Document:

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                                                                    EXHIBIT 10.2

                         AGREEMENT OF MERGER AND PLAN OF
                                 REORGANIZATION

                                      AMONG

                            MATRIA HEALTHCARE, INC.,
                          MATRIA HOLDING COMPANY, INC.
                           AND MATRIA MERGERSUB, INC.

                                DECEMBER 30, 2004

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                 AGREEMENT OF MERGER AND PLAN OF REORGANIZATION

      THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION ("Agreement"), dated
as of December 30, 2004, is among Matria Healthcare, Inc., a Delaware
corporation (the "Company") Matria Holding Company, Inc., a Delaware corporation
("Holdco") and a direct, wholly owned subsidiary of the Company, and Matria
MergerSub, Inc., a Delaware corporation ("MergerSub") and a direct, wholly owned
subsidiary of Holdco.

                                    RECITALS

      A. The Company's authorized capital stock consists of (i) 25,000,000
shares of common stock, par value $.01 per share ("Company Common Stock"), of
which 10,563,421 shares were issued and outstanding as of December 29, 2004 and
(ii) 50,000,000 shares of preferred stock, $.01 per share, none of which is
currently outstanding ("Company Preferred Stock").

      B. As of the date hereof, Holdco's authorized capital stock consists of
(i) 25,000,000 shares of common stock, par value $.01 per share ("Holdco Common
Stock"), of which 1,000 shares are issued and outstanding and (ii) 50,000,000
shares of preferred stock, no par value, none of which is currently outstanding
("Holdco Preferred Stock").

      C. The designations, rights and preferences, and the qualifications,
limitations and restrictions thereof, of the Holdco Preferred Stock and the
Holdco Common Stock are the same as those of the Company Preferred Stock and the
Company Common Stock.

      D. The Certificate of Incorporation and the By-laws of Holdco immediately
after the Effective time (as hereinafter defined) will contain provisions
identical to the Certificate of Incorporation and By-laws of the Company
immediately before the Effective Time (other than with respect to matters
excepted by Section 251(g) of the General Corporation Law of the State of
Delaware (the "DGCL").

      E. The directors of the Company immediately prior to the Merger (as
hereinafter defined) will be the directors of Holdco as of the Effective Time.

      F. Holdco and MergerSub are newly formed corporations organized for the
purpose of participating in the transactions herein contemplated.

      G. The Company desires to create a new holding company structure by
merging MergerSub with and into the Company with the Company being the surviving
corporation, and converting each outstanding share of Company Common Stock into
a like number of shares of Holdco Common Stock, all in accordance with the terms
of this Agreement.

<PAGE>

      H. The Boards of Directors of Holdco, MergerSub and the Company have
approved this Agreement and the merger of MergerSub with and into the Company
upon the terms and subject to the conditions set forth in this Agreement (the
"Merger").

      I. For federal income tax purposes, it is intended that the Merger shall
qualify as in reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended.

      NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained in this Agreement, and intending to be legally bound
hereby, the Company, Holdco and MergerSub hereby agree as follows:

                                    ARTICLE I
                                   THE MERGER

      Section 1.1 The Merger. In accordance with Section 251(g) of the DGCL and
subject to and upon the terms and conditions of this Agreement, MergerSub shall,
at the Effective Time, be merged with and into the Company, the separate
corporate existence of MergerSub shall cease and the Company shall continue as
the surviving corporation. The Company as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "Surviving Corporation." At
the Effective time, the effect of the Merger shall be as provided in Section 259
of the DGCL.

      Section 1.2 Effective Time. The Merger shall become effective upon the
filing of a copy of this Agreement with the Secretary of State of the State of
Delaware, or at such other time as is specified in the Certificate of Merger
(the time of such filing, or other specified time, being referred to herein as
the "Effective Time").

      Section 1.3 Certificate of Incorporation. From and after the Effective
Time the Certificate of Incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended as provided by law; provided,
however, that, from and after the Effective Time:

      (a)   Article I thereof shall be amended so as to read in its entirety as
            follows:

            "The name of this Corporation is Matria Women's and Children's
            Health, Inc."

      (b)   Article IV shall be amended so as to read in its entirety as
            follows:

                                   "Article IV

                  The aggregate number of shares which the Corporation shall
            have authority to issue shall be one thousand (1,000), consisting of
            one thousand (1,000) shares of Common Stock, par value $.01 per
            share."

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      (c)   Article V shall be deleted in its entirety.

      (d)   Article VI shall be renumbered Article V.

      (e)   Article VII shall be renumbered as Article VI and shall be amended
            so as to read in its entirety as follows:

                                   "Article VI

                  In furtherance and not in limitation of the powers conferred
            by law, the Board of Directors is authorized to adopt, amend or
            repeal the Bylaws of the Corporation."

      (f)   Article VIII shall be renumbered Article VII.

      (g)   Article IX shall be renumbered as Article VIII.

      (h)   A new Article IX shall be added thereto which shall be and read in
            its entirety as follows:

                                  "Article IX.

            Any act or transaction by or involving the Corporation, other
      than the election or removal of directors, that requires for its adoption
      under the General Corporation Law of the State of Delaware or its
      certificate of incorporation the approval of the stockholders of the
      Corporation shall, by virtue of this reference to Section 251(g)(7)(i) of
      the General Corporation Law of the State of Delaware, require, in
      addition, the approval of the stockholders of Matria Healthcare, Inc., a
      Delaware corporation, or any successor thereto by merger, by the same vote
      as is required by the General Corporation Law of the State of Delaware
      and/or the certificate of incorporation of this Corporation."

      Section 1.4 Bylaws. From and after the Effective Time, the Bylaws of
MergerSub, as in effect immediately prior to the Effective time, shall
thereafter continue in full force and effect as the bylaws of the Surviving
Corporation until thereafter amended or repealed as provided therein.

      Section 1.5 Directors. The directors of MergerSub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation and
will hold office from the Effective Time until their successors are duly elected
or appointed and qualified in the manner provided in the Certificate of
Incorporation and the Bylaws of the Surviving Corporation or as otherwise
provided by law.

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      Section 1.6 Officers. The officers of MergerSub immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
will hold office from the Effective Time until their successors are duly elected
or appointed and qualified in the manner provided in the Certificate of
Incorporation and the Bylaws of the Surviving Corporation or as otherwise
provided by law.

      Section 1.7 Additional Actions. Subject to the terms of this Agreement,
the parties hereto shall take all such reasonable and lawful action as may be
necessary or appropriate in order to effectuate the Merger. If, at any time
after the Effective Time, the Surviving Corporation shall consider or be advised
that any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of either of MergerSub or the
Company acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of each of MergerSub and the
Company, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of each of MergerSub and the Company or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.

      Section 1.8 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Holdco, MergerSub, the Company
or the holder of any of the following securities:

            (a) Each share of Company Common Stock issued and outstanding
      immediately prior to the Effective Time shall be converted into and
      thereafter represent one fully paid, duly issued and nonassessable share
      of Holdco Common Stock, and each such certificate previously representing
      any such shares of Company Common Stock shall thereafter represent
      automatically, without the requirement of any exchange thereof, the same
      number of shares of Holdco Common Stock.

            (b) Each share of common stock, par value $.01 per share, of
      MergerSub issued and outstanding immediately prior to the Effective Time
      shall be converted into and thereafter represent one duly issued, fully
      paid and nonassessable share of common stock, par value $.01 per share, of
      the Surviving Corporation.

            (c) From and after the Effective Time, holders of certificates
      formerly evidencing Company Common Stock shall cease to have any rights as
      stockholders of the Company, except as provided by law; provided, however,
      that such holders shall have the rights set forth in Section 1.10 herein.

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      Section 1.9 Purchase Rights.

            (a) In accordance with Section 23 of that certain Amended and
      Restated Rights Agreement dated as of April 27, 1999 between the Company
      and SunTrust Bank, as Rights Agent (the "Company Rights Plan"), each
      outstanding purchase right of the Company ("Company Purchase Right") shall
      terminate as of the Effective Time.

            (b) Holdco shall, prior to the Effective Time, adopt a rights plan
      (the "Holdco Rights Plan") substantially similar in form and substance to
      the Company Rights Plan and, in accordance therewith, Holdco shall, at the
      Effective Time but without duplication of Holdco's obligations under the
      Holdco Rights Plan, issue to each holder of Holdco Common Stock issued
      pursuant hereto one purchase right ("Holdco Purchase Right") for each
      share of Holdco Common Stock issued by it pursuant to Section 1.8(a)
      herein.

      Section 1.10 No Surrender of Certificates; Stock Transfer Books. As a
result of the provisions of Section 1.3 herein, in conjunction with the
provisions of a certificate of merger of the certificate of incorporation of
Holdco and Matria Mergeco, Inc. to be filed with the Secretary of State of the
State of Delaware and to become effective immediately after the Effective Time,
the corporate name of Holdco immediately following the Effective Time will be
"Matria Healthcare, Inc.," the same name as the corporate name of the Company
immediately prior to the Effective Time. Accordingly and pursuant to Section
251(g) of the DGCL, until thereafter surrendered for transfer or exchange in the
ordinary course, each outstanding certificate that, immediately prior to the
Effective Time, evidenced Company Common Stock shall be deemed and treated for
all corporate purposes to evidence the ownership of the number of shares of
Holdco Common Stock into which such shares of Company Common Stock were
converted pursuant to the provisions of Sections 1.8 (b) herein. In addition,
immediately after the Effective Time, each such certificate shall also evidence
a number of Holdco Purchase Rights equal to the number of Company Purchase
Rights evidenced thereby immediately prior to the Effective Time of the Merger.

                                   ARTICLE II
                             ACTIONS TO BE TAKEN IN
                           CONNECTION WITH THE MERGER

      Section 2.1 Company Indebtedness. As of the date of this Agreement, the
Company is a party to the following indentures (individually, an "Indenture"
and, collectively, the "Indentures"):

            (1) Indenture (the "Indenture") dated as of July 9, 2001 between the
      Company, Wells Fargo Bank, N.A., as trustee and the subsidiary guarantors
      listed therein, pursuant to which the Company has heretofore issued $122
      million in aggregate principal amount of 11% Notes due 2008, the ("11%
      Senior Notes"), of which $2.0 million in aggregate principal amount
      currently remain outstanding; and

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            (2) Indenture (the "Convertible Indenture") dated as of May 5, 2004
      between the Company, the subsidiary guarantors listed therein, and Wells
      Fargo Bank, N.A., as trustee, pursuant to which the Company has heretofore
      issued $86.250 million in aggregate principal amount of 4.875% Convertible
      Senior Subordinated Notes due 2024, all of which are currently
      outstanding.

      As of the Effective time, Holdco and the Company shall, with respect to
each such Indenture, together with the trustee under each Indenture, execute,
acknowledge and deliver supplemental indentures (each, a "Supplemental
Indenture") to each of such Indentures pursuant to which Holdco shall assume and
agree to perform all obligations of the Company thereunder and the Company shall
be released from its obligations thereunder and Holdco will agree to pay,
perform and discharge all obligations of the Company under the Notes.

      Section 2.2 Conversion of Company Notes.

            (a) At the Effective Time, each 4.875% Convertible Senior
      Subordinated Note due 2024 of the Company, convertible in whole or in part
      into shares of Company Common Stock which is then issued and outstanding
      (a "Convertible Note") shall cease to be convertible into shares of
      Company Common Stock and shall be convertible, under the same terms and
      conditions as were applicable to such Convertible Note immediately prior
      to the Effective time, into shares of Holdco Common Stock. The number of
      shares of Holdco Common Stock issuable upon conversion of such Convertible
      Note shall be equal to the number of shares of Company Common Stock that
      were issuable under the Convertible Note immediately prior to the
      Effective Date.

            (b) At or prior to the Effective Time, Holdco shall reserve for
      issuance the number of shares of Holdco Common Stock necessary to satisfy
      Holdco's obligations under Section 2.2(a).

      Section 2.3 Assumption of Registered Stock Plans. Holdco and the Company
hereby agree that they will, at the Effective Time, execute, acknowledge and
deliver an assumption agreement pursuant to which Holdco will, from and after
the Effective Time, assume and agree to perform all obligations of the Company
pursuant to the Company's 2004 Stock Incentive Plan (Registration No.
333-117875), 2002 Stock Incentive Plan (Registration No. 333-100977), 2002 Stock
Purchase Plan (Registration No. 333-100977), 2001 Stock Incentive Plan
(Registration No. 333-72516), 2000 Directors' Non-qualified Stock Option Plan
(Registration No. 333-72512), 2000 Stock Incentive Plan (Registration No.
333-42856), 1997 Stock Incentive Plan (Registration No. 333-69347), 1996 Stock
Incentive Plan (Registration No. 333-02283), 1996 Employee Stock Purchase Plan
(Registration No. 333-01539) and the MarketRing.com, Inc. 1999 Stock Option and
Stock Appreciation Rights Plan (Registration No. 333-90822) (collectively, the
"Registered Stock Plans").

      The outstanding options and other awards assumed by Holdco shall be
exercisable upon the same terms and conditions as under the Plans immediately
prior to the Effective Time, except

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that, upon the exercise of each such option or award, shares of Holdco Common
Stock shall be issuable in lieu of each share of Company Common Stock issuable
upon the exercise thereof immediately prior to the Effective Time.

      Section 2.4 Company Warrant. At the Effective Time, the Warrant between
the Company and Steve Arminio, DPM, dated June 6, 2002 (the "Company Warrant")
shall cease to represent a right to acquire shares of Company Common Stock and
shall be converted automatically into a warrant to acquire, under the same terms
and conditions as was applicable to the Company Warrant immediately prior to the
Effective Time, shares of Holdco Common Stock, and Holdco shall assume the
Company Warrant. The number of shares of Holdco Common Stock purchasable upon
exercise of the Warrant shall be equal to the number of shares of Company Common
Stock that were purchasable under the Company Warrant immediately prior to the
Effective date, subject to adjustment as appropriate to reflect any stock split,
stock dividend, recapitalization or other similar transaction with respect to
Holdco Common Stock subsequent to the Effective Time.

      Section 2.5 Post-Effective Amendments. It is the intent of the parties
hereto that Holdco, as of the Effective Time, be deemed a "successor issuer" for
purposes of continuing offerings under the Securities Act of 1933, as amended.
As soon as practicable following the Merger, Holdco will file post-effective
amendments to the Company's shelf registration statement on Form S-3
(Registration No. 333-109488), the Company's resale shelf registration on Form
S-3 (Registration No. 333-116200) pursuant to which the Company's Convertible
Notes are registered for resale, and the Company's registration statements on
Form S-8 covering the Registered Stock Plans, adopting such statements as its
own registration statements for all purposes of the Securities Act and the
Exchange Act and setting forth any additional information necessary to reflect
any material changes made in connection with or resulting from the succession,
or necessary to keep the registration statements from being misleading.

      Section 2.6 Reservation of Shares. On or prior to the Effective Time,
Holdco will reserve sufficient shares of Holdco Common Stock to provide for the
issuance of Holdco Common Stock upon exercise of the Company Warrant and the
options outstanding under the Registered Stock Plans and will reserve a number
of shares of Holdco Common Stock sufficient to provide for the issuance thereof
upon exercise of Holdco Purchase Rights.

                                   ARTICLE III
                              CONDITIONS OF MERGER

      Section 3.1 Conditions Precedent. The obligations of the parties to this
Agreement to consummate the Merger and the transactions contemplated by this
Agreement shall be subject to fulfillment or waiver by the parties hereto of
each of the following conditions:

            (a) Holdco shall have adopted the Holdco Rights Plan.

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            (b) The Company, Holdco, the subsidiary guarantors and the trustee
      shall have executed and delivered the Supplemental Indentures contemplated
      by Article II herein subject only to the occurrence of the Effective Time
      of the Merger.

            (c) Prior to the Effective Time, the Company shall have received the
      consent of HFG Healthco-4 LLC (the "Lender"), under that certain Credit
      Agreement, dated October 22, 2002, as amended (the "Credit Agreement"), to
      consummate the Merger and create the holding company structure
      contemplated hereby.

            (d) Prior to the Effective Time, the Company shall have received an
      interpretive opinion or no-action letter from the staff of the Securities
      and Exchange Commission in connection with the Company's no-action request
      letter, dated November 9, 2004, or shall be reasonably assured that such
      interpretive opinion or no-action letter will be received promptly
      thereafter.

            (e) Prior to the Effective Time, no order, statute, rule,
      regulation, executive order, injunction, stay, decree, judgment or
      restraining order shall have been enacted, entered, promulgated or
      enforced by any court or governmental or regulatory authority or
      instrumentality which prohibits or makes illegal the consummation of the
      Merger or the transactions contemplated hereby.

                                   ARTICLE IV
                                    COVENANTS

      Section 4.1 Election of Directors. Effective as of the Effective Time, the
Company, in its capacity as the sole stockholder of Holdco, will remove each of
the then directors of Holdco, and will elect each person who is then a member of
the board of directors of the Company as a director of Holdco, each of whom
shall serve until the next annual meeting of shareholders of Holdco and until
his successor shall have been elected and qualified.

      Section 4.2 Employee Benefit Plans. The Company and Holdco will take or
cause to be taken all actions necessary or desirable in order for Holdco to
assume the Registered Stock Plans and to assume (or become a participating
employer in) each other existing employee benefit plan and agreement of the
Company, with or without amendments, or to adopt, comparable plans, all to the
extent deemed appropriate by the Company and Holdco and permitted under
applicable law.

      Section 4.3 Section 253 Subsidiary Merger. In order to change the name of
Holdco to "Matria Healthcare, Inc.," as soon as practicable after the Effective
Time, Holdco will take or cause to be taken all such actions as may be necessary
or desirable to effect a merger, in accordance with Section 253 of the DGCL,
between Holdco and Matria Mergeco, Inc., a direct, wholly-owned subsidiary of
Holdco.

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      Section 4.4 Additional Covenants. Subject to, and promptly after,
obtaining (1) any approval of the stockholders of Holdco required under Section
251(g)(7)(i) of the General Corporation Law of the State of Delaware and Article
IX of the Certificate of Incorporation of the Surviving Corporation and (2) any
consent of the Lender required under the Credit Agreement to any of the
following actions:

            (a) Conversion to LLC. The Company shall take the action required
      under Section 266 of the General Corporation Law of the State of Delaware
      to convert from a corporation to a limited liability company organized
      under the Limited Liability Company Act of the State of Delaware.

            (b) Inter-Company Stock Transfers. The Surviving Corporation shall
      (i) contribute to Holdco all of the issued and outstanding stock or
      membership interests, as applicable, of its direct, wholly-owned
      subsidiaries Diabetes Acquisition, Inc., a Georgia corporation, Matria
      Insurance, Ltd., a Vermont corporation, Shared Care, Inc., a Georgia
      corporation, Clinical-Management Systems, Inc., a Georgia corporation and
      Facet Technologies, LLC, a Georgia limited liability company, (ii) cause
      Diabetes Acquisition, Inc., the Company's direct, wholly-owned subsidiary,
      to contribute to Facet Technologies, LLC the outstanding capital stock of
      Facet Technologies Limited, a corporation organized under the laws of the
      United Kingdom, (iii) contribute to Clinical-Management Systems, Inc. all
      of the outstanding capital stock of Quality Oncology, Inc., a Delaware
      corporation, and (iv) contribute to Holdco its 35% stock ownership
      interest in Matria Holding GmbH, a company organized under the laws of
      Germany.

            (c) Name Change. Holdco shall take or cause to be taken all such
      actions as may be necessary or desirable to effect an amendment to the
      Articles of Incorporation of Clinical-Management Systems, Inc. to change
      the name of Clinical-Management Systems, Inc. to "Matria Health
      Enhancement Co."

            (d) Transfer of Disease Management Contracts. The Company shall
      transfer and assign to Matria Health Enhancement Co. the disease
      management contracts to which the Company is a party.

            (e) Subsidiary Merger. The Surviving Corporation shall cause Q
      Liquidation Corp., a Delaware corporation and MarketRing.com, Inc., a
      Georgia corporation to merge with and into Shared Care, Inc., in
      accordance with Section 252 of the DGCL and Section 14-2-1104 of the
      Georgia Business Corporation Code, as applicable.

            (f) Options Unlimited.
      Holdco shall take or cause to be taken all such actions as may be
      necessary or desirable for Diabetes Management Solutions, Inc. to transfer
      all of the assets exclusively used in the operations of Options Unlimited
      to Matria Case Management, Inc., a New York

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<PAGE>

      corporation and a direct, wholly-owned subsidiary of Clinical-Management
      Solutions, Inc.

      It is understood and agreed that none of the actions described in
paragraphs (b) - (f) of this Section 4.4 shall occur until after the action
described in paragraph (a) of this Section 4.4 has occurred.

                                    ARTICLE V
                            TERMINATION AND AMENDMENT

      Section 5.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time by
action of the Board of Directors of the Company, Holdco or MergerSub if it
should determine that for any reason the completion of the transactions provided
for herein would be inadvisable or not in the best interest of such corporation
or its stockholders. In the event of such termination and abandonment, this
Agreement shall become void and neither the Company, Holdco or MergerSub nor
their respective stockholders, directors or officers shall have any liability
with respect to such termination and abandonment.

      Section 5.2 Amendment. This Agreement may be supplemented, amended or
modified by the mutual consent of the Boards of Directors of the parties to this
Agreement.

                                   ARTICLE VI
                            MISCELLANEOUS PROVISIONS

      Section 6.1 Governing Law. This Agreement shall be governed by and
construed and enforced under the laws of the State of Delaware.

      Section 6.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.

      Section 6.3 Entire Agreement. This Agreement, including the documents and
instruments referred to herein, constitutes the entire agreement and supersedes
all other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.

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<PAGE>

      IN WITNESS WHEREOF, the Company, Holdco and MergerSub have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

                                   MATRIA HEALTHCARE, INC.

                                   By: /s/ Parker H. Petit
                                      -----------------------------------------
                                   Name: Parker H. Petit
                                   Title: Chairman and Chief Executive Officer

                                   MATRIA HOLDING COMPANY, INC.

                                   By: /s/ Parker H. Petit
                                      -----------------------------------------
                                   Name: Parker H. Petit
                                   Title: President

                                   MATRIA MERGERSUB, INC.

                                   By: /s/ Parker H. Petit
                                      -----------------------------------------
                                   Name: Parker H. Petit
                                   Title: President

I, Roberta L. McCaw, Secretary of Matria Healthcare, Inc. hereby certify that
this Agreement has been adopted pursuant to Subsection 251(g) of the DGCL and
the conditions specified in the first sentence of Subsection 251(g) have been
satisfied.

                                            Matria Healthcare, Inc.

                                                   /s/ Roberta L. McCaw
                                            ------------------------------------
                                            By: Roberta L. McCaw, Secretary

                                       11<PAGE>
                                                                    EXHIBIT 10.1
                         PERFORMANCE FOOD GROUP COMPANY

                        SENIOR MANAGEMENT SEVERANCE PLAN

I.       PLAN PURPOSE

Performance Food Group Company (the "Company") hereby adopts this Senior
Management Severance Plan (the "Plan"). The purpose of the Plan is to provide
transition and severance benefits, as well as payments for a non-competition
agreement, to eligible associates solely in the event of a company-initiated,
non-misconduct separation from the Company.

II.      PLAN INTERPRETATION

The Plan is intended to be a "top hat" plan, that is, an unfunded plan
maintained by the Company to provide transition and severance benefits, as well
as payments for a non-competition agreement, for a select group of management or
highly compensated employees, as that term is defined in Title I of the Employee
Retirement Income Security Act of 1974 ("ERISA"), and the Plan shall be
interpreted and administered consistent with the top hat provisions of Title I
of ERISA.

III.     PLAN ELIGIBILITY

An associate who works for (i) the Company or (ii) any one of the Company's U.S.
based subsidiaries or affiliates which are participating in this Plan with the
permission of the Plan Administrator (as defined in Section V below) (any such
entity referred to as an "Employer"), shall be eligible to participate in the
Plan during such times as the associate satisfies both of the following:

          1.   The associate holds a position with the Employer with a title of
               Vice President or Corporate Director or above.

          2.   The associate is a member of a "select group of management or
               highly  compensated employees", within the meaning of Title I of
               ERISA, as determined by the Plan Administrator.

Eligible associates shall commence participation in the Plan as of the date the
Employer provides the associate with written notification of the Employer's
intent to initiate the termination of the associate's employment based on
factors other than termination for Cause (as defined herein).

<PAGE>

IV.      PLAN SPECIFICS

Eligible associates who have been provided with the notice of termination as
specified in Article III above (hereafter referred to as "Participant(s)") may
be offered pursuant to this Plan:

1.       Transition Pay

Eligible Participants may be granted a transition period at the discretion of
the Plan Administrator (the "Transition Period") during which they will remain
employed by the Employer and will be eligible to receive their then-current base
salary compensation and benefits to assist with the transition of
responsibilities. The Transition Period will commence on the date stated as the
Transition Period start date in the written notification by the Employer to the
Participant of the intent to sever the employment relationship. The Transition
Period will be calculated on a calendar year basis (365/366 days), inclusive of
the date stated in the written notification according to the schedule set forth
below.

If the Plan Administrator grants a Participant a Transition Period, the
Participant will be entitled to Transition Pay for the period set forth in the
table below based on the Eligible Participant's title immediately prior to the
commencement of the Transition Period and may be provided with office space at
the discretion of PFG management.

                            Transition Period (Weeks)

<TABLE>
<CAPTION>
                                                                         less than   more than or    more than
                                                                           5 Yrs    equal to 5 Yrs    10 Yrs
------------------ --------------------------------------------------- ------------ -------------- -------------
<S>               <C>                                                  <C>          <C>           <C>
Tier 5             Currently including titles of OPCO Level CFO,         4 weeks      8 weeks       12 weeks
                   SVP, EVP and VP Corp. Level Functional Directors
------------------ --------------------------------------------------- ------------ -------------  -------------
Tier 4             Currently including titles of OPCO/Branch             8 weeks      12 weeks      18 weeks
                   Presidents, Plant and General Managers, Division
                   Level VP, and Regional CFO
------------------ --------------------------------------------------- ------------ -------------  -------------
Tier 3             Currently including titles of Corporate VP, Corp.     8 weeks      12 weeks      18 weeks
                   Treasurer, Corp. Controller, Division Level EVP,
                   SVP and CFO, and Division VP
------------------ --------------------------------------------------- ------------ -------------  -------------
Tier 2             Currently including titles of Division President      8 weeks      12 weeks      18 weeks
                   and CEOs, and Corporate Level SVP
------------------ --------------------------------------------------- ------------ -------------  -------------
Tier 1             Currently including titles of Chief Executive         8 weeks      12 weeks      18 weeks
                   Officer, President, and COO
------------------ --------------------------------------------------- ------------ -------------  -------------
</TABLE>

The Participant's continued employment during the Transition Period and receipt
of transition payments are contingent upon his/her execution of a Transition
Confidentiality and Non-Compete Agreement and General Release (hereafter
"Transition Agreement") covering all claims, known or unknown, arising from the
date of hire through the commencement of the Transition Period.

                                       2
<PAGE>

2.       Severance Pay

After receiving his/her regular ongoing base salary compensation and benefits
during the Transition Period if granted by the Plan Administrator, the
Participant will, if qualified, receive severance payments (subject to
applicable withholdings) on their regular payroll basis based on his/her: (a)
base salary as of the commencement of the Transition Period or termination date,
as applicable, (b) position, and (c) years of service with the Employer
according to the following schedule ("Severance Payment(s)"):

                               Base Salary (Weeks)

<TABLE>
<CAPTION>
                                          less than                         more than or        more than
                                           2 Yrs           2-5 Yrs         equal to 5 Yrs        10 Yrs
-------------------------------------- ---------------- ----------------- ----------------- ----------------
<S>                                    <C>              <C>               <C>               <C>
Tier 5                                    4 weeks           7 weeks           14 weeks         21 weeks
-------------------------------------- ---------------- ----------------- ----------------- ----------------
Tier 4                                    7 weeks           14 weeks          29 weeks         43 weeks
-------------------------------------- ---------------- ----------------- ----------------- ----------------
Tier 3                                    14 weeks          29 weeks          50 weeks         71 weeks
-------------------------------------- ---------------- ----------------- ----------------- ----------------
Tier 2                                    17 weeks          34 weeks          60 weeks         83 weeks
-------------------------------------- ---------------- ----------------- ----------------- ----------------
Tier 1                                    20 weeks          39 weeks          69 weeks         93 weeks
-------------------------------------- ---------------- ----------------- ----------------- ----------------
</TABLE>

Severance Payments under this Plan and the above schedule will be limited to:

         The amount of the Participant's base salary on a daily basis using
         365/366 as the denominator multiplied by a fraction, the numerator of
         which is the applicable number of days from the table above.

The receipt of Severance Payment is conditioned upon the Participant signing the
Non-Compete Agreement and General Release or Post-Transition and Non-Compete
Agreement and General Release, as applicable (hereafter "Severance Period
Agreement"). The Participant will be presented with the Severance Period
Agreement at the end of the Transition Period or at the date of Participant's
termination of employment if no Transition Period is granted.

3.       Annual Incentive Plans

The Participant will receive the components of any applicable senior management
bonus program prorated through the commencement of the Transition Period or the
date of Participant's termination of employment if no Transition Period is
granted. This portion of the incentive will be based on actual payout results.
The bonus, if earned, will be paid at the time earned incentives are paid to
continuing executive associates.

Following the commencement of the Transition Period, or Participant's
termination of employment if no Transition Period is granted, eligible
Participants will not receive any further opportunity to participate in any
portion of any senior management bonus program for the current or prospective
fiscal year. Additionally, no other incentive plan payments will be made from
the senior management bonus program nor any other incentive plan as part of this
Plan. Eligible Participants will not be entitled to any other benefits following
the Transition Period or Participant's termination of employment if no
Transition Period is granted.

                                       3
<PAGE>

4.       Long-Term Incentive Plans

This Plan does not provide any separate terms for the administration and
determination of eligibility or payments under the Company's long-term incentive
plans, including any stock options or restricted stock. The underlying
agreements and the actual provisions of those long-term plans will govern any
payment or vesting.

5.       Termination Upon Death

This Plan and any and all benefits provided under this Plan shall continue in
the event of the death of a Participant at any time while receiving benefits
under the Plan.

V.       ADMINISTRATION

The Company will pay for the benefits provided by this Plan from the general
assets of the Company under the circumstances set forth herein.

This Plan will be administered by the Chairman and CEO and the National VP,
Human Resources of the Company (or their designees) or the Chairman of the
Company's Compensation Committee in the event that the Participant is designated
by the Board of Directors as a reporting person under Section 16 of the
Securities Exchange Act of 1934, as amended, or in the event that the National
VP, Human Resources is involved as a potential participant (hereafter
collectively "Plan Administrator").

The Plan Administrator has complete and sole discretion and authority to
interpret the terms of the Plan and has sole discretion and authority to
determine questions of eligibility and amount of Transition Payments, if any,
and Severance Payments and any other benefits contemplated herein, if any, due
under the Plan.

The Company reserves the right to modify and/or discontinue this Plan. Any
modification or termination of the Plan will be communicated to all eligible
associates.

In the event a claimant believes he or she is entitled to benefits under the
Plan that have not been provided, the Associate must make a written claim for
benefits with the Plan Administrator. The Plan Administrator will advise the
claimant within ninety (90) days of receiving the claim, whether that claim will
be accepted or denied. If denied, the claimant may request that the decision be
reviewed by filing an appeal with the Plan Administrator within sixty (60) days
of receiving the denial of claim. If the appeal is denied, the claimant will be
given a written explanation of the reasons for the denial within sixty (60) days
of the filing of the claimant's appeal. In certain circumstances, it may take
longer to make a decision regarding the appeal. If it takes longer than sixty
(60) days to make a decision on the appeal, the claimant will be notified of the
need for additional time. In no event will the additional time exceed one
hundred twenty (120) days from receipt of the request for review. If the
claimant disagrees with the final decision on appeal, the claimant may exercise
his or her right to bring legal action.

                                       4
<PAGE>

The Company reserves the right to discontinue payments under this Plan if a
Participant is terminated for Cause (as defined below) during the Transition
Period, if any, or if Participant at any time violates any confidentiality,
non-competition or non-solicitation agreement between Participant and any
Employer, as determined in the Plan Administrator's sole discretion. Any such
determination shall be final and binding on a Participant. "Cause" shall mean
(i) a felony conviction of a Participant or the failure of a Participant to
contest prosecution for a felony, (ii) a Participant's willful misconduct or
dishonesty, which is directly and materially harmful to the business or
reputation of the Company or any subsidiary or affiliate, (iii) the engaging by
the Participant in conduct which is demonstrably injurious to the Company,
monetarily or otherwise, (iv) a material failure on the part of a Participant to
meet performance standards or objectives established by the Participant's
supervisor(s), (v) a material breach or violation of the Company's employee
policies, or (vi) any act, omission or failure to act by the Participant which
the Plan Administrator determines, in its sole discretion, constitutes Cause.
For purposes of this paragraph, no act, or failure to act, on the Participant's
part shall be considered "willful" unless done, or omitted to be done, by the
Participant not in good faith and without reasonable belief that the
Participant's action or omission was in the best interest of the Company.

VI.      EXCLUSION

This Plan will not provide any benefits in the event of a transaction involving
a spinoff, corporate sale, sale of assets or a legal or organizational
restructuring of one or more subsidiaries, segments or divisions of the Company,
including any Employer, or for intercompany transfers within the Company and its
subsidiaries. In the event that a Participant receives benefits pursuant to an
Agreement for Key Executives between the Company and the Participant, the
Participant shall not be entitled to any benefits pursuant to this Plan.

VII.     EMPLOYMENT AGREEMENTS

Any Severance Payments payable pursuant to this Plan shall be reduced by any
amounts payable pursuant to an employment or similar agreement between Employer
and the Participant upon Participant's termination of employment.

VIII.    PLAN YEAR

The Plan operates on a calendar year basis until amended or terminated by the
Company.

                                       5
<PAGE>

                         SENIOR MANAGEMENT SEVERANCE PAY

                                  ATTACHMENT A

The following legal entities or segments have adopted this Plan as an Employer
as that term is used in the Plan for purposes of determining eligibility.

Performance Food Group Company

Fresh Express Inc.

Customized Distribution

Broadline Distribution

                                       6

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