Employment Agreement - Encompass Management Co., Encompass Services Corp. and Darren B. Miller


                              EMPLOYMENT AGREEMENT

                                        
     This Employment Agreement (this "Agreement") is effective as of March 21,
2000, among Encompass Management Co. a Delaware corporation (the "Company"),
Encompass Services Corporation, a Texas corporation ("Encompass"), and Darren B.
Miller, a resident of Fort Bend County, Texas ("Employee"). In consideration of
the premises and the mutual covenants contained herein, the parties hereby agree
as follows:

     1. Employment. The Company hereby agrees to employ Employee and Employee
hereby agrees to work for the Company as its Senior Vice President - Chief
Financial Officer. Employee's principal office shall be in Houston, Texas. So
long as Employee is employed by the Company, Employee shall devote Employee's
skill, energy and substantially all of his business-related efforts to the
faithful discharge of Employee's duties as an employee of the Company. In
providing services hereunder, Employee shall comply with and follow all
directives, policies, standards and regulations from time to time established by
the Board of Directors of the Company.

     2. Term of Employment. Employee's employment by the Company pursuant to
this Agreement shall continue in effect for a term of two years from the date of
this Agreement (the "Initial Period"), which shall be automatically extended for
additional, successive one year periods (the "Additional Periods") commencing on
the second anniversary date of this Agreement and on each anniversary date
thereafter, unless either party gives notice of non-renewal as provided in
Section 10(e) or otherwise terminates this Agreement in accordance with the
other provisions of Section 10.

     3. Representations and Warranties. Employee represents and warrants that
Employee is under no contractual or other restrictions or obligations that will
significantly limit Employee's activities on behalf of the Company or will
prohibit or limit the disclosure or use of by Employee of any information which
directly or indirectly relates to the nature of the Company or the services to
be rendered by Employee under this Agreement.

     4. Compensation. Subject to the provisions of Section 10, Employee will be
entitled to the compensation and benefits set forth in this Section 4.

     (a) During the Initial Period, the Company shall pay Employee an Annual
Base Salary, payable semi-monthly, in equal semi-monthly installments at a rate
equal to $240,000 per year for the first calendar year or portion thereof. In
each subsequent calendar year during the term of this Agreement, the Company
shall pay to Employee an Annual Base Salary determined by the Board of Directors
following its annual salary and performance review. Employee's Annual Base
Salary will be reviewed at least annually in the fourth quarter of each fiscal
year of Employee's employment hereunder, commencing in the fourth quarter of
fiscal year 2000.

     (b) Employee shall be eligible to receive an annual bonus pursuant to the
incentive compensation program in effect from time to time for executive
employees of the Company. The target bonus of Employee under such program shall
not be less than 80% of Employee's annual

 
salary. The bonus will be earned for Employee's performance during each
calendar year but will be finally determined and paid following the closing of
the books and records of the Company for the calendar year and review of same by
the Compensation Committee of the Company and the Company's independent
auditors.

     (c) All payments of salary and other compensation to Employee shall be made
after deduction of any taxes required to be withheld with respect thereto under
applicable federal and state laws.

     5.  Fringe Benefits; Expenses. (a) During the term of employment of
Employee hereunder, Employee shall participate in all employee benefit plans
sponsored by the Company for its executive employees, including but not limited
to stock bonus, stock purchase, stock performance incentive and stock option
plans, sick leave and disability leave, health insurance, dental insurance and
pension and/or profit sharing plans; provided, however, that except as provided
below, the nature, amount and limitations of such plans shall be determined from
time to time by the Board of Directors of the Company.

     (b) The Company will reimburse Employee for all reasonable business
expenses incurred by Employee in the scope of Employee's employment; provided,
however, that Employee must file expense reports with respect to such expenses
in accordance with the Company's policies as are in effect from time to time.

     (c) During the term of employment of Employee hereunder, Employee shall be
entitled to a minimum of four weeks paid vacation during each calendar year and
to paid holidays and other paid leave set forth in the Company's policies in
effect from time to time. Any vacation not used during a calendar year may not
be used during any subsequent period.

     (d) During the term of employment of Employee hereunder, the Company will
pay all license fees, occupation taxes and reasonable educational costs and
expenses necessary to maintain Employee's good standing under any professional
licenses.

     (e) During the term of employment of Employee hereunder, the Company shall
use reasonable efforts to provide (i) life insurance payable to Employee's
designated beneficiary in an amount at least three times Employee's Annual Base
Salary and (ii) disability insurance on behalf of Employee which, as a goal,
shall provide for salary continuation in the event of permanent disability in an
amount equal to the lesser of (i) 60% of Employee's Annual Base Salary, or (ii)
$10,000 per month.

     6. Indemnification and Insurance. The Company shall indemnify Employee with
respect to matters relating to Employee's services as an officer and/or director
of the Company or any of its Affiliates (as defined in Exhibit A attached
hereto) to the extent set forth in the Company's By-laws and in accordance with
the terms of any other indemnification which is generally applicable to
executive officers of the Company or any of its Affiliates that may be provided
by the Company or any such Affiliate from time to time. The foregoing indemnity
is contractual and will survive any adverse amendment to or repeal of the By-
laws. The Company

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will also cover Employee under a policy of officers' and directors' liability
insurance providing coverage that is comparable to that provided now or
hereafter to any other executive officer or director of the Company. The
provisions of this Section 6 will survive the termination of Employee's
employment for any reason and the term of this Agreement.

     7. Change in Control of the Company.

     (a) If a Change of Control (as defined in Exhibit A attached hereto) occurs
and if during the Protected Period (as defined in Exhibit A attached hereto),
Employee's employment is terminated or not renewed pursuant to Section 10,
whether by the Company or by Employee, then the Company shall promptly pay or
otherwise provide to Employee the benefits set forth below:

         (i) An amount equal to two times the sum of (A) Employee's Annual Base
     Salary then in effect and (B) the amount of the Employee's target bonus
     established by the Compensation Committee of the Board at the beginning of
     the calendar year in which such termination occurs, which shall not be less
     than 80% of the Annual Base Salary for such year, payable in a single lump
     sum by certified or bank cashier's check within 30 days of such
     termination; and

        (ii) An amount equal to the product of (A) the maximum monthly premium
     payment that may be charged to continue coverage for Employee and
     Employee's dependents under the Company's health insurance plan under COBRA
     and under all life insurance and disability policies provided by Employer
     for Employee, multiplied by (B) 24 months (payable over such period). Any
     unpaid amount under this clause (ii) will cease if Employee obtains
     substantially similar coverage under new employment.

The Company will use its best efforts to keep the policies of insurance referred
to in clause (ii) above in effect for the benefit of the Employee through the 24
month period, and after the expiration of such 24 month period, if the Employee
is unable to secure reasonable alternative coverage as a result of lack of
insurability, at the written request of the Employee, the Company will use
reasonable commercial efforts to continue such coverage, provided that the
Company will have no obligation to incur any incremental cost or risk (other
than minor administration inconvenience) and Employee shall agree in writing to
bear all such cost and risk and hold the Company harmless against same.
Notwithstanding the foregoing, Employee shall not be entitled to any benefits
under this Section 7 if such termination is (i) due to Employee's death, (ii) by
the Company on account of Employee's disability as provided in Section 10(d)
below, (iii) by the Company for Cause (as defined in Exhibit A attached hereto)
or (iv) by Employee for other than Good Reason (as defined in Exhibit A attached
hereto) as provided in Section 10 below.

     8.  Gross-Up of Parachute Payments.

     (a) To provide Employee with adequate protection in connection with
Employee's ongoing employment with the Company, this Agreement or other
incentive plans of the Company provide Employee with various benefits in the
event of termination of Employee's

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employment with the Company during the Protected Period. If Employee's
employment is terminated or not renewed pursuant to Section 10 during a
Protected Period or otherwise in connection with a "change of control" of the
Company, within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), a portion of those benefits could be
characterized as "excess parachute payments" within the meaning of Section 280G
of the Code. The parties hereto acknowledge that the protections set forth in
this Section 8 are important, and it is agreed that Employee should not have to
bear the full burden of the excise tax that might be levied under Section 4999
of the Code or any similar provision of state or federal law, in the event that
any portion of the benefits payable to Employee pursuant to this Agreement or
the other incentive plans of the Company are treated as an excess parachute
payment. The parties, therefore, have agreed as set forth in this Section 8.

     (b) Anything in this Agreement to the contrary notwithstanding, if it shall
be determined that any payment or distribution (including income recognized by
Employee upon the early vesting of restricted property or upon the exercise of
options whose exercise date has been accelerated) by the Company or any other
person to or for the benefit of Employee (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
8) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any similar provision of state or federal law or any interest or
penalties are incurred by Employee with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Company shall pay an additional
payment, not to exceed $250,000 in the aggregate (a "Gross-Up Payment"), in an
amount such that after payment by Employee of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed on the Gross-Up Payment, Employee retains an amount of
the Gross-Up Payment equal to fifty percent (50%) of the Excise Tax imposed on
the Payments. The Employee will bear the cost of the remaining 50% until the
aggregate Gross Payments from the Company have reached $250,000, and will
thereafter bear all additional taxes, interest or penalties.

     (c) In the event of any dispute as to the applicability or amount of any
Gross-Up Payment, all determinations required to be made under this Section 8,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the independent public accounting firm regularly
employed by the Company (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and to Employee within 15 business
days after the receipt of notice from Employee that there has been a Payment, or
such earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm will be borne by the Company. If the Accounting Firm determines
that no Excise Tax is payable by Employee, it shall furnish Employee with a
written statement that failure to report the Excise Tax on Employee's applicable
federal income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding on
the Company and Employee unless and until a final determination is received from
the Internal Revenue Service indicating a contrary result. As a result of
uncertainty in the application of

                                       4

 
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments may not have
been made by the Company that should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. If the Employee thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Employee, consistent with the maximum limitation stated in paragraph 8(b) above.
In the event it is determined by the Accounting Firm that the Gross Payments
previously made by the Company exceeded the limitations stated in paragraph 8(b)
above, upon written notice from the Company, accompanied by a copy of the
Accounting Firm's calculation of same, the amount of such overpayment shall be
promptly paid by the Employee to the Company.

     9. Options and Other Stock-Related Plans. Except to the extent otherwise
provided in this Section 9, the terms and conditions of any option, stock bonus,
restricted stock, stock award or other stock-related plan or program with
respect to capital stock of the Company which may be granted to Employee or in
which Employee may participate shall be governed by the applicable Company plan,
if any, and/or separate agreement(s) between the Company and Employee with
respect thereto.

     (a) All stock options granted to the Employee prior to February 22, 2000
will vest upon a termination of this Agreement by the Company or the Employee
under Section 10(c) at any time during the Initial Period.

     (b) Upon the occurrence of any of the termination events described in
Section 9(a) above, the exercise period of each stock option granted before
February 22, 2000 and then held by the Employee shall be the greater of (i) the
balance of the Initial Period, or (ii) ninety (90) days from the date of such
termination, but in neither event beyond the unexpired term of such option as
set forth in the respective plan or option agreement under which such option was
initially granted.

     (c) The exercise period of all Founder Options (as defined in Exhibit A)
held by the Employee on the date hereof shall be the remainder of the ten-year
term of such Founder Options.

     (d) Except as otherwise provided in Section 9(b) or 9(c), the exercise
period for stock options held by the Employee at the time of any termination of
the Agreement shall be the greater of (i) ninety (90) days from the effective
date of termination of employment other than under Section 10(b), (ii) thirty
(30) days from the effective date of termination of employment under Section
10(b), (iii) the exercise period established in or under the terms of the stock
option plan or stock option agreement to which such stock options are subject,
or (iv) the exercise period established in or under the terms of any other
written agreement between the Employee and the Company with respect to such
stock options.

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     10. Termination or Non-Renewal of Employment.

     (a) Termination by Either Party; General Provisions. Either the Company or
Employee may terminate Employee's employment hereunder at any time during the
term of this Agreement by delivery of sixty (60) days prior written notice by
the terminating party to the other party. Promptly after such termination of
employment, in addition to any other payments or benefits provided in this
Section 10, the Company shall pay to Employee an amount equal to the sum of (i)
Employee's earned but unpaid Annual Base Salary through the date of termination
of employment at the rate in effect at the time of such termination, (ii)
vacation pay earned but not taken to the date of such termination, and (iii) all
other amounts previously deferred by Employee or earned but not paid as of such
date under all Company incentive or deferred compensation plans or programs.

     (b) Termination for Cause; Resignation without Good Reason. If the Company
terminates Employee's employment for Cause, or if the Employee terminates
employment without Good Reason, the payments due to Employee shall be limited to
the amounts described in Section 10(a).

     (c) Termination Without Cause; Termination for Good Reason. If the Company
terminates Employee's employment without Cause (except as provided in Section
10(d) below), or if the Employee terminates Employee's employment for Good
Reason, then the Company shall promptly pay or otherwise provide to Employee the
following amounts in addition to those set forth in Section 10(a):

          (i) An amount equal to two times the sum of (A) Employee's Annual Base
     Salary then in effect and (B) the amount of the Employee's target bonus
     established by the Compensation Committee of the Board at the beginning of
     the calendar year in which such termination occurs, which shall not be less
     than 80% of the Annual Base Salary for such year, payable in a single lump
     sum by certified or bank cashier's check within 30 days of such
     termination; and

         (ii) An amount equal to the product of (A) the maximum monthly premium
     payment that may be charged to continue coverage for Employee and
     Employee's dependents under the Company's health insurance plan under
     COBRA, and under all life insurance and disability policies provided by
     Employer for Employee multiplied by (B) 24 months (payable over such
     period). Any unpaid amount under this clause (ii) will cease if Employee
     obtains substantially similar coverage under new employment.

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     (d) Termination on Disability. If at any time during the term of Employee's
employment hereunder, Employee is unable due to physical or mental disability,
to perform effectively Employee's duties hereunder, the Company shall continue
payment of salary as provided in Section 4 during the first 12 month period of
such disability to the extent not covered by the Company's disability insurance
policies (the Company may offset against its obligations in this sentence the
amounts actually received by the Employee under such policies). Upon the
expiration of such 12 month period, the Company, at its sole option, may
continue payment of Employee's salary for such additional periods as the Company
elects, or may terminate Employee's employment hereunder without any further
compensation obligations to Employee hereunder. If Employee should die during
the term of Employee's employment hereunder, Employee's employment and the
Company's obligations hereunder for compensation payments shall terminate as of
the end of the month in which Employee's death occurs.

     (e) Non-Renewal of Employment; General Provisions. Either the Company or
Employee may elect not to renew Employee's employment hereunder at the end of
the Initial Period, or at the end of any Additional Period thereafter, by
delivery of sixty (60) days prior written notice by the electing party to the
other party. At the expiration of the employment term (in addition to any other
amounts provided in Section 10(f) below in the case of a non-renewal by the
Company), the Company shall pay to Employee an amount equal to the sum of (i)
Employee's earned but unpaid Annual Base Salary through the date of termination
of employment at the rate then in effect, (ii) vacation pay earned but not taken
to the date of such termination, and (iii) all other amounts previously deferred
by Employee or earned but not paid as of such date under all Company incentive
or deferred compensation plans or programs. In the event of a non-renewal by the
Employee, the amounts due the Employee shall be limited to the amounts specified
in clause (i), (ii) and (iii) of the preceding sentence.

     (f) Non-Renewal by the Company at End of Initial Period or Additional
Period. If the Company elects not to renew the Employee's employment as of the
end of the Initial Period or an Additional Period, and provided the Employee
continues to perform Employee's duties and responsibilities through the end of
such Initial Period or Additional Period, as the case may be, then the Company
shall promptly pay or otherwise provide to Employee the following amounts in
addition to those set forth in Section 10(a):

          (i) An amount equal to the sum of (A) Employee's Annual Base Salary
     then in effect and (B) the amount of the Employee's target bonus
     established by the Compensation Committee of the Board at the beginning of
     the calendar year in which such termination occurs, which shall not be less
     than 80% of the Annual Base Salary for such year, payable in a single lump
     sum by certified or bank cashier's check within 30 days of such
     termination; and

         (ii) An amount equal to the product of (A) the maximum monthly premium
     payment that may be charged to continue coverage for Employee and
     Employee's dependents under the Company's health insurance plan under
     COBRA, and under all life insurance and disability policies provided by
     Employer for Employee multiplied by (B)

                                       7

 
     12 months (payable over such period). Any unpaid amount under this clause
     (ii) will cease if Employee obtains substantially similar coverage under
     new employment.

     (g) Continuance of Insurance. The Company will use its best efforts to keep
the policies of insurance referred to in clause (ii) of Sections 10(c) and
Section 10(f) above in effect for the benefit of the Employee through the 24 or
12 month period (as the case may be), and after the expiration of such 24 or 12
month period (as the case may be) if the Employee is unable to secure
reasonable alternative coverage as a result of lack of insurability, at the
written request of the Employee, the Company will use reasonable commercial
efforts to continue such coverage, provided that the Company will have no
obligation to incur any incremental cost or risk (other than minor
administration inconvenience) and Employee shall agree in writing to bear all
such cost and risk and hold the Company harmless against same.

     (h) Waiver of Claims. In the event this Agreement expires as a result of
non-renewal by the Company, or is terminated by the Company without Cause or as
a result of a disability of Employee in accordance with Section 10(d), or is
terminated by Employee with Good Reason, Employee agrees to accept, in full
settlement of any and all claims, losses, damages and other demands that
Employee may have arising out of such termination or non-renewal, as liquidated
damages and not as a penalty, the payments, benefits and vesting of rights set
forth in this Agreement. Employee hereby waives any and all rights Employee may
have to bring any cause of action or proceeding contesting any such termination
or non-renewal; provided, however, that such waiver shall not be deemed to
affect Employee's rights to enforce any other obligations of the Company
unrelated to employment. Under no circumstances shall Employee be entitled to
any compensation or confirmation of any benefits under this Agreement for any
period of time following Employee's date of termination if Employee's
termination is for Cause.

     (i) Lock-ups, etc. During the one year period after Employee receives the
lump sum payments as provided in Section 10(c) or (f) above, Employee shall sign
any lock-up letters, standstill agreements, or other similar documentation
specifically required by an underwriter from such Employee in connection with a
public offering of securities by the Company or take other actions reasonably
related thereto as requested by the Board of Directors of the Company; provided,
however, that equivalent agreements are being required of Company management and
the period of any such lock-up or standstill agreements shall not exceed the
shorter of (i) 180 days or (ii) the balance of the one (1) year period. In the
event Employee fails to sign any such letters, agreements or similar
documentation or take any such action, the Company may seek and obtain specific
performance of such covenant, including any injunction requiring execution
thereof or the taking of any such actions, and Employee hereby appoints the then
president of the Company in office from time to time to sign any such documents
on Employee's behalf so long as such documents are prepared on the same basis as
other shareholders generally or as all Company management shareholders.

     11. No Mitigation Obligation. The Company acknowledges that it will be
difficult and may be impossible (i) for Employee to find reasonably comparable
employment following termination of Employee's employment and (ii) to measure
the amount of damages which Employee may suffer as a result of the termination
of Employee's employment. Accordingly, all

                                       8

 
amounts paid to Employee under this Agreement following Employee's
termination of employment are acknowledged by the Company to be reasonable and
to be liquidated damages, and Employee will not be required to mitigate the
amount of such payments by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever
(including from other employment) create any mitigation, offset, reduction or
any other obligation on the part of Employee under this Agreement.

     12. Covenant Not to Compete.

     (a) During Employee's employment with the Company or any of its Affiliates
and thereafter during the Restricted Period (as defined in Exhibit A attached
hereto), regardless of the reason for the termination of Employee's employment,
Employee will not engage in or carry on, directly or indirectly, either for
himself or as a member of a partnership or as a shareholder, investor, owner,
officer or director of a company or other entity, or as an employee, agent,
associate or consultant of any person, partnership, corporation or other entity,
any business in any State of the United States or in any other part of the world
that directly competes with any services or products produced, sold, conducted,
developed, or in the process of development by the Company or its Affiliates on
the date of termination of Employee's employment.

     (b) Notwithstanding the foregoing, Employee shall not be deemed to be in
violation of Section 12(a) based solely on the ownership of less than one
percent of any class of securities of a publicly-held company whose gross assets
exceed $100,000,000.

     (c) Employee acknowledges that the limitations set forth herein on
Employee's rights to compete with the Company and its Affiliates are reasonable
and necessary for the protection of the Company and its Affiliates. In this
regard, Employee specifically agrees that the limitations as to period of time
and geographic area, as well as all other restrictions on Employee's activities
specified herein, are reasonable and necessary for the protection of the Company
and its Affiliates. In particular, Employee acknowledges that the parties
anticipate that Employee will be actively seeking markets for the products and
services of the Company and its Affiliates throughout the United States during
Employee's employment with the Company.

     (d) In the event that there shall be any violation of the covenant not to
compete set forth in this Section 12, then the time limitation thereof shall be
extended for a period of time equal to the period of time during which such
violation continues; and in the event the Company is required to seek relief
from such violation in any court, board of arbitration or other tribunal, then
the covenant shall be extended for a period of time equal to the pendency of
such proceedings, including all appeals.

     (e) Employee agrees that the remedy at law for any breach by Employee of
this Section 12 will be inadequate and that the Company shall also be entitled
to injunctive relief.

     13.  Confidential Information. During the term of Employee's employment
hereunder, and for five years after Employee's termination of employment,
Employee shall not use or disclose, without the prior written consent of the
Company, Confidential Information (as defined

                                       9

 
in Exhibit A attached hereto) relating to the Company or any of its Affiliates,
and upon termination of Employee's employment will return to the Company all
written materials in Employee's possession embodying such Confidential
Information. Employee will promptly disclose to the Company all Confidential
Information, as well as any business opportunity related to the Company which
comes to Employee's attention during the term of Employee's employment with the
Company. Employee will not take advantage of or divert any such business
opportunity for the benefit of Employee or any other Person (as defined in
Exhibit A attached hereto) without the prior written consent of the Company.
Employee agrees that the remedy at law for any breach by Employee of this
Section 13 will be inadequate and that the Company shall also be entitled to
injunctive relief.

     14.  Intellectual Property.

     (a) To the extent they relate to, or result from, directly or indirectly,
the actual or anticipated operations of the Company or any of its Affiliates,
Employee hereby agrees that all patents, trademarks, copyrights, trade secrets,
and other intellectual property rights, all inventions, whether or not
patentable, and any product, drawing, design, recording, writing, literary work
or other author's work, in any other tangible form developed in whole or in part
by Employee during the term of this Agreement, or otherwise developed, purchased
or acquired by the Company or any of its Affiliates, shall be the exclusive
property of the Company or such Affiliate, as the case may be ("Intellectual
Property").

     (b) Employee will hold all Intellectual Property in trust for the Company
and will deliver all Intellectual Property in Employee's possession or control
to the Company upon request and, in any event, at the end of Employee's
employment with the Company.

     (c) Employee shall assign and does hereby assign to the Company all
property rights that Employee may now or hereafter have in the Intellectual
Property. Employee shall take such action, including, but not limited to, the
execution, acknowledgment, delivery and assistance in preparation of documents,
and the giving of testimony, as may be requested by the Company to evidence,
transfer, vest or confirm the Company's right, title and interest in the
Intellectual Property.

     (d) Employee will not contest the validity of any invention, any copyright,
any trademark or any mask work registration owned by or vesting in the Company
or any of its Affiliates under this Agreement.

     15.  Definitions. As used in this Agreement, the terms defined in Exhibit
A have the means assigned to such terms in such exhibit.

     16. Notices. All notices, requests, demands and other communications
required by or permitted under this Agreement shall be in writing and shall be
sufficiently delivered if delivered by hand, by courier service, or sent by
registered or certified mail, postage prepaid, to the parties at their
respective addresses listed below:

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     (a)  If to Employee:
          _______________________ 
          _______________________ 
          _______________________ 

     (b)  If to the Company:
          Encompass Management Co.
          3 Greenway Plaza, Suite 2000
          Houston, Texas 77046
          Attention: Corporate Secretary
          Facsimile:   713-626-4766

Any party may change such party's address by such notice to the other parties.

     17. Set-off Rights. The Company's obligations to make the payments and
provide the benefits required by this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set off, counterclaim,
recoupment, defense or other claim, right or action that the Company may have
against Employee or others, unless such amount is a determinable liability of
the Employee to the Company.

     18. Assignment. This Agreement is personal to Employee, and Employee shall
not assign any of Employee's rights or delegate any of Employee's duties
hereunder without the prior written consent of the Company. Neither Employee nor
Employee's spouse will have the right to commute, encumber, or otherwise dispose
of any payments under this Agreement. The Company shall have the right to assign
this Agreement to a successor in interest in connection with a merger, sale of
substantially all assets, or the like; provided however, that an assignment of
this Agreement to an entity with operations, products or services outside of the
industries in which the Company is then active shall not be deemed to expand the
scope of Employee's covenant not to compete with such operations, products or
services without Employee's written consent. The Company shall require any
Person who is the successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization, or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform,
by a written agreement in form and substance reasonably satisfactory to
Employee, all of the obligations of the Company under this Agreement. As used in
this Agreement, the term "Company" means the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, written agreement, or
otherwise.

     19.  Survival. The provisions of this Agreement shall survive the
termination of Employee's employment hereunder in accordance with their terms.

     20. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of Texas without regard to the choice-of-
law principles thereof.

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     21. Binding Upon Successors. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns.

     22. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and Employee with respect to the terms of employment of
Employee by the Company and supersedes all prior agreements and understandings,
whether written or oral, between them concerning such terms of employment.

     23. Amendments and Waivers. This Agreement may be amended, modified or
supplemented, and any obligation hereunder may be waived, only by a written
instrument executed by the parties hereto. The waiver by either party of a
breach of any provision of this Agreement shall not operate as a waiver of any
subsequent breach. No failure on the part of any party to exercise, and no delay
in exercising, any right or remedy hereunder shall operate as a waiver hereof,
nor shall any single or partial exercise of any such right or remedy by such
party preclude any other or further exercise thereof or the exercise of any
other right or remedy.

     24. Cumulative Rights And Remedies. All rights and remedies hereunder are
cumulative and are in addition to all other rights and remedies provided by law,
agreement or otherwise. Employee's obligations to the Company and the Company's
rights and remedies hereunder are in addition to all other obligations of
Employee and rights and remedies of the Company created pursuant to any other
agreement.

      25. Construction. Each party to this Agreement has had the opportunity to
review this Agreement with legal counsel. This Agreement shall not be construed
or interpreted against any party on the basis that such party drafted or
authored a particular provision, parts of or the entirety of this Agreement.

     26. Severability. In the event that any provision or provisions of this
Agreement is held to be invalid, illegal or unenforceable by any court of law or
otherwise, the remaining provisions of this Agreement shall nevertheless
continue to be valid, legal and enforceable as though the invalid or
unenforceable parts had not been included therein. In addition, in such event
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible with respect
to those provisions which were held to be invalid, illegal or unenforceable.

     27. Attorneys' Fees and Costs. If any action at law or in equity is brought
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which it may be entitled.

                                       12

 
     28. Encompass Performance Agreement. Encompass shall cause the Company to
perform each and every obligation to be performed by the Company hereunder.

     IN WITNESS WHEREOF, the Company and Employee have executed this Agreement
on the date first above written.
                                       
                                             COMPANY:                         
                                                                              
                                             ENCOMPASS MANAGEMENT CO.         
                                                                              
                                             By: /S/ J. PATRICK MILLINOR, JR. 
                                                 ---------------------------- 
                                             Name: J. PATRICK MILLINOR, JR.   
                                                   --------------------------
                                             Title: Chairman                  
                                                    -------------------------
                                                                              
                                             ENCOMPASS:                       
                                                                              
                                             ENCOMPASS SERVICES CORPORATION   
                                                                              
                                             By: /S/ J. PATRICK MILLINOR, JR. 
                                                 ---------------------------- 
                                             Name: J. PATRICK MILLINOR, JR.   
                                                   --------------------------   
                                             Title: Chairman                  
                                                    -------------------------
                                                                              
                                             EMPLOYEE:                        
                                                                              
                                             /S/ DARREN B. MILLER             
                                             ---------------------
 
                                             Printed Name: Darren B. Miller   
                                                           -------------------
                                             
 

                                       13

 
                                                                       EXHIBIT A

                                  DEFINITIONS
                                        
     "Annual Base Salary" means the salary of Employee in effect at the relevant
time determined in accordance with Section 4(a) hereof.

     "Affiliate" means, with respect to any Person, each other Person who
controls, is controlled by, or is under common control with the Person
specified.

     "Cause" when used in connection with the termination of employment with the
Company, means the termination of Employee's employment by the Company by reason
of (i) the conviction of Employee of a crime involving moral turpitude by a
court of competent jurisdiction; (ii) the proven commission by Employee of an
act of fraud upon the Company; (iii) the willful and proven misappropriation of
any funds or property of the Company by Employee; (iv) the willful, continued
and unreasonable failure by Employee to perform material duties assigned to
Employee after reasonable notice and opportunity to cure such performance has
been given by the Company; (v) the knowing engagement by Employee in any direct,
material conflict of interest with the Company without compliance with the
Company's conflict of interest policy, if any, then in effect; (vi) the knowing
engagement by Employee, without the written approval of the Board of Directors
of the Company, in any activity which competes with the business of the Company
or any of its Affiliates or which would result in a material injury to the
Company or any of its Affiliates; or (vii) the knowing engagement in any
activity which would constitute a material violation of the provisions of the
Company's Insider Trading Policy or Business Ethics Policy, if any, then in
effect.

     "Change of Control" means

          (i) the acquisition by any individual, entity or group (within the
      meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Designated
      Person") of beneficial ownership (within the meaning of Rule 13d-3
      promulgated under the Securities Exchange Act of 1934, as amended, (the
      "Exchange Act")) of 30% or more of either (1) the then outstanding shares
      of Common Stock of the Company (the "Outstanding Company Common Stock") or
      (2) the combined voting power of the then outstanding voting securities of
      the Company entitled to vote generally in the election of directors (the
      "Outstanding Company Voting Securities"); provided, however, that the
      following acquisitions shall not constitute a Change of Control: (a) any
      acquisition of Common Stock of the Company or voting securities of the
      Company directly from the Company (excluding an acquisition by virtue of
      the exercise of a conversion privilege), (b) any acquisition of Common
      Stock of the Company or voting securities of the Company by the Company
      (c) any acquisition of Common Stock of the Company or voting securities
      of the Company by any employee benefit plan(s) (or related trust(s))
      sponsored or maintained by the Company or any corporation controlled by
      the Company and approved

                                       14

 
     by the Incumbent Board, (d) any acquisition by any corporation pursuant to
     a reorganization, merger or consolidation, if, immediately following such
     reorganization, merger or consolidation, the conditions described in
     clauses (1), (2) and (3) of paragraph (iii) below of this definition are
     satisfied, or (e) an acquisition by Apollo Management L.P. and/or one or
     more of its affiliates resulting in an ownership of no more than 40% of the
     Common Stock of the Company (for this purpose, any securities convertible
     into Common Stock held by Apollo Management L.P. and its affiliates will be
     treated as if they have been converted for purposes of determining the
     percentage of ownership held on an "as-converted basis"); or

          (ii) individuals who, as of the date hereof, constitute the entire
     Board of Directors of the Company (the "Incumbent Board") cease for any
     reason to constitute at least a majority of the Board of Directors of the
     Company (the "Board"); provided, however, that any individual becoming a
     director subsequent to the date hereof whose election, or nomination for
     election by the Company's shareholders, was approved by a vote of at least
     a majority of the directors then comprising the Incumbent Board shall be
     considered as though such individual were a member of the Incumbent Board,
     but excluding, for this purpose, any such individual whose initial
     assumption of office occurs as a result of either (1) an actual or
     threatened election contest (as such terms are used in Rule 14a-11 of the
     Regulation 14A promulgated under the Exchange Act), or an actual or
     threatened solicitation of proxies or consents by or on behalf of a Person
     other than the Board or (2) a plan or agreement to replace a majority of
     the members of the Board then comprising the Incumbent Board; or

          (iii) approval by the shareholders of the Company of a reorganization,
     merger or consolidation, in each case unless, immediately following such
     reorganization, merger or consolidation, (1) more than 50% (or such greater
     percentage as may be approved by the Incumbent Board) of the then
     outstanding shares of common stock of the corporation resulting from such
     reorganization, merger or consolidation (including, without limitation, a
     corporation which as a result of such transaction owns the Company through
     one or more subsidiaries) and the combined voting power of the then
     outstanding voting securities of such corporation entitled to vote
     generally in the election of directors is then beneficially owned, directly
     or indirectly, by all or substantially all of the individuals and entities
     who were the beneficial owners, respectively, of the Outstanding Company
     Common Stock and Outstanding Company Voting Securities immediately prior to
     such reorganization, merger or consolidation in substantially the same
     proportions as their ownership immediately prior to such reorganization,
     merger or consolidation, of the Outstanding Company Common Stock or
     Outstanding Company Voting Securities, as the case may be, (2) no
     Designated Person (excluding the Company, any employee benefit plan(s) (or
     related trust(s)) of the Company and/or its subsidiaries or any Person
     beneficially owning, immediately prior to such reorganization, merger or
     consolidation, directly or indirectly, 30% (or such lesser percentage as
     may be approved by the Incumbent Board) or more of the Outstanding Company
     Common Stock or Outstanding Company Voting Securities, as the case may be)
     beneficially owns, directly or indirectly, 30% (or such lesser percentage
     as may be approved by the Incumbent Board) or more of, respectively, the
     then outstanding shares of common stock of the corporation resulting


                                       15

 
     from such reorganization, merger or consolidation or the combined voting
     power of the then outstanding voting securities of such corporation
     entitled to vote generally in the election of directors, and (3) at least a
     majority of the members of the board of directors of the corporation
     resulting from such reorganization, merger or consolidation were members of
     the Incumbent Board at the time of the execution of the initial agreement
     providing for such reorganization, merger or consolidation; or

          (iv) approval by the shareholders of the Company of (1) a complete
     liquidation or dissolution of the Company or (2) the sale or other
     disposition of all or substantially all of the assets of the Company, other
     than to a corporation, with respect to which immediately following such
     sale or other disposition, (A) more than 50% (or such greater percentage as
     may be approved by the Incumbent Board) of the then outstanding shares of
     common stock of such corporation and the combined voting power of the then
     outstanding voting securities of such corporation entitled to vote
     generally in the election of directors is then beneficially owned, directly
     or indirectly, by all or substantially all of the individuals and entities
     who were beneficial owners, respectively, of the Outstanding Company Common
     Stock and Outstanding Company Voting Securities immediately prior to such
     sale or other disposition in substantially the same proportion as their
     ownership, immediately prior to such sale or other disposition, of the
     Outstanding Company Common Stock and Outstanding Company Voting Securities,
     as the case may be, (B) no Designated Person (excluding the Company and any
     employee benefit plan (or related trust) of the Company and/or its
     subsidiaries or such corporation and any Person beneficially owning,
     immediately prior to such sale or other disposition, directly or
     indirectly, 30% (or such lesser percentage as may be approved by the
     Incumbent Board) or more of the Outstanding Company Common Stock or
     Outstanding Company Voting Securities, as the case may be) beneficially
     owns, directly or indirectly, 30% (or such lesser percentage as may be
     approved by the Incumbent Board) or more of, respectively, the then
     outstanding shares of common stock of such corporation or the combined
     voting power of the then outstanding voting securities of such corporation
     entitled to vote generally in the election of directors, and (C) at least a
     majority of the members of the board of directors of such corporation were
     members of the Incumbent Board at the time of the execution of the initial
     agreement or action of the Board providing for such sale or other
     disposition of assets of the Company; or

     "Confidential Information" includes information conveyed or assigned to the
Company or any of its Affiliates by Employee or conceived, compiled, created,
developed, discovered or obtained by Employee from and during Employee's
employment relationship with the Company, whether solely by Employee or jointly
with others, which concerns the affairs of the Company or its Affiliates and
which the Company could reasonably be expected to desire be held in confidence,
or the disclosure of which would likely be embarrassing, detrimental or
disadvantageous to the Company or its Affiliates and without limiting the
generality of the foregoing includes information relating to inventions, and the
trade secrets, technologies, algorithms, products, services, finances, business
plans, marketing plans, legal affairs, supplier lists, client lists, potential
clients, business prospects, business opportunities, personnel assignments,
contracts and assets of the Company or any of its Affiliates and information
made available to the Company or any of its Affiliates by other parties under a
confidential

                                       16

 
relationship. Confidential Information, however, shall not include information
(a) which is, at the time in question, in the public domain through no wrongful
act of Employee, (b) which is later disclosed to Employee by one not under
obligations of confidentiality to the Company or any of its Affiliates or
Employee, (c) which is required by court or governmental order, law or
regulation to be disclosed, or (d) which the Company has expressly given
Employee the right to disclose pursuant to written agreement.

     "Founder Options" mean the options to acquire common stock of the Company
for an exercise price of approximately $3.07 per share (as presently
constituted) granted to the Employee prior to the Company's initial public
offering.

     "Good Reason" means the occurrence of any of the following events:

     (a) Employee is assigned duties, taken as a whole, that are materially
inconsistent with, or materially diminished from, Employee's positions, duties,
responsibilities and status with the Company immediately prior to such action,
or Employee's status, reporting responsibilities, titles or offices are
materially diminished from those in effect immediately prior to such action, or
Employee's duties and responsibilities are materially increased without a
corresponding reasonable increase in the Employee's compensation (provided that
in the case of such a change within a Protected Period, such increase must be
satisfactory to the Employee in Employee's sole reasonable judgment), except in
each case in connection with the termination of Employee's employment by the
Company for Cause or on account of disability, or as a result of the Employee's
death, or by the Employee for other than Good Reason; provided, however, that
Good Reason shall not be triggered under this subsection (a) by an immaterial
action not taken in bad faith or by an action that is remedied by the Company
promptly after receipt of written notice from Employee; or

     (b) Employee's Annual Base Salary is reduced (i) within a Protected Period,
from that in effect immediately prior to the commencement of a Protected Period
or as the same may be increased from time to time thereafter, or (ii) other than
within a Protected Period, from that which was in effect prior to such action
unless such reduction is part of a general reduction in compensation within the
officer ranks due to economic or company-wide considerations; or

     (c) The Company (i) within a Protected Period, fails to continue in effect
any benefit or compensation plan, including, but not limited to, the annual
bonus plan, qualified retirement plan, executive life insurance plan and/or
health and accident plan, in which Employee is participating immediately prior
to the commencement of the Protected Period, or plans providing, in the sole
reasonable judgment of Employee, Employee with substantially similar benefits,
or the Company takes any action that would adversely affect Employee's
participation in or reduce Employee's benefits under any of such plans
(excluding any such action by the Company that is required by law), or (ii)
other than within a Protected Period, takes any action to materially reduce or
eliminate Employee's participation in the Company's benefit or compensation
plans unless such reduction or elimination is part of a general reduction in
benefits within the officer ranks due to economic or company-wide
considerations; or

                                       17

 
     (d) The Company requires the Employee at any time to relocate more
than 50 miles from where Employee's principal office was located immediately
prior to such event; or

     (e) The amendment, modification or repeal of any provision of the
Certificate of Incorporation or Bylaws of the Company that was in effect
immediately prior to the commencement of a Protected Period, if such amendment,
modification or repeal would materially adversely affect Employee's rights to
indemnification by the Company; or

     (g) The Company shall violate or breach any obligation of the Company
(regardless whether such obligation be set forth in the Bylaws of the Company
and/or in this Agreement or any other separate agreement entered into between
the Company and Employee) to indemnify Employee against any claim, loss, expense
or liability sustained or incurred by Employee by reason, in whole or in part,
of the fact that Employee is or was an officer or director of the Company; or

     (h) The Company shall violate or breach any other material obligation of
the Company owing to Employee relating to Employee's employment with the
Company, provided that in the event of a violation or breach that is reasonably
subject to being cured by the Company, Good Reason shall only occur if the
Company shall fail or refuse to commence a cure within 15 days after written
notice thereof is given by Employee to the Company or shall thereafter fail to
diligently prosecute such cure to completion; or

     (i) The Company shall fail to keep in force, for the benefit of Employee,
directors' and officers' insurance policy with coverage amounts and scope at
least equal to the coverage amounts in effect on the date hereof; or

     (j) The Company shall fail to obtain from a successor (including a
successor to a material portion of the business or assets of the Company) a
satisfactory assumption in writing of the Company's obligations under this
Agreement; or

     (k) The Company shall fail to provide Employee with office space, related
facilities and support personnel (including, but not limited to, administrative
and secretarial assistance) that are both commensurate with the Employee's
position and Employee's responsibilities to and position with the Company and
not materially dissimilar to the office space, related facilities and support
personnel provided to other executive officers of the Company; or

     (l) The Company notifies Employee of the Company's intention not to observe
or perform one or more of the material obligations of the Company under this
Agreement.

     "Person" means any individual, corporation, trust, partnership, limited
partnership, foundation, association, limited liability company, joint stock
association or other legal entity.

     "Protected Period" means the period of time beginning with a Change of
Control and ending 6 months following such Change of Control; provided, however,
that if any event has occurred which could reasonably be expected to result in a
Change of Control and a Change of

                                       18

 
Control occurs within six months after such event, then the Protected Period
will begin on the date of such event.

     "Restricted Period" means the period beginning on the date of the
termination or resignation of Employee's employment with the Company and its
Affiliates and ending as follows, as applicable:

          (i) one year after the termination of Employee's employment if
      Employee is not entitled to benefits under Section 7(a) or 10(c); or;

         (ii) two years after the termination of Employee's employment, if
      Employee receives all of the benefits under Section 7(a) or 10(c) (after
      giving effect to any permissible setoff).

                                       19