exv10w1



 




Exhibit 10.1




AMENDED AND RESTATED

EXECUTIVE SEVERANCE AGREEMENT




     This Amended and Restated Executive Severance Agreement (this “Agreement”) is made as of this
1st day of November, 2007, between Apria Healthcare Group Inc., a Delaware corporation (the
“Company”), and William E. Monast (the “Executive”).



RECITALS




     A. It is the desire of the Company to retain the services of the Executive and to recognize
the Executive’s contribution to the Company.



     B. The Company and the Executive wish to set forth certain terms and conditions of the
Executive’s employment.



     C. The Company wishes to provide to the Executive certain benefits in the event that his
employment is terminated by the Company without Cause (as defined below) or in the event that he
terminates employment for Good Reason (as defined below), in order to encourage the Executive’s
performance and continued commitment to the Company.



     NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and
agreements set forth below, the parties hereto agree as follows:



     1. Positions and Duties. The Executive shall serve in such positions and undertake
such duties and have such authority as the Company, through its Chief Executive Officer, shall
assign to the Executive from time to time in the Company’s sole and absolute discretion. The
Company has the right to change the nature, amount or level of authority and responsibility
assigned to the Executive at any time, for any reason or no reason, and with or without cause. The
Company may also change the title or titles assigned to the Executive at any time, for any reason
or no reason, and with or without cause. The Executive agrees to devote substantially all of his
working time and efforts to the business and affairs of the Company. The Executive further agrees
that he shall not undertake any outside activities which create a conflict of interest with his
duties to the Company, or which, in the judgment of the Chief Executive Officer or Board of
Directors of the Company, interfere with the performance of the Executive’s duties to the Company.



     2. Compensation and Benefits.



          a. Salary. The Executive’s salary shall be such salary as the Company assigns to him
from time to time in accordance with its regular practices and policies. The parties to this
Agreement recognize that the Company may, in its sole discretion, change such salary on a
prospective basis at any time.



          b. Bonus. The Executive shall be entitled to participate in the Executive Bonus Plan
or such other bonus plans applicable to his position as may be in effect from time to time. The
parties to this Agreement recognize that such bonus plans may be amended and/or terminated by the
Company at any time without the consent of the Executive in accordance with the terms of such bonus
plans.



 









 





          c. Expenses. During the term of the Executive’s employment, the Executive shall be
entitled to receive reimbursement for all reasonable and customary expenses incurred by the
Executive in performing services for the Company in accordance with the Company’s reimbursement
policies as they may be in effect from time to time. The parties to this Agreement recognize that
such policies may be amended and/or terminated by the Company at any time without the consent of
the Executive.



          d. Other Benefits. The Executive shall be entitled to participate in all employee
benefit plans, programs and arrangements of the Company (including, without limitation, stock
option plans or agreements and insurance, retirement and vacation plans, the deferred compensation
plan and any other programs and arrangements), in accordance with the terms of such plans, programs
or arrangements as they shall be in effect from time to time during the period of the Executive’s
employment; provided, however, that nothing herein shall entitle the Executive to any specific
awards under the Company’s equity compensation plans or other discretionary employee benefit plans.
The parties to this Agreement recognize that the Company may terminate or modify such plans,
programs or arrangements at any time without the consent of the Executive.



     3. Grounds for Termination. The Executive’s employment may be terminated by the
Company or the Executive at any time, for any reason or no reason, with or without Cause or Good
Reason (as such terms are defined below), and except as expressly provided herein, with or without
any advance notice. The Executive’s employment may end for any one of the following reasons:



          a. Without Cause or Good Reason. The Executive or the Company may terminate the
Executive’s employment at any time, without Cause (in the case of the Company) or for Good Reason
(in the case of the Executive), by giving the other party to this Agreement at least 30 days
advance written notice of such termination.



          b. Death. The Executive’s employment hereunder shall terminate upon his death.



          c. Disability. If, as a result of the Executive’s incapacity due to physical or
mental illness, the Executive shall have been unable to perform the essential functions of his
position, even with reasonable accommodation that does not impose an undue hardship on the Company,
on a full-time basis for the entire period of six (6) consecutive months, and within thirty (30)
days after written notice of termination is given (which may occur before or after the end of such
six-month period), shall not have returned to the performance of his duties hereunder on a
full-time basis (a “disability”), the Company may terminate the Executive’s employment on account
of such disability.



          d. Cause. The Company may terminate the Executive’s employment for Cause. For
purposes of this Agreement (except as set forth below), “Cause” shall mean that the Company, acting
in good faith based upon the information then known to the Company, determines that the Executive
has (i) engaged in or committed willful misconduct; (ii) engaged in or committed theft, fraud or
other illegal conduct; (iii) refused or demonstrated an unwillingness to substantially perform his
duties after written demand for substantial performance is delivered



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by the Company that specifically identifies the manner in which the Company believes the
Executive has not substantially performed his duties; (iv) refused or demonstrated an unwillingness
to reasonably cooperate in good faith with any Company or government investigation or provide
testimony therein (other than such failure resulting from the Executive’s disability); (v) engaged
in or committed insubordination; (vi) engaged in or committed any willful act that is likely to and
which does in fact have the effect of injuring the reputation or business of the Company; (vii)
willfully violated his fiduciary duty or his duty of loyalty to the Company or the Company’s Code
of Ethical Business Conduct in any material respect; (viii) used alcohol or drugs (other than drugs
prescribed to the Executive by a physician and used by the Executive for their intended purpose for
which they had been prescribed) in a manner which materially and repeatedly interferes with the
performance of his duties hereunder or which has the effect of materially injuring the reputation
or business of the Company; or (ix) engaged in or committed a breach of any term of this Agreement.
For purposes of the above clauses (i), (vi) and (vii) of this Section 3(d), no act, or failure to
act, on the Executive’s part shall be considered willful unless done or omitted to be done, by him
not in good faith or without reasonable belief that his action or omission was in the best interest
of the Company. Notwithstanding anything herein to the contrary, for purposes of any termination
of employment that occurs within the period that (i) begins with the first to occur of (1) the
initial public announcement of a Change of Control (as defined below), or (2) the 90th day
preceding a Change of Control and (ii) ends two years following such Change of Control, “Cause”
shall instead mean only the occurrence of either or both of the following: (A) the Executive’s
conviction for committing an act of fraud, embezzlement, theft, or other act constituting a felony
(other than traffic related offenses or as a result of vicarious liability); or (B) the willful
engaging by the Executive in misconduct that is significantly injurious to the Company. For
purposes of the above clause (B) of this Section 3(d), no act, or failure to act, on the
Executive’s part shall be considered willful unless done or omitted to be done, by him not in good
faith or without reasonable belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated
for Cause without delivery to the Executive of a notice of termination signed by the Company’s
Chief Executive Officer or President stating that, in the good faith opinion of the officer signing
such notice, the Executive has engaged in or committed conduct of the nature described above in
this Section 3(d), and specifying the particulars thereof.



          e. Resignation for Good Reason. The Executive may resign on account of Good Reason
(as defined below).



     4. Payments upon Termination.



          a. Without Cause or with Good Reason. In the event that the Executive’s employment is
terminated by the Company for any reason other than death, disability or Cause as defined in
Sections 3(b), (c) and (d) of this Agreement, or in the event that the Executive terminates his
employment hereunder with Good Reason as defined in Section 4(c) of this Agreement, the Executive
shall be entitled to receive severance pay in an aggregate amount equal to 100% of his Annual
Compensation, which shall be paid, subject to Section 12, in periodic installments in accordance
with the Company’s customary payroll practices over a period of one (1) year, less any amounts
required to be withheld by applicable law, in exchange for a valid release of all claims the
Executive may have against the Company in the form



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attached hereto as Exhibit A (which may be modified only to the extent necessary to reflect
developments in applicable law that would jeopardize enforceability of such release unless the
modifications are not made) and continued compliance with the restrictive covenants described in
Sections 7-9 below. The Company will also pay to the Executive any earned but unused vacation time
at the rate of pay in effect on the date of the notice of termination.



          b. Annual Compensation. For purposes of this Section 4, the term “Annual
Compensation” means an amount equal to the Executive’s annual base salary at the rate in effect on
the date on which the Executive received or gave written notice of his termination, plus the sum of
(i) an amount equal to the average of the annual bonuses with respect to the Company’s two (2) most
recently completed fiscal years, if any, determined to be payable and/or paid to the Executive
under the Company’s the Executive Bonus Plan (or comparable bonus plan) prior to such notice of
termination, and (ii) an amount determined by the Company from time to time in its sole discretion
to be equal to the annual cost for the Executive of obtaining medical, dental and vision insurance
under COBRA, which annual amount is hereby initially estimated to be $20,000.



          c. Good Reason. For purposes of this Section 4 (except as set forth below) the term
“Good Reason” means the occurrence of any of the following, without the written consent of the
Executive, unless such event is rescinded within ten (10) business days after the Executive
notifies the Company that the Executive objects thereto:




	 	(i)	 	any reduction in the Executive’s annual base
salary, except for a general one-time “across-the-board” salary
reduction not exceeding ten percent (10%) which is imposed
simultaneously on all executive officers of the Company;
	 
	 	or	 	 
	 
	 	(ii)	 	the Company requires the Executive to be based
at an office location which will result in an increase of more than
thirty (30) miles in the Executive’s one-way commute, except in
connection with a relocation of the Company’s principal executive
offices;




provided, however, that “Good Reason” shall cease to exist for an event on the 60th
day following the earlier of the Company’s written notice of the change to the Executive or the
Executive’s becoming aware thereof, unless the Executive has given the Company written notice of
his objection thereto prior to such date.



Notwithstanding anything herein to the contrary, for purposes of any termination of employment that
occurs within the period that (i) begins with the first to occur of (1) the initial public
announcement of a Change of Control (as defined below), or (2) the 90th day preceding a Change of
Control and (ii) ends two years following such Change of Control, “Good Reason” shall instead mean,
without the Executive’s express written consent, the occurrence of any one or more of the
following:





	 	(a)	 	a material reduction in the nature, status or scope
of the Executive’s authorities, duties, and/or responsibilities, (when
such authorities,




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	 	 	 	duties, and/or responsibilities are viewed in the aggregate) from their
level in effect on the day immediately prior to the Change of Control
(provided, however, that neither of (A) a change in the Executive’s
title or reporting relationships, nor (B) an adjustment in the nature of
the Executive’s duties and responsibilities that in either case does not
remove from him the authority with respect to the Company’s functional
area, employees or products and services that the Executive had
immediately prior to such change or adjustment shall constitute “Good
Reason”);
	 
	 	(b)	 	a reduction in the Executive’s base salary from its
highest level in effect at any point in the three months preceding the
Change of Control or a significant reduction in the Executive’s aggregate
incentive opportunities under the Company’s short and/or long-term
incentive programs, as such opportunities exist immediately prior to the
Change of Control;
	 
	 	(c)	 	the failure of the Company to maintain the
Executive’s relative level of coverage and accruals (as compared to other
Company executives) under the Company’s employee benefit and/or
retirement plans, policies, practices, or arrangements in which the
Executive participates immediately prior the Change of Control (both in
terms of the amount of benefits provided, and amounts accrued) (for this
purpose, the Company may eliminate and/or modify existing programs and
coverage levels without the Executive’s consent; provided, however, that
the Executive’s level of coverage under all such programs must be at
least as great as is provided to executives who have the same or lesser
levels of reporting responsibilities within the Company’s organization);
or
	 
	 	(d)	 	the Executive is informed by the Company that his
principal place of employment for the Company will be relocated to a
location that will result in an increase of more than thirty (30) miles
in the Executive’s one-way commute (as compared to the Executive’s
one-way commute prior to the Change of Control).





          d. Release of all Claims. The Executive understands and agrees that the Company’s
obligation to pay the Executive severance pay under this Agreement is subject to the Executive’s
execution of a valid written waiver and release of all claims which the Executive may have against
the Company and/or its successors in the form attached hereto as Exhibit A (modified only to the
extent necessary to have the same legal effect on the date of execution as it would if it were
executed on the date hereof).



          e. No Mitigation or Offset. Notwithstanding anything herein to the contrary, the
amount of any payment or benefit provided for in this Section 4 shall not be reduced, offset or
subject to recovery by the Company or any of its subsidiaries or affiliates by reason of any
compensation earned by the Executive as the result of employment by another employer after the



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Executive’s employment with the Company terminates for any reason. In addition, the Executive
shall be under no obligation to seek other employment or to take any other actions to mitigate the
amounts payable under this Section 4.



          f. Death, Disability or Cause. In the event that the Executive’s employment is
terminated due to death, disability or Cause, the Company shall not be obligated to pay the
Executive any amount other than earned unused vacation, reimbursement for business expenses
incurred prior to his termination and in compliance with the Company’s reimbursement policies, any
unpaid salary for days worked prior to the termination, all other amounts accrued or earned by the
Executive through the date of termination under the then existing plans and policies of the
Company, and any amounts owing in respect of the Company’s indemnification obligations to the
Executive.



          g. Change of Control. For purposes of this Agreement, a “Change of Control” shall,
unless otherwise determined by the Board of Directors of the Company or Compensation Committee
thereof prior to the consummation of the Change of Control, be deemed to have occurred if:




	 	(i)	 	any “person,” as such term is used in Sections
13(d)and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”) is, becomes or enters a contract to become, the
“beneficial owner,” as such term is used in Rule 13d-3 promulgated
under the 1934 Act, directly or indirectly, of securities representing
twenty-five percent (25%) or more of the voting common stock of the
Company;
	 
	 	(ii)	 	all or substantially all of the business or
assets of the Company are disposed of, or a contract is entered to
dispose of all of the business of the Company pursuant to a merger,
consolidation other transaction in which (a) the Company is not the
surviving parent company or (b) the stockholders of the Company prior
to the transaction do not continue to own at least sixty percent (60%)
of the surviving parent company in substantially the same proportions
as their ownership immediately prior to such transaction; or
	 
	 	(iii)	 	the Company is materially or completely
liquidated.




Notwithstanding clause (i) above, a “Change of Control” shall not be deemed to have occurred solely
because a person shall be, become or enter into a contract to become the beneficial owner of 25% or
more, but less than 40%, of the voting common stock of the Company, if and for so long as such
person is bound by, and in compliance with, a contract with the Company providing that such person
may not nominate, vote for, or select more than a minority of the directors of the Company. The
exception provided by the preceding sentence shall cease to apply with respect to any person upon
expiration, waiver, or non-compliance with any such contract, by which such person was bound.




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          h. In the event that at any time following a Change of Control the Executive initiates
arbitration pursuant to Section 16 to enforce his rights to any payments under Section 4, or the
Company seeks to deny, dispute or reduce any such payments for any reason, then:




	 	(i)	 	the burden of proving that the Executive is not
entitled to such payments shall be on the Company;
	 
	 	(ii)	 	the Company shall pay all expenses incurred by
the Executive in prosecuting or defending any such proceeding as they
are incurred by the Executive in advance of the final disposition of
such dispute, together with any tax liability incurred by the Executive
in connection with the receipt of such amounts; provided, however, that
the payment of such expenses incurred in advance of the final
disposition of such proceeding shall be made only upon delivery to the
Company of an undertaking, by or on behalf of the Executive, to repay
all amounts so advanced to the extent the arbitrator in such proceeding
affirmatively determines that the Company is the prevailing party,
taking into account all claims made by any such party to such
proceeding; and
	 
	 	(iii)	 	all such payments or benefits described in
this Agreement shall continue to be made or provided on the dates
provided herein as if all assertions or claims made by the Executive
are accurate without any offsets, claims or charges of any kind
whatsoever being asserted by the Company, except in the event a final
determination pursuant to the arbitration provisions of Section 16 has
been rendered and such determination provides that the Company is
entitled to assert any such offset, claim or charge against the
Executive.





     5. Successors; Binding Agreement.



          a. The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the Executive to compensation
from the Company in the same amount and on the same terms as he would be entitled to hereunder if
he terminated his employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be deemed the date of
termination. As used in this Agreement, “Company” shall mean the Company as herein before defined
and any successor to its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 5 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.



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



     6. Notices. For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be deemed to have been
duly given when delivered personally, by telecopy, telex or other form of written electronic
transmission, by overnight courier or by registered or certified mail, postage prepaid, or mailed
by United States certified or registered mail, return receipt requested, postage prepaid, addressed
as follows:




If to the Executive:




William E. Monast

6 Brentwood

Coto de Caza, California 92679




If to the Company:




Apria Healthcare Group Inc.

26220 Enterprise Court

Lake Forest, California 92630

Attention: Chief Executive Officer


With a copy to the attention of: Senior Vice President, Human Resources or to such other address as
either party may have furnished to the other in writing in accordance herewith, except that notices
of change of address shall be effective only upon receipt.




     7. Antisolicitation.



          a. The Executive promises and agrees that, during the period of his employment by the Company
and for a period of one year thereafter, he will not influence or attempt to influence customers or
patients of the Company or any of its present or future subsidiaries or affiliates, either directly
or indirectly, to divert their business to any individual, partnership, firm, corporation or other
entity then in competition with the business of the Company, or any subsidiary or affiliate of the
Company, where the identity of the customer or patient, or any information concerning the
relationship between the customer or patient and the Company, is a trade secret or other
Confidential Material (as defined below).



          b. The Executive expressly acknowledges and agrees that if the Company has a reasonable good
faith belief that he is in violation of any of the restrictive covenants set forth in this Section
7, then the Company, following written notice to the Executive explaining the basis for its belief,
may, except as provided in Section 4(h), suspend any future payments scheduled to be made pursuant
to Section 4, unless and until the Executive establishes to the



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Company’s reasonable good faith satisfaction that no such violation has occurred. In
addition, the Company and the Executive acknowledge and agree that such cessation of payments shall
be the Company’s sole and exclusive remedy of any breach by the Executive of any of the restrictive
covenants set forth in this Section 7. In order to implement the principle of this Section 7(c),
in the event that an arbitrator determines that the Executive has violated the provisions of this
Section 7, the arbitrator may require that the Executive return to the Company any amounts paid to
the Executive pursuant to Section 4(h) following the date of such violation.



     8. Soliciting Employees. The Executive promises and agrees that, for a period of one
year following termination of his employment, he will not, directly or indirectly, solicit any of
the Company employees who earned annually $50,000 or more as a Company employee during the last six
months of his or her own employment, or facilitate the hiring of any such employee, to work for any
other business, individual, partnership, firm, corporation, or other entity.



     9. Confidential Information.



          a. The Executive, in the performance of his duties on behalf of the Company, shall have access
to, receive and be entrusted with confidential information, including but not limited to systems
technology, field operations, reimbursement, development, marketing, organizational, financial,
management, administrative, clinical, customer, distribution and sales information, data,
specifications and processes presently owned or at any time in the future developed, by the Company
or its agents or consultants, or used presently or at any time in the future in the course of its
business that is not otherwise part of the public domain (collectively, the “Confidential
Material”). All such Confidential Material is considered secret and will be available to the
Executive in confidence. Except in the performance of duties on behalf of the Company, the
Executive shall not, directly or indirectly for any reason whatsoever, disclose or use any such
Confidential Material, unless such Confidential Material ceases (through no fault of the
Executive’s) to be confidential because it has become part of the public domain. All records,
files, drawings, documents, notes, disks, diskettes, tapes, magnetic media, photographs, equipment
and other tangible items, wherever located, relating in any way to the Confidential Material or
otherwise to the Company’s business, which the Executive prepares, uses or encounters during the
course of his employment, shall be and remain the Company’s sole and exclusive property and shall
be included in the Confidential Material. Upon termination of this Agreement by any means, or
whenever requested by the Company, the Executive shall promptly deliver to the Company any and all
of the Confidential Material, not previously delivered to the Company, that may be or at any
previous time has been in the Executive’s possession or under the Executive’s control.



          b. The Executive hereby acknowledges that the sale or unauthorized use or disclosure of any of
the Company’s Confidential Material by any means whatsoever and at any time before, during or after
the Executive’s employment with the Company shall constitute unfair competition. The Executive
agrees he shall not engage in unfair competition either during the time employed by the Company or
any time thereafter.



          c. The Executive promises and agrees that for a period of one year following termination of
his employment, he will not, other than as required by law or by order of a court



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or other competent authority, make or publish, or cause any other person to make or publish,
any statement that is disparaging or that reflects negatively upon the Company, or that is or
reasonably would be expected to be damaging to the reputation of the Company. The Company promises
and agrees that it will use its best efforts to not, other than as required by law or by order of a
court or other competent authority, make or publish, or cause any other person to make or publish,
any statement that is disparaging or that reflects negatively upon the Executive, or that is or
reasonably would be expected to be damaging to the reputation of the Executive.



     10. Parachute Limitation.



          a. Notwithstanding any other provision of this Agreement, in the event that any amount or
benefit that may be paid or otherwise provided to or in respect of the Executive by or on behalf of
the Company or any affiliate, whether pursuant to this Agreement or otherwise (collectively,
“Covered Payments”), is or may become subject to the tax imposed under Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”) (or any successor provision or any comparable
provision of state, local or foreign law) (“Excise Tax”), then the portion of the Covered Payments
that would be treated as “parachute payments” under Code Section 280G (“Covered Parachute
Payments”) shall be reduced so that the Covered Parachute Payments, in the aggregate, are reduced
to the Safe Harbor Amount (as defined below). For purposes of this Agreement, the term “Safe
Harbor Amount” means the largest portion of the Covered Payments that would result in no portion of
the Covered Payments being subject to the Excise Tax. In the event that it is determined that the
amount of any Covered Payments will be reduced in accordance with this Section 10, the Executive
shall have the right to designate which of the Covered Payments shall be reduced and to what
extent, provided that the Executive may not so elect to the extent that, in the determination of
counsel to the Company, such election would cause the Executive to be subject to the Excise Tax.



          b. The determination of (i) whether an event described in Section 280G(b)(2)(A)(i) of the Code
has occurred, (ii) the value of any Covered Parachute Payments and the Safe Harbor Amount, (iii)
whether any reduction in the Covered Payments is required under Section 10(a), and (iv) the amount
of any such reduction, shall be made initially by an accounting firm selected by the Compensation
Committee of the Board of Directors (as constituted prior to the occurrence of any Change of
Control), or, if no such firm is selected, by the independent compensation consulting firm retained
by the Compensation Committee prior to any Change of Control to provide consulting advice to the
Compensation Committee (the “Accountants”). For purposes of making the calculations required by
this Section 10, the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations concerning the application
of the Code, and other applicable legal authority. The Company and the Executive shall furnish to
the Accountants such information and documents as the Accountants may reasonably request in order
to make a determination under this Section 10. The Company shall bear and be solely responsible
for all costs the Accountants may reasonably incur in connection with any calculations contemplated
by this Section 10.



          c. If, notwithstanding any reduction described in this Section 10, the Internal Revenue
Service (“IRS”) determines that the Executive is liable for the Excise Tax as a result of the
receipt of amounts payable under this Agreement or otherwise as described above, then the



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Executive shall be obligated to pay back to the Company, within thirty (30) days after a final
IRS determination or in the event that the Executive challenges the final IRS determination, a
final judicial determination, a portion of such amounts equal to the “Repayment Amount”. The
Repayment Amount with respect to the payment of benefits shall be the smallest such amount as shall
be required to be paid to the Company so that the Executive is not subject to the Excise Tax.



     11. Funding Upon Change Of Control.



          a. Immediately prior to the occurrence of a Change of Control, the Company shall fund, to the
extent it has not done so, a sum equal to the present value on the date of the Change of Control of
any amounts that are or would reasonably be expected to become payable to the Executive under the
provisions of Sections 4 and 12 hereof (including a good faith estimate of expenses of the trust in
the event that the Company does not timely pay such expenses) and the provisions of that certain
Noncompetition Agreement, dated as of May 5, 2006, by and between the Executive and the Company
(the “Noncompetition Agreement”), which in any event shall be no less than 125% of such present
value (determined using an interest rate equal to the short-term applicable federal rate (with
annual compounding) established under Section 1274(d) of the Code for the month in which the Change
of Control), by establishing and irrevocably funding a trust for the benefit of the Executive. In
addition, immediately prior to the occurrence of a Change of Control, the Company shall contribute
to the trust established under this Section 11, to the extent it has not done so, a number of
shares of common stock of the Company equal to the total number of shares subject to all
outstanding awards (whether vested or unvested) of stock options, restricted stock purchase rights
and restricted stock units held by the Executive as of immediately prior to the Change of Control.
The trustee of such trust shall be instructed to pay out any such amounts as and to the extent such
amounts become payable in accordance with the terms of this Agreement and the agreements
documenting the terms of the Executive’s outstanding stock awards.



          b. The trust established under this Section 11 shall be a grantor trust described in Section
671 of the Code. The Company shall be solely responsible for and shall directly pay all fees and
expenses of the trust; provided, however, in the event that the Company does not pay all of the
fees and expenses of the trust, the trustee shall have the authority to pay such fees from the
assets of the trust.



          c. Any payments of compensation, severance or other benefits by the trust established pursuant
to this Section 11 shall, to the extent thereof, discharge the Company’s obligation to pay
compensation, pension, severance and other benefits hereunder, it being the intent of the Company
that assets in such trust be held for the purpose of discharging any obligation of the Company to
pay compensation, severance and other benefits under this Agreement and all equity compensation
agreements between the Company and the Executive under such circumstances in which such trust is in
effect.



          d. The trust established under this Section 11 shall not terminate until the date on which all
payments and benefits to be funded out of the trust have been satisfied and discharged in full.
Upon termination of the trust any assets remaining in the trust shall be returned to the Company.



11









 





     12. Effect of Section 409A of the Code. Notwithstanding anything to the contrary in
this Agreement, if the Company determines (a) that on the date the Executive’s employment with the
Company terminates or at such other time that the Company determines to be relevant, the Executive
is a “specified employee” (as such term is defined under Section 409A) of the Company and (b) that
any payments to be provided to the Executive pursuant to this Agreement are or may become subject
to the additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties
imposed under Section 409A of the Code (“Section 409A Taxes”) if provided at the time otherwise
required under this Agreement then (i) such payments shall be delayed until the date that is six
months after date of the Executive’s “separation from service” (as such term is defined under
Section 409A of the Code) with the Company, or such shorter period that, as determined by the
Company, is sufficient to avoid the imposition of Section 409A Taxes (the “Payment Delay Period”)
and (ii) such payments shall be increased by an amount equal to interest on such payments for the
Payments Delay Period at a rate equal to the prime rate in effect as of the date the payment was
first due plus one point (for this purpose, the prime rate will be based on the rate published from
time to time in The Wall Street Journal).



     13. Modification and Waiver. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Executive and the Chief Executive Officer or the President of the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of California without regard to its conflicts of law principles.



     14. Severability. The provisions of this Agreement are severable and in the event
that a court of competent jurisdiction determines that any provision of this Agreement is in
violation of any law or public policy, in whole or in part, only the portions of this Agreement
that violate such law or public policy shall be stricken. All portions of this Agreement that do
not violate any statute or public policy shall not be affected thereby and shall continue in full
force and effect. Further, any court order striking any portion of this Agreement shall modify the
stricken terms as narrowly as possible to give as much effect as possible to the intentions of the
parties under this Agreement.



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



     16. Arbitration. Any dispute or controversy arising under or in connection with this
Agreement or the Executive’s employment by the Company shall be settled exclusively by arbitration,
conducted before a single neutral arbitrator in accordance with the American Arbitration
Association’s National Rules for Resolution of Employment Disputes as then in effect. Judgment may
be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that the
Company shall be entitled to seek a restraining order or injunction in



12









 







any court of competent jurisdiction to prevent any continuation of any violation of the
provisions of Sections 7, 8 or 9 of this Agreement and the Executive hereby consents that such
restraining order or injunction may be granted without the necessity of the Company’s posting any
bond, and provided, further, that the Executive shall be entitled to seek specific performance of
his right to be paid until the date of employment termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement. Each party shall pay its own
attorneys’ fees and costs. If any party prevails on a statutory claim which affords attorneys’
fees and costs, the arbitrator may award reasonable attorneys’ fees and/or costs to the prevailing
party. The fees and expenses of the arbitrator and the arbitration shall be borne by the Company.



     17. Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto; and any prior agreement of
the parties hereto in respect of the subject matter contained herein is hereby terminated and
canceled.



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     IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above
written.



	 	 	 	 	 
	 	APRIA HEALTHCARE GROUP INC.

 	 
	 	By:  	/s/ Lawrence M. Higby
 	 
	 	 	Name:  	Lawrence M. Higby 	 
	 	 	Title:  	Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	By:  	/s/ William E. Monast
 	 
	 	 	Name:  	William E. Monast 	 
	 	 	 	 



 









 






	 	 	 	 	 



EXHIBIT A




GENERAL RELEASE





     THIS GENERAL RELEASE (this “Release”) is made as of the ___day of ___, 20___, by and
between ___, an individual (“Executive”), and Apria Healthcare Group Inc., a Delaware
corporation (“Apria”). In consideration of the payments and benefits described in paragraph 1
below to be provided to Executive pursuant to that certain Amended and Restated Executive Severance
Agreement, dated November 1, 2007, to which Executive and Apria are parties (the “Severance
Agreement”), the sufficiency of which is acknowledged hereby, Executive and Apria agree as follows:



     1. In consideration of ___’s general release of claims, his agreements in
paragraphs 7, 8 and 9 of the Severance Agreement, and his other promises set forth herein, Apria
shall pay to ___the following amounts:



          a. a total of $___in severance compensation, subject to standard withholding for
federal and state taxes, which shall be payable in accordance with Apria’s regular payroll
procedures in 26 consecutive bi-weekly installments over the 12-month period beginning on
___, each in the gross amount of $___; and



          b. all earned but unpaid vacation and holiday pay and all salary amounts earned but not yet
paid, subject to standard withholding for federal and state taxes, payable on or as soon as
practicable after ___.



     2. On or before ___, ___shall return to Apria his
company-provided laptop computer, cell phone, BlackBerry, credit cards, electronic fuel card,
electronic building access cards, toll road FasTrak transmitter and all other property of Apria.
He shall not take or copy in any form or manner any financial information, lists of customers,
prices, or any other confidential and proprietary materials or information of Apria.



     3. Neither this Release nor anything in this Release shall be construed to be or shall be
admissible in any proceeding as evidence of an admission by Apria or Executive of any violation of
Apria’s policies or procedures, or state or federal laws or regulations. This Release may be
introduced, however, in any proceeding to enforce the Release. Such introduction shall be pursuant
to an order protecting its confidentiality.



     4. Except for (i) those obligations created by or arising out of this Release, (ii) any rights
Executive may have under stock option agreements with Apria and any retirement, 401(k), or similar
benefit plans of Apria, and (iii) the continuing right to indemnification as provided by applicable
law or in Apria’s bylaws and articles of incorporation in connection with acts, suits or
proceedings by reason of the fact that he was an officer or employee of Apria where the basis of
the claims against him consists of acts or omissions taken or made in such capacity, Executive on
behalf of himself, his descendants, dependents, heirs, executors, administrators, assigns, and
successors, and each of them, hereby covenants not to sue and fully releases and discharges Apria,
and its predecessors, subsidiaries and affiliates, past and present, and each of them, as



 









 







well as its and their trustees, directors, officers, agents, attorneys, insurers, employees,
stockholders, representatives, assigns, and successors, past and present, and each of them,
hereinafter together and collectively (including Apria) referred to as the “Apria Releasees,” with
respect to and from any and all claims, wages, demands, rights, liens, agreements, contracts,
covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees,
damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise,
whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden,
which he now owns or holds or he has at any time heretofore owned or held as against the Apria
Releasees, arising out of or in any way connected with his employment relationship with any Apria
Releasee, or his voluntary resignation from employment with the Apria Releasees or any other
transactions, occurrences, actions, omissions, claims, losses, damages or injuries whatsoever,
known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of
any Apria Releasee committed or omitted prior to the date of this Release, including, without
limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and
Medical Leave Act of 1993, the Fair Employment Practices Act, the Equal Pay Laws, the Workers’
Compensation Act, the Family and Medical Leave Act, the Civil Rights Act of 1991, Sections 1981
through 1988 of Title 42 of the United States Code, the Employee Retirement Income Security Act of
1974, the California Fair Employment and Housing Act, the California Labor Code, the state and
federal Worker Adjustment and Retraining Notification Act, the California Business and Professions
Code, or any common law or statutory claim for fraud, wrongful termination, violation of public
policy or defamation, or any claim for compensation, severance pay, bonus, sick leave, holiday pay,
vacation pay, life insurance, health or medical insurance or any other fringe benefit, workers’
compensation or disability.



     Except for those obligations created by or arising out of this Release, and except as provided
below, Apria on behalf of itself and the Apria Releasees (to the extent the matter in question
arises on the basis of their relationship to Apria) hereby acknowledges full and complete
satisfaction of and releases and discharges, and covenants not to sue, Executive from and with
respect to any and all claims, agreements, obligations, losses, damages, injuries, demands and
causes of action, known or unknown, suspected or unsuspected, whether or not concealed or hidden,
arising out of or in any way connected with Executive’s employment relationship with any Apria
Releasee or his voluntary resignation from employment with the Apria Releasees, or any other
transactions, occurrences, actions, omissions, claims, losses, damages or injuries whatsoever,
known or unknown, suspected or unsuspected, which Apria now owns or holds or has at any time
heretofore owned or held as against Executive.



     5. It is the intention of Apria and Executive in executing this Release that the same shall be
effective as a bar to each and every claim, demand and cause of action hereinabove specified. In
furtherance of this intention, Apria and Executive hereby expressly waive any and all rights and
benefits conferred upon them by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and
expressly consent that this Release shall be given full force and effect according to each and all
of its express terms and provisions, including those related to unknown and unsuspected claims,
demands and causes of action, if any, as well as those relating to any other claims, demands and
causes of action hereinabove specified. SECTION 1542 provides:



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          “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST
HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”



     Apria and Executive, and each of them, acknowledge that either may hereafter discover claims
or facts in addition to or different from those which either or both of them now knows or believes
to exist with respect to the subject matter of this Release and which, if known or suspected at the
time of executing this Release, may have materially affected this settlement. Nevertheless, Apria
and Executive each hereby waive any right, claim or cause of action that might arise as a result of
such different or additional claims or facts. Apria and Executive each acknowledge that it or he
understands the significance and consequence of such release and such specific waiver of SECTION
1542.



     6. The terms and conditions of this Release shall remain confidential as between the parties
and professional advisers to the parties and neither of them shall disclose them to any other
person, except as provided herein or as required by the rules and regulations of the Securities and
Exchange Commission (“SEC”) or as otherwise may be required by law or court order. Without
limiting the generality of the foregoing, neither Apria nor Executive will respond to or in any way
participate in or contribute to any public discussion concerning, or in any way relating to, the
execution of this Release or the events which led to its execution. Except as provided above with
respect to SEC rules and regulations or as otherwise may be required by law or court order, if
inquiry is made of Apria concerning any of the claims released by this Release or relating to
Executive’s employment with Apria, Apria shall provide to third parties Executive’s dates of
employment with Apria and its predecessors and his job titles during such employment, in accordance
with the normal practices of Apria’s human resources department.



     7. Executive expressly acknowledges and agrees that, by entering into this Release, he is
waiving any and all rights or claims that may have arisen under the Age Discrimination in
Employment Act of 1967, as amended, which have arisen on or before the date of execution of this
Release. Executive further expressly acknowledges that:



          a. He is hereby advised in writing by this Release to consult with an attorney before signing
this Release;



          b. He was given a copy of this Release on ___, and informed that he had 21 days
within which to consider the Release, although he is free to accept this Release anytime within
that 21-day period; and



          c. He was informed that he has seven days following the date of his execution of this Release
in which to revoke the Release, which revocation may be effected by means of a written notice sent
to the General Counsel of Apria at Apria’s corporate headquarters.



3 









 





          d. Apria and Executive agree that this Release will not become effective or enforceable until
the seven-day revocation period has expired without his having revoked this Release.



     8. Apria and Executive each warrant and represent that neither has heretofore assigned or
transferred to any person not a party to this Release any released matter or any part or portion
thereof and each shall defend, indemnify and hold harmless the other from and against any claim
(including the payment of attorneys’ fees and costs actually incurred whether or not litigation is
commenced) based on or in connection with or arising out of any such assignment or transfer made,
purported or claimed.



     9. Apria and Executive acknowledge that any employment or contractual relationship between
them (including with any other Apria Releasee) will terminate on ___, that they have no
further employment or contractual relationship except as may arise out of this Release and that
Executive waives any right or claim to reinstatement as an employee of any Apria Releasee and will
not seek employment in the future with Apria, unless by mutual consent.



     10. This Release shall be incorporated into and made a part of the Severance Agreement as of
the date hereof. This Release together with the Severance Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof and supersedes all
prior and contemporaneous oral and written discussions, agreements and understandings of any kind
or nature. This Release shall inure to the benefit of and be binding upon the parties hereto and
their respective permitted successors and assigns. This Release does not, however, affect
Executive’s rights under any Apria retirement, 401(k), or similar benefit plan. This Release also
does not modify the provisions of any of Executive’s stock options, restricted stock purchase
rights or restricted stock units.



     11. If any provision of this Release or the application thereof is held invalid, the
invalidity shall not affect the other provisions or applications of this Release which can be given
effect without the invalid provisions or applications and to this end the provisions of this
Release are declared to be severable.



     12. This Release has been executed and delivered by Executive within the State of California,
and the rights and obligations of the parties hereunder shall be construed and enforced in
accordance with, and governed by, the laws of the State of California without regard to principles
of conflict of laws.



     13. This Release may be executed in counterparts, and each counterpart, when executed, shall
have the efficacy of a signed original. Photographic copies of such signed counterparts may be
used in lieu of the originals for any purpose.



     14. Any dispute or controversy between Executive on the one hand, and Apria (or any other
Apria Releasee), on the other hand, in any way arising out of, related to, or connected with this
Release or the subject matter hereof, or otherwise in any way arising out of, related to, or
connected with Executive’s employment with any Apria Releasee or the termination of



4 









 







Executive’s employment with any Apria Releasee, shall be submitted for resolution by arbitration in
accordance with the provisions of the Severance Agreement. APRIA AND EXECUTIVE ACKNOWLEDGE,
UNDERSTAND AND AGREE THAT IN THE EVENT OF A DISPUTE UNDER THIS RELEASE, EACH PARTY HAS WAIVED ANY
RIGHT TO A JURY TRIAL AND A JUDICIAL RESOLUTION OF THE DISPUTE.



     15. No waiver of any breach of any term or provision of this Release shall be construed to be,
or shall be, a waiver of any other breach of this Release. No waiver shall be binding unless in
writing and signed by the party waiving the breach.



     16. In entering this Release, the parties represent that they have relied upon the advice of
their attorneys, who are attorneys of their own choice, and that they have read the Release and
have had the opportunity to have the Release explained to them by their attorneys, and that those
terms are fully understood and voluntarily accepted by them.



     17. All parties agree to cooperate fully and to execute any and all supplementary documents
and to take all additional actions that may be necessary or appropriate to give full force to the
terms and intent of this Release and which are not inconsistent with its terms.



     18. Executive hereby declares as follows:



     I, ___, hereby acknowledge that I was given 21 days to consider the foregoing
Release and voluntarily chose to sign the Release prior to the expiration of the 21-day period.



     I have read the foregoing Release and I accept and agree to the provisions it contains and
hereby execute it voluntarily with full understanding of its consequences.



     I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.



[signature page follows]




5 









 








     IN WITNESS WHEREOF, the undersigned have executed and delivered this Release this ___day of
___, 20_.



	 	 	 	 	 
	 	 	 
	 	 	 
	 	[Executive] 	 
	 	 	 
	 	 	 
	 	 	 
	 



	 	 	 	 	 
	 	APRIA HEALTHCARE GROUP INC.

 	 
	 	By:  	 	 
	 	 	[Name] 	 
	 	 	[Title] 	 
	 




6