Document:

exv10w31

 

Exhibit
10.31

APRIA HEALTHCARE GROUP INC.

2003 PERFORMANCE INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

     THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Award Agreement”) dated                      by
and between APRIA HEALTHCARE GROUP INC., a Delaware corporation (the “Corporation”), and
                                        (the “Grantee”) evidences the award (the “Award”) of restricted stock
units (“Stock Units”) granted by the Corporation to the Grantee as to the number of Stock Units
first set forth below.

	 	 	 	 	 
	Number of Stock Units:1

	 	                    
	 	Award Date:                         
	 
	 	 	 	 
	Performance-Based Vesting Period:1,2     January 1,                — December 31,              
	 
	 	 	 	 
	Time-Based Vesting Period:1,2     January 1,              — December 31,             

     The Award is granted under the Apria Healthcare Group Inc. 2003 Performance Incentive Plan
(the “Plan”) and subject to the Terms and Conditions of Restricted Stock Units (the “Terms”)
attached to this Award Agreement (incorporated herein by this reference) and to the Plan. The
Award has been granted to the Grantee in addition to, and not in lieu of, any other form of
compensation otherwise payable or to be paid to the Grantee. Capitalized terms are defined in the
Plan if not defined herein. The parties agree to the terms of the Award set forth herein.

“GRANTEE”

 
Signature

 
Print Name

APRIA HEALTHCARE GROUP INC.

a Delaware corporation

			
	By:	 	
 

			
	Print Name:	 	
 

			
	Title:	 	
 

CONSENT OF SPOUSE

     In consideration of the Corporation’s execution of this Award Agreement, the undersigned
spouse of the Grantee agrees to be bound by all of the terms and provisions hereof and of the Plan.

     

	 	 	 	 	 
	 

Signature of Spouse

	 	 

Date
	 	 

 

			
	1	 	Subject to adjustment under Section 7 of the Terms and Section 7.1 of the Plan.
	 
	2	 	Subject to early termination under Sections 2, 5 and 8 of the Terms and Section 7.4 of the Plan.

 

 

TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS

1.    Stock Units; Vesting.

     1.1    Stock Units. As used herein, a “Stock Unit” is a non-voting unit of measurement which is
deemed for bookkeeping purposes to be equivalent in value to one outstanding share of Common Stock
of the Corporation. The Stock Units shall be used solely as a device for the determination of any
payment to eventually be made to the Grantee if and when such Stock Units vest pursuant to this
Section 1. One-third (1/3) of the Stock Units subject to the Award shall be subject to the
time-based vesting requirements set forth in Section 1.2 (“Time-Based Units”). Two-thirds
of the Stock Units subject to the Award shall be subject to the performance-based and time-based
vesting requirements set forth in Section 1.3 (“Performance-Based Units”).

     1.2    Time-Based Units. Subject to Sections 2 and 5 below, one hundred percent (100%)
of the Time-Based Units subject to the Award shall vest and become nonforfeitable on the last day
of the Time-Based Vesting Period (as set forth on the cover page of this Award Agreement) (the
“Time-Based Unit Vesting Date”).

     1.3    Performance-Based Units. The Performance-Based Units subject to the Award shall be
subject to the vesting requirements set forth in both Section 1.3.1 and Section
1.3.2.

     1.3.1    Performance-Based Vesting. Subject to Sections 1.3.2, 2 and 5 below, promptly
following the conclusion of the Performance-Based Vesting Period (as set forth on the cover page of
this Award Agreement), the Compensation Committee of the Corporation’s Board of Directors (the
“Committee”) shall determine the number of Performance-Based Units subject to the Award (if any)
that have become vested for purposes of this Section 1.3.1 based on the actual performance
of the Corporation during the Performance-Based Vesting Period (“Actual Performance”) relative to
the performance threshold (“Performance Threshold”) and performance target (“Performance Target”)
for each of the performance measures (each, a “Performance Measure”) established by the Committee
for such period as set forth on Schedule A attached hereto. Subject to Section 1.3.2,
Stock Units shall vest for purposes of this Section 1.3.1 as of the conclusion of the
Performance Period as follows:

	 	•	 	if Actual Performance for that Performance Measure equals or exceeds the Performance
Target, 50% of the Performance-Based Units will vest on February 18, 2009 based on that
Performance Measure, or as soon thereafter as the achievement can practicably be
determined;
	 
	 	•	 	if Actual Performance for that Performance Measure equals but does not exceed the
Performance Threshold, 25% of the Performance-Based Units will vest on February 18,
2009 based on that Performance Measure, or as soon thereafter as the achievement can
practicably be determined;
	 
	 	•	 	if Actual Performance for that Performance Measure has exceeded the Performance
Threshold but the Performance Target for that Performance Measure has not been
achieved, between 25% and 50% of the Performance-Based Units will vest on a linear
basis (e.g., if the actual revenue performance is exactly between the Performance
Threshold and the Performance Target for that Performance Measure, 37.5% of the
Performance-Based Units will vest based on actual revenue) based on that Performance
Measure on February 18, 2009 or as soon thereafter as the achievement can practicably
be determined; and

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	 	•	 	if the Performance Threshold for that Performance Measure has not been achieved, 0%
of the Performance-Based Units will vest as a result of performance based on that
Performance Measure.

No more than 50% of the total number of Performance-Based Units subject to the Award shall vest
with respect to any particular Performance Measure. Vesting pursuant to this Section 1.3.1
is cumulative as to both Performance Measures (that is, the total number of Performance-Based Units
subject to the Award that vest with respect to one Performance Measure shall be added to the total
number of Performance-Based Units subject to the Award that vest with respect to the other
Performance Measure to determine the total number of Performance-Based Units subject to the Award
that vest pursuant to this Section 1.3.1). Performance-Based Units subject to the Award
that do not vest in accordance with this Section 1.3.1 shall be forfeited without payment
therefor as of the last day of the Performance-Based Vesting Period.

     1.3.2    Time-Based Vesting of Performance-Based Units. Subject to Sections 2 and 5
below and notwithstanding anything to the contrary in Section 1.3.1, (a) one-half (1/2) of
the number of Performance-Based Units subject to the Award that become vested for purposes of
Section 1.3.1 shall become vested for purposes of this Section 1.3.2 as of the
earlier of the date in 2009 the Corporation’s 2008 financial results are audited and February 28,
2009, and (b) the remaining one-half of the Performance-Based Units subject to the Award that
become vested for purposes of Section 1.3.1 shall become vested for purposes of this
Section 1.3.2 as of February 18, 2010 (the applicable vesting date referred to in clause
(a) above and February 18, 2010 are each referred to in this Award Agreement as a
“Performance-Based Unit Vesting Date”). In the event that the Corporation’s 2008 financial results
have not been audited as of February 28, 2009, the number of Performance-Based Units that become
vested for purposes of Section 1.3.1 and clause (a) of this Section 1.3.2 shall be
determined by the Committee in good faith based on the financial information then available. For
avoidance of doubt, subject to Sections 2 and 5 below, Performance-Based Units subject to
the Award shall not become payable, and there shall be no Distribution Date (as defined in
Section 4 below) with respect thereto, unless and until such Performance-Based Units have
become vested for purposes of both Section 1.3.1 and this Section 1.3.2.

2.    Termination of Employment/Service; No Employment/Service Commitment.

     2.1    Continuance of Employment/Service Required. The vesting of Time-Based Units and
Performance-Based Units subject to the Award and the rights and benefits under this Award Agreement
require continued employment or service through the applicable Distribution Date (as defined in
Section 4) applicable to such units. Except as expressly provided in this Section
2 or in Section 5, employment or service for only a portion of the vesting period, even
if a substantial portion, will not entitle the Grantee to any proportionate vesting or avoid or
mitigate a termination of rights and benefits upon or following a termination of employment or
services as provided herein or under the Plan.

     2.2    Possible Vesting upon Termination of Employment/Service. If the Grantee ceases to be
employed by or ceases to provide services to the Corporation or a Subsidiary, unless the provisions
of Section 5 apply in which case the provisions of that section shall prevail, the
following rules shall apply (the last day that the Grantee is employed by or provides services to
the Corporation or a Subsidiary is referred to as the Grantee’s “Severance Date”). The Committee
shall be the sole judge of whether the Grantee continues to render employment or services for
purposes of this Award Agreement.

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     2.2.1    Termination Due to Death, Disability or Retirement Prior to End of Time-Based Vesting
Period. In the event the Grantee’s employment or services terminate due to the Grantee’s death,
Disability (as defined below) or Retirement (as defined below) prior to the conclusion of the
Time-Based Vesting Period, the Time-Based Units subject to this Award shall vest on a pro rata
basis as of the Grantee’s Severance Date. The number of Time-Based Units that shall so vest shall
equal (i) the number of Time-Based Units subject to the Award (to the extent such units are not
then vested), multiplied by (ii) a fraction, the numerator of which shall be the number of whole
months during the Time-Based Vesting Period the Grantee was employed by or rendered services to the
Corporation or a Subsidiary, and the denominator of which shall be the number of whole months in
the Time-Based Vesting Period. If this Section 2.2.1 applies, any Time-Based Units subject
to the Award that do not vest in accordance with the foregoing provisions shall terminate as of the
Grantee’s Severance Date.

     2.2.2    Termination Due to Death, Disability or Retirement Prior to End of Performance-Based
Vesting Period. In the event the Grantee’s employment or services terminate due to the Grantee’s
death, Disability or Retirement prior to the conclusion of the Performance-Based Vesting Period,
the number of Performance-Based Units subject to the Award that shall become vested as of the
conclusion of the Performance-Based Vesting Period shall equal (a) the number of Performance-Based
Units subject to the Award that would have vested as of the conclusion of the Performance-Based
Vesting Period in accordance with Section 1.3.1 above (assuming no termination of
employment or services had occurred), multiplied by (b) a fraction, the numerator of which shall be
the number of whole months during the Performance-Based Vesting Period the Grantee was employed by
or rendered services to the Corporation or a Subsidiary, and the denominator of which shall be the
number of whole months in the Performance-Based Vesting Period (the “Pro-Rata Fraction”). If this
Section 2.2.2 applies, any Performance-Based Units subject to the Award that do not vest in
accordance with the foregoing provisions shall terminate as of the conclusion of the
Performance-Based Vesting Period.

     2.2.3    Termination Due to Death, Disability or Retirement after Performance-Based Vesting
Period. In the event the Grantee’s employment or services terminate due to the Grantee’s death,
Disability or Retirement on or after the conclusion of the Performance-Based Vesting Period, the
aggregate number of Performance-Based Units subject to the Award that became vested as of the
conclusion of the Performance-Based Vesting Period in accordance with Section 1.3.1 above
shall become vested as of the Grantee’s Severance Date (to the extent outstanding and not otherwise
vested on or before such date pursuant to Section 1.3.2).

     2.2.4    Termination for Any Reason Other than Death, Disability or Retirement. Subject to
Section 5 below, in the event the Grantee’s employment or services terminate for any reason
other than the Grantee’s death, Disability or Retirement, the Award and any Stock Units subject to
the Award, to the extent not vested (pursuant to Sections 1.2 and 1.3) on the Severance
Date, shall terminate as of the Severance Date.

     2.2.5    Definitions. For purposes of this Award Agreement, “Disability” means a “disability” as
such term is defined for purposes of Section 409A of the Code. For purposes of this Award
Agreement, “Retirement” means a Separation from Service (as defined below) by the Grantee that
occurs both (a) upon or after the Grantee’s attainment of age 55 and (b) upon or after the date
when the sum of the Grantee’s age and the Grantee’s years of service to the Corporation and its
Subsidiaries (such years of service determined in accordance with the rules for determining years
of service under the Corporation’s 401(k) Plan) is at least 60. For purposes of this Award
Agreement, a “Separation from Service” means the Grantee’s

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“separation from service” with the Corporation and its Subsidiaries as that term is used for
purposes of Section 409A of the Code.

     2.3    No Employment/Service Commitment. Nothing contained in this Award Agreement or the Plan
constitutes a continued employment or service commitment by the Corporation or any of its
Subsidiaries, affects the Grantee’s status, if he or she is an employee, as an employee at will who
is subject to termination without cause, confers upon the Grantee any right to remain employed by
or in service to the Corporation or any Subsidiary, interferes in any way with the right of the
Corporation or any Subsidiary at any time to terminate such employment or service, or affects the
right of the Corporation or any Subsidiary to increase or decrease the Grantee’s other
compensation.

3.    No Stockholder Rights.

     The Grantee shall have no rights as a stockholder of the Corporation, no dividend rights and
no voting rights with respect to the Stock Units or any shares of Common Stock issuable in respect
of such Stock Units, until shares of Common Stock are actually issued to and held of record by the
Grantee. No adjustments will be made for dividends or other rights of a holder for which the
record date is prior to the date of issuance of the stock certificate evidencing the shares.

4.    Timing and Manner of Distribution of Stock Units.

     Stock Units subject to the Award that vest (pursuant to Section 1.2 or 1.3) will be
paid in an equivalent number of shares of Common Stock (either by delivering one or more
certificates for such shares or by entering such shares in book entry form, as determined by the
Corporation in its discretion) no later than seventy (70) days after the applicable Distribution
Date with respect to such Stock Units. Such payment shall be subject to the tax withholding
provisions of Section 8 below and Section 8.5 of the Plan and subject to adjustment
as contemplated by Section 7 below and Section 7.1 of the Plan and shall be in
complete satisfaction of such vested Stock Units. The Grantee or other person entitled under the
Plan to receive the shares shall deliver to the Corporation any representations or other documents
or assurances required pursuant to Section 8.1 of the Plan. Delivery of any certificates
will be made to the Grantee’s last address reflected on the books of the Corporation or its
Subsidiaries unless the Corporation is otherwise instructed in writing.

     The “Distribution Date” for the Stock Units that vest pursuant to the Award shall be
determined pursuant to this paragraph. The Distribution Date for Time-Based Units that vest
pursuant to Section 1.2 shall be the Time-Based Unit Vesting Date. The Distribution Date
for Performance-Based Units that vest pursuant to Section 1.3 shall be the applicable
Performance-Based Unit Vesting Date. The Distribution Date for Performance-Based Units that vest
pursuant to Section 2.2.2 shall be the last day of the Performance-Based Vesting Period.
The Distribution Date for Stock Units that vest pursuant to either Section 2.2.1 or
Section 2.2.3 shall be the date of the Grantee’s death, Disability or Retirement, as
applicable. The Distribution Date for Stock Units that vest pursuant to Section 5.1 or
Section 5.2 shall be the date on which the related Change in Control occurs.

5.    Changes in Control.

     5.1 Possible Acceleration upon Change in Control. Upon a Change in Control (as defined
below), if the Stock Units subject to the Award are not then otherwise fully vested (and

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have not previously terminated), they shall automatically become vested immediately prior to
the occurrence of such event. Subject to Section 5.2 below, if an acceleration of the
outstanding Stock Units subject to the Award is triggered by this Section 5.1 but the
Grantee’s employment terminated prior to the event triggering such acceleration in circumstances
covered by Section 2.2.2 and the number of Performance-Based Units that are to vest
pursuant to Section 2.2.2 has not yet been determined as of the date of such event, the
number of Performance-Based Units subject to the Award which shall vest in accordance with such
event shall equal the number of Performance-Based Units outstanding subject to the Award
immediately prior to such event multiplied by the Pro-Rata Fraction, and the balance of the
Performance-Based Units subject to the Award (the portion not so vested) shall thereupon terminate.
The preceding sentence shall control in the event of any discrepancy with Section 2.2.2.
For purposes of this Award Agreement, “Change in Control” shall mean a “change in the ownership or
effective control” of the Corporation, or a change “in the ownership of a substantial portion of
the assets” of the Corporation within the meaning of Section 409A of the Code.

     5.2    Termination of Employment in Connection with a Change in Control. The following
provisions of this Section 5.2 supersede any inconsistent provision of Section 2.2.
The Stock Units subject to the Award, to the extent such Stock Units are outstanding and have not
previously become vested in accordance with the terms hereof and except as provided in the next
sentence, shall be deemed to be have been fully vested as of the Grantee’s Severance Date if the
Grantee incurs a Qualifying Termination. The Grantee shall be deemed to have incurred a
“Qualifying Termination” for this purpose if the Grantee’s employment is terminated by the
Corporation or a Subsidiary without Cause within the period that ends with a Change in Control and
begins with the first to occur of (i) the initial public announcement of the Change in Control, or
(ii) the 90th day preceding the Change in Control.

     For purposes of this Award Agreement, “Cause” shall mean that the Corporation, acting in good
faith based upon the information then known to the Corporation, determines that the Grantee has (1)
engaged in or committed willful misconduct; (2) engaged in or committed theft, fraud or other
illegal conduct; (3) refused or demonstrated an unwillingness to substantially perform his duties
for a 30-day period after written demand for substantial performance that refers to this paragraph
and is delivered by the Corporation that specifically identifies the manner in which the
Corporation believes the Grantee has not substantially performed his duties; (4) refused or
demonstrated an unwillingness to reasonably cooperate in good faith with any Corporation or
government investigation or provide testimony therein (other than such failure resulting from the
Grantee’s disability); (5) engaged in or committed insubordination; (6) engaged in or committed any
willful act that is likely to and which does in fact have the effect of injuring the reputation or
business of the Corporation or, if the Grantee is employed by a Subsidiary, the Subsidiary that
employs the Grantee; (7) willfully violated his fiduciary duty or his duty of loyalty to the
Corporation or a Subsidiary, or the Corporation’s Code of Ethical Business Conduct in any material
respect; (8) used alcohol or drugs (other than drugs prescribed to the Grantee by a physician and
used by the Grantee for their intended purpose for which they had been prescribed) in a manner
which materially and repeatedly interferes with the performance of his duties hereunder or which
has the effect of materially injuring the reputation or business of the Corporation or a
Subsidiary; or (9) engaged in or committed a material breach of any written agreement with the
Corporation or a Subsidiary for a 30-day period after written notification is delivered by the
Corporation or a Subsidiary, as applicable, that specifically refers to this paragraph and
identifies the manner in which the Corporation or Subsidiary believes the Grantee has materially
breached such agreement. For purposes of this paragraph, no act, or failure to act, on the
Grantee’s part shall be considered willful unless done or omitted to be done,

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by the Grantee not in good faith or without reasonable belief that his action or omission was in
the best interest of the Corporation or, if the Grantee is employed by a Subsidiary, the
Subsidiary. Notwithstanding anything herein to the contrary, for purposes of any termination of
employment that occurs within the period that (1) begins with the first to occur of (a) the initial
public announcement of a Change in Control, or (b) the 90th day preceding a Change in Control and
(2) ends with such Change in Control, “Cause” shall instead mean only the occurrence of either or
both of the following: (A) the Grantee’s conviction for committing an act of fraud, embezzlement,
theft, or other act constituting a felony (other than traffic related offenses or as a result of
vicarious liability); or (B) the willful engaging by the Grantee in misconduct that is
significantly injurious to the Corporation. Notwithstanding the foregoing, the Grantee shall not
be deemed to have been terminated for Cause without delivery to the Grantee of a notice of
termination signed by the Corporation’s Chairman of the Board stating that the Board of Directors
of the Corporation has determined that the Grantee has engaged in or committed conduct of the
nature described in this paragraph, and specifying the particulars thereof in detail.

     5.3    Section 280G. Notwithstanding anything else contained in this Section 5 to the
contrary, in no event shall the Award be accelerated to an extent or in a manner which would not be
fully deductible by the Corporation for federal income tax purposes because of Section 280G of the
Code. If the Grantee would be entitled to benefits or payments hereunder and under any other plan
or program that would constitute “parachute payments” as defined in Section 280G of the Code, then
the Grantee may by written notice to the Corporation designate the order in which such parachute
payments will be reduced or modified so that the Corporation is not denied federal income tax
deductions for any “parachute payments” because of Section 280G of the Code. Notwithstanding the
foregoing, if the Grantee is a party to an employment or other agreement with the Corporation, or
is a participant in a severance program sponsored by the Corporation, that contains express
provisions regarding Section 280G and/or Section 4999 of the Code (or any similar successor
provision), the Section 280G and/or Section 4999 provisions of such employment or other agreement
or plan, as applicable, shall control as to the Award (for example, and without limitation, the
Grantee may be a party to an employment agreement with the Corporation that provides for a
“gross-up” as opposed to a “cut-back” in the event that the Section 280G thresholds are reached or
exceeded in connection with a change in control and, in such event, the Section 280G and/or Section
4999 provisions of such employment agreement shall control as to the Award).

     5.4    Section 409A. Notwithstanding any provision of this Award Agreement to the contrary, if
the Grantee is a “specified employee” as defined in Section 409A of the Code, the Grantee shall not
be entitled to any payment with respect to the Award in connection with the Grantee’s Separation
From Service until the earlier of (a) the date which is six (6) months after the Grantee’s
Separation From Service for any reason other than the Grantee’s death, or (b) the date of the
Grantee’s death. Any amounts otherwise payable to the Grantee following the Grantee’s Separation
From Service that are not so paid by reason of this Section 5.4 shall be paid as soon as
practicable (and in all events within thirty (30) days) after the date that is six (6) months after
the Grantee’s Separation From Service (or, if earlier, the date of the Grantee’s death). The
provisions of this Section 5.4 shall only apply if, and to the extent, required to comply
with Section 409A of the Code.

6.    Non-Transferability.

     Prior to the time the Stock Units are vested and paid, neither the Stock Units comprising the
Award nor any other rights of the Grantee under this Award Agreement or the Plan may be
transferred, except as expressly provided in Section 5.7 of the Plan. No specific
exception to the

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general transfer prohibitions set forth in Section 5.7 of the Plan has been authorized
by the Committee.

7.    Adjustments.

     Upon the occurrence of an Event (as defined below), the Committee shall make adjustments as it
deems appropriate in the number and kind of securities or other consideration that may become
payable with respect to the Award. If an Event shall occur and the Award has not been fully vested
and paid upon such Event or prior thereto, the Award may become payable in securities or other
consideration (the “Restricted Property”) rather than in the Common Stock otherwise payable in
respect of the Award. Such Restricted Property shall become payable at the times set forth in
Section 4 above. Notwithstanding the foregoing, to the extent that the Restricted Property
includes any cash, the commitment hereunder shall become an unsecured promise to pay an amount
equal to such cash (with earnings attributable thereto as if such amount had been invested,
pursuant to policies established by the Committee, in interest bearing, FDIC insured (subject to
applicable insurance limits) deposits of a depository institution selected by the Committee) at
such times and in such proportions as the Award becomes payable in accordance with Section
4 above. Notwithstanding the foregoing, the Award and any Common Stock or other securities or
property payable in respect of the Award shall continue to be subject to proportionate and
equitable adjustments (if any) under this Section 7 consistent with the effect of such
events on stockholders generally, as the Committee determines to be necessary or appropriate, and
in the number, kind and/or character of shares of Common Stock or other securities, property and/or
rights payable in respect of Stock Units granted under the Plan. All rights of the Grantee
hereunder are subject to those adjustments. For purposes of this Award Agreement, “Event” means a
liquidation, dissolution, Change in Control, merger, consolidation, or other combination or
reorganization, stock split, stock dividend, reverse stock split, or a recapitalization,
reclassification, extraordinary dividend or other distribution (including a split up or a spin off
of the Corporation or any significant Subsidiary), or a sale or other distribution of all or
substantially all the assets of the Corporation as an entirety.

     The Committee shall, to the extent it determines appropriate in order to preserve the intended
incentives, adjust the Performance Measures, Performance Thresholds and Targets to mitigate the
unbudgeted impact of material, unusual or nonrecurring gains and losses, accounting changes or
other extraordinary events not foreseen at the time the targets were established, including without
limitation the effects of any unbudgeted changes in government reimbursement rates, [sensitive
competitive information deleted]. Notwithstanding the forgoing, the Committee will not make any
change or adjustment under the Plan to the extent it would cause Plan bonuses to cease to qualify
as “performance-based compensation” within the meaning of Section 162(m) of the Code. No
adjustment may be made on or following the occurrence of a Change in Control, except by the
Committee as constituted immediately prior to such Change in Control within a reasonable period of
time following the occurrence of such Change in Control.

8.    Tax Withholding.

     Subject to Section 8.5 of the Plan, upon any distribution of Common Stock in respect
of the Stock Units, the Corporation shall, to the extent it is legally permitted to do so,
automatically reduce the number of shares to be delivered by (or otherwise reacquire) the
appropriate number of whole shares, valued at their then fair market value (with the “fair market
value” of such shares determined in accordance with the applicable provisions of the Plan), to
satisfy any withholding obligations of the Corporation or its Subsidiaries with respect to such
distribution of shares at the minimum applicable withholding rates unless the Grantee has made
other

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arrangements approved by the Administrator to provide for such withholding. In the event that
the Corporation cannot legally satisfy such withholding obligations by such reduction of shares, or
in the event of a cash payment or any other withholding event in respect of the Stock Units, the
Corporation (or a Subsidiary) shall be entitled to require a cash payment by or on behalf of the
Grantee and/or to deduct from other compensation payable to the Grantee any sums required by
federal, state or local tax law to be withheld with respect to such distribution or payment.

9.    Notices.

     Any notice to be given under the terms of this Award Agreement shall be in writing and
addressed to the Corporation at its principal office to the attention of the Secretary, and to the
Grantee at the address last reflected on the Corporation’s payroll records. Any notice shall be
delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid,
registered or certified, and deposited (postage and registry or certification fee prepaid) in a
post office or branch post office regularly maintained by the United States Government. Any such
notice shall be deemed to be “given” only when actually received, but if the Grantee is no longer
an Eligible Person, shall be deemed to have been duly “given” as of the date mailed in accordance
with the foregoing provisions of this Section 9.

10.    Limitation on Grantee’s Rights.

     The Stock Units create no fiduciary duty to the Grantee and shall create only a contractual
obligation on the part of the Corporation to make distributions, subject to vesting and the other
terms and conditions hereof, as provided in Sections 3 and 4 above. The Stock Units shall
not be treated as property or as a trust fund of any kind. No assets have been secured or set
aside by the Corporation with respect to the Award and, if amounts become distributable or payable
to the Grantee pursuant to this Award Agreement, the Grantee’s rights with respect to such amounts
shall be no greater than the rights of any general unsecured creditor of the Corporation.

11.    Plan.

     The Award and all rights of the Grantee under this Award Agreement are subject to all of the
terms and conditions of the Plan, incorporated herein by this reference. The Grantee agrees to be
bound by the terms of the Plan and this Award Agreement (including these Terms). The Grantee
acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Award
Agreement and having had ample opportunity to consult (to the extent the Grantee has determined it
appropriate to do so) with his or her own legal, tax and financial advisors regarding the Award.
Unless otherwise expressly provided in other sections of this Award Agreement, provisions of the
Plan that confer discretionary authority on the Board or the Committee do not and shall not be
deemed to create any rights in the Grantee unless such rights are expressly set forth herein or are
otherwise in the sole discretion of the Board or the Committee so conferred by appropriate action
of the Board or the Committee under the Plan after the date hereof.

12.    Entire Agreement.

     This Award Agreement (including these Terms and any other document expressly referred to
herein) and the Plan together constitute the entire agreement and supersede all prior
understandings and agreements, written or oral, of the parties hereto with respect to the subject
matter hereof. The Plan and this Award Agreement may be amended pursuant to Section 8.6 of

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the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation
may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not
adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any other provision
hereof.

13.    Governing Law.

     This Award Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware without regard to conflict of law principles thereunder.

14.    Arbitration.

     Any dispute or controversy arising under or in connection with this Award Agreement
shall be settled exclusively by arbitration, conducted before a single neutral arbitrator in
accordance with the American Arbitration Association’s National Rules for Resolution of Employment
Disputes as then in effect. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction. The fees and expenses of the arbitrator shall be borne by the Company.

15.    Construction.

     This Award Agreement shall be construed and interpreted to comply with Section 409A of
the Code. The Corporation reserves the right to amend this Award Agreement to the extent it
reasonably determines is necessary in order to preserve the intended tax consequences of the Stock
Units in light of Section 409A of the Code and any regulations or other guidance promulgated
thereunder.

16.    Effect of this Agreement.

     This Award Agreement shall be assumed by, be binding upon and inure to the benefit of any
successor or successors to the Corporation.

17.    Counterparts.

     This Award Agreement may be executed simultaneously in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.

18.    Section Headings.

     The section headings of this Award Agreement are for convenience of reference only and shall
not be deemed to alter or affect any provision hereof.

19.    Agreements Regarding Noncompetition and Nonsolicitation.

     Notwithstanding anything else contained herein to the contrary, the right of the Grantee to
the Award, as well as the right of the Grantee to or with respect to any Common Stock or cash that
is payable or has, at the relevant time, previously been paid with respect to the Award (or any
consideration received in respect thereof, as the case may be) is subject to the terms and
conditions of the Grantee’s “Noncompetition and Nonsolicitation Agreement” with the Corporation (or
any similar or successor agreement, as applicable), including any such

9

 

agreement that may be entered into after the Award Date (the Grantee’s “Noncompetition and
Nonsolicitation Agreement”). This Restricted Stock Unit Award Agreement is one of the Grantee’s
Incentive Compensation Agreements as defined in such Noncompetition and Nonsolicitation Agreement.
By accepting the Award, and again by accepting any payment of Common Stock or cash with respect to
the Award, the Grantee affirms his or her representations, covenants and agreements set forth in
his or her Noncompetition and Nonsolicitation Agreement and agrees that his or her rights with
respect to the Award and any such payment (or any consideration received in respect thereof, as the
case may be) are and shall continue thereafter to be subject to such Noncompetition and
Nonsolicitation Agreement. [Provision included in agreements for Divisional Vice Presidents and
above.]

20.    Stock Ownership Requirements.

     The
Award and all rights of Grantee under this Award Agreement or in connection with any shares of
the Corporation’s Common Stock acquired pursuant to this Award
Agreement are and shall be subject
to, and Grantee agrees to be bound by, all of the terms and
conditions of the Corporation’s Stock
Ownership Requirements as in effect from time to time.
[Provision included in agreements for Senior
Vice Presidents and above.]

10

 

SCHEDULE A

2008 PERFORMANCE MEASURES

	 	 	 	 	 	 	 
	Performance	 	Performance	 	Performance	 	 
	Measure	 	Threshold	 	Target	 	Weight
	 
	 	 	 	 	 	 	 
	[confidential financial performance measures omitted]

Note: For purposes of this Agreement, each Performance Measure shall be determined on a
consolidated basis in accordance with generally accepted accounting principles as applied in the
Corporation’s financial reporting.

All thresholds and targets are also subject to adjustment in accordance with Section 7 of
this Agreement.

 

 

Schedule B contains sensitive competitive information

and has been omitted from this filing.exv10w32

 

Exhibit
10.32

APRIA HEALTHCARE GROUP INC.

2008 EXECUTIVE BONUS PLAN

This document sets forth the terms of the 2008 Executive Bonus Plan (the “Plan”) of Apria
Healthcare Group Inc. (the “Company”).

Operation of the Plan

Potential Bonus. The Company’s Chief Executive Officer, President and Chief Operating
Officer and Executive Vice Presidents, as well as the officers of Coram, Inc. designated by
the Compensation Committee of the Company’s Board of Directors (the “Committee”) as
participating in the Plan, may be eligible to receive a bonus under the Plan (the “bonus
opportunity”). The target aggregate bonus opportunity for any such participant under the
Plan is equal to 100% of the participant’s annualized rate of base salary as in effect on
January 1, 2008 (the participant’s “2008 rate of base salary”), and the maximum aggregate
bonus opportunity for any such participant under the Plan is equal to 150% of the
participant’s 2008 rate of base salary.

Components of Potential Bonus and their Relative Weights. The portion of a participant’s
bonus opportunity that is actually paid out will depend upon the achievement of Company and
individual performance goals established for calendar 2008; provided that the bonus
opportunity for one or more participants may be based entirely on Company performance (with
no individual goals). Company performance will be determined based on the actual level of
the Company’s [confidential financial performance measures omitted] (each, a “Company
performance measure”) for calendar 2008 compared to the target level of such Company
performance measures for 2008 (as set forth below). For purposes of the Plan, all of such
Company performance measures will be determined on a consolidated basis in accordance with
generally accepted accounting principles as applied in the Company’s financial reporting.
Individual performance will be determined based on the actual level of achievement of
individual performance goals (each, an “individual performance measure”) for calendar 2008
(as set forth in the participant’s individual award notice). The “weighting” between
Company performance measures and individual performance measures for each participant are
set forth in the participant’s individual award notice. Specific weightings and individual
performance measures may vary from participant to participant. The form of individual
participant award notice is attached hereto as Schedule A.

For each Company performance measure (and, if applicable and so provided in the applicable
bonus opportunity, for one or more individual performance measures), there is a minimum
performance goal that must be achieved (a “threshold”) in order for a bonus to be payable
with respect to that performance measure, a target performance goal (a “target”) that must
be achieved for the bonus to be paid at the target level with respect to that performance
measure, and a maximum performance goal (a “maximum”) that must be achieved for the bonus to
be paid at the maximum level with respect to that performance measure. If the threshold
level for a particular performance measure is not met, no bonus will be payable with respect
to

 

 

that performance measure. If the target level for a particular measure is met, then 100% of
the portion of the participant’s bonus opportunity that is payable with respect to that
performance measure will be payable, subject to the other terms and conditions of the Plan.
Except as provided in the following paragraph, if the maximum level for a particular measure
is met or exceeded, then 150% of the portion of the participant’s bonus opportunity that is
payable with respect to that performance measure will be payable, subject to the other terms
and conditions of the Plan.

If the Company or the individual, as applicable, meets or exceeds the threshold level for a
particular performance measure but does not meet the target or maximum level for that
measure, then the portion of the bonus opportunity that will be payable with respect to that
performance measure will be determined by linear interpolation with (i) 50% of the portion
of the bonus opportunity payable with respect to the performance measure for achievement at
the threshold level, (ii) 100% of the portion of the bonus opportunity payable with respect
to the performance measure for achievement at the target level and (iii) 150% of the portion
of the bonus opportunity payable with respect to the performance measure for achievement at
the maximum level. Notwithstanding the foregoing, even if the actual achievement levels of
the      *      performance measures are in excess of the target
levels for those measures, the payment of the bonus opportunity payable with respect to
those measures shall not exceed the target levels unless actual achievement of
the      *      measure meets or exceeds the      *      target level.

The threshold, target and maximum levels for each Company performance measure are set forth
in the following chart:

	 	 	 	 	 	 	 
	Threshold, Target and Maximum Levels for Performance Measures
	[confidential financial performance measures omitted]
	Weighting

	 	*
	 	*
	 	*
	Threshold Level

	 	*
	 	*
	 	*
	Target Level

	 	*
	 	*
	 	*
	Maximum Level

	 	*
	 	*
	 	*

The portion of a participant’s bonus opportunity that is to be determined based on
Company performance will be allocated among the three Company performance measures in
proportion to the weighting indicated in the table above with respect to each performance
measure.

Payment Terms

Award Payment and Timing. As soon as administratively practicable after the Company’s
audited financial statements for 2008 have been prepared, the Committee will determine
whether and the extent to which bonuses are payable pursuant to the Plan. No payment shall
be made with respect to the Plan unless

 

			
	*	 	Performance measure omitted.

2

 

and until the Committee has certified, by resolution or other appropriate action in writing,
that the amount of any such bonus has been accurately determined in accordance with the
terms, conditions and limits of the Plan and that the applicable performance condition(s)
were, in fact, satisfied at the applicable level(s). To the extent a participant is
entitled to a bonus under the Plan, such bonus shall be paid promptly following such
determination by the Committee and in no event before January 1, 2009 or later than December
31, 2009.

Payment shall be made in cash; provided, however, that as to a participant who, at the time
the Committee makes its bonus determination as to that participant, is subject to but is not
then in compliance with the applicable target level of Company stock ownership required
pursuant to the Company’s Stock Ownership Requirements for Senior Executive Officers (the
“Requirements”), the Committee shall pay up to one-half of the participant’s bonus that
would otherwise be paid in cash in Company common stock (with the balance paid in cash). In
the event of any stock payment and subject to adjustment pursuant to Section 7.1 of the Plan
(adjustments for stock splits and similar changes in capitalization), the number of shares
to be delivered to the participant shall equal (1) the portion (expressed as a cash amount)
of the participant’s bonus to be paid in the form of Company common stock, divided by (2)
the fair market value (as such term is defined in the Plan) of a share of Company common
stock on the date such bonus determination is made by the Committee, and rounded down to the
nearest whole share (with any fractional share amount to be settled in cash). Any such
shares so delivered (or such lesser portion of such shares as is required to bring the
participant into compliance with the applicable target level of Company stock ownership
required pursuant to the Requirements) shall be retained by the participant to satisfy the
Requirements for so long as the participant is subject to the Requirements.

Other Rules

Termination of Employment Rules. Except as provided below, a participant must be employed
by the Company or one of its affiliates or subsidiaries on the date that bonus payments are
actually made under the Plan in order to be eligible to receive a bonus under the Plan
(subject to the achievement of the applicable performance measures), and a participant will
have no right to a Plan bonus (or any partial bonus) if the participant’s employment
terminates or is terminated (regardless of the reason, whether with or without cause) prior
to the time that bonuses are paid under the Plan.

In the event that, subsequent to June 30, 2008 but prior to the date in 2009 that bonus
payments are made, a participant’s employment with the Company or one of its affiliates is
terminated by the Company or the affiliate that employs the participant other than for Cause
(as defined below) and other than on account of the participant’s death or Disability (as
defined below), the participant will be entitled to a bonus under the Plan equal to (1) the
bonus the participant would have received under the Plan had the participant remained
employed with the Company or one of its affiliates through the time that bonuses are
actually paid under the Plan, multiplied by (2) a fraction, the numerator of which is the
number of calendar days in

3

 

2008 that occurred prior to the termination of the participant’s employment and the
denominator of which is 365. Payment of the bonus will be made at the same time as the
payment of Plan bonuses generally.

For purposes of the Plan, “Cause” and “Disability” shall have the respective meanings
assigned to such terms in the participant’s Executive Severance Agreement or Employment
Agreement.

Change in Control Event. Notwithstanding anything to the contrary in the Plan, in the event
a Change in Control Event (as defined below) occurs in 2008, the Plan will immediately
terminate upon the event, and a participant who is employed by the Company or one of its
affiliates immediately prior to such event will be entitled to a bonus under the Plan equal
to (1) the participant’s target bonus opportunity, multiplied by (2) a fraction, the
numerator of which is the number of calendar days in 2008 that occurred prior to the Change
in Control Event and the denominator of which is 365. In such event, Plan bonuses
(including any pro-rated bonus to a terminated participant who is entitled to a bonus
pursuant to the foregoing termination of employment rules) will be paid entirely in cash on
the effective date of the Change in Control Event. For purposes of the Plan, the term
“Change in Control Event” means a Change in Control Event as defined in the Company’s 2003
Performance Incentive Plan that also qualifies as either (1) a “change in the ownership or
effective control” of the Company or (2) a change “in the ownership of a substantial portion
of the assets” of the Company within the meaning of Section 409A of the Internal Revenue
Code (“Section 409A”).

Code Section 409A. It is intended that any amounts payable under the Plan and the Company’s
exercise of authority or discretion hereunder shall either be exempt from or comply with
Section 409A so as not to subject any participant to payment of any interest or additional
tax imposed under Section 409A. Notwithstanding any provision of the Plan to the contrary,
if the participant is a “specified employee” (within the meaning of Treasury Regulation
Section 1.409A-1(i)) and the participant is entitled to payments in connection with his or
her separation from service (within the meaning of Treasury Regulation Section 1.409A-1(h)),
the participant shall not be entitled to any payments upon a separation from service until
the earlier of (1) the date which is six (6) months after the participant’s separation from
service with the Company for any reason other than death, or (2) the date of the
participant’s death. Any amounts otherwise payable to the participant in connection with
the participant’s separation from service that are not so paid by reason of the preceding
sentence shall be paid as soon as practicable (and in no event more than 30 days) after the
date that is six (6) months after the participant’s separation from service (or, if earlier,
the date of the participant’s death). The provisions of this paragraph shall only apply if,
and to the extent, required to comply with Section 409A.

No Assignment. The rights, if any, of a participant or any other person to any payment or
other benefits under the Plan may not be assigned, transferred, pledged, or encumbered
except by will or the laws of descent or distribution.

4

 

Taxation. Bonus payments will be taxed as ordinary income (wages) in the year of payment.
All payments will be subject to required income, employment and other tax withholdings and
any other authorized deductions. Without limiting the generality of the preceding sentence,
in the event any bonus is paid in a combination of cash and Company common stock, the
Company may reduce the amount of cash otherwise payable by the amount of such tax
withholdings and any other authorized deductions on the total amount otherwise payable
(including the portion to be paid in Company common stock).

Amendment. The Committee reserves the right to amend and/or terminate the Plan at any time
and in any manner, with or without notice; provided, however, that the consent of a
participant will be required to the extent such amendment or termination materially and
adversely affects the participant’s rights under the Plan. Adjustments pursuant to the
“Adjustment” section below shall not require participant consent. No amendment shall be
binding upon the Company unless approved by the Committee and set forth in writing.

No Fiduciary Relationship. Nothing contained in the Plan and no action taken pursuant to
the provisions of the Plan shall create or be construed as creating a trust or any kind of
fiduciary relationship between the Company and any of its affiliates, or the Committee, on
one hand, and any participant or any other person on the other hand.

No Right to Bonus or Continued Employment. Nothing contained in the Plan or any related
document constitutes an employment or service commitment by the Company (or any affiliate),
affects an employee’s status as an employee at will who is subject to termination without
cause, confers upon any participant any right to remain employed by or in service to the
Company (or any affiliate), or interferes in any way with the right of the Company (or any
affiliate) to terminate a participant’s employment or to change the participant’s
compensation or other terms of employment at any time. The Plan does not constitute a
contract and does not confer upon any person any right to receive a bonus or any other
payment or benefit. There is no commitment or obligation on the part of the Company (or any
affiliate) to continue any bonus plan (similar to the Plan or otherwise) in any future
fiscal year.

Administration. The Committee shall administer the Plan, select participants for the Plan,
determine the applicable performance measures, relative weights of those measures, specific
performance goals, and bonus opportunities, determine performance and the extent to which
any applicable goals have been satisfied, determine whether any bonus is actually payable
under the Plan and, subject to the express limitations of the Plan, the amount of each
bonus, and determine the time or times at which and the form and manner in which bonuses
will be paid. The Committee shall have the authority to construe and interpret the Plan and
any agreement or other document relating to the Plan. All actions taken and all
interpretations and determinations made by the Company in respect of the Plan shall be
conclusive and binding on all persons and shall be given the maximum deference permitted by
law. Bonuses under the Plan are granted pursuant to

5

 

Section 5.2 of the Company’s 2003 Performance Incentive Plan (the “Stock Plan”) and are
intended to qualify as “performance-based compensation” within the meaning of Section 162(m)
of the Internal Revenue Code (“Section 162(m)”). The Plan will be construed in accordance
with the applicable provisions of the Stock Plan and Section 162(m) and any applicable
regulations thereunder.

Agreements Regarding Noncompetition and Nonsolicitation. Notwithstanding anything else
contained herein to the contrary, the right of any current or former participant in the Plan
to a bonus or with respect to any bonus that is payable or has, at the relevant time,
previously been paid pursuant to the Plan to the participant is subject to the terms and
conditions of the participant’s “Noncompetition and Nonsolicitation Agreement” with the
Company (or any similar or successor agreement, as applicable), including any such agreement
that may be entered into after the effective date of the Plan (the participant’s
“Noncompetition and Nonsolicitation Agreement”). The Plan is one of the participant’s
Incentive Compensation Plans as defined in such Noncompetition and Nonsolicitation
Agreement. By accepting any bonus payment made pursuant to the Plan, the participant
affirms his or her representations, covenants and agreements set forth in his or her
Noncompetition and Nonsolicitation Agreement and agrees that his or her rights with respect
to such payment are and shall continue thereafter to be subject to such Noncompetition and
Nonsolicitation Agreement.

Adjustments. The Committee shall, to the extent it determines appropriate in order to
preserve the intended incentives, adjust the performance thresholds, targets and maximum
levels to mitigate the unbudgeted impact of material, unusual or nonrecurring gains and
losses, accounting changes or other extraordinary events not foreseen at the time the
targets were established, including without limitation the effects of any unbudgeted changes
in government reimbursement rates, [sensitive competitive information deleted].
Notwithstanding the foregoing, the Committee will not make any change or adjustment under
the Plan to the extent it would cause Plan bonuses to cease to qualify as “performance-based
compensation” within the meaning of Section 162(m). No adjustments may be made on or
following the occurrence of a Change in Control Event, except by the Committee as
constituted immediately prior to such Change in Control Event within a reasonable period of
time following the occurrence of such Change in Control Event.

6

 

Schedules A and B contain sensitive competitive information

and have been omitted from this filing.

7

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