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                                                                    EXHIBIT 10.8




                                                          Harry O. Nicodemus, IV


                              EMPLOYMENT AGREEMENT


                 THIS EMPLOYMENT AGREEMENT (this "Agreement"), is entered into
and effective as of March 4, 1998 (the "Effective Date") by and between
AMERICAN RESIDENTIAL SERVICES, INC., a Delaware corporation (the "Company"),
and HARRY O. NICODEMUS, IV (the "Employee").

                                    RECITALS

                 In entering into this Agreement, the Company desires to
provide the Employee with substantial incentives to serve the Company as a
senior executive performing at the highest levels of leadership and
stewardship, without distraction or concern over minimum compensation, benefits
or tenure, to manage the Company's growth and development and maximize the
returns to the Company's stockholders.

                 NOW, THEREFORE, in consideration of the foregoing and the
mutual provisions contained herein, and for other good and valuable
consideration, the parties hereto agree with each other as follows:

1.       CERTAIN DEFINITIONS

                 A.       Certain Definitions.  As used herein, the following
terms have the meanings assigned to them below:

                 "Acquiring Person" means any Person who or which, together
         with all Affiliates and Associates of such Person, is or are the
         Beneficial Owner of twenty-five percent (25%) or more of the shares of
         Common Stock then outstanding, but does not include any Exempt Person;
         provided, however, that a Person shall not be or become an Acquiring
         Person if such Person, together with its Affiliates and Associates,
         shall become the Beneficial Owner of twenty-five percent (25%) or more
         of the shares of Common Stock then outstanding solely as a result of a
         reduction in the number of shares of Common Stock outstanding due to
         the repurchase of Common Stock by the Company, unless and until such
         time as such Person or any Affiliate or Associate of such Person shall
         purchase or otherwise become the Beneficial Owner of additional shares
         of Common Stock constituting one percent (1%) or more of the then
         outstanding shares of Common Stock or any other Person (or Persons)
         who is (or collectively are) the Beneficial Owner of shares of Common
         Stock constituting one percent (1%) or more of the then outstanding
         shares of Common Stock shall become an Affiliate or Associate of such
         Person, unless, in either such case, such Person, together with all
         Affiliates and Associates of such Person, is not then the Beneficial
         Owner of twenty-five percent (25%) or more of the shares of Common
         Stock then outstanding.





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                 "Active Status" means the Employee's Employment status from
         the Effective Date to and including the first to occur of (a) the
         Part-time Employment Effective Date or (b) the Termination Date.

                 "Affiliate" has the meaning ascribed to that term in Exchange
         Act Rule 12b-2.

                 "Annual Cash Compensation" of the Employee for any
         Compensation Year means the sum of the salary and bonus earned by the
         Employee from the Company during that Compensation Year, including all
         amounts deferred at the election of the Employee pursuant to a
         Compensation Plan intended to qualify as a plan under Section 401(k)
         of the Code or otherwise.  If any of that salary or bonus is paid in
         whole or in part in property other than cash (such as Common Stock)
         the amount so paid shall be the fair market value thereof on the date
         of payment.

                 "Associate" means, with reference to any Person, (a) any
         corporation, firm, partnership, association, unincorporated
         organization or other entity (other than the Company or a subsidiary
         of the Company) of which that Person is an officer or general partner
         (or officer or general partner of a general partner) or is, directly
         or indirectly, the Beneficial Owner of 10% or more of any class of its
         equity securities, (b) any trust or other estate in which that Person
         has a substantial beneficial interest or for or of which that Person
         serves as trustee or in a similar fiduciary capacity and (c) any
         relative or spouse of that Person, or any relative of that spouse, who
         has the same home as that Person.

                 "Average Annual Cash Compensation" of the Employee means, as
         of the Part-time Employment Effective Date, the average of (a) the
         Annual Cash Compensation earned by the Employee in each of the two (2)
         Compensation Years next preceding that date or, if less than two (2)
         Compensation Years have occurred prior to that date and since the
         Effective Date, (b) the Annual Cash Compensation in each whole
         Compensation Year, if any, and, restated on an annualized basis, the
         Annual Cash Compensation in each partial Compensation Year (up to a
         maximum of two (2) partial Compensation Years) next preceding the
         Part-time Employment Effective Date.

                 "Base Salary" means:  (a) prior to the Part-time Employment
         Effective Date, the guaranteed minimum annual salary payable by the
         Company to the Employee pursuant to Section 4(A); and (b) on and after
         the Part-time Employment Effective Date, the guaranteed minimum
         annual salary payable by the Company to the Employee pursuant to
         Section 5(E).

                 A specified Person is deemed the "Beneficial Owner" of, and is
         deemed to "beneficially own," any securities:

                          (a)     of which that Person or any of that Person's
                 Affiliates or Associates, directly or indirectly, is the
                 "beneficial owner" (as determined pursuant to Exchange





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                 Act Rule 13d-3) or otherwise has the right to vote or dispose
                 of, including pursuant to any agreement, arrangement or
                 understanding (whether or not in writing); provided, however,
                 that a Person shall not be deemed the "Beneficial Owner" of,
                 or to "beneficially own," any security under this subparagraph
                 (a) as a result of an agreement, arrangement or understanding
                 to vote that security if that agreement, arrangement or
                 understanding:  (1) arises solely from a revocable proxy or
                 consent given in response to a public (that is, not including
                 a solicitation exempted by Exchange Act Rule 14a-2(b)(2))
                 proxy or consent solicitation made pursuant to, and in
                 accordance with, the applicable provisions of the Exchange
                 Act; and (2) is not then reportable by such Person on Exchange
                 Act Schedule 13D (or any comparable or successor report);

                          (b)     which that Person or any of  that Person's
                 Affiliates or Associates, directly or indirectly, has the
                 right or obligation to acquire (whether that right or
                 obligation is exercisable or effective immediately or only
                 after the passage of time or the occurrence of an event)
                 pursuant to any agreement, arrangement or understanding
                 (whether or not in writing) or on the exercise of conversion
                 rights, exchange rights, other rights, warrants or options, or
                 otherwise; provided, however, that a Person shall not be
                 deemed the "Beneficial Owner" of, or to "beneficially own,"
                 securities tendered pursuant to a tender or exchange offer
                 made by that Person or any of that Person's Affiliates or
                 Associates until those tendered securities are accepted for
                 purchase or exchange; or

                          (c)     which are beneficially owned, directly or
                 indirectly, by (1) any other Person (or any Affiliate or
                 Associate thereof) with which the specified Person or any of
                 the specified Person's Affiliates or Associates has any
                 agreement, arrangement or understanding (whether or not in
                 writing) for the purpose of acquiring, holding, voting (except
                 pursuant to a revocable proxy or consent as described in the
                 proviso to subparagraph (a) of this definition) or disposing
                 of any voting securities of the Company or (2) any group (as
                 that term is used in Exchange Act Rule 13d-5(b)) of which that
                 specified Person is a member;

         provided, however, that nothing in this definition shall cause a
         Person engaged in business as an underwriter of securities to be the
         "Beneficial Owner" of, or to "beneficially own," any securities
         acquired through such Person's participation in good faith in a firm
         commitment underwriting until the expiration of forty (40) days after
         the date of that acquisition.  For purposes of this Agreement,
         "voting" a security shall include voting, granting a proxy, acting by
         consent, making a request or demand relating to corporate action
         (including, without limitation, calling a stockholder meeting) or
         otherwise giving an authorization (within the meaning of Section 14(a)
         of the Exchange Act) in respect of such security.

                 "Board" means the entire Board of Directors of the Company.





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                 "Business Reason" for the Company's termination of the
         Employee's Employment means any lawful reason other than Cause.

                 "Cause" for the Company's termination of the Employee's
         Employment means:  (a) the Employee's final conviction of a felony
         crime that enriched the Employee at the expense of the Company; or (b)
         the Employee's deliberate and intentional continuing failure to
         substantially perform his duties and responsibilities hereunder
         (except by reason of the Employee's incapacity due to physical or
         mental illness or injury) for a period of forty-five (45) days after
         the Required Board Majority has delivered to the Employee a written
         demand for substantial performance hereunder which specifically
         identifies the bases for the Required Board Majority's determination
         that the Employee has not substantially performed his duties and
         responsibilities hereunder (such period being the "Grace Period");
         provided, that for purposes of this clause (b), the Company shall not
         have Cause to terminate the Employee's Employment unless (1) at a
         meeting of the Board called and held following the Grace Period in the
         city in which the Company's principal executive offices are located of
         which the Employee was given not less than ten (10) days' prior
         written notice and at which the Employee was afforded the opportunity
         to be represented by counsel, appear and be heard, the Required Board
         Majority shall adopt a written resolution which (A) sets forth the
         Required Board Majority's determination that the failure of the
         Employee to substantially perform his duties and responsibilities
         hereunder has (except by reason of his incapacity due to physical or
         mental illness or injury) continued past the Grace Period and (B)
         specifically identifies the bases for that determination and (2) the
         Company, at the written direction of the Required Board Majority,
         shall deliver to the Employee a Notice of Termination for Cause to
         which a copy of that resolution, certified as being true and correct
         by the secretary or any assistant secretary of the Company, is
         attached.  Cause of the type referred to in clause (a) of the
         preceding sentence is a "Type I Cause," while Cause of the type
         referred to in clause (b) of the preceding sentence is a "Type II
         Cause."  For purposes of determining whether a Type II Cause has
         occurred, no act or failure to act on the part of the Employee shall
         be considered "deliberate and intentional" unless it is taken or
         omitted to be taken by the Employee in bad faith or without a
         reasonable belief that the Employee's act or omission was in the best
         interests of the Company.

                 "Change of Control" means the occurrence of any of the
         following events that occurs after the Effective Date:  (a) any Person
         becomes an Acquiring Person; (b) at any time the then Continuing
         Directors cease to constitute a majority of the members of the Board;
         (c) a merger of the Company with or into, or a sale by the Company of
         its properties and assets substantially as an entirety to, another
         Person occurs and, immediately after that occurrence, any Person,
         other than an Exempt Person, together with all Affiliates and
         Associates of such Person, shall be the Beneficial Owner of
         twenty-five percent (25%) or more of the total voting power of the
         then outstanding Voting Shares of the Person surviving that
         transaction (in the case or a merger or consolidation) or the Person
         acquiring those properties and assets substantially as an entirety.





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                 "Change of Control Payment" means at any time the amount equal
         to three (3) times the Employee's then highest Base Salary during the
         term of this Agreement.

                 "Code" means the Internal Revenue Code of 1986.

                 "Common Stock" means the common stock of the Company.

                 "Company" means (a) American Residential Services, Inc., a
         Delaware corporation, and (b) any Person that assumes the obligations
         of "the Company" hereunder, by operation of law, pursuant to Section
         9(D)(iii) or otherwise.

                 "Compensation Plan" means any compensation arrangement, plan,
         policy, practice or program established, maintained or sponsored by
         the Company or any subsidiary of the Company, or to which the Company
         or any subsidiary of the Company contributes, on behalf of any
         Executive Officer or any member of the family of any Executive
         Officer, (a) including (i) any "employee pension benefit plan" (as
         defined in Section 3(2) of ERISA) or other "employee benefit plan" (as
         defined in Section 3(3) of ERISA), (ii) any other retirement and
         savings plan, including any supplemental benefit arrangement relating
         to any plan intended to be qualified under Section 401(a) of the Code
         or whose benefits are limited by the Code or ERISA, (iii) any
         "employee welfare plan" (as defined in Section 3(1) of ERISA), (iv)
         any arrangement, plan, policy, practice or program providing for
         severance pay, deferred compensation or insurance benefit, (v) any
         Incentive Plan and (vi) any arrangement, plan, policy, practice or
         program (A) authorizing and providing for the payment or reimbursement
         of expenses attributable to first-class air travel and first-class
         hotel occupancy while on travel or (B) providing for the payment of
         business luncheon and country club dues, long-distance charges, mobile
         phone monthly air time or other recurring monthly charges or any other
         fringe benefit, allowance or accommodation of employment, but (b)
         excluding any compensation arrangement, plan, policy, practice or
         program to the extent it provides for annual base salary.

                 "Compensation Committee" means the committee of the Board to
         which the Board has delegated duties respecting the compensation of
         Executive Officers and the administration of Incentive Plans, if any,
         intended to qualify for the Exchange Act Rule 16b-3 exemption.

                 "Compensation Year" means any calendar year.

                 "Confidential Information" means, with respect to the Company
         or any subsidiary of the Company, all trade secrets and other
         confidential, nonpublic and/or proprietary information of that Person,
         including information derived from reports, investigations, research,
         work in progress, codes, marketing and sale programs, customer lists,
         records of customer service requirements, capital expenditure
         projects, cost summaries, pricing





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         formulae, contract analyses, financial information, projections,
         confidential filings with any governmental authority and all other
         confidential, nonpublic concepts, methods of doing business, ideas,
         materials or information prepared or performed for, by or on behalf of
         that Person.

                 "CPI" means for any period the Consumer Price Index for All
         Urban Consumers--All Items Index for Houston, Texas (or any
         substantially similar index published for the same area), as published
         by the United States Department of Labor, Bureau of Labor Statistics
         (or its successor) for that period.

                 "Continuing Director" means at any time any individual who
         then (a) is a member of the Board and was a member of the Board as of
         the Effective Date or whose nomination for his first election, or that
         first election, to the Board following that date was recommended or
         approved by a majority of the then Continuing Directors (acting
         separately or as a part of any action taken by the Board or any
         committee thereof) and (b) is not an Acquiring Person, an Affiliate or
         Associate of an Acquiring Person or a nominee or representative of an
         Acquiring Person or of any such Affiliate or Associate.

                 "Disability" of the Employee means the Employee has been
         determined (which determination shall be final and binding on all
         Persons, absent manifest error), as a result of a physical or mental
         illness or personal injury he has incurred (including illness or
         injury resulting from any substance abuse), by a Qualified Physician
         (who may be the doctor treating or otherwise acting as the Employee's
         doctor in connection with the illness or injury in question) selected
         by the Employee with the consent of the Company, or by the Company
         with the consent of the Employee (which consent shall not be
         unreasonably withheld in either case), to be unable to perform, at the
         time of that determination and, in all reasonable medical likelihood,
         indefinitely thereafter, the normal duties then most recently
         assigned, under and in accordance with the terms hereof, to the
         Employee while on Active Status; provided that, the determination
         whether the Employee has incurred a Disability shall be made by a
         majority of three (3) Qualified Physicians, (a) one (1) of whom shall
         be selected by the Employee, (b) one (1) of whom shall be selected by
         the Company and (c) the remaining one (1) of whom shall be selected by
         the Qualified Physicians selected by the Employee and the Company
         pursuant to clauses (a) and (b) of this proviso and the fees and
         expenses of whom will be shared and paid in equal amounts by the
         Employee and the Company, if: (1)(A) the Company has reasonably
         withheld its consent to the Qualified Physician, if any, selected by
         the Employee or (B) the Employee has reasonably withheld his consent
         to the Qualified Physician, if any, selected by the Company and  (2)
         the Qualified Physicians selected by the Employee and the Company
         disagree as to whether the Employee has incurred a Disability.  For
         purposes of this definition, if the Employee is unable by reason of
         illness or injury to give an informed consent to the performance of
         the treatment of that illness or injury, a Qualified Physician
         selected by any Person who is authorized by applicable law to give
         that consent will be deemed to have been selected by the Employee.





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                 "Effective Date" means March 4, 1998.

                 "ERISA" means the Employee Retirement Income Security Act of
         1974.

                 "Employment" means the salaried employment of the Employee by
         the Company or a subsidiary of the Company hereunder.

                 "Exchange Act" means the Securities Exchange Act of 1934.

                 "Executive Officer" means any of the chairman of the board,
         the chief executive officer, the chief operating officer, the chief
         financial officer, the president, any executive or senior vice
         president or the general counsel of the Company.

                 "Exempt Person" means (a) (1) the Company, any subsidiary of
         the Company, any employee benefit plan of the Company or of any
         subsidiary of the Company and (2) any Person organized, appointed or
         established by the Company for or pursuant to the terms of any such
         plan or for the purpose of funding any such plan or funding other
         employee benefits for employees of the Company or any subsidiary of
         the Company and (b) the Employee, any Affiliate or Associate of the
         Employee or any group (as that term is used in Exchange Act Rule
         13d-5(b)) of which the Employee or any Affiliate or Associate of the
         Employee is a member.

                 "Good Reason" for the Employee's termination of his Employment
         means:  (a) any violation hereof in any material respect by the
         Company; (b) either (1) a failure of the Company to continue in effect
         any Compensation Plan in which the Employee was participating or (2)
         the taking of any action by the Company which would adversely affect
         the Employee's participation in or materially reduce the Employee's
         benefits under, any such Compensation Plan, unless (A) in the case of
         either subclause (1) or (2) of this clause, there is substituted a
         comparable Compensation Plan that is at least economically equivalent,
         in terms of the benefit offered to the Employee, to the Compensation
         Plan being ended or in which the  Employee's participation is being
         adversely affected or the Employee's benefits are being materially
         reduced or (B) in the case of that subclause (1), the failure, or in
         the case of that subclause (2), the taking of action, adversely
         affects Executive Officers generally; or (c) the assignment to the
         Employee of duties inconsistent in any material respect with the
         Employee's then current positions (including status, offices, titles
         and reporting requirements), authority, duties or responsibilities or
         any other action by the Company which results in a material diminution
         in those positions, authority, duties or responsibilities.

                 "Incentive Plan" means any compensation arrangement, plan,
         policy, practice or program established, maintained or sponsored by
         the Company or any subsidiary of the Company, or to which the Company
         or any subsidiary of the Company contributes, on behalf of any
         Executive Officer and which provides for incentive, bonus or other
         performance-





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         based awards of cash, securities or the phantom equivalent of
         securities, including any stock option, stock appreciation right and
         restricted stock plan, but excluding any plan intended to qualify as a
         plan under any one or more of Sections 401(a), 401(k) or 423 of the
         Code.

                 "Nonterminating Party" means the Employee or the Company, as
         the case may be, to which the Terminating Party delivers a Notice of
         Termination.

                 "Notice of Termination" to or from the Employee  means a
         written notice that:  (a) to the extent applicable, sets forth in
         reasonable detail the facts and circumstances claimed to provide a
         basis for termination of the Employee's Employment, and if the
         Termination Date is other than the date of receipt of the notice, (b)
         sets forth that Termination Date.

                 "Outside Director" means at any time a member of the Board at
         that time who is not then an employee of the Company or any subsidiary
         of the Company.

                 "Part-time Employment Effective Date" means, (a) if the
         Company elects pursuant to any applicable provision hereof to
         terminate the Employee's Employment other than for Cause or (b) if the
         Employee elects pursuant to the applicable provision hereof to
         terminate his Employment for Good Reason or by reason of his
         Disability, the date the Nonterminating Party receives the Terminating
         Party's Notice of Termination.

                 "Part-time Employment Period" means the period of time which
         begins on the Part-time Employment Effective Date and ends on the
         first to occur of (a) the third (3rd) anniversary of that Part-time
         Employment Effective Date, (b) the termination by the Company of the
         Employee's Employment for Type I Cause or (c) the death or Retirement
         of the Employee.

                 "Person" means any natural person, sole proprietorship,
         corporation, partnership of any kind having a separate legal status,
         limited liability company, business trust, unincorporated organization
         or association, mutual company, joint stock company, joint venture,
         estate, trust, union or employee organization or governmental
         authority.

                 "Qualified Physician" means, in the case of any determination
         whether the Employee has sustained a Disability, a physician (a)
         holding an M.D. degree from a medical school located in the United
         States and having a national reputation in the United States as a
         leading medical school, (b) specializing and board- certified in the
         treatment of the injury or illness that has or may have caused that
         Disability, (c) licensed to practice that speciality in the State of
         Texas or the state in which the Employee then is domiciled and (d)
         having admission privileges to one or more private hospitals located
         in the Texas Medical Center in Houston, Texas or in a hospital of
         comparable reputation in the state in which the Employee then is
         domiciled.





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                 "Required Board Majority" means at any time a majority of the
         members of the Board at that time which includes at least a majority
         of the Outside Directors at that time.

                 "Retirement" of the Employee means the Employee terminates his
         Employment on or after the date he has attained age 65.

                 "Securities Act" means the Securities Act of 1933.

                 "Terminating Party" means the Employee or the Company, as the
         case may be, who or which terminates the Employee's Employment by
         means of a Notice of Termination.

                 "Termination Date" means:  (a) if the Employee's Employment is
         terminated by reason of the Employee's death or Retirement, the date
         of that death or Retirement; (b) if the Employee's Employment is
         terminated by reason of the Employee's giving a Notice of Termination
         following a Change of Control pursuant to Section 5(B)(i)(b), the
         first date on which the Company pays to the Employee in full the
         amounts owed to the Employee pursuant to Section 5(B)(iii); (c) if the
         Employee's Employment is terminated by reason of the Employee's giving
         a Notice of Termination without Good Reason and other than for
         Disability pursuant to Section 5(B)(i)(c), the elapse of the thirtieth
         (30th) day after the Company receives that notice; (d) if the
         Employee's Employment is terminated by the Company at any time for
         Type I Cause or, prior to the Part-time Employment Effective Date, at
         any time for Type II Cause, the date the Employee receives the
         Company's Notice of Termination for Cause; and (e) if the Employee's
         Employment is terminated for any other reason, at the expiration of
         the Part-time Employment Period.

                 "Type I Cause" means Cause of the type referred to in clause
(a) of the definition of Cause herein.

                 "Type II Cause" means Cause of the type referred to in clause
(b) of the definition of Cause herein.

                 "Voting Shares" means:  (a) in the case of any corporation,
         stock of that corporation of the class or classes having general
         voting power under ordinary circumstances to elect a majority of that
         corporation's board of directors; and (b) in the case of any other
         entity, equity interests of the class or classes having general voting
         power under ordinary circumstances equivalent to the Voting Shares of
         a corporation.

         B.      Other Definitional Provisions.  (i) Except as otherwise
specified herein, all references herein to any statute defined or referred to
herein, including the Code, ERISA and the Exchange Act, shall be deemed
references to that statute or any successor statute, as the same may have been
or may be amended or supplemented from time to time, and any rules or
regulations promulgated thereunder.





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                 (ii)     When used in this Agreement, the words "herein,"
"hereof" and "hereunder" and words of similar import shall refer to this
Agreement as a whole and not to any provision of this Agreement, and the word
"Section" refers to a Section of this Agreement unless otherwise specified.

                 (iii)    Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes each
other gender and the neuter.

                 (iv)     The word "including" (and, with correlative meaning,
the word "include") means including, without limiting the generality of any
description preceding such word, and the words "shall" and "will" are used
interchangeably and have the same meaning.

2.       EMPLOYMENT

                 A.        On the terms and subject to the conditions
hereinafter set forth, and beginning as of the Effective Date, the Company will
employ the Employee as a Senior Vice President and the Employee will serve in
the Company's employ in that position.  The Employee shall perform such duties,
and have such powers, authority, functions, duties and responsibilities for the
Company and corporations affiliated with the Company as are commensurate and
consistent with his employment as a Senior Vice President of the Company.  The
Employee also shall have such additional powers, authority, functions, duties
and responsibilities as may be assigned to him by the Board; provided that,
without the Employee's written consent, such additional powers, authority,
functions, duties and responsibilities shall not be inconsistent or interfere
with, or detract from, those herein vested in, or otherwise then being
performed for the Company by, the Employee.

                 B.       The Employee shall not, at any time during his
Employment, engage in any other activities unless those activities do not
interfere materially with the Employee's duties and responsibilities for the
Company at that time, except that the Employee shall be entitled, subject to
the provisions of Section 7, (a) to continue with such activities as the
Employee has carried on prior to the Effective Date, including making and
managing his personal investments and participating in other business or civic
activities and (b) to serve on corporate or other business, civic or charitable
boards or committees and trade association or similar boards or committees.

3.       TERM OF EMPLOYMENT

                 Subject to the provisions of Section 5, the term of the
Employee's Employment shall be for a continually renewing term of three (3)
years commencing on the Effective Date and renewing each day thereafter for an
additional day without any further action by either the Company or the
Employee, it being the intention of the parties that there shall be
continuously a remaining term of three (3) years' duration of the Employee's
Employment until an event has occurred as described in, or one of the parties
shall have made an appropriate election pursuant to, the provisions of Section
5.  When the Termination Date shall have occurred and the Company shall have
paid to the Employee all the applicable amounts Section 5 provides the Company
shall pay as a result of the





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termination of the Employee's Employment, including all amounts accruing during
the Part-time Employment Period, if any, this Agreement will terminate and have
no further force or effect, except that Sections 4(C), 8, 9, 10 and 11 shall
survive that termination indefinitely and Section 7 shall survive for the
period of time provided for therein.

4.       COMPENSATION

                 A.       Base Salary.     A Base Salary shall be payable to
the Employee by the  Company as a guaranteed minimum annual amount hereunder
for each Compensation Year during the period from the Effective Date to the
first to occur of the Part-time Employment Effective Date or the Termination
Date.  That Base Salary shall be payable in the intervals consistent with the
Company's normal payroll schedules (but in no event less infrequently than
semi-monthly), shall be payable initially at the annual rate of $170,000 and
shall be increased (but not decreased or adjusted other than as provided in
Section 5) as follows:

                 (i)      on the first and each subsequent anniversary of the
         Effective Date, by the same percentage increase (if any) in the CPI
         for the twelve (12) month period immediately preceding such
         anniversary;

                 (ii)     on the first and each subsequent anniversary of the
         Effective Date, by such additional amount as shall be determined in
         the sole discretion of the Compensation Committee, but only in such
         form and to such extent as the Compensation Committee may from time to
         time approve, as evidenced by the written minutes or records of the
         Compensation Committee and its written notices of such determinations
         or approvals to the Employee; and

                 (iii)    if the Employee relocates from a state without a
         personal income tax at the time of his relocation to a state having a
         personal income tax, or if the Employee resides in a state without a
         personal income tax on the date hereof which subsequently adopts a
         personal income tax, then, in either case, the Base Salary in effect
         at the time of such relocation or adoption, as applicable, shall
         immediately be increased by the amount equal to  the Base Salary
         immediately prior to this increase multiplied by seventy percent (70%)
         of the highest personal income tax rate of such state; for example, if
         the Employee relocates from a state without a personal income tax to a
         state having a personal income tax and the highest rate of that tax is
         six percent (6%) when the Base Salary is $170,000, then the Base
         Salary will be increased by $7,140 (computed at 70% x 6% x $170,000).

Effective as of the Part-time Employment Effective Date, the Base Salary
theretofore in effect shall be adjusted as provided in Section 5(E).

                 B.       Other Compensation.  The Employee shall be entitled
to participate  in all Compensation Plans from time to time in effect while he
remains on Active Status, regardless of





                                     11
<PAGE>   12
whether the Employee is an Executive Officer.  All awards to the Employee under
all Incentive Plans shall take into account the Employee's positions with and
duties and responsibilities to the Company and its subsidiaries.

                 C.       Tax Indemnity.  Should any of the payments of Base
Salary, other incentive or supplemental compensation, benefits, allowances,
awards, payments, reimbursements or other perquisites, or any other payment in
the nature of compensation, singly, in any combination or in the aggregate,
that are provided for hereunder to be paid to or for the benefit of the
Employee be determined or alleged to be subject to an excise or similar purpose
tax pursuant to Section 4999 of the Code, or any successor or other comparable
federal, state or local tax law by reason of being a "parachute payment"
(within the meaning of Section 280G of the Code), the Company shall pay to the
Employee such additional compensation as is necessary (after taking into
account all federal, state and local taxes payable by the Employee as a result
of the receipt of such additional compensation) to place the Employee in the
same after-tax position (including federal, state and local taxes) he would
have been in had no such excise or similar purpose tax (or interest or
penalties thereon) been paid or incurred.  The Company hereby agrees to pay
such additional compensation within the earlier to occur of (i) five (5)
business days after the Employee notifies the Company that the Employee intends
to file a tax return taking the position that such excise or similar purpose
tax is due and payable in reliance on a written opinion of the Employee's tax
counsel (such tax counsel to be chosen solely by the Employee) that it is more
likely than not that such excise tax is due and payable or (ii) twenty-four
(24) hours of any notice of or action by the Company that it intends to take
the position that such excise tax is due and payable.  The costs of obtaining
the tax counsel opinion referred to in clause (i) of the preceding sentence
shall be borne by the Company, and as long as such tax counsel was chosen by
the Employee in good faith, the conclusions reached in such opinion shall not
be challenged or disputed by the Company.  If the Employee intends to make any
payment with respect to any such excise or similar purpose tax as a result of
an adjustment to the Employee's tax liability by any federal, state or local
tax authority, the Company will pay such additional compensation by delivering
its cashier's check payable in such amount to the Employee within five (5)
business days after the Employee notifies the Company of his intention to make
such payment.  Without limiting the obligation of the Company hereunder, the
Employee agrees, in the event the Employee makes any payment pursuant to the
preceding sentence, to negotiate with the Company in good faith with respect to
procedures reasonably requested by the Company which would afford the Company
the ability to contest the imposition of such excise or similar purpose tax;
provided, however, that the Employee will not be required to afford the Company
any right to contest the applicability of any such excise or similar purpose
tax to the extent that the Employee reasonably determines (based upon the
opinion of his tax counsel) that such contest is inconsistent with the overall
tax interests of the Employee.





                                     12
<PAGE>   13
5.       TERMINATION, PART-TIME EMPLOYMENT PERIOD, DISABILITY AND DEATH

                 A.       Termination of Employment by the Company.  (i) The
Company shall be entitled, if acting at the direction of the Required Board
Majority, to terminate the Employee's Employment (a) at any time for Type I
Cause or (b) at any time prior to the Part-time Employment Effective Date for
Type II Cause or for any Business Reason.  If the Employee is neither a member
of the Board nor an Executive Officer, the Company shall be entitled, if acting
at the direction of the chief executive officer of the Company, to terminate
the Employee's Employment at any time prior to the Part-time Employment Date
for any Business Reason.  The Company's termination of the Employee's
Employment for Cause will be effective on the date the Company delivers a
Notice of Termination for Cause to the Employee pursuant to this Section
5(A)(i)(together, in the case of a termination for Type II Cause, with the
certified resolution referred to in clause (b) of the definition herein of
Cause), while the Company's termination of the Employee's Employment for a
Business Reason will be effective on the third (3rd) anniversary of the date
the Company delivers a Notice of Termination for a Business Reason to the
Employee pursuant to this Section 5(A)(i).

                 (ii)     If the Company terminates the Employee's Employment
for Cause, the Company  promptly thereafter, and in any event within five (5)
business days thereafter, shall pay the Employee his Base Salary to and
including the Termination Date and the amount of all compensation previously
deferred by the Employee (together with any accrued interest or earnings
thereon), in each case to the extent not theretofore paid, and, when that
payment is made, the Company shall, notwithstanding Section 3, have no further
or other obligations hereunder to the Employee.

                 (iii)    If the Company terminates the Employee's Employment
for a Business Reason, the respective rights and obligations of the Company and
the Employee during the Part-time Employment Period will be as set forth in
Section 5(E).

                 B.       Termination of Employment by the Employee.  (i) The
Employee shall be entitled to terminate his Employment (a) for a Good Reason at
any time within one hundred eighty (180) days after the facts or circumstances
constituting that Good Reason first exist and are known to the Employee, (b) by
reason of a Change of Control at any time within three hundred sixty-five (365)
days after that Change of Control occurs (provided, however, that the Employee
shall not be entitled to terminate his Employment by reason of that Change of
Control if it occurs (1) during the thirty (30) day period  following the
Company's receipt of the Employee's Notice of Termination without Good Reason
and other than for Disability  pursuant to this Section 5(B)(i), (2) after (A)
the receipt by the Nonterminating Party of the Terminating Party's Notice of
Termination pursuant to Section 5(C) or (B) the Employee's receipt of the
Company's Notice of Termination for a Business Reason (other than in connection
with that Change of Control) pursuant to Section 5(A) or (3) more than three
hundred sixty-five (365) days after the Company's receipt of the Employee's
Notice of Termination for Good Reason pursuant to this Section 5(B)(i)) or (c)
without Good Reason and other





                                     13
<PAGE>   14
than for Disability at any time.  The Employee's termination of his Employment
for Good Reason will be effective on the third (3rd) anniversary of the date
the Employee delivers a Notice of Termination for Good Reason to the Company
pursuant to this Section 5(B)(i).  The Employee's  termination of his
Employment by reason of a Change of Control will be effective on the first date
on which the Change of Control Payment shall have been paid in full to the
Employee.  The Employee's termination of his Employment without Good Reason and
other than for Disability will be effective on the thirtieth (30th) day
following the Employee's delivery of a Notice of Termination without Good
Reason and other than for Disability pursuant to this Section 5(B)(i).

                 (ii)     If  the Employee terminates his Employment for Good
Reason, the respective rights and obligations of the Company and the Employee
during the Part-time Employment Period will be as set forth in Section 5(E ).

                 (iii)    If the Employee terminates his Employment by reason
of a Change of Control, the Company shall pay to the Employee in a cash lump
sum within five (5) business days after the date the Company receives the
Employee's Notice of Termination by reason of that Change of Control the amount
equal to the sum of (a) the portion of the Base Salary to and including the
Termination Date which has not yet been paid, (b) all compensation previously
deferred by the Employee (together with any accrued interest and earnings
thereon), (c) any accrued but unpaid vacation pay and (d) the Change of Control
Payment.

                 (iv)     If the Employee terminates his Employment without
Good Reason and other than for Disability, the Company shall pay to  the
Employee, in a cash lump sum within five (5) business days after the
Termination Date, the amount equal to the sum of (a) the portion of the Base
Salary to and including the Termination Date which has not yet been paid, (b)
all compensation previously deferred by the Employee (together with any accrued
interest and earnings thereon) which has not yet been paid, (c) any accrued but
unpaid vacation pay and (d) the amount equal to fifty percent (50%) of the Base
Salary being paid for the Compensation Year in which the Company receives the
Employee's Notice of Termination without Good Reason and other than for
Disability; provided, however, that if the Employee terminates his Employment
without Good Reason and other than for Disability within six (6) months of the
theretofore scheduled final day of the Part-time Employment Period, the amount
payable pursuant to clause (d) of this sentence shall be the amount determined
pursuant to that clause multiplied by a fraction the numerator of which is the
number of days from and excluding the date the Company receives the Notice of
Termination to and including that final day and the denominator of which is one
hundred eighty-two (182).  For purposes of this Section 5(B)(iv), if the
anniversary of the Effective Date in the Compensation Year in which the Company
receives the Notice of Termination without Good Reason and other than for
Disability has not occurred on or prior to the date of that receipt, the Base
Salary for that Compensation Year will be calculated on the assumption that no
increase in the amount thereof would be made effective as of that anniversary
pursuant to Section 4(A) or 5(E)(i), as applicable.





                                     14
<PAGE>   15
                 C.       Termination by Reason of Disability.  If the Employee
incurs any Disability while on Active Status, either the Employee or the
Company may terminate the Employee's Employment effective on the third (3rd)
anniversary of the date the Nonterminating Party receives a Notice of
Termination from the Terminating Party pursuant to this Section 5(C).  If the
Employee's Employment is terminated by reason of the Employee's Disability, the
respective rights and obligations of the Company and the Employee during the
Part-time Employment Period will be as set forth in Section 5(E).

                 D.       Termination of Employment by Death.  The Employee's
Employment shall terminate automatically at the time of his death.  If the
Employee's Employment is terminated by reason of the Employee's death, the
Company shall pay to the Person the Employee has designated in a written notice
delivered to the Company as his beneficiary entitled to such payment, if any,
or to the Employee's estate, as applicable, in a cash lump sum within thirty
(30) days after the Termination Date, the amount equal to the sum of (i) the
portion of the Base Salary through the end of the month in which the
Termination Date occurs which has not yet been paid, (ii) all compensation
previously deferred by the Employee (together with any accrued interest or
earnings thereon) which has not yet been paid, (iii) any accrued but unpaid
vacation pay (if the Employee dies while on Active Status) and (iv) (a) if the
Employee dies while on Active Status, the product of (1) the Base Salary being
paid for the Compensation Year in which he dies multiplied by (2) three (3) or
(b) if the Employee dies during the Part-time Employment Period, the product of
(1) one-twelfth (1/12th) of the Base Salary being paid for the Compensation
Year in which the Employee dies multiplied by (2) the number of whole and
partial calendar months in the period beginning with the first calendar month
after the calendar month in which he dies and ending with the last calendar
month in which the Termination Date would have occurred if the Employee's
Employment were to have continued to the end of the Part-time Employment
Period.  For purposes of this Section 5(D), if the anniversary of the Effective
Date in the Compensation Year in which the Employee dies has not occurred on or
before the Termination Date, the Base Salary for that Compensation Year will be
calculated on the assumption that no increase in the amount thereof would be
made effective as of that anniversary pursuant to Section 4(A) or 5(E)(i), as
applicable.

                 E.       Employee's Rights During the Part-time Employment
Period.   (i)   The Company shall pay the Employee a Base Salary, in the
intervals consistent with the Company's normal payroll schedules (but in no
event less frequently than semi-monthly) from the Part-time Employment
Effective Date to and including the Termination Date in the amounts determined
from time to time as follows:  Effective as of the Part-time Employment
Effective Date, the Base Salary payable by the Company to the Employee for the
period from and including that date to and excluding the third (3rd)
anniversary of that date shall be as follows:

                 (a)      if the Part-time Employment Effective Date occurs as
         a result of the receipt by the Nonterminating Party of a Notice of
         Termination for a Business Reason pursuant to Section 5(A) or a Notice
         of Termination for Good Reason pursuant to Section 5(B)(i), the amount
         equal to the Average Annual Cash Compensation of the Employee
         determined as of





                                     15
<PAGE>   16
         the Part-time Employment Effective Date; and (b) if the Part-time
         Employment Effective Date occurs as a result of the receipt by the
         Nonterminating Party of a Notice of Termination for Disability
         pursuant to Section 5(C), the amount equal to the amount by which (1)
         seventy-five percent (75%) of the Average Annual Cash Compensation of
         the Employee determined as of the Part-time Employment Effective Date
         exceeds (2) the aggregate amount of periodic payments the Employee
         receives during the twelve (12) months beginning on that date under
         Compensation Plans then in effect and providing for the payment to the
         Employee solely as a result or on account of disability; and

                 (b)      on the first and each subsequent anniversary of the
         Part-time Employment Effective Date, the Base Salary payable pursuant
         to this Section 5(E) shall be increased (but not decreased) by the
         same percentage increase (if any) in the CPI for the twelve (12) month
         period immediately preceding that anniversary.

                 (ii)  (a)  The Employee shall continue to participate in all
Compensation Plans from time to time in effect during the Part-time Employment
Period, provided, however, that:  (1) the Employee shall not be entitled to
receive any new award or grant under any Incentive Plan, and any such new award
or grant shall be at the sole discretion of the Compensation Committee or the
Board, as applicable, with respect to that Incentive Plan; and (2) if (A) the
terms of any such plan preclude the Employee's continued participation therein
or (B) his continued participation in any such plan would or reasonably could
be expected to disqualify that plan under the Code, the Employee shall not be
entitled to participate in that plan, but the Company instead shall provide the
Employee with the after-tax equivalent of the benefits that would have been
provided to the Employee were he a participant in that plan.

                 (b)      For purposes of determining eligibility (including
years of service) for retirement benefits payable under any Compensation Plan,
the Employee shall be deemed to have retired at the Termination Date.

                 (iii)    Subject to the provisions of Section 7, the Employee
shall not be (A) prevented from accepting other employment or engaging in (and
devoting substantially all his time to) other business activities or (B)
required to perform any regular duties for the Company (except to provide such
services consistent with the Employee's educational background, experience and
prior positions with the Company as may be acceptable to the Employee) or to
seek or accept additional employment with any other Person.  If the Employee,
at his discretion, shall accept any such additional employment or engage in any
such other business activity there shall be no offset, reduction or effect upon
any rights, benefits or payments to which the Employee is entitled pursuant to
this Agreement.  Furthermore, the Employee shall have no obligation to account
for, remit, rebate or pay over to the Company any compensation or other amounts
earned or derived in connection with such additional employment or business
activity.  The Employee shall, however, make himself generally available for
special projects or to consult with the Company and its employees at such times
and at such places as may be reasonably requested by the Company and which
shall be





                                     16
<PAGE>   17
reasonably satisfactory to the Employee and consistent with the Employee's
regular duties and responsibilities in the course of his then new occupation or
other employment, if any.

                 (iv)     Unless and until the Employee shall have sustained a
Disability, the Company shall continue to provide the Employee with either the
same or, at the Company's election, at a different location within thirty-five
(35) miles of the Employee's principal residence, in any case reasonably
acceptable to the Employee, alternate but comparable office space, furnishings,
facilities, reserved parking, supplies, services, equipment, secretarial and
administrative assistance that are in each case at least commensurate with the
size and quality of that which were provided to the Employee during the
Compensation Year immediately preceding the Part-time Employment Effective Date
pursuant to Section 6(C), but in no event less than are being furnished or
provided on the date hereof.  The Company and Employee may mutually agree upon
an equivalent monthly cash allowance in lieu of the Employee being provided all
or any part of these items.

                 (v)      The Employee shall remain entitled to the benefits of
Section 4(C).

                 F.       Return of Property.  On termination of the Employee's
Employment, however brought about, the Employee (or his representatives) shall
promptly deliver and return to the Company all the Company's property that is
in the possession or under the control of the Employee.

                 G.       Stock Options.  Notwithstanding any provision of this
Agreement to the contrary: (i) except in the case of a termination of the
Employee's Employment for Cause, all stock options previously granted to the
Employee under Incentive Plans that have not been exercised and are outstanding
as of the time immediately prior to the Termination Date shall, notwithstanding
any contrary provision of any applicable Incentive Plan, remain outstanding
(and continue to become exercisable pursuant to their respective terms) until
exercised or the expiration of their term, whichever is earlier; and (ii) in
the case of a termination of the Employee's Employment for Cause, all stock
options previously granted to the Employee under Incentive Plans that have not
been exercised and are outstanding as of the time immediately prior to the
Termination Date shall, notwithstanding any contrary provision of any
applicable Incentive Plan, remain outstanding and continue to be exercisable
until exercised or the date that is ten (10) days after the Termination Date,
whichever is earlier.  No stock option previously granted to the Employee under
any Incentive Plan shall, notwithstanding any contrary provision of that
Incentive Plan, expire or fail to become exercisable or, if exercisable, cease
to be exercisable by reason of either (i) the occurrence of the Employee's
Part-time Employment Effective Date or (ii) the Employee's service during the
Employee's Part-time Employment Period being less than full-time.

6.       OTHER EMPLOYEE RIGHTS

                 A.       Paid Vacation; Holidays.  The Employee shall be
entitled to not less than four (4) weeks of annual vacation and all legal
holidays during which times his applicable compensation shall be paid in full.





                                     17
<PAGE>   18
                 B.       Business Expenses.  The Employee is authorized to
incur, and will be entitled to receive prompt reimbursement for, all reasonable
expenses incurred by the Employee in performing his duties and carrying out his
responsibilities hereunder, including business meal, entertainment and travel
expenses, provided that the Employee complies with the applicable policies,
practices and procedures of the Company relating to the submission of expense
reports, receipts or similar documentation of those expenses.  The Company
shall either pay directly or promptly reimburse the Employee for such expenses
not more than twenty (20) days after the submission to the Company by the
Employee from time to time of an itemized accounting of such expenditures for
which direct payment or reimbursement is sought.  Unpaid reimbursements after
such twenty (20) day period shall accrue interest in accordance with Section
9(K).

                 C.       Support.  While on Active Status, the Employee shall
be provided by the Company with office space, furnishings, and facilities,
reserved parking, secretarial and administrative assistance, supplies and other
support equipment (including a computer, facsimile machine and photocopier).

                 D.       No Forced Relocation.  The Employee shall not be
required to move his principal place of residence from the Houston, Texas area
or to perform regular duties that could reasonably be expected to require
either such move against his wish or to spend amounts of time each week outside
the Houston, Texas area which are unreasonable in relation to the duties and
responsibilities of the Employee hereunder, and the Company agrees that, if it
requests the Employee to make such a move and the Employee declines that
request, (i) that declination shall not constitute any basis for a
determination that Type II Cause exists and (ii) no animosity or prejudice will
be held against Employee.

7.       COVENANT NOT TO COMPETE

                 A.       The Employee recognizes that in each of the highly
competitive businesses in which the Company is engaged, personal contact is of
primary importance in securing new customers and in retaining the accounts and
goodwill of present customers and protecting the business of the Company.  The
Employee, therefore, agrees that during the term of his Employment and for a
period of one (1) year after the Termination Date, he will not, within fifty
(50) miles of the geographic location in which the he has devoted substantial
attention at such location to the material business interests of the Company:
(i) accept employment or render service to any Person that is engaged in a
business directly competitive with the business then engaged in by the Company
or (ii) enter into or take part in or lend his name, counsel or assistance to
any business, either as proprietor, principal, investor, partner, director,
officer, employee, consultant, advisor, agent, independent contractor, or in
any other capacity whatsoever, for any purpose that would be competitive with
the business of the Company.

                 B.       If the provisions of this Section 7 are violated in
any material respect, the Company shall be entitled, upon application to any
court of proper jurisdiction, to a temporary





                                     18
<PAGE>   19
restraining order or preliminary injunction (without the necessity of posting
any bond with respect thereto) to restrain and enjoin the Employee from that
violation.  If the provisions of this Section 7 should ever be deemed to exceed
the time, geographic or occupational limitations permitted by the applicable
law, the Employee and the Company agree that such provisions shall be and are
hereby reformed to the maximum time, geographic or occupational limitations
permitted by the applicable law.

8.       CONFIDENTIAL INFORMATION

                 A.       The Employee acknowledges that he has had and will
continue to have access to various Confidential Information.  The Employee
agrees, therefore, that he will not at any time, either while employed by the
Company or afterwards, knowingly make any independent use of, or knowingly
disclose to any other person (except as authorized by the Company) any
Confidential Information.  Confidential Information shall not include (i)
information that becomes known to the public generally through no fault of the
Employee, (ii) information required to be disclosed by law or legal process or
the order of any governmental authority under color of law, provided, that
prior to disclosing any information pursuant to this clause (ii), the Employee
shall, if possible, give prior written notice thereof to the Company and
provide the Company with the opportunity to contest such disclosure, or (iii)
the Employee reasonably believes that such disclosure is required in connection
with the defense of a lawsuit against the Employee.  In the event of a breach
or threatened breach by the Employee of the provisions of this Section 8(A)
with respect to any Confidential Information, the Company shall be entitled to
a temporary restraining order and a preliminary and permanent injunction
(without the necessity of posting any bond in connection therewith) restraining
the Employee from disclosing, in whole or in part, that Confidential
Information.  Nothing herein shall be construed as prohibiting the Company from
pursuing any other available remedy for that breach or threatened breach,
including the recovery of damages.

                 B.       The Employee shall disclose promptly to the Company
any and all conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, which are conceived or made by the
Employee solely or jointly with any other Person or Persons during the period
of his Employment and which pertain primarily to the material business
activities of the Company, and the Employee hereby assigns and agrees to assign
all his interests therein to the Company or to its nominee; whenever requested
to do so by the Company, the Employee shall execute any and all applications,
assignments or other instruments which the Company shall deem necessary to
apply for and obtain Letters of Patent of the United States or any foreign
country or to otherwise protect the Company's interest therein.  These
obligations shall (i)  continue beyond the Termination Date with respect to
inventions, improvements, and valuable discoveries, whether patentable or not,
conceived, made or acquired by the Employee during the period of his Employment
and (ii) be binding upon the Employee's assigns, executors, administrators and
other legal representatives.





                                     19
<PAGE>   20
9.       GENERAL PROVISIONS

                 A.       Severability.  If any one or more of the provisions
of this Agreement shall, for any reason, be held or found by final judgment of
a court of competent jurisdiction to be invalid, illegal or unenforceable in
any respect, (i) such invalidity, illegality or unenforceability shall not
affect any other provisions of this Agreement, (ii) this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein (except that this clause (ii) shall not prohibit any
modification allowed under Section 7(B)) and (iii) if the effect of a holding
or finding that any such provision is invalid, illegal or unenforceable is to
modify to the Employee's detriment, reduce or eliminate any compensation,
reimbursement, payment, allowance or other benefit to the Employee intended by
the Company and Employee in entering into this Agreement, the Company shall,
within thirty (30) days after the date of such finding or holding, negotiate
and expeditiously enter into an agreement with the Employee which contains
alternative provisions (reasonably acceptable to the Employee) that will
restore to the Employee (to the extent lawfully permissible) substantially the
same economic, substantive and income tax benefits and legal rights the
Employee would have enjoyed had such provision been upheld as legal, valid and
enforceable.

                 B.       Nonexclusivity of Rights.  Nothing herein shall
prevent or limit the Employee's continuing or future participation in any
Compensation Plan or, subject to Section 9(N), limit or otherwise affect such
rights as the Employee may have under any other contract or agreement with the
Company.  Vested benefits and other amounts to which the Employee is or becomes
entitled to receive under any Compensation Plan on or after the Termination
Date shall be payable in accordance with that Compensation Plan, except as
expressly modified hereby.

                 C.       Full Settlement.  The Company's obligations to make
the payments provided for in, and otherwise to perform its undertakings in,
this Agreement shall not be affected by any right of set-off, counterclaim,
recoupment, defense or other action, claim or right the Company may have
against the Employee or others.  In no event shall the Employee be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Employee under any provision hereof, and those amounts
shall not be reduced, regardless of whether the Employee obtains other
employment or becomes self-employed.

                 D.       Successors.  (i) This Agreement is personal to the
Employee and, without the prior written consent of the Company, is not
assignable by the Employee otherwise than by will or the laws of descent and
distribution.  This Agreement shall inure to the benefit and be enforceable by
the Employee's legal representatives acting in their capacities as such
pursuant to applicable law.

                 (ii)     This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.  If the Employee is
not an Executive Officer, but is an officer of a subsidiary of the Company, the
Company shall be entitled to assign all its obligations hereunder to that
subsidiary and treat the Employee as an employee of that subsidiary for all





                                     20
<PAGE>   21
purposes, but the Company shall remain liable for the full, timely performance
of all the obligations so assigned as if the assignment had not been made.

                 (iii)    The Company shall require any successor (direct or
indirect and whether by purchase, merger, consolidation, share exchange or
otherwise) to the business, properties and assets of the Company substantially
as an entirety expressly to assume and agree to perform this Agreement in the
same manner and to the same extent the Company would have been required to
perform it had no such succession taken place.

                 E.       Amendments; Waivers.  This Agreement may not be
amended or modified except by a written agreement executed and delivered by the
parties hereto or their respective successors or legal representatives acting
in their capacities as such pursuant to applicable law.

                 F.       Notices.  All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the appropriate Person at the address of such Person set forth
below (or at such other address as such Person may designate by written notice
to each other party in accordance herewith):

                 (a)      if to the Employee, addressed as follows:

                          Harry O. Nicodemus, IV
                          1810 Crutchfield
                          Katy, Texas 77449

; and

                 (b)      if to the Company, addressed as follows:

                          American Residential Services, Inc.
                          Post Oak Tower, Suite 725
                          5051 Westheimer
                          Houston, Texas 77056-5604
                          Attn:   Corporate Secretary

                 G.       No Waiver.  The failure of the Company or the
Employee to insist on strict compliance with any provision of, or to assert any
right under, this Agreement (including the right of the Employee to terminate
his Employment for Good Reason or by reason of a Change of Control pursuant to
Section 5(B) (i)) shall not be deemed a waiver of that provision or of any
other provision of or right under this Agreement.





                                     21
<PAGE>   22
                 H.       GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT
REFERENCE TO ANY PRINCIPLES OF CONFLICTS OF LAWS.

                 I.       Jurisdiction and Venue.  The Company irrevocably
consents with respect to any action, suit or other legal proceeding pertaining
directly to this Agreement or to the interpretation or enforcement of any of
the Employee's rights hereunder to service of process in the State of Texas and
hereby waives any right to contest or oppose receipt of such service of
process.  The Company irrevocably (i) agrees that any such action, suit or
other legal proceeding may be brought in the courts of such state or in the
courts of the United States sitting in such state, (ii) consents to the
jurisdiction of each such court in any such action, suit  or other legal
proceeding and (iii) waives any objection it may have to the laying of venue of
any such action, suit or other legal proceeding in any of such courts.

                 J.       Headings.  The headings of Sections and subsections
hereof are included solely for convenience of reference and shall not control
the meaning or interpretation of any of the provisions of this Agreement.

                 K.       Interest.  If any amounts required to be paid or
reimbursed to the Employee hereunder are not so paid or reimbursed at the times
provided herein (including amounts required to be paid by the Company pursuant
to Sections 6 and 10, those amounts shall accrue interest compounded daily at
the annual percentage rate which is three percentage points (3%) above the
interest rate announced by Texas Commerce Bank National Association, Houston,
Texas (or its successor), from time to time, as its Base Rate (or prime lending
rate), from the date those amounts were required to have been paid or
reimbursed to the Employee until those amounts are finally and fully paid or
reimbursed; provided, however, that in no event shall the amount of interest
contracted for, charged or received hereunder exceed the maximum non-usurious
amount of interest allowed by applicable law.

                 L.       Publicity.   The Company agrees with the Employee
that, except to the extent required by law or legal process (including the
Exchange Act and the Securities Act), it will not make or publish, without the
prior written consent of the Employee, any written or oral statement concerning
the terms of the Employee's employment relationship with the Company and will
not, if  a Notice of Termination is given by either the Company or the Employee
for any reason, publish or cause to be published any statement concerning the
Employee, including his work-related performance or the reasons or basis for
the giving of that Notice of Termination.

                 M.       Tax Withholding.  Notwithstanding any other provision
hereof, the Company may withhold from amounts payable hereunder all Federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.





                                     22
<PAGE>   23
                 N.       Entire Agreement.  The Company and the Employee (i)
acknowledge that this Agreement amends and restates the Employment Agreement
dated as of April 1, 1997 between the Company and the Employee and (ii) agree
that this Agreement supersedes all prior written and oral agreements between
them with respect to the Employment of the Employee by the Company.

10.      INTENDED BENEFITS TO EMPLOYEE; PAYMENT OF EXPENSES; RESOLUTION OF
         DISPUTES

                 A.       Intended Benefits; Payment of Expenses.  In entering
into this Agreement the Company intends that the Employee receive without
reduction or delay all the intended benefits of this Agreement and that those
benefits, and the terms and conditions hereof, be construed in a manner most
favorable to the Employee; the Company, therefore, agrees that it will strive
expeditiously and in good faith to construe and resolve in the Employee's favor
and to his benefit any ambiguities or uncertainties that may be created by the
express language hereof.  If, however, at any time during the term hereof or
afterwards: (i) there should exist a dispute or conflict between the Employee
and the Company or another Person as to the validity, interpretation or
application of any term or condition hereof, or as to the Employee's
entitlement to any benefit intended to be bestowed hereby, which is not
resolved to the satisfaction of the Employee, (ii) the Employee must (A) defend
the validity of this Agreement, (B) contest any determination by the Company
concerning the amounts payable (or reimbursable) by the Company to the Employee
or (C) determine in any tax year of the Employee the tax consequences to the
Employee of any amounts payable (or reimbursable) under Section 4(C) or
4(B)(iii), or (iii) the Employee must prepare responses to an Internal Revenue
Service ("IRS") audit of, or otherwise defend, his personal income tax return
for any year the subject of any such audit, or an adverse determination,
administrative proceedings or civil litigation arising therefrom that is
occasioned by or related to an audit by the IRS of the Company's income tax
returns, then the Company hereby unconditionally agrees:  (a) on written demand
of the Company by the Employee, to provide sums sufficient to advance and pay
on a current basis (either by paying directly or by reimbursing the Employee)
not less than thirty (30) days after a written request therefor is submitted by
the Employee, the Employee's out of pocket costs and expenses (including
attorney's fees, expenses of investigation, travel, lodging, copying, delivery
services and disbursements for the fees and expenses of experts, etc.) incurred
by the Employee in connection with any such matter; (b)  the Employee shall be
entitled, upon application to any court of competent jurisdiction, to the entry
of a mandatory injunction without the necessity of posting any bond with
respect thereto which compels the Company to pay or advance such costs and
expenses on a current basis; and (c) the company's obligations under this
Section 10(A) will not be affected if the Employee is not the prevailing party
in the final resolution of any such matter.

                 B.       Resolution of Disputes.  If a dispute of any type
referred to in Section 10(A) arises between the Company and the Employee and
they fail to resolve that dispute by direct negotiation, the Company and the
Employee agree that  the next step taken to resolve that dispute, prior to
either party initiating any litigation to resolve that dispute (not including
any litigation that may be required to enforce the Employee's rights to the
payment or advancement of expenses and





                                     23
<PAGE>   24
legal fees on a current basis pursuant to Section 10(A)) shall be to submit the
dispute to an agreed Alternative Dispute Resolution ("ADR") process, to which
process the parties shall strive diligently in good faith to agree within ten
(10) business days after either party has given written notice to the other
party that it is unable to concur in the other party's final proposed
negotiated resolution of the dispute. If the Company and the Employee are
unable to agree in writing to an acceptable ADR process within that ten (10)
business day period, then the parties shall submit to a mandatory ADR process
by making joint application to the then Chief United States Federal District
Judge in the Southern District of Texas for the selection of an ADR process for
the parties.  The parties shall diligently in good faith participate in the ADR
process chosen by that judge.  If the parties are unable to resolve their
dispute after diligent good faith participation in the ADR process, then either
party shall be free to initiate such litigation as that party deems appropriate
under the circumstances.  Under no circumstances shall the Employee be
obligated to pay for the cost of any ADR process or to pay or reimburse the
Company for any attorneys' fees, costs or other expenses incurred by the
Company in connection with any process undertaken by the Employee to resolve
disputes under this Agreement.   As used in this Section 10, the term
"Employee" includes, if the Employee has died or become incompetent as a matter
of applicable law, the Employee's legal representative acting in his capacity
as such under applicable law.

11.      INDEMNIFICATION

                 The Employee shall be indemnified by the Company to the
maximum extent permitted by the law of Delaware, the state of the Company's
incorporation, and the law of the state of incorporation of any subsidiary of
the Company of which the Employee is a director or an officer or employee, as
the same may be in effect from time to time.





                                     24
<PAGE>   25
                 IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the day and year indicated above.

                                       AMERICAN RESIDENTIAL SERVICES, INC.



                                       By: /s/ THOMAS N. AMONETT
                                          -------------------------------------
                                       Thomas N. Amonett
                                       President and Chief Executive Officer


                                       EMPLOYEE


                                       /s/ HARRY O. NICODEMUS, IV
                                       ----------------------------------------
                                       HARRY O. NICODEMUS, IV

                                       Employee's Permanent Address:

                                                1810 Crutchfield
                                                Katy, Texas 77449





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