Settlement Agreement dated March 9, 2005


    
      

        SETTLEMENT
          AGREEMENT AND GENERAL RELEASE

        


        This
          Settlement Agreement and General Release (“Agreement”) is entered into as of
          November 6, 2006, by and between MAJ Industries LLC, formerly known as
          Miavita
          LLC (“Seller”)
          and
          Matria Healthcare, Inc. (“Matria”) (collectively referred to as “the
          Parties”).

        WHEREAS,
          on March
          9, 2005, Seller and Matria entered into an Asset Purchase Agreement regarding
          the purchase and sale of Seller’s Assets to Matria (the “Purchase
          Agreement”);

        WHEREAS,
          the
          Purchase Agreement requires Matria to make annual “Mile Stone Payments” to
          Seller through the period ending June 30, 2012, to be calculated in accordance
          with the terms and conditions set out in Sections 2.4 and 2.5 of the Purchase
          Agreement;

        WHEREAS,
          on July
          6, 2006, counsel for Seller sent a Mile Stone Objection Notice to the General
          Counsel of Matria objecting to the Mile Stone Statement for Period
          1;

        WHEREAS,
          the
          Parties, on the terms and conditions contained herein, desire to compromise
          and
          settle all of the claims and disputes between them, including, without
          limitation, those outlined in the Mile Stone Objection Notice;

        NOW,
          THEREFORE,
          in
          consideration of the mutual covenants and promises contained herein, the
          Parties, intending to be legally bound, agree as follows:

        I. CONSIDERATION

        A. Future
          Mile Stone Payments: In
          lieu
          of any further Mile Stone Payments under Section 2.4(b)(ii) of the Purchase
          Agreement, Seller shall be entitled to Mile Stone Payments equal to 3.575
          times
          the Net Revenue derived from New Customers during Period 2. A “New Customer”
shall mean any of the companies included upon the list attached as Exhibit
          A to
          this Agreement or any other company to which the Parties mutually agree
          upon in
          writing in the 


        
          
             

          

          
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        future.
          Payments made pursuant to this Section I.A. shall be included in the calculation
          of the Mile Stone Payment Cap. The information required to be delivered
          to the
          Seller on May 15, 2007 pursuant to Section 2.5(a)(i) of the Purchase Agreement
          shall include only a calculation of Net Revenue from New Customers, Ancillary
          Revenue and the applicable Mile Stone Payment, if any, together with a
          certificate of a duly authorized officer of Matria certifying the
          foregoing.

        B. Payment:
          For and
          in consideration of the agreements and covenants of the Parties as set
          forth
          herein, and conditioned upon Matria receiving actual payments of not less
          than
          FIVE HUNDRED THOUSAND 0/100 DOLLARS ($500,000.00) from New Customers on
          or
          before May 1, 2007, Matria will pay the sum of TWENTY MILLION 0/100 DOLLARS
          ($20,000,000.00) (the “Payment”) to Seller on or before May 1, 2007. Subject to
          the terms and conditions set forth herein, such Payment shall be made consistent
          with the wiring instructions that Seller communicates in writing to Matria
          on or
          before the date on which this Agreement is executed. At the election of
          Matria,
          up to one-half (1/2) of the Payment may be made in Matria Common Stock
          valued at
          the Closing Stock Price on May 1, 2007. Any shares of Matria Common Stock
          issued
          pursuant to the preceding sentence (the “Payment Shares”) will be issued
          pursuant to an exemption from registration available under the Securities
          Act
          and will therefore be deemed “restricted securities” as such term is defined in
          the rules promulgated under the Securities Act. In connection with the
          potential
          issuance of Payment Shares, Seller hereby reaffirms the representations
          contained in Section 4.35 of the Purchase Agreement.

        Within
          thirty (30) days of the issuance of any Payment Shares, Matria shall file
          a
          shelf registration statement with the SEC covering the resale of the Payment
          Shares and Matria shall use its best efforts to cause such shelf registration
          statement to become effective as soon as 

         


        
          
             

          

          
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        practicable
          following the filing thereof, and to use its best efforts to keep the shelf
          registration statement effective until the earlier of (i) all Payment Shares
          registered pursuant to such registration statement having been sold pursuant
          thereto, or (ii) the expiration of the holding period with respect to such
          Payment Shares under Rule 144(k) under the Securities Act, or any successor
          provision. Matria shall have the right to suspend the use of such registration
          statement by Seller in the event Matria determines such suspension is necessary
          as a result of pending corporate developments, filings with the SEC or
          similar
          events; provided,
          that
          any such suspension period shall not (i) exceed thirty days (30) in any
          three-month period; or (ii) an aggregate of ninety (90) days for any twelve
          (12)
          month-period. In connection with the registration of the Payment Shares,
          Matria
          shall (i) pay all expenses of the shelf registration statement, (ii) as
          reasonably required by Seller, provide Seller with copies of the prospectus
          relating to such registration statement, (iii) notify Seller when the
          registration statement has become effective and of any suspension thereof,
          and
          (iv) take all other reasonable actions as are necessary to permit unrestricted
          resales of the Payment Shares by Seller.

         

        Seller
          hereby agrees that its rights to receive the Payment shall be in all respects
          subordinate and subject in right of payment to the payment of any and all
          indebtedness of Matria, whether outstanding on the date hereof or hereafter
          incurred, created or assumed, which is owed to any creditor under the Credit
          Agreement (currently, that certain Credit Agreement dated January 19, 2006,
          by
          and among Matria, certain domestic subsidiaries as guarantors, and Bank
          of
          America, N.A.). Seller agrees to take any and all further actions, and
          to
          execute any and all further agreements, instruments and other documents,
          as are
          reasonably requested by Matria or 

         


        
          
             

          

          
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        Matria’s
          applicable lenders in order to further evidence, clarify or give effect
          to the
          foregoing subordination provisions.

         

         

        In
          the
          event Matria is prohibited under the Credit Agreement as a result of the
          subordination contemplated by this Section I.B from making the Payment
          to Seller
          when due hereunder, such Payment shall bear interest from the due date
          at a rate
          per annum (on the basis of a 365-day year) equal to the Prime Rate on the
          due
          date plus one percent (1%); provided,
          however,
          that,
          to the extent the Payment remains unpaid, the rate of interest payable
          on the
          Payment shall be increased by one half of one percent (.5%) on each anniversary
          of the applicable due date (i.e. on the first anniversary of the due date,
          the
          rate of interest would increase to the Prime Rate plus one and one-half
          percent
          (1.5%).

         

        Matria’s
          obligations under this Section I.B. are in lieu of all Mile Stone Payments
          under
          Section 2.4(b) of the Purchase Agreement that have not been paid to date
          other
          than as expressly provided in Section I.A. above. Payments made pursuant
          to this
          Section I.B. shall be included in the calculation of the Mile Stone Payment
          Cap.

        C. Termination
          of Matria’s Obligation to Keep Business Intact
          as a Separate Business:
          As of
          the effective date of this Settlement Agreement, Matria’s obligation to keep the
          Business intact as a separate business unit, pursuant to Section 2.4(h)
          of the
          Purchase Agreement, is null and void. Matria will have sole discretion
          in
          determining whether the Business will be maintained as a separate business
          or
          integrated with Matria’s other businesses. Seller acknowledges and agrees that
          Matria has no obligation of any kind to facilitate or maximize any further
          Mile
          Stone Payments under the Purchase Agreement. Without limiting the generality
          of
          the foregoing, Matria shall have no liability to Seller of any kind for
          failure
          to 


        
          
             

          

          
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        pursue,
          accept, timely implement or fulfill its obligations to any New Customer
          or
          proposed New Customer or for failure to pursue, accept, timely implement
          or
          fulfill its obligations under any Designated Contract or proposed Designated
          Contract, provided that if Matria does not receive actual payments of not
          less
          than FIVE
          HUNDRED THOUSAND 00/100
          DOLLARS ($500,000.00)
          due to Matria’s negligent failure to act or bad faith, said condition in Section
          I.B. above to the payment of the sum of TWENTY
          MILLION 00/100 DOLLARS
          ($20,000,000.00) shall be deemed to have been satisfied as of May 1,
          2007.

        II. RELEASE

        A. Seller
          Release:
          Seller,
          for and on behalf of itself, and each of its past,
          present and future employers, parents, subsidiaries, affiliates, divisions,
          predecessors, successors, assigns, agents, employees, officers, directors,
          insurers, reinsurers, related entities, and all persons acting by, through,
          or
          in concert with any of the foregoing
          (the
“Seller Releasing Parties”), does hereby fully, finally, and forever release and
          discharge Matria and each of its past, present, and future employers, parents,
          subsidiaries, affiliates, divisions, predecessors, successors, assigns,
          agents,
          employees, officers, directors, insurers, reinsurers, related entities,
          and all
          persons acting by, through, or in concert with any of the foregoing from
          any and
          all actions, claims, suits, damages, debts, judgments, levies, executions
          or
          liabilities, of any kind or character, whether now known or unknown, asserted
          or
          unasserted, liquidated or unliquidated, fixed or contingent, legal or equitable,
          direct or indirect, which Seller or any of the Seller Releasing Parties
          has or
          may have in the future arising
          out of the actions
          and claims outlined in the Mile Stone Objection Notice
          or
          related in any way to the Mile Stone Payment for Period 1 (the “Seller Released
          Claims”). The fulfillment of Matria’s obligations in Section I.B. is an



        
          
             

          

          
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        express
          condition subsequent to the effectiveness of this Release, and if such
          obligations are not fulfilled,, this Release shall be null and
          void.

        B. Matria
          Release:
          Matria,
          for and on behalf of itself, and its past, present, and future employers,
          parents, subsidiaries, affiliates, divisions, predecessors, successors,
          assigns,
          agents, employees, officers, directors, insurers, reinsurers, related entities,
          and all persons acting by, through, or in concert with any of the foregoing
          (the
“Matria Releasing Parties”) does hereby fully, finally, and forever release and
          discharge Seller and all of its past, present and future employers, parents,
          subsidiaries, affiliates, divisions, predecessors, successors, assigns,
          agents,
          employees, officers, directors, insurers, reinsurers, related entities,
          and all
          persons acting by, through, or in concert with any of the foregoing from
          any and
          all actions, claims, suits, damages, debts, judgments, levies, executions
          or
          liabilities, of any kind or character, whether now known or unknown, asserted
          or
          unasserted, liquidated or unliquidated, fixed or contingent, legal or equitable,
          direct or indirect, which Matria or any of the Matria Releasing Parties
          has or
          may have in the future arising out of the actions and claims outlined in
          the
          Mile Stone Objection Notice or related in any way to the Mile Stone Payment
          for
          Period 1 (the “Matria Released Claims”).

        C. Releases
          Include Unknown Claims:

        (1) The
          Parties understand and agree that both the Seller Released Claims and Matria
          Released Claims are intended to and do include any and all claims of every
          nature and kind whatsoever (whether known, unknown, suspected, or unsuspected)
          which the Parties have, had or may have in the future, individually or
          collectively.

        (2) The
          Parties further acknowledge that they may hereafter discover facts different
          from or in addition to those which they now know or believe to be true
          with
          respect to the Seller 


        
          
             

          

          
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        Released
          Claims and Matria Released Claims and agree that, in such event, this Agreement
          shall nevertheless be and remain effective in all respects, notwithstanding
          such
          different or additional facts, or the discovery thereof.

        III. COVENANT
          NOT TO SUE

        A. Each
          of
          the Parties to this Agreement hereby mutually covenants that it will not
          sue,
          sue further, or otherwise litigate in any way against any person or entity
          released by this Agreement with respect to any of the Seller Released Claims
          or
          Matria Released Claims.

        B. The
          Parties represent and acknowledge (i) that they and their attorneys have
          conducted whatever investigation was deemed necessary to ascertain all
          facts and
          matter related to this Agreement; (ii) that they have consulted with and
          received advice from legal counsel concerning this Agreement; and (iii)
          that
          they are not relying in any way on any statement or representation by the
          opposing Party or opposing Party’s counsel, except as expressly stated herein,
          in reaching their decision to enter into this Agreement.

        IV. CONSTRUCTION:  This
          Agreement shall be construed without regard to the Party or Parties responsible
          for its preparation and shall be deemed as prepared jointly by both Parties
          hereto. Any ambiguity or uncertainty existing herein shall not be interpreted
          or
          construed against either Party on the basis that the Party drafted this
          Agreement.

        V. NO
          ADMISSION OF LIABILITY:
          The
          Parties hereby acknowledge that this Agreement and the mutual releases
          contained
          herein effect the settlement of disputed and contested claims and nothing
          herein
          shall be construed as an admission of liability on the part of any Party.
          Neither this Agreement, nor any discussions or negotiations leading to
          it, shall
          be 


        
          
             

          

          
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        admissible
          for any purpose in any matter, except that this Agreement shall be admissible
          as
          necessary to enforce its terms.

        VI. ATTORNEYS’
          FEES:
          The
          Parties hereto agree that each will be solely responsible for its own attorney’s
          fees and costs incurred in connection with this dispute, including all
          costs
          associated with performing each party’s duties and obligations under this
          Agreement.

        VII. NON-ASSIGNMENT:
          The
          Parties represent that they have not assigned, sold or transferred any
          of the
          claims described in Section II of this Agreement.

        VIII. CHOICE
          OF LAW:

        A. This
          Settlement Agreement and General Release shall be governed by the laws
          of the
          State of Georgia without regard to its principles of conflicts of laws
          or the
          conflicts of laws principles of the forum in which any party seeks
          enforcement.

        B. If
          any
          provision of this Agreement should for any reason be held violative of
          any
          applicable law, governmental rule or regulation, or if any provision should
          ever
          be held to be unenforceable or invalid, then the invalidity of any such
          specific
          provision herein shall not be contended or held to invalidate the remaining
          provisions of this Agreement. Such other provisions and the entirety of
          this
          Agreement absent the provision(s) held to be unenforceable shall remain
          in full
          force and effect unless the removal of such unenforceable provision(s)
          destroys
          the legitimate purpose of this Agreement, in which event the Agreement
          shall be
          null and void.

        IX. ENTIRE
          AGREEMENT:
          The
          Parties acknowledge that this Agreement constitutes the sole and entire
          agreement of the Parties with respect to the subject matter hereof, superseding
          any and all prior or contemporaneous agreements, discussions, or
          representations, whether oral 


        
          
             

          

          
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        or
          written, and further acknowledge that this Agreement cannot be varied or
          amended
          except by the written consent of the Parties hereto. All capitalized terms
          used
          herein and not otherwise defined herein shall have the meaning assigned
          to such
          term in the Purchase Agreement.

        X. NO
          REPRESENTATIONS:
          The
          Parties acknowledge that no representations, promises, inducements, or
          warranties, other than those expressly set forth herein, have been made
          to
          induce the execution of this Agreement, and the Parties acknowledge that
          they
          have not executed this Agreement in reliance upon any promise, representation,
          inducement, or warranty not contained herein.

        XI. NO
          MODIFICATION OR WAIVER: This
          Agreement may not be modified except in a writing signed by all of the
          Parties.
          Any of the terms or conditions of this Agreement may be waived in writing
          at any
          time by the Party entitled to the benefits thereof, but only as to that
          Party.
          No waiver of any of the provisions of this Agreement shall be deemed to
          or shall
          constitute a waiver of any other provision hereof.

        XII. SUCCESSORS
          AND ASSIGNS:
          This
          Agreement shall inure to the benefit of and be binding on each of the Parties’
parent and affiliated companies, successors, assigns, heirs, administrators,
          representatives and trustees. Without the prior written consent of the
          other
          Parties, no Party hereto may assign its rights, duties or obligations hereunder
          to any other person or entity. No Party may assert that another Party’s conduct
          operates to waive the requirement of a writing in this Paragraph.

        XIII. WARRANTY
          OF CAPACITY:
          The
          Parties each hereby warrant and represent that the person signing this
          Agreement
          on their behalf has full authority to do so and that this Agreement is
          binding
          on them, and is fully enforceable in accordance with its terms. The Parties
          further 


        
          
             

          

          
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        warrant
          and represent that they are the only person, firm, or entity having any
          interest
          in the claims released herein and that they have not assigned, sold,
          transferred, or purported to assign, sell, or transfer any claim, complaint,
          demand, action, suit, or cause of action relating in any way to the matters
          released in herein. The Parties agree that the warranties and representations
          set forth in this Paragraph are material to this Agreement.

        XIV. EFFECTIVE
          ONLY UPON EXECUTION BY ALL:
          This
          Agreement shall become effective only upon the due and proper execution
          of this
          Agreement and delivery thereof by the Parties hereto.

        XV. COUNTERPARTS:
          The
          Parties may execute this Agreement in counterparts. A facsimile counterpart
          shall be binding as an original.

        XVI. EFFECTIVE
          DATE:
          This
          Agreement, once executed by the Parties, shall be deemed effective as of
          the
          date referenced in the preamble on page 1 hereof.

        IN
          WITNESS WHEREOF,
          the
          Parties have executed this Settlement Agreement and General Release. 

        


        Dated:
          November 6, 2006.

        


        MAJ
          INDUSTRIES LLC    MATRIA
          HEALTHCARE, INC.

        


        


        By:___________________________   By:__________________________

        Ralph
          Finerman

        Secretary     Its:__________________________

        


        



        
          
             

          

          
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        EXHIBIT
          A

        


        
          	
                  24
                    HOUR FITNESS

                	 
	
                  AARP

                	 
	
                  ACTIVISION

                	 
	
                  AIG

                	 
	
                  ALLSTATE

                	 
	
                  AMC
                    THEATRES

                	 
	
                  AMERICAN
                    FINANCIAL

                	 
	
                  APOLLO
                    /UNIVERISTY OF PHOENIX

                	 
	
                  APOLLO
                    MANAGEMENT

                	 
	
                  ARAMARK

                	 
	
                  BARNES
                    & NOBLE

                	 
	
                  BEAR
                    STEARNS

                	 
	
                  BLACKROCK

                	 
	
                  BLACKSTONE

                	 
	
                  BROADCOM

                	 
	
                  CABLEVISION

                	 
	
                  CASTLE
                    AND COOK

                	 
	
                  CBS

                	 
	
                  CINTAS

                	 
	
                  CITY
                    NATIONAL BANK

                	 
	
                  CLARK
                    COUNTY SCHOOL DISTRICT

                	 
	
                  COMCAST

                	 
	
                  COSTCO

                	 
	
                  COUNTRYWIDE
                    FINANCIAL

                	 
	
                  CREDIT
                    SUISSE

                	 
	
                  DANAHER

                	 
	
                  DEUTSCHE
                    BANK

                	 
	
                  DISNEY

                	 
	
                  DOLE
                    FOODS

                	 
	
                  ERNEST
                    & YOUNG

                	 
	
                  FIDELITY

                	 
	
                  FRANKLIN
                    TEMPLETON

                	 
	
                  FTI
                    CONSULTING

                	 
	
                  GNC

                	 
	
                  GOLDMAN
                    SACHS

                	 
	
                  GUARDSMARK

                	 
	
                  GUGGENHEIM
                    

                	 
	
                  HARRAH'S

                	 
	
                  HERTIGAGE
                    HEALTH NETWORK

                	 
	
                  HILTON

                	
                  INCREMENTAL
                    CHANGE*

                
	
                  HOME
                    DEPOT

                	 
	
                  HOUGHTON
                    MIFFLIN

                	 
	
                  HYATT
                    HOTELS

                	 
	
                  INTERACTIVE
                    CORP

                	 
	
                  JEFFERIES

                	 
	
                  K12

                	 
	
                  KB
                    HOMES

                	 


        


        
          
             

          

          
            11

            
              

            

          

          
             

          

        


        


        
          	
                  KLC

                	
                  INCREMENTAL
                    CHANGE*

                
	
                  LA
                    CITY

                	 
	
                  LA
                    COUNTY

                	 
	
                  LAS
                    VEGAS SANDS

                	 
	
                  LATHAN
                    WATKINS

                	 
	
                  LEHMAN
                    

                	 
	
                  LEONARD
                    GREEN

                	 
	
                  LEUCADIA
                    NATIONAL

                	 
	
                  LIBRA

                	 
	
                  MDC
                    HOLDINGS

                	 
	
                  MELLON
                    BANK

                	 
	
                  MERRILL
                    LYNCH

                	 
	
                  MID
                    OCEAN

                	 
	
                  MORGAN
                    STANLEY

                	 
	
                  NEW
                    YORK LIFE

                	 
	
                  NEWSCORP

                	 
	
                  NIKE,
                    INC

                	 
	
                  NYC
                    SCHOOL DISTRICT

                	 
	
                  OAKTREE
                    CAPITAL

                	 
	
                  OCCIDENTAL
                    PETROLEUM

                	 
	
                  ORACLE

                	 
	
                  PHILADELPHIA
                    HEALTH CARE TRUST

                	 
	
                  PRINCIPAL
                    GROUP

                	 
	
                  PROGRESSIVE
                    INSURANCE

                	 
	
                  PRUDENTIAL

                	 
	
                  ROBERT
                    HALF

                	 
	
                  ROLL
                    INTERNATIONAL

                	
                  INCREMENTAL
                    CHANGE*

                
	
                  SAFEWAY

                	 
	
                  SALESFORCE.COM

                	 
	
                  SIMON
                    PROPERTY GROUP

                	 
	
                  SLM

                	 
	
                  SONY

                	 
	
                  STAPLES

                	 
	
                  STARWOOD

                	 
	
                  TEXAS
                    PACIFIC

                	 
	
                  TH
                    LEE

                	 
	
                  THOR
                    INDUSTRIES

                	 
	
                  TIME
                    WARNER

                	 
	
                  TOYS
                    R US

                	 
	
                  TRIARC/ARBY'S

                	 
	
                  TRUST
                    CO OF THE WEST

                	 
	
                  TURNER
                    BROADCASTING

                	 
	
                  UBS

                	 
	
                  VIACOM

                	 
	
                  VISTAGE
                    INTERNATIONAL

                	 
	
                  WARNER
                    MUSIC

                	 
	
                  WEBMD

                	 
	
                  WELLS
                    FARGO

                	 


        


        
          
             

          

          
            12

            
              

            

          

          
             

          

        


        


        
          	
                  WYNN
                    RESORTS

                	 
	
                  YAHOO

                	 
	
                  YUCAIPA/FOOD
                    FOR LESS

                	 
	
                  ZENITH
                    NATIONAL

                	 
	 	 
	 	 
	
                  *
                    INCREMENTAL CHANGE MEANS ANY NEW BUSINESS SEPARATE AND APART
                    FROM ANY
                    EXISTING BUSINESS MATRIA DOES WITH SAID COMPANY

                	 
	 	 
	 	 
	 	 
	 	 
	 	 


        

        


      

    

     

     

     

    
      
         

      

      
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