EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT


          This  Employment  Agreement (the  "Agreement")  is entered into by and
     between  APRIA  HEALTHCARE  GROUP INC.  (the  "Company")  and  LAWRENCE  A.
     MASTROVICH (the "Executive"), as of April 4, 2002.


     I. EMPLOYMENT.

          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,
     provided that for purposes of Section IV-D-3,  the "Expiration  Date" shall
     initially be April 7, 2004,  and shall be extended one (1) day for each day
     of the Executive's  employment  during the term of this Agreement until the
     Executive's  employment is terminated for any reason. For instance,  if the
     Executive's  employment  with the Company is terminated on January 1, 2003,
     the Expiration Date shall be December 31, 2004. 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.

          The Executive  shall serve during the course of his  employment as the
     Chief  Operating  Officer of the Company,  reporting to the Chief Executive
     Officer.  The Executive shall 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,
     provided  such  duties and  responsibilities  are the types of duties  that
     would  ordinarily be assigned to a person with employment  experience and a
     position  comparable  to that of the  Executive.  Initially,  the Executive
     shall  have  responsibility  for the  following  areas:  field  operations,
     corporate  logistics,  corporate revenue management,  clinical services and
     regulatory   affairs  and  compliance.   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 in interest with
     his  duties to the  Company,  or  which,  in the  judgment  of the Board of
     Directors of the Company, interfere with the performance of the Executive's
     duties to the Company.

     III. COMPENSATION.

          A. The Company will pay to the  Executive a base salary at the rate of
     $375,000 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.

          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 the Chief Executive Officer of the Company,  including without
     limitation (i) the Company's Executive Bonus Plan (a copy of which has been
     previously provided to the Executive) and (ii) 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 senior 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 $8,400 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 conjunction  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 the
     Chief Executive Officer 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.

          G.  Relocation.  The  Executive  agrees to relocate his family and his
     primary residence to Orange County,  California,  and to perform his duties
     under Section II of this Agreement  primarily from the Company's  executive
     offices in Lake Forest, California. The Company shall provide the Executive
     with the relocation  benefits described in the Company's offer letter dated
     March 29, 2002.

     IV. TERMINATION.

          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  XVII  if 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; failure 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 material  term of this  Agreement for a 30-day
     period  after  written  notification  is  delivered  by  the  Company  that
     specifically  refers to this  paragraph and  identifies the manner in which
     the Company  believes the  Executive  has breached a material  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  Chief  Executive  Officer or Chairman of the Board
     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
     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, (i) any amounts due pursuant to the terms
          of any applicable welfare benefit plans; (ii) obligations  pursuant to
          the  terms of any  outstanding  stock  option  agreements;  and  (iii)
          obligations under the Company's 401(k) Savings Plan.

          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:

          (1) an amount equal to the Contract  Balance (as defined below) in one
          lump sum upon such termination of his employment; and

          (2)  the  Accrued  Obligations  as  of  the  date  of  termination  of
          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,  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) if 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) if,  following  the  Executive's  relocation  to the  Orange
               County, California area, 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 does not permit the Executive to continue to
               serve  as  the  Chief  Operating   Officer  or  another  mutually
               acceptable senior executive position.

          (c) The term  "Contract  Balance"  means an amount equal to the annual
          base salary and car allowance  that  Executive  would have earned from
          the Company had the Executive  continued his employment  from the date
          the  Executive's  employment  terminated  through the Expiration  Date
          (i.e.,  base salary and car  allowance  for two (2) years),  using the
          rate of base  salary  and the car  allowance  in effect on the date on
          which  the   Executive   received  or  gave  written   notice  of  his
          termination,  plus an amount  equal to two (2) times the sum of (i) an
          amount  equal to the  average of the  Executive's  two (2) most recent
          annual bonuses,  if any, received under the Company's  Executive 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 average annual cost for Company employees of obtaining
          medical,  dental and vision insurance under COBRA, which annual amount
          is  hereby  initially  determined  to be  $10,000.

          (d) A "Change of Control" shall 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 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; 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.

          (e) In the event  the  Executive  initiates  arbitration  pursuant  to
          Section V to enforce  his rights to any  payments  under this  Section
          IV-D-3,  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 V; and

               (iii) All such  payments  required  under  this  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  V 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. 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 Sections VI, VII, or VIII 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.  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(e)(ii).  The fees and expenses of the  arbitrator  shall be borne by
     the Company.


     VI. NONCOMPETITION; ANTISOLICITATION.

          The  Executive  promises  and  agrees  that  during  the  term of this
     Agreement and for a period of two years  thereafter,  he will not, directly
     or  indirectly,  either  for  himself  or for any other  person,  entity or
     business,  (i) be  engaged  in any way  with a  competing  business  of the
     Company or any of its present or future subsidiaries or affiliates, or (ii)
     induce or attempt to induce any patient, customer,  supplier,  licensee, or
     other  party  having  a  business  relationship  with  Apria  or any of its
     subsidiaries   or   affiliates  to  cease  or  reduce  the  scope  of  that
     relationship.  For  purposes of the above  covenant in this Section VI, the
     Executive  shall "be  engaged in any way with a  competing  business of the
     Company"  if he,  directly  or  indirectly,  engages or invests  in,  owns,
     manages,  operates,  finances,  controls, or participates in the ownership,
     management,  operation  or control  of, is employed  by,  lends his name or
     credit  to, or  renders  consulting  or other  services  or advice  to, any
     person, firm,  corporation or other business entity which performs or sells
     services or products which are competitive with those services and products
     performed  or sold at any time after the date  hereof by the Company or any
     of its subsidiaries or affiliates in any jurisdiction.

     VII. SOLICITING EMPLOYEES.

          The  Executive  promises  and agrees  that,  for a period of two years
     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
     to work for any other business, individual, partnership, firm, corporation,
     or other entity.


     VIII. 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,   reimbursements,   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  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  that he shall not  engage in unfair  competition  either
     during the time employed by the Company or any time thereafter.

     IX. 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  IX-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  IX-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 IX shall
     not be conditioned upon the Executive's termination of employment.

          C.  Notwithstanding the foregoing  provisions of this Section IX-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 IX-C. The
     Company  shall  notify the  Executive of any intent to reduce the amount of
     any Covered Payments in accordance with this Section IX-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 IX-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 IX
     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.



     X. SUCCESSORS.

          A. This Agreement is personal to the Executive and shall not,  without
     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.


     XI. 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.


     XII. MODIFICATION.

          This  Agreement may not be amended or modified other than by a written
     agreement  executed by the  Executive  and the  Company's  Chief  Executive
     Officer or Chairman.

     XIII. SAVINGS CLAUSE.

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

     XIV. 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.  It supersedes and replaces 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  shall  not be  binding  upon or
     enforceable  against either party.  This is a fully  integrated  agreement.
     Except as provided herein, the Executive's  Executive  Severance  Agreement
     with the Company, dated June 27, 2001, is no longer in effect.

     XV. 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,  the  laws of the  State  of  California  without  regard  to
     principles of conflicts of laws.

     XVI. 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.


     XVII. 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 105 Country View Lane,
     McMurray,  PA 15317 or addressed to the Company at 26220 Enterprise  Court,
     Lake Forest, California 92630, Attention: Senior Vice President and General
     Counsel,  with a copy to the attention if the Senior Vice President,  Human
     Resources.  Either party may change the address at which  notices  shall be
     given by written notice given in the above manner.

     XVIII. 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.


     IX. 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: ____________________________        _______________________________
         Lawrence M. Higby                   Lawrence A. Mastrovich
         Chief Executive Officer