EMPLOYMENT AGREEMENT

           This Employment Agreement dated as of January 20, 1997 (this
"AGREEMENT") is entered into by and between American Residential Services, Inc.,
a Delaware corporation (the "CORPORATION"), and Harry O. Nicodemus IV (the
"EMPLOYEE").

           1. EMPLOYMENT. The Corporation hereby employs the Employee and the
Employee hereby accepts employment with the Corporation upon the terms and
subject to the conditions set forth herein.

           2. DUTIES AND RESPONSIBILITIES. Subject to the power of the board of
directors of the Corporation to manage the business and affairs of the
Corporation and to elect and remove officers of the Corporation and its
subsidiaries, the Employee shall serve the Corporation as Vice President, Chief
Financial Officer and Chief Accounting Officer and shall perform the services
and functions relating to such office or otherwise reasonably incident to such
offices. The Employee shall report directly to the Chief Executive Officer of
the Corporation, or such other officer of the Corporation as the board of
directors of the Corporation may determine.

           3.  COMPENSATION AND OTHER EMPLOYEE BENEFITS.

                     As compensation for his services under the terms of this
Agreement:

                     Subject to section 4 hereof, the Employee shall be paid an
                     annual salary of $125,000, payable in accordance with the
                     then-current payroll policies of the Corporation (such
                     annual salary is herein referred to as the "BASE SALARY");
                     the Base Salary shall be subject to increase (but not
                     decrease) at the discretion of the Corporation;

                     (b) subject to the right of the Corporation to amend or
                     terminate any employee and/or group or senior executive
                     benefit, bonus and/or stock option plan, the Employee shall
                     be entitled to receive the following employee benefits:

                      the Employee shall have the right to participate in such
                     medical and dental plans as are adopted by the Corporation,
                     as well as any or future employee and/or group benefit
                     plans of the Corporation that are available to its exempt
                     salaried employees generally (including, without
                     limitation, disability, accident, medical, life insurance
                     and hospitalization plans);

                     (2) the Employee shall have the right to participate, at
                     levels determined by the board of directors (or the
                     compensation committee thereof), in such executive benefit,
                     bonus and/or stock option plans of the Corporation as shall
                     be

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                     determined by the board of directors (or the compensation
                     committee thereof); and

                     (3) the Employee shall be entitled to reimbursement from
                     the Corporation for reasonable out-of-pocket expenses
                     incurred by him in the course of the performance of his
                     duties hereunder.

           4.  TERM.

                     The term of the Employee's employment under this Agreement
           shall commence on the date of this Agreement and the term shall
           continuously extend, without the necessity of action of either party,
           for a continually renewing period of one year's duration, 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 6
           of this Agreement. Such term is referred to herein as the "EMPLOYMENT
           TERM".

           5.  COMPETITION AND CONFIDENTIALITY.

                     (a) If, during the Employment Term (or any extension
           thereof), the employment of the Employee is terminated pursuant to
           Section 6(a) or Section 6(e), or if the Employee voluntarily
           terminates his employment pursuant to Section 6(d), or if this
           Agreement expires pursuant to its terms, then for the period of time
           remaining in the Employment Term, the Employee shall not (i) accept
           employment with or render service to any person, firm or corporation
           that is engaged in a business directly competitive with the plumbing,
           heating, air conditioning or electrical business of the Corporation,
           (ii) directly or indirectly own manage, operate, finance or control
           or participate in the ownership, management, operation or control of,
           or be connected as a principal, agent, representative, consultant,
           advisor, investor, owner, partner, financier, manager or joint
           venturer with, or permit his name to be used by or in connection
           with, any business or enterprise directly competitive with the
           residential service business of the Corporation (provided, however,
           that the Employee may invest as an investor in the voting securities
           of any person that is a reporting company under the Securities
           Exchange Act of 1934, as amended, so long as (A) the aggregate amount
           of such securities that the Employee owns directly or indirectly is
           less than five percent of the total outstanding voting securities of
           such person and (B) the Employee has no other affiliation with such
           person), or (iii) solicit the employment of any person who, within
           six months before or after the date of the Employee's termination, is
           employed by the Corporation on a full or part-time basis. For the
           purposes of this Section 5, the Corporation shall be deemed to
           include all of the subsidiaries of the Corporation.

                     (b) It is the desire and intent of each of the parties that
           the provisions of Section 5(a) shall be enforced to the fullest
           extent permissible under the laws and public policies applied in the
           State of Texas. Accordingly, if any particular portion of Section

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           5(a)shall be adjudicated to be invalid or unenforceable, Section 5(a)
           shall be deemed amended to (i) reform the particular portion to
           provide for such maximum restrictions as will be valid and
           enforceable, or if that is not possible, then (ii) delete therefrom
           the portion thus adjudicated to be invalid or unenforceable. Section
           5(a) shall inure to the benefit of any successor to the Corporation.

                     (c) During the Employment Term and for a period of two
           years after termination of the Employment Term, the Employee will not
           divulge or appropriate to his own use or to the use of others any
           secret or confidential information pertaining to the business of the
           Corporation obtained by the Employee in his capacity as an employee
           of the Corporation. For purposes of this Agreement, the term secret
           and confidential information does not include any information that is
           or becomes generally available to and known by the public (other than
           as a result of an unpermitted disclosure directly or indirectly by
           the Employee).

                     (d) The Employee acknowledges that Sections 5(a) and (c)
           are expressly for the benefit of the Corporation, that the
           Corporation would be irreparably injured by a violation of Section
           5(a) or (c), and that the Corporation would have no adequate remedy
           at law in the event of such violation. Therefore, the Employee
           acknowledges and agrees that injunctive relief, specific performance
           or any other appropriate equitable remedy (without any bond or other
           security being required) are appropriate remedies to enforce
           compliance by the Corporation with Sections 5(a) and (c).

           6.  TERMINATION OF EMPLOYMENT.

                     (a) FOR DUE CAUSE. Nothing herein shall prevent the
           Corporation from terminating, without prior notice, the Employee for
           "Due Cause" (as hereinafter defined), in which event the Employee
           shall be entitled to receive his Base Salary on a pro rata basis to
           the date of termination. In the event of such termination for Due
           Cause, all other rights and benefits the Employee may have under the
           employee and/or group or senior executive benefit, bonus and/or stock
           option plans and programs of the Corporation, generally, shall be
           determined in accordance with the terms and conditions of such plans
           and programs. The term "DUE CAUSE" shall mean (i) the Employee has
           committed a willful serious act, such as fraud, embezzlement or
           theft, against the Corporation intending to enrich himself at the
           expense of the Corporation, (ii) the Employee has been convicted of a
           felony, (iii) the Employee has engaged in improper conduct which has
           caused demonstrable and serious injury, monetary or otherwise, to the
           Corporation, (iv) the Employee, in carrying out his duties hereunder,
           has been guilty of willful gross neglect or willful gross misconduct,
           (v) the Employee has refused to carry out his duties in gross
           dereliction of duty and, after receiving written notice to such
           effect from the Corporation, the Employee fails to cure the existing
           problem within five days, or (vi) the Employee has materially
           breached this Agreement and has not remedied such breach within five
           days after receipt of written notice from the Corporation that a
           breach of this Agreement has occurred.


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                     (b) DUE TO DEATH. In the event of the death of the
           Employee, this Agreement shall terminate on the date of death and the
           estate of the Employee shall be entitled to the Employee's Base
           Salary through the end of the month in which he died. In the event of
           such termination due to death, all other rights and benefits the
           Employee (or his estate) may have under the employee and/or group or
           senior executive benefit, bonus and/or stock option plans and
           programs of the Corporation, generally, shall be determined in
           accordance with the terms and conditions of such plans and programs.

                     (c) DISABILITY. In the event the Employee suffers a
           "Disability" (as hereinafter defined), this Agreement shall terminate
           on the date on which the Disability occurs and the Employee shall be
           entitled to his Base Salary through the end of the month in which his
           employment is terminated due to the Disability. In the event of such
           termination due to Disability, all other rights and benefits the
           Employee may have under the
           employee and/or group or senior executive benefit, bonus and/or stock
           option plans and programs of the Corporation, generally, shall be
           determined in accordance with the terms and conditions of such plans
           and programs. For purposes of this Agreement, "DISABILITY" shall mean
           the inability or incapacity (by reason of a medically determinable
           physical or mental impairment) of the Employee to perform the duties
           and responsibilities related to the job or position with the
           Corporation described in Section 2 for a period that can be
           reasonably expected to last more than 180 days. Such inability or
           incapacity shall be documented to the reasonable satisfaction of the
           Corporation by appropriate correspondence from registered physicians
           reasonably satisfactory to the Corporation.

                     (d) VOLUNTARY TERMINATION. The Employee may voluntarily
           terminate his employment under this Agreement at any time by
           providing at least 21 days' prior written notice to the Corporation.
           In such event, the Employee shall be entitled to receive his Base
           Salary until the date his employment terminates and all other
           benefits the Employee may have under the employee and/or group or
           senior executive benefit, bonus and/or stock option plans and
           programs of the Corporation, generally, shall be determined in
           accordance with the terms and conditions of such plans and programs.

                     (e) CONSTRUCTIVE TERMINATION.

                     (i) If the Corporation (i) terminates the employment of the
                     Employee other than for Due Cause or because of a
                     Disability, (ii) demotes the Employee to a lesser position
                     than as provided in Section 2, (iii) decreases the
                     Employee's Base Salary below the level provided for by the
                     terms of Section 3(a), or (iv) requires the Employee to
                     move his principal residence from the Houston, Texas area,
                     then such action by the Corporation, unless consented to in
                     writing by the Employee, shall be deemed to be a
                     constructive termination by the Corporation of the
                     Employee's employment ("CONSTRUCTIVE TERMINATION").


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                        (ii)  In the event of a Constructive Termination, the
                          Employee shall be entitled to receive, from the date
                          of Constructive Termination, his Base Salary (as
                          provided in Section 3(a)) for a period equal to the
                          remaining period in the Employment Term, payable in
                          accordance with the then-current payroll policies of
                          the Corporation. In the event of such Constructive
                          Termination, all other rights and benefits the
                          Employee may have under the employee and/or group or
                          senior executive benefit, bonus and/or stock option
                          plans and programs of the Corporation, generally,
                          shall be determined in accordance with the terms and
                          conditions of such plans and programs.

                          (iii)In the event of the death or Disability of
                          the Employee following Constructive
                          Termination, the amounts set forth in Section
                          6(e)(ii) shall continue to be owing and shall
                          be paid to the estate of the Employee or the
                          Employee, as applicable.

           7. NOTICES. All notices, requests, demands and other communications
given under or by reason of this Agreement shall be in writing and shall be
deemed given when delivered in person or when mailed, by certified mail (return
receipt requested), postage prepaid, addressed as follows (or to such other
address as a party may specify by notice pursuant to this provision):

                     (a) If to the Corporation:

                               American Residential Services, Inc.
                               Post Oak Tower, Suite 725
                               5051 Westheimer Road
                               Houston, Texas 77056
                               Attn: Chief Executive Officer

                     If to the Employee:

                           Harry O. Nicodemus IV
                           1810 Crutchfield
                           Katy, Texas 77449


           8. CONTROLLING LAW. The execution, validity, interpretation and
performance of this Agreement shall be governed by and construed in accordance
with the law of the State of Texas.

           9. ADDITIONAL INSTRUMENTS. The Employee and the Corporation shall
execute and deliver any and all additional instruments and agreements that may
be necessary or proper to carry out the purposes of this Agreement.

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           10. ENTIRE AGREEMENT AND AMENDMENTS. This Agreement contains the
entire agreement of the Employee and the Corporation relating to the matters
contained herein and supersedes all prior agreements and understandings, oral or
written, between the Employee and the Corporation with respect to the subject
matter hereof. This Agreement may be changed only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.

           11. SEPARABILITY. If any provision of this Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by the decision of any arbitrator or by decree of a court
of last resort, the Employee and the Corporation shall promptly meet and
negotiate substitute provisions for those rendered or declared illegal or
unenforceable to preserve the original intent of this Agreement to the extent
legally possible, but all other provisions of this Agreement shall remain in
full force and effect.

           12. ASSIGNMENTS. The Corporation may assign this Agreement to any
person or entity succeeding to all or substantially all of the business
interests of the Corporation by merger or otherwise. The rights and obligations
of the Employee under this Agreement are personal to him, and no such rights,
benefits or obligations shall be subject to voluntary or involuntary alienation,
assignment or transfer, except as otherwise contemplated hereby.

           13. EFFECT OF AGREEMENT. Subject to the provisions of Section 12 with
respect to assignments, this Agreement shall be binding upon the Employee and
his heirs, executors, administrators, legal representatives and assigns and upon
the Corporation and its respective successors and assigns, except as otherwise
contemplated hereby.

           14. EXECUTION. This Agreement may be executed in multiple
counterparts each of which shall be deemed an original and all of which shall
constitute one and the same instrument.

           15. WAIVER OF BREACH. The waiver by either party to this Agreement of
a breach of any provision of the Agreement by the other party shall not operate
or be construed as a waiver by such party of any subsequent breach by such other
party.

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IN WITNESS WHEREOF, the Employee and the Corporation have executed this
Agreement effective as of the date first above written.


                                 AMERICAN RESIDENTIAL SERVICES, INC.

                                 /s/C. CLIFFORD WRIGHT, JR.
                                 C. Clifford Wright, Jr.
                                 Chief Executive Officer

                                 /s/HARRY O. NICODEMUS
                                 Harry O. Nicodemus