Change-in-Control Severance Compensation and Restrictive Covenant Agreement
      between Matria and Roberta L. McCaw dated April 26, 2006


    

      CHANGE
        IN CONTROL

      SEVERANCE
        COMPENSATION

      AND

      RESTRICTIVE
        COVENANT AGREEMENT

      


      


      THIS
        SEVERANCE COMPENSATION AND RESTRICTIVE COVENANT AGREEMENT
        (the
“Agreement”) is dated as of April 26, 2006 between MATRIA
        HEALTHCARE, INC.,
        a
        Delaware corporation (the “Company”), and ROBERTA
        L. MCCAW (the
        “Executive”).

      


      WHEREAS,
        the
        Company, has determined that it is appropriate to reinforce and encourage
        the
        continued attention and dedication of members of the Company’s management,
        including the Executive, to their assigned duties without distraction in
        potentially disruptive circumstances arising from the possibility of a Change
        in
        Control (as hereinafter defined) of the Company; and

      


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

      


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

      


      1. Term.
        This
        Agreement shall terminate, except to the extent that any obligation of the
        Company hereunder remains unpaid as of such time, upon the earliest of
        (i) the Date of Termination (as hereinafter defined) of the Executive’s
        employment with the Company as a result of the Executive’s death, Disability (as
        defined in Section 3(b)) or Retirement (as defined in Section 3(c)),
        by the Company for Cause (as defined in Section 3(d)) or by the Executive
        other than for Good Reason (as defined in Section 3(e)); and
        (ii) three years from the date of a Change in Control if the Executive’s
        employment with the Company has not terminated as of such time.

      


      2. Change
        in Control.
        For
        purposes of this Agreement, “Change in Control” shall mean changes in the
        ownership of the Company, changes in the effective control of the Company,
        changes in ownership of a substantial portion of the Company’s assets and a
        disposition of a substantial portion of the Company’s assets, all as defined
        below:

      


      (a)  A
        change
        in the ownership of the Company occurs on the date that any one person, or
        more
        than one person acting as a group, acquires ownership of stock of the Company
        which, together with stock held by such person or group, represents more
        than
        fifty percent (50%) of the total fair market value or total voting power
        of the
        stock of the Company. An increase in the percentage of stock owned by any
        one
        person, or persons acting as a group, as a result of a transaction in which
        the
        Company acquires its stock in exchange for property will be 


      
        
           

        

        
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      treated
        as an acquisition of stock.

      


      (b) A
        change
        in the effective control of the Company occurs on the date that either: any
        one
        person, or more than one person acting as a group becomes the beneficial
        owner
        of stock of the Company possessing twenty-five percent (25%) or more of the
        total voting power of the stock of the Company; or a majority of members
        of the
        Company’s board of directors is replaced during any 24-month period by directors
        whose appointment or election is not endorsed by at least two-thirds (2/3)
        of
        the members of the Company’s board of directors who were directors prior to the
        date of the appointment or election of the first of such new
        directors.

      


      (c) A
        change
        in the ownership of a substantial portion of the Company’s assets occurs on the
        date that any one person, or more than one person acting as a group, acquires
        (or has acquired during the 12-month period ending on the date of the most
        recent acquisition by such person or persons) assets from the Company that
        have
        a total fair market value equal to or more than one-half (1/2) of the total
        fair
        market value of all of the assets of the Company immediately prior to such
        acquisition or acquisitions. The transfer of assets by the Company is not
        treated as a change in the ownership of such assets if the assets are
        transferred: to a shareholder of the Company (immediately before the asset
        transfer) in exchange for such shareholder’s capital stock of the Company having
        a fair market value approximately equal to the fair market value of such
        assets;
        or to an entity, fifty percent (50%) or more of the total value or voting
        power
        of which is owned, directly or indirectly, by the Company.

      


      (d) A
        disposition of a substantial portion of the Company’s assets occurs on the date
        that the Company transfers assets by sale, lease, exchange, distribution
        to
        shareholders, assignment to creditors, foreclosure or otherwise, in a
        transaction or transactions not in the ordinary course of the Company’s business
        (or has made such transfers during the 12-month period ending on the date
        of the
        most recent transfer of assets) that have a total fair market value equal
        to or
        more than one-half (1/2) of the total fair market value of all of the assets
        of
        the Company as of the date immediately prior to the first such transfer or
        transfers. The transfer of assets by the Company is not treated as a disposition
        of a substantial portion of the Company’s assets if the assets are transferred
        to an entity, fifty percent (50%) or more of the total value or voting power
        of
        which is owned, directly or indirectly, by the Company.

      


      For
        purposes of the provision of this Agreement defining “Change in Control,” (i)
        references to the Company herein include the Delaware corporation known as
        Matria Healthcare, Inc. as of the date of execution of this Agreement, and
        any
        corporation that is the Successor or Assign (as defined in Section 7(a))
        to such
        corporation; and (ii) the terms “person,” “acting as a group” and “ownership”
shall have the meanings prescribed in Sections 3(a)(9) and 13(d)(3) of the
        Securities Exchange Act of 1934, as amended, and Rule 13d-3 promulgated
        thereunder; provided, however, that in any merger, consolidation or share
        exchange in which less than fifty percent (50%) of the outstanding voting
        securities of the Company or its successor corporation are held by the former
        shareholders of the Company, the shareholders of the other parties to the
        transaction shall be deemed to have acted as a group that acquired ownership
        of
        more than fifty percent (50%) of the 


      
        
           

        

        
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      outstanding
        voting securities of the Company, resulting in a change in ownership under
        Section 2(a) above.

      


      3. Termination
        Following Change in Control.

      


      (a) General.
        If the
        Executive is still an employee of the Company at the time of a Change in
        Control, the Executive shall be entitled to the compensation and benefits
        provided in Section 4 upon the subsequent termination of the Executive’s
        employment with the Company by the Executive or by the Company during the
        term
        of this Agreement, unless such termination is as a result of (i) the
        Executive’s death; (ii) the
        Executive’s Disability; (iii) the
        Executive’s Retirement; (iv) the
        Executive’s termination by the Company for Cause; or (v) the
        Executive’s decision to terminate employment other than for Good
        Reason.

      


      (b) Disability.
        The
        term “Disability” as used in this Agreement shall mean termination of the
        Executive’s employment by the Company as a result of the Executive’s incapacity
        due to physical or mental illness, provided that the Executive shall have
        been
        absent from his duties with the Company on a full-time basis for six consecutive
        months and such absence shall have continued unabated for 30 days after Notice
        of Termination as described in Section 3(f) is thereafter given to the Executive
        by the Company.

      


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

      


      (d) Cause.
        The
        term “Cause” for purposes of this Agreement shall mean the Company’s termination
        of the Executive’s employment on the basis of criminal or civil fraud on the
        part of the Executive involving a material amount of funds of the Company.
        Notwithstanding the foregoing, the Executive shall not be deemed to have
        been
        terminated for Cause unless and until there shall have been delivered to
        the
        Executive a copy of a resolution duly adopted by the affirmative vote of
        not
        less than three-quarters of the entire membership of the Company’s Board of
        Directors at a meeting of the Board called and held for such purpose (after
        reasonable notice to the Executive and an opportunity for the Executive,
        together with the Executive’s counsel, to be heard before the Board) finding
        that in the good faith opinion of the Board the Executive was guilty of conduct
        set forth in the first sentence of this Section 3(d) and specifying the
        particulars thereof in detail. For purposes of this Agreement only, the
        preparation and filing of fictitious, false or misleading claims in connection
        with any federal, state or other third party medical reimbursement program,
        or
        any other violation of any rule or regulation in respect of any federal,
        state
        or other third party medical reimbursement program by the Company or any
        subsidiary of the Company shall not be deemed to constitute “criminal fraud” or
“civil fraud.”


      
        
           

        

        
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      (e) Good
        Reason.
        For
        purposes of this Agreement, “Good Reason” shall mean any of the following
        actions taken by the Company without the Executive’s express written
        consent:

      


      (i)
        The
        assignment to the Executive by the Company of duties inconsistent with, or
        a
        material adverse alteration of the powers and functions associated with,
        the
        Executive’s position, duties, responsibilities and status with the Company prior
        to a Change in Control, or an adverse change in the Executive’s titles or
        offices as in effect prior to a Change in Control, or any removal of the
        Executive from or any failure to re-elect the Executive to any of such
        positions, except in connection with the termination of his employment for
        Disability, Retirement or Cause or as a result of the Executive’s death or by
        the Executive other than for Good Reason;

      


      (ii)
        A
        reduction in the Executive’s base salary as in effect on the date hereof or as
        the same may be increased from time to time during the term of this Agreement
        or
        the Company’s failure to increase (within 12 months of the Executive’s last
        increase in base salary) the Executive’s base salary after a Change in Control
        in an amount which at least equals, on a percentage basis, the average annual
        percentage increase in base salary for all corporate officers of the Company
        effected in the preceding 36 months;

      


      (iii)
        Any
        failure by the Company to continue in effect any benefit plan, program or
        arrangement (including, without limitation, any profit sharing plan, group
        annuity contract, group life insurance supplement, or medical, dental, accident
        and disability plans) in which the Executive was eligible to participate
        at the
        time of a Change in Control (hereinafter referred to as “Benefit Plans”), or the
        taking of any action by the Company which would adversely affect the Executive’s
        participation in or materially reduce the Executive’s benefits under any such
        Benefit Plan, unless a comparable substitute Benefit Plan shall be made
        available to the Executive, or deprive the Executive of any fringe benefit
        enjoyed by the Executive at the time of a Change in Control;

      


      (iv)
        Any
        failure by the Company to continue in effect any incentive plan or arrangement
        (including, without limitation, any bonus or contingent bonus arrangements
        and
        credits and the right to receive performance awards and similar incentive
        compensation benefits) in which the Executive is participating at the time
        of a
        Change in Control (or any other plans or arrangements providing him with
        substantially similar benefits) (hereinafter referred to as “Incentive Plans”)
        or the taking of any action by the Company which would adversely affect the
        Executive’s participation in any such Incentive Plan or reduce the Executive’s
        benefits under any such Incentive Plan, expressed as a percentage of his
        base
        salary, by more than five percentage points in any fiscal year as compared
        to
        the immediately preceding fiscal year, or any action to reduce Executive’s
        bonuses under any Incentive Plan by more than 20% of the average annual bonus
        previously paid to Executive with respect to the preceding three fiscal
        years;

      


      (v)
        Any
        failure by the Company to continue in effect any plan or arrangement to receive
        securities of the Company (including, without limitation, the Company’s



      
        
           

        

        
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      1997
        Stock Incentive Plan, Employee Stock Purchase Plan and any other plan or
        arrangement to receive and exercise stock options, stock appreciation rights,
        restricted stock or grants thereof) in which the Executive is participating
        or
        has the right to participate in prior to a Change in Control (or plans or
        arrangements providing him with substantially similar benefits) (hereinafter
        referred to as “Securities Plans”) or the taking of any action by the Company
        which would adversely affect the Executive’s participation in or materially
        reduce the Executive’s benefits under any such Securities Plan, unless a
        comparable substitute Securities Plan shall be made available to the
        Executive;

      


      (vi)
        A
        relocation of the Company’s principal executive offices to a location more than
        ten (10) miles outside of Marietta, Georgia, or the Executive’s relocation to
        any place other than the Company’s principal executive offices, except for
        required travel by the Executive on the Company’s business to an extent
        substantially consistent with the Executive’s business travel obligations
        immediately prior to a Change in Control;

      


      (vii)
        Any
        failure by the Company to provide the Executive with the number of paid vacation
        days (or compensation therefor at termination of employment) accrued to the
        Executive through the Date of Termination;

      


      (viii)
        Any
        material breach by the Company of any provision of this Agreement;

      


      (ix)
        Any
        failure by the Company to obtain the assumption of this Agreement by any
        successor or assign of the Company effected in accordance with the provisions
        of
        Section 7(a) hereof;

      


      (x)
        Any
        purported termination of the Executive’s employment that is not effected
        pursuant to a Notice of Termination satisfying the requirements of
        Section 3(f), and for purposes of this Agreement, no such purported
        termination shall be effective; or

      


      (xi)
        Any
        proposal or request by the Company after the Effective Date to require that
        the
        Executive enter into a non-competition agreement with the Company where the
        terms of such agreement as to its scope or duration are greater than the
        terms
        set forth in Section 5 hereof.

      


      (f) Notice
        of Termination.
        Any
        termination of the Executive’s employment by the Company for a reason specified
        in Section 3(b), 3(c) or 3(d) shall be communicated to the Executive by a
        Notice of Termination prior to the effective date of the termination. For
        purposes of this Agreement, a “Notice of Termination” shall mean a written
        notice which shall indicate whether such termination is for the reason set
        forth
        in Section 3(b), 3(c) or 3(d) and which sets forth in reasonable detail the
        facts and circumstances claimed to provide a basis for termination of the
        Executive’s employment under the provision so indicated. For purposes of this
        Agreement, no termination of the Executive’s employment by the Company shall
        constitute a termination for Disability, Retirement or Cause unless such
        termination is preceded by a Notice of Termination.


      
        
           

        

        
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      (g) Date
        of Termination.
“Date
        of Termination” shall mean (a) if
        the Executive’s employment is terminated by the Company for Disability, 30 days
        after a Notice of Termination is given to the Executive (provided that the
        Executive shall not have returned to the performance of the Executive’s duties
        on a full-time basis during such 30-day period) or (b) if
        the Executive’s employment is terminated by the Company or the Executive for any
        other reason, the date on which the Executive’s termination is effective;
        provided that, if within 30 days after any Notice of Termination is given
        to the
        Executive by the Company the Executive notifies the Company that a dispute
        exists concerning the termination, the Date of Termination shall be the date
        the
        dispute is finally determined whether by mutual agreement by the parties
        or upon
        final judgment, order or decree of a court of competent jurisdiction (the
        time
        for appeal therefrom having expired and no appeal having been perfected).
        For
        purposes of this Agreement, the Executive’s employment by the Company shall be
        deemed terminated upon the date the Executive incurs a “separation from service”
within the meaning of Section
        409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (“Code”), and
        the regulations issued thereunder.

      


      4. Compensation
        and Benefits upon Termination of Employment.

      


      (a) If
        the
        Company shall terminate the Executive’s employment after a Change in Control
        other than pursuant to Section 3(b), 3(c) or 3(d) and Section 3(f), or if
        the Executive shall terminate his employment for Good Reason, then the Company
        shall pay to the Executive, as severance compensation and in consideration
        of
        the Executive’s adherence to the terms of Section 5 hereof, the
        following:

      


      (i) On
        the
        Date of Termination, the Company shall become liable to the Executive for
        an
        amount equal to two times the Executive’s annual base compensation, targeted
        base bonus and annual car allowance on the date of the Change in Control,
        which
        amount shall be paid to the Executive in cash on or before the fifth day
        following the Date of Termination.

      


      (ii) For
        a
        period of two years following the Date of Termination, the Executive and
        anyone
        entitled to claim under or through the Executive shall be entitled to all
        benefits under the group hospitalization plan, health care plan, dental care
        plan, life or other insurance or death benefit plan, or other present or
        future
        similar group employee benefit plan or program of the Company for which key
        executives are eligible at the date of a Change in Control, to the same extent
        as if the Executive had continued to be an employee of the Company during
        such
        period and such benefits shall, to the extent not fully paid under any such
        plan
        or program, be paid by the Company. Also during such two-year period, the
        Company will extend full insurance coverage for the Executive’s primary
        automobile in favor of the Executive, as an additional named
        insured.

      


      (iii) Notwithstanding
        any other provision of this Agreement, it is intended that any payment or
        benefit provided pursuant to or in connection with this Agreement that is
        considered to be nonqualified deferred compensation subject to Section 409A
        of
        the Code shall be provided and paid in a manner, and at such time and in
        such
        form, as complies with the 


      
        
           

        

        
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      applicable
        requirements of Section 409A of the Code. If and to the extent required by
        Section 409A of the Code, no payment or benefit shall be made or provided
        to a
“specified employee” (as defined below) prior to the six (6) month anniversary
        of the Executive’s separation from service (within
        the meaning of Section
        409A(a)(2)(A)(i) of the Code). The amounts provided for in this Agreement
        that
        constitute nonqualified deferred compensation shall be paid as soon as the
        six
        month deferral period ends. In the event that benefits are required to be
        deferred, any such benefit may be provided during such six month deferral
        period
        at the Executive’s expense, with the Executive having a right to reimbursement
        from the Company for the amount of any premiums or expenses paid by the
        Executive once the six month deferral period ends. For this purpose, a specified
        employee shall mean an individual who is a key employee (as defined in
        Section 416(i) of the Code without regard to Section 416(i)(5) of the
        Code) of the Company at any time during the 12-month period ending on each
        December 31 (the “identification date”). If the Executive is a key employee as
        of an identification date, the Executive shall be treated as a specified
        employee for the 12-month period beginning on the April 1 following the
        identification date. Notwithstanding the foregoing, the Executive shall not
        be
        treated as a specified employee unless any stock of the Company or a corporation
        or business affiliated with it pursuant to Sections 414(b) or (c) of the
        Code is
        publicly traded on an established securities market or otherwise.

      


      (b) The
        parties hereto agree that the payments provided in Section 4(a) hereof are
        reasonable compensation in light of the Executive’s services rendered to the
        Company and in consideration of the Executive’s adherence to the terms of
        Section 5 hereof. Neither party shall contest the payment of such benefits
        as
        constituting an “excess parachute payment” within the meaning of
        Section 280G(b)(1) of the Code. In the event that the Executive becomes
        entitled to the compensation and benefits described in Section 4(a) hereof
        (the “Compensation Payments”) and the Company has determined, based upon the
        advise of tax counsel selected by the Company’s independent auditors and
        acceptable to the Executive, that, as a result of such Compensation Payments
        and
        any other benefits or payments required to be taken into account under Code
        Section 280G(b)(2) (“Parachute Payments”), any of such Parachute Payments must
        be reported by the Company as “excess parachute payments” and are therefore not
        deductible by the Company, the Company shall pay to the Executive at the
        time
        specified in Section 4(a) above an additional amount (the “Gross-Up
        Payment”) such that the net amount retained by the Executive, after deduction of
        any of the tax imposed on the Executive by Section 4999 of the Code (the
“Excise
        Tax”) and any Federal, state and local income tax and Excise Tax upon the
        Gross-Up Payment, shall be equal to the Parachute Payments determined prior
        to
        the application of this paragraph. The value of any non-cash benefits or
        any
        deferred payment or benefit shall be determined by the Company’s independent
        auditors. For purposes of determining the amount of the Gross-Up Payment,
        the
        Executive shall be deemed to pay Federal income taxes at the highest marginal
        rate of Federal income taxation in the calendar year in which the Gross-Up
        Payment is to be made and state and local income taxes at the highest marginal
        rates of taxation in the state and locality of the Executive’s residence on the
        Date of Termination, net of the maximum reduction in Federal income taxes
        which
        could be obtained from deduction of such state and local taxes. In the event
        that the Excise Tax payable by the Executive is subsequently determined to
        be
        less than the amount, if any,


      
        
           

        

        
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      taken
        into account hereunder at the time of termination of the Executive’s employment,
        the Executive shall repay to the Company at the time that the amount of such
        reduction in Excise Tax is finally determined the portion of the Gross-Up
        Payment attributable to such reduction plus interest on the amount of such
        repayment at the rate provided for in Section 1274(b)(2)(B) of the Code
        (“Repayment Amount”). In the event that the Excise Tax payable by the Executive
        is determined to exceed the amount, if any, taken into account hereunder
        at the
        time of the termination of the Executive’s employment (including by reason of
        any payment the existence or amount of which cannot be determined at the
        time of
        the Gross-Up Payment), the Company shall make an additional Gross-Up Payment
        in
        respect of such excess (plus any interest and penalty payable with respect
        to
        such excess) immediately prior to the time that the amount of such excess
        is
        required to be paid by Executive (“Additional Gross-up”), such that the net
        amount retained by the Executive, after deduction of any Excise Tax on the
        Parachute Payments and any Federal, state and local income tax and Excise
        Tax
        upon the Additional Gross-Up Payment, shall be equal to the Parachute Payments
        determined prior to the application of this paragraph. The obligation to
        pay any
        Repayment Amount or Additional Gross-up shall remain in effect under this
        Agreement for the entire period during which the Executive remains liable
        for
        the Excise Tax, including the period during which any applicable statute
        of
        limitation remains open.

      


      (c) The
        payments provided in Section 4(a) above shall be in lieu of any other
        severance compensation otherwise payable to Executive under any other agreement
        between Executive and the Company or the Company’s established severance
        compensation policies; provided, however, that nothing in this Agreement
        shall
        affect or impair Executive’s vested rights under any other employee benefit plan
        or policy of the Company. For the avoidance of doubt, if more than one Change
        in
        Control occurs during the term hereof, the term of this Agreement shall be
        measured from the latest such Change in Control to occur and the amount of
        compensation payable under Section 4(a)(1) shall be based upon the highest
        annual base salary, targeted base bonus and car allowance payable to Executive
        on the date of any such Change in Control, but Executive shall not be entitled
        to receive severance compensation under Section 4(a) more than
        once.

      


      (d) Unless
        the Company determines that any Parachute Payments made hereunder must be
        reported as “excess parachute payments” in accordance with the third sentence of
        Section 4(b) above, neither party shall file any return taking the position
        that the payment of such benefits constitutes an “excess parachute payment”
within the meaning of Section 280G(b)(1) of the Code. If the Internal
        Revenue Service proposes an assessment of Excise Tax against the Executive
        in
        excess of the amount, if any, taken into account at the time specified in
        Section 4(a), then, if the Company notifies Executive in writing that the
        Company elects to contest such assessment at its expense, unless the Executive
        waives the right to an Additional Gross-Up Payment, the Executive (i) shall
        in good faith cooperate with the Company in contesting such proposed assessment;
        and (ii) such Executive shall not settle such contest without the written
        consent of the Company. Any such contest shall be controlled by the Company,
        provided,
        however,
        that the
        Executive may participate in such contest.


      
        
           

        

        
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      5. Protective
        Covenants.

      


      (a) Definitions.

      


      This
        Subsection sets forth the definition of certain capitalized terms used in
        Subsections (a) through (f) of this Section 5.

      


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

      


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

      


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

      


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

      


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

      


      (b) Limitation
        on Competition.
        In
        consideration of the Company’s entering into this Agreement, the Executive
        agrees that during the Covenant Period, the Executive will not,



      
        
           

        

        
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      without
        the prior written consent of the Company, anywhere within the Restricted
        Territory, either directly or indirectly, alone or in conjunction with any
        other
        party, accept, enter into or take any action in conjunction with or in
        furtherance of a Competitive Position (other than action to reject an
        unsolicited offer of a Competitive Position).

      


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

      


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

      


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

      


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

      


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

      


      (a) All
        compensation and benefits provided to the Executive under this Agreement
        are in
        consideration of the Executive’s services rendered to the Company and of the
        Executive’s adhering to the terms set forth in Section 5 hereof and the
        Executive shall not be required to mitigate damages or the amount of any
        payment
        provided for under this Agreement by seeking other employment or otherwise,
        nor
        shall the amount of any payment provided for under


      
        
           

        

        
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      this
        Agreement be reduced by any compensation earned by the Executive as the result
        of employment by another employer after the Date of Termination, or
        otherwise.

      


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

      


      7. Successor
        to the Company.

      


      (a) The
        Company will require any successor or assign (whether direct or indirect,
        by
        purchase, merger, consolidation or otherwise) to all or substantially all
        of the
        business and/or assets of the Company (“Successor or Assign”), by agreement in
        form and substance satisfactory to the Executive, expressly, absolutely and
        unconditionally to assume and agree to perform this Agreement in the same
        manner
        and to the same extent that the Company would be required to perform it if
        no
        such succession or assignment had taken place. Any failure of the Company
        to
        obtain such agreement prior to the effectiveness of any such succession or
        assignment shall be a material breach of this Agreement and shall entitle
        the
        Executive to terminate the Executive’s employment for Good Reason. As used in
        this Agreement (except for purposes of defining “Change in Control” in Section
        2), “Company” shall mean the Company as hereinbefore defined and any Successor
        or Assign to the Company. If at any time during the term of this Agreement
        the
        Executive is employed by any corporation a majority of the voting securities
        of
        which is then owned by the Company, “Company” as used in Sections 3, 4, 12
        and 14 hereof shall in addition include such employer. In such event, the
        Company agrees that it shall pay or shall cause such employer to pay any
        amounts
        owed to the Executive pursuant to Section 4 hereof.

      


      (b) This
        Agreement shall inure to the benefit of and be enforceable by the Executive’s
        personal and legal representatives, executors, administrators, successors,
        heirs, distributees, devisees and legatees. If the Executive should die while
        any amounts are still payable to him hereunder, all such amounts, unless
        otherwise provided herein, shall be paid in accordance with the terms of
        this
        Agreement to the Executive’s devisee, legatee, or the designee or, if there be
        no such designee, to the Executive’s estate.

      


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


      
        
           

        

        
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      If
        to
        Company:

      


      Matria
        Healthcare, Inc.

      1850
        Parkway Place, 12th Floor

      Marietta,
        GA 30067

      Attention:
        General Counsel

      


      If
        to
        Executive:

      


      Roberta
        L. McCaw

      810
        Millsbee Drive

      Roswell,
        GA 30075

      


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

      


      9. Miscellaneous.
        No
        provisions of this Agreement may be modified, waived or discharged unless
        such
        waiver, modification or discharge is agreed to in writing signed by the
        Executive and the Company. No waiver by either party hereto at any time of
        any
        breach by the other party hereto of, or compliance with, any condition or
        provision of this Agreement to be performed by such other party shall be
        deemed
        a waiver of similar or dissimilar provisions or conditions at the same or
        at any
        prior or subsequent time. No agreements or representations, oral or otherwise,
        express or implied, with respect to the subject matter hereof have been made
        by
        either party which are not set forth expressly in this Agreement. This Agreement
        shall be governed by and construed in accordance with the laws of the State
        of
        Delaware. This Agreement supersedes that certain Change in Control Severance
        Compensation and Restrictive Covenant Agreement between the parties dated
        February 19, 2002.

      


      10. Validity.
        The
        invalidity or unenforceability of any provisions of this Agreement shall
        not
        affect the validity or enforceability of any other provision of this Agreement,
        which shall remain in full force and effect.

      


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

      


      12. Legal
        Fees and Expenses.
        The
        Company shall pay all legal fees, expenses and damages which the Executive
        may
        incur as a result of the Executive’s instituting legal action to enforce his
        rights hereunder, or in the event the Company contests the validity,
        enforceability or the Executive’s interpretation of, or determinations under,
        this Agreement. If the Executive is the prevailing party or recovers any
        damages
        in such legal action, the Executive shall be entitled to receive in addition
        thereto pre-judgment and post-judgment interest on the amount of such
        damages.


      
        
           

        

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

      


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

      


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

      


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

      



      
        
           

        

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

      


      


      MATRIA
        HEALTHCARE, INC.

      


      


      By:       

      Its
        Chief
        Executive Officer

      


      


       

      


       

      Executive

      


    

    
      
         

      

      
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