Exhibit 10.18

                              EMPLOYMENT AGREEMENT

     This Employment  Agreement (the "Agreement") is entered into by and between
Apria   Healthcare  Group  Inc.  (the  "Company")  and  Philip  L.  Carter  (the
"Executive"), as of December 7, 2000, effective as of January 1, 2000.

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,  provided that for purposes of Section
IV-D-3, the "Expiration Date" shall initially be December 31, 2001, 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, 2001, the Expiration Date shall be December 31, 2002. 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
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.
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     A.  Commencing on January 1, 2000,  the Company will pay to the Executive a
base salary at the rate of $650,000 per year.  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.

     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 $12,500 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.

     G. Stock Options. The provisions in Section 2-G of the employment agreement
between the Executive and the Company dated as of May 5, 1998, as amended, shall
remain in full force and effect.

     H.  Relocation.  The provisions in Section 2-H of the employment  agreement
between the Executive and the Company dated as of May 5, 1998, as amended, shall
remain in full force and effect.

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;  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 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:

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

                  (2) 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  and  the  Company's  obligation  to  provide  the  benefits
         required by Section  IV-D-3(e) below, and payments  required to be made
         under  any other  incentive  compensation  plan,  and  except  that the
         Company  will also pay to the  Executive  any Accrued  Obligations  (as
         defined in Section IV-D-1).

         (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 Orange County,
                    California, 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)   if a Change  of Control of  the  Company  occurs and, at any
                    time  concurrent  with  or  during   the   six-month  period
                    following  said  Change  of  Control,   the Executive  shall
                    have  sent to the  Chairman  of the Company a written notice
                    terminating   his  employment on  a  date  specified in said
                    notice.

         (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  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 Incentive  Compensation 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;

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

             (iv)   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 (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  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.

         (f) In the  event  the  Executive  initiates  arbitration  pursuant  to
         Section V 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 V; 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  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 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(f)(ii).  The fees and  expenses of the  arbitrator  shall be borne by the
Company.

VI.  CERTAIN MODIFICATIONS TO NONDISCLOSURE AGREEMENT.
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     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 VI
shall be resolved in the manner specified in Section V hereof.

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.

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.  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
prior employment agreement with the Company is no longer in effect.

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 10520  Wilshire  Boulevard,  #702,  Los Angeles,
California 90024, or addressed to the Company at 3560 Hyland Avenue, Costa Mesa,
California  92626,  Attention:  Chairman of the Board, with a copy to the Senior
Vice President and General  Counsel,  with a copy to the attention of 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
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 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                       Philip L. Carter
   Chairman


<PAGE>


                                    EXHIBIT A

                   Nondisclosure and Noncompetition Agreement

     This Nondisclosure and Noncompetition Agreement (this "Agreement") is dated
as of this 7th day of  December,  2000 by and  between  Philip  L.  Carter  (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 December 7, 2000, effective as
of January 1, 2000 (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  Holding,  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 following payments,
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:

     (i) An amount equal to the Executive's annual base salary in effect on such
date;

     (ii) An amount equal to 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;

     (iii) An amount equal to the  Executive's  annual car  allowance as of such
date; and

     (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 amount  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(f)(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.

     (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.

     (f) 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.

     (g)  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.

     (h) 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 10520 Wilshire Boulevard,  #702,
Los  Angeles,  California  90024,  or  addressed  to the  Company at 3560 Hyland
Avenue, Costa Mesa, California 92626,  Attention:  Chairman of the Board, with a
copy to the  Senior  Vice  President  and  General  Counsel,  with a copy to the
attention of 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  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.

     (i) 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.

     (j) 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                       Philip L. Carter
   Chairman