Document:

Exhibit 10.2

Exhibit 10.2

PLEDGE AGREEMENT

 

PLEDGE AGREEMENT dated as of January 21, 2005, between Matria Healthcare, Inc., a Delaware corporation formerly known as Matria Holding Company, Inc. (the "Grantor"), and HFG Healthco-4 LLC, a Delaware limited liability company (the "Lender").

 

PRELIMINARY STATEMENTS. The Lender has entered into that certain Loan and Security Agreement dated as of October 22, 2002, by and among Matria Women’s and Children’s Healthcare, Inc., a Delaware corporation ("Matria WCH"), as the successor by merger to Matria Healthcare, Inc., a Delaware corporation, Diabetes Acquisition, Inc., a Georgia corporation, Gainor Medical Acquisition Company, a Georgia corporation, Diabetes Management Solutions, Inc., a Delaware corporation, Diabetes Self Care, Inc., a Virginia corporation, Matria Laboratories, Inc., a Delaware corporation, Facet Technologies, LLC, a Georgia limited liability company, Matria of New York, Inc., a New York corporation, Matria Healthcare of Illinois, Inc., a Georgia corporation and Quality Oncology, Inc., a Delaware corporation, as Borrowers, and the Lender (as amended, modified or supplemented from time to time in accordance with its terms, including by that certain Consent Agreement and Amendment No. 6 to Loan and Security Agreement dated as of December 31, 2004, the "LSA").

 

The Lender has agreed to extend Revolving Advances and certain other financial accommodations to the Borrowers pursuant to, and subject to the terms and conditions of, the LSA. The Grantor is the sole shareholder of Matria WCH and is benefitting from the transactions described in the LSA and is a beneficiary thereof.

 

The Grantor has agreed, pursuant to the terms of the Consent Agreement and Amendment No. 6 referred to above (the "Consent Agreement") to execute and deliver the Guarantee dated as of even date herewith in favor of the Lender and a pledge agreement in the form hereof to secure the Guaranteed Obligations (as such term is defined in the Guarantee) and all other obligations of the Grantor under the Guarantee and this Pledge Agreement, including without limitation any and all reasonable costs and expenses (including reasonable counsel fees and expenses) paid or incurred in enforcing any rights under the Guarantee or this Pledge Agreement (the "Obligations").

 

NOW, THEREFORE, the Grantor and the Lender hereby agree as follows: 

 

1.  Pledge. As security for the payment and performance in full of the Obligations, the Grantor hereby transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over, endorses over, and delivers unto the Lender, and grants to the Lender, for its own benefit, a security interest in, (a) the shares of capital stock, limited liability company interests and membership interests listed in Schedule I annexed hereto next to the Grantor’s name (the "Initial Pledged Equity") and any additional shares of common stock, limited liability company interests and membership interests of the Borrowers and any other subsidiaries of the Grantor obtained in the future by the Grantor (collectively, the Initial Pledged Equity together with all such additional shares, limited liability company interests or membership interests pledged in the future, the "Pledged Equity") and (b) subject to Section 5 below, all proceeds of the Pledged Equity, including, without limitation, all cash, securities or other property at any time and from time to time receivable or otherwise distributed in respect of or in exchange for any of or all such Pledged Equity (the items referred to in clauses (a) and (b) being collectively called the "Collateral"). Upon delivery to the Lender, any securities now or hereafter included in the Collateral including, without limitation, the Pledged Equity (the "Pledged Securities") shall be accompanied by undated stock powers duly executed in blank in the form attached hereto as Exhibit A or other instruments of transfer reasonably satisfactory to the Lender and by such other instruments and documents as the Lender may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule showing a description of the securities theretofore and then being pledged hereunder, which schedule shall be attached hereto as Schedule I and made a part hereof. Each schedule so delivered shall supplement or supersede, as applicable, any prior schedules so delivered.

 

2.  Delivery of Collateral. The Grantor agrees to deliver promptly or cause to be delivered to the Lender any and all Pledged Securities, and any and all certificates or other instruments or documents representing any of the Collateral (together with any necessary endorsement).

 

3.  Representations, Warranties and Covenants. The Grantor hereby represents, warrants and covenants to and with the Borrower and the Lender that:

 

(a)  It is a corporation, duly incorporated, validly existing and in good standing under the laws of the state of its incorporation set forth in the preamble hereto, and is duly qualified to do business, and is in good standing, in every jurisdiction where the nature of its business requires it to be so qualified, except where the failure to be so qualified could not reasonably be expected to result in a Material Adverse Effect. For the purposes of this Pledge Agreement, "Material Adverse Effect" means any event, condition, change or effect that (i) has a materially adverse effect on the business, Properties, capitalization, assets, liabilities, operations or financial condition of the Grantor, (ii) materially impairs the ability of the Grantor to perform its obligations under this Pledge Agreement, or (iii) materially impairs the validity or enforceability of, or materially impairs the rights, remedies or benefits available to the Lender under this Pledge Agreement or any other Document.

 

(b)  The execution, delivery and performance by it of this Pledge Agreement and the actions contemplated hereby (i) are within its corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) do not contravene (1) its charter or its bylaws, (2) any law, rule or regulation applicable to it, (3) any contractual restriction binding on or affecting it or its Property, or (4) any order, writ, judgment, award, injunction or decree binding on or affecting it or its Property, and (iv) do not result in or require the creation of any Lien upon or with respect to any of its Properties, other than in favor of the Lender pursuant to the terms hereof. This Pledge Agreement has been duly executed and delivered by it.

 

(c)  This Pledge Agreement constitutes the legal, valid and binding obligation of the Grantor, enforceable against the Grantor in accordance with its terms, except as limited by bankruptcy, insolvency, moratorium, fraudulent conveyance or other laws relating to the enforcement of creditors' rights generally and general principles of equity (regardless of whether enforcement is sought at equity or law).

 

(d)  No consent, approval, authorization or other action by, and no notice to or of, or declaration or filing with, any governmental or other public body, or any other Person, is required for the due authorization, execution, delivery and performance by the Grantor of this Pledge Agreement or the consummation of the transactions contemplated hereby, except for disclosure filings required by applicable securities laws and such filings or notices as may be necessary to perfect the Lien granted to the Lender pursuant to this Agreement;

 

(e)  Except as disclosed on Schedule II hereto, there is no pending or, to its knowledge, threatened action or proceeding or injunction, writ or restraining order affecting it before any court, Governmental Entity or arbitrator which could reasonably be expected to result in a Material Adverse Effect.

 

(f)  No proceeding referred to in paragraph (h) of Exhibit V of the LSA is pending against the Grantor and no other event referred to in such paragraph (h) of such Exhibit V has occurred and is continuing with respect to the Grantor, and the property of the Grantor is not subject to any assignment for the benefit of creditors;

 

(g)  The Grantor is the sole shareholder of Matria WCH and Matria WCH has no outstanding rights, options, warrants or agreements pursuant to which it may be required to sell any of its capital stock interests;

 

(h)  Except for the security interest granted to the Borrower and assigned to the Lender, the Grantor (i) is and will at all times continue to be the direct owner, beneficially and of record, of the Pledged Securities that it is pledging hereunder, (ii) holds the Collateral that it is pledging hereunder free and clear of all Liens, charges, encumbrances and security interests of every kind and nature, and the Pledged Equity is subject to no options to purchase or any similar or other rights of any person, (iii) will make no assignment, pledge, hypothecation or transfer of, or create any security interest in, the Collateral that it is pledging hereunder including, without limitation, by virtue of becoming bound by any agreement which restricts in any manner the rights of any present or future holder of any Pledged Equity with respect thereto, and (iv) subject to Section 5 below, will cause any and all Pledged Securities and other certificates, instruments or documents evidencing or representing any of the Collateral, whether for value paid by the Grantor or otherwise, to be forthwith deposited with the Lender and pledged or assigned hereunder.

 

(i)  The Grantor (i) has good right and legal authority to pledge the Collateral it is pledging hereunder in the manner hereby done or contemplated, (ii) will not amend, modify or supplement any Pledged Equity without the prior written consent of the Borrower and the Lender, nor forgive any indebtedness evidenced by any Pledged Equity, and (iii) will defend its title or interest thereto or therein against any and all attachments, Liens, claims, encumbrances, security interests or other impediments of any nature, however arising, of all persons whomsoever.

 

(j)  No consent or approval of any governmental body or regulatory authority or any securities exchange was or is necessary to the validity of the pledge effected hereby;

 

(k)  By virtue of the execution and delivery by the Grantor of this Pledge Agreement, when the certificates, instruments or other documents representing or evidencing the Collateral are delivered to the Lender in accordance with this Pledge Agreement and UCC financing statement in the form attached hereto as Exhibit B are filed in the appropriate jurisdictions, the Lender will obtain a valid and perfected first Lien upon and security interest in such Collateral as security for the repayment of the Obligations, prior to all other Liens and encumbrances thereon and security interests therein.

 

(l)  The pledge effected hereby is effective to vest in the Lender the rights in the Collateral as set forth herein.

 

(m)  All of the Pledged Equity has been duly authorized and validly issued and as at the date hereof, the Initial Pledged Equity constitutes all of the issued and outstanding shares of capital stock of the issuers listed on Schedule I annexed hereto.

 

(n)  The Grantor is located in the State of formation set forth in the preamble hereto for the purposes of Section 9-307 of the UCC as in effect in the State of New York.

 

All representations, warranties and covenants of the Grantor contained in this Pledge Agreement shall survive the execution, delivery and performance of this Pledge Agreement until the termination of this Pledge Agreement pursuant to Section 14 hereof.

 

4.  Registration in Nominee Name; Denominations. Upon the occurrence and during the continuance of an Event of Default, the Lender shall have the right (in their sole and absolute discretion with subsequent notice to the Grantor) to transfer to or to register the Pledged Securities in their own name or the name of their nominee. In addition, the Lender shall at all times following the occurrence and during the continuance of an Event of Default have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Pledge Agreement.

 

5.  Voting Rights; Dividends; etc.

 

(a)  Unless and until an Event of Default under the LSA ("Event of Default") shall have occurred and be continuing:

 

(i)  The Grantor shall be entitled to exercise any and all voting and/or consensual rights and powers accruing to an owner of Pledged Securities or any part thereof for any purpose not inconsistent with the terms of this Pledge Agreement provided that such action would not adversely affect the rights inuring to the Grantor and its successors, transferees and assigns, including, without limitation, the Lender, under this Pledge Agreement or adversely affect the rights and remedies of the Lender under this Pledge Agreement or the ability of the Lender to exercise the same.

 

(ii)  The Lender shall execute and deliver to the Grantor, or cause to be executed and delivered to the Grantor, all such proxies, powers of attorney, and other instruments as the Grantor may reasonably request for the purpose of enabling the Grantor to exercise the voting and/or consensual rights and powers which they are entitled to exercise pursuant to subparagraph (i) above.

 

(iii)  The Grantor shall be entitled to receive and retain any and all cash dividends paid on the Pledged Securities only to the extent that such cash dividends are permitted by, and otherwise paid in accordance with the terms and conditions of, the LSA and applicable laws. Any and all

 

a.    noncash dividends,

 

b.    stock or dividends paid or payable in cash or otherwise in connection with a partial or total liquidation or dissolution, and

 

c.    instruments, securities, other distributions in property, return of capital, capital surplus or paid-in surplus or other distributions made on or in respect of Pledged Securities (other than dividends permitted by this Section 5(a)(iii)), whether paid or payable in cash or otherwise, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise (together with a. and b. above, "Distributions"), shall be and become part of the Collateral. If any Distributions are received by the Grantor upon the occurrence or during continuance of an Event of Default or otherwise in violation of this Agreement, the LSA or any other Document (as such term is defined in the LSA), such Distribution shall not be commingled by the Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Lender and shall be forthwith delivered to the Lender in the same form as so received (with any necessary endorsement).

 

(b)  Upon the occurrence and during the continuance of an Event of Default, all rights of the Grantor to receive any dividends, stock, instruments, securities and other distributions which the Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 5 shall cease, and all such rights shall thereupon become vested in the Lender, which shall have the sole and exclusive right and authority to receive and retain such dividends. All dividends which are received by the Grantor contrary to the provisions of this Section 5(b) shall be received in trust for the benefit of the Lender, shall be segregated from other property or funds of the Grantor and shall be forthwith delivered to the Lender as Collateral in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by the Lender pursuant to the provisions of this Section 5 (b) shall be retained by the Lender in an account to be established by the Lender upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 8 hereof.

 

(c)  Upon the occurrence and during the continuance of an Event of Default, all rights of the Grantor to exercise the voting and consensual rights and pursuant to the irrevocable proxy granted herein, powers which it is entitled to exercise pursuant to Section 5(a)(i) shall cease, and all such rights shall thereupon become vested in the Lender, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers.

 

(d)  In order to permit the Lender to exercise the voting and other consensual rights which it may be entitled to exercise pursuant to Section 5(c) and to receive all dividends and other distributions which it may be entitled to receive under Section 5(a)(iii) or Section 5(b), the Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Lender all such proxies, dividend payment orders and other instruments as the Lender may from time to time reasonably request.

 

Without limiting the effect of the foregoing, the Grantor does hereby constitute and appoint the Lender as its proxy, and the Lender shall have the right, upon the occurrence and during the continuance of an Event of Default, to exercise all rights, benefits, privileges and powers accruing to the Grantor, as owner of the Pledged Securities, including, without limitation, giving or withholding consent, calling and attending shareholders to be held from time to time with full power to vote and act for and in the name, place, and stead of the Grantor and in the same manner, to the same extent, and with the same effect that the Grantor would if personally present at such meetings, giving to the Lender full power of substitution and revocation, which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Equity on the record books of the issuer thereof) by any person (including the issuer of the Pledged Equity or any officer or agent thereof).

 

THIS PROXY IS IRREVOCABLE

 

Any proxy or proxies heretofore given by the Grantor to any person or persons whatsoever are hereby revoked. This proxy shall continue in full force and effect until such time as all Obligations are paid and satisfied in full.

 

6.  Issuance of Additional Stock. The Grantor agrees that it will cause each of its subsidiaries not to issue any stock, limited liability company interests and other securities to any Person other than the Grantor, whether in addition to, by stock dividend or other distribution upon, or in substitution for, the Pledged Securities or otherwise; provided, however, that if an Event of Default shall have occurred or is continuing, Grantor will not permit its subsidiaries to issue any stock or other securities to any Person whatsoever.

 

7.  Remedies upon Event of Default. If an Event of Default shall have occurred and be continuing, the Lender may sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Lender shall deem appropriate. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of the Grantor, and the Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which the Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

 

The Lender shall give the Grantor 10 days’ written notice (which the Grantor agrees is reasonable notice within the meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in New York) of the Lender’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Lender may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Lender may (in its sole and absolute discretion) determine. The Lender shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Lender may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Lender until the sale price is paid by the purchaser or purchasers thereof, but the Lender shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public sale made pursuant to this Section 7, the Lender may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay or appraisal on the part of the Grantor (all said rights being also hereby waived and released to the extent permitted by law), with respect to the Collateral or any part thereof offered for sale and the Lender may make payment on account thereof by using any claim then due and payable to the Lender from the Grantor as a credit against the purchase price, and the Lender may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to the Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Lender shall be free to carry out such sale and purchase pursuant to such agreement, and the Grantor shall not be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Lender shall have entered into such an agreement all defaults under the LSA and the Guarantee shall have been remedied and the Obligations paid in full. The Grantor shall remain liable for any deficiency. As an alternative to exercising the power of sale herein conferred upon it, the Lender may proceed by a suit or suits at law or in equity to foreclose this Pledge Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver.

 

8.  Application of Proceeds of Sale. The proceeds of any sale of Collateral, as well as any Collateral consisting of cash, shall be applied by the Lender promptly as follows:

 

FIRST, to the payment of all reasonable costs and expenses reasonably incurred by the Lender in connection with such sale or otherwise in connection with this Pledge Agreement or any of the Obligations, including, but not limited to, all court costs and the reasonable fees and expenses of the Lender and its legal counsel, the repayment of all advances made by the Lender on behalf of the Grantor and as specified to the Grantor and any other reasonable costs or expenses incurred in connection with the exercise of any right or remedy hereunder;

 

SECOND, to the Lender to the payment in full of all Obligations; and 

 

LAST, to the Grantor, its successors or assigns, or as a court of competent jurisdiction may otherwise direct.

 

9.  The Lender Appointed Attorney-in-Fact. The Grantor hereby appoints the Lender its attorney-in-fact effective upon the occurrence of an Event of Default for the purpose of carrying out the provisions of this Pledge Agreement and taking any action and executing any instrument which the Lender may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Lender shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution in the name of the Grantor, to ask for, demand, sue for, collect, receive receipt and give acquittance for any and all moneys due or to become due and under and by virtue of any Collateral, to endorse checks, drafts, orders and other instruments for the payment of money payable to the Grantor representing any interest or dividend, or other distribution payable in respect of the Collateral or any part thereof or on account thereof and to give full discharge for the same, to settle, compromise, prosecute or defend any action, claim or proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer and make any agreement respecting, or otherwise deal with, the same; provided, however, that nothing herein contained shall be construed as requiring or obligating the Lender to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Lender, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby, and no action taken by the Lender, or omitted to be taken with respect to the Collateral or any part thereof shall give rise to any defense, counterclaim or offset in favor of the Grantor or to any claim or action against the Lender in the absence of the gross negligence or wilful misconduct of the Lender.

 

10.  No Waiver. No failure on the part of the Lender to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by the Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The Lender shall not be deemed to have waived any rights hereunder or under any other agreement or instrument unless such waiver shall be in writing and signed by the Lender.

 

11.  Registration, etc. The Grantor agrees that, upon the occurrence and during the continuance of an Event of Default, if for any reason the Lender desires to sell any of the Pledged Securities at a public sale, it will, at any time and from time to time, upon the written request of the Lender, take or to cause the issuer of such Pledged Securities to take such action and to prepare, distribute and/or file such documents, as are required or advisable in the opinion of counsel for the Lender to permit the public sale of such Pledged Securities. The Grantor further agrees to indemnify, defend and hold harmless the Lender, any member of the Lender Group (as defined in the LSA) and any underwriter and their respective officers, directors, affiliates and controlling persons (within the meaning of Section 20 of the Securities Exchange Act of 1934) from and against all loss, liability, expenses, costs, fees and disbursements of counsel (including, without limitation, a reasonable estimate of the cost to the Lender of legal counsel), and claims (including the costs of investigation) which they may incur insofar as such loss, liability, expense or claim arises out of or is based upon any untrue statement of a material fact contained in any prospectus (or any amendment or supplement thereto) or in any notification or offering circular, or arises out of or is based upon any omission to state a material fact required to be stated therein or necessary to make the statements in any thereof not misleading, except in so far as the same arises out of any untrue statement or omission based upon information furnished in writing to the Grantor or the issuer of such Pledged Securities by the Lender, any member of the Lender Group or the underwriter expressly for use therein. The Lender (with respect to such information furnished by it) shall indemnify, defend and hold harmless the Grantor or the issuer of such Pledged Securities and their respective officers, directors, affiliates and controlling persons (within the meaning of Section 20 of the Securities Exchange Act of1934) upon the same terms as are applicable to the Grantor pursuant hereto. The Grantor further agrees to use its best efforts to qualify, file or register, or cause the issuer of such Pledged Securities to qualify, file or register, any of the Pledged Securities under the Blue Sky or other securities laws of such states as may be requested by the Lender upon the occurrence and during the continuance of an Event of Default and keep effective, or cause to be kept effective, all such qualifications, filings or registrations. The Grantor will bear all costs and expenses of carrying out its obligations under this Section 11. The Grantor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section 11 and that such30997105.WPD 10failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section 11 may be specifically enforced.

 

12.  Security Interest Absolute. All rights of the Lender hereunder, the grant of a security interest in the Collateral and all obligations of the Grantor hereunder, shall be absolute and unconditional irrespective of (i) any lack of validity or enforceability of the LSA, the Guarantee, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (ii) any change in time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the LSA, the Guarantee or any other agreement or instrument, (iii) any exchange, release or nonperfection of any other collateral, or any release or amendment or waiver of or consent to or departure from any guarantee, for all or any of the Obligations or (iv) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Grantor in respect of the Obligations or in respect of this Pledge Agreement.

 

13.  Lender’s Fees and Expenses. The Grantor shall be obligated to, upon demand, pay to the Lender the amount of any and all reasonable expenses, including the reasonable fees and expenses of their respective counsel and of any experts or agents which the Lender may incur in connection with (i) the negotiation, preparation, execution and delivery and administration of this Pledge Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of the Lender hereunder or (iv) the failure by the Grantor to perform or observe any of the provisions hereof. In addition, the Grantor indemnifies and holds the Lender harmless from and against any and all liability incurred by the Lender hereunder or in connection herewith, unless such liability shall be due to the gross negligence or wilful misconduct of the Lender, as the case may be. Any such amounts payable as provided hereunder or thereunder shall be additional Obligations secured hereby.

 

14.  Termination. This Pledge Agreement shall terminate when (a) all of the Obligations have been fully paid in immediately available funds and (b) the Lender has no further commitment to make any advances under the LSA, at which time the Lender shall reassign and deliver to the Grantor, or to such person or persons as the Grantor shall designate, against receipt, such of the Collateral (if any) as shall not have been sold or otherwise still be held by it hereunder, together with appropriate instruments of reassignment and release, including delivery of Uniform Commercial Code termination statements and similar documents reasonably requested by the Grantor; provided, however, that all indemnities of the Grantor contained in this Pledge Agreement shall survive, and remain operative and in full force and effect regardless of, the termination of this Pledge Agreement. Any such reassignment shall be without recourse to or warranty by the Lender and at the expense of the Grantor.

 

15.  Notices. All communications and notices hereunder shall be in writing and given as provided in the LSA (with respect to the Grantor, to the address of the Authorized Representative as set forth in the Loan Agreement).

 

16.  Further Assurances. The Grantor agrees to do such further acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, as the Lender may at any time reasonably request in connection with the administration and enforcement of this Pledge Agreement or with respect to the Collateral or any part thereof or in order better to assure and confirm unto the Lender its rights and remedies hereunder.

 

17.  ASSIGNABILITY. NEITHER THE GRANTOR NOR ITS SUCCESSORS AND ASSIGNS SHALL ASSIGN ITS RIGHTS OR OBLIGATIONS HEREUNDER OR ANY INTEREST HEREIN WITHOUT THE PRIOR WRITTEN CONSENT OF THE LENDER. THE GRANTOR HEREBY ACKNOWLEDGES AND CONFIRMS THAT, AS COLLATERAL SECURITY FOR ANY AND ALL OBLIGATIONS OF THE GRANTOR PURSUANT TO THE GUARANTEE AND HEREUNDER, THE BORROWER IS GRANTING TO THE LENDER, WHICH IS FURTHER GRANTING TO ITS LENDERS, A SECURITY INTEREST IN, AND COLLATERAL ASSIGNMENT OF, THIS PLEDGE AGREEMENT AND ALL OF THE GRANTOR’S RIGHTS, TITLE AND INTERESTS HEREUNDER , INCLUDING, ALL MONIES DUE OR TO BECOME DUE TO THE GRANTOR, UNDER OR IN CONNECTION WITH THIS PLEDGE AGREEMENT.

 

18.  Binding Agreement; Assignments. This Pledge Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Grantor shall not be permitted to assign this Pledge Agreement or any interest herein or in the Collateral, or any part thereof, or otherwise pledge, encumber or grant any option with respect to the Collateral, or any part thereof, or any cash or property held by the Lender as Collateral under this Pledge Agreement.

 

19.  GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATION LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES THEREOF).

 

20.  Severability. In case any one or more of the provisions contained in this Pledge Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired.

 

21.  Counterparts. This Pledge Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument. This Pledge Agreement shall be effective when a counterpart which bears the signature of the Grantor shall have been delivered to the Lender.

 

22.  Section Headings. Section headings used herein are for convenience only and are not to affect the construction of, or be taken into consideration in interpreting, this Pledge Agreement.

 

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

 

	 	 	 
	 	MATRIA HEALTHCARE, INC.
	 
 	 
 	 
 
		By:  	/s/ Stephen M. Mengert
	 	

Name: Stephen M. Mengert
	 	Title: Vice President Finance and Chief Financial Officer

 

	 	 	 
	 	HFG HEALTHCO-4, LLC., as Lender
	 
 	 
 	 
 
		By:  	/s/ Mary L. Brady
	 	

Name: Mary L. Brady
	 	Title: Vice PresidentQuickLinks
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Exhibit 10.2  

 
 

DOLLAR FINANCIAL CORP.
  2005 STOCK INCENTIVE PLAN    
    

        1.     Purposes of the Plan. The purposes of this Plan are: 

        (a)   to
attract and retain the best available personnel for positions of substantial responsibility, 

        (b)   to
provide additional incentive to selected key Employees, Consultants and Directors, and 

        (c)   to
promote the success of the Company's business. 

        2.     Definitions. For the purposes of this Plan, the following terms will have the following meanings: 

        (a)   "Administrator" means the Board or any of its Committees that administer the Plan, in accordance with Section 4. 

        (b)   "Applicable Laws" means the legal requirements relating to the administration of and issuance of securities under stock
incentive plans, including, without limitation, the requirements of state corporations law, federal and state securities law, federal and state tax law, and the requirements of any stock exchange or
quotation system upon which the Shares may then be listed or quoted. For all purposes of this Plan, references to statutes and regulations shall be deemed to include any successor statutes and
regulations, to the extent reasonably appropriate as determined by the Administrator. 

        (c)   "Board" means the Board of Directors of the Company. 

        (d)   "Cause" shall have the meaning set forth in a Grantee's employment or consulting agreement with the Company (if any), or
if not defined therein, shall mean (i) acts or omissions by the Grantee which constitute intentional material misconduct or a knowing violation of a material policy of the Company or any of its
subsidiaries, (ii) the Grantee personally receiving a benefit in money, property or services from the Company or any of its subsidiaries or from another person dealing with the Company or any
of its subsidiaries, in material violation of applicable law or Company policy, (iii) an act of fraud, conversion, misappropriation, or embezzlement by the Grantee or his conviction of, or
entering a guilty plea or plea of no contest with respect to, a felony, or the equivalent thereof (other than DUI), or (iv) any material misuse or improper disclosure of confidential or
proprietary information of the Company. 

        (e)   "Code" means the Internal Revenue Code of 1986, as amended. For all purposes of this Plan, references to Code sections
shall be deemed to include any successor Code sections, to the extent reasonably appropriate as determined by the Administrator. 

        (f)    "Committee" means a Committee appointed by the Board in accordance with Section 4. 

        (g)   "Common Stock" means the common stock, $0.001 par value per share, of the Company. 

        (h)   "Company" means Dollar Financial Corp., a Delaware corporation. 

        (i)    "Consultant" means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render
bona fide services and who is compensated for such services, provided that the term "Consultant" does not include (i) Employees or (ii) Directors who are paid only a director's fee by
the Company or who are not compensated by the Company for their services as Directors or (iii) any person who provides services in connection with the offer or sale of securities in a
capital-raising transaction, or who directly or indirectly promotes or maintains a market for the securities of the Company. 

        (j)    "Continuous Status as an Employee, Director or Consultant" means that the employment, director or consulting relationship
is not interrupted or terminated by the Company, 

 

any
Parent or Subsidiary, or by the Employee, Director or Consultant. Continuous Status as an Employee, Director or Consultant will not be considered interrupted in the case of: (i) any leave
of absence approved by the Board or required by Applicable Law, including sick leave, military leave, or any other personal leave, provided, that for
purposes of Incentive Stock Options, any such leave may not exceed 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract (including certain Company policies)
or statute; (ii) transfers between locations of the Company or between the Company, its Parent, its Subsidiaries or its successor, or (iii) in the case of a Nonqualified Stock Option or
Stock Award, the ceasing of a person to be an Employee while such person remains a Director or Consultant, the ceasing of a person to be a Director while such person remains an Employee or Consultant,
or the ceasing of a person to be a Consultant while such person remains an Employee or Director. 

        (k)   "Director" means a member of the Board. 

        (l)    "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code. 

        (m)  "Employee" means any person, including Officers and Directors employed as a common law employee by the Company or any
Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director's fee by the Company will be sufficient, in and of itself, to constitute "employment" by the Company. 

        (n)   "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        (o)   "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: 

        (i)    If
the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, NASDAQ, the Fair Market Value of a Share of
Common Stock will be (A) the closing sales price for such stock (or the closing bid, if no sales are reported) as quoted on that system or exchange (or the system or exchange with the greatest
volume of trading in Common Stock) on the last market trading day prior to the day of determination, or (B) any sales price for such stock (or the closing bid, if no sales are reported) as
quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Common Stock) on the day of determination, as the Administrator may select, as reported in the  Wall Street
Journal or any other source the Administrator considers reliable. 

        (ii)   If
the Common Stock is regularly quoted by recognized securities dealers but selling prices are not reported, the Fair Market Value of a Share of Common Stock will be
the mean between the high bid and low asked prices for the Common Stock on (A) the last market trading day prior to the day of determination, or (B) the day of determination, as the
Administrator may select, as reported in the Wall Street Journal or any other source the Administrator considers reliable. 

        (iii)  If
the Common Stock is not traded as set forth above, the Fair Market Value will be determined in good faith by the Administrator with reference to the earnings
history, book value and prospects of the Company in light of market conditions generally, and any other factors the Administrator considers appropriate, such determination by the Administrator to be
final, conclusive and binding. 

        (p)   "Family Member" means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Grantee's household (other than a tenant or employee), a
trust in which these persons 

2

 

(or
the Grantee) control the management of assets, and any other entity in which these persons (or the Grantee) own more than 50% of the voting interests. 

        (q)   "Grant Notice" shall mean a written notice evidencing certain terms and conditions of an individual Option grant. The
Grant Notice is part of the Option Agreement. 

        (r)   "Grantee" shall mean (i) any Optionee or (ii) any Employee, Consultant or Director to whom a Stock Award
has been granted pursuant to this Plan. 

        (s)   "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder. 

        (t)    "NASDAQ" means the Nasdaq Stock Market, Inc. 

        (u)   "Nonqualified Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 

        (v)   "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder. 

        (w)  "Option" means a stock option granted under this Plan. 

        (x)   "Option Agreement" means a written agreement between the Company and an Optionee evidencing the terms and conditions of
an individual Option grant. Each Option Agreement is subject to the terms and conditions of this Plan. 

        (y)   "Optioned Stock" means the Common Stock subject to an Option. 

        (z)   "Optionee" means an Employee, Consultant or Director who holds an outstanding Option. 

        (aa) "Parent" means a "parent corporation" with respect to the Company, whether now or later existing, as defined in
Section 424(e) of the Code. 

        (bb) "Plan" means this 2005 Stock Incentive Plan. 

        (cc) "Section" means, except as otherwise specified, a section of this Plan. 

        (dd) "Share" means a share of the Common Stock, as adjusted in accordance with Section 15. 

        (ee) "Stock Award" shall mean a grant or sale by the Company of a specified number of Shares upon terms and conditions
determined by the Administrator. 

        (ff)  "Subsidiary" means (i) a "subsidiary corporation" with respect to the Company, whether now or later existing, as
defined in Section 424(f) of the Code, or (ii) a limited liability company, whether now or later existing, which would be a "subsidiary corporation" with respect to the Company under
Section 424(f) of the Code if it were a corporation. 

        3.     Stock Subject to the Plan. Subject to the provisions of Section 15 of the Plan, the maximum aggregate number of
Shares which may be issued under the Plan will be 1,718,695 Shares of Common Stock. The Shares may be authorized, but unissued, or reacquired Common Stock. 

        If
an Option expires or becomes unexercisable without having been exercised in full, or if a Stock Award shall be cancelled or surrendered or expire for any reason without having been
received in full, the Shares that were not purchased or received or that were cancelled will become available for future grant or sale under the Plan (unless the Plan has terminated). If the Company
purchases Shares which were issued pursuant to the exercise of an Option or grant of a Stock Award, however, those purchased Shares will not be available for future grant under the Plan. 

3

 

        4.     Administration of the Plan. 

        (a)   Procedure. 

        (i)    Composition of the Administrator. The Plan will be administered by (A) the Board, or (B) a Committee
designated by the Board, which Committee will be constituted to satisfy Applicable Laws. Once appointed, a Committee will serve in its designated capacity until otherwise directed by the Board. The
Board may increase the size of the Committee and appoint additional members, remove members (with or without cause) and substitute new members, fill vacancies (however caused), and remove all members
of the Committee and thereafter directly administer the Plan. Notwithstanding the foregoing, unless the Board expressly resolves to the contrary, from and after such time as the Company is registered
pursuant to Section 12 of the Exchange Act, the Plan will be administered only by a Committee, which will then consist solely of persons who are both "non-employee directors" within
the meaning of Rule 16b-3 promulgated under the Exchange Act and "outside directors" within the meaning of Section 162(m) of the Code; provided, however, the failure of the
Committee to be composed solely of individuals who are both "non-employee directors" and "outside directors" shall not render ineffective or void any awards or grants made by, or other
actions taken by, such Committee. 

        (ii)   Multiple Administrative Bodies. The Plan may be administered by different bodies with respect to Directors, Officers who
are not Directors, and Employees and Consultants who are neither Directors nor Officers. 

        (b)   Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the
specific duties delegated by the Board to that Committee, the Administrator will have the authority, in its discretion: 

        (i)    to
determine the Fair Market Value of the Common Stock, in accordance with Section 2(o); 

        (ii)   to
select the Consultants, Employees or Directors to whom Options or Stock Awards may be granted; 

        (iii)  to
determine whether and to what extent Options or Stock Awards are granted, and whether Options are intended as Incentive Stock Options or Nonqualified Stock Options; 

        (iv)  to
determine the number of Shares to be covered by each Option or Stock Award granted; 

        (v)   to
approve forms of Grant Notices, Option Agreements and agreements governing Stock Awards; 

        (vi)  to
determine the terms and conditions, not inconsistent with the terms of this Plan, of any grant of Options or Stock Awards, including, but not limited to,
(A) the Options' exercise price, (B) the time or times when Options may be exercised or Stock Awards will be vested, which may be based on performance criteria or other reasonable
conditions such as Continuous Status as an Employee, Director or Consultant, (C) any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any
Option, Optioned Stock or Stock Award, based in each case on factors that the Administrator determines in its sole discretion, including but not limited to a requirement subjecting the Optioned Stock
or Shares to (1) certain restrictions on transfer (including without limitation a prohibition on transfer for a specified period of time and/or a right of first refusal in favor of the
Company), and (2) a right of repurchase in favor of the Company upon termination of the Grantee's Continuous Status as an Employee, Director or Consultant; 

4

 

        (vii) to
determine the terms and restrictions applicable to Options or Stock Awards; 

        (viii) to
modify or amend each Option or Stock Award, subject to Section 17(c); 

        (ix)  to
authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator; 

        (x)   to
accelerate the vesting or exercisability of an Option or Stock Award; 

        (xi)  to
construe and interpret the terms of this Plan; 

        (xii) to
prescribe, amend, and rescind rules and regulations relating to the administration of this Plan; and 

        (xiii) to
make all other determinations it considers necessary or advisable for administering this Plan. 

        (c)   Effect of Administrator's Decision. The Administrator's decisions, determinations and interpretations will be final and
binding on all holders of Options or Stock Awards. The Administrator shall not be required to exercise its authority or discretion on a uniform or nondiscriminatory basis. 

        5.     Eligibility. Options granted under this Plan may be Incentive Stock Options or Nonqualified Stock Options, as determined
by the Administrator at the time of grant. Nonqualified Stock Options and Stock Awards may be granted to Employees, Consultants and Directors. Incentive Stock Options may be granted only to Employees;
provided, however, that Incentive Stock Options shall not be granted to Employees of a Subsidiary that is a limited liability company unless such limited liability company is wholly-owned by the
Company or by a Subsidiary that is a corporation. If otherwise eligible, an Employee, Consultant or Director who has been granted an Option or a Stock Award may be granted additional Options or Stock
Awards. 

        6.     Limitations on Grants of Incentive Stock Options. Each Option will be designated in the Grant Notice as either an
Incentive Stock Option or a Nonqualified Stock Option. However, notwithstanding such designations, if the Shares subject to an Optionee's Incentive Stock Options (granted under all plans of the
Company or any Parent or Subsidiary), which become exercisable for the first time during any calendar year, have a Fair Market Value in excess of $100,000, the Options accounting for this excess will
be treated as Nonqualified Stock Options. For purposes of this Section 6, Incentive Stock Options will be taken into account in the order in which they were granted, and the Fair Market Value
of the Shares will be determined as of the time of grant. 

        7.     Limit on Annual Grants to Individuals. From and after such time as the Company is required to be registered pursuant to
Section 12 of the Exchange Act, no Optionee may receive grants, during any fiscal year of the Company or portion thereof, of Options which, in the aggregate, cover more than 500,000 Shares,
subject to adjustment as provided in Section 15. If an Option expires or terminates for any reason without having been exercised in full, the unpurchased shares subject to that expired or
terminated Option will continue to count against the maximum numbers of shares for which Options may be granted to an Optionee during any fiscal year of the Company or portion thereof. 

        8.     Term of the Plan. Subject to Section 21, this Plan will become effective upon the earlier to occur of its adoption
by the Board or its approval by the shareholders of the Company as described in Section 21. It will continue in effect for a term of ten years unless terminated earlier under Section 17.
Unless otherwise provided in this Plan, its termination will not affect the validity of any Option or Stock Award outstanding at the date of termination, which shall continue to be governed by the
terms of this Plan as though it remained in effect. 

        9.     Term of Option. The term of each Option will be stated in the Option Agreement;  provided, however, that in no event may
the term be more than ten years from the date of grant. In
addition, in 

5

 

the
case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the voting power of all classes of capital
stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five years from the date of grant or any shorter term specified in the Option Agreement. 

        10.   Option Exercise Price and Consideration. 

        (a)   Exercise Price of Incentive Stock Options. The exercise price for Shares to be issued pursuant to exercise of an
Incentive Stock Option will be determined by the Administrator provided that the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant; provided,
further that in the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the voting power of all
classes of capital stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant. 

        (b)   Exercise Price of Nonqualified Stock Options. In the case of a Nonqualified Stock Option, the exercise price for Shares
to be issued pursuant to the exercise of any such Option will be determined by the Administrator. 

        (c)   Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which
the Option may be exercised and will determine any conditions which must be satisfied before the Option may be exercised. Exercise of an Option may be conditioned upon performance criteria or other
reasonable conditions such as Continuous Status as an Employee, Director or Consultant. 

        (d)   Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option,
including the method of payment. Such consideration may consist partially or entirely of: 

        (i)    cash; 

        (ii)   to
the extent permitted by Applicable Law, a promissory note made by the Optionee in favor of the Company; 

        (iii)  other
Shares which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which an Option will be exercised; 

        (iv)  delivery
of a properly executed exercise notice together with any other documentation as the Administrator and the Optionee's broker, if applicable, require to effect
an exercise of the Option and delivery to the Company of the proceeds required to pay the exercise price; or 

        (v)   any
other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws. 

        11.   Exercise of Option. 

        (a)   Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder will be exercisable according to the terms
of the Plan and at times and under conditions determined by the Administrator and set forth in the Option Agreement; provided,  however, that an Option may
not be exercised for a fraction of a Share. 

        An
Option will be deemed exercised when the Company receives: (i) written notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the
Option, (ii) full payment for the Shares with respect to which the Option is exercised, and (iii) all representations, indemnifications and documents reasonably requested by the
Administrator. Full payment may consist 

6

 

of
any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and this Plan. Shares issued upon exercise of an Option will be issued in the name of
the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. Subject to the provisions of Sections 14, 18, and 19, the Company will issue (or cause to be issued) such stock certificate promptly after the Option
is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 15 of the
Plan. Notwithstanding the foregoing, the Administrator in its discretion may require the Company to retain possession of any certificate evidencing Shares of Common Stock acquired upon exercise of an
Option, if those Shares remain subject to repurchase under the provisions of the Option Agreement or any other agreement between the Company and the Optionee, or if those Shares are collateral for a
loan or obligation due to the Company. 

        Exercising
an Option in any manner will decrease the number of Shares thereafter available, both for purposes of this Plan and for sale under the Option, by the number of Shares as to
which the Option is exercised. 

        (b)   Termination of Employment or Consulting Relationship or Directorship. If an Optionee holds exercisable Options on the
date his or her Continuous Status as an Employee, Director or Consultant terminates (other than because of termination due to Cause, death or Disability), the Optionee may exercise the Options that
were vested and exercisable as of the date of termination for a period of 90 days following such termination (or such other period as is set forth in the Option Agreement or determined by the
Administrator). If the Optionee is not entitled to exercise his or her entire Option at the date of such termination, the Shares covered by the unexercisable portion of the Option will revert to the
Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator. The Administrator may determine in its sole discretion that such unexercisable portion of the Option will
become exercisable at such times and on such terms as the Administrator may determine in its sole discretion. If the Optionee does not exercise an Option within the time specified above after
termination, that Option will expire, and the Shares covered by it will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator. 

        (c)   Disability of Optionee. If an Optionee holds exercisable Options on the date his or her Continuous Status as an Employee,
Director or Consultant terminates because of Disability, the Optionee may exercise the Options that were vested and exercisable as of the date of termination for a period of twelve months following
such termination (or such other period as is set forth in the Option
Agreement or determined by the Administrator). If the Optionee is not entitled to exercise his or her entire Option at the date of death, the Shares covered by the unexercisable portion of the Option
will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator. The Administrator may determine in its sole discretion that such unexercisable portion
of the Option will become exercisable at such times and on such terms as the Administrator may determine in its sole discretion. If the Optionee's estate or a person who acquired the right to exercise
the Option by bequest or inheritance does not exercise an Option within the time specified above after termination, that Option will expire, and the Shares covered by it will revert to the Plan,
unless otherwise set forth in the Option Agreement or determined by the Administrator. 

        (d)   Death of Optionee. If an Optionee holds exercisable Options on the date his or her death, the Optionee's estate or a
person who acquired the right to exercise the Option by bequest or inheritance may exercise the Options that were vested and exercisable as of the date of death for a 

7

 

period
of twelve months following the date of death (or such other period as is set forth in the Option Agreement or determined by the Administrator). If the Optionee is not entitled to exercise his
or her entire Option at the date of death, the Shares covered by the unexercisable portion of the Option will revert to the Plan. 

        (e)   Termination for Cause. If an Optionee's Continuous Status as an Employee, Director or Consultant is terminated for Cause,
then all Options (including any vested Options) held by Optionee shall immediately be terminated and cancelled. 

        (f)    Disqualifying Dispositions of Incentive Stock Options. If Common Stock acquired upon exercise of any Incentive Stock
Option is disposed of in a disposition that, under Section 422 of the Code, disqualifies the holder from the application of Section 421(a) of the Code, the holder of the Common Stock
immediately before the disposition will comply with any requirements imposed by the Company in order to enable the Company to secure the related income tax deduction to which it is entitled in such
event. 

        12.   Non-Transferability of Options. 

        (a)   No Transfer. An Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. Notwithstanding the foregoing, to the extent that the
Administrator so authorizes at the time a Nonqualified Stock Option is granted or amended, (i) such Option may be assigned pursuant to a qualified domestic relations order as defined by the
Code, and exercised by the spouse or former spouse of the Optionee who obtained such Option pursuant to such qualified domestic relations order, or (ii) such Option may be assigned, in whole or
in part, during the Optionee's lifetime to one or more Family Members of the Optionee. Rights under the
assigned portion may be exercised by the Family Member(s) who acquire a proprietary interest in such Option pursuant to the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the Option immediately before such assignment and shall be set forth in such documents issued to the assignee as the Administrator deems appropriate. 

        (b)   Designation of Beneficiary. An Optionee may file a written designation of a beneficiary who is to receive any
Options that remain unexercised in the event of the Optionee's death. If a participant is married and the designated beneficiary is not the spouse, spousal consent will be required for the designation
to be effective. The Optionee may change such designation of beneficiary at any time by written notice to the Administrator, subject to the above spousal consent requirement. 

        (c)   Effect of No Designation. If an Optionee dies and there is no beneficiary validly designated and living at the time of
the Optionee's death, the Company will deliver such Optionee's Options to the executor or administrator of his or her estate, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such Options to the spouse or to any one or more dependents or relatives of the Optionee, or if no spouse, dependent or relative
is known to the Company, then to such other person as the Company may designate. 

        (d)   Death of Spouse or Dissolution of Marriage. If an Optionee designates his or her spouse as beneficiary, that designation
will be deemed automatically revoked if the Optionee's marriage is later dissolved. Similarly, any designation of a beneficiary will be deemed automatically revoked upon the death of the beneficiary
if the beneficiary predeceases the Optionee. Without limiting the generality of the preceding sentence, the interest in Options of a spouse of an Optionee who has predeceased the Optionee or (except
as provided in Section 12(a) regarding qualified domestic relations orders) whose marriage has been dissolved will automatically pass to the Optionee, and 

8

 

will
not be transferable by such spouse in any manner, including but not limited to such spouse's will, nor will any such interest pass under the laws of intestate succession. 

        13.   Stock Awards. 

        (a)   Grant. Subject to the express provisions and limitations of the Plan, the Administrator, in its sole and absolute
discretion, may grant Stock Awards to Employees, Consultants or Directors for a number of shares of Common Stock on such terms and conditions and to such Employees, Consultants or Directors as it
deems advisable and specifies in the respective grants. Subject to the limitations and restrictions set forth in the Plan, an Employee, Consultant or Director who has been granted an Option or Stock
Award may, if otherwise eligible, be granted additional Options or Stock Awards if the Administrator shall so determine. 

        (b)   Restrictions. The Administrator, in its sole and absolute discretion, may impose restrictions in connection with any
Stock Award, including without limitation, (i) imposing a restricted period during which all or a portion of the Common Stock subject to the Stock Award may not be sold, assigned, transferred,
pledged or otherwise encumbered (the "Restricted Period"), (ii) providing for a vesting schedule with respect to such Common Stock such that if a
Grantee ceases to be an Employee, Consultant or Director during the Restricted Period, some or all of the shares of Common Stock subject to the Stock Award shall be immediately forfeited and returned
to the Company. The Administrator may, at any time, reduce or terminate the Restricted Period. Each certificate issued in respect of shares of Common Stock pursuant to a Stock Award which is subject
to restrictions shall be registered in the name of the Grantee, shall be deposited by the Grantee with the Company together with a stock power endorsed in blank and shall bear an appropriate legend
summarizing the restrictions imposed with respect to such shares of Common Stock. 

        (c)   Rights As Shareholder. Subject to the terms of any agreement governing a Stock Award, the Grantee of a Stock Award shall
have all the rights of a shareholder with respect to the Common Stock issued pursuant to a Stock Award, including the right to vote such Shares; provided, however, that dividends or distributions paid
with respect to any such Shares which have not vested shall be deposited with the Company and shall be subject to forfeiture until the underlying Shares have vested unless otherwise provided by the
Administrator in its sole discretion. A Grantee shall not be entitled to interest with respect to the dividends or distributions so deposited. 

        14.   Withholding Taxes. The Company will have the right to take whatever steps the Administrator deems necessary or
appropriate to comply with all applicable federal, state, local, and employment tax withholding requirements, and the Company's obligations to deliver Shares upon the exercise of an Option or in
connection with a Stock Award will be conditioned upon compliance with all such withholding tax requirements. Without limiting the generality of the foregoing, upon the exercise of an Option, the
Company will have the right to withhold taxes from any other compensation or other amounts which it may owe to the Optionee, or to require the Optionee to pay to the Company the amount of any taxes
which the Company may be required to withhold with respect to the Shares issued on such exercise. Without limiting the generality of the foregoing, the Administrator in its discretion may authorize
the Grantee to satisfy all or part of any withholding tax liability by (a) having the Company withhold from the Shares which would otherwise be issued in connection with a Stock Award or on the
exercise of an Option that number of Shares having a Fair Market Value, as of the date the withholding tax liability arises, equal to or less than the amount of the Company's withholding tax
liability, or (b) by delivering to the Company previously-owned and unencumbered Shares of the Common Stock having a Fair Market Value, as of the date the withholding tax liability arises,
equal to or less than the amount of the Company's withholding tax liability. 

9

 

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

        (a)   Changes in Capitalization. Subject to any required action by the shareholders of the Company, if the outstanding shares
of Common Stock are increased, decreased, changed into or exchanged for a different number or kind of shares or securities of the Company or a successor entity, or for other property (including
without limitation, cash), through reorganization, recapitalization, reclassification, stock combination, stock dividend, stock split, reverse stock split, spin off, extraordinary corporate
distribution or other similar transaction, an appropriate and proportionate adjustment will be made in the maximum number and kind of shares as to which Options and Stock Awards may be granted under
this Plan. The Administrator shall also, in its discretion, adjust the number or kind of shares or other property allocated in respect of Stock Awards or deliverable upon exercise of any unexercised
Options which have been granted prior to any such change. Any such adjustment in the outstanding Options will be made without change in the aggregate purchase price applicable to the unexercised
portion of the Options but with a corresponding adjustment in the price for each share or other unit of any security covered by the Option. Such adjustment will be made by the Administrator, whose
determination in that respect will be final, binding, and conclusive. 

        Where
an adjustment under this Section 15(a) is made to an Incentive Stock Option, the adjustment will be made in a manner which will not be considered a "modification" under the
provisions of subsection 424(h)(3) of the Code. 

        (b)   Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, to the extent that an
Option had not been previously exercised or a Stock Award had not previously vested, it will terminate immediately prior to the consummation of such proposed dissolution or liquidation. In such
instance, the Administrator may, in the exercise of its sole discretion, declare that any Stock Award shall become vested or any Option will terminate as of a date fixed by the Administrator and give
each Optionee the right to exercise his or her Option as to all or any part of the Optioned Stock, including Shares as to which the Option would not otherwise be exercisable. 

        (c)   Corporate Transaction. Upon the happening of a merger, reorganization, extraordinary corporate distribution, sale of a
subsidiary or business unit or sale of substantially all of the assets of the Company, the Administrator, may, in its sole discretion, do one or more of the following: (i) shorten the period
during which Options are exercisable (provided they remain exercisable for at least 30 days after the date notice of such shortening is given to the Optionees); (ii) accelerate any
vesting schedule to which an Option or Stock Award is subject; (iii) arrange to have the surviving or successor entity or purchaser entity or any parent entity thereof assume the Stock Awards
and the Options or grant replacement options with appropriate adjustments in the option prices and adjustments in the number and kind of securities issuable upon exercise or adjustments so that the
Options or their replacements represent the right to purchase the shares of stock, securities or other property (including cash) as may be issuable or payable as a result of such transaction with
respect to or in exchange for the number of Shares of Common Stock purchasable and receivable upon exercise of the Options had such exercise occurred in full prior to such transaction;
(iv) cancel Options or Stock Awards upon payment to the Optionees or Grantees in cash, with respect to each Option or Stock Award to the extent then exercisable or vested (including, if
applicable, any Options or Stock Awards as to which the vesting schedule has been accelerated as contemplated in clause (ii) above), of an amount that is the equivalent of the excess of the
Fair Market Value of the Common Stock (at the effective time of the merger, reorganization, sale or other event) over (in the case of Options) the exercise price of the Option; or (v) make such
other adjustments to the consideration issuable upon exercise of Options and other terms of the Options as the Administrator deems appropriate in its sole and absolute 

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discretion.
The Administrator may also provide for one or more of the foregoing alternatives in any particular Option Agreement or agreement governing a Stock Award. 

        16.   Date of Grant. The date of grant of an Option or Stock Award will be, for all purposes, the date as of which the
Administrator makes the determination granting such Option or Stock Award, or any other, later date determined by the Administrator and specified in the Option Agreement. Notice of the determination
will be provided to each Grantee within a reasonable time after the date of grant. 

        17.   Amendment and Termination of the Plan. 

        (a)   Amendment and Termination. The Board may at any time amend, alter or suspend or terminate the Plan. 

        (b)   Shareholder Approval. The Company will obtain shareholder approval of any Plan amendment that increases the number of
Shares for which Options or Stock Awards may be granted, or to the extent necessary and desirable to comply with Section 422 of the Code (or any successor statute) or other Applicable Laws, or
the requirements of any exchange or quotation system on which the Common Stock is listed or quoted. Such shareholder approval, if required, will be obtained in such a manner and to such a degree as is
required by the Applicable Law or requirement. 

        (c)   Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the
rights of a Grantee, unless mutually agreed otherwise between the Grantee and the Administrator. Any such agreement must be in writing and signed by the Grantee and the Company. 

        18.   Conditions Upon Issuance of Shares. 

        (a)   Legal Compliance. Shares will not be issued in connection with a Stock Award or pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of such Shares will comply with all Applicable Laws, and will be further subject to the approval of counsel for the Company with
respect to such compliance. Any securities delivered under the Plan will be subject to such restrictions, and the person acquiring such securities will, if requested by the Company, provide such
assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all Applicable Laws. To the extent permitted by Applicable Laws, the Plan and
Options and Stock Awards granted hereunder will be deemed amended to the extent necessary to conform to such laws, rules and regulations. 

        (b)   Investment Representation. As a condition to the exercise of an Option or grant of a Stock Award, the Company may require
the person exercising such Option or receiving such Stock Award to represent and warrant at the time of any such exercise or receipt that the Shares are being acquired only for investment and without
any present intention to sell, transfer, or distribute such Shares. 

        19.   Liability of Company. 

        (a)   Inability to Obtain Authority. If the Company cannot, by the exercise of commercially reasonable efforts, obtain
authority from any regulatory body having jurisdiction for the sale of any Shares under this Plan, and such authority is deemed by the Company's counsel to be necessary to the lawful issuance of those
Shares, the Company will be relieved of any liability for failing to issue or sell those Shares. 

        (b)   Grants Exceeding Allotted Shares. If the Optioned Stock covered by an Option or Shares subject to a Stock Award exceed,
as of the date of grant, the number of Shares which may be issued under the Plan without additional shareholder approval, that Option or Stock Award will be contingent with respect to such excess
Shares, unless and until shareholder approval of an 

11

 

amendment
sufficiently increasing the number of Shares subject to this Plan is timely obtained in accordance with Section 17(b). 

        (c)   Rights of Participants and Beneficiaries. The Company will pay all amounts payable under this Plan only to the Grantee,
or beneficiaries entitled thereto pursuant to this Plan. The Company will not be liable for the debts, contracts, or engagements of any Grantee or his or her beneficiaries, and rights to cash payments
under this Plan may not be taken in execution by attachment or garnishment, or by any other legal or equitable proceeding while in the hands of the Company. 

        20.   Reservation of Shares. The Company will at all times reserve and keep available for issuance a number of Shares
sufficient to satisfy this Plan's requirements during its term. 

        21.   Shareholder Approval. Continuance of this Plan will be subject to approval by the shareholders of the Company within
12 months before or after the date of its adoption. Such shareholder approval will be obtained in the manner and to the degree required under Applicable Laws. Options or Stock Awards may be
granted but Options may not be exercised prior to shareholder approval of the Plan. If any Options or Stock Awards are so granted and shareholder approval is not obtained within 12 months of
the date of adoption of this Plan by the Board, those Options or Stock Awards will terminate retroactively as of the date they were granted. 

        22.   Legending Stock Certificates. In order to enforce any restrictions imposed upon Common Stock issued in connection with a
Stock Award or upon exercise of an Option granted under this Plan or to which such Common Stock may be subject, the Administrator may cause a legend or legends to be placed on any certificates
representing such Common Stock, which legend or legends will make appropriate reference to such restrictions, including, but not limited to, a restriction against sale of such Common Stock for any
period of time as may be required by Applicable Laws. Additionally, and not by way of limitation, the Administrator may impose such restrictions on any Common Stock issued pursuant to the Plan as it
may deem advisable. 

        23.   No Employment Rights. Neither this Plan nor any Option or Stock Award will confer upon a Grantee any right with respect
to continuing the Grantee's employment or consulting relationship with the Company, or continuing service as a Director, nor will they interfere in any way with the Grantee's right or the Company's
right to terminate such employment or consulting relationship or directorship at any time, with or without cause. 

        24.   Governing Law. The Plan will be governed by, and construed in accordance with the laws of the State of Delaware (without
giving effect to conflicts of law principles). 

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DOLLAR FINANCIAL CORP. 2005 STOCK INCENTIVE PLAN

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