Non-Negotiable Subordinated Promissory Note (08-24-2000)

         THE SECURITIES  REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED,  OR ANY STATE SECURITIES ACT AND MAY NOT
BE SOLD OR  TRANSFERRED  IN THE  ABSENCE OF SUCH  REGISTRATION  OR AN  EXEMPTION
THEREFROM,  OR IN THE  ABSENCE  OF RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL
REASONABLY  SATISFACTORY  TO THE  MAKER  THAT  THEY  MAY BE SOLD OR  TRANSFERRED
WITHOUT SUCH REGISTRATION.

         THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13)
OF CODE SECTION  10-5-9 OF THE GEORGIA  SECURITIES  ACT OF 1973,  AND MAY NOT BE
SOLD OR  TRANSFERRED  EXCEPT IN A TRANSACTION  WHICH IS EXEMPT UNDER SUCH ACT OR
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.

THIS NOTE IS SUBJECT TO CERTAIN RIGHTS OF CANCELLATION AS PROVIDED IN A PURCHASE
AND SALE  AGREEMENT  DATED  AS OF  DECEMBER  21,  1998,  A COPY OF WHICH  MAY BE
OBTAINED FROM MAKER.

                   NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE

Atlanta, Georgia

$410,311                                                     August 22, 2000


         FOR  VALUE  RECEIVED,  the  undersigned,  MATRIA  HEALTHCARE,  INC.,  a
Delaware   corporation  (the  "Maker"),   promises  to  pay  to  GAINOR  MEDICAL
MANAGEMENT,  L.L.C.,  a Georgia  limited  liability  company  (together with any
subsequent  holders or transferees  hereof,  individually and collectively,  the
"Holder"),  at 40301 Fisher Island Drive, Fisher Island, Florida 33109-0972,  or
at such  other  address as Holder  may  designate  to Maker from time to time in
writing,  the  principal sum of Four Hundred Ten Thousand  Three Hundred  Eleven
Dollars ($410,311),  in immediately available funds and in such coin or currency
of the United  States  which  shall be legal  tender in payment of all debts and
dues,  public and private,  at the time of payment together with (i) interest on
the principal  amount from time to time  outstanding  under this  Non-Negotiable
Subordinated  Promissory Note (this "Note") until said principal  amount is paid
in full,  payable as provided herein and (ii) any and all other amounts that may
be due by the Maker to the Holder pursuant to this Note.

         Interest shall accrue on the unpaid principal balance of this Note from
time to time outstanding and shall be payable as follows:


<PAGE>


(A)               interest  shall accrue at the fixed rate of eight percent (8%)
                  per annum on the  principal  amount  outstanding  from time to
                  time under this Note and shall be due and payable to Holder in
                  arrears on  January  1, April 1, July 1 and  October 1 of each
                  year this Note remains outstanding; and

(B)               interest  shall  accrue at the fixed rate of four percent (4%)
                  per annum on the  principal  amount  outstanding  from time to
                  time under this Note  ("Specified  Interest") and shall be due
                  and payable to Holder on each of the "Third Anniversary",  the
                  "Fourth  Anniversary" and the "Maturity Date" (each as defined
                  below).

Interest shall accrue on the basis of the actual number of days elapsed based on
a 360 day year made up of twelve (12) thirty-day months.

         Provided that the following  payment will not result in a default under
the Maker's  Senior Debt (as defined  herein) and unless sooner  accelerated  by
Holder  pursuant to the terms  hereof,  the Maker shall  prepay to Holder on the
third  anniversary  of the  date of this  Note  (the  "Third  Anniversary")  (i)
$136,770,  such amount being one-third of the initial  principal  amount of this
Note,  and (ii) all  Specified  Interest  then  outstanding.  Provided  that the
following payment will not result in a default under the Maker's Senior Debt and
unless sooner  accelerated  by Holder  pursuant to the terms  hereof,  the Maker
shall prepay to Holder on the fourth  anniversary  of the date of this Note (the
"Fourth  Anniversary") (i) $136,770,  such amount being one-third of the initial
principal amount of this Note, and (ii) all Specified Interest then outstanding.
Subject to the subordination provisions set forth in this Note and unless sooner
accelerated  by Holder  pursuant  to the terms  hereof,  the Maker  shall pay to
Holder on the fifth  anniversary of the date of this Note (the "Maturity  Date")
(i) the remaining  principal  balance of this Note,  (ii) all accrued but unpaid
interest thereon, and (iii) all other amounts owing hereunder, if any.

         If any date for the  payment of  principal  or  interest,  as set forth
above, falls on Saturday,  Sunday or a holiday for which banks are authorized to
be closed in  Atlanta,  Georgia,  then  such  payment  shall be made on the next
business day for which banks are not so authorized  and interest  shall continue
to accrue thereon. Payments received by Holder after 2:00 p.m., Atlanta, Georgia
time on any business day shall not be credited as received  until the  following
business day.

         Upon the occurrence of an  "Acceleration  Event" (as defined below) and
during the continuance thereof,  the outstanding  principal balance of this Note
shall bear interest at a rate per annum ("Default Interest") equal to the lesser
of (i) fifteen  percent  (15%) per annum or (ii) the maximum  rate  permitted by
applicable law. Maker shall pay Default Interest upon demand by Holder, provided
that the payment of such Default  Interest  shall not be required to be made for
so long as such payment is not permitted under the Maker's Senior Debt Documents
(as hereinafter defined).


<PAGE>


         Maker covenants and agrees that the indebtedness evidenced by this Note
shall be senior in right of payment to all promissory  notes issued by the Maker
to sellers or their  affiliates or shareholders in connection with  acquisitions
consummated  after the date  hereof  ("Junior  Seller  Notes"),  and each of the
Junior  Seller Notes shall  contain a legend  clearly  stating that such note is
subordinate  in  right  of  payment  to the  Holder  hereof  and  shall  contain
subordination  provisions,  acknowledged  by the holder  thereof,  substantially
similar to those  contained in numbered  paragraphs  1 through 13 (except  5(b))
hereof.

         This  Note  is  issued  pursuant  to that  certain  Purchase  and  Sale
Agreement  dated as of December  21,  1998 (the  "Purchase  Agreement"),  by and
between  the  Maker  and  Gainor  Medical  Management,  LLC  and  represents  an
"Additional   Purchase  Price   Payment"  due  under  the  Purchase   Agreement.
Capitalized  terms used in this Note but not otherwise defined herein shall have
the respective meanings assigned to such terms in the Purchase  Agreement.  This
Note is subject to certain rights of  cancellation  pursuant to Article 9 of the
Purchase Agreement.  If the Maker is entitled to cancel all or a portion of this
Note pursuant  thereto,  notice of  cancellation  shall be mailed,  first class,
postage  prepaid,  not  less  than 30 days nor  more  than 60 days  prior to the
cancellation  date, to the Holder.  In addition to any  information  required by
law,  such  notice  shall  set  forth the  cancellation  date and the  amount of
principal and accrued interest  outstanding  hereunder to be cancelled.  In case
less than the  total  amount  of  principal  and  accrued  interest  outstanding
hereunder is to be cancelled,  a new note in substantially the same form as this
Note  representing  the  total  principal  and  accrued  interest  that  was not
cancelled  will be issued to the Holder upon surrender of this Note without cost
to Holder. Except as set forth in this paragraph, Maker waives and agrees not to
assert  any  right of setoff or offset  against  Holder in  connection  with any
amounts due under this Note.

         Maker shall be entitled, at any time and from time to time, without the
consent of Holder and without paying any penalty or premium therefor,  to prepay
all or any  portion of the  outstanding  principal  and accrued  interest  owing
thereon due hereunder by  delivering  30 days' prior  written  notice to Holder;
provided that no such prepayment  shall be made to the extent such prepayment is
then prohibited by the terms of any of Maker's Senior Debt.

         Any of the following  shall  constitute an  "Acceleration  Event" under
this Note:

     (a) Maker fails to pay any  installment of principal or interest  within 10
days after such installment is due;

     (b) Maker  fails to pay any other  amount  due and  owing  under  this Note
within 30 days  following  receipt by Maker of written  notice  from Holder that
such amount is due and owing to Holder;

     (c) Maker (i) files a voluntary  petition or  assignment in bankruptcy or a
voluntary petition,  assignment or answer seeking  liquidation,  reorganization,
arrangement,  or  readjustment  of its debts under the Bankruptcy  Reform Act of
1978, as amended (the "Bankruptcy Code"), or under any similar federal, state or
foreign law  pertaining  to  insolvency  or debtor  relief,  (ii) enters into an
agreement  indicating  its  consent  to or  approval  of any  such  petition  or
proceeding,  (iii)  applies for or consents  to the  appointment  of a receiver,
custodian or trustee of Maker, or of all or  substantially  all of its property,
(iv) makes an assignment for the benefit of its creditors, (v) becomes insolvent
or is unable  or fails to pay its debts  generally  as they  become  due or (vi)
takes corporate or other official action in furtherance of the foregoing;

     (d) there is filed  against  Maker an  involuntary  petition in  bankruptcy
seeking the liquidation, reorganization,  arrangement or readjustment of Maker's
debts or any similar  relief  under the  Bankruptcy  Code or any similar  state,
federal or foreign law, which remains undismissed or unstayed for a period of 90
days;

     (e) the  occurrence of a Change in Control of Maker,  which for purposes of
this subparagraph  (e), shall mean any of the following  events:  (i) any person
(as the term  "person" is used in Section  13(d)(3)  or Section  14(d)(2) of the
Securities  Exchange  Act  of  1934,  as  amended),   other  than  an  "Existing
Stockholder"  (as  hereinafter  defined)  is or becomes  the direct or  indirect
beneficial  owner of shares of the Maker's  capital stock  representing  greater
than 50% of the  power  to vote in the  election  of  directors  under  ordinary
circumstances or (ii) the Maker sells, transfers or otherwise disposes of all or
substantially all of the assets of the Maker other than in a transaction between
the Maker and a wholly-owned  subsidiary of the Maker in which the  wholly-owned
subsidiary assumes this Note pursuant to an assignment and assumption  agreement
in form and substance acceptable to the Holder and such wholly-owned  subsidiary
causes a law firm  acceptable  to the Holder to issue a legal  opinion as to the
corporate  authority and capacity of the subsidiary,  the enforceability of this
Note (as assumed) and such other matters as the Holder may  reasonably  require,
all in  form  and  substance  satisfactory  to  each  Holder  in its  reasonable
discretion,  or (iii)  the Maker is a party to a merger  or a  consolidation  in
which the  holders of the  Maker's  voting  securities  prior to such  merger or
consolidation own, directly or indirectly, securities representing less than 50%
of the voting power in the surviving entity.  "Existing  Stockholder" shall mean
Mark J. Gainor, SZ Investments, LLC., any holder of Convertible Preferred Stock,
Redeemable Preferred Stock or Warrants or any affiliate of any of them;

     (f) the failure of the Maker to comply with or perform any other  provision
of this Note (and not constituting an Acceleration  Event under any of the other
provisions  of this  paragraph)  and  continuance  of such  failure  for 30 days
following receipt of written notice thereof by Maker from Holder; or

     (g) the  acceleration  of any of Maker's  Senior  Debt or the taking of any
collection  action by any of the "Senior Debt Holders"  against the Maker or any
of its subsidiaries or their respective properties.

         Subject at all times to the subordination provisions set forth below in
this Note, including without limitation the standstill provisions of paragraph 5
below, (i) if an Acceleration  Event described in subparagraphs (c) or (d) above
shall occur,  this Note and all interest and other amounts due  hereunder  shall
become  immediately  due and payable,  all without  notice of any kind, and (ii)
upon the  occurrence  and  during  the  continuation  of an  Acceleration  Event
(including, without limitation, an Acceleration Event under subparagraphs (c) or
(d)  above),  the  Holder  (x) may,  at its  option,  declare  this Note and all
interest and other amounts due hereunder  immediately  due and payable,  and (y)
shall have all of the rights and remedies provided to it at law or in equity.

         Until this Note has been fully  satisfied in cash,  Maker shall mail to
Holder  within 105 days after the close of each  fiscal year of Maker and within
50 days after the close of each of the first three  quarters of each fiscal year
of Maker financial statements,  including any notes thereto (and, in the case of
fiscal  year  end,  an  auditors'  report  by a  firm  of  established  national
reputation) and the Management's  Discussion and Analysis of Financial Condition
and Results of Operations, for Maker comparable to those required to be included
in annual and quarterly  reports furnished  pursuant to the Securities  Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.

         Until this Note has been fully satisfied in cash,  Maker will not enter
into any material  transaction  with any Affiliate (as  hereinafter  defined) of
Maker  (other  than the Holder of this Note or any  wholly-owned  subsidiary  of
Maker) unless such  transaction is on terms and conditions at least as favorable
to  Maker as  could  be  obtained  through  arm's  length  negotiations  with an
independent  third party. For purposes of this Note, an "Affiliate",  as applied
to any  person or  entity,  shall mean any other  person or entity  directly  or
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control  with that  person  or  entity.  For the  purposes  of this  definition,
"control"  when used with  respect  to any  person or entity  means the power to
direct  the  management  and  policies  of such  person or entity,  directly  or
indirectly,  whether through the ownership of voting securities,  by contract or
otherwise;  and the terms  "controlling"  and  "controlled"  shall have meanings
correlative to the foregoing.

         Maker agrees to pay all costs of  collection  of this Note in the event
of nonpayment as required hereunder,  including  reasonable  attorneys' fees and
court costs actually incurred.

         Except as expressly provided herein,  Maker hereby waives  presentment,
demand, protest, notice of dishonor or protest, notice of nonpayment,  notice of
maturity,  notice of acceleration  of maturity,  diligence of collection and all
other notices of any kind.

         No failure or delay on the part of the  Holder in the  exercise  of any
right,  power or  privilege  under this Note shall  impair such right,  power or
privilege or be construed to be a waiver of any default or Acceleration Event or
acquiescence therein nor shall any single or partial exercise of any such right,
power or privilege  preclude other or further  exercise  thereof or of any other
right,  power  or  privilege.  All  rights  and  remedies  under  this  Note are
cumulative to and not exclusive of any rights or remedies otherwise available.

         Any consent, notice or other communication herein required or permitted
shall be given in writing  and in the  manner  set forth in Section  12.1 of the
Purchase  Agreement  and shall be given to the  addresses  of the Holder and the
Maker set forth  therein or, as to each party,  at such other  address as may be
designated by such party in a written notice to all of the other parties.

         The  obligations,  duties  and  rights  of Maker  under  this  Note are
personal to Maker and may not be assigned or assumed  without the prior  written
consent of Holder;  provided,  however,  subject to compliance  with  applicable
securities  laws and provided that any transferee  agrees in writing to be bound
by the terms and  conditions  hereof,  Holder may assign all or a portion of its
interest  in this Note,  to any member of Holder as of the  Closing  Date or any
"Permitted  Transferee"  (as such term is  defined  in that  certain  Standstill
Agreement  dated  January  19,  1999  between  Maker,  Mark  J.  Gainor  and  SZ
Investments, L.L.C.) (each, an "Assignee"), or may sell or convey participations
interests  in this Note to any  member of Holder as of the  Closing  Date or any
Permitted Transferee. Upon an assignment by a Holder of an interest in the Note,
and at the request of Holder,  Maker will issue a note to each such  Assignee in
the  principal  amount  assigned  and shall also  reissue this Note so that each
Holder shall hold a note in the face principal amount of the indebtedness  owing
to such Holder, and the aggregate principal balance of the notes shall equal the
then  outstanding  principal  balance  owed by Maker to  Holder  hereunder.  The
percentage  of principal  held by any Holder of the then  outstanding  principal
balance  of  the  indebtedness  of  Maker  to  Holder  hereunder  shall  be  the
"Percentage Interest" of such party in the indebtedness evidenced hereby.

         Subject to the terms of the  Subordination  provisions of this Note and
any  applicable  Senior Debt (to the extent any such  provisions,  agreements or
instruments  require the consent of any other parties),  and except as set forth
in the next succeeding sentence,  this Note may be altered,  amended or modified
by a writing  signed by Maker and the Holders which,  in the  aggregate,  hold a
Percentage  Interest  equal to, in the  aggregate,  at least  sixty-six  percent
(66%),  but excluding for purposes of this  calculation any Percentage  Interest
held by the Maker or an Affiliate of Maker. The following waivers,  alterations,
amendments or  modifications of this Note require the written consent of Holders
which,  in the  aggregate,  hold a Percentage  Interest equal to at least ninety
percent  (90%),  but excluding for purposes of this  calculation  any Percentage
Interest held by the Maker or an Affiliate of Maker: any change in the principal
amount or the  Maturity  Date of this Note or the  manner,  place or time of any
payment of principal;  any change in the interest  rate or the manner,  place or
time of any payment of interest; any change in the entitlement of each Holder to
receive principal,  interest and other amounts due under this Note in proportion
to their respective  Percentage Interest;  any change in the Acceleration Events
or any waiver of any default or Acceleration Event; any assumption or assignment
of the obligations, duties or rights of Maker under this Note; and any change to
this paragraph.

         The provisions of this Note shall be construed and interpreted, and all
rights and obligations of the parties under this Note determined,  in accordance
with the laws of the State of Georgia  without regard to principles of conflicts
of law.

         It is the  intention  of the  parties to conform  strictly to the usury
laws, whether state or federal, that are applicable to this Note. All agreements
between Maker and Holder,  whether now existing or hereafter arising and whether
oral or written, are hereby expressly limited so that in no contingency or event
whatsoever,  shall the amount paid or agreed to be paid to the Holder hereof, or
collected  by the Holder,  for the use,  forbearance  or  detention of the money
loaned or to be loaned hereunder or otherwise, or for the payment or performance
of any  covenant  or  obligation  contained  herein,  or in any  other  document
evidencing,  securing or pertaining to the indebtedness evidenced hereby, exceed
the maximum amount  permissible under applicable federal or state usury laws. If
under any  circumstances  whatsoever  fulfillment of any provision hereof or any
other  documents,  at the time performance of such provision shall be due, shall
involve  exceeding the limit of validity  prescribed by law, then the obligation
to be fulfilled shall be reduced to the limit of such validity; and if under any
circumstances  the Holder hereof shall ever receive an amount deemed interest by
applicable  law,  which would exceed the highest  lawful rate,  such amount that
would be excessive  interest under applicable usury laws shall be applied to the
reduction  of the  principal  amount owing  hereunder  and not to the payment of
interest,  or if such excessive interest exceeds the unpaid balance of principal
and such other  indebtedness,  the excess shall be deemed to have been a payment
made by mistake  and shall be refunded  to Maker or to any other  person  making
such payment on Maker's behalf. All sums paid or agreed to be paid to the Holder
hereof  for the use,  forbearance  or  detention  of the  indebtedness  of Maker
evidenced hereby outstanding from time to time shall, to the extent permitted by
applicable law, and to the extent  necessary to preclude  exceeding the limit of
validity  prescribed by law, be amortized,  prorated,  allocated and spread from
the date of  disbursement  of the proceeds of this Note until payment in full of
the loan evidenced hereby so that the actual rate of interest on account of such
indebtedness is uniform  throughout the term hereof. The terms and provisions of
this  paragraph  shall  control  and  supersede  every  other  provision  of all
agreements between Maker and the Holder.

         Maker  warrants  and  represents  to the Holder  that the  indebtedness
evidenced  by this  Note is with  respect  to an  exempt  transaction  under the
Truth-In-Lending  Act, 15 U.S.C.  1601,  et seq.  and that this Note is made for
business or commercial purposes (and not for personal or agricultural purposes).

         Time  is of  the  essence  with  respect  to  the  performance  of  the
obligations of Maker under this Note.

         MAKER  AND  HOLDER   HEREBY   IRREVOCABLY   SUBMIT  TO  THE   EXCLUSIVE
JURISDICTION  OF THE UNITED STATES  DISTRICT COURT FOR THE NORTHERN  DISTRICT OF
GEORGIA AND THAT OF ANY GEORGIA STATE COURT SITTING IN ATLANTA,  GEORGIA FOR THE
PURPOSES  OF ALL LEGAL  PROCEEDINGS  ARISING OUT OF OR RELATING TO THIS NOTE AND
HEREBY WAIVE,  TO THE FULLEST EXTENT  PERMITTED BY LAW, ANY OBJECTION WHICH THEY
MAY NOW OR  HEREAFTER  HAVE TO THE  LAYING OF THE  VENUE OF ANY SUCH  PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT  HAS  BEEN  BROUGHT  IN  AN  INCONVENIENT  FORUM.  MAKER  AND  THE  HOLDER
IRREVOCABLY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
NOTE.

         In the event any one or more of the  provisions  of this Note shall for
any reason be held to be invalid,  illegal or  unenforceable,  such  invalidity,
illegality  or  unenforceability  shall not affect any other  provisions of this
Note  and  this  Note  shall  be  construed  as  if  such  invalid,  illegal  or
unenforceable provision had never been contained herein or therein.

                               SUBORDINATION TERMS

         This Note and the entire  indebtedness  evidenced  hereby  from time to
time, whether for principal,  interest or any other amounts payable hereunder or
in respect hereof,  shall be subject,  subordinate and junior in all respects to
the following:  (i) all "Obligations" of Maker under and as such term is defined
in the Credit  Agreement  dated as of January  19, 1999 (as  amended,  modified,
extended or  restated,  the "Credit  Agreement"),  among the Maker,  the Lenders
party  thereto  from  time  to  time,   and  First  Union   National   Bank,  as
Administrative  Agent  (in  such  capacity,   together  with  any  successor  or
replacement  agent  under  such  agreement  or any  refinancing  or  replacement
agreement,  the  "Agent")  (as such may be amended,  modified,  supplemented  or
restated from time to time, the "Senior Credit Facility");  (ii) all obligations
of Maker to any  lender or group of  lenders  for  borrowed  money,  whether  to
refinance,  in  whole  or in part,  the  indebtedness  owing  under  the  Credit
Agreement pursuant to an infusion of new money that pays in full the Obligations
under the Senior Credit Facility or consisting of a new credit facility which is
established  after the Senior Credit  Facility has been  terminated (as such new
facility may be amended,  modified,  supplemented or restated from time to time,
the "New Senior Credit Facility"); and (iii) all obligations of Maker to holders
of any  non-investment  grade  securities  (as  such may be  amended,  modified,
supplemented or restated from time to time, the "High Yield Debt").

         All indebtedness, obligations and liabilities of Maker under the Senior
Credit Facility, the New Senior Credit Facility, or the High Yield Debt, whether
such  indebtedness,  obligations  and  liabilities are now existing or hereafter
arising,  whether or not  evidenced by notes or other  instruments,  and whether
direct or indirect, fixed or contingent,  liquidated or unliquidated,  due or to
become due, secured or unsecured, and whether for principal, interest (including
interest  accruing  after the filing of a petition  initiating  any  bankruptcy,
insolvency  or a similar  proceeding  as described in Section  9.1(f) or Section
9.1(g) of the Credit Agreement, whether or not such interest is an allowed claim
enforceable against the Maker in any such proceeding), and all other obligations
or liabilities  (including all fees,  taxes,  additional  compensation,  expense
reimbursements  and  indemnification)  now or  hereafter  payable  under or with
respect to any of the  foregoing  are  collectively  referred  to as the "Senior
Debt".  All  documents  evidencing  the Senior Credit  Facility,  the New Senior
Credit  Facility,  or the High Yield Debt,  including  without  limitation,  all
credit agreements, security agreements, pledge agreements, notes, bonds or other
instruments,  financing statements,  mortgages,  deeds of trust, deeds to secure
debt,  investment  property,  securities,  financing  statements,  certificates,
powers  of  attorney,   stock  powers  or  similar   documents,   agreements  or
certificates, are hereinafter referred to as the "Senior Debt Documents".

         By its  acceptance of this Note,  Holder  covenants and agrees that the
subordination  terms set forth below shall inure to the benefit of the "Lenders"
under and as such term is  defined in the Senior  Credit  Facility  from time to
time party thereto (hereinafter the "Senior Lenders"),  the lenders from time to
time  party to any New  Senior  Credit  Facility  (hereinafter  the "New  Senior
Lenders"),  and the holders  from time to time of any High Yield Debt (the "High
Yield Debt  Holders";  the Senior  Lenders,  the New Senior Lenders and the High
Yield Debt Holders are  hereinafter  collectively  sometimes  referred to as the
"Senior Debt Holders"), and the successors and assigns of any of the Senior Debt
Holders.

         Holder  hereby  covenants  and agrees  that it will,  upon the  Maker's
request, from time to time enter into such subordination agreements as requested
by  Maker  or a  Senior  Debt  Holder  to  evidence  the  subordination  of  the
indebtedness  evidenced hereby to the Senior Debt to the fullest extent provided
hereunder  with  respect  to debt  subordination,  the  restrictions  placed  on
Holder's  acceleration  of the debt  evidenced  hereby  and the  enforcement  of
remedies against Maker.

         In the event Maker fails to pay the  principal  balance of this Note on
the  Maturity  Date,   Holder  shall  be  entitled  in  connection  with  (i)  a
modification of the Senior Credit  Facility other than a modification  resulting
from a default or event of default thereunder,  (ii) a refinancing of the senior
indebtedness of Maker pursuant to a proposed New Senior Credit Facility,  or any
negotiations resulting from the occurrence of an event of default thereunder; or
(iii) the issuance of new High Yield Debt, or any  negotiations  resulting  from
the  occurrence  of an event  of  default  thereunder,  to  participate  in such
negotiations  to express its  position  concerning  its rights  under this Note.
However, the consent of Holder to the terms of such modification,  new financing
or  placement  of new High  Yield  Debt or  modification  thereof  shall  not be
required to be obtained as a condition  to such  transactions,  and Holder shall
not  have  standing  to  object  to  Maker's  consummation  of  the  transaction
contemplated  by any of (i), (ii) or (iii) of this  paragraph on terms Maker and
deems appropriate in its sole and absolute discretion.

     1.  Subordination.  Anything in this Note to the contrary  notwithstanding,
all  principal,  interest  and other  amounts  due or to become due on this Note
shall be  subordinate  and  junior in right of  payment  to the extent set forth
herein to the prior payment in full in cash of all Senior Debt.

         2. Priority and Payment Over Upon  Insolvency and  Dissolution.  In the
event  of  (i)  any   insolvency  or  bankruptcy   case  or  proceeding  or  any
receivership,  liquidation,  reorganization  or similar  case or  proceeding  in
connection  therewith  relative  to  the  Maker  or  to  its  assets,  (ii)  any
liquidation,  dissolution or other winding up of the Maker, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy,  or (iii) any
assignment  for the  benefit of  creditors  or other  marshalling  of assets and
liabilities  of the Maker,  then and in any such event the Senior  Debt  Holders
shall be  entitled  to receive  payment in full in cash of all amounts due or to
become due on or in respect  of all Senior  Debt  before the Holder of this Note
shall be entitled to receive and retain any payment on account of the principal,
interest or other  amounts due or to become due on this Note and to that end the
Senior Debt Holders shall be entitled to receive, for application to the payment
of the Senior  Debt,  any  payment  or  distribution  of any kind or  character,
whether  in  cash,  property  or  securities,  including  any  such  payment  or
distribution which may be payable or deliverable by reason of the payment of any
other  indebtedness  of the Maker which is  subordinated  to the payment of this
Note,  which may be payable or  deliverable  in respect of this Note in any such
case,  proceeding,  dissolution,  liquidation  or  other  winding  up or  event.
Accordingly,  any payment or  distribution of assets of the Maker of any kind or
character,  whether in cash, property or securities,  which would otherwise have
been made to the Holder of this Note but for the  provisions  of this  Section 2
shall  instead be made by the Maker or by the trustee in  bankruptcy,  receiver,
liquidating trustee,  custodian,  assignee, agent or other person making payment
or  distribution  of assets of the Maker directly to the Senior Debt Holders (or
the  agent  or  trustee  for the  Senior  Debt  Holders  on  their  behalf)  for
application  to the  payment of all Senior Debt  remaining  unpaid to the extent
necessary  to pay all  Senior  Debt in full in cash after  giving  effect to any
concurrent  payment or  distribution  to or for the  benefit of the Senior  Debt
Holders.

         If,  notwithstanding  the  foregoing  provisions of this Section 2, the
Holder of this Note shall have received any payment of distribution of assets of
the Maker of any kind or  character,  whether in cash,  property or  securities,
including any such payment or  distribution  which may be payable or deliverable
by  reason  of the  payment  of any other  indebtedness  of the  Maker  which is
subordinated  to the  payment of this Note,  before all amounts due or to become
due on or in respect of all Senior Debt have been paid in full in cash, then and
in such event such  payment or  distribution  shall be received in trust for the
Senior Debt Holders and shall be forthwith  paid over or delivered by the Holder
of this Note  receiving  the same directly to the Senior Debt Holders (or to the
agent or trustee for the Senior Debt Holders on their  behalf) or, to the extent
legally required, to the trustee in bankruptcy,  receiver,  liquidating trustee,
custodian,  assignee,  agent or other person making such payment or distribution
of assets of the Maker,  for  application  to the  payment  of all  Senior  Debt
remaining  unpaid to the extent necessary to pay all Senior Debt in full in cash
after giving  effect to any  concurrent  payment or  distribution  to or for the
benefit of the Senior Debt Holders.  Notwithstanding  anything set forth in this
Section 2 or  elsewhere  in this  Note,  the Maker may make and the  Holder  may
retain any payment  received on account of this Note prior to the  occurrence of
an event described in clauses (i) through (iii) of this Section 2 or clauses (i)
through (ii) of Section 3.

         3.  Payment on Note  Suspended  When Senior Debt is in Default.  In the
event and during the continuation of (i) any default in the payment of principal
of or interest on any Designated Senior Debt (as hereinafter  defined),  whether
at maturity, at a date fixed for prepayment or by declaration of acceleration or
otherwise, or any default in the payment of any other obligations or liabilities
constituting  Designated  Senior Debt, or (ii) any other event of default (after
expiration  of any  applicable  grace  or  cure  periods)  with  respect  to any
Designated  Senior Debt which would permit the holders of such Designated Senior
Debt (or a person or persons,  including  the agent or trustee for such holders,
acting on their behalf) to declare such Designated Senior Debt to become due and
payable  prior  to the date on which it  would  otherwise  have  become  due and
payable,  then in the case of either  (i) or (ii)  above,  unless and until such
default or event of default shall have been cured or waived or shall have ceased
to exist or such acceleration  shall have been rescinded or annulled,  or in the
event any judicial proceeding shall be pending with respect to any such event of
default,  then no payment  (including any payment which may be payable by reason
of the payment of any other  indebtedness  of the Maker which is subordinated to
the payment of this Note) shall be made by the Maker on account of the principal
of or interest on this Note or on account of the  purchase or other  acquisition
by it of this Note.  The  "Designated  Senior Debt" shall mean,  all Senior Debt
under the  Senior  Credit  Facility  or the New  Senior  Credit  Facility,  and,
provided there is no Senior Credit Facility or New Senior Credit Facility,  then
Designated Senior Debt shall mean the High Yield Debt.

         If,  notwithstanding the foregoing  provisions of this Section 3 or the
provisions of Section 5, the Maker shall make any payment or  distribution on or
with respect to this Note prohibited by the foregoing provisions of this Section
3 or the provisions of Section 5, or the Holder of this Note shall have received
any  payment or  distribution  of assets of the Maker of any kind or  character,
whether  in  cash,  property  or  securities,  including  any  such  payment  or
distribution which may be payable or deliverable by reason of the payment of any
other  indebtedness  of the Maker which is  subordinated  to the payment of this
Note, at a time when such payment or distribution is prohibited by the foregoing
provisions  of this Section 3 or the  provisions  of Section 5, then and in such
event such  payment or  distribution  shall be  received in trust for the Senior
Debt Holders and shall be forthwith paid over or delivered by the Holder of this
Note  receiving the same directly to the Senior Debt Holders (or to the agent or
trustee for the Senior Debt Holders on their  behalf) or, to the extent  legally
required,  to  the  trustee  in  bankruptcy,   receiver,   liquidating  trustee,
custodian,  assignee,  agent or other person making such payment or distribution
of assets of the Maker,  for  application  to the  payment  of all  Senior  Debt
remaining  unpaid to the extent necessary to pay all Senior Debt in full in cash
after giving  effect to any  concurrent  payment or  distribution  to or for the
benefit of the  Senior  Debt  Holders.  Nothing  set forth in this  Section 3 or
elsewhere in this Note, shall prohibit or restrict the Holder from accepting and
retaining  for its own  account  at any time  common  stock in the  Maker or its
Affiliate  (but nothing herein shall require the Holder to accept or require the
Maker to offer  such  common  stock) in full or partial  payment of amounts  due
under this Note.

         4.  Obligation  to Pay Note Not Impaired;  Provisions  Solely to Define
Relative Rights.  The subordination  provisions of this Note are intended solely
for the purpose of defining  the  relative  rights of the Holder of this Note on
the one hand and the Senior Debt  Holders on the other hand.  It is and shall be
the intent of the  parties  that these  provisions  shall  constitute  a present
assignment  by the  Holder of this Note of its  rights to  receive  payments  or
distributions of cash, property and securities of the Maker otherwise payable to
the  Holder of this Note in the  circumstances  described  in  Sections  2 and 3
hereof. Nothing contained herein shall (i) impair or affect, as among the Maker,
its creditors  (other than the Senior Debt Holders) and the Holder of this Note,
the  obligation of the Maker,  which is absolute and  unconditional,  to pay the
Holder of this Note the  principal  of and  interest on this Note as of when the
same shall become due and payable in accordance with their terms, or (ii) affect
the  relative  rights  against  the  Maker of the  Holder  of this  Note and the
creditors of the Maker (other than the Senior Debt  Holders),  or (iii)  prevent
the Holder of this Note from  exercising  all  remedies  otherwise  permitted by
applicable law upon default under the  instrument or instruments  governing this
Note,  subject to the rights, if any, under this Note of the Senior Debt Holders
to receive cash, property and securities otherwise payable or deliverable to the
Holder and subject to the other subordination provisions of this Note.

5.       Actions Against the Maker.

         (a) No Holder of this Note will (i)  declare  this Note or any  portion
hereof due and  payable  before  the  stated  maturity  hereof  (other  than any
Acceleration Event described in paragraphs (c) or (d) of the definition thereof,
which results in an automatic  acceleration of this Note) or commence any action
or  proceeding  against the Maker to recover all or any part of this Note,  (ii)
ask,  demand,  sue for,  or take  other  collection  action  against  the Maker,
directly or indirectly,  in cash, property or securities or other property or by
set-off  or in  any  manner  (including  without  limitation  from  or by way of
collateral)  receive payment of all or any part of this Note, or (iii) join with
any creditor in bringing any proceeding  against the Maker under Title 11 of the
United States Code or any other state or federal insolvency statute,  unless and
until,  in each case under (i),  (ii) and (iii) above,  either (a) the requisite
percentage  of the Senior Debt  Holders  necessary to take such action under the
instrument  or  instruments  governing  the Senior Debt shall have  commenced or
joined  action  or (b) all  Senior  Debt  has  been  paid in full in  cash,  all
commitments  to  extend  credit  under  the  Senior  Debt  Documents  have  been
terminated,  and all  letters  of credit  issued  pursuant  to the  Senior  Debt
Documents  have been  canceled or  otherwise  terminated,  all as more fully set
forth in Section 3 hereof.

         (b)  Notwithstanding  the foregoing paragraph 5(a) or anything else set
forth in this Note, in the event (i) Maker fails to pay the principal balance of
and any other amounts due under this Note on the Maturity Date,  (ii) the Senior
Credit  Facility  Maturity  Date has  occurred and (iii) solely as to the Senior
Credit Facility (and not the New Senior Credit Facility or the High Yield Debt),
no event  described  in clauses  (i)  through  (iii) of Section 2 or clauses (i)
through  (ii) of Section 3 exists,  Holder  shall be allowed to  accelerate  the
obligations  due under this Note and to exercise  such remedies as are available
to Holder under this Note or applicable  law provided  that Holder  forbear from
exercising  any remedies  for a period of not less than one hundred  eighty days
(180) after the Maturity Date (hereinafter the "Standstill Period"). Any cash or
property  acquired by Holder in  connection  with its  exercise of its  remedies
under the Note or any judgment  obtained by Holder in  connection  with the Note
shall be held in trust for the  benefit of the  Senior  Debt  Holders  until all
Senior Debt has been paid in full, in cash, all  commitments to extend credit to
Maker  pursuant to the Senior Debt  Documents  have been  canceled or  otherwise
terminated,  and all  letters  of credit  issued  pursuant  to the  Senior  Debt
Documents  have been  canceled or  otherwise  terminated,  all as more fully set
forth in Section 3 hereof. The "Senior Credit Facility Maturity Date" shall mean
the  earlier of (x) March 31,  2004,  subject to  extension  of such date to the
then-current  maturity date of that certain Credit Agreement dated as of January
19, 1999 among the Maker,  the Lenders  and the Agent,  as amended,  modified or
extended,  but (as to  extensions)  only to the extent  that the March 31,  2004
maturity date is being  extended  because of a default or event of default under
the Senior  Credit  Facility  or in  connection  with a workout  of the  Maker's
obligations under the Senior Credit Facility required in order to avoid a future
default or event of default thereunder or (y) the date the Obligations under and
as such term is defined in the Credit Agreement  executed in connection with the
Senior  Credit  Facility  are paid in full  and the  Credit  Agreement  has been
terminated by the Agent.


<PAGE>



         6.  Subrogation.  Subject to the  payment in full in cash of all Senior
Debt, the  termination of all commitments to extend credit under the Senior Debt
Documents,  and the  cancellation or termination of all letters of credit issued
pursuant  to the  Senior  Debt  Documents,  the  Holder  of this  Note  shall be
subrogated  to the extent of the  payments or  distributions  made to the Senior
Debt Holders  pursuant to these  provisions to the rights of the holders of such
Senior  Debt to  receive  payments  and  distributions  of  cash,  property  and
securities  applicable to the Senior Debt until the principal of and interest on
this Note shall be paid in full. For purposes of such  subrogation,  no payments
or distributions to the Senior Debt Holders of any cash,  property or securities
to which the Holder of this Note would be entitled but for these provisions, and
no payments over pursuant to the provisions of Section 2 or 3 to the Senior Debt
Holders by the Holder of this Note  shall,  as among the  Maker,  its  creditors
(other than the Senior Debt  Holders) and the Holder of this Note,  be deemed to
be a payment or distribution by the Maker to or on account of the Senior Debt.

         7.  Proofs of Claim.  The  Holder of this Note or any  trustee or other
person  acting on its behalf may file such  proofs of claim and other  papers or
documents  as may be  necessary  or advisable in order to have the claims of the
Holder  of this  Note  in  respect  of  this  Note  allowed  in any  bankruptcy,
insolvency  or other  judicial  proceedings  relative to the Maker (or any other
obligor on this Note,  including any guarantor),  its creditors or its property.
Any  term  or  provision  of this  Section  7 to the  contrary  notwithstanding,
however, if any bankruptcy,  insolvency or judicial proceeding referred to above
is  commenced  by or against  the Maker,  and so long as all Senior Debt has not
been paid in full: (i) each of the Senior Debt Holders (and the agent or trustee
of such Senior Debt Holders on their  behalf) is hereby  irrevocably  authorized
and  empowered  (in its own name or in the name of the  Holder  of this  Note or
otherwise),  but shall have no  obligation,  to  demand,  sue for,  collect  and
receive every payment or distribution received in respect of any such proceeding
and give acquittances therefor, to file claims and proofs of claims, to vote the
claims of the Holder of this Note in any proceeding  (and for that purpose,  the
Holder of this Note hereby  irrevocably  assigns to the Senior Debt  Holders the
right to file a proof of claim in the  Holder's  name and to vote its  claims in
any such proceeding),  and to take such other action as it may deem necessary or
advisable for the exercise or  enforcement  of any of the rights or interests of
such Senior Debt  Holders or Holder of this Note with respect  hereto,  and (ii)
the Holder of this Note shall duly and  promptly  take,  for the  account of the
Senior Debt  Holders,  such  action as the Senior Debt  Holders (or the agent or
trustee for the Senior Debt Holders on their  behalf) may request (a) to collect
all  amounts  payable  by the  Maker  in  respect  of this  Note and to file the
appropriate  claims or proofs of claim in respect  of this Note,  (b) to execute
and deliver to the Senior Debt Holders such assignments or other  instruments as
the Senior Debt  Holders (or the agent or trustee for the Senior Debt Holders on
their  behalf) may  request in order to enable the Senior  Debt  Holders (or the
agent or trustee for the Senior Debt Holders on their behalf) to enforce any and
all  claims  with  respect to any and all  security  interests  and other  liens
securing  payment  of all  amounts  payable  in  respect of this Note and (c) to
insure  that  all  payments  and  distributions  made  in  respect  of any  such
proceedings  are made to the Senior Debt  Holders as it or their  interests  may
appear.


<PAGE>


         8. Reliance on Subordination. The Holder of this Note by its acceptance
hereof  consents  and agrees  that all Senior  Debt shall be deemed to have been
made or incurred at the request of the Holder of this Note and in reliance  upon
the subordination of this Note pursuant to the subordination provisions hereof.

         9.  Restrictions  on  Certain  Actions.  The Holder of this Note by its
acceptance hereof agrees not to sell, assign or transfer all or any part of this
Note while any Senior  Debt  remains  unpaid  unless  such sale,  assignment  or
transfer is made expressly subject to these provisions.  The Holder of this Note
represents that no other  subordination of this Note is in existence on the date
hereof,  and such Holder agrees that this Note will not be  subordinated  to any
indebtedness  owed to any person other than the Senior Debt  Holders.  Until the
Senior  Debt has been paid in full,  no Holder of this Note will file or create,
or cause to be filed or created,  any lien or  encumbrance  of any kind upon the
assets of the Maker or any of its subsidiaries, without the prior consent of the
Senior Debt Holders.

         10. Changes.  The Senior Debt Holders may at any time, and from time to
time,  without  the  consent of or notice to the  Holder of this  Note,  without
incurring  responsibility to such Holder, and without impairing or releasing any
of the rights of the  Senior  Debt  Holders,  or any of the  obligations  of the
Holder of this Note hereunder:

                  (i) change the time, amount, manner, place or terms of payment
of, or change or extend the time of payment of, or renew or otherwise alter, any
of the Senior Debt Documents,  or any other  instrument or agreement  evidencing
any Senior  Debt or securing  payment  thereof or relating to the Senior Debt in
any manner;

     (ii) sell, exchange,  release or otherwise deal with any collateral for all
or any of the Senior Debt (whether or not in a commercially reasonable manner);

     (iii) release  anyone liable in any manner for the payment or collection of
any Senior Debt;

     (iv) exercise or refrain from  exercising  any rights  against the Maker or
others (including the Holder of this Note);

                  (v) apply any sums  received  by the Senior Debt  Holders,  by
whomsoever paid and however realized,  to the payment of the Senior Debt in such
manner  as the  Senior  Debt  Holders,  in their  sole  discretion,  shall  deem
appropriate; and

                  (vi) take any other action which might otherwise  constitute a
defense  available  to,  or a  discharge  of,  this  Note in  respect  of  these
provisions.


<PAGE>


         11.  Continued  Effectiveness.  These  provisions  shall continue to be
effective  or be  reinstated,  as the case may be, if at any time any payment of
any of the Senior Debt is rescinded or must  otherwise be returned by any Senior
Debt Holders upon the insolvency,  bankruptcy or  reorganization of the Maker or
otherwise, all as though such payment had been due but not made at such time.

         12. Amendments.  The subordination  provisions of this Note are for the
benefit of the Senior  Debt  Holders  and,  so long as any Senior  Debt  remains
unpaid, may not be amended, modified,  rescinded or canceled in whole or in part
in any manner  that would be adverse to any holder of Senior  Debt  without  the
prior written consent of such holder.

         13.  Binding  Affect;  Assignment.  This Note shall be binding upon and
inure to the  benefit of Maker and Holder and their  respective  successors  and
permitted  assigns,  and  representatives.  Holder  may not assign its rights or
obligations under this Note (by operation of law or otherwise) other than to any
Permitted  Transferee or Assignee as expressly provided in this Note without the
prior written  consent of Maker,  and any attempted  assignment  without consent
where required shall be void.  The  subordination  provisions of this Note shall
inure to the  benefit of the  successors  and assigns of each of the Senior Debt
Holders.

         IN WITNESS  WHEREOF,  Maker has  caused  this Note to be  executed  and
delivered as of the day and year first above written.

                                            MAKER:

                                            MATRIA HEALTHCARE, INC.


                                            By:________________________________

                                            Name:    George W. Dunaway
                                            Title:   Chief Financial Officer

Accepted and agreed as of this ____ day of __________, 2000.

HOLDER:

GAINOR MEDICAL MANAGEMENT, L.L.C.


By:     ___________________________________
Name:   Mark J. Gainor
Title:  President