Exhibit 10.1


    

      Exhibit
        10.1

      


      CONSENT
        AND WAIVER AGREEMENT AND

      AMENDMENT
        NO. 7

      TO
        LOAN AND SECURITY AGREEMENT

      


       

      CONSENT
        AND WAIVER AGREEMENT AND AMENDMENT NO. 7 TO LOAN AND SECURITY AGREEMENT,
        dated
        as of September 22, 2005 (this “Agreement”),
        by
        and among MATRIA WOMEN’S AND CHILDREN’S HEALTH, LLC, a Delaware limited
        liability company (together with its permitted successors and assigns,
“Parent”)
        and by
        conversion from Matria Women’s and Children’s Health, Inc. (“Immediate
        Predecessor”)
        successor by merger to Matria Healthcare, Inc., a Delaware corporation (together
        with the Immediate Predecessor, “Former
        Parent”),
        DIABETES ACQUISITION, INC., a Georgia corporation (together with its permitted
        successors and assigns, “DAI”),
        GAINOR MEDICAL ACQUISITION COMPANY, a Georgia corporation (together with
        its
        permitted successors and assigns, “Gainor”),
        DIABETES MANAGEMENT SOLUTIONS, INC., a Delaware corporation (together with
        its
        permitted successors and assigns, “DMS”),
        DIABETES SELF CARE, INC., a Virginia corporation (together with its permitted
        successors and assigns, “DSC”),
        MATRIA LABORATORIES, INC., a Delaware corporation (together with its permitted
        successors and assigns, “MLI”),
        FACET
        TECHNOLOGIES, LLC, a Georgia limited liability company (together with its
        permitted successors and assigns, “Facet”),
        MATRIA OF NEW YORK, INC., a New York corporation (together with its permitted
        successors and assigns, “MNY”),
        MATRIA HEALTHCARE OF ILLINOIS, INC., a Georgia corporation (together with
        its
        permitted successors and assigns, “MII”),
        QUALITY ONCOLOGY, INC., a Delaware corporation (together with its permitted
        successors and assigns, “QO”)
        (Parent, DAI, Gainor, DMS, DSC, MLI, Facet, MNY, MII and QO, each individually
        a
“Borrower”
and
        jointly and severally, the “Borrowers”),
        Parent, in its capacity as authorized representative of the Borrowers
        (“Authorized
        Representative”),
        and
        HFG HEALTHCO-4, LLC, a Delaware limited liability company (together with
        its
        successors and assigns, the “Lender”).

       

      W
        I T N E
        S S E T H

       

      WHEREAS,
        the Borrowers, Former Parent, in its capacity as the authorized representative
        of the Borrowers, and the Lender are parties to that certain Loan and Security
        Agreement, dated as of October 22, 2002 (including all annexes, exhibits
        and schedules thereto, and as amended, restated, supplemented or otherwise
        modified from time to time,
        the
        “Loan
        and Security Agreement”);

       

      WHEREAS,
        Former Parent, Matria Healthcare, Inc., a Delaware corporation formerly known
        as
        Matria Holding Company, Inc. (together with its permitted successors and
        assigns, “Holdco”),
        and
        Matria MergerSub, Inc., a Delaware corporation (“MergerSub”),
        are
        party to that certain Agreement of Merger and Plan of Reorganization dated
        as of
        December 31, 2004 (the “Merger
        Agreement”),
        pursuant to which Former Parent created a new holding company structure by
        (a)
        merging MergerSub with and into Former Parent and (b) converting the outstanding
        capital stock of Former Parent into a like number of shares of capital stock
        of
        Holdco, with the result being that Former Parent became a wholly-owned
        subsidiary of Holdco, all on the terms of and subject to the conditions of
        the
        Merger Agreement;

       


      
        
          
          

        

        
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      WHEREAS,
        pursuant to the terms of the Merger Agreement, Former Parent changed its
        name to
“Matria Women’s and Children’s Health, Inc.” and subsequently converted from a
        Delaware corporation to a Delaware limited liability company, “Matria Women’s
        and Children’s Health, LLC” (the “Conversion”);

       

      WHEREAS,
        pursuant to the terms of the Merger Agreement, Matria Health Enhancement
        Company, a Delaware corporation, formerly known as Clinical-Management Systems,
        Inc. (together with its successors and assigns, “MHE”)
        changed its name from “Clinical-Management Systems, Inc.” to “Matria Health
        Enhancement Co.” and subsequently changed its domicile from Georgia to Delaware
        under the name “Matria Health Enhancement Company” (the “HED
        Name Change”);
        

       

      WHEREAS,
        pursuant to the terms of the Merger Agreement, Parent shall (i) contribute
        to
        Holdco all of the issued and outstanding stock or membership interests, as
        applicable, of its direct, wholly-owned subsidiaries DAI, MHE, Matria Insurance,
        Ltd., a Vermont corporation, Shared Care, Inc., a Georgia corporation, and
        Facet, (ii) cause DAI to contribute to Facet the outstanding capital stock
        of
        Facet Technologies Limited, a corporation organized under the laws of the
        United
        Kingdom, (iii) contribute to MHE all of the outstanding capital stock of
        QO, and
        (iv) contribute to Holdco its 35% stock ownership interest in Matria Holding
        GmbH, a company organized under the laws of Germany (the “Inter-Company
        Transfers”);

       

      WHEREAS,
        pursuant to the terms of the Merger Agreement, Parent shall transfer and
        assign
        to MHE all of the disease management contracts to which Parent is a party
        (the
“Assignment
        and Assumption”);

       

      WHEREAS,
        pursuant to the terms of the Merger Agreement, Parent shall cause Q Liquidation
        Corp., a Delaware corporation and MarketRing.com, Inc., a Georgia corporation
        to
        merge with and into Shared Care, Inc., in accordance with Section 252 of
        the
        DGCL and Section 14-2-1104 of the Georgia Business Corporation Code, as
        applicable;

       

      WHEREAS,
        pursuant to the terms of the Merger Agreement, Holdco shall cause DMS to
        transfer all of the assets exclusively used in the operations of its Options
        Unlimited division to Matria Case Management, Inc., a New York corporation
        and
        direct, wholly-owned subsidiary of MHE;

       

      WHEREAS,
        the consummation of the transactions contemplated hereby would be in violation
        of the Loan and Security Agreement, and Lender has agreed to consent to the
        consummation of such transactions and waive certain Defaults and Events of
        Default solely to the extent set forth herein; and

       

      WHEREAS,
        the
        parties to the Agreement have agreed to amend the Loan and Security Agreement
        as
        described herein.

       

      NOW
        THEREFORE, in consideration of the premises and for other good and valuable
        consideration, the receipt, adequacy and sufficiency of which are hereby
        acknowledged, the Borrowers, the Authorized Representative and the Lender
        hereby
        agree as follows:


      
        
          
          

        

        
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      1.  Definitions.
        Capitalized terms not otherwise defined herein shall have the meanings ascribed
        to them in the Loan and Security Agreement.

       

      2.  Consents.
        As of
        the Agreement Effective Date (as hereinafter defined), the Lender hereby
        consents, pursuant to Section 6.01 of the Loan and Security Agreement and
        notwithstanding anything set forth to the contrary in clauses (b) (solely
        with
        respect to the final sentence thereof, to the extent that such clause (b)
        requires Parent to provide the Lender with 30 days’ prior Written Notice of
        Parent changing its name from “Matria Women’s and Children’s Health, Inc.” to
“Matria Women’s and Children’s Health, LLC”), (g), (r), (w) and (z) of Exhibit
        IV and clauses (m), (v) and (y) of Exhibit V to the Loan and Security Agreement,
        to Parent, Holdco and the Borrowers party to the Inter-Company Transfers
        consummating the transactions contemplated by the Merger Agreement, the
        Assumption and Assignment, the Conversion, the HED Name Change and the
        Inter-Company Transfers (collectively, the “Subject
        Transactions”).
        

       

      3.  Waiver
        Upon the
        Agreement Effective Date, the Lender hereby agrees to waive any Default or
        Event
        of Default arising pursuant to a breach of the covenant set forth in the
        final
        sentence of clause (b) of Exhibit IV of the Loan and Security Agreement,
        solely
        to the extent that such breach arises with respect to Parent failing to provide
        the Lender with 30 days’ prior Written Notice of Parent changing its name from
“Matria Women’s and Children’s Health, Inc.” to “Matria Women’s and Children’s
        Health, LLC”.

       

      4.  Amendments
        to Loan and Security Agreement.
        Notwithstanding the delivery of any Written Notice by any Borrower or the
        Authorized Representative to the effect that the Borrowers do not intend
        to
        extend the term of the Loan and Security Agreement beyond the Scheduled Maturity
        Date in effect immediately prior to the effectiveness of this Agreement,
        the
        parties hereto agree to amend the Loan and Security Agreement as
        follows:

       

      a.  Section
        6.06(a) of the Agreement is amended by deleting the date “October 21, 2005”
therein and substituting in lieu thereof the date “October 21,
        2006”.

       

      b.  Section
        6.06(c) of the Agreement is amended in its entirety to read as
        follows:

       

      (c)
        The
        Borrowers may terminate this Agreement at any time prior to the Maturity
        Date by
        providing one days’
        prior Written Notice to the Lender, subject to payment in full of all Lender
        Debt, if any, including all applicable fees, charges, premiums and costs,
        all as
        provided hereunder, and in the event of such occurrence, the Revolving
        Commitment shall be deemed to be terminated.

       

      c.  The
        definition of “Scheduled Maturity Date” in Exhibit I to the Loan and Security
        Agreement is amended in its entirety to read as follows:

       

      “Scheduled
        Maturity Date”
means
        October 21, 2006, as such date may be extended thereafter in accordance with
        Section 6.06(a).

       

      d.  The
        definition of “Early Termination Fee” in Exhibit I to the Loan and Security
        Agreement is amended in its entirety to read as follows:

       


      
        
          
          

        

        
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      “Early
        Termination Fee”
shall
        mean an amount equal to the decrease in or termination of the Revolving
        Commitment multiplied by the applicable percentage below:

      


      
        	
                Period

              	
                Percentage

              
	
                From
                  October 22, 2003 until October 21, 2005

              	
                0.75%

              
	
                from
                  October 22, 2005 until the date immediately prior to the Scheduled
                  Maturity Date

              	
                0.00%

              


      

      


      5.  Post-Closing
        Obligations
        As a
        condition to the Lender granting the foregoing consents and waiver, the
        Borrowers and the Authorized Representative hereby agree that, prior to the
        advance of any Revolving Advance on or after the date hereof, in addition
        to
        satisfying the conditions set forth in the Loan and Security Agreement, the
        Borrowers and the Authorized Representative shall have delivered to the Lender
        an executed amendment to the Loan and Security Agreement effecting such
        modifications to the Loan and Security Agreement relating to the Subject
        Transactions as the Lender shall require, and shall have executed and delivered
        such other agreements, opinions, lien searches, financing statements, account
        control agreements, instruments, documents and information as the Lender
        may
        request, in form and substance satisfactory to the Lender.

       

      6.  Confirmation
        and Reaffirmation of Obligations.
        Without
        affecting in any way any provisions of the Documents pursuant to which the
        obligations of the Borrowers thereunder are agreed to be absolute and
        unconditional irrespective of any amendment thereof:

       

      a.  Parent
        hereby confirms and agrees that, notwithstanding (i) the consummation of
        the
        transactions contemplated by the Merger Agreement, including the Conversion,
        and
        (ii) the effectiveness of this Agreement, each of the Documents which Parent
        or
        Former Parent has heretofore executed and delivered, and the obligations
        of
        Parent thereunder, are, and shall continue to be, in full force and effect
        and
        shall apply to the Documents as amended hereby, and each of such Documents
        is
        hereby ratified and confirmed and such obligations are ratified and confirmed
        as
        obligations of Parent.

       

      b.  Without
        limiting the foregoing, Parent agrees that the security interests and rights
        of
        set-off granted by Parent and Former Parent pursuant to the Documents,
        including, without limitation, the Loan and Security Agreement and the Pledge
        Agreement -- Parent, are hereby ratified and reaffirmed by Parent in all
        respects and shall remain in full force and effect as continuing security
        interests and rights of set-off.

       

      c.  Each
        of
        the other Borrowers hereby confirms and agrees that:

       

      i. notwithstanding
        (x) the consummation of the Subject Transactions and (y) the effectiveness
        of
        this Agreement, each of the Documents and the obligations of such Borrowers
        thereunder, are, and shall continue to be, in full force and effect and shall
        apply to the Documents as amended hereby, and each of such Documents is hereby
        ratified and confirmed by such Borrower and such obligations are ratified
        and
        confirmed as obligations of such Borrower; 


      
        
          
          

        

        
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      ii. the
        security interests and rights of set-off granted by such Borrower pursuant
        to
        the Documents are hereby ratified and reaffirmed by such Borrower in all
        respects and shall remain in full force and effect as continuing security
        interests and rights of set-off; and

      


      iii. without
        limiting the foregoing, the indemnification obligations of the Borrowers
        described in Section 1.08, 1.09 and 6.06 of the Loan and Security Agreement
        are
        hereby ratified and confirmed by such Borrower and such obligations are ratified
        and confirmed as obligations of such Borrower.

      


      7.  Remedies.
        This
        Agreement shall constitute a Document. The breach by any Borrower of any
        representation, warranty, covenant or agreement in this Agreement shall
        constitute an immediate Event of Default hereunder and under the other
        Documents.

       

      8.  Representations
        and Warranties.
        To
        induce the Lender to enter into this Agreement, each Borrower, jointly and
        severally and giving effect to this Agreement, makes the following
        representations and warranties to the Lender:

       

      a.  The
        execution, delivery and performance by it of this Agreement and the performance
        of the Loan and Security Agreement, as amended hereby, the Documents and
        the
        other documents to be delivered by it hereunder and thereunder and the actions
        contemplated hereby and thereby, including, in the case of the parties thereto,
        the Merger Agreement, the Assumption and Assignment, the Transfer Agreements
        and
        each
        other document or instrument executed and delivered in connection therewith
        (i)
        are within its corporate or company powers, (ii) have been duly authorized
        by
        all necessary corporate or company action, (iii) do not contravene (1) its
        charter or its bylaws, or its operating agreement, as applicable, (2) any
        law,
        rule or regulation applicable to it, (3) the Indenture or any contractual
        restriction binding on or affecting it or its Property, or (4) any order,
        writ,
        judgment, award, injunction or decree binding on or affecting it or its
        Property, and (iv) do not result in or require the creation of any Lien upon
        or
        with respect to any of its Properties, other than in favor of the Lender
        pursuant to this Agreement, the Loan and Security Agreement, as amended hereby,
        or the Documents. This Agreement has been duly executed and delivered by
        it.

       

      b.  This
        Agreement, the Loan and Security Agreement, as amended hereby, and the Documents
        constitute the legal, valid and binding obligation of the Borrowers, enforceable
        against the Borrowers in accordance with their respective terms, except as
        limited by bankruptcy, insolvency, moratorium, fraudulent conveyance or other
        laws relating to the enforcement of creditors’ rights generally and general
        principles of equity (regardless of whether enforcement is sought at equity
        or
        law).

       

      c.  Except
        as
        expressly waived by Lender herein, no event has occurred and is continuing,
        or
        would result from the execution of this Agreement, that constitutes a Default
        or
        Event of Default.

       

      d.  After
        giving effect to this Agreement, the representations and warranties of each
        Borrower contained in the Loan and Security Agreement and each other Document
        are true and correct on and as of the Agreement Effective Date with the


       


      
        
          
          

        

        
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      same
        effect as if such representations and warranties had been made on and as
        of such
        date, except that any such representation or warranty which is expressly
        made
        only as of a specified date need be true only as of such date.

       

      9.  No
        Other Waivers or Consents.
        Except
        as expressly provided herein, the Loan and Security Agreement and the other
        Documents shall be unmodified and shall continue to be in full force and
        effect
        in accordance with their terms. In addition, except as specifically provided
        herein, this Agreement shall not be deemed a (i) waiver of any term or condition
        of any Document or (ii) consent to any deviation from the terms of the Loan
        and
        Security Agreement or any of the other Documents on the part of any Borrower,
        and shall not be deemed to prejudice any right or rights which the Lender
        may
        now have or may have in the future under or in connection with the Loan and
        Security Agreement or any other Document or any of the instruments or agreements
        referred to therein, as the same may be amended from time to time.

       

      10.  Effectiveness.
        This
        Agreement shall become effective as of the date first set forth above (the
        “Agreement
        Effective Date”)
        only
        upon satisfaction in full in the judgment of the Lender of each of the following
        conditions: 

       

      a.  The
        Lender shall have received copies by facsimile of duly executed signature
        pages
        of this Agreement from each Borrower, the Authorized Representative and the
        Lender.

       

      b.  The
        Lender shall have received all UCC-3 amendment statements as it shall deem
        necessary or reasonably desirable in order to correctly identify each of
        the
        Borrowers and correctly identify the collateral granted by each such Borrower,
        to be filed on or immediately prior to the Agreement Effective Date under
        the
        UCC.

       

      c.  The
        representations and warranties of or on behalf of the Borrowers in this
        Agreement shall be true and correct on and as of the Agreement Effective
        Date.

       

      d.  The
        Borrowers shall have (i) paid to Kaye Scholer LLP all outstanding legal fees
        and
        expenses related to its representation of the Lender in connection with this
        Agreement and/or the Loan and Security Agreement and (ii) paid and reimbursed
        the Lender for all other reasonable costs and out-of-pocket expenses incurred
        in
        connection with the negotiation, preparation, execution and delivery of this
        Agreement and all other documents and instruments delivered in connection
        herewith. 

       

      11.  GOVERNING
        LAW.
        THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH,
        THE LAW
        OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES
        THEREOF.

       

      12.  WAIVER
        OF JURY TRIAL, JURISDICTION AND VENUE.
        EACH OF THE PARTIES HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN
        THE
        EVENT OF ANY LITIGATION WITH RESPECT TO ANY MATTER RELATED TO THIS AGREEMENT
        OR
        THE LOAN AND SECURITY AGREEMENT, AND HEREBY IRREVOCABLY CONSENTS TO THE
        JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY,
        NEW
        YORK CITY, NEW YORK IN CONNECTION WITH ANY ACTION OR PROCEEDING
        ARISINGOUT
        OF OR RELATING TO THIS AGREEMENT OR THE LOAN AND SECURITY AGREEMENT. IN ANY
        SUCH
        LITIGATION, EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS,
        COMPLAINT OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE BY
        CERTIFIED OR REGISTERED MAIL DIRECTED TO THE PARTIES HERETO AT THEIR ADDRESSES
        SET FORTH ON SCHEDULE I TO THE LOAN AND SECURITY AGREEMENT, AS AMENDED,
        RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME. THE PARTIES
        HERETO SHALL APPEAR IN ANSWER TO SUCH SUMMONS, COMPLAINT OR OTHER PROCESS
        WITHIN
        THE TIME PRESCRIBED BY LAW, FAILING WHICH THE PARTY FAILING TO SO APPEAR
        SHALL
        BE DEEMED IN DEFAULT AND JUDGMENT MAY BE ENTERED BY THE OTHER PARTY FOR THE
        AMOUNT OF THE CLAIM AND OTHER RELIEF REQUESTED THEREIN.

       

      13.  Counterparts.
        This
        Agreement may be executed by the parties hereto on any number of separate
        counterparts and all of said counterparts taken together shall be deemed
        to
        constitute one and the same instrument. Delivery of an executed counterpart
        of a
        signature page to this Agreement by telecopier or electronic mail shall be
        effective as delivery of a manually executed counterpart of this
        Agreement.

       

      [SIGNATURE
        PAGE FOLLOWS]

       

      


       


      
        
          
          

        

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

       

      
        	
                HFG
                  HEALTHCO-4 LLC

                 

                 

                By:
                   

                Name:

                Title:

              	
                MATRIA
                  LABORATORIES, INC.

                 

                 

                By:
                   

                Name:

                Title:

              
	
                MATRIA
                  WOMEN’S AND CHILDREN’S HEALTH, LLC

                 

                By:
                    

                Name:

                Title:

              	
                FACET
                  TECHNOLOGIES, LLC

                 

                 

                By:
                   

                Name:

                Title:

              
	
                DIABETES
                  ACQUISITION, INC.

                 

                 

                By:
                   

                Name:

                Title:

              	
                MATRIA
                  OF NEW YORK, INC.

                 

                 

                By:
                   

                Name:

                Title:

              
	
                 

                GAINOR
                  MEDICAL ACQUISITION COMPANY

                 

                 

                By:
                   

                Name:

                Title:

              	
                 

                MATRIA
                  HEALTHCARE OF ILLINOIS, INC.

                 

                By:
                   

                Name:

                Title:

              
	
                 

                DIABETES
                  MANAGEMENT SOLUTIONS, INC.

                 

                 

                By:
                   

                Name:

                Title:

              	
                 

                QUALITY
                  ONCOLOGY, INC.

                 

                 

                By:
                   

                Name:

                Title:

              
	
                 

                DIABETES
                  SELF CARE, INC.

                 

                 

                By:
                   

                Name:

                Title: