial or administrative process or, in the opinion of such Person's counsel,
by other requirements of law, or (b) such party can show that such Information
was (1) available to such Person on a nonconfidential basis (other than from a
member of the other party's Group) prior to its disclosure by the other party's
Group, (2) in the public domain through no fault of such Person or (3) lawfully
acquired by such Person from another source after the time that it was
furnished to such Person by the other party's Group, and not acquired from such
source subject to any confidentiality obligation on the part of such source, or
on the part of the acquiror, known to the acquiror. Notwithstanding the
foregoing, each of Fresenius AG and GmbH shall be deemed to have satisfied its
obligations under this

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Section 6.05 with respect to any Information (other than Privileged Information)
if it exercises the same care with regard to such Information as it takes to
preserve confidentiality for its own similar Information.

SECTION 6.06 COOPERATION WITH RESPECT TO GOVERNMENT REPORTS
AND FILINGS. Fresenius AG, on behalf of itself and each member of the Fresenius
AG Group, agrees to provide any member of the FWD Business Group, and GmbH, on
behalf of itself and each member of the FWD Business Group, agrees to provide
any member of the Fresenius AG Group, with such cooperation and Information as
may be reasonably requested by the other in connection with the preparation or
filing of any government report or other government filing contemplated by this
Agreement or in conducting any other government proceeding relating to
pre-Contribution business of the Fresenius AG Group or the FWD Business Group,
Assets or Liabilities of either Group or relating to or in connection with the
relationship between the Groups on or prior to the Contribution Date. Such
cooperation and Information shall include, without limitation, promptly
forwarding copies of appropriate notices and forms or other communications
received from or sent to any government authority which relate to the Fresenius
AG Group, in the case of the FWD Business Group, or the FWD Business Group, in
the case of the Fresenius AG Group. Each party shall make its employees and
facilities available during normal business hours and on reasonable prior notice
to provide explanation of any documents or Information provided hereunder.

ARTICLE VII

NO REPRESENTATIONS OR WARRANTIES

SECTION 7.01 NO REPRESENTATIONS OR WARRANTIES. Fresenius AG
acknowledges that, prior to the date of this Agreement, it has had primary
responsibility for the operation and management of the FWD Business Assets. GmbH
understands and agrees that no member of the Fresenius AG Group is, in this
Agreement or in any other agreement or document, representing or warranting to
GmbH or any member of the FWD Business Group in any way as to the FWD Business
Assets, the FWD Business or the Liabilities of the FWD Business Group or as to
any consents or approvals required in connection with the consummation of the
transactions contemplated by this Agreement, it being agreed and understood that
GmbH and each member of the FWD Business Group shall take all of the FWD
Business Assets "as is, where is". GmbH and each member of the FWD Business
Group shall bear the economic and legal risk that conveyances of the FWD
Business Assets shall prove to be insufficient, that the title of any member of
the FWD Business Group to any FWD Business Assets, shall be other than good and
marketable and free from encumbrances or that results from the failure of GmbH
or any member of the FWD Business Group to obtain any consents or approvals
relating to the FWD Business required in connection with the consummation of the
transactions contemplated by this Agreement. The foregoing shall be without
prejudice to any rights under Section 4.02 or Section 5.05 of this Agreement.

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ARTICLE VIII

MISCELLANEOUS

SECTION 8.01 USE OF FRESENIUS AG NAME AND XXXX. Prior to
the Contribution Date, Fresenius AG shall enter into a license agreement
consistent with the terms set forth in Exhibit C hereto, providing for the use
of certain of Fresenius AG's names and marks.

SECTION 8.02 COMPLETE AGREEMENT. This Agreement, the exhibits
and schedules hereto and the agreements and other documents referred to herein
shall constitute the entire agreement between the parties hereto with respect to
the subject matter hereof (other than the Reorganization Agreement and the
schedules and exhibits thereto) and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.

SECTION 8.03 EXPENSES. Fresenius AG shall bear all costs with
respect to the transactions contemplated hereby and by the Other Agreements,
except as otherwise specifically provided in the Reorganization Agreement and
the Other Agreements.

SECTION 8.04 JURISDICTION AND FORUM. (a) The parties hereto
agree that the appropriate forum for any disputes between any of the parties
hereto arising out of this Agreement or the transactions contemplated hereby
shall be any state or federal court in the State of New York or the State of
Delaware provided that the foregoing shall not limit the rights of any person to
obtain execution of judgment in any other jurisdiction. The parties hereto
further agree, to the extent permitted by law, that final and unappealable
judgment against any of them in any action or proceeding contemplated above
shall be conclusive and may be enforced in any other jurisdiction within or
outside the United States by suit on the judgment, a certified or exemplified
copy of which shall be conclusive evidence of the fact and amount of such
judgment.

(b) By the execution and delivery of this Agreement, each of
the parties hereto (i) irrevocably designates and appoints The Corporation Trust
Company ("CTC-NY") care of CT Corporation System, at 0000 Xxxxxxxx, 00xx xxxxx,
xx xxx Xxxx xx Xxx Xxxx, Xxxxxx of Xxx Xxxx, Xxxxx xx Xxx Xxxx, 00000, or The
Corporation Trust Company ("CTC-DE") care of Corporation Trust Company, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000, as its authorized agent upon which
process may be served in any action or proceeding arising out of or relating to
this Agreement, (ii) submits to the personal jurisdiction of any state or
federal court in the State of New York or the State of Delaware in any such
action or proceeding, and (iii) agrees that service of process upon CTC-NY or
upon CTC-DE shall be deemed in every respect effective service of process upon
such person in any such action or proceeding. Each of the parties hereto further
agrees to take any and all action, including the execution and filing of any and
all such documents and instruments, as may be necessary to continue such
designation and appointment of CTC-NY or CTC-DE in full force and effect so long
as this Agreement shall be in effect. The foregoing shall not limit the rights
of any party to serve process in any other manner permitted by law.

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(c) To the extent that either of the parties hereto has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, such person hereby irrevocably waives such immunity in respect
of its obligations with respect to this Agreement.

SECTION 8.05 NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telegram, telex or other standard form of telecommunications, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

If to Fresenius AG or any member of the Fresenius AG Group:

Fresenius AG
Borkenberg 14
61440 Xxxxxxxxx
00000 Xxx Xxxxxxx
Xxxxxxx
Attention: Xx. Xxx Xxxxx
Fax: 000-00-0000-00-0000

with a copy to:

O'Melveny & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xx. Xxxxxx Xxxxxx
Fax: (000) 000-0000

If to GmbH or any member of the FWD Business Group

GmbH
x/x Xxxxxxxxx XX
Xxxxxxxxxx 00
00000 Xxxxxxxxx
00000 Xxx Xxxxxxx
Xxxxxxx
Attention: Xx. Xxx Xxxxx
Fax: 000-00-0000-00-0000

with a copy to:

X. X. Xxxxx & Co.-Conn.
Xxx Xxxx Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Secretary
Fax: (000) 000-0000

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with a copy to:

Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000

or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section 8.05.

SECTION 8.06 AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified or supplemented only by a written agreement signed by all of
the parties hereto.

SECTION 8.07 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY
BENEFICIARIES. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
and obligations hereunder shall be assigned by any party hereto without the
prior written consent of the other party. Except for the provisions of Sections
4.02 and 4.03 relating to indemnities, which are also for the benefit of the
Indemnitees, this Agreement is solely for the benefit of the parties hereto and
their Subsidiaries and Affiliates and is not intended to confer upon any other
Persons any rights or remedies hereunder.

SECTION 8.08 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.

SECTION 8.09 INTERPRETATION. The Article and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties hereto and shall not in any way affect the
meaning or interpretation of this Agreement.

SECTION 8.10 SEVERABILITY. If any provision of this Agreement
or the application thereof to any person or circumstance is determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party.

SECTION 8.11 REFERENCES; CONSTRUCTION. References to any
"Article," "Exhibit," "Schedule" or "Section," without more, are to Articles,
Exhibits, Schedules and Sections to or of this Agreement. Unless otherwise
expressly stated, clauses beginning with the term "including" set forth examples
only and in no way limit the generality of the matters thus exemplified.

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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.

FRESENIUS AG

By: /s/ Xxxx Xxxxx
-------------------------------
Name:
Title:

STERIL PHARMA GMBH

By: /s/ Xxxx Xxxxx
-------------------------------
Name:
Title:

X. X. XXXXX & CO.-XXXX.

By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name:
Title:

140

EXHIBIT A

TAX INDEMNIFICATION AGREEMENT

TAX INDEMNIFICATION AGREEMENT (the "Agreement"), dated
February , 1996, among FRESENIUS AG, an Aktiengesellschaft organized under the
laws of the Federal Republic of Germany ("Fresenius AG"), Newco and X.X. Xxxxx
& Co.-Xxxx., a Connecticut corporation ("Grace-Conn.").

RECITALS

A. WHEREAS Fresenius AG has organized Newco for the purposes
of effecting the transactions described herein and in the Agreement and Plan of
Reorganization dated February 4, 1996 (the "Reorganization Agreement");

B. WHEREAS, as part of those transactions, Fresenius AG will
have made the Contribution, as such term is defined in the Reorganization
Agreement;

C. WHEREAS, as part of such transactions, X.X. Xxxxx & Co., a
New York corporation ("Grace") will have effected the Recapitalization and the
Distribution, as such terms are defined in the Reorganization Agreement;

D. WHEREAS, as part of such transactions, the Fresenius USA
Merger and the Grace Merger, as such terms are defined in the Reorganization
Agreement, will have occurred; and

E. WHEREAS the parties hereto have determined that it is
necessary and desirable to set forth their agreement with regard to the
liability for Taxes (as such term is defined in that certain Tax Sharing and
Indemnification Agreement dated as of the Closing Date, between Grace and
Grace-Conn. (the "Tax Sharing Agreement")) relating to the Contribution and the
Fresenius USA Merger;

NOW THEREFORE, in consideration of the premises, and of the
covenants and agreements set forth herein and other good and valuable
consideration, the parties agree as follows:

Section 1. Definitions. Capitalized terms not otherwise
defined herein or by reference to a particular document referred to herein
shall have the meaning ascribed to such terms in the Tax Sharing Agreement.

Section 2. Indemnification. Subject to the other provisions
of this Agreement, Fresenius AG agrees to indemnify, defend and to hold
harmless Grace, Grace-Conn., the Grace-Conn. Indemnities, Newco and Newco's
subsidiaries from and against any Taxes, liability and Indemnifiable Losses,
(1) resulting from the Contribution or the Fresenius USA Merger or (2) arising
out of, relating to or associated with any business or assets of Fresenius AG
or its subsidiaries other than the FWD Business Assets or FWD Business ("Other
Business"). Without limiting the foregoing, in the event that a Fresenius AG
subsidiary operates both an FWD Business and an Other Business ("Dual
Subsidiary"), Fresenius AG will indemnify and hold harmless Newco and its
subsidiaries from and against any Tax liability and Indemnifiable Losses
arising from or relating to any Other Business Tax Items. "Other Business Tax
Items" shall mean a Tax Item attributable to

141

Fresenius AG and its subsidiaries other than a Tax Item solely attributable to
the FWD Business. "Tax Item" means any item of income, gain, loss, deduction,
credit, provisions for reserves, recapture of credit or any other item which
increases or decreases taxes paid or payable. Fresenius AG will advance to
Newco and/or any Dual Subsidiary any Taxes attributable to Other Business Tax
Items in advance of the due date for the payment of such Taxes in respect of
any Dual Subsidiary and pay the Tax due with respect to such Tax Return. Newco
will cause to be filed any Tax Returns in respect of any Dual Subsidiary due
after the Closing Date. Fresenius AG shall not be responsible for, and shall
not indemnify, defend or hold harmless Newco or its subsidiaries from, any
Taxes for which any of the corporations that are the subject of the
Contribution or the Fresenius USA Merger are liable in connection with any of
the operations of the FWD Business (and not Other Business Tax Items), whether
occurring before or after the date of the Contribution or the Fresenius US
Merger. Disputes with respect to the calculation of Other Business Tax Items
shall be resolved in the manner set forth in Section 5.04 of the Tax Sharing
Agreement.

Section 3. Notice of Indemnity. Whenever Newco or
Grace-Conn., or any of their respective subsidiaries (hereinafter an
"Indemnitee"), becomes aware of the existence of an issue which could cause
Fresenius AG (hereinafter the "Indemnitor") to have any liability for
indemnification hereunder ("Indemnity Issue"), the Indemnitee shall promptly
give notice to the Indemnitor of such Indemnity Issue. The failure of any
Indemnity to give such notice shall not relieve the Indemnitor of its
obligations under this Agreement except to the extent the Indemnitor or any of
its affiliates is actually materially prejudiced by such failure to give
notice. The Indemnitor and its representatives, at the Indemnitor's expense,
shall be entitled to participate (i) in all conferences, meetings or
proceedings with any taxing authority, the subject matter of which is or
includes an Indemnity Issue and (ii) in all appearances before any court, the
subject matter of which is or includes an Indemnity Issue. The party who has
the responsibility for filing the Tax Return with respect to which there in an
increased Tax liability as a result of an Indemnity Issue (the "Responsible
Party") shall have the right to decide as between the parties how such matter
is to be dealt with and finally resolved with the appropriate taxing authority
and shall control all audits and similar proceedings. The Responsible Party
agrees to cooperate in the settlement of any Indemnity Issue with the other
party and to take such other party's interests into account. If the Indemnitor
is not the Responsible Party, (A) such cooperation may include permitting the
Indemnitor, at the Indemni-tor's sole expense, to litigate or otherwise resolve
any Indemnity Issue, and (B) whenever more than one action is reasonably
available in connection with any Indemnity Issue, the Responsible Party agrees
to take whatever action would mitigate the Indemnitor's liability hereunder,
after consultation with the Indemnitor. Notwithstanding the foregoing, nothing
herein shall require or obligate the Indemnitor to contest any Indemnity Issue.

Section 4. Expenses. Unless otherwise expressly provided in
this Agreement, each party shall bear any and all expenses that arise from
their respective obligations under this Agreement.

Section 5. Entire Agreement. This Agreement, together with
the Tax Sharing Agreement, constitutes the entire agreement of the parties
concerning the subject matter hereof and supersedes all other agreements,
whether or not written, in respect of any indemnification obligation of
Fresenius AG to Newco or Grace-Conn. or any of their respective subsidiaries.
This Agreement may not be amended except in writing, signed by

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142

the parties hereto. Anything in this Agreement or the Distribution Agreement
to the contrary notwithstanding, in the event and to the extent that there
shall be a conflict between the provisions of this Agreement and the
Distribution Agreement, the provisions of this Agreement shall control.

Section 6. Notices.

To Grace-Conn. or any member of the Grace-Conn. Group:

Grace-Conn.
Xxx Xxxx Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Secretary
Fax: (000) 000-0000

With a copy to:

Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000

To Grace or any member of the NMC Group:

National Medical Care, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel

Section 7. Term. This Agreement shall commence on the date
of execution indicated below and shall continue in effect until otherwise
agreed to in writing by Grace-Conn. and Fresenius AG, or their successors.

Section 8. Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without in-

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143
validating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Without prejudice to
any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach
of the provisions of this Agreement and agrees that the obligations of the
parties hereunder shall be specifically enforceable.

Section 9. Governing Law. This Agreement shall be governed
by the laws of New York.

Section 10. Titles and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part or to affect the meaning or interpretation of this
Agreement.

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144

In WITNESS WHEREOF, the parties have executed this Agreement
as of the day of , 1996.

FRESENIUS AG

By:
-----------------------
Name:
Title:

NEWCO

By:
-----------------------
Name:
Title:

X.X. XXXXX & CO.-XXXX.

By:
-----------------------
Name:
Title:

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EXHIBIT B

PROPOSED TERMS OF LEASE

Property Land and buildings located in Germany to the
extent used in FWD's operations.

Term 30 years.

Rental The equivalent of $12 million per year,
exclusive of maintenance and other costs,
providing for adjustment in accordance with
German commercial practices for similar real
estate.
146
EXHIBIT C

TERMS OF LICENSE FOR NAME AND XXXX

Worldwide exclusive use of Fresenius name and trademarks in the Newco corporate
name and in connection with all aspects of the business of supplying renal
care-related goods or services (the "Renal Business"), including laboratories.
The license will be royalty-free and perpetual, subject to minimal trademark
limitations.

North American exclusive use of Fresenius name and trademarks in connection with
all aspects of other businesses of Newco in health care goods or services,
provided that such license shall apply to a particular product or service only
if, at the time of the first proposed commercial use by Newco in connection with
a product or service, such product or service does not compete with a North
American business of Fresenius AG then using the Fresenius name (i.e., first
commercial use, existing Fresenius businesses to be grandfathered). Outside
North America, Newco may obtain a license to use the Fresenius name and
trademarks in connection with health care goods and services with the consent of
Fresenius AG which will not be unreasonably withheld.

Newco to have a right of first negotiation/first refusal from Fresenius AG and
Grace-Conn. on all new technology with respect to application in or in material
special relationship to the Renal Business and the right to use the Fresenius
name and trademark in respect of goods or services manufactured, sold or
provided under such technology.

The parties will negotiate in good faith with respect to commercially reasonable
licenses of the Fresenius name and trademarks beyond the foregoing.

Fresenius AG and Grace-Conn. will each give an appropriate 10-year covenant not
to compete with Newco in the Renal Business.

Outside North America, Newco will do business under the name Fresenius Medical
Care. In North America, Newco will do business initially under the name
Fresenius/NMC.

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ARTICLE II CERTIFICATE OF INCORPORATION AND BY-LAWS

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