Exhibit 10.4


    Exhibit
      10.4

    


    MATRIA
      HEALTHCARE, INC.

    


    2005
      EMPLOYEE STOCK PURCHASE PLAN

    


    


    The
      following constitute the provisions of the 2005 Employee Stock Purchase Plan
      of
      Matria Healthcare, Inc.

    


    1. Purpose.
      The
      purpose of the Plan is to provide employees of the Company and its Designated
      Subsidiaries with an opportunity to purchase Common Stock of the Company through
      accumulated payroll deductions. It is the intention of the Company to have
      the
      Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code.
      The provisions of the Plan, accordingly, shall be construed so as to extend
      and
      limit participation in a manner consistent with the requirements of that section
      of the Code.

    


    2. Definitions.

    


    (a) “Board”
shall
      mean the Board of Directors of the Company.

    


    (b) “Code”
shall
      mean the Internal Revenue Code of 1986, as amended.

    


    (c) “Common
      Stock”
shall
      mean the common stock, $0.01 par value per share, of the Company.

    


    (d) “Company”
      shall mean Matria Healthcare, Inc., a Delaware corporation.

    


    (e) “Compensation”
shall
      mean an Employee’s base salary, including commissions, from the Company or one
      or more Designated Subsidiaries, including such amounts of base salary as are
      deferred by the Employee (i) under a qualified cash or deferred arrangement
      described in Section 401(k) of the Code, or (ii) to a plan qualified under
      Section 125 of the Code. Compensation does not include overtime, bonuses,
      reimbursements or other expense allowances, fringe benefits (cash or noncash),
      moving expenses, deferred compensation, and contributions (other than
      contributions describe din the first sentence) made on the Employee’s behalf by
      the Company or one or more Designated Subsidiaries under any employee benefit
      or
      welfare plan now or hereafter established.

    


    (f) “Designated
      Subsidiaries”
shall
      mean the Subsidiaries which have been designated by the Board from time to
      time
      in its sole discretion as eligible to participate in the Plan.

    


    (g) “Effective
      Date”
shall
      mean the later of July 1, 2005 or (ii) the date that the Plan is approved by
      the
      Company’s stockholders. However, should any Designated Subsidiary become a
      Participating Company in the Plan after such date, then such entity shall
      designate a separate Effective Date with respect to its employee
      participants.

    


    (h) “Employee”
shall
      mean any individual who is engaged in the rendition of personal services to
      the
      Company or a Designated Subsidiary for Compensation. For purposes of the Plan,
      the employment relationship shall be treated as continuing intact while the
      individual is on sick leave or other leave of absence approved by the Company.
      Where the period of leave exceeds 90 days and the individual’s right to
      reemployment is not guaranteed either by statute or by contract, the employment
      relationship will be deemed to have terminated on the 91st
      day of
      such leave.

    


    (i) “Enrollment
      Date”
shall
      mean the first day of each Purchase Period.

    


    (j) “Exercise
      Date”
shall
      mean the last day of each Purchase Period.


    
      
        Exhibit
          10 4 Matria 2005 Employee Stock Purchase Plan A-

        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    (k) “Fair
      Market Value”
shall
      mean, as of any date, the value of Common Stock determined as
      follows:

    


    (1) If
      the
      Common Stock is listed on any established stock exchange or a national market
      system, including with out limitation the Nasdaq National Market, its Fair
      Market Value shall be the closing selling price of such stock on the principal
      securities exchange or national market system on which the Common Stock is
      at
      the time listed for trading. If there are no sales of Common Stock on that
      date,
      then the closing selling price for the Common Stock on the next preceding day
      for which such closing selling price is quoted shall be determinative of Fair
      Market Value; or

    


    (2) If
      the
      Common Stock is not traded on an exchange or a national market system, its
      Fair
      Market Value shall be determined in good faith by the Board, and such
      determination shall be conclusive and binding on all persons.

    


    (l) “Participant”
means
      an Employee of the Company or Designated Subsidiary who is actively
      participating in the Plan.

    


    (m) “Plan”
shall
      mean this Employee Stock Purchase Plan.

    


    (n) “Plan
      Administrator”
shall
      mean either the Board or a committee of the Board that is responsible for the
      administration of the Plan.

    


    (o) “Purchase
      Period”
shall
      mean a period of approximately three months, commencing on January 1, April
      1,
      July 1 and October 1 of each year and terminating on the next following March
      31, June 30, September 30 or December 31, respectively, provided, however,
      that
      the first Purchase Period shall commence on the Effective Date and shall end
      on
      December 31, 2005.

    


    (p) “Purchase
      Price”
shall
      mean an amount equal to 85% of the Fair Market Value of a share of Common Stock
      on the Enrollment Date or on the Exercise Date, whichever is lower.

    


    (q) “Reserves”
shall
      mean the number of shares of Common Stock covered by each option under the
      Plan
      which have not yet been exercised and the number of shares of Common Stock
      which
      have been authorized for issuance under the Plan but not yet placed under
      option.

    


    (r) “Subsidiary”
shall
      mean a corporation, domestic or foreign, of which not less than 50% of the
      voting shares are held by the Company or a Subsidiary, whether or not such
      corporation now exists or is hereafter organized or acquired by the Company
      or a
      Subsidiary.

    


    3. Eligibility.

    


    (a) General.
      Any
      Employee who is employed by the Company on a given Enrollment Date shall be
      eligible to participate in the Plan for the Purchase Period commencing with
      such
      Enrollment Date.

    


    (b) Limitations
      on Grant and Accrual.
      Any
      provisions of the Plan to the contrary notwithstanding, no Employee shall be
      granted an option under the Plan (i) if, immediately after the grant, such
      Employee (taking into account stock owned by any other person whose stock would
      be attributed to such Employee pursuant to Section 424(d) of the Code) would
      own
      stock and/or holding outstanding options to purchase stock possessing five
      percent (5%) or more of the total combined voting power or value of all classes
      of stock of the company or of any Subsidiary of the Company, or (ii) which
      permits his or her rights to purchase stock under all employee stock purchase
      plans of the Company and its Subsidiaries to accrue at a rate which exceeds
      Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the Fair
      Market Value of the shares at the time such option is granted) for each calendar
      year in which such option is outstanding at any time. The determination of
      the
      accrual of the right to purchase stock shall be made in accordance with Section
      423(b)(8) of the Code and the regulations thereunder.


    
      
        Exhibit
          10 4 Matria 2005 Employee Stock Purchase Plan A-

        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    (c) Other
      Limits on Eligibility.
      Notwithstanding paragraph (a) above, the following Employees, as defined in
      paragraph 2, shall not be eligible to participate in the Plan for any relevant
      Purchase Period: (i) employees whose customary employment is 20 hours or less
      per week; and (ii) employees whose customary employment is for not more than
      5
      months in any calendar year.

    


    4. Purchase
      Periods.
      

    


    (a) The
      Plan
      shall be implemented through consecutive Purchase Periods until such time as
      (i)
      the maximum number of shares of Stock available for issuance under the Plan
      shall have been purchased, or (ii) the Plan shall have been sooner terminated
      in
      accordance with paragraph 19 hereof.

    


    (b) A
      Participant shall be granted a separate purchase right for each Purchase Period
      in which he/she participates. The purchase right shall be granted on the first
      day of the Purchase Period and shall be automatically exercised on the last
      day
      of the Purchase Period.

    


    (c) Except
      as
      specifically provided herein, the acquisition of Common Stock through
      participation in the Plan for any Purchase Period shall neither limit nor
      require the acquisition of Common Stock by a Participant in any subsequent
      Purchase Period.

    


    5. Participation.

    


    (a) An
      eligible Employee may become a Participant in the Plan by completing a
      subscription agreement authorizing payroll deductions in the form of Exhibit
      A
      to this Plan and filing it with the Company’s payroll office at least fifteen
      (15) business days prior to the Enrollment Date for the Purchase Period in
      which
      such participation will commence, unless a later time for filing the
      subscription agreement is set by the Board for all eligible Employees with
      respect to a given Purchase Period.

    


    (b) Payroll
      deductions for a Participant shall commence with the first period payroll
      following the Enrollment Date and shall end on the last complete payroll period
      during the Purchase Period, unless sooner terminated by the Participant as
      provided in paragraph 10.

    


    6. Payroll
      Deductions.

    


    (a) At
      the
      time a Participant files his/her subscription agreement, he/she shall elect
      to
      have payroll deductions made on each pay day during the Purchase Period in
      an
      amount not exceeding ten percent (10%) of the Compensation which he/she receives
      on each payday during the Purchase Period.

    


    (b) All
      payroll deductions made for a Participant shall be credited to his/her account
      under the Plan and will be withheld in whole percentages only. A Participant
      may
      not make any additional payments into such account.

    


    (c) A
      Participant may discontinue his or her participation in the Plan as provided
      in
      paragraph 10, or may decrease the rate of his/her deductions during the Purchase
      Period by completing or filing with the Company a new subscription agreement
      authorizing a decrease in payroll deduction rate. The decrease in rate shall
      be
      effective with the first full payroll period following ten (10) business days
      after the Company’s receipt of the new subscription agreement unless the Company
      elects to process a given change in participation more quickly. A Participant
      may increase the rate of his/her payroll deductions for a future Purchase Period
      by filing with the Company a new subscription agreement authorizing an increase
      in payroll deduction rate within ten (10) business days (unless the Company
      elects to process a given change in participation more quickly) before the
      commencement of the upcoming Purchase Period. A Participant’s subscription
      agreement shall remain in effect for successive Purchase Periods unless
      terminated as provided in paragraph 10. The Board shall be authorized to limit
      the number of participation rate changes during any Purchase
      Period.

    


    (d) Notwithstanding
      the foregoing, to the extent necessary to comply with Section 423(b)(8) of
      the Code and paragraph 3(b) herein, a Participant’s payroll deductions may be



    
      
        Exhibit
          10 4 Matria 2005 Employee Stock Purchase Plan A-

        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    decreased
      to 0% at such time during any Purchase Period which is scheduled to end during
      the current calendar year (the “Current Purchase Period”) that the aggregate of
      all payroll deductions which were previously used to purchase stock under the
      Plan in a prior Purchase Period which ended during that calendar year plus
      all
      payroll deductions accumulated with respect to the Current Purchase Period
      equals $25,000. Payroll deductions shall recommence at the rate provided in
      such
      Participant’s subscription agreement at the beginning of the first Purchase
      Period which is scheduled to end in the following calendar year, unless
      terminated by the Participant as provided in paragraph 10.

    


    7. Grant
      of Option.
      On the
      first day of each Purchase Period, each eligible Employee participating in
      such
      Purchase Period shall be granted an option to purchase on the Exercise Date
      for
      such Purchase Period (at the applicable Purchase Price) up to a number of shares
      of the Company’s Common Stock determined by dividing such Employee’s payroll
      deductions accumulated prior to such Exercise Date and retained in the
      Participant’s account as of the Exercise Date by the applicable Purchase Prices,
      provided (i) that such purchase shall be subject to the limitations set
      forth in paragraphs 3(b), 12, and 21 hereof, and (ii) the maximum number of
      shares of Common Stock an Employee shall be permitted to purchase in any
      Purchase Period shall be 375 shares, subject to adjustment as provided in
      paragraph 18 hereof. Exercise of the option shall occur as provided in
      paragraph 8, unless the Participant has withdrawn pursuant to
      paragraph 10, and the option, to the extent not exercised, shall expire on
      the last day of the Purchase Price.

    


    8. Exercise
      of Option.
      Unless
      a Participant withdraws from the Plan as provided in paragraph 10 below,
      his/her option for the purchase of shares will be exercised automatically on
      each Exercise Date, and the maximum number of full shares subject to option
      shall be purchased for such Participant at the applicable Purchase Price with
      the accumulated payroll deductions in his/her account. No fractional shares
      will
      be purchased; any payroll deductions accumulated in a Participant’s account
      which are not sufficient to purchase a full share shall be carried over to
      the
      next Purchase Period, if the Participant elects to participate in the next
      Purchase Period, or returned to the Participant. Any amount remaining in a
      Participant’s account following the purchase of shares on the Exercise Date,
      other than the amounts described in the preceding sentence, shall be returned
      to
      the Participant and shall not be carried over to the next Purchase Period.
      During a Participant’s lifetime, a Participant’s option to purchase shares
      hereunder is exercisable only by him/her.

    


    9. Delivery.
      Upon
      receipt of a request from a Participant after each Exercise Date on which a
      purchase of shares occurs, the Company shall arrange the delivery to such
      Participant, as appropriate, of a certificate representing the shares purchased
      upon exercise of his/her options.

    


    10. Withdrawal,
      Termination of Employment.
      

    


    (a) A
      Participant may withdraw all but not less than all the payroll deductions
      credited to his/her account and not yet used to exercise his/her option under
      the Plan at any time by giving written notice to the Company in the form of
      Exhibit B to this Plan. All of the Participant’s payroll deductions credited to
      his/her account will be paid to such Participant promptly after receipt of
      notice of withdrawal, such Participant’s option for the Purchase Period will be
      automatically terminated, and on further payroll deductions for the purchase
      of
      shares will be made during the Purchase Period. If a Participant withdraws
      from
      a Purchase Period, payroll deductions will not resume at the beginning of the
      succeeding Purchase Period unless the Participant delivers to the Company a
      new
      subscription agreement.

    


    (b) Upon
      a
      Participant’s ceasing to be an Employee for any reason or upon termination of a
      Participant’s employment relationship (as described in paragraph 2(h), the
      payroll deductions credited to such Participant’s account during the Purchase
      Period but not yet used to exercise the option will be returned to such
      Participant or, in the case of his/her death, to the person or persons entitled
      thereto under paragraph 14, and such Participant’s option will be
      automatically terminated.

    


    11. Interest.
      No
      interest shall accrue on the payroll deductions of a Participant in the
      Plan.


    
      
        Exhibit
          10 4 Matria 2005 Employee Stock Purchase Plan A-

        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    12. Stock.
      

    


    (a) The
      maximum number of shares of the company’s Common Stock which shall be made
      available for sale under the Plan shall be 150,000 shares, subject to adjustment
      upon changes in capitalization of the Company as provided in paragraph 18.
      If on a given Exercise Date the number of shares with respect to which options
      are to be exercised exceeds the number of shares then available under the Plan,
      the Company shall make a pro rata allocation of the shares remaining available
      for purchase in as uniform a manner as shall be practicable and as it shall
      determine to be equitable. 

    


    (b) A
      Participant will have no interest or voting right in shares covered by his/her
      option until such shares are actually purchased on the Participant’s behalf in
      accordance with the applicable provisions of the Plan. No adjustment shall
      be
      made for dividends, distributions or other rights for which the record date
      is
      prior to the date of such purchase.

    


    (c) Shares
      to
      be delivered to a Participant under the Plan will be registered in the name
      of
      the Participant or in the name of the Participant and his/her
      spouse.

    


    13. Administration.

    


    (a) Administrative
      Body.
      The
      Plan shall be administered by the Board of the Company or a committee of members
      of the Board appointed by the Board. The Board or its committee shall have
      full
      and exclusive discretionary authority to construe, interpret and apply the
      terms
      of the Plan, to determine eligibility and to adjudicate all disputed claims
      filed under the Plan. Every finding, decision and determination made by the
      Board or its committee shall, to the full extent permitted by law, be final
      and
      binding under all parties. Members of the Board who are eligible Employees
      are
      permitted to participate in the Plan to the extent limited by subparagraph
      (b)
      of this paragraph 13.

    


    (b) Rule
      16b-3 Limitations.
      Notwithstanding the provisions of subparagraph (a) of this paragraph 13, in
      the
      event that Rue 26b-3 promulgated under The Securities Exchange Act of 1934,
      as
      amended, or any successor provision (“Rule 16b-3”) provides specific
      requirements for the administrators of plans of this type, the Plan shall be
      only administered by such a body and in such a manner as shall comply with
      the
      applicable requirements of Rule 16b-3. Unless permitted by Rule 16b03, no
      discretion concerning decisions regarding the Plan shall be afforded to any
      committee or person that is not “disinterested” as that term is used in Rule
      16b-3.

    


    14. Designation
      of Beneficiary.
      (a)
      Each Participant will file a written designation of a beneficiary who is to
      receive any shares and cash, if any, from the Participant’s account under the
      Plan in the event of such Participant’s death subsequent to an Exercise Date on
      which the option is exercised but prior to delivery to such Participant of
      such
      shares and cash. In addition, a Participant may file a written designation
      of a
      beneficiary who is to receive any cash from the Participant’s account under the
      Plan in the event of such Participant’s death prior to exercise of the option.
      If a Participant is married and the designated beneficiary is not the spouse,
      spousal consent shall be required for such designation to be
      effective.

    


    (b) Such
      designation of beneficiary may be changed by the Participant (and his or her
      spouse, if any) at any time by written notice. In the event of the death of
      a
      Participant and to the absence of a beneficiary validly designated under the
      Plan who is living at the time of such Participant’s death, the Company shall
      deliver such shares and/or cash to the executor or administrator of the estate
      of the Participant, or if no such executor or administrator of the estate of
      the
      Participant, or if no such executor or administrator has been appointed (to
      the
      knowledge of the Company), the Company, in it discretion, may delivery such
      shares and/or cash to the spouse or to any one or more dependents or relatives
      of the Participant, or if no spouse, dependent or relative is known to the
      Company, then to such other person as the Company may designate.

    


    15. Transferability.
      Neither
      payroll deductions credited to a Participant’s account nor any rights with
      regard to the exercise of an option or to receive shares under the Plan may
      be
      assigned, transferred, pledge or otherwise disposed of in any way (other than
      by
      will, the laws of descent and distribution or as provided in 


    
      
        Exhibit
          10 4 Matria 2005 Employee Stock Purchase Plan A-

        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    paragraph
      14 hereof) by the Participant. Any such attempt at assignment, transfer, pledge
      or other disposition shall be without effect, except that the Company may not
      treat such act as an election to withdraw funds from a Purchase Period in
      accordance with paragraph 10.

    


    16. Use
      of Funds.
      All
      payroll deduction received or held by the Company under the Plan may be used
      by
      the Company for any corporate purpose, and the Company shall not be obligated
      to
      segregate such payroll deductions.

    


    17. Reports.
      Individual accounts will be maintained for each Participant in the Plan.
      Statements of account will be given to Participants at least annually, which
      statements will set forth the amounts of payroll deductions, the Purchase Price,
      the number of shares purchased and the remaining cash balance, if
      any.

    


    18. Adjustments
      Upon Changes in Capitalization, Dissolution, Merger or Asset
      Sale.

    


    (a) Changes
      in Capitalization.
      Subject
      to any required action by the shareholders of the Company, the Reserves, as
      well
      as the price per share of Common Stock covered by each option under the Plan
      which has not yet been exercised, shall be proportionately adjusted for any
      increase or decrease in the number of issued shares of Common Stock resulting
      from a stock split, reverse stock split, stock dividend, combination or
      reclassification of the Common Stock, or any other increase or decrease in
      the
      number shares of Common Stock effected without receipt of consideration by
      the
      Company, provided, however, that conversion of any convertible securities of
      the
      Company shall not be deemed to have been “effected without receipt of
      consideration.” Such adjustment shall be made by the Board, whose determination
      in that respect shall be final, binding and conclusive. Except as expressly
      provided herein, no issue by the Company of share of stock of any class, or
      securities convertible into shares of stock of any class, shall affect, and
      no
      adjustment by reason thereof shall be made with respect to, the number of price
      of shares of Common Stock subject to an option. The Board may, if it so
      determines in the exercise of its sole discretion, make provision for adjusting
      the Reserves, as well as the price per share of Common Stock covered by each
      outstanding option, in the event the Company effects one or more reorganization,
      recapitalizations, rights offerings or other increases or reductions of shares
      of its outstanding Common Stock.

    


    (b) Change
      in Ownership, Dissolution or Liquidation.
      In the
      event of a proposed sale of all or substantially all of the assets of the
      Company, the merger of the Company with or into another corporation, in which
      merger the Company will not be the surviving corporation (other than a
      reorganization effectuated primarily to change the state in which the Company
      is
      incorporated), or a reverse merger in which the Company is the surviving
      corporation but in which securities possessing more than fifty percent (50%)
      of
      the total combined voting power of the Company’s outstanding securities are
      transferred to a person or persons different from the person or persons holding
      those securities immediately prior to the transfer, each option under the Plan
      shall be assumed or an equivalent option shall be substituted by such successor
      corporation or a parent or subsidiary of such successor corporation, unless
      the
      Board determines, in the exercise, of its sole discretion and in lieu of such
      assumption or substitution, to shorten the Purchase Period then in progress
      by
      setting a new Exercise Date (the “New Exercise Date”). If the Board shortens the
      Purchase Period then in progress in lieu of assumption or substitution in the
      event of a merger or sale of assets, the Board shall notify each Participant
      in
      writing, at least ten (10) days prior to the New Exercise Date, that the
      Exercise Date for his/her option ahs been changed to the New Exercise Date
      and
      that his/her option will be exercised automatically on the New Exercise Date,
      unless prior to such date he/she has withdrawn from the Purchase Period as
      provided in paragraph 10. For purposes of this paragraph, an option granted
      under the Plan shall be deemed to be assumed if, following the sale of assets
      or
      merger, the option confers the right to purchase, for each share of option
      stock, subject to the option immediately prior to the sale of assets or merger,
      the consideration (whether stock, cash or other securities or property) received
      in the sale of assets or merger by holders of Common Stock for each share of
      Common Stock held on the effective date of the transaction (and if such holders
      were offered a choice of consideration, the type of consideration chosen by
      the
      holders of a majority of the outstanding shares of Common Stock); provided,
      however, that if such consideration received in the sale of assets or merger
      was
      not solely common stock of the successor corporation or its parent (as defined
      in Section 424(e) of the Code), the Board may, with the consent of the successor
      corporation and the Participant, provide for the consideration to be received
      upon exercise of the option to be solely common stock of the successor
      corporation or its parent equal in fair market value to the per share
      consideration received by holders of Common Stock in the sale of assets or
      merger.


    
      
        Exhibit
          10 4 Matria 2005 Employee Stock Purchase Plan A-

        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    19. Amendment
      or Termination.
      

    


    (a) The
      Board
      of Directors of the Company may at any time and for any reason terminate or
      amend the Plan. Except as provided in paragraph 18, no such termination can
      affect options previously granted, provided that a Purchase Period may be
      terminated by the Board of Directors on any Exercise Date if the Board
      determines that the termination of the Plan is in the best interests of the
      Company and its shareholders. Except as provided in paragraph 18, no amendment
      may make any change in any option theretofore granted which amendment adversely
      affects the rights of any Participant. To the extent necessary to comply with
      Rule 16b-3 or Section 423 of the Code (or any successor rule or provision or
      any
      other applicable law or regulation), the Company shall obtain shareholder
      approval in such a manner and to such a degree as required.

    


    (b) Without
      shareholder consent and without regard to whether any Participant rights may
      be
      considered to have been “adversely affected,” the Board (or its committee) shall
      be entitled to change the Purchase Period, limit the frequency and/or number
      of
      changes in the amounts withheld during Purchase Periods, establish the exchange
      ratio applicable to amounts withheld in a currency other than U.S. dollars,
      permit payroll withholding in excess of the amount designated by a Participant
      in order to adjust for delays or mistakes in the Company’s processing of
      properly completed withholding elections, establish reasonable waiting and
      adjustment periods and/or accounting and crediting procedures to ensure that
      amounts applied toward the purchase of Common Stock for each Participant
      properly correspond with amounts withheld from the Participant’s Compensation,
      and establish such other limitations or procedures as the Board (or its
      committee), determines in its sole discretion advisable which are consistent
      with the Plan.

    


    20. Notices.
      All
      notices or other communications by a Participant to the Company under or in
      connection with the Plan shall be deemed to have been duly given when received
      in the form specified by the Company at the location, or by the person,
      designated by the Company for the receipt thereof.

    


    21. Conditions
      Upon Issuance of Shares.
      Shares
      shall not be issued with respect to an option unless the exercise of such option
      and the issuance and delivery of such shares pursuant thereto shall comply
      with
      all applicable provisions of law, domestic or foreign, including, without
      limitation, the Securities Act of 1933, as amended, the Securities Exchange
      Act
      of 1934, as amended, the rules and regulations promulgated thereunder, the
      requirements of any stock exchange upon which the shares may then be listed,
      and
      applicable income or employment tax laws, and shall be further subject to the
      approval of counsel for the Company with respect to such option to represent
      and
      warrant at the time of any such exercise that the shares are being purchased
      only for investment and without any present intention to sell or distribute
      such
      shares if, in the opinion of counsel for the Company, such a representation
      is
      required by any of the aforementioned applicable provisions of law. In addition,
      no purchase rights shall be exercised or shares issued hereunder before the
      Plan
      shall have been approved by shareholders of the Company as provided in
      paragraph 25.

    


    22. Term
      of Plan.
      The
      Plan shall become effective upon the earlier to occur of its adoption by the
      Board of Directors or its approval by the shareholders of the Company. It shall
      continue in effect for a term of ten (10) years unless sooner terminated under
      paragraph 19.

    


    23. Additional
      Restrictions of Rule 16b-3.
      The
      terms and conditions of options granted hereunder to, and the purchase of shares
      by, persons subject to Section 16 of the Exchange Act shall comply with the
      applicable provisions of Rule 16b-3. This Plan shall be deemed to contain,
      such
      options shall contain, and the shares issued upon exercise thereof shall be
      subject to, such additional conditions and restrictions as may be required
      by
      Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange
      Act with respect to Plan transactions.

    


    24. Shareholder
      Approval.
      Continuance of the Plan shall be subject to approval by the shareholders of
      the
      Company within twelve (12) months before or after the date the Plan is adopted.
      If such shareholder approval is obtained at a duly held shareholders’ meeting,
      the Plan must be approved by a majority of the votes cast at such shareholders’
meeting at which a quorum representing a majority of all outstanding voting
      stock of the Company is, either in person or by proxy, present and voting on
      the
      Plan. If such shareholder approval is obtained by written consent, it must
      be
      obtained by the written consent of the holders of a majority of all outstanding
      voting stock of the Company. However, approval at a meeting or by written
      consent may be obtained by a lesser degree of shareholder approval if the Board
      determines, in its discretion after consultation with the Company’s legal
      counsel, that such a 


    
      
        Exhibit
          10 4 Matria 2005 Employee Stock Purchase Plan A-

        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    lesser
      degree of shareholder approval will comply with all applicable laws and will
      not
      adversely affect the qualification of the Plan under Section 423 of the
      Code.

    


    25. No
      Employment Rights.
      The
      Plan does not, directly or indirectly, create any right for the benefit of
      any
      employee or class of employees to purchase any shares under the Plan, or create
      in any employee or class of employees any right with respect to continuation
      of
      employment by the Company, and it shall not be deemed to interfere in any way
      the Company’s right to terminate, or otherwise modify, an employee’s employment
      at any time.

    


    26. Effect
      of Plan.
      The
      provisions of the Plan shall, in accordance with its terms, be binding upon,
      and
      inure to the benefit of, all successors of each employee participating in the
      Plan, including, without limitation, such employee’s estate and the executors,
      administrators or trustees thereof, heirs and legatees, and any receiver,
      trustee in bankruptcy or representative of creditors of such
      employee.