Exhibit 10.55

SEVERANCE COMPENSATION
AND
RESTRICTIVE COVENANT AGREEMENT

THIS SEVERANCE COMPENSATION AND RESTRICTIVE COVENANT AGREEMENT (the “Agreement”)
is dated as of June 4, 2007 between MATRIA HEALTHCARE, INC., a Delaware
corporation (the “Company”), and THOMAS D. UNDERWOOD (the “Executive”).

WHEREAS, the severance benefits payable by the Company to the Executive as
provided herein are in part intended to ensure that the Executive receives
reasonable compensation given the specific circumstances of Executive’s
employment history with the Company;

NOW, THEREFORE, in consideration of their respective obligations to one another
set forth in this Agreement, and other good and valuable consideration, the
receipt, sufficiency and adequacy of which the parties hereby acknowledge, the
parties to this Agreement, intending to be legally bound, hereby agree as
follows:

1.           Term.  The term of this Agreement began on June 4, 2007 and shall
terminate, except to the extent that any obligation of the Company hereunder
remains unpaid as of such time, upon the Date of Termination (as hereinafter
defined) of the Executive’s employment with the Company as a result of the
Executive’s death, Disability (as defined in Section 2(b)) or Retirement (as
defined in Section 2(c)), by the Company for Cause (as defined in Section 2(d)),
or by the Executive other than for Good Reasons (as defined in Section 2(e)).

2.           Termination of Employment During the Term.

(a)           General.  The Executive shall be entitled to the compensation and
benefits provided in Section 3 upon the termination of the Executive’s
employment with the Company by the Executive or by the Company during the term
of this Agreement, unless such termination is as a result of (i) the Executive’s
death; (ii) the Executive’s Disability; (iii) the Executive’s Retirement;
(iv) the Executive’s termination by the Company for Cause; or (v) the
Executive’s decision to terminate employment other than for Good Reason.

(b)           Disability.  The term “Disability” as used in this Agreement shall
mean termination of the Executive’s employment by the Company as a result of the
Executive’s incapacity due to physical or mental illness, provided that the
Executive shall have been absent from his duties with the Company on a full-time
basis for six consecutive months and such absence
 
1

--------------------------------------------------------------------------------

 
shall have continued unabated for 30 days after Notice of Termination as
described in Section 2(f) is thereafter given to the Executive by the Company.

(c)           Retirement.  The term “Retirement” as used in this Agreement shall
mean termination of the Executive’s employment by the Company based on the
Executive’s having attained age 65 or such later retirement age as shall have
been established pursuant to a written agreement between the Company and the
Executive.

(d)           Cause.  The term “Cause” for purposes of this Agreement shall mean
(i) the Executive’s failure, neglect or refusal, as determined by the reasonable
judgment of the Company, to perform the duties of his position, unless the
Executive shall have cured such failure, neglect or refusal within 30 days of
receipt of written notice from the Company of such failure, neglect or refusal
and has not at any time thereafter repeated such failure or failed to sustain
such cure; (ii) any intentional act by the Executive that has the effect of
injuring the reputation or business of the Company or any of its affiliates in
any material respect; (iii) the Executive’s continued or repeated absence from
the Company, unless such absence is (x) approved or excused by the Chief
Executive Officer of the Company or (y) is the result of illness, Disability or
incapacity; (iv) the Executive’s use of illegal drugs or repeated drunkenness;
(v) the Executive’s arrest and/or conviction for the commission of a felony; or
(vi) the commission by the Executive of an act of fraud, deceit, material
misrepresentation or embezzlement against the Company or any of its
affiliates.  For purposes of this Agreement only, the preparation and filing of
fictitious, false or misleading claims in connection with any federal, state or
other third party medical reimbursement program, or any other violation of any
rule or regulation in respect of any federal, state or other third party medical
reimbursement program by the Company or any subsidiary of the Company shall not
be deemed to constitute “criminal fraud” or “civil fraud.”

(e)           Good Reason.  For purposes of this Agreement, “Good Reason” shall
mean (i) a reduction of the Executive’s base salary; (ii) any failure of the
Company to continue the Executive’s participation in its applicable Management
Incentive Plan or any reduction in the Executive’s bonus amount as expressed as
a percentage of the Executive’s base salary; (iii) failure of the Company to
continue the Executive’s participation in any benefit programs except those
programs or arrangements that may be discontinued for all other similarly
situated executives of the Company; or (iv) a relocation of the Company’s
principal executive offices to a location more than 50 miles outside of
Marietta, Georgia or the relocation of the Executive’s office to any place other
than the Company’s principal executive offices.

(f)           Notice of Termination.  Any termination of the Executive’s
employment by the Company for a reason specified in Section 2(b), 2(c) or 2(d)
shall be communicated to the Executive by a Notice of Termination prior to the
effective date of the termination.  For purposes of this Agreement, a “Notice of
Termination” shall mean a written notice which shall indicate whether such
termination is for the reason set forth in Section 2(b), 2(c) or 2(d) and which
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated.  For purposes of this Agreement, no
 
2

--------------------------------------------------------------------------------

 
termination of the Executive’s employment by the Company shall constitute a
termination for Disability, Retirement or Cause unless such termination is
preceded by a Notice of Termination.

(g)           Date of Termination.  For purposes of this Agreement, “Date of
Termination” shall mean (a) if the Executive’s employment is terminated by the
Company for Disability, 30 days after a Notice of Termination is given to the
Executive (provided that the Executive shall not have returned to the
performance of the Executive’s duties on a full-time basis during such 30-day
period) or (b) if the Executive’s employment is terminated by the Company or the
Executive for any other reason, the date on which the Executive’s termination is
effective.

3.           Compensation and Benefits upon Termination of Employment.

(a)           If the Company shall terminate the Executive’s employment other
than pursuant to Section 2(b), 2(c) or 2(d) and Section 2(f), or if the
Executive shall terminate his or her employment for Good Reason, then, provided
the Executive shall have executed the Company’s standard general release (which
release shall not obligate the Executive to release any benefits payable in
connection with any supplemental executive retirement plan or other retiree
benefits), the Company shall pay to the Executive, as severance compensation and
in consideration of the Executive’s adherence to the terms of Section 4 hereof
and execution of the aforesaid general release, the following:

(i)           On the Date of Termination, the Company shall become liable to the
Executive for an amount equal to one times the Executive’s annual base
compensation, targeted base bonus and annual car allowance, which amount shall
be payable over the one year following the Date of Termination on the regular
payroll dates.

(ii)           For a period of one year following the Date of Termination, the
Executive and anyone entitled to claim under or through the Executive shall be
entitled to all benefits under the group hospitalization plan, health care plan,
dental care plan, life insurance or death benefit plan, or other present or
future similar group employee benefit plan or program of the Company for which
he was eligible at the Date of Termination, to the same extent as if the
Executive had continued to be an employee of the Company during such period.

(iii)           Notwithstanding any other provision of this Agreement, it is
intended that any payment or benefit provided pursuant to or in connection with
this Agreement that is considered to be nonqualified deferred compensation
subject to Section 409A of the Code shall be provided and paid in a manner, and
at such time and in such form, as complies with the applicable requirements of
Section 409A of the Code.  If and to the extent required by Section 409A of the
Code, no payment or benefit shall be made or provided to a “specified employee”
(as defined below) prior to the six-month anniversary of the Executive’s
separation from service (within the meaning of Section 409A(a)(2)(A)(i) of the
Code).  The amounts provided for in this Agreement that constitute nonqualified
deferred compensation shall be paid as soon as the six-month deferral period
ends.  In the event that benefits are required to be deferred, any such benefit
may be provided during such six-month deferral period at the Executive’s
expense, with
 
3

--------------------------------------------------------------------------------

 
the Executive having a right to reimbursement from the Company for the amount of
any premiums or expenses paid by the Executive once the six month deferral
period ends.  For this purpose, a specified employee shall mean an individual
who is a key employee (as defined in Section 416(i) of the Code without regard
to Section 416(i)(5) of the Code) of the Company at any time during the 12-month
period ending on each December 31 (the “identification date”).  If the Executive
is a key employee as of an identification date, the Executive shall be treated
as a specified employee for the 12-month period beginning on the April 1
following the identification date.  Notwithstanding the foregoing, the Executive
shall not be treated as a specified employee unless any stock of the Company or
a corporation or business affiliated with it pursuant to Sections 414(b) or (c)
of the Code is publicly traded on an established securities market or otherwise.

(b)           The parties hereto agree that the payments provided in
Section 3(a) hereof are reasonable compensation in light of the Executive’s
services rendered to the Company and in consideration of the Executive’s
adherence to the terms of Section 4 hereof.

(c)           The payments provided in Section 3(a) above shall be in lieu of
any other severance compensation otherwise payable to Executive under any other
agreement between Executive and the Company (other than the Change in Control
Severance Compensation and Restrictive Covenant Agreement of even date (the
“CIC”)) or the Company’s established severance compensation policies; provided,
however, that nothing in this Agreement shall affect or impair Executive’s
vested rights under any other employee benefit plan or policy of the
Company.  In circumstances in which the Executive is entitled to severance
benefits under the CIC, the Company’s obligations under this Agreement shall be
null and void.

4.           Protective Covenants.

(a)           Definitions.

This Subsection sets forth the definition of certain capitalized terms used in
Subsections (a) through (f) of this Section 4.

(i)  “Competing Business” shall mean a business (other than the Company) that,
directly or through a controlled subsidiary or through an affiliate, (a)
provides disease management programs for diabetes, congestive heart failure,
coronary artery disease, chronic obstructive pulmonary disease, cancer,
pregnancy, depression, chronic pain or hepatitis C; and/or (b) provides
obstetrical home care; and/or (c) provides on-line programs targeting weight
loss, nutrition and diet, fitness, smoking cessation or stress management;
and/or (d) provides informatics  services (collectively, “Competing
Services”).  Notwithstanding the foregoing, no business shall be deemed a
“Competing Business” unless, within at least one of the business’s three most
recently concluded fiscal years, that business, or a division of that business,
derived more than twenty percent (20%) of its gross revenues or more than
$2,000,000 in gross revenues from the provision of Competing Services.
 
4

--------------------------------------------------------------------------------

 
(ii)  “Competitive Position” shall mean:  (A) the Executive’s direct or indirect
equity ownership (excluding ownership of less than one percent (1%) of the
outstanding common stock of any publicly held corporation) or control of any
portion of any Competing Business; or (B) any employment, consulting,
partnership, advisory, directorship, agency, promotional or independent
contractor arrangement between the Executive and any Competing Business where
the Executive performs services for the Competing Business substantially similar
to those the Executive performed for the Company, provided, however, that the
Executive shall not be deemed to have a Competitive Position solely because of
the Executive’s services for a Competing Business that are not directly related
to the provision of Competing Services, unless more than thirty-five percent
(35%) of the gross revenues of the Competing Business are derived from the
provision of Competing Services.

(iii)  “Covenant Period” shall mean the period of time from the date of this
Agreement to the date that is one year after the Date of Termination.

(iv)  “Customers” shall mean actual customers, clients or referral sources to or
on behalf of which the Company provides Competing Services (A) during the one
year prior to the date of this Agreement and (B) during the Covenant Period.

(v)  “Restricted Territory” shall mean the 48 contiguous states of the
continental United States.

(b)           Limitation on Competition.  In consideration of the Company’s
entering into this Agreement, the Executive agrees that during the Covenant
Period, the Executive will not, without the prior written consent of the
Company, anywhere within the Restricted Territory, either directly or
indirectly, alone or in conjunction with any other party, accept, enter into or
take any action in conjunction with or in furtherance of a Competitive Position
(other than action to reject an unsolicited offer of a Competitive Position).

(c)           Limitation on Soliciting Customers.  In consideration of the
Company’s entering into this Agreement, the Executive agrees that during the
Covenant Period, the Executive will not, without the prior written consent of
the Company, alone or in conjunction with any other party, solicit, divert or
appropriate or attempt to solicit, divert or appropriate on behalf of a
Competing Business with which Executive has a Competitive Position any Customer
located in the Restricted Territory (or any other Customer with which the
Executive had any direct contact on behalf of the Company) for the purpose of
providing the Customer or having the Customer provided with a Competing Service.

(d)           Limitation on Soliciting Personnel or Other Parties.  In
consideration of the Company’s entering into this Agreement, the Executive
hereby agrees that he will not, without the prior written consent of the
Company, alone or in conjunction with any other party, solicit or attempt to
solicit any employee, consultant, contractor, independent broker or other
personnel of the Company or any subsidiary of the Company to terminate, alter or
lessen that party’s affiliation
 
5

--------------------------------------------------------------------------------

 
with the Company or to violate the terms of any agreement or understanding
between such employee, consultant, contractor or other person and the Company or
any subsidiary of the Company.

(e)           Acknowledgement.  The parties acknowledge and agree that the
Protective Covenants are reasonable as to time, scope and territory given the
Company’s need to protect its trade secrets and confidential business
information and given the substantial payments and benefits to which the
Executive may be entitled pursuant to this Agreement.

(f)           Remedies.  The parties acknowledge that any breach or threatened
breach of a Protective Covenant by the Executive is reasonably likely to result
in irreparable injury to the Company, and therefore, in addition to all remedies
provided at law or in equity, the Executive agrees that the Company shall be
entitled to a temporary restraining order and a permanent injunction to prevent
a breach or contemplated breach of the Protective Covenant.  If the Company
seeks an injunction, the Executive waives any requirement that the Company post
a bond or any other security.

5.           No Obligation to Mitigate Damages; No Effect on Other Contractual
Rights.

(a)           All compensation and benefits provided to the Executive under this
Agreement are in consideration of the Executive’s services rendered to the
Company and of the Executive’s adhering to the terms set forth in Section 4
hereof and the Executive shall not be required to mitigate damages or the amount
of any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this Agreement
be reduced by any compensation earned by the Executive as the result of
employment by another employer after the Date of Termination, or otherwise.

(b)           The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive’s existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or arrangement.

6.           Notice.  For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by overnight courier service
(e.g., Federal Express) or mailed by United States certified mail, return
receipt required, postage prepaid, as follows:

If to Company:

Matria Healthcare, Inc.
1850 Parkway Place, 12th Floor
Marietta, GA  30067
Attention:  General Counsel
 
6

--------------------------------------------------------------------------------

 
If to Executive:

Thomas D. Underwood
10570 Oxford Mill Circle
Alpharetta, GA  30022

or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

7.           Miscellaneous.  No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company.  No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.  No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.

8.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

9.           Section 409A Indemnification.  Notwithstanding any other provision
of this Agreement, it is intended that any payment or benefit which is provided
pursuant to or in connection with this Agreement which is considered to be
nonqualified deferred compensation subject to Section 409A of the Code shall be
provided and paid in a manner, and at such time and in such form, as complies
with the applicable requirements of Section 409A of the Code.  The Company and
the Executive shall cooperate to modify this Agreement as necessary to comply
with the requirements of Section 409A of the Code.  In the event the Company
does not so cooperate, it shall indemnify and hold harmless the Executive on an
after-tax basis from any tax or interest penalty imposed under Section 409A of
the Code with respect to any payment or benefit provided pursuant to this
Agreement or any other plan or arrangement sponsored or maintained by the
Company to the extent such tax or interest penalty is imposed as a result of any
failure of the Company to comply with Section 409A of the Code with respect to
such payment or benefit.

10.           Severability; Modification.  All provisions of this Agreement are
severable from one another, and the unenforceability or invalidity of any
provision of this Agreement shall not affect the validity or enforceability of
the remaining provisions of this Agreement, but such remaining provisions shall
be interpreted and construed in such a manner as to carry out fully the
intention of the parties.  Should any judicial body interpreting this Agreement
deem any provision of this Agreement to be unreasonably broad in time,
territory, scope or otherwise, it is the intent and desire of the parties that
such judicial body, to the greatest extent possible, reduce the breadth of such
 
7

--------------------------------------------------------------------------------

 
 provision to the maximum legally allowable parameters rather than deeming such
provision totally unenforceable or invalid.

11.           Confidentiality.  The Executive acknowledges that he has
previously entered into, and continues to be bound by the terms of, a
Confidentiality and Non-Solicitation Agreement with the Company.

12.           Agreement Not an Employment Contract.  This Agreement shall not be
deemed to constitute or be deemed ancillary to an employment contract between
the Company and the Executive, and nothing herein shall be deemed to give the
Executive the right to continue in the employ of the Company or to eliminate the
right of the Company to discharge the Executive at any time.

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

MATRIA HEALTHCARE, INC.

By:           
Its Chief Administrative Officer

THOMAS D. UNDERWOOD

Executive

 
8

--------------------------------------------------------------------------------