Exhibit 10.20
                               HAGLER BAILLY, INC.
                   EMPLOYEE INCENTIVE AND NON-QUALIFIED STOCK
                        OPTION AND RESTRICTED STOCK PLAN

                         Originally Adopted May 17, 1995

             Amended and Restated, Effective as of December 31, 1996

                             Amended March 11, 1997

                              Amended July 22, 1998

                             Amended March 31, 1999

                              Amended June 16, 1999


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                                TABLE OF CONTENTS

                               HAGLER BAILLY, INC.
                   EMPLOYEE INCENTIVE AND NON-QUALIFIED STOCK
                        OPTION AND RESTRICTED STOCK PLAN

SECTION 1.  PURPOSES                                                         1
SECTION 2.  DEFINITIONS                                                      1
SECTION 3.  PARTICIPATION.                                                   4
SECTION 4.  ADMINISTRATION.                                                  5
SECTION 5.  ELIGIBILITY                                                      6
SECTION 6.  STOCK SUBJECT TO THE PLAN                                        6
SECTION 7.  TERMS AND CONDITIONS OF OPTIONS                                  6
SECTION 8.  RESTRICTED STOCK                                                10
SECTION 9.  DETERMINATION OF FAIR MARKET VALUE PER SHARE OF COMMON STOCK.   11
SECTION 10.  ADJUSTMENTS.                                                   11
SECTION 11.  RIGHTS AS A STOCKHOLDER                                        11
SECTION 12.  TIME OF AWARDING OPTIONS                                       12
SECTION 13.  MODIFICATION, EXTENSION AND RENEWAL OF OPTION.                 12
SECTION 14.  PURCHASE FOR INVESTMENT AND OTHER RESTRICTIONS                 12
SECTION 15.  TRANSFERABILITY                                                13
SECTION 16.  OTHER PROVISIONS                                               13
SECTION 17.  POWER OF BOARD IN CASE OF CHANGE OF CONTROL                    13
SECTION 18.  AMENDMENT OF THE PLAN                                          14
SECTION 19.  APPLICATION OF FUNDS.                                          14
SECTION 20.  NO OBLIGATION TO EXERCISE OPTION.                              14
SECTION 21.  APPROVAL OF STOCKHOLDERS.                                      14
SECTION 22.  CONDITIONS UPON ISSUANCE OF SHARES.                            14
SECTION 23.  RESERVATION OF SHARES.                                         15
SECTION 24.  STOCK OPTION AND STOCK PURCHASE AGREEMENTS.                    15
SECTION 25.  TAXES, FEES, EXPENSES AND WITHHOLDING OF TAXES                 15
SECTION 26.  NOTICE.                                                        16
SECTION 27.  NO ENLARGEMENT OF AWARDEE RIGHTS.                              16
SECTION 28.  INFORMATION TO AWARDEES.                                       16
SECTION 29.  AVAILABILITY OF PLAN                                           16
SECTION 30.  INVALID PROVISIONS                                             16
SECTION 3 1.  APPLICABLE LAW                                                17
SECTION 32.  BOARD ACTION                                                   17








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17

                               HAGLER BAILLY, INC.
                   EMPLOYEE INCENTIVE AND NON-QUALIFIED STOCK
                        OPTION AND RESTRICTED STOCK PLAN


                           Section 1.  Purposes.

                  The Hagler Bailly,  Inc. Employee  Incentive and Non-Qualified
Stock Option and Restricted  Stock Plan (the "Plan") was  originally  adopted on
May 17, 1995.  The Plan was amended and restated,  effective  December 31, 1996.
The plan was amended  further on March 11, 1997 and again on July 22, 1998.  The
purposes of the Plan are (a) to recognize and compensate  selected key Employees
of Hagler Bailly,  Inc. (the "Company") and its  Subsidiaries  who contribute to
the development and success of the Company and its Subsidiaries; (b) to maintain
the competitive  position of the Company and its  Subsidiaries by attracting and
retaining key Employees;  and (c) to provide incentive  compensation to such key
Employees based upon the Company's performance,  as measured by the appreciation
in Common  Stock.  The  Options  granted  pursuant  to the Plan are  intended to
constitute  either  Incentive Stock Options within the meaning of section 422 of
the Code, or non-qualified stock options, as determined by the Committee, or the
Board if no  Committee  has been  appointed,  at the time of Award.  The type of
Options  awarded will be specified in the Option  Agreement  between the Company
and the  Optionee.  The terms of this Plan shall be  incorporated  in the Option
Agreement to be executed by the Optionee.

                           Section 2.  Definitions.

                  (a) "Affiliate" shall mean, with respect to a Person, a Person
that directly or indirectly  controls,  or is controlled  by, or is under common
control with such Person.

(b) "Award" shall mean a grant of an Option or Options or an award of Restricted
Stock to an Employee  pursuant to the  provisions  of this Plan.  Each  separate
grant of an  Option  or  Options  to an  Employee,  and each  separate  award of
Restricted Stock, and each group of Options which matures on a separate date, is
treated as a separate Award.

(c)      "Awardee" shall mean an Employee to whom an Award is made.

                  (d) "Board"  shall mean the Board of Directors of the Company,
as constituted from time to time.

                  (e) "Change of Control"  shall mean a change in the control of
the Company which shall be deemed to have occurred upon the earliest to occur of
the following:  (i) the date the  stockholders  of the Company (or the Board, if
stockholder action is not required) approve a plan or other arrangement pursuant
to which the  Company  will be  dissolved  or  liquidated,  or (ii) the date the
stockholders of the Company approve a definitive  agreement to sell or otherwise
dispose of all or substantially  all of the assets of the Company,  or (iii) the
date  the  stockholders  of the  Company  and  the  stockholders  of  the  other
constituent corporations (or their respective boards of directors, if and to the
extent that  stockholder  action is not  required)  have  approved a  definitive
agreement to merge or consolidate the Company with or into another  corporation,
other than,  in either case, a merger or  consolidation  of the Company in which
the Company is the surviving entity, and in which shares of the Company's voting
capital stock  outstanding  immediately  before such merger or consolidation are
exchanged  or  converted  into  shares  which  represent  more  than  50% of the
Company's  voting  capital  stock  after such merger or  consolidation,  as such
holders' ownership of voting capital stock of the Company immediately before the
merger  or  consolidation,  or (iv)  the  date any  Person,  other  than (A) the
Company,  or (B)  any of its  Subsidiaries,  or (C)  any of the  holders  of the
capital  stock of the  Company,  as  determined  on the date  that  this Plan is
adopted  by the Board,  or (D) any  employee  benefit  plan (or  related  trust)
sponsored or  maintained  by the Company or any of its  Subsidiaries  or (E) any
Affiliate of any of the foregoing,  shall have acquired beneficial ownership of,
or shall have  acquired  voting  control  over more than 50% of the  outstanding
shares of the Company's voting capital stock (on a fully diluted basis),  unless
the transaction pursuant to which such Person acquired such beneficial ownership
or control  resulted from the original  issuance by the Company of shares of its
voting  capital  stock and was approved by at least a majority of the  directors
then in office.

(f)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

(g)      "Committee"  shall  mean  the  Committee  appointed  by  the  Board  in
         accordance with Section 4(a) of the Plan, if one is appointed, in which
         event in connection  with this Plan, the Committee shall possess all of
         the power and authority of, and shall be authorized to take any and all
         actions  required  to be  taken  hereunder  by,  and  make  any and all
         determinations required taken hereunder by, the Board.

(g) "Common  Stock" shall mean common  stock of the Company,  $.01 par value per
Share.

(h)      "Company" shall mean Hagler Bailly, Inc., a Delaware corporation.

(i) "Covenant Not to Compete" shall mean the  noncompetition  covenant set forth
in Section  10 of the  Stockholders  Agreement  or (if an Awardee is not a party
thereto)   otherwise   applicable   to  the  Awardee  and  the  Company  or  its
Subsidiaries.

(j) "Disability"  shall mean a disability of an employee,  officer or a director
which  renders  such  employee,  officer or director  unable to perform the full
extent of his duties and responsibilities by reason of his illness or incapacity
which  would  entitle  that  employee,  officer or  director  to receive  Social
Security  Disability  Income under the Social Security Act, as amended,  and the
regulations promulgated  thereunder.  "Disabled" shall mean having a Disability.
The determination of whether an Optionee is Disabled shall be made by the Board,
whose  determination  shall be conclusive;  provided that, (i) if an Optionee is
bound by the terms of an  Employment  Agreement  between  the  Optionee  and the
Company,  whether the Optionee is  "Disabled"  for purposes of the Plan shall be
determined  in  accordance  with the  procedures  set  forth in said  Employment
Agreement,  if such procedures are therein provided;  and (ii) an Optionee bound
by such an Employment Agreement shall not be determined to be Disabled under the
Plan any earlier than he would be determined to be disabled under his Employment
Agreement.

(k)  "Employee"  shall mean any  person  employed  by the  Company or any of its
Subsidiaries  on whose behalf wages are reported on IRS Form W-2.  Additionally,
solely for purposes of deter-mining  those persons eligible under the Plan to be
recipients of Awards of Options, which Options shall be limited to non-qualified
stock  options or  Restricted  Stock,  and not for the purpose of affecting  the
status  of the  relationship  between  such  person  and the  Company,  the term
"Employee"  shall include  independent  contractors  of and  consultants  to the
Company,  as well as  members  of the  Board or of the board of  directors  of a
Subsidiary.

                  (m) "Exchange Act" shall mean The  Securities  Exchange Act of
1934, as amended.

                  (n) "Fair  Market  Value Per Share" shall mean the fair market
value of a share of Common Stock, as determined pursuant to Section 9 hereof.

                  (o) "Grant Date" means (i) the effective date of  registration
under  Section 12 of the  Exchange  Act of a class of equity  securities  of the
Company; (ii) each date on which a Non-Employee Director is first elected to the
Board  by  the  stockholders  or the  Board;  and  (iii)  each  date  thereafter
prescribed  under the Company's  Articles of  Incorporation  and By-laws for the
election of directors  which falls before the earlier of (A) the date six months
after the termination of such registration,  or (B) the tenth anniversary of the
date on which this Plan is adopted by the Board.

(p)  "Incentive  Stock Option" shall mean an Option which is an incentive  stock
     option as described in Section 422 of the Code.

                  (q)  "Non-Employee  Director" shall have the meaning set forth
in Rule  16b-3(b)(3)(i)  promulgated by the  Securities and Exchange  Commission
under the Exchange Act, or any successor  definition  adopted by the  Securities
and Exchange Commission.

                  (r)  "Option(s)"  shall mean an  Incentive  Stock  Option or a
non-qualified  stock option to purchase  Shares that is Awarded  pursuant to the
Plan.

(s) "Option Agreement" shall mean a written,  or such other form or forms as the
Board or Committee  (subject to the terms and  conditions of this Plan) may from
time to time approve evidencing and reflecting the terms of an Option.

(t)      "Optionee" shall mean an Employee to whom an Option is awarded.

                  (u) "Participant" shall mean each Employee of the Company or a
Subsidiary to whom an Award is granted pursuant to the Plan.

                  (v)   "Person"   shall   mean  an   individual,   partnership,
corporation,  limited liability company,  trust,  joint venture,  unincorporated
association, or other entity or association.

                  (w)  "Plan"  shall  mean  the  Hagler  Bailly,  Inc.  Employee
Incentive and  Non-Qualified  Stock Option and Restricted Stock Plan, as amended
from time to time.

(x)  "Pool" shall mean the pool of Shares of Common  Stock  subject to the Plan,
     as described in Section 6 hereof.

                  (y) "Restricted Stock" shall mean an Award of Shares of Common
Stock that is subject to restrictions pursuant to Section 8 hereof.

                  (z) "Securities Act" shall mean The Securities Act of 1933, as
amended.

(aa) "Shares"  shall  mean  shares of Common  Stock  contained  in the Pool,  as
     adjusted in accordance with Section 10 of the Plan.

                  (bb)  "Stock  Purchase  Agreement"  shall  mean  an  agreement
substantially  in the form  attached  hereto as Exhibit B, or such other form as
the Board or Committee  (subject to the terms and  conditions  of this Plan) may
from time to time approve,  which an Optionee  shall be required to execute as a
condition of purchasing Shares upon the exercise of an Option.

                  (cc)  "Stockholders  Agreement"  shall  mean the  Stockholders
Agreement  dated  as  of  May  15,  1995  by  and  among  the  Company  and  its
stockholders, as amended from time to time.

                  (dd) "Subsidiary" shall mean a subsidiary corporation, whether
now or hereafter existing, as defined in sections 424(f) and (g) of the Code.

                           Section 3.  Participation.

                  (a) In General.  Participants in the Plan shall be selected by
the Board  from the  Employees.  The Board may make  Awards at any time and from
time to time to Employees. Any Award may include or exclude any Employee, as the
Board shall determine in its sole discretion.

                  (b)  Non-Employee  Directors.  In the event the  Company has a
class of equity securities registered under Section 12 of the Exchange Act, from
the effective date of such  registration  until six months after the termination
of such  registration,  no Awards of Options shall be made under the Plan to any
director of the Company who is a Non-Employee  Director  except pursuant to this
Section 3(b).
(i)  Automatic  Award.  Awards of Options to  directors  of the  Company who are
     Non-Employee Directors shall be granted,  without any further action by the
     Board or Committee.  as follows.  Upon the effective  date of the Company's
     registration  of a class  of  equity  securities  under  Section  12 of the
     Exchange  Act,  and on each Grant Date  thereafter,  each  director  of the
     Company  who  is a  Non-Employee  Director  shall  receive  an  Award  of a
     nonqualified  stock Option to purchase  7,500 Shares and each  Non-Employee
     Director who was elected to the Board by the Board in 1998 shall  receive a
     nonqualified  stock Option to purchase 3,000 shares of Common Stock on June
     16, 1999 with  immediate  vesting and an exercise  price of the Fair Market
     Value Per Share on June 16, 1999.

(ii) Option  Price.  The price per Share payable upon the exercise of any Option
     granted  under this  Section 3(b) shall be 100% of the Fair Market Value of
     such Share on the Grant Date,

                           Section 4.  Administration.

                  (a) Procedure.  The Plan shall be  administered  by the Board.
The Board may at any time by a unanimous vote, with each Member voting,  appoint
a  Committee  consisting  of not  less  than  two  persons,  each  of  whom is a
Non-Employee Director, to administer the Plan on behalf of the Board, subject to
such terms and conditions as the Board may  prescribe.  Members of the Committee
shall serve for such period of time as the Board may  determine.  Members of the
Board or the Committee who are eligible for Options or have been Awarded Options
may vote on any matters affecting the administration of the Plan or the Award of
any Options pursuant to the Plan,  except that no such member shall act upon the
Award of an Option to himself or herself,  but any such member may be counted in
determining  the  existence of a quorum at any meeting of the Board or Committee
during  which action is taken with respect to the Award of Options to himself or
herself

                  From  time to time  the  Board  may  increase  the size of the
Committee  and appoint  additional  members  thereto,  remove  members  (with or
without cause) and appoint new members in substitution therefor,  fill vacancies
however caused,  or remove all members of the Committee and thereafter  directly
administer the Plan.

                  (b)  Powers  of the Board and the  Committee.  Subject  to the
provisions of the Plan, the Board or its Committee shall have the authority,  in
its discretion: (i) to make Awards; (ii) to deter-mine the Fair Market Value Per
Share;  (iii) to determine  the  exercise  price of the Options to be Awarded in
accordance with Sections 7 and 8 of the Plan; (iv) to determine the Employees to
whom,  and the time or times at which,  Awards shall be made,  and the number of
Shares to be subject to each Award;  (v) to  prescribe,  amend and rescind rules
and regulations relating to the Plan; (vi) to determine the terms and provisions
of each Award under the Plan,  each  Option  Agreement  and each Stock  Purchase
Agreement  (which need not be identical  with the terms of other Awards,  Option
Agreements and Stock Purchase Agreements) and, with the consent of the Optionee,
to modify or amend an  outstanding  Option,  Option  Agreement or Stock Purchase
Agreement; (vii) to accelerate the vesting or exercise date of any Award; (viii)
to interpret the Plan or any agreement  entered into with respect to an Award or
exercise of Options,  (ix) to  authorize  any person to execute on behalf of the
Company any  instrument  required to  effectuate  an Award or to take such other
actions as may be necessary or appropriate  with respect to the Company's rights
pursuant to Awards or agreements relating to the Award or exercise thereof;  and
(x) to make such other  determinations and establish such other procedures as it
deems necessary or advisable for the administration of the Plan.



                  (c)  Effect  of  the  Board's  or  Committee's  Decision.  All
decisions,  determinations  and  interpretations  of the Board or the  Committee
shall be final and binding with respect to all Awards under the Plan.


                  (d) Limitation of Liability.  Notwithstanding  anything herein
to the  contrary  (with the  exception  of Section 32 hereof),  no member of the
Board or of the Committee shall be liable for any good faith determination,  act
or failure to act in connection with the Plan or any Award hereunder.

                           Section 5.  Eligibility.

                  Awards  may be made only to  Employees.  An  Employee  who has
received an Award, if he or she is otherwise  eligible,  may receive  additional
Awards.

                           Section 6.  Stock Subject to the Plan.

                  Subject to the provisions of this Section 6 and the provisions
of Section 10 of the Plan, the maximum  aggregate  number of Shares which may be
Awarded  and  sold  under  the  Plan  is   5,000,000   Shares  of  Common  Stock
(collectively,  the  "Pool").  Options  Awarded  from  the  Pool  may be  either
Incentive  Stock Options or  non-qualified  stock options,  as determined by the
Board. If an Option should expire or become unexercisable for any reason without
having been  exercised  in full,  or if a  Restricted  Stock Award shall fail to
become vested,  or if Shares are  subsequently  repurchased by the Company,  the
unpurchased or repurchased  Shares which were subject thereto shall,  unless the
Plan shall have been  terminated,  be returned to the Plan and become  available
for future Award under the Plan.

                           Section 7.  Terms and Conditions of Options.

                  Each Option  Awarded  pursuant to the Plan shall be authorized
by the Board and shall be evidenced  by an Option  Agreement in such form as the
Board may from time to time determine.  Each Option Agreement shall  incorporate
by reference all other terms and conditions of the Plan, including the following
terms and conditions:

                  (a)  Number of  Shares.  The  number of Shares  subject to the
Option, which may include fractional Shares.

                  (b) Option Price.  The price per Share payable on the exercise
of any Option which is an  Incentive  Stock Option shall be stated in the Option
Agreement  and  shall be no less  than the Fair  Market  Value  Per Share of the
Common  Stock  on the  date  such  Option  is  Awarded,  without  regard  to any
restriction other than a restriction which will never lapse. Notwithstanding the
foregoing,  if an Option  which is an  Incentive  Stock  Option shall be Awarded
under this Plan to any person who, at the time of the Award of such Option, owns
stock possessing more than 10% of the total combined voting power of all classes
of the  Company's  stock,  the price per Share  payable  upon  exercise  of such
Incentive  Stock  Option  shall be no less than 110  percent  (110%) of the Fair
Market  Value Per Share of the Common  Stock on the date such Option is Awarded.
The  price  per  Share  payable  on  the  exercise  of  an  Option  which  is  a
non-qualified  stock option shall be at least $.01 per Share and shall be stated
in the Option Agreement.

                  (c) Consideration. The consideration to be paid for the Shares
to be issued upon the  exercise of an Option,  including  the method of payment,
shall be  determined  by the  Board and may  consist  entirely  of cash,  check,
promissory notes or Shares of Common Stock having an aggregate Fair Market Value
Per Share on the date of surrender equal to the aggregate  exercise price of the
Shares as to which said Option shall be exercised,  or any  combination  of such
methods of payment,  or such other consideration and method of payment permitted
under any laws to which the  Company is  subject  and which is  approved  by the
Board. In making its  determination  as to the type of  consideration to accept,
the Board shall consider if acceptance of such  consideration  may be reasonably
expected to benefit the Company.

(i)  if the consideration for the exercise of an Option is a promissory note, it
     may, in the discretion of the Board, be either full recourse or nonrecourse
     and shall  bear  interest  at a per annum  rate  which is not less than the
     applicable  federal rate  determined in accordance  with section 1274(d) of
     the Code as of the date of  exercise.  In such an instance the Company may,
     in its sole  discretion,  retain the Shares  purchased upon exercise of the
     Option in escrow as security for payment of the promissory note.

(ii) if the  consideration  for the  exercise of an Option is the  surrender  of
     previously  acquired and owned shares of Common Stock, the Optionee will be
     required to make representations and warranties satisfactory to the Company
     regarding  his  title to the  shares  of Common  Stock  used to effect  the
     purchase   (the   "Payment   Shares"),    including   without   limitation,
     representations  and  warranties  that the Optionee has good and marketable
     title  to such  Payment  Shares  free  and  clear  of any  and  all  liens,
     encumbrances,  charges, equities,  claims, security interests.,  options or
     restrictions,  and has full power to deliver  such Payment  Shares  without
     obtaining the consent or approval of any person or  governmental  authority
     other than those which have already  given  consent or approval in a manner
     satisfactory  to the  Company.  The per Share value of the  Payment  Shares
     shall be the Fair Market Value Per Share of such Payment Shares on the date
     of exercise as determined by the Board in its sole discretion, exercised in
     good faith. If such Payment Shares were acquired upon previous  exercise of
     Incentive  Stock Options  granted within two years prior to the exercise of
     the  Option  or  acquired  by the  Optionee  within  one year  prior to the
     exercise of the Option, such Optionee shall be required.  as a condition to
     using the Payment Shares in payment of the exercise price of the Option, to
     acknowledge  the tax  consequences  of doing so,  In that  such  previously
     exercised  Incentive  Stock  Options may have,  by such action,  lost their
     status as Incentive Stock- Options,  and the Optionee may have to recognize
     ordinary income for tax purposes as a result.

                  (d) Form of Option.  The Option  Agreement  will state whether
the Option Awarded is an Incentive Stock Option or a non-qualified stock option,
and will constitute a binding determination as to the form of Option Awarded.

                  (e) Exercise of Options. Any Option Awarded hereunder shall be
exercisable at such times and under such conditions as shall be set forth in the
Option  Agreement (as may be determined by the Board and as shall be permissible
under the  terms of the  Plan),  which may  include  performance  criteria  with
respect to the Company and/or the Optionee,  and as shall be  permissible  under
the terms of the Plan.  Notwithstanding the foregoing,  any Option awarded under
Section 3(b) hereunder shall be immediately exercisable in full,


An   Option may be exercised in accordance  with the  provisions of this Plan as
     to all or any portion of the Shares then  exercisable  under an Option from
     time to time during the term of the Option.  An Option may not be exercised
     for a fraction of a Share.

                           An  Option  shall  be  deemed  to be  exercised  when
written notice of such exercise has been given to the
Company at its principal  executive  office in accordance  with the terms of the
Option  Agreement by the person entitled to exercise the Option and full payment
for the Shares with respect to which the Option is exercised  has been  received
by the Company,  accompanied by any agreements required by the terms of the Plan
and/or Option Agreement,  including an executed Stock Purchase  Agreement.  Full
payment may consist of such  consideration and method of payment allowable under
Section 7 of the Plan. No adjustment shall be made for a dividend or other right
for which the record date is prior to the date the Option is  exercised,  except
as provided in Section 10 of the Plan.

As   soon as  practicable  after any proper  exercise of an Option in accordance
     with the  provisions of the Plan, the Company  shall,  without  transfer or
     issue  tax to  the  Optionee,  deliver  to the  Optionee  at the  principal
     executive  office of the  Company or such other  place as shall be mutually
     agreed  upon  between  the  Company  and the  Optionee,  a  certificate  or
     certificates  representing  the Shares for which the Option shall have been
     exercised.

Exercise of an Option in any manner  shall result in a decrease in the number of
     Shares which thereafter may be available, both for purposes of the Plan and
     for sale under the  Option,  by the number of Shares as to which the Option
     is exercised,

                  (f)      Term and Vesting of Options.

(i)  Notwithstanding  any other  provision of this Plan,  no Option shall be (A)
     Awarded  under  this Plan  after ten (10) years from the date on which this
     Plan is adopted by the Board, or (B)  exercisable  more than ten (10) years
     from  the date of  Award;  provided,  however,  that if an  Option  that is
     intended to be an Incentive  Stock Option shall be Awarded  under this Plan
     to any  person  who,  at the time of the Award of such  Option,  owns stock
     possessing more than 10% of the total combined voting power for all classes
     of the Company's  stock,  the foregoing clause (B) shall be deemed modified
     by substituting "five (5) years" for the term "ten (10) years" that appears
     therein.

                           (ii) No  Option  Awarded  to any  Optionee  shall  be
treated as an Incentive Stock Option, to the extent
such Option would cause the aggregate Fair Market Value Per Share (determined as
of the date of Award of each such  Option) of the Shares  with  respect to which
Incentive  Stock  Options are  exercisable  by such  Optionee for the first time
during any calendar year to exceed $100,000. For purposes of determining-whether
Incentive Stock Option would cause such aggregate Fair Market Value Per Share to
exceed the $100,000 limitation, such Incentive Stock Options shall be taken into
account in the order Awarded.  For proposes of this subsection,  Incentive Stock
Options  include all Incentive Stock Options under all plans of the Company that
are Incentive Stock Option plans within the meaning of section 422 of the Code.

                  Except  as  provided  in  Section  7(g)(iv),  Options  Awarded
hereunder shall mature and become exercisable in whole or in part, in accordance
with such vesting schedule as the Board shall determine, which schedule shall be
stated in the Option Agreement.  Notwithstanding the preceding sentence, Options
awarded  pursuant  to Section  3(b)  hereunder  shall be fully  vested at grant.
Options may be exercised in any order elected by the Optionee whether or not the
Optionee holds any unexercised  Options under this Plan or any other plan of the
Company.

                  (g)      Termination of Options.

(i)  Unless  sooner  terminated  as provided in this Plan,  each Option shall be
     exercisable for such period of time as shall be determined by the Board and
     set forth in the  Option  Agreement,  and  shall be void and  unexercisable
     thereafter.

(ii) Except as otherwise provided herein or by the terms of any Award, no Option
     shall be exercisable after termination of the Optionee's employment with or
     other engagement by the Company for any reason.

(iii)Except as otherwise  provided herein of by the terms of any Award, upon the
     Disability  or death of an  Optionee  while in the  employ of the  Company,
     Options  held  by such  Optionee  which  arc  exercisable  oil the  date of
     Disability or death shall be exercisable for a period of twelve (12) months
     commencing  on the  date of the  Optionee's  Disability  or  death.  by the
     Optionee or his legal guardian or representative  or. in the case of death,
     by his executor(s) or administrator(s),

(iv) Options may be terminated at any time by agreement  between the Company and
     the Optionee.

                  (h)  Forfeiture.  Notwithstanding  any other provision of this
Plan, if an Optionee  shall engage in any activity in breach of the Covenant Not
to Compete,  all Options held by such Optionee which have not yet been exercised
shall terminate immediately upon the commencement  thereof.  Notwithstanding any
other  provision of this Plan,  if the  Optionee's  employment  or engagement is
terminated  for  "cause" (as such term is defined in the  Optionee's  employment
agreement or non-disclosure  agreement with the Company, if any) or if the Board
makes a determination that the Optionee:

(i)  has engaged in any type of  disloyalty  to the Company,  including  without
     limitation, fraud, embezzlement,  theft, or dishonesty in the course of his
     employment or engagement, or has otherwise breached any fiduciary duty owed
     to the Company;

(ii) has been convicted of a felony;

(iii) has disclosed trade secrets or confidential information of the Company;

(iv) has  breached  any  agreement  with or duty to the  Company  in  respect of
     confidentiality,   non-disclosure,   non-competition   or  otherwise,   all
     unexercised Options shall terminate upon the date of such a finding, or, if
     earlier, the date of termination of employment or engagement for "cause."

                  In the  event of such a  finding,  in  addition  to  immediate
termination of all  unexercised  Options,  the Optionee shall forfeit all Shares
for which the Company has not yet delivered  share  certificates to the Optionee
and the Company shall refund to the Optionee the Option  purchase  price paid to
it,  if any,  in the  same  form  as it was  paid  (or in cash at the  Company's
discretion).  Notwithstanding  anything herein to the contrary,  the Company may
withhold  delivery of share  certificates  pending the resolution of any inquiry
that could lead to a finding resulting in forfeiture.

                           Section 8.  Restricted Stock.

                  (a)  Administration.  Shares of Restricted Stock may be issued
either alone or in addition to other Awards  granted  under the Plan.  The Board
shall  determine the persons to whom, and the time or times at which,  grants of
Restricted Stock will be made, the number of Shares to be Awarded. the price (if
any) to be paid by the recipient of Restricted  Stock,  the time or times within
which such Awards may be subject to forfeiture,  and all other conditions of the
Awards.

                  The Board may condition  the vesting of Restricted  Stock upon
the attainment of specified performance goals or Such other factors as the Board
may determine, in its sole discretion, at the time of the Award.

         The  provisions  of  Restricted  Stock Awards need not be the same with
respect to each recipient.

                  (b) Awards.  The prospective  recipient of a Restricted  Stock
Award  shall not have any rights with  respect to such  Award,  unless and until
such recipient has executed an agreement  evidencing the Award and has delivered
a fully  executed copy thereof to the Company,  and has otherwise  complied with
the applicable terms and conditions of such Award. The purchase price for shares
of Restricted Stock may be zero.

                  Each  Employee  receiving  a  Restricted  Stock Award shall be
required,  as a  condition  precedent  to  receipt of such  Award,  to execute a
joinder or other counterpart to the Stockholders Agreement.

                  (c)  Restrictions  and Conditions.  Except as provided in this
Section 8(c), the Employee shall have,  with respect to the Shares of Restricted
Stock, all of the rights of a shareholder of the Company, including the right to
vote the shares, and the right to receive any cash dividends.  The Board, in its
sole discretion,  as deter-mined at the time of Award, may permit or require the
payment of cash dividends in respect of Shares of Restricted Stock Awarded under
the  Plan  to be  deferred  and,  if the  Board  so  determines,  reinvested  in
additional  Shares of Restricted  Stock to the extent Shares are available under
Section 6 of the Plan.

Section 9. Determination of Fair Market Value Per Share of Common Stock.

                  (a) Except to the extent otherwise provided in this Section 9,
the Fair Market Value Per Share of Common Stock shall be determined by the Board
in its sole discretion.

                  (b)  Notwithstanding  the  provisions  of Section 9(a), in the
event that shares of Common Stock are traded in the over-the-counter market, the
Fair  Market  Value Per Share of Common  Stock  shall be the mean of the bid and
asked  prices  for a share of Common  Stock on the  relevant  valuation  date as
reported  in The Wall  Street  Journal  (or, if not so  reported,  as  otherwise
reported by the National  Association of Securities Dealers Automated Quotations
("NASDAQ")  System),  as applicable  or, if there is no trading on such date, on
the next  trading  date.  In the event  shares of Common  Stock are  listed on a
national or regional  securities  exchange or traded through the NASDAQ National
Market,  the Fair Market  Value of a share of Common  Stock shall be the closing
price for a share of Common  Stock on the  exchange  or on the  NASDAQ  National
Market.  as reported in The Wall Street Journal on the relevant  valuation date,
or if there is no trading on that date, on the next trading date.

                           Section 10.  Adjustments.

                  (a) Subject to required  action by the  stockholders,  If any,
the  number of Shares as to which  Awards  may be made  under  this Plan and the
number of Shares  subject to  outstanding  Options and the Option prices thereof
shall be adjusted  proportionately for any increase or decrease in the number of
outstanding  Shares of Common Stock of the Company  resulting from stock splits,
reverse stock splits. stock dividends,  reclassifications and recapitalizations,
merger, consolidation,  exchange of shares, or rights offered to purchase shares
of Common  Stock at a price  substantially  below Fair Market Value Per Share or
any similar change affecting Common Stock.

                  (b) No  fractional  Shares shall be issuable on account of any
action mentioned in Section 10(a), and the aggregate number of Shares into which
Shares then  covered by the Award,  when  changed as the result of such  action,
shall be reduced  to the  number of whole  Shares  resulting  from such  action,
unless  the  Board,  in its sole  discretion,  shall  determine  to issue  scrip
certificates with respect to any fractional Shares, which scrip certificates, in
such event,  shall be in a form and have such terms and  conditions as the Board
in its discretion shall prescribe.

                           Section 11.  Rights as a Stockholder.

                  A  recipient  of an  Option  Award  shall  have no rights as a
stockholder  of the Company and shall neither have the right to vote nor receive
dividends  with respect to any Shares subject to an Option until such Option has
been exercised and a certificate  with respect to the Shares purchased upon such
exercise has been issued to him. A recipient  of a Restricted  Stock Award shall
have all rights as a stockholder  with respect to the Shares of Restricted Stock
Awarded  from and  after  the  later to occur of (i) the date of the  Award  (as
determined  under  Section 12 hereof) or (ii) the date the Awardee makes payment
of the purchase  price,  if any,  designated by the Board as a condition of such
Award.

                           Section 12.  Time of Awarding Options.

                  The  date of an Award  shall,  for all  purposes,  be the date
which the Board specifies when the Board makes its  determination  that an Award
is made or if none is  specified,  then the date of the  Board's  determination.
Notice of the determination  shall be given to each Employee to whom an Award is
made within a reasonable time after the date of such Award.

Section 13. Modification, Extension and Renewal of Option.

                  Subject to the terms and conditions of the Plan, the Board may
modify,  extend or renew an Award,  or accept the  surrender of an Award (to the
extent  not  theretofore  exercised).  Notwithstanding  the  foregoing,  (a)  no
modification  of an Award which  adversely  affects  the  Awardee  shall be made
without the consent of the  Awardee,  and (b) no  Incentive  Stock Option may be
modified,  extended or renewed if such  action  would cause it to cease to be an
"Incentive  Stock Option" within the meaning of section 422 of the Code,  unless
the Optionee  specifically  acknowledges and consents to the tax consequences of
such action.
Section 14. Purchase for Investment and Other Restrictions.

                  (a) The  obligation  of the  Company  to  issue  Shares  to an
Awardee upon the  exercise of an Option or as part of a  Restricted  Stock Award
granted  under  the Plan is  conditioned  upon  (i) the  Company  obtaining  any
required permit or order from appropriate governmental agencies, authorizing the
Company to issue such Shares. and (ii) such issuance complying with all relevant
provisions of the law, including,  without  limitation,  the Securities Act, the
Exchange Act, the rules and regulations promulgated thereunder.

                  (b) At the option of the Board,  the obligation of the Company
to issue Shares to an Awardee upon the exercise of an Option granted,  or upon a
Restricted  Stock Award made,  under the Plan may be conditioned  upon obtaining
appropriate  representations,  warranties,  restrictions  and  agreements of the
Awardee as set forth in the  applicable  Stock Purchase  Agreement.  Among other
representations,  warranties,  restrictions  and agreements,  the Awardee may be
required  to  represent  and agree  that the  purchase  of  Shares  shall be for
investment,  and not with a view to the public resale or  distribution  thereof,
unless the Shares are  registered  under the Securities Act and the issuance and
sale  of the  Shares  complies  with  all  other  laws,  rules  and  regulations
applicable  thereto.  Unless the issuance of such Shares is registered under the
Securities Act, the Awardee shall  acknowledge that the Shares purchased are not
registered under the Securities Act and may not be sold or otherwise transferred
unless the Shares have been  registered  under the  Securities Act in connection
with the sale or other transfer  thereof,  or that counsel  satisfactory  to the
Company has issued an opinion satisfactory to the Company that the sale or other
transfer of such Shares is exempt from  registration  under the Securities  Act,
and unless  said sale or  transfer is in  compliance  with all other  applicable
laws,  rules  and  regulations,  including  all  applicable  federal  and  state
securities laws, rules and regulations.  Additionally,  the Shares, when issued,
shall be subject to other  transfer  restrictions,  rights of first  refusal and
rights of repurchase as set forth in Stockholders  Agreement.  Unless the Shares
subject to an Award are registered  under the Securities  Act, the  certificates
representing   such  Shares  issued  shall  contain  the  following   legend  in
substantially the following form:

THE SHAR.ES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT OF 1933, AS AMENDED OR ANY  APPLICABLE  STATE  SECURITIES  LAWS.
THESE SHARES HAVE NOT BEEN ACQUIRED WITH A VIEW TO DISTRIBUTION  OR RESALE,  AND
MAY NOT BE  SOLD,  ASSIGNED,  EXCHANGED,  MORTGAGED,  PLEDGED,  HYPOTHECATED  OR
OTHERWISE  TRANSFERRED  OR  DISPOSED  OF,  BY GIFT OR  OTHERWISE,  OR IN ANY WAY
ENCUMBERED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR
A  SATISFACTORY  OPINION OF COUNSEL  SATISFACTORY  TO HAGLER  BAILLY,  INC. THAT
REGISTRATION  IS  NOT  REQUIRED  UNDER  SUCH  ACT  AND  UNDER  APPLICABLE  STATE
SECURITIES LAWS.

                           Section 15.  Transferability.

                  No Option shall be assignable or  transferable  otherwise than
by will or by the laws of descent and  distribution.  During the lifetime of the
Optionee,  his Options shall be exercisable  only by such  Optionee,  or, in the
event of his or her legal incapacity or Disability, then by the Optionee's legal
guardian or representative.

                           Section 16.  Other Provisions.

                  The Option Agreement and Stock Purchase  Agreement may contain
such other  provisions as the Board in its discretion  deems advisable and which
are not  inconsistent  with the  provisions  of this  Plan,  including,  without
limitation,  restrictions  upon or  conditions  precedent to the exercise of the
Option.

Section 17. Power of Board in Case of Change of Control.

                  Notwithstanding  anything  to the  contrary  set forth in this
Plan (with the  exception  of Section  32  hereof),  in the event of a Change of
Control,  the  Board  shall  have the right to  accelerate  the  vesting  of all
unmatured  Options or Restricted  Stock Awards.  In addition,  in the event of a
Change of Control of the  Company  by reason of a merger,  consolidation  or tax
free  reorganization  or sale of all or  substantially  all of the assets of the
Company,  the  Board  shall  have the  right to  terminate  this Plan and to (a)
exchange all Options or Restricted  Stock Awards for options to purchase  common
stock in the successor corporation or (b) distribute to each Awardee cash and/or
other  property in an amount equal to and in the same form as the Optionee would
have  received  from the  successor  corporation  if the  Optionee had owned the
Shares subject to the Option rather than the Option at the time of the Change of
Control,  The form of payment or distribution  to the Optionee  pursuant to this
Section shall be determined by the Board.

                           Section 18.  Amendment of the Plan.

                  Insofar as permitted  by law and the Plan.  the Board may from
time to time suspend. terminate or discontinue the Plan or revise or amend it in
any respect whatsoever ,vith respect to any Shares at the time not subject to an
Option;  provided,  however, that without approval of the stockholders,  no such
revision  or  amendment  may  change  the  aggregate  number of Shares for which
Options  may be  awarded  hereunder,  change  the  designation  of the  class of
Employees eligible to receive Options or decrease the price at which Options may
be awarded.

                  Any other  provision of this Section 18  notwithstanding,  the
Board  specifically  is authorized to adopt any amendment to this Plan deemed by
the Board to be  necessary  or  advisable  to assure  that the  Incentive  Stock
Options or the non-qualified  stock options available under the Plan continue to
be treated as such, respectively, under all applicable laws.

                           Section 19.  Application of Funds.

                  The  proceeds  received by the Company from the sale of Shares
pursuant to the exercise of Options or the purchase of Restricted Stock shall be
used for general  corporate  purposes or such other purpose as may be determined
by the Board.

                           Section 20.  No Obligation to Exercise Option.

                  The Awarding of an Option shall impose no obligation  upon the
Optionee to exercise such Option.

                           Section 21.  Approval of Stockholders.

                  This  Plan  shall  become  effective  on the  date  that It is
adopted by the  Board;  provided,  however,  that it shall  become  limited to a
non-qualified  stock  option  plan if it is not  approved  by the  holders  of a
majority of the Company's outstanding voting stock within one year (365 days) of
its adoption by the Board. The Board may make Awards hereunder prior to approval
of the Plan or any material  amendments  thereto by the holders of a majority of
the Company's  outstanding  voting stock;  provided,  however,  that any and all
Options so Awarded  automatically  shall be converted into  non-qualified  stock
options if the Plan is not approved by such stockholders  within 365 days of its
adoption or material amendment.

                           Section 22.  Conditions Upon Issuance of Shares.

                  Shares  shall not be issued  pursuant  to the  exercise  of an
Option or Award of  Restricted  Stock unless the exercise of such Option and the
issuance  and  delivery  of such  Shares  pursuant  thereto or the  issuance  of
Restricted  Stock shall comply with all relevant  provisions of law,  including,
without  limitation,  the  Securities  Act,  the  Exchange  Act,  the  rules and
regulations promulgated  thereunder,  and the requirements of any stock exchange
upon which the Shares may then be listed,  arid shall be further  subject to the
approval of counsel for the Company with respect to such compliance.

                           Section 23.  Reservation of Shares.

                  The Company,  during the term of this Plan, shall at all times
reserve  and keep  available  such  number of Shares as shall be  sufficient  to
satisfy the requirements of the Plan.

                  The Company,  during the term of this Plan, shall use its best
efforts to seek to obtain from  appropriate  regulatory  agencies any  requisite
authorization  in order to issue  and sell  such  number  of  Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain from any such  regulatory  agency  having  jurisdiction  the requisite
authorizations  deemed by the  Company's  counsel to be necessary for the lawful
issuance and sale of any Shares  hereunder,  or the  inability of the Company to
confirm to its  satisfaction  that any issuance and sale of any Shares hereunder
will meet  applicable  legal  requirements,  shall  relieve  the  Company of any
liability  in  respect to the  failure to issue or sell such  Shares as to which
such requisite authority shall not have been obtained.

Section 24. Stock Option and Stock Purchase Agreements.

                  Options shall be evidenced by an Option Agreement in such form
or forms as the Board shall  approve from time to time.  Upon the exercise of an
Option,  the  Optionee  shall sign and deliver to the  Company a Stock  Purchase
Agreement in such form or forms as the Board shall approve from time to time.

Section 25. Taxes, Fees, Expenses and Withholding of Taxes.

                  (a) The  Company  shall pay all  original  issue and  transfer
taxes (but not income taxes, if any) with respect to the Award of Options and/or
the issue and transfer of Shares pursuant to the exercise thereof, and all other
fees arid expenses necessarily incurred by the Company in connection  therewith,
and will from  time to time use its best  efforts  to  comply  with all laws and
regulations  which,  in the  opinion  of  counsel  for  the  Company,  shall  be
applicable thereto.

                  (b) The Award of Options or Restricted Stock hereunder and the
issuance of Shares  pursuant to the exercise of Options is conditioned  upon the
Company's reservation of the right to withhold in accordance with any applicable
law, from any  compensation or other amounts  payable to the Awardee,  any taxes
required to be  withheld  under  federal,  state or local law as a result of the
Award or exercise of such Option or the sale of the Shares  issued upon exercise
thereof.  To the extent that  compensation or other amounts,  if any, payable to
the Awardee is  insufficient  to pay any taxes  required to be so withheld,  the
Company may, in its sole  discretion,  require the Awardee (or such other person
entitled  herein to exercise the  Option),  as a condition of the exercise of an
Option,  to pay in cash to the  Company an amount  sufficient  to cover such tax
liability or otherwise to make adequate provision for the Company's satisfaction
of its withholding obligations under federal, state and local law.

                           Section 26.  Notice.

                  Any  notice  to be  given  to  the  Company  pursuant  to  the
provisions  of this  Plan  shall  be  addressed  to the  Company  in care of its
Secretary (or such other person as the Company may designate  from time to time)
at its  principal  executive  office,  and any  notice to be given to an Awardee
shall be delivered  personally  or addressed to him or her at the address  given
beneath his or her  signature on his or her Option  Agreement,  or at such other
address as such Awardee or his or her permitted transferee (upon the transfer of
the Shares) may hereafter  designate in writing to the Company.  Any such notice
shall be deemed duly given on the date and at the time  delivered  via personal,
courier or recognized overnight delivery service or, if sent via telecopier,  on
the date and at the time telecopied with confirmation of delivery or, if mailed,
on the date  five (5) days  after  the date of the  mailing  (which  shall be by
regular,  registered or certified mail).  Delivery of a notice by telecopy (with
confirmation)  shall be permitted and shall be  considered  delivery of a notice
notwithstanding  that it is not an original  that is  received.  It shall be the
obligation  of each  Optionee  and  each  permitted  transferee  holding  Shares
purchased upon exercise of an Option to provide the Secretary of the Company, by
letter  mailed as  provided  herein,  with  written  notice of his or her direct
mailing address.

                           Section 27.  No Enlargement of Awardee Rights.

                  This Plan is purely voluntary on the part of the Company,  and
the continuance of the Plan shall not be deemed to constitute a contract between
the Company and any Awardee,  or to be  consideration  for or a condition of the
employment  or service of any Awardee.  Nothing  contained in this Plan shall be
deemed to give any  Awardee the right to be retained in the employ or service of
the Company or any Subsidiary,  or to interfere with the right of the Company or
any such  corporation  to  discharge  or retire any Awardee  thereof at any time
subject to  applicable  law.  No Awardee  shall have any right to or interest in
Awards authorized hereunder prior to the Award thereof to such Awardee, and upon
such  Award he shall  have only  such  rights  and  interests  as are  expressly
provided herein, subject, however, to all applicable provisions of the Company's
Certificate of Incorporation, as the same may be amended from time to time.

                           Section 28.  Information to Awardees.

                  The Company,  upon request,  shall provide  without  charge to
each Awardee  copies of such annual and periodic  reports as are provided by the
Company to its stockholders generally.

                           Section 29.  Availability of Plan.

                  A copy of this Plan shall be delivered to the Secretary of the
Company  and  shall be shown by him to any  eligible  person  making  reasonable
inquiry concerning it.

                           Section 30.  Invalid Provisions.

In       the event  that any  provision  of this Plan is found to be  invalid or
         otherwise  unenforceable  under any applicable  law, such invalidity or
         unenforceability   shall  not  be  construed  as  rendering  any  other
         provisions  contained herein as invalid or unenforceable,  and all such
         other  provisions  shall be given  full  force  and  effect to the same
         extent  as  though  the  invalid  or  unenforceable  provision  was not
         contained herein.

                           Section 3 1.  Applicable Law.

This Plan shall be governed by and construed in accordance  with the laws of the
     State of Delaware. Section 32. Board Action.

         Notwithstanding  anything to the contrary  set forth in this Plan,  any
and all actions of the Board or Committee, as the case may be, taken under or in
connection   with  this  Plan  and  any  agreements,   instruments,   documents,
certificates or other writings entered into,  executed,  granted,  issued and/or
delivered  pursuant to the terms hereof,  shall be subject to and limited by any
and all votes, consents,  approvals,  waivers or other actions of all or certain
stockholders  of the  Company  or other  persons  required  pursuant  to (i) the
Company's  Certificate  of  Incorporation  (as the  same may be  amended  and/or
restated  from  time to time),  (ii) the  Company's  Bylaws  (as the same may be
amended  and/or  restated  from  time to time),  and (iii) any other  agreement,
instrument,  document or writing now or hereafter existing, between or among the
Company and its  stockholders  or other persons (as the same may be amended from
time to time).