EXHIBIT 10.1


                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

      This  Amended and  Restated  Employment  Agreement  (the  "Agreement")  is
entered into by and between  APRIA  HEALTHCARE  GROUP INC. (the  "Company")  and
LAWRENCE  M. HIGBY (the  "Executive")  as of August 29,  2002,  effective  as of
February 12, 2002.

I.    EMPLOYMENT.
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      The Company hereby employs the Executive and the Executive  hereby accepts
such employment,  upon the terms and conditions  hereinafter set forth. The term
of the employment will continue until the termination of Executive's  employment
by reason of his written resignation,  termination by the Company for any reason
by written notice of termination,  or death.  The Executive's  employment may be
terminated  at any time by written  notice from the  Executive to the Company or
from the Company to the Executive, in the manner provided in Section XVI hereof.

II.   DUTIES.
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      A. The  Executive  shall serve during the course of his  employment as the
President and Chief Executive Officer of the Company,  reporting to the Board of
Directors.   The  Executive  shall  be  the  senior  executive  officer  of  the
Corporation,  with the authority to supervise and direct the other  officers and
employees of the  Corporation,  and with authority from time to time to delegate
to other  officers such  executive and other powers with duties as he shall deem
appropriate, subject in all respects to the authority of the Board.

      B. The Executive agrees to devote  substantially  all of his time,  energy
and ability to the business of the  Company.  Nothing  herein shall  prevent the
Executive,  upon approval of the Board of Directors of the Company, from serving
as a director or trustee of other  corporations  or businesses  which are not in
competition  with the business of the Company or in competition with any present
or future  affiliate of the Company.  Nothing herein shall prevent the Executive
from  investing in real estate for his own account or from becoming a partner or
a  stockholder  in  any  corporation,   partnership  or  other  venture  not  in
competition  with the business of the Company or in competition with any present
or future affiliate of the Company.

III.  COMPENSATION.
      ------------

      A. Salary. The Company will pay to the Executive a base salary at the rate
of $600,000 per year.  Such salary shall be payable in periodic  installments in
accordance  with the Company's  customary  practices.  Amounts  payable shall be
reduced  by  standard   withholdings  and  other  authorized   deductions.   The
Executive's  salary may be increased  from time to time at the discretion of the
Company's Board of Directors or its Compensation Committee. Annual increases, if
granted, will normally be effective as of January 1 of each year.

      B. Annual Bonus,  Incentive,  Savings and Retirement  Plans. The Executive
shall be entitled to  participate  in all annual bonus,  incentive,  savings and
retirement plans, practices, policies and programs applicable generally to other
executives of the Company,  including without limitation the Company's Incentive
Compensation Plan and the Company's 401(k) Savings Plan.

      C. Welfare Benefit Plans. The Executive and/or his family, as the case may
be, shall be eligible for  participation in and shall receive all benefits under
welfare benefit plans, practices,  policies and programs provided by the Company
(including,  without  limitation,  medical,  prescription,  dental,  disability,
salary continuance,  group life,  accidental death and travel accident insurance
plans and programs) to the extent  applicable  generally to other  executives of
the Company.  The Company  reserves the right to modify,  suspend or discontinue
any and all of the above  plans,  practices,  policies  and programs at any time
without recourse by the Executive so long as such action is taken generally with
respect to other similarly  situated peer executives and does not single out the
Executive.

      D. Expenses.   The  Executive   shall   be   entitled  to  receive  prompt
reimbursement  for  all  reasonable  employment  expenses  incurred  by  him  in
accordance  with the policies,  practices and procedures as in effect  generally
with respect to other executives of the Company.

      E. Fringe  Benefits.  The Executive shall be entitled to fringe  benefits,
including without limitation (i) a car allowance of $14,400 per year, payable in
periodic installments in accordance with the Company's customary practices, (ii)
reasonable access to the Company's  independent  auditors for personal financial
planning,  (iii) reasonable travel and entertainment expenses of the Executive's
spouse,  on an  actually  incurred  basis  when  necessary  in  connection  with
participation in Company events, and (iv) such other benefits in accordance with
the plans,  practices,  programs and policies as may be in effect generally with
respect to other executives of the Company.

      F.  Vacation.  The  Executive  shall  be  entitled  to four  weeks of paid
vacation annually,  to be available and prorated monthly during the term of this
Agreement and otherwise to be consistent  with the vacation  policy and practice
applicable to other executives of the Company.

IV.   TERMINATION.
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      A.  Death  or  Disability.  The  Executive's  employment  shall  terminate
automatically  upon the  Executive's  death.  If the Company  determines in good
faith  that the  Disability  of the  Executive  has  occurred  (pursuant  to the
definition of Disability set forth below),  it may give to the Executive written
notice  in  accordance  with  Section  XVI of its  intention  to  terminate  the
Executive's  employment.  In such event,  the  Executive's  employment  with the
Company shall  terminate  effective on the 30th day after receipt of such notice
by the  Executive,  provided  that,  within the 30 days after such receipt,  the
Executive  shall not have returned to full-time  performance of his duties.  For
purposes  of this  Agreement,  "Disability"  shall  mean a  physical  or  mental
impairment which substantially limits a major life activity of the Executive and
which  renders the Executive  unable to perform the  essential  functions of his
position,  even with  reasonable  accommodation  which  does not impose an undue
hardship on the Company.  The Company reserves the right, in good faith, to make
the  determination  of Disability  under this Agreement  based upon  information
supplied by the Executive and/or his medical  personnel,  as well as information
from medical personnel (or others) selected by the Company or its insurers.

      B. Cause. The Company may terminate the Executive's  employment for Cause.
For purposes of this Agreement,  "Cause" shall mean that the Company,  acting in
good faith based upon the information then known to the Company, determines that
the Executive has engaged in or committed:  willful misconduct;  theft, fraud or
other illegal conduct;  refusal or  unwillingness  to substantially  perform his
duties (other than such failure resulting from the Executive's Disability) for a
30-day period after written demand for  substantial  performance is delivered by
the Company that specifically refers to this paragraph and identifies the manner
in which the Company believes the Executive has not substantially  performed his
duties;  insubordination;  any  willful  act that is likely to and which does in
fact have the effect of injuring  the  reputation  or  business of the  Company;
violation of any fiduciary duty; violation of the Executive's duty of loyalty to
the  Company;  or a breach of any term of this  Agreement.  For purposes of this
paragraph,  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
and  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  Chairman of the Board stating
that the Board of Directors of the Company has determined that the Executive has
engaged in or committed  conduct of the nature  described in the second sentence
of this paragraph, and specifying the particulars thereof in detail.

      C. Other than Cause or Death or  Disability.  The Executive or the Company
may terminate the Executive's  employment at any time,  without Cause, by giving
the other party to this  Agreement  at least 30 days advance  written  notice of
such termination, subject to the provisions of this Agreement.

      D. Obligations of the Company Upon Termination.

      1. Death or  Disability.  If the  Executive's  employment is terminated by
reason of the  Executive's  death or Disability,  this Agreement shall terminate
without further obligations to the Executive or his legal  representatives under
this  Agreement,  other than for (a)  payment of the sum of (i) the  Executive's
base salary  through the date of  termination  of  employment  to the extent not
theretofore  paid,  plus  (ii)  any  earned  vacation  pay,  to the  extent  not
theretofore paid (the sum of the amounts described in clauses (i) and (ii) shall
be hereinafter referred to as the "Accrued Obligations"), which shall be paid to
the Executive or his estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the date of termination of employment;  and (b) payment to the
Executive or his estate or beneficiary,  as applicable, any amounts due pursuant
to the terms of any applicable welfare benefit plans.

      2. Cause. If the  Executive's  employment is terminated by the Company for
Cause,  this  Agreement  shall  terminate  without  further  obligations  to the
Executive other than for the timely payment of the Accrued Obligations. If it is
subsequently  determined  that the  Company  did not have Cause for  termination
under this Section  IV-D-2,  then the Company's  decision to terminate  shall be
deemed to have been made under Section IV-D-3 and the amounts payable thereunder
shall be the only amounts the Executive may receive for his termination.


      3. Other than Cause or Death or Disability.


      (a)  If, during the term of this Agreement, (i)the Company  terminates the
           Executive's  employment  for other than Cause or death or Disability,
           or (ii) the Executive  terminates his employment  hereunder with Good
           Reason (as defined below), the Executive's employment shall terminate
           and the Executive shall be entitled to receive the following:

           (i)  the Accrued Obligations (as defined in Section IV-D-1) as of the
                date of termination of employment; and

           (ii) in exchange for the  post-termination  covenants provided in the
                Nondisclosure and  Noncompetition  Agreement  attached hereto as
                Exhibit  A  (the   "Nondisclosure   Agreement"),   the  payments
                described  in  Section  3(b)  of  the  Nondisclosure  Agreement.
                Nothing in this  Section  IV-D-3(a)  shall be deemed to create a
                presumption  concerning  the reason for the  termination  of the
                Executive's employment.

           Any payment made pursuant to this Section  IV-D-3(a) shall be reduced
           by all amounts  required to be withheld by applicable  law, and shall
           only be made  in  exchange  for a valid  release  of all  claims  the
           Executive  may have against the Company in a form  acceptable  to the
           Company. Such payment shall constitute the sole and entire obligation
           of the  Company  to  provide  any  compensation  or  benefits  to the
           Executive  upon   termination,   except  for  obligations  under  the
           Company's 401(k) Savings Plan,  obligations  pursuant to the terms of
           any outstanding stock option agreements,  the Company's obligation to
           provide the benefits  required by Section  IV-D-3(c)  below,  and the
           Company's  obligations to make payments required to be made under any
           other incentive compensation plan.

      (b)  The term "Good Reason" means:

           (i)  the  Executive's  annual base  salary is  reduced,  except for a
                general  one-time   "across-the   board"  salary  reduction  not
                exceeding ten percent (10%) which is imposed  simultaneously  on
                all 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; or

           (iii)if  the  Company's  Board  of  Directors  does  not  permit  the
                Executive  to continue to serve as the Chief  Executive  Officer
                with  the  responsibilities  as  described  in  Section  II-A or
                another mutually acceptable senior executive position; or

           (iv) there shall  occur a "change of control" of the Company  and, at
                any  time  concurrent  with  or  during  the  six-month   period
                following such change of control,  the Executive shall have sent
                to the  Chairman of the  Company's  Board of Directors a written
                notice  terminating  his  employment on a date specified in said
                notice.  For  purposes of this  Agreement,  the term  "change of
                control" shall mean the occurrence of one of the following:

                (1)  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;

                (2)  all or substantially  all of the business of the Company is
                     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  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 corporation;

                (3)  the Company is materially or completely liquidated; or

                (4)  any person  (other than the Company)  purchases  any common
                     stock of the Company in a tender or exchange offer with the
                     intent,  expressed or implied,  of  purchasing or otherwise
                     acquiring control of the Company.

      Notwithstanding  clause (1)  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.

      (c)  In  the  event  of any  termination  of  the  Executive's  employment
           pursuant to Section IV-D-3(a), the Company shall, for a period of one
           year  following the  termination  date,  provide the  Executive  with
           appropriate  office  space in a  furnished  office  suite,  including
           reasonable secretarial, telephone, copying and delivery services. The
           Company  shall not be  required to spend more than a total of $50,000
           to provide this benefit to the Executive.

      (d)  In the event the Executive initiates  arbitration pursuant to Section
           VI to enforce his rights to any payments  under this  Section  IV-D-3
           (including  but not  limited  to  payments  under  the  Nondisclosure
           Agreement),  or the  Company  seeks to  withhold  or reduce  any such
           payments for any reasons, 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 so determines as
                provided in Section VI; and

           (iii)all such payments  required under this Agreement  (including but
                not limited to payments under the Nondisclosure Agreement) shall
                continue  to be made on the dates  provided  herein  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 VI has been
                rendered  and such  determination  provides  that the Company is
                entitled to assert any such offset,  claim or charge against the
                Executive.

      4. Exclusive Remedy.  The Executive agrees that the payments  contemplated
by this  Agreement  shall  constitute  the  exclusive  and sole  remedy  for any
termination  of his  employment  and the  Executive  covenants  not to assert or
pursue any other remedies,  at law or in equity, with respect to any termination
of employment.

V.    CERTAIN MODIFICATIONS TO NONDISCLOSURE AGREEMENT.
      -------------------------------------------------

      The Nondisclosure Agreement provides for certain payments to the Executive
if the  Executive  agrees  to  refrain  from  taking  certain  actions  within a
specified period following a termination of employment,  including  accepting an
employment  or  consulting  relationship  with  a  principal  competitor  of the
Company. The Company and the Executive may, from time to time (but no more often
than once during any six (6)-month  period and no later than the occurrence of a
Change of  Control),  propose to add or delete  one or more  names of  principal
competitors to or from, as  applicable,  those  identified in the  Nondisclosure
Agreement by giving  notice to the other party as specified in Section XVI. Such
addition  or deletion  shall be made if such entity  becomes or ceases to be, as
applicable, a principal competitor of the Company,  provided that there shall be
no more than three (3) principal  competitors  of the Company  identified on the
Nondisclosure  Agreement at any given time.  If no objection to such proposal is
made within ten (10) business days following the giving of notice thereof,  such
proposal  shall be deemed  accepted  and the  Nondisclosure  Agreement  shall be
modified  accordingly.  Any dispute  concerning  the operation of this Section V
shall be resolved in the manner specified in Section VI hereof.


VI.   ARBITRATION.
      ------------

      Any  dispute  or  controversy  arising  under or in  connection  with this
Agreement or 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.  Such arbitration  shall be conducted in
Orange  County,  California,  and the  arbitrator  shall be a resident of Orange
County,  California  or of a county  contiguous  to Orange  County,  California.
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 any  court of  competent  jurisdiction  to
prevent any continuation of any violation of the provisions of the Nondisclosure
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. Any arbitration proceeding pertaining to this
Agreement shall be consolidated  with any arbitration  proceeding  pertaining to
the Nondisclosure  Agreement. The arbitrator's order shall specify, based on the
outcome  of the  arbitration,  whether  the  Executive  shall  repay  any of the
Executive's  expenses  theretofore  paid  by the  Company  pursuant  to  Section
IV-D-3(d)(ii).  The fees and  expenses of the  arbitrator  shall be borne by the
Company.

VII.  REFRAINING FROM UNFAIR COMPETITION.
      -----------------------------------

      A. Concurrently herewith, the Executive is entering into the Nondisclosure
Agreement.

      B. The  Company  and the  Executive  hereby  agree  that the  terms of the
Nondisclosure  Agreement are incorporated into this Agreement by this reference,
and shall be a part hereof.

VIII. EXCISE TAX.
      -----------

      A. 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"), the Company will pay to the Executive a  "Reimbursement  Amount"
equal to the total of: (A) any Excise Tax on the Covered Payments,  plus (B) any
Federal,  state, and local income taxes,  employment and excise taxes (including
the  Excise  Tax) on the  Reimbursement  Amount,  plus  (C) the  product  of any
deductions disallowed for Federal, state or local income tax purposes because of
the inclusion of the Reimbursement  Amount in the Executive's  income multiplied
by the Executive's  combined  Federal,  state, and local income tax rate for the
calendar year in which the Reimbursement Amount is includible in the Executive's
taxable  income,  plus (D) any  interest,  penalties or additions to tax imposed
under  applicable  law in  connection  with the Excise Tax or the  Reimbursement
Amount, plus (E) any reasonable out-of-pocket costs incurred by the Executive in
connection with any of the foregoing.  For purposes of this Section VIII-A,  the
Executive  will be  deemed  to pay  (1)  Federal  income  taxes  at the  highest
applicable  marginal rate of Federal income  taxation  applicable to individuals
for the calendar  year in which the  Reimbursement  Amount is  includible in the
Executive's  taxable income and (2) any applicable  state and local income taxes
at the highest  applicable  marginal rate of taxation  applicable to individuals
for the calendar  year in which such  Reimbursement  Amount is includible in the
Executive's taxable income, net of the maximum reduction in Federal income taxes
which could be obtained  from the deduction of such state or local taxes if paid
in such year (determined  without regard to limitations on deductions based upon
the  amount of the  Executive's  adjusted  gross  income).  Except to the extent
provided in Section VIII-C below,  this provision is intended to put Employee in
the same  position  as Employee  would have been had no Excise Tax been  imposed
upon or incurred as a result of any Payment.

      B. The payment of a Reimbursement Amount under this Section VIII shall not
be conditioned upon the Executive's termination of employment.

      C. Notwithstanding the foregoing provisions of this Section VIII-A, if the
Company  determines that,  absent this sentence,  the Executive is entitled to a
Reimbursement Amount, but that the portion of the Covered Payments that would be
treated as  "parachute  payments"  under Code Section 280G  ("Covered  Parachute
Payments")  does not exceed  103% of the  greatest  amount of Covered  Parachute
Payments  that  could be paid to the  Executive  such that the  receipt  of such
Covered  Parachute  Payments  would not give rise to any  Excise  Tax (the "Safe
Harbor  Amount"),  then no  Reimbursement  Amount shall be paid to the Executive
(unless for any reason  Executive is  determined to be subject to the Excise Tax
after  application  of the  balance  of this  sentence,  in which  case the full
Reimbursement  Amount shall be paid), and the Covered Parachute Payments payable
under this Agreement shall be reduced so that the Covered Parachute Payments, in
the aggregate,  are reduced to the Safe Harbor Amount.  For purposes of reducing
the Covered Parachute  Payments to the Safe Harbor Amount,  only amounts payable
under this Agreement  shall be reduced.  If the reduction of the amounts payable
under this  Agreement  would not result in a reduction of the Covered  Parachute
Payments to the Safe Harbor Amount,  no amounts  payable under this Agreement or
otherwise shall be reduced  pursuant to this Section  VIII-C.  The Company shall
notify the Executive of any intent to reduce the amount of any Covered  Payments
in accordance with this Section VIII-C (which notice,  if practicable,  shall be
given  prior to the  occurrence  of an event  that  would give rise to a Covered
Parachute Payment), and 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.

      D. The  determination  of  whether  an  event  described  in Code  Section
280G(b)(2)(A)(i) has occurred, the amount of any Reimbursement Amount and/or the
amounts  described  in  Section  VIII-C  above  shall  be made  initially  by an
accounting firm mutually acceptable to the Company and the Executive;  provided,
however, that nothing herein shall limit the Executive's right to payment of the
Reimbursement  Amount in the  event it is  determined  that any of such  initial
determinations was incorrect.

      E. The Executive shall promptly notify the Company in writing of any claim
by any taxing  authority  that, if successful,  would require the payment by the
Company  of a  Reimbursement  Amount;  provided,  however,  that  failure by the
Executive  to give  such  notice  promptly  shall  not  result  in a  waiver  or
forfeiture  of any of the  Executive's  rights under this Section VIII except to
the  extent  of  actual  damages  suffered  by the  Company  as a result of such
failure.  If the Company  notifies the Executive in writing within 15 days after
receiving such notice that it desires to contest such claim (and demonstrates to
the  reasonable  satisfaction  of the Executive its ability to pay any resulting
Reimbursement Amount), the Executive shall:

      1.  give the Company any information  reasonably  requested by the Company
          relating to such claim;

      2.  take such  action in  connection  with  contesting  such  claim as the
          Company  shall  reasonably  request  in  writing  from  time to  time,
          including,  without  limitation,  accepting legal  representation with
          respect to such claim by an attorney  selected by the Company  that is
          reasonably acceptable to the Executive;

      3.  cooperate  with the  Company  in good  faith in order  effectively  to
          contest such claim; and

      4.  permit the Company to participate in any proceedings  relating to such
          claim;

provided, however, that the Company's actions do not unreasonably interfere with
or prejudice  the  Executive's  disputes  with the taxing  authority as to other
issues;  and  provided,  further,  that  the  Company  shall  bear and pay on an
after-tax  and  as-incurred  basis,  all  attorneys  fees,  costs  and  expenses
(including  additional  interest,  penalties  and  additions to tax) incurred in
connection  with  such  contest  and  shall  indemnify  and hold  the  Executive
harmless,  on an  after-tax  and  as-incurred  basis,  for all  resulting  taxes
(including,  without limitation,  income and excise taxes), interest,  penalties
and additions to tax.

IX.   SUCCESSORS.
      ----------

      A. This Agreement is personal to the Executive and shall not,  without the
prior written consent of the Company, be assignable by the Executive.

      B. This  Agreement  shall inure to the benefit of and be binding  upon the
Company,   its  subsidiaries  and  its  successors  and  assigns  and  any  such
subsidiary,  successor or assignee shall be deemed  substituted  for the Company
under the terms of this Agreement for all purposes. As used herein,  "successor"
and  "assignee"  shall include any person,  firm,  corporation or other business
entity which at any time, whether by purchase, merger or otherwise,  directly or
indirectly  acquires  the stock of the Company or to which the  Company  assigns
this Agreement by operation of law or otherwise.

X.    WAIVER.
      -------

      No waiver of any breach of any term or provision of this  Agreement  shall
be  construed  to be,  nor  shall  be,  a waiver  of any  other  breach  of this
Agreement.  No waiver shall be binding unless in writing and signed by the party
waiving the breach.

XI.   MODIFICATION.
      -------------

      This  Agreement  may not be  amended or  modified  other than by a written
agreement  executed by the Executive and the Company's  Chairman of the Board of
Directors,  or if the  Executive is the Chairman of the Board,  any such written
agreement  shall be executed by the  Executive and the Chairman of the Corporate
Governance and Nominating Committee of the Board.

XII.  SAVINGS CLAUSE.
      --------------

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

XIII. COMPLETE AGREEMENT.
      -------------------

      This  Agreement  constitutes  and contains the entire  agreement and final
understanding  concerning the  Executive's  employment  with the Company and the
other subject matters  addressed  herein between the parties.  It is intended by
the  parties  as a  complete  and  exclusive  statement  of the  terms  of their
agreement  from and after the date hereof.  It supersedes and replaces all prior
negotiations and all agreements proposed or otherwise,  whether written or oral,
concerning  the  subject  matter  hereof,   including  without   limitation  the
Executive's  Employment  Agreements  dated  November 7, 1997,  January 26, 1998,
February 27, 1999, and December 7, 2000,  except that (i) such prior  agreements
shall remain in effect with respect to the time periods prior to the date hereof
during  which such  agreements  were in effect,  and (ii) any  reference  in the
Executive's  stock option  agreements with the Company to the term "Good Reason"
as  defined  in such  agreements  shall be deemed to refer to "Good  Reason"  as
defined  in  this  Agreement.  Any  representation,  promise  or  agreement  not
specifically included in this Agreement shall not be binding upon or enforceable
against either party. This is a fully integrated agreement.

XIV.  GOVERNING LAW.
      -------------

      This Agreement shall be deemed to have been executed and delivered  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, by the laws
of the State of California without regard to principles of conflict of laws.

XV.   CONSTRUCTION.
      -------------

      In any  construction to be made of this  Agreement,  the same shall not be
construed  against  any party on the basis that the party was the  drafter.  The
captions of this Agreement are not part of the provisions  hereof and shall have
no force or effect.


XVI.  COMMUNICATIONS.
      ---------------

      All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if  delivered  by hand or
by courier,  or if mailed by  registered  or certified  mail,  postage  prepaid,
addressed to the Executive at 218 Via Lido Nord, Newport Beach, California 92663
or addressed to the Company at 26220 Enterprise Court,  Lake Forest,  California
92630,  Attention:  Chairman  of  the  Board,  with a copy  to the  Senior  Vice
President  and General  Counsel,  and with a copy to the Senior Vice  President,
Human Resources; provided, however, that if the Executive is the Chairman of the
Board,  such  communication  shall  be sent  to the  Chairman  of the  Corporate
Governance and Nominating  Committee of the Board  (together with such copies to
the Senior Vice  President  and General  Counsel and the Senior Vice  President,
Human  Resources).  Either party may change the address at which notice shall be
given by written notice given in the above manner.

XVII. EXECUTION.
      ----------

      This Agreement may be executed in one or more counterparts,  each of which
shall be deemed an original,  but all of which together shall constitute one and
the same instrument.  Xerographic copies of such signed counterparts may be used
in lieu of the originals for any purpose.

XVIII.LEGAL COUNSEL.
      -------------

      The Executive and the Company recognize that this is a legally binding
contract and acknowledge and agree that they have had the opportunity to consult
with legal counsel of their choice.

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

APRIA HEALTHCARE GROUP INC.                 THE EXECUTIVE



By ____________________________             _____________________________
       Ralph V. Whitworth                      Lawrence M. Higby
       Chairman

<PAGE>
                                                                     EXHIBIT A

                   NONDISCLOSURE AND NONCOMPETITION AGREEMENT

      This  Nondisclosure  and  Noncompetition  Agreement (this  "Agreement") is
dated as of the 12th day of February, 2002 by and between Lawrence M. Higby (the
"Executive") and Apria Healthcare Group Inc. (the "Company).

                                    RECITALS

      WHEREAS,   concurrently  herewith,  the  Executive  is  entering  into  an
Employment Agreement with the Company dated as of the 12th day of February, 2002
(the "Employment Agreement");

      WHEREAS,  the Employment  Agreement  provides that this Agreement shall be
incorporated  by reference into and become a part of the  Employment  Agreement;
and

      WHEREAS, the Executive and the Company hereby intend to enter into certain
agreements  pertaining to  confidentiality  and their obligations to perform and
refrain from  performing  certain acts prior to and following the termination of
the  Executive's  employment  with  the  Company,  and  for the  Company  to pay
consideration to the Executive in exchange for the agreement by the Executive to
take and refrain from taking  certain  actions  following  such  termination  of
employment.

                                    AGREEMENT

      1.  Acknowledgements by the Executive.  The Executive acknowledges that:

      (a) In carrying out his duties and  responsibilities  under the Employment
Agreement  and his  predecessor  employment  agreement  with  the  Company,  the
Executive  is  a  member  of  the  Company's  senior  executive  management  and
participates  in formulating and  implementing  business plans and policies that
are and will continue to be essential to the Company's competitive success;

      (b) These activities require relationships of trust and confidence between
the Executive and the Company's other officers and the Company's directors;

      (c) The  Executive,  in the  performance  of his  duties  on behalf of the
Company, has had and will have access to, has received and will receive, and was
entrusted and will 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
owned 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 was and will be made available to
the Executive in confidence;

      (d) 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;

      (e) The  Executive's  employment with a competitor of the Company within a
reasonable  time following the  termination  of his employment  with the Company
would  create a  substantial  likelihood  that the  Executive  would  inevitably
disclose or use, to the detriment of the Company, such Confidential Information,
and that it is essential to the Company's legitimate business interests and also
to free and fair  competition  in the  industry  within  which the Company  does
business, to protect the Company's Confidential Material from disclosure; and

      (f) The risk of inevitable  disclosure is  particularly  applicable to any
such  employment  by the  Executive  in a similar  senior  position  with  those
competitors of the Company that are similar in operation,  service, missions and
markets to the  Company  ("Principal  Competitors"),  and that as of the date of
this Agreement the Principal  Competitors are Lincare Holdings,  Inc.,  American
Home  Patient,  Rotech  Medical  Corporation  and their parent,  affiliated  and
subsidiary companies.

      2.  Nondisclosure  and  Noncompetition  Agreement.  The  Executive  hereby
acknowledges, represents, warrants and covenants that:

      (a)  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 the Employment 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  agrees that he shall not engage in unfair  competition
either during the time employed by the Company or any time thereafter;

      (c) The Executive will not,  within one year following the  termination of
his  employment  with the Company  (the  "Post-Termination  Period"),  accept an
employment or consulting relationship,  directly or indirectly,  with any entity
engaged in the business of home respiratory therapy,  home infusion therapy, and
home  medical  equipment,   within  the  United  States.  Without  limiting  the
generality of the foregoing,  during the Post-Termination  Period, the Executive
has not accepted and will not accept any  employment or consulting  relationship
with any Principal Competitor;

      (d) During  the term of his  employment  and  during the  Post-Termination
Period, the Executive will not initiate communications with any of the Company's
employees  who  earned  annually  $50,000 or more as a Company  employee  during
six-month period prior to the termination of such employee's employment with the
Company,  for the  purpose of  soliciting  such  employee  to work for any other
business, individual, partnership, firm, corporation, or other entity; and

      (e) During  the term of his  employment  and  during the  Post-Termination
Period,  the Executive  will not influence or attempt to influence  customers 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.

      3. Agreement to Compensate the Executive.


      (a) The parties  agree that the Executive  will be adequately  compensated
under  the  Employment  Agreement,  without  regard to this  Section  3, for the
representations  and  warranties  set forth above and for the covenants that the
Executive  has  agreed  herein to perform  prior to the date of the  Executive's
termination of employment.

      (b) The parties  further  agree that,  if the  Executive's  employment  is
terminated under either of the circumstances described in Section IV-3(a) of the
Employment  Agreement,  the Executive shall be entitled to the receive  payments
that in the aggregate equal the  Post-Termination  Covenant  Payment (as defined
below),  it being  understood  that (i) such payments are intended to compensate
the Executive fully for the performance of the covenants of Executive during the
Post-Termination  Period provided in Section 2 above,  and (ii) the Executive is
not  entitled  to receive  any  payments  under this  Section 3 in the event the
Executive's  employment is terminated  other than under one of the  circumstance
described in Section IV-3(a) of the Employment Agreement.

      As used herein, the term  "Post-Termination  Payment" shall mean an amount
equal to three (3) times the sum of: (i) the  Executive's  annual base salary in
effect on such  date,  plus (ii) the  average  of the  Executive's  two (2) most
recent  annual  bonuses,   if  any,  received  under  the  Company's   Incentive
Compensation  Plan  prior  to  such  notice  of  termination,   plus  (iii)  the
Executive's annual car allowance as of such date, plus (iv) an amount determined
by the Company in its sole discretion to be equal to the average annual cost for
Company employees of obtaining medical, dental and vision insurance under COBRA,
which amount is hereby initially determined to be $10,000.

      (c)  Timing  of  Payment.  The  Post-Termination  Payment  payable  to the
Executive  pursuant to Section 3(b) above shall be divided into  fifty-two  (52)
equal installments and paid weekly over the fifty-two (52)-week period beginning
on the third (3rd) business day after termination of the Executive's  employment
with  the  Company,  and on the  same day of each of the  fifty-one  (51)  weeks
thereafter.

      4. Miscellaneous

      (a) 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.  Such arbitration shall be
conducted in Orange County,  California,  and the arbitrator shall be a resident
of  Orange  County,  California  or of a county  contiguous  to  Orange  County,
California.  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 any court of competent jurisdiction to
prevent any continuation of any violation of the provisions of Section 2 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. Any arbitration proceeding pertaining to this
Agreement shall be consolidated  with any arbitration  proceeding  pertaining to
the Employment  Agreement.  The arbitrator's  order shall specify,  based on the
outcome  of the  arbitration,  whether  the  Executive  shall  repay  any of the
Executive's  expenses  theretofore  paid  by the  Company  pursuant  to  Section
IV-D-3(d)(ii)  of  the  Employment  Agreement.  The  fees  and  expenses  of the
arbitrator shall be borne by the Company.

      (b) Successors.

      (i) This Agreement is personal to the Executive and shall not, without the
prior written consent of the Company, be assignable by the Executive.

      (ii) This Agreement  shall inure to the benefit of and be binding upon the
Company,   its  subsidiaries  and  its  successors  and  assigns  and  any  such
subsidiary,  successor or assignee shall be deemed  substituted  for the Company
under the terms of this Agreement for all purposes. As used herein,  "successor"
and  "assignee"  shall include any person,  firm,  corporation or other business
entity which at any time, whether by purchase, merger or otherwise,  directly or
indirectly  acquires  the stock of the Company or to which the  Company  assigns
this Agreement by operation of law or otherwise.

      (c)  Waiver.  No waiver of any  breach  of any term or  provision  of this
Agreement  shall be  construed to be, nor shall be, a waiver of any other breach
of this  Agreement.  No waiver shall be binding  unless in writing and signed by
the party waiving the breach.

      (d) Modification. This Agreement may not be amended or modified other than
by a written agreement  executed by the Executive and the Company's  Chairman of
the Board of Directors,  or if the  Executive is the Chairman of the Board,  any
such written  agreement  shall be executed by the  Executive and the Chairman of
the Corporate Governance and Nominating Committee of the Board.

      (e) Savings Clause.  If any provision of this Agreement or the application
thereof is held invalid,  such invalidity  shall not affect any other provisions
or  applications  of the Agreement which can be given effect without the invalid
provisions or  applications  and, to this end, the  provisions of this Agreement
are declared to be severable.

      (f)  Complete  Agreement.  This  Agreement  and the  Employment  Agreement
constitute and contain the entire agreement and final  understanding  concerning
the  Executive's  employment  with the  Company  and the other  subject  matters
addressed  herein  between  the  parties.  This  Agreement  and  the  Employment
Agreement are intended by the parties as a complete and  exclusive  statement of
the terms of their agreement.  They supersede and replace all prior negotiations
and all agreements  proposed or otherwise,  whether written or oral,  concerning
the  subject  matter  hereof.  Any  representation,  promise  or  agreement  not
specifically included in this Agreement or the Employment Agreement shall not be
binding upon or enforceable against either party. This Agreement,  together with
the Employment Agreement, constitute a fully integrated agreement.

      (g) Governing  Law. This  Agreement  shall be deemed to have been executed
and delivered  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, by the laws of the State of California without regard to principles
of conflict of laws.

      (h)  Construction.  In any construction to be made of this Agreement,  the
same shall not be  construed  against  any party on the basis that the party was
the  drafter.  The  captions of this  Agreement  are not part of the  provisions
hereof and shall have no force or effect.

      (i)   Communications.   All   notices,   requests,   demands   and   other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly given if delivered  by hand or by courier,  or if mailed by  registered  or
certified  mail,  postage  prepaid,  addressed to the  Executive at 218 Via Lido
Nord,  Newport  Beach,  California  92663,  or addressed to the Company at 26220
Enterprise Court, Lake Forest,  CA 92630,  Attention:  Senior Vice President and
General  Counsel,  with a copy to the  attention  of the Senior Vice  President,
Human  Resources.  Either  party may change the address at which notice shall be
given by written notice given in the above manner.

      (j) Execution. This Agreement may be executed in one or more counterparts,
each of which  shall be  deemed an  original,  but all of which  together  shall
constitute  one and the  same  instrument.  Xerographic  copies  of such  signed
counterparts may be used in lieu of the originals for any purpose.

      (k) Legal Counsel.  The Executive and the Company recognize that this is a
legally  binding  contract and acknowledge and agree that they have each had the
opportunity to consult with legal counsel of their choice.

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

APRIA HEALTHCARE GROUP INC.                 THE EXECUTIVE

By ____________________________             _____________________________
     Ralph V. Whitworth                       Lawrence M. Higby
     Chairman