**I.**
                **Purpose** 
 The
            2007
            MIP is designed to provide an incentive for key members of the Matria
            (Matria or
            Company) management team to exceed the 2007 Business Plan and reward
            those
            management team members with deserving performance by sharing a portion
            of the
            profits.
 
  ***The
            goals of the 2007 MIP are:***
  1.
                To
                    increase shareholder value.  2.
                To
                    achieve and exceed the 2007 Business Plan for Consolidated Matria
                    and each
                    Business Unit and Subsidiary of the
                    Company.  3.
                To
                    reward key individuals for demonstrated
                    performance.  4.
                To
                    enhance Matria’s ability to attract and retain a highly motivated,
                    superior management team.  
 **II.**
                **Program
                    Period** 
 This
            program is in effect from January 1, 2007 through December 31, 2007.
            The program
            is subject to adjustment by the MIP Compensation Committee at any time
            during or
            after the program period. In the event of a program adjustment, an addendum
            will
            be published to inform eligible participants.
 
 **III.**
                **Participation
                    and Eligibility** 
 Participation
            and eligibility are determined by the MIP Compensation Committee at its
            sole
            discretion. No individual is automatically included in the Matria 2007
            MIP. Only
            those individuals approved by the Compensation Committee and confirmed
            in
            writing are eligible. Verbal comments or promises to any employee or
            past
            practices are not binding on Matria or any of its subsidiaries in any
            manner.
            Employees in a status other than full-time regular are not eligible for
            participation in the Matria 2007 MIP.
 
 
 
 
  
 
 **III.**  **Participation
            and Eligibility (** ***cont’d)***
 
 ***Terminated
            Employees*** :
            If a
            participant terminates from the Company, the following guidelines will
            be used
            for all voluntary or involuntary terminations as well as terminations
            due to a
            Reduction in Force:
 
 Incentives
            are only earned by employees in good standing on the date payment is
            made .
            Participants terminating employment prior to the date of payment are
            not
            eligible for any incentive payment.
 
 ***First
            Time Participants*** :
            New
            management employees hired or promoted into an eligible position will
            be able to
            begin participating in the MIP on the first day of the first full month
            in the
            eligible position. The Base Bonus will be prorated based on the number
            of months
            employed in the eligible position. No
            incentives will be earned or paid for new hires beginning employment
            after
            September 30, 2007 .
 
 ***Existing
            Participants*** :
            Participants who transfer during the period January 1, 2007 through December
            31,
            2007 from one MIP eligible position to another MIP eligible position,
            having
            either a higher or lower Base Bonus or a different financial performance
            target,
            will begin participating at the new MIP level and/or financial target
            on the
            first day of the first full month in the new position. The participant’s Base
            Bonus will be prorated for the months employed in each eligible
            position.
 
 ***Leave
            of Absence*** :
            Participants who have been on an approved leave of absence for medical
            or other
            reasons for greater than 60 cumulative days during the year will receive
            a
            prorated portion of their earned Base Bonus. The earned Base Bonus for
            participants on approved leaves of absence of less than 60 cumulative
            days will
            not be prorated based on the period of approved leave. Participants who
            have
            been on an approved leave of absence for medical or other reasons for
            greater
            than 180 cumulative days during the year will not be eligible to earn
            any amount
            of MIP for the year.
 
 **IV.**
                **Administration** 
 The
            MIP
            Compensation Committee will be responsible for the methods of calculation
            and
            administration of the Plan. The Committee will be comprised of the Chairman
            & CEO; President & Chief Operating Officer; Sr. Vice President &
CFO; and Sr. Vice President & Chief Administrative Officer.
 
 The
            MIP
            Compensation Committee may change the plan from time to time in any respect.
            All
            decisions made by the MIP Compensation Committee relative to the plan
            are final
            and binding. The determination of compliance with the individual objectives
            established under the plan for an employee shall be made by the MIP Compensation
            Committee in its sole discretion.
 
 **V.**
                **Incentive
                    Determination and Payment** 
 The
            2007
            MIP provides for the determination of a Base Bonus expressed as a percentage
            of
            the participant’s annual salary in effect at the end of the program period or
            the end of each respective period when a participant transfers from one
            MIP
            eligible position to another.
 
 Participants
            approved for MIP participation as of January 1, 2007 are eligible for
            a full
            year’s participation not subject to proration. All incentives earned under
            the
            MIP will be measured and paid annually.
  
  
  
 **VI.**
                **Method
                    of Calculation** 
 Each
            participant’s incentive will be calculated based on the achievement of a
            financial target and individual objectives. The stated financial target
            will be
            Consolidated Matria Operating Earnings from Continuing Operations (“Matria
            Earnings”). The individual objectives will be comprised of one or more key
            operational measures and/or major milestone outcomes that are specific
            to the
            participant’s position and directly influenced by the participant’s performance.
            Individual objectives must be approved by Senior Management. A percentage
            of the
            participant’s full Base Bonus will be allocated to the Matria Earnings component
            and a percentage allocated to the individual objectives component.
 
 MATRIA
            EARNINGS COMPONENT
 
 To
            be
            eligible for the Matria Earnings Component of the MIP, the Company must
            achieve
            its 2007 client retention goal as measured by the dollar amount of client
            attrition (“Matria Retention Goal”). For purposes of the 2007 MIP, the Matria
            Retention Goal is defined as client attrition, net of upsells, for 2007
            shall
            not exceed $ **[XXX]** .
            For
            purposes of calculating client attrition, it shall be defined as pertaining
            to
            the Company’s Health Enhancement services and shall be measured as the 2007
            revenues lost from contracts for which notice of termination is received
            in
            2007, measured by the run rate of monthly revenues at the point of termination.
            Upsells of any disease management, wellness or MaternaLink revenues shall
            be
            credited against the attrition. If the Matria Retention Goal is not achieved,
            no
            amounts can be earned for the Matria Earnings Component of the MIP.
 
 If
            Matria
            Earnings is 100% to Plan and the Matria Retention Goal is achieved, the
            Company
            will begin to fund a pool (Bonus Pool) to pay the Base Bonus of each
            eligible
            Corporate participant. For Matria Earnings performance in excess of 100%
            to
            Plan, the Company will fund the Bonus Pool at the rate of dollar for
            dollar for
            each dollar of Matria Earnings in excess of 100% to Plan until the Base
            Bonus of
            each eligible Corporate participant is fully funded. For Matria Earnings
            performance below 100% to Plan, no incentive for this component of the
            MIP is
            earned.
 
 If
            the
            Matria Earnings target continues to be exceeded after the funding of
            all earned
            Corporate and Business Unit MIP Base Bonuses, the Corporate participant
            may earn
            an Excess Bonus. An Excess Bonus Pool will be funded as a percentage
            of each
            dollar of available Matria Earnings that remains following the funding
            of all
            earned Corporate and Business Unit Base Bonuses. This funding percentage
            will be
            determined and authorized by the MIP Compensation Committee. This Excess
            Bonus
            Pool will continue to be funded at this percentage from available excess
            Matria
            Earnings until the maximum MIP amount is earned by each eligible participant
            in
            the pool. The maximum MIP amount is equal to two (2) times the participant’s
            Base Bonus.
 
 INDIVIDUAL
            OBJECTIVES COMPONENT
 
 A
            minimum
            of 85% of the Matria Earnings target must be achieved before any incentive
            can
            be earned for individual objectives performance. If 85% of the Matria
            Earnings
            target is not achieved, no amounts can be earned for this component of
            the MIP.
            If 85% of the Matria Earnings target is achieved, the Matria Earnings
            component
            and the individual objectives component of the MIP will operate independent
            of
            the other, and if the Base Bonus is not earned in the Matria Earnings
            component,
            the participant is still eligible to earn the Base Bonus allocated to
            the
            individual objectives component.
 
 
 
 If
            a
            minimum of 85% of the Matria Earnings target is achieved and all of the
            individual objectives are achieved, the Corporate participant may earn
            the Base
            Bonus amount allocated to the individual objectives component of the
            MIP. If
            some, but not all, of the individual objectives are attained, a partial
            amount
            of the Base Bonus allocated to the individual objectives component may
            be earned
            on a proportionate basis. For example, if two of three individual objectives
            were achieved, the participant may earn 2/3 of the Base Bonus amount
            allocated
            to individual objectives. If no individual objectives are attained, no
            incentive
            is earned for this component of the MIP.
 
 **VII.**
                **Miscellaneous** 
 Nothing
            in the MIP shall be deemed to constitute a contract for the continuance
            of
            employment of the participants or bring about a change of status of employment.
            Neither the action of the Company in establishing this program, nor any
            provisions hereof, nor any action taken by the Company shall be construed
            as
            giving any employee the right to be retained in the employ of the Company
            for
            any period of time, or to be employed in any particular position, or
            at any
            particular rate of remuneration.
 
 Further,
            nothing contained herein shall in any manner inhibit the day-to-day conduct
            of
            the business of the Company and its subsidiaries, which shall remain
            within the
            sole discretion of management of the Company; nor shall any requirements
            imposed
            by management or resulting from the conduct of the business of the Company
            constitute an excuse for, or waiver from, compliance with any goal established
            under this plan.
 
 No
            persons shall have any right, vested or contingent, or any claim whatsoever,
            to
            be granted any award or receive any payment hereunder, except payments
            of awards
            determined and payable in accordance with the specific provisions hereof
            or
            pursuant to a specific and properly approved agreement regarding the
            granting or
            payment of an award to a designated individual.
 
 Neither
            this program, nor any payments pursuant to this program, shall affect,
            or have
            any application to, any of the Company’s life insurance, disability insurance,
            sick leave, vacation, medical or other related benefit plans, whether
            contributory or non-contributory on the part of the employee except as
            may be
            specifically provided by the terms of the benefit plan.
 
 All
            payments pursuant to this program are in gross amounts less applicable
            withholdings.
 
 Matria
            reserves the right to apply a participant’s incentive payment against any
            outstanding obligations owing to the Company.
  **[XXXX]**
                  Represents
                      material deleted per Matria’s request for Confidential Treatment and filed
                      separately with the Securities and Exchange Commission pursuant
                      to Rule
                      24b-2 under the Securities Exchange Act of 1934, as
                      amended.