EXHIBIT 10.54


                              EMPLOYMENT AGREEMENT


          THIS  EMPLOYMENT  AGREEMENT  (this  "Agreement") is entered into as of
     August  28,  1998,  by and  between  Putnam,  Hayes  &  Bartlett,  Inc.,  a
     Massachusetts  corporation (the "Company" or "PHB"), and John C. Butler III
     ("Employee").

          WHEREAS,  pursuant to that certain  Agreement  and Plan of Merger (the
     "Merger  Agreement") dated as of the date hereof among the Company,  HAGLER
     BAILLY,  INC., a Delaware  corporation  ("Hagler  Bailly"),  and PHB MERGER
     CORP., a Massachusetts  corporation and  wholly-owned  subsidiary of Hagler
     Bailly  ("Merger  Sub"),  Merger  Sub  will  merge  with  and into PHB (the
     "Merger"), and Hagler Bailly will acquire one hundred percent (100%) of the
     common  stock  of PHB,  including  the  common  stock  of PHB  owned by the
     Employee,  in exchange for shares of common stock of Hagler Bailly ("Common
     Stock");

          WHEREAS,  after the  Merger,  certain  operating  companies  of Hagler
     Bailly will be merged with and into PHB and the  surviving  corporation  of
     such merger will be named PHB Hagler Bailly,  Inc.  ("PHB Hagler  Bailly");
     and

          WHEREAS,  as an  inducement  to Hagler Bailly to enter into the Merger
     Agreement and as a condition precedent to Hagler Bailly's obligations under
     the Merger  Agreement,  Employee  has agreed to execute  and  deliver  this
     Agreement  and to  terminate,  effective  as of the  Effective  Time of the
     Merger  (as  defined  in  the  Merger  Agreement),   any  prior  employment
     agreements or arrangements with PHB;

          WHEREAS,   in   consideration   of  Employee's   employment   and  the
     compensation  paid to  Employee  by the  Company,  and for  other  good and
     valuable  consideration,  the  receipt and  sufficiency  of which is hereby
     acknowledged, the parties agree as follows:

          NOW,  THEREFORE,  in  consideration of the foregoing and of the mutual
     covenants and agreements  hereinafter set forth,  the parties hereto hereby
     agree as follows:

          1.  Employment.  On  the  terms  and  conditions  set  forth  in  this
     Agreement,  the Company agrees to employ Employee and Employee agrees to be
     employed  by the  Company for the term set forth in Section 2 hereof and in
     the position and with the duties set forth in Section 3 hereof.

          2. Term. The term of this Agreement shall commence as of the Effective
     Time of the  Merger  (the  "Commencement  Date") and shall end on the third
     anniversary  of the date  hereof,  unless  sooner  terminated  pursuant  to
     Section 6 hereof (the "Term").

          3. Position and Duties.  Employee shall serve as a "Managing Director"
     of the Company or such other comparable position as may, from time to time,
     be prescribed by the Chief Executive  Officer and Board of Directors of the
     Company (the "Board of  Directors")  or any of its affiliates and agreed to
     by Employee.

          Employee agrees to serve the Company faithfully and to the best of his
     ability; to devote his time, energy and skill during regular business hours
     (except for illness or incapacity  and except for vacation time as provided
     herein) to such employment;  to use his best efforts, skills and ability to
     promote the Company's interests;  if elected, to serve as a director of the
     Company and its  subsidiaries or affiliated  corporations  or entities;  to
     perform  such  duties  and  responsibilities  as from  time to time  may be
     assigned to him by the Chief Executive  Officer and the Board of Directors,
     which duties  shall be  consistent  with his  positions as set forth in the
     preceding paragraph.

     4. Compensation.

          The Company agrees to pay Employee,  either directly or through one of
     its  affiliates,  as  compensation  for all duties  performed by him in any
     capacity during the period of his employment under this Agreement:

(a)  An annual base salary ("Base Salary"),  payable in equal installments twice
     monthly to Employee, at the annualized rate of $287,664 per year commencing
     on the Commencement Date through December 31, 1998.  Commencing  January 1,
     1999 and for the  remainder  of the Term,  the annual  rate of Base  Salary
     shall be determined  by  management  of the Company in accordance  with the
     compensation  policies of the Company for employees of comparable  rank but
     in no event shall the Base Salary be less than  $287,664 at any time during
     the term of this Agreement;

(b)  A bonus payment ("Bonus") for the calendar year 1998, in an amount, if any,
     determined by management of the Company  substantially  in accordance  with
     the bonus structure used by PHB as outlined in Appendix A attached  hereto;
     for calendar year 1999 and each calendar year thereafter during the Term, a
     Bonus,  in an amount,  if any,  determined  by management of the Company in
     accordance with the  compensation  policies of the Company for employees of
     comparable rank;

(c)  A grant of  options to  purchase  30,000  shares of common  stock of Hagler
     Bailly,  Inc. on the Commencement  Date, with an exercise price at the fair
     market value on the Commencement Date and a term of ten (10) years, vesting
     in accordance with the schedule set forth in the Stock Option  Agreement to
     be executed by and between  Hagler Bailly and Employee,  and subject to the
     terms  and  conditions  of  the  Hagler  Bailly   Employee   Incentive  and
     Non-Qualified Stock Option and Restricted Stock Plan or any successor plan;
     and

(d)  From time to time  Employee  shall also be eligible  to receive  options to
     purchase  Common Stock pursuant to the terms of the Hagler Bailly  Employee
     Incentive and  Non-Qualified  Stock Option and Restricted Stock Plan or any
     successor plan, and in the amounts  determined by, and subject to the terms
     and conditions of, the Stock Option Committee of the Board of Directors, or
     the Board of Directors, of Hagler Bailly.

5. Benefits; Reimbursement of Expenses; Vacation.

     During the Term, Employee shall also be eligible to:

(a)  For calendar  year 1998, to continue to  participate  in all of the benefit
     programs  which  are  currently   provided  by  PHB;   including,   without
     limitation, all vacation, retirement, health, life and disability insurance
     programs  ("Benefit  Programs") in  accordance  with policies in effect for
     officers of comparable rank; provided, that nothing in this Agreement shall
     require  the  Company  to  create,   continue  or  refrain  from  amending,
     modifying,  revising or revoking any Benefit Programs described herein. For
     calendar  year  1999  and   thereafter,   Employee  shall  be  entitled  to
     participate  in all of the Benefit  Programs which are then provided by the
     Company. For purposes of Employee's  participation in the Benefit Programs,
     the Company shall treat the full period of Employee's  service with PHB, or
     any PHB subsidiary; Dickenson, O'Brien & Associates, Inc.; and/or Freeman &
     Mills, Incorporated as if it had been service with the Company;

(b)  Reimbursement  by the Company of all  expenses  reasonably  incurred by him
     during  the  Term  in  connection  with  the  performance  of  his  duties,
     including, without limitation, travel and entertainment expenses reasonably
     related to the business or interests of the Company, upon submission by him
     of written documentation of such expenses; and

(c) The other benefits set forth in this Agreement.

6. Termination.

This Agreement may be terminated prior to the expiration of its Term as follows:

(a) Automatically upon Employee's death;

(b)  By the Company,  for "cause,"  which for purposes of this  Agreement  shall
     mean: (i) failure to comply with material rules,  standards,  or procedures
     reasonably promulgated by the Company in accordance with ordinary and usual
     business standards, or dereliction of assigned responsibilities  consistent
     with Section 3 above,  such  failure or  dereliction  remaining  uncured by
     Employee  for thirty  (30) days after  receiving  written  notice  from the
     Company of such failure or  dereliction  that  specifically  describes  the
     nature of such alleged failures;

(ii) substandard performance of assigned responsibilities measured in accordance
     with  performance  standards  agreed upon from time to time by Employee and
     the Company;

(iii)material  violation  by  Employee,  or any  other  person  acting  upon his
     specific  directions,  of a  federal,  state  or  local  statute,  rule  or
     regulation  applicable  to  the  Company,  to  its  management,  or to  the
     operation of the Company's business;

(iv) material breach of the terms of this Agreement;

(v)  knowing falsification of Company's records or documents;

(vi) gross negligence;

(vii)conviction by Employee, or any other person acting upon Employee's specific
     directions, of any misdemeanor that involves fraud or results in a material
     loss to the Company or of a felony; or

(viii) any material act of dishonesty or moral turpitude.

The  refusal to permanently  relocate from Employee's current place of work will
     not constitute a "cause" for termination of employment by the Company.

During the Term of the  Agreement,  the Company shall have no right to terminate
     this Agreement without "cause."

(c)  By Employee,  upon the  Company's  failure to perform or observe any of the
     material terms or provisions of this Agreement,  and the continued  failure
     of the Company to cure such default  within  thirty (30) days after written
     demand for  performance  has been given to the Company by  Employee,  which
     demand shall describe  specifically  the nature of such alleged  failure to
     perform or observe such material terms or provisions.  Without limiting the
     generality of the foregoing,  it is acknowledged and agreed that Sections 4
     and 5 of this Agreement are material provisions of this Agreement;

          (d) By Employee,  upon notice from Employee upon the Company's failure
     to pay Employee amounts under Section 4 when due and the continued  failure
     of the  Company to make such  payment  within  ten (10) days after  written
     demand for such payment is made by Employee; and

(e)  Upon  permanent  disability  of  Employee,  as such term is  defined in the
     disability insurance programs of the Company; and

(f)  By Employee at any time, in the Employee's discretion.

7.   Effect of Termination.

(a)  In the event of the  termination of this  Agreement  pursuant to paragraphs
     (a), (b) and (f) of Section 6, the Company  shall be under no obligation to
     Employee,  except to pay his accrued and unpaid Base Salary, Bonus and paid
     leave payments to the date of  termination,  and any vested but unexercised
     options  under the Option  Plan,  and  Employee  shall not be  entitled  to
     receive  any Base  Salary or Bonus  after the date of  termination,  or any
     unvested options under the Option Plan.

(b) In the event of the termination of this Agreement by Employee of the Company
pursuant to paragraphs  (c), (d) or (e) of Section 6, Employee shall be entitled
(without  regard to any pay received by Employee from a subsequent  employer) to
receive all of the compensation and benefits  provided herein until the later of
(i) the date  the  Term  would  have  expired  absent  any  termination  of this
Agreement,  or (ii) six (6) months from the effective  date of such  termination
(such later date being herein referred to as the "Final Payment  Date").  In the
event of any  termination  pursuant to Section 6 (e), any  payments  pursuant to
this Section 7 shall be reduced by any disability  benefits received by Employee
pursuant to any  disability  insurance  provided by the Company or  purchased by
Employee (the cost of which is  reimbursed  by the Company).  If the Company and
Employee  shall become  involved in a dispute  relating to any alleged breach of
this  Agreement  by the  Company  or  Employee,  and if  Employee  prevails  (by
judgment,  settlement or otherwise) in such dispute, the Company shall reimburse
Employee for all reasonable costs (including fees and  disbursements of counsel)
incurred by him in connection with such dispute upon presentation to the Company
of evidence of such costs.


8.       Non-compete and Other Restrictive Covenants.

(a)  Employee  acknowledges  that,  because  of the  competitive  nature  of the
Company's  business and the Company's repeat  transaction with its clients,  the
development and enhancement of relationships with clients  constitute  goodwill,
which is critical to the  Company's  success  and is one of the  Company's  most
valuable business assets.

(b) Employee agrees that it is Employee's responsibility to generate and develop
goodwill  between the Company and its clients.  Employee  recognizes  and hereby
explicitly  agrees that all goodwill  with the  Company's  clients  generated or
developed by Employee  during  Employee's  employment  with the Company  belongs
exclusively  to the  Company,  even if such  goodwill  was  generated  solely by
Employee's own efforts.

(c) In order to protect the Company's legitimate business interests,  including,
without  limitation,  protecting the Company's  goodwill,  Employee  agrees that
Employee  will not  solicit or cause any of the clients of the Company set forth
in  Schedule  A  attached  hereto  (and  amended  with  additional  clients on a
quarterly basis) to divert business from the Company without the Company's prior
written consent.  It is acknowledged and agreed that Schedule A will be specific
for the "practice area" in which Employee provides consulting services, and will
include  only those  clients of the Company for which that  "practice  area" has
provided  services from 1 January 1997 forward.  The Company agrees that it will
be reasonable in its  consideration  of such requests for prior written consent,
and that prior  written  consent  will not be  withheld in the event the Company
discontinues a "practice area".

(i)  Employee  further  agrees that Employee will not,  directly or  indirectly,
     recruit  or  otherwise  seek to induce  any  employees  of the  Company  to
     terminate their  employment or to violate any agreement with the Company or
     to assist any third party in so doing.

(d)  The covenants contained in this Section 8 shall be construed as a series of
     separate and severable covenants. Employee and the Company agree that if in
     any  proceeding,  the tribunal  shall refuse to enforce fully any covenants
     contained  herein because such  covenants  cover too extensive a geographic
     area or too long a period of time or for any other reason  whatsoever,  any
     such  covenant  shall be  deemed  amended  to the  extent  (but only to the
     extent)  required  by law.  Each party  acknowledges  and  agrees  that the
     services to be rendered  by  Employee  to the  Company  hereunder  are of a
     special and unique character. Each party shall have the right to injunctive
     relief,  in addition to all of its other  rights and  remedies at law or in
     equity, to enforce the provisions of this Agreement.

                           (e) The  obligations of Employee under this Section 8
shall not survive if this
Agreement is terminated earlier than the Term pursuant to Section 6 (c) and (d),
but in any  event  these  obligations  will not  survive  longer  than the third
anniversary of the Agreement.

9. Proprietary Rights.

(a) Employee  acknowledges  that,  in order for  Employee to perform  Employee's
duties,  the Company  must  entrust  Employee  with  certain  trade  secrets and
confidential  business  information  belonging to the Company (the "Confidential
Information").  The Confidential  Information  includes,  but is not limited to,
client  lists,  including  the identity of the  Company's  clients,  information
concerning the  characteristics of the Company's  clients,  pricing policies and
practices,  negotiating  strategies,  computer software,  financial information,
information about the Company's  business plans, and any other information about
or  generated  by the  Company  which  could,  if  disclosed,  be  useful to any
competitors  of the  Company.  The  Confidential  Information  does not  include
information that is in the public domain through no fault or action of Employee.
Employee  further  acknowledges  that the Company has developed or acquired such
Confidential  Information  at great  effort and  significant  expense,  that the
Confidential Information is critical to the success and survival of the Company,
and that the  unauthorized  disclosure  or use of the  Confidential  Information
would cause the Company irreparable harm.

(b) Employee  agrees that,  during the term of  Employee's  employment  with the
Company and  thereafter,  Employee will not disclose the Company's  Confidential
Information  or use it in any way,  except on behalf of the Company,  whether or
not such  Confidential  Information  was  produced by  Employee's  own  efforts.
Employee further agrees, upon termination of Employee's employment,  promptly to
deliver to the Company all Confidential Information,  including, but not limited
to, all files,  books,  documents,  computer disks or tapes,  and other property
prepared on behalf of the Company or  purchased  with Company  funds,  including
Confidential Information produced by Employee's own efforts, and to refrain from
making, retaining or distributing any copies thereof.

(c)  At all times  during  the Term,  all  right,  title,  and  interest  in all
     copyrightable  material which Employee shall conceive or originate,  either
     individually or jointly with others, in Employee's  capacity as an employee
     of the  Company  will  be the  property  of the  Company  and  are by  this
     Agreement  assigned  to the  Company  along with  ownership  of any and all
     copyrights  in the  copyrightable  material.  At all times during the Term,
     Employee agrees to execute all papers and perform all other acts reasonably
     necessary to assist the Company to obtain and register  copyrights  on such
     materials in any and all countries,  and the Company agrees to pay expenses
     associated with such copyright registration. Works of authorship created by
     Employee  for the Company in  performing  his  responsibilities  under this
     Agreement  during the Term  shall be  considered  "works  made for hire" as
     defined in the U.S. Copyright Act. In addition,  Employee hereby assigns to
     the  Company all  proprietary  rights  which  originate  during  Employee's
     employment  with the Company,  including,  but not limited to, all patents,
     copyrights,  trade secrets and trademarks Employee might otherwise have, by
     operation  of law or  otherwise,  in all  inventions,  discoveries,  works,
     ideas,  information,  knowledge  and data  based on  Employee's  access  to
     Confidential  Information  of the Company or  developed  by Employee in his
     capacity as an employee of the Company.

(d)  If, during the Term, Employee is engaged in or associated with the planning
     or  implementing of any project,  program or venture  involving the Company
     and a third party or parties all rights in such project, program or venture
     shall belong to the Company.  Except as formally  approved by the Company's
     Board of Directors,  Employee shall not be entitled to any interest in such
     project,  program or venture or to any  commission,  finder's  fee or other
     compensation in connection therewith other than the compensation to be paid
     to Employee as provided in this Agreement.

(e)  At all times during the Term and  thereafter,  Employee  further  agrees to
     execute and deliver any additional  documents,  instruments,  applications,
     oaths or other  writings  reasonably  necessary  or  desirable  to  further
     evidence  the   assignments   described  in  this  Section  9  ("Supporting
     Documents").

                           (f) The  obligations of Employee under this Section 9
shall survive the termination
or expiration of the Term.

                  10.      Notice.

All  notices or other  communications  which may be or are required to be given,
     served or sent by any party to any other party  pursuant to this  Agreement
     shall be in  writing  and  shall be mailed by  first-class,  registered  or
     certified mail, return receipt requested,  postage prepaid,  or transmitted
     by hand delivery,  or a nationally  recognized  overnight  courier service,
     addressed as follows:

                           (a)      If to the Company:

                                    Hagler Bailly, Inc.
                                    1530 Wilson Boulevard
                                    Arlington, Virginia  22209

                                    Telephone No:  (703) 312-9855
                                    Attention: Stephen V.R. Whitman,
                                    Vice President and General Counsel

                           (b)      If to the Employee:

                                    John C. Butler III
                                    Box 65L, Route 9 Arroyo Hondo
                                    Santa Fe, NM  87505

                                    Telephone No:  (505) 989-7579

                                    And  at  the   Employee's   usual  place  of
business, if known by the Company.

Each party may  designate by notice in writing a new address to which any notice
or other  communication may thereafter be so given,  served or sent. Each notice
or other  communication  which  shall be mailed  or  transmitted  in the  manner
described above, shall be deemed sufficiently given, served, sent, delivered and
received for all purposes at such time as it is delivered to the addressee (with
the return  receipt,  the delivery  receipt or the affidavit of messenger  being
deemed  conclusive  evidence  of such  delivery)  or at such time as delivery is
refused by the addressee upon presentation.

11. Severability.

          If any part or any  provision  of this  Agreement  shall be invalid or
     unenforceable  under  applicable law, such part shall be ineffective to the
     extent of such  invalidity  or  unenforceability  only,  without in any way
     affecting the remaining parts of such provision or the remaining provisions
     of this Agreement.

12. Survival.

          It is the express  intention and agreement of the parties  hereto that
     all  covenants,  agreements  and  statements  made  by any  party  in  this
     Agreement shall survive the execution and delivery of this  Agreement,  and
     that  certain  covenants,  agreements  and  statements  shall  survive  the
     termination  or expiration of the Term to the extent  specified in Sections
     7, 8 and 9 hereof.

13. Waiver.

          Neither  the waiver of any of the  parties  hereto of any breach of or
     default under any of the provisions of this  Agreement,  nor the failure of
     any of  the  parties,  on  one or  more  occasion,  to  enforce  any of the
     provisions  of  this  Agreement  or to  exercise  any  right  or  privilege
     hereunder,  shall  thereafter  be construed  as a waiver of any  subsequent
     breach  or  default,  or as a waiver  of any such  provisions,  rights,  or
     privileges hereunder.

14. Binding Effect.

          This Agreement shall be binding upon and shall inure to the benefit of
     the parties  hereto  and,  subject to Section 19 hereof,  their  respective
     heirs, devisees, executors,  administrators,  legal representatives, and to
     the benefit of PHB Hagler Bailly as successor to the Company.

15. Entire Agreement.

          As of  immediately  prior to the  Effective  Time of the Merger,  this
     Agreement (a) represents the entire  understanding  and agreement among the
     parties  hereto with respect to the subject  matter hereof and  supersedes,
     cancels and terminates all other negotiations, agreements, arrangements and
     understandings, oral or written, between such parties with respect thereto,
     (b) constitutes the sole agreement between the parties with respect to this
     subject  matter,  and (c)  supersedes,  cancels  and  terminates  all prior
     negotiations, agreements, arrangements and understandings, oral or written,
     with respect to (i) the Employee's  employment with PHB or any affiliate of
     PHB, and (ii) any other  obligations or liabilities of PHB or any affiliate
     of PHB except as reflected in PHB's audited  financials  for 1997 or as set
     forth in Schedule B hereto.

16. Amendment.

          No amendment or modification of this Agreement and no waiver hereunder
     or thereunder  shall be valid or binding unless set forth in writing,  duly
     executed  by  the  party  against  whom   enforcement   of  the  amendment,
     modification or waiver is sought.

17. Governing Law.

          This  Agreement  shall be subject to and  governed  by the laws of the
     state of California.

18. Forum.

          At all times during the Term, (a) Employee  irrevocably submits to the
     exclusive  jurisdiction of any California court or Federal court sitting in
     California,  in any action or proceeding arising out of or relating to this
     Agreement or the transactions contemplated hereby, and Employee irrevocably
     agrees that all claims in respect of any such action or  proceeding  may be
     heard and  determined  in such  California or Federal  court;  (b) Employee
     irrevocably  consents  to the  service  of any and all  process in any such
     action or  proceeding  by the mailing of copies of such process to Employee
     at his address specified in Section 10; (c) Employee  irrevocably  confirms
     that  service of process out of such courts in such manner  shall be deemed
     due service  upon him for the  purposes of such action or  proceeding;  (d)
     Employee  irrevocably waives (i) any objection he may have to the laying of
     venue of any such action or proceeding  in any of such courts,  or (ii) any
     claim that he may have that any such action or proceeding  has been brought
     in an inconvenient forum; and (e) Employee  irrevocably agrees that a final
     judgment in any such action or proceeding  shall be  conclusive  and may be
     enforced  in other  jurisdictions  by suit on the  judgment or in any other
     manner  provided by law.  Nothing in this Section 18 shall affect the right
     of any party hereto to serve legal process in any manner permitted by law.

19. Assignment.

          Except as  otherwise  provided  herein,  this  Agreement  shall not be
     assignable by either party hereto without the prior written  consent of the
     other party hereto.

20. Headings.

          Headings  contained in this Agreement are inserted for  convenience of
     reference only,  shall not be deemed to be a part of this Agreement for any
     purpose,   and  shall  not  in  any  way  define  or  affect  the  meaning,
     construction or scope of any of the provisions hereof.

21. Execution in Counterparts.

          This  Agreement may be executed in one or more  counterparts,  each of
     which shall be deemed an original  hereof,  and all of which together shall
     constitute one and the same instrument.

22. Termination of Merger Agreement.

          This  Agreement  shall  automatically  terminate and be of no force or
     effect upon the termination of the Merger Agreement.










<PAGE>



                  IN WITNESS  WHEREOF,  the undersigned  have duly executed this
Employment  Agreement,  or have  caused  this  Employment  Agreement  to be duly
executed on their behalf, as of the day and year first hereinabove set forth.



                                    PUTNAM, HAYES & BARTLETT, INC.


                                    By:/s/ William E. Dickenson
                                    Name:    William E. Dickenson
                                    Title: President and Chief Executive Officer


                                    John C. Butler III


                                    /s/ John C. Butler III


<PAGE>



11


                                  EXHIBIT 10.55




                              EMPLOYMENT AGREEMENT


                  THIS EMPLOYMENT  AGREEMENT (this  "Agreement") is entered into
as of August  28,  1998,  by and  between  Putnam,  Hayes &  Bartlett,  Inc.,  a
Massachusetts corporation (the "Company" or "PHB"), and William H.
Hieronymus ("Employee").

                  WHEREAS, pursuant to that certain Agreement and Plan of Merger
(the "Merger  Agreement") dated as of the date hereof among the Company,  HAGLER
BAILLY, INC., a Delaware corporation ("Hagler Bailly"),  and PHB MERGER CORP., a
Massachusetts  corporation and wholly-owned subsidiary of Hagler Bailly ("Merger
Sub"), Merger Sub will merge with and into PHB (the "Merger"), and Hagler Bailly
will acquire one hundred  percent  (100%) of the common stock of PHB,  including
the common stock of PHB owned by the Employee,  in exchange for shares of common
stock of Hagler Bailly ("Common Stock");

                  WHEREAS,  after the Merger,  certain  operating  companies  of
Hagler Bailly will be merged with and into PHB and the surviving  corporation of
such merger will be named PHB Hagler Bailly, Inc. ("PHB Hagler Bailly"); and

                  WHEREAS,  as an  inducement to Hagler Bailly to enter into the
Merger  Agreement and as a condition  precedent to Hagler  Bailly's  obligations
under the Merger  Agreement,  Employee  has agreed to execute and  deliver  this
Agreement and to terminate, effective as of the Effective Time of the Merger (as
defined  in  the  Merger   Agreement),   any  prior  employment   agreements  or
arrangements with PHB;

                  WHEREAS,  in  consideration  of Employee's  employment and the
compensation  paid to Employee by the  Company,  and for other good and valuable
consideration,  the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

                  NOW,  THEREFORE,  in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:

1. Employment.

          On the terms and conditions set forth in this  Agreement,  the Company
     agrees to employ Employee and Employee agrees to be employed by the Company
     for the term set forth in Section 2 hereof and in the position and with the
     duties set forth in Section 3 hereof.

2. Term.

          The term of this Agreement  shall commence as of the Effective Time of
     the Merger (the "Commencement Date") and shall end on the third anniversary
     of the date hereof,  unless sooner terminated  pursuant to Section 6 hereof
     (the "Term").

3. Position and Duties.

          Employee  shall serve as a "Managing  Director" of the Company or such
     other  comparable  position as may, from time to time, be prescribed by the
     Chief  Executive  Officer and Board of Directors of the Company (the "Board
     of Directors") or any of its affiliates and agreed to by Employee.

          Employee agrees to serve the Company faithfully and to the best of his
     ability; to devote his time, energy and skill during regular business hours
     (except for illness or incapacity  and except for vacation time as provided
     herein) to such employment;  to use his best efforts, skills and ability to
     promote the Company's interests;  if elected, to serve as a director of the
     Company and its  subsidiaries or affiliated  corporations  or entities;  to
     perform  such  duties  and  responsibilities  as from  time to time  may be
     assigned to him by the Chief Executive  Officer and the Board of Directors,
     which duties  shall be  consistent  with his  positions as set forth in the
     preceding paragraph.

4. Compensation.

          The Company agrees to pay Employee,  either directly or through one of
     its  affiliates,  as  compensation  for all duties  performed by him in any
     capacity during the period of his employment under this Agreement:

(a) An annual base salary ("Base Salary"),  payable in equal  installments twice
monthly to Employee,  at the annualized  rate of $287,664 per year commencing on
the Commencement Date through December 31, 1998.  Commencing January 1, 1999 and
for  the  remainder  of the  Term,  the  annual  rate of Base  Salary  shall  be
determined  by management  of the Company in  accordance  with the  compensation
policies of the Company for employees of  comparable  rank but in no event shall
the Base  Salary  be less  than  $287,664  at any time  during  the term of this
Agreement;

(b) A bonus payment  ("Bonus") for the calendar year 1998, in an amount, if any,
determined  by management of the Company  substantially  in accordance  with the
bonus  structure  used by PHB as  outlined in  Appendix A attached  hereto;  for
calendar year 1999 and each calendar year  thereafter  during the Term, a Bonus,
in an amount, if any, determined by management of the Company in accordance with
the compensation policies of the Company for employees of comparable rank;

(c) A grant of  options  to  purchase  12,250  shares of common  stock of Hagler
Bailly, Inc. on the Commencement Date, with an exercise price at the fair market
value  on the  Commencement  Date  and a term  of ten  (10)  years,  vesting  in
accordance  with the  schedule  set forth in the Stock  Option  Agreement  to be
executed by and between Hagler Bailly and Employee, and subject to the terms and
conditions  of the Hagler Bailly  Employee  Incentive  and  Non-Qualified  Stock
Option and Restricted Stock Plan or any successor plan; and

(d) From time to time  Employee  shall also be  eligible  to receive  options to
purchase  Common  Stock  pursuant  to the terms of the  Hagler  Bailly  Employee
Incentive  and  Non-Qualified  Stock  Option  and  Restricted  Stock Plan or any
successor  plan, and in the amounts  determined by, and subject to the terms and
conditions  of, the Stock  Option  Committee of the Board of  Directors,  or the
Board of Directors, of Hagler Bailly.

5. Benefits; Reimbursement of Expenses; Vacation.

During the Term, Employee shall also be eligible to:

          (a) For calendar year 1998, to continue to  participate  in all of the
     benefit programs which are currently  provided by PHB;  including,  without
     limitation, all vacation, retirement, health, life and disability insurance
     programs  ("Benefit  Programs") in  accordance  with policies in effect for
     officers of comparable rank; provided, that nothing in this Agreement shall
     require  the  Company  to  create,   continue  or  refrain  from  amending,
     modifying,  revising or revoking any Benefit Programs described herein. For
     calendar  year  1999  and   thereafter,   Employee  shall  be  entitled  to
     participate  in all of the Benefit  Programs which are then provided by the
     Company. For purposes of Employee's  participation in the Benefit Programs,
     the Company shall treat the full period of Employee's  service with PHB, or
     any PHB subsidiary; Dickenson, O'Brien & Associates, Inc.; and/or Freeman &
     Mills, Incorporated as if it had been service with the Company;

          (b) Reimbursement by the Company of all expenses  reasonably  incurred
     by him during the Term in connection  with the  performance  of his duties,
     including, without limitation, travel and entertainment expenses reasonably
     related to the business or interests of the Company, upon submission by him
     of written documentation of such expenses; and

          (c) The other benefits set forth in this Agreement.

6. Termination.

          This  Agreement may be terminated  prior to the expiration of its Term
     as follows:

          (a) Automatically upon Employee's death;

          (b) By the Company,  for "cause," which for purposes of this Agreement
     shall mean:

     (i)  failure  to comply  with  material  rules,  standards,  or  procedures
     reasonably promulgated by the Company in accordance with ordinary and usual
     business standards, or dereliction of assigned responsibilities  consistent
     with Section 3 above,  such  failure or  dereliction  remaining  uncured by
     Employee  for thirty  (30) days after  receiving  written  notice  from the
     Company of such failure or  dereliction  that  specifically  describes  the
     nature of such alleged failures;

     (ii)  substandard  performance  of  assigned  responsibilities  measured in
     accordance  with  performance  standards  agreed  upon from time to time by
     Employee and the Company;

     (iii) material  violation by Employee,  or any other person acting upon his
     specific  directions,  of a  federal,  state  or  local  statute,  rule  or
     regulation  applicable  to  the  Company,  to  its  management,  or to  the
     operation of the Company's business;

     (iv) material breach of the terms of this Agreement;

     (v) knowing falsification of Company's records or documents;

     (vi) gross negligence;

     (vii)  conviction by Employee,  or any other person acting upon  Employee's
     specific directions, of any misdemeanor that involves fraud or results in a
     material loss to the Company or of a felony; or

     (viii) any material act of dishonesty or moral turpitude.

     The refusal to permanently  relocate from Employee's  current place of work
     will not constitute a "cause" for termination of employment by the Company.

During the Term of the  Agreement,  the Company shall have no right to terminate
this Agreement without "cause."

          (c) By Employee,  upon the Company's failure to perform or observe any
     of the material  terms or provisions of this  Agreement,  and the continued
     failure of the Company to cure such default  within  thirty (30) days after
     written demand for  performance  has been given to the Company by Employee,
     which demand shall describe specifically the nature of such alleged failure
     to perform or observe such material terms or provisions.  Without  limiting
     the  generality  of the  foregoing,  it is  acknowledged  and  agreed  that
     Sections  4 and  5 of  this  Agreement  are  material  provisions  of  this
     Agreement;

          (d) By Employee,  upon notice from Employee upon the Company's failure
     to pay Employee amounts under Section 4 when due and the continued  failure
     of the  Company to make such  payment  within  ten (10) days after  written
     demand for such payment is made by Employee; and

          (e) Upon permanent disability of Employee,  as such term is defined in
     the disability insurance programs of the Company; and

          (f) By Employee at any time, in the Employee's discretion.

7. Effect of Termination.

          (a) In the event of the  termination  of this  Agreement  pursuant  to
     paragraphs  (a),  (b) and (f) of Section 6, the  Company  shall be under no
     obligation  to Employee,  except to pay his accrued and unpaid Base Salary,
     Bonus and paid leave  payments to the date of  termination,  and any vested
     but  unexercised  options under the Option Plan,  and Employee shall not be
     entitled to receive any Base Salary or Bonus after the date of termination,
     or any unvested options under the Option Plan.

          (b) In the event of the  termination  of this Agreement by Employee of
     the Company  pursuant to paragraphs  (c), (d) or (e) of Section 6, Employee
     shall be entitled  (without  regard to any pay received by Employee  from a
     subsequent  employer)  to  receive  all of the  compensation  and  benefits
     provided herein until the later of (i) the date the Term would have expired
     absent any termination of this  Agreement,  or (ii) six (6) months from the
     effective date of such  termination  (such later date being herein referred
     to as the "Final Payment Date").  In the event of any termination  pursuant
     to Section 6 (e), any payments  pursuant to this Section 7 shall be reduced
     by any disability  benefits received by Employee pursuant to any disability
     insurance  provided by the Company or  purchased  by Employee  (the cost of
     which is  reimbursed  by the  Company).  If the Company and Employee  shall
     become  involved  in a  dispute  relating  to any  alleged  breach  of this
     Agreement  by the  Company  or  Employee,  and  if  Employee  prevails  (by
     judgment,  settlement  or  otherwise)  in such  dispute,  the Company shall
     reimburse   Employee  for  all  reasonable   costs   (including   fees  and
     disbursements  of counsel)  incurred by him in connection with such dispute
     upon presentation to the Company of evidence of such costs.

8. Non-compete and Other Restrictive Covenants.

(a)  Employee  acknowledges  that,  because  of the  competitive  nature  of the
     Company's  business and the Company's repeat  transaction with its clients,
     the development and enhancement of  relationships  with clients  constitute
     goodwill,  which is  critical  to the  Company's  success and is one of the
     Company's most valuable business assets.
(b)  Employee  agrees  that it is  Employee's  responsibility  to  generate  and
     develop goodwill between the Company and its clients.  Employee  recognizes
     and hereby  explicitly  agrees that all goodwill with the Company's clients
     generated or developed by Employee  during  Employee's  employment with the
     Company  belongs  exclusively  to the  Company,  even if such  goodwill was
     generated solely by Employee's own efforts.

(c)  In order to protect the Company's legitimate business interests, including,
     without limitation, protecting the Company's goodwill, Employee agrees that
     Employee  will not  solicit or cause any of the  clients of the Company set
     forth in Schedule A attached hereto (and amended with additional clients on
     a
                                          ----------
          quarterly  basis) to divert  business  from the  Company  without  the
     Company's  prior  written  consent.  It is  acknowledged  and  agreed  that
     Schedule  A will be  specific  for the  "practice  area" in which  Employee
     provides
                                   ----------
          consulting  services,  and will  include  only  those  clients  of the
     Company for which that "practice area" has provided services from 1 January
     1997  forward.  The  Company  agrees  that  it will  be  reasonable  in its
     consideration  of such requests for prior written  consent,  and that prior
     written consent will not be withheld in the event the Company  discontinues
     a "practice area".

          (i)  Employee  further  agrees  that  Employee  will not,  directly or
     indirectly,  recruit  or  otherwise  seek to induce  any  employees  of the
     Company to terminate their  employment or to violate any agreement with the
     Company or to assist any third party in so doing.

          (d) The covenants  contained in this Section 8 shall be construed as a
     series of separate and severable covenants.  Employee and the Company agree
     that if in any  proceeding,  the tribunal shall refuse to enforce fully any
     covenants  contained  herein because such  covenants  cover too extensive a
     geographic  area or too  long a  period  of time  or for any  other  reason
     whatsoever,  any such covenant  shall be deemed  amended to the extent (but
     only to the extent)  required by law.  Each party  acknowledges  and agrees
     that the services to be rendered by Employee to the Company  hereunder  are
     of a special  and  unique  character.  Each  party  shall have the right to
     injunctive  relief,  in addition to all of its other rights and remedies at
     law or in equity, to enforce the provisions of this Agreement.

          (e) The obligations of Employee under this Section 8 shall not survive
     if this Agreement is terminated earlier than the Term pursuant to Section 6
     (c) and (d),  but in any event these  obligations  will not survive  longer
     than the third anniversary of the Agreement.

9. Proprietary Rights.

(a) Employee  acknowledges  that,  in order for  Employee to perform  Employee's
duties,  the Company  must  entrust  Employee  with  certain  trade  secrets and
confidential  business  information  belonging to the Company (the "Confidential
Information").  The Confidential  Information  includes,  but is not limited to,
client  lists,  including  the identity of the  Company's  clients,  information
concerning the  characteristics of the Company's  clients,  pricing policies and
practices,  negotiating  strategies,  computer software,  financial information,
information about the Company's  business plans, and any other information about
or  generated  by the  Company  which  could,  if  disclosed,  be  useful to any
competitors  of the  Company.  The  Confidential  Information  does not  include
information that is in the public domain through no fault or action of Employee.
Employee  further  acknowledges  that the Company has developed or acquired such
Confidential  Information  at great  effort and  significant  expense,  that the
Confidential Information is critical to the success and survival of the Company,
and that the  unauthorized  disclosure  or use of the  Confidential  Information
would cause the Company irreparable harm.

(b) Employee  agrees that,  during the term of  Employee's  employment  with the
Company and  thereafter,  Employee will not disclose the Company's  Confidential
Information  or use it in any way,  except on behalf of the Company,  whether or
not such  Confidential  Information  was  produced by  Employee's  own  efforts.
Employee further agrees, upon termination of Employee's employment,  promptly to
deliver to the Company all Confidential Information,  including, but not limited
to, all files,  books,  documents,  computer disks or tapes,  and other property
prepared on behalf of the Company or  purchased  with Company  funds,  including
Confidential Information produced by Employee's own efforts, and to refrain from
making, retaining or distributing any copies thereof.

     (c)  At all times during the Term,  all right,  title,  and interest in all
          copyrightable  material  which  Employee  shall conceive or originate,
          either  individually or jointly with others, in Employee's capacity as
          an employee of the Company will be the property of the Company and are
          by this Agreement  assigned to the Company along with ownership of any
          and all copyrights in the copyrightable  material. At all times during
          the Term,  Employee agrees to execute all papers and perform all other
          acts reasonably necessary to assist the Company to obtain and register
          copyrights on such materials in any and all countries, and the Company
          agrees to pay expenses  associated  with such copyright  registration.
          Works of authorship  created by Employee for the Company in performing
          his  responsibilities  under this  Agreement  during the Term shall be
          considered "works made for hire" as defined in the U.S. Copyright Act.
          In addition,  Employee  hereby assigns to the Company all  proprietary
          rights which originate during Employee's  employment with the Company,
          including, but not limited to, all patents,  copyrights, trade secrets
          and trademarks  Employee might  otherwise have, by operation of law or
          otherwise, in all inventions,  discoveries, works, ideas, information,
          knowledge  and  data  based  on  Employee's   access  to  Confidential
          Information of the Company or developed by Employee in his capacity as
          an employee of the Company.

     (d) If,  during the Term,  Employee  is engaged in or  associated  with the
     planning or implementing of any project,  program or venture  involving the
     Company and a third party or parties all rights in such project, program or
     venture  shall  belong to the Company.  Except as formally  approved by the
     Company's  Board  of  Directors,  Employee  shall  not be  entitled  to any
     interest in such project, program or venture or to any commission, finder's
     fee  or  other   compensation  in  connection   therewith  other  than  the
     compensation to be paid to Employee as provided in this Agreement.

     (e) At all times during the Term and thereafter, Employee further agrees to
     execute and deliver any additional  documents,  instruments,  applications,
     oaths or other  writings  reasonably  necessary  or  desirable  to  further
     evidence  the   assignments   described  in  this  Section  9  ("Supporting
     Documents").

          (f) The obligations of Employee under this Section 9 shall survive the
     termination or expiration of the Term.

10. Notice.

          All notices or other communications which may be or are required to be
     given,  served  or sent by any party to any other  party  pursuant  to this
     Agreement  shall  be  in  writing  and  shall  be  mailed  by  first-class,
     registered or certified mail, return receipt requested, postage prepaid, or
     transmitted by hand delivery,  or a nationally recognized overnight courier
     service, addressed as follows:

                           (a)      If to the Company:

                                    Hagler Bailly, Inc.
                                    1530 Wilson Boulevard
                                    Arlington, Virginia  22209

                                    Telephone No:  (703) 312-9855
                                    Attention: Stephen V.R. Whitman,
                                           Vice President and General Counsel

                           (b)      If to the Employee:

                                    William H. Hieronymus
                                    15 Reservoir Road
                                    Wayland, MA  01778

                                    Telephone No:  (508) 358-6614

                                    And  at  the   Employee's   usual  place  of
                                    business, if known by the Company.

Each party may  designate by notice in writing a new address to which any notice
or other  communication may thereafter be so given,  served or sent. Each notice
or other  communication  which  shall be mailed  or  transmitted  in the  manner
described above, shall be deemed sufficiently given, served, sent, delivered and
received for all purposes at such time as it is delivered to the addressee (with
the return  receipt,  the delivery  receipt or the affidavit of messenger  being
deemed  conclusive  evidence  of such  delivery)  or at such time as delivery is
refused by the addressee upon presentation.

11. Severability.

          If any part or any  provision  of this  Agreement  shall be invalid or
     unenforceable  under  applicable law, such part shall be ineffective to the
     extent of such  invalidity  or  unenforceability  only,  without in any way
     affecting the remaining parts of such provision or the remaining provisions
     of this Agreement.

12. Survival.

          It is the express  intention and agreement of the parties  hereto that
     all  covenants,  agreements  and  statements  made  by any  party  in  this
     Agreement shall survive the execution and delivery of this  Agreement,  and
     that  certain  covenants,  agreements  and  statements  shall  survive  the
     termination  or expiration of the Term to the extent  specified in Sections
     7, 8 and 9 hereof.

13. Waiver.

          Neither  the waiver of any of the  parties  hereto of any breach of or
     default under any of the provisions of this  Agreement,  nor the failure of
     any of  the  parties,  on  one or  more  occasion,  to  enforce  any of the
     provisions  of  this  Agreement  or to  exercise  any  right  or  privilege
     hereunder, shall thereafter be construed as a
waiver  of any  subsequent  breach  or  default,  or as a  waiver  of  any  such
provisions, rights, or privileges hereunder.

14. Binding Effect.

          This Agreement shall be binding upon and shall inure to the benefit of
     the parties  hereto  and,  subject to Section 19 hereof,  their  respective
     heirs, devisees, executors,  administrators,  legal representatives, and to
     the benefit of PHB Hagler Bailly as successor to the Company.

15. Entire Agreement.

          As of  immediately  prior to the  Effective  Time of the Merger,  this
     Agreement (a) represents the entire  understanding  and agreement among the
     parties  hereto with respect to the subject  matter hereof and  supersedes,
     cancels and terminates all other negotiations, agreements, arrangements and
     understandings, oral or written, between such parties with respect thereto,
     (b) constitutes the sole agreement between the parties with respect to this
     subject  matter,  and (c)  supersedes,  cancels  and  terminates  all prior
     negotiations, agreements, arrangements and understandings, oral or written,
     with respect to (i) the Employee's  employment with PHB or any affiliate of
     PHB, and (ii) any other  obligations or liabilities of PHB or any affiliate
     of PHB except as reflected in PHB's audited  financials  for 1997 or as set
     forth in Schedule B hereto.

16. Amendment.

          No amendment or modification of this Agreement and no waiver hereunder
     or thereunder  shall be valid or binding unless set forth in writing,  duly
     executed  by  the  party  against  whom   enforcement   of  the  amendment,
     modification or waiver is sought.

17. Governing Law.

          This  Agreement  shall be subject to and  governed  by the laws of the
     Commonwealth of Massachusetts.

18. Forum.

          At all times during the Term, (a) Employee  irrevocably submits to the
     exclusive  jurisdiction of any Massachusetts court or Federal court sitting
     in Massachusetts, in any action or proceeding arising out of or relating to
     this  Agreement  or the  transactions  contemplated  hereby,  and  Employee
     irrevocably  agrees  that all  claims  in  respect  of any such  action  or
     proceeding  may be heard and  determined in such  Massachusetts  or Federal
     court;  (b)  Employee  irrevocably  consents  to the service of any and all
     process in any such action or  proceeding  by the mailing of copies of such
     process to Employee at his address  specified  in Section 10; (c)  Employee
     irrevocably  confirms  that  service of process  out of such courts in such
     manner shall be deemed due service upon him for the purposes of such action
     or  proceeding;  (d) Employee  irrevocably  waives (i) any objection he may
     have to the laying of venue of any such action or proceeding in any of such
     courts,  or (ii) any  claim  that he may  have  that  any  such  action  or
     proceeding  has been  brought in an  inconvenient  forum;  and (e) Employee
     irrevocably  agrees that a final  judgment in any such action or proceeding
     shall be conclusive and may be enforced in other  jurisdictions  by suit on
     the  judgment  or in any other  manner  provided  by law.  Nothing  in this
     Section  18 shall  affect  the  right of any party  hereto  to serve  legal
     process in any manner permitted by law.

19. Assignment.

          Except as  otherwise  provided  herein,  this  Agreement  shall not be
     assignable by either party hereto without the prior written  consent of the
     other party hereto.

20. Headings.

          Headings  contained in this Agreement are inserted for  convenience of
     reference only,  shall not be deemed to be a part of this Agreement for any
     purpose,   and  shall  not  in  any  way  define  or  affect  the  meaning,
     construction or scope of any of the provisions hereof.

21. Execution in Counterparts.

          This  Agreement may be executed in one or more  counterparts,  each of
     which shall be deemed an original  hereof,  and all of which together shall
     constitute one and the same instrument.

22. Termination of Merger Agreement.
          This  Agreement  shall  automatically  terminate and be of no force or
     effect upon the termination of the Merger Agreement.










<PAGE>



                  IN WITNESS  WHEREOF,  the undersigned  have duly executed this
Employment  Agreement,  or have  caused  this  Employment  Agreement  to be duly
executed on their behalf, as of the day and year first hereinabove set forth.



                                    PUTNAM, HAYES & BARTLETT, INC.


                                    By:      /s/ William E. Dickenson
                                    Name:    William E. Dickenson
                                    Title: President and Chief Executive Officer


                                    William H. Hieronymus


                                    /s/ William H. Hieronymus






<PAGE>



11


                                  EXHIBIT 10.56




                              EMPLOYMENT AGREEMENT


                  THIS EMPLOYMENT  AGREEMENT (this  "Agreement") is entered into
as of August  28,  1998,  by and  between  Putnam,  Hayes &  Bartlett,  Inc.,  a
Massachusetts corporation (the "Company" or "PHB"), and Walter H. A.
Vandaele ("Employee").

                  WHEREAS, pursuant to that certain Agreement and Plan of Merger
(the "Merger  Agreement") dated as of the date hereof among the Company,  HAGLER
BAILLY, INC., a Delaware corporation ("Hagler Bailly"),  and PHB MERGER CORP., a
Massachusetts  corporation and wholly-owned subsidiary of Hagler Bailly ("Merger
Sub"), Merger Sub will merge with and into PHB (the "Merger"), and Hagler Bailly
will acquire one hundred  percent  (100%) of the common stock of PHB,  including
the common stock of PHB owned by the Employee,  in exchange for shares of common
stock of Hagler Bailly ("Common Stock");

                  WHEREAS,  after the Merger,  certain  operating  companies  of
Hagler Bailly will be merged with and into PHB and the surviving  corporation of
such merger will be named PHB Hagler Bailly, Inc. ("PHB Hagler Bailly"); and

                  WHEREAS,  as an  inducement to Hagler Bailly to enter into the
Merger  Agreement and as a condition  precedent to Hagler  Bailly's  obligations
under the Merger  Agreement,  Employee  has agreed to execute and  deliver  this
Agreement and to terminate, effective as of the Effective Time of the Merger (as
defined  in  the  Merger   Agreement),   any  prior  employment   agreements  or
arrangements with PHB;

                  WHEREAS,  in  consideration  of Employee's  employment and the
compensation  paid to Employee by the  Company,  and for other good and valuable
consideration,  the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

                  NOW,  THEREFORE,  in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:

                  1.       Employment.

          On the terms and conditions set forth in this  Agreement,  the Company
     agrees to employ Employee and Employee agrees to be employed by the Company
     for the term set forth in Section 2 hereof and in the position and with the
     duties set forth in Section 3 hereof.

                  2.       Term.

          The term of this Agreement  shall commence as of the Effective Time of
     the Merger (the "Commencement Date") and shall end on the third anniversary
     of the date hereof,  unless sooner terminated  pursuant to Section 6 hereof
     (the "Term").

                  3.       Position and Duties.

          Employee  shall serve as a "Managing  Director" of the Company or such
     other  comparable  position as may, from time to time, be prescribed by the
     Chief  Executive  Officer and Board of Directors of the Company (the "Board
     of Directors") or any of its affiliates and agreed to by Employee.

          Employee agrees to serve the Company faithfully and to the best of his
     ability; to devote his time, energy and skill during regular business hours
     (except for illness or incapacity  and except for vacation time as provided
     herein) to such employment;  to use his best efforts, skills and ability to
     promote the Company's interests;  if elected, to serve as a director of the
     Company and its  subsidiaries or affiliated  corporations  or entities;  to
     perform  such  duties  and  responsibilities  as from  time to time  may be
     assigned to him by the Chief Executive  Officer and the Board of Directors,
     which duties  shall be  consistent  with his  positions as set forth in the
     preceding paragraph.

4. Compensation.

          The Company agrees to pay Employee,  either directly or through one of
     its  affiliates,  as  compensation  for all duties  performed by him in any
     capacity during the period of his employment under this Agreement:

(a) An annual base salary ("Base Salary"),  payable in equal  installments twice
monthly to Employee,  at the annualized  rate of $287,664 per year commencing on
the Commencement Date through December 31, 1998.  Commencing January 1, 1999 and
for  the  remainder  of the  Term,  the  annual  rate of Base  Salary  shall  be
determined  by management  of the Company in  accordance  with the  compensation
policies of the Company for employees of  comparable  rank but in no event shall
the Base  Salary  be less  than  $287,664  at any time  during  the term of this
Agreement;

(b) A bonus payment  ("Bonus") for the calendar year 1998, in an amount, if any,
determined  by management of the Company  substantially  in accordance  with the
bonus  structure  used by PHB as  outlined in  Appendix A attached  hereto;  for
calendar year 1999 and each calendar year  thereafter  during the Term, a Bonus,
in an amount, if any, determined by management of the Company in accordance with
the compensation policies of the Company for employees of comparable rank;

(c) A grant of  options  to  purchase  30,000  shares of common  stock of Hagler
Bailly, Inc. on the Commencement Date, with an exercise price at the fair market
value  on the  Commencement  Date  and a term  of ten  (10)  years,  vesting  in
accordance  with the  schedule  set forth in the Stock  Option  Agreement  to be
executed by and between Hagler Bailly and Employee, and subject to the terms and
conditions  of the Hagler Bailly  Employee  Incentive  and  Non-Qualified  Stock
Option and Restricted Stock Plan or any successor plan; and

(d) From time to time  Employee  shall also be  eligible  to receive  options to
purchase  Common  Stock  pursuant  to the terms of the  Hagler  Bailly  Employee
Incentive  and  Non-Qualified  Stock  Option  and  Restricted  Stock Plan or any
successor  plan, and in the amounts  determined by, and subject to the terms and
conditions  of, the Stock  Option  Committee of the Board of  Directors,  or the
Board of Directors, of Hagler Bailly.

5. Benefits; Reimbursement of Expenses; Vacation.

During the Term, Employee shall also be eligible to:

          (a) For calendar year 1998, to continue to  participate  in all of the
     benefit programs which are currently  provided by PHB;  including,  without
     limitation, all vacation, retirement, health, life and disability insurance
     programs  ("Benefit  Programs") in  accordance  with policies in effect for
     officers of comparable rank; provided, that nothing in this Agreement shall
     require  the  Company  to  create,   continue  or  refrain  from  amending,
     modifying,  revising or revoking any Benefit Programs described herein. For
     calendar  year  1999  and   thereafter,   Employee  shall  be  entitled  to
     participate  in all of the Benefit  Programs which are then provided by the
     Company. For purposes of Employee's  participation in the Benefit Programs,
     the Company shall treat the full period of Employee's  service with PHB, or
     any PHB subsidiary; Dickenson, O'Brien & Associates, Inc.; and/or Freeman &
     Mills, Incorporated as if it had been service with the Company;

          (b) Reimbursement by the Company of all expenses  reasonably  incurred
     by him during the Term in connection  with the  performance  of his duties,
     including, without limitation, travel and entertainment expenses reasonably
     related to the business or interests of the Company, upon submission by him
     of written documentation of such expenses; and

          (c) The other benefits set forth in this Agreement.

6. Termination.

          This  Agreement may be terminated  prior to the expiration of its Term
     as follows:

          (a) Automatically upon Employee's death;

          (b) By the Company, for "cause," which for purposes
of this Agreement shall mean:

                                    (i) failure to comply with  material  rules,
                                    standards,    or    procedures    reasonably
                                    promulgated  by the  Company  in  accordance
                                    with ordinary and usual business  standards,
                                    or dereliction of assigned  responsibilities
                                    consistent   with  Section  3  above,   such
                                    failure or dereliction  remaining uncured by
                                    Employee   for   thirty   (30)  days   after
                                    receiving written notice from the Company of
                                    such    failure    or    dereliction    that
                                    specifically  describes  the  nature of such
                                    alleged failures;

                                    (ii)  substandard  performance  of  assigned
                                    responsibilities measured in accordance with
                                    performance  standards agreed upon from time
                                    to time by Employee and the Company;

                                    (iii) material violation by Employee, or any
                                    other   person   acting  upon  his  specific
                                    directions,  of a  federal,  state  or local
                                    statute,  rule or  regulation  applicable to
                                    the Company,  to its  management,  or to the
                                    operation of the Company's business;

          (iv) material breach of the terms of this Agreement;

          (v) knowing falsification of Company's records or documents;

          (vi) gross negligence;

          (vii)  conviction  by  Employee,  or  any  other  person  acting  upon
     Employee's specific  directions,  of any misdemeanor that involves fraud or
     results in a material loss to the Company or of a felony; or

          (viii) any material act of dishonesty or moral turpitude.

          The refusal to permanently  relocate from Employee's  current place of
     work will not  constitute a "cause" for  termination  of  employment by the
     Company.

During the Term of the  Agreement,  the Company shall have no right to terminate
this Agreement without "cause."

          (c) By Employee,  upon the Company's failure to perform or observe any
     of the material  terms or provisions of this  Agreement,  and the continued
     failure of the Company to cure such default  within  thirty (30) days after
     written demand for  performance  has been given to the Company by Employee,
     which demand shall describe specifically the nature of such alleged failure
     to perform or observe such material terms or provisions.  Without  limiting
     the  generality  of the  foregoing,  it is  acknowledged  and  agreed  that
     Sections  4 and  5 of  this  Agreement  are  material  provisions  of  this
     Agreement;

          (d) By Employee,  upon notice from Employee upon the Company's failure
     to pay Employee amounts under Section 4 when due and the continued  failure
     of the  Company to make such  payment  within  ten (10) days after  written
     demand for such payment is made by Employee; and

          (e) Upon permanent disability of Employee,  as such term is defined in
     the disability insurance programs of the Company; and

          (f) By Employee at any time, in the Employee's discretion.

7. Effect of Termination.

          (a) In the event of the  termination  of this  Agreement  pursuant  to
     paragraphs  (a),  (b) and (f) of Section 6, the  Company  shall be under no
     obligation  to Employee,  except to pay his accrued and unpaid Base Salary,
     Bonus and paid leave  payments to the date of  termination,  and any vested
     but  unexercised  options under the Option Plan,  and Employee shall not be
     entitled to receive any Base Salary or Bonus after the date of termination,
     or any unvested options under the Option Plan.

          (b) In the event of the  termination  of this Agreement by Employee of
     the Company  pursuant to paragraphs  (c), (d) or (e) of Section 6, Employee
     shall be entitled  (without  regard to any pay received by Employee  from a
     subsequent  employer)  to  receive  all of the  compensation  and  benefits
     provided herein until the later of (i) the date the Term would have expired
     absent any termination of this  Agreement,  or (ii) six (6) months from the
     effective date of such  termination  (such later date being herein referred
     to as the "Final Payment Date").  In the event of any termination  pursuant
     to Section 6 (e), any payments  pursuant to this Section 7 shall be reduced
     by any disability  benefits received by Employee pursuant to any disability
     insurance  provided by the Company or  purchased  by Employee  (the cost of
     which is  reimbursed  by the  Company).  If the Company and Employee  shall
     become  involved  in a  dispute  relating  to any  alleged  breach  of this
     Agreement  by the  Company  or  Employee,  and  if  Employee  prevails  (by
     judgment,  settlement  or  otherwise)  in such  dispute,  the Company shall
     reimburse   Employee  for  all  reasonable   costs   (including   fees  and
     disbursements  of counsel)  incurred by him in connection with such dispute
     upon presentation to the Company of evidence of such costs.

8. Non-compete and Other Restrictive Covenants.

(a)  Employee  acknowledges  that,  because  of the  competitive  nature  of the
Company's  business and the Company's repeat  transaction with its clients,  the
development and enhancement of relationships with clients  constitute  goodwill,
which is critical to the  Company's  success  and is one of the  Company's  most
valuable   business   assets.   (b)  Employee   agrees  that  it  is  Employee's
responsibility  to  generate  and develop  goodwill  between the Company and its
clients. Employee recognizes and hereby explicitly agrees that all goodwill with
the  Company's  clients  generated or developed  by Employee  during  Employee's
employment  with the Company  belongs  exclusively to the Company,  even if such
goodwill was generated solely by Employee's own efforts.

(c) In order to protect the Company's legitimate business interests,  including,
without  limitation,  protecting the Company's  goodwill,  Employee  agrees that
Employee  will not  solicit or cause any of the clients of the Company set forth
in  Schedule  A  attached  hereto  (and  amended  with  additional  clients on a
quarterly basis) to divert business from the Company without the Company's prior
written consent.  It is acknowledged and agreed that Schedule A will be specific
for the "practice area" in which Employee provides consulting services, and will
include  only those  clients of the Company for which that  "practice  area" has
provided  services from 1 January 1997 forward.  The Company agrees that it will
be reasonable in its  consideration  of such requests for prior written consent,
and that prior  written  consent  will not be  withheld in the event the Company
discontinues a "practice area".

          (i)  Employee  further  agrees  that  Employee  will not,  directly or
     indirectly,  recruit  or  otherwise  seek to induce  any  employees  of the
     Company to terminate their  employment or to violate any agreement with the
     Company or to assist any third party in so doing.

          (d) The covenants  contained in this Section 8 shall be construed as a
     series of separate and severable covenants.  Employee and the Company agree
     that if in any  proceeding,  the tribunal shall refuse to enforce fully any
     covenants  contained  herein because such  covenants  cover too extensive a
     geographic  area or too  long a  period  of time  or for any  other  reason
     whatsoever,  any such covenant  shall be deemed  amended to the extent (but
     only to the extent)  required by law.  Each party  acknowledges  and agrees
     that the services to be rendered by Employee to the Company  hereunder  are
     of a special  and  unique  character.  Each  party  shall have the right to
     injunctive  relief,  in addition to all of its other rights and remedies at
     law or in equity, to enforce the provisions of this Agreement.

                           (e) The  obligations of Employee under this Section 8
shall not survive if this
Agreement is terminated earlier than the Term pursuant to Section 6 (c) and (d),
but in any  event  these  obligations  will not  survive  longer  than the third
anniversary of the Agreement.

9. Proprietary Rights.

(a) Employee  acknowledges  that,  in order for  Employee to perform  Employee's
duties,  the Company  must  entrust  Employee  with  certain  trade  secrets and
confidential  business  information  belonging to the Company (the "Confidential
Information").  The Confidential  Information  includes,  but is not limited to,
client  lists,  including  the identity of the  Company's  clients,  information
concerning the  characteristics of the Company's  clients,  pricing policies and
practices,  negotiating  strategies,  computer software,  financial information,
information about the Company's  business plans, and any other information about
or  generated  by the  Company  which  could,  if  disclosed,  be  useful to any
competitors  of the  Company.  The  Confidential  Information  does not  include
information that is in the public domain through no fault or action of Employee.
Employee  further  acknowledges  that the Company has developed or acquired such
Confidential  Information  at great  effort and  significant  expense,  that the
Confidential Information is critical to the success and survival of the Company,
and that the  unauthorized  disclosure  or use of the  Confidential  Information
would cause the Company irreparable harm.

(b) Employee  agrees that,  during the term of  Employee's  employment  with the
Company and  thereafter,  Employee will not disclose the Company's  Confidential
Information  or use it in any way,  except on behalf of the Company,  whether or
not such  Confidential  Information  was  produced by  Employee's  own  efforts.
Employee further agrees, upon termination of Employee's employment,  promptly to
deliver to the Company all Confidential Information,  including, but not limited
to, all files,  books,  documents,  computer disks or tapes,  and other property
prepared on behalf of the Company or  purchased  with Company  funds,  including
Confidential Information produced by Employee's own efforts, and to refrain from
making, retaining or distributing any copies thereof.

          (c) At all times during the Term,  all right,  title,  and interest in
     all  copyrightable  material  which  Employee  shall conceive or originate,
     either  individually or jointly with others,  in Employee's  capacity as an
     employee of the Company will be the property of the Company and are by this
     Agreement  assigned  to the  Company  along with  ownership  of any and all
     copyrights  in the  copyrightable  material.  At all times during the Term,
     Employee agrees to execute all papers and perform all other acts reasonably
     necessary to assist the Company to obtain and register  copyrights  on such
     materials in any and all countries,  and the Company agrees to pay expenses
     associated with such copyright registration. Works of authorship created by
     Employee  for the Company in  performing  his  responsibilities  under this
     Agreement  during the Term  shall be  considered  "works  made for hire" as
     defined in the U.S. Copyright Act. In addition,  Employee hereby assigns to
     the  Company all  proprietary  rights  which  originate  during  Employee's
     employment  with the Company,  including,  but not limited to, all patents,
     copyrights,  trade secrets and trademarks Employee might otherwise have, by
     operation  of law or  otherwise,  in all  inventions,  discoveries,  works,
     ideas,  information,  knowledge  and data  based on  Employee's  access  to
     Confidential  Information  of the Company or  developed  by Employee in his
     capacity as an employee of the Company.

          (d) If, during the Term, Employee is engaged in or associated with the
     planning or implementing of any project,  program or venture  involving the
     Company and a third party or parties all rights in such project, program or
     venture  shall  belong to the Company.  Except as formally  approved by the
     Company's  Board  of  Directors,  Employee  shall  not be  entitled  to any
     interest in such project, program or venture or to any commission, finder's
     fee  or  other   compensation  in  connection   therewith  other  than  the
     compensation to be paid to Employee as provided in this Agreement.

          (e) At all times  during  the Term and  thereafter,  Employee  further
     agrees to  execute  and  deliver  any  additional  documents,  instruments,
     applications,  oaths or other writings reasonably necessary or desirable to
     further  evidence the assignments  described in this Section 9 ("Supporting
     Documents").

                           (f) The  obligations of Employee under this Section 9
shall survive the termination
or expiration of the Term.

10. Notice.

          All notices or other communications which may be or are required to be
     given,  served  or sent by any party to any other  party  pursuant  to this
     Agreement  shall  be  in  writing  and  shall  be  mailed  by  first-class,
     registered or certified mail, return receipt requested, postage prepaid, or
     transmitted by hand delivery,  or a nationally recognized overnight courier
     service, addressed as follows:

                           (a)      If to the Company:

                                    Hagler Bailly, Inc.
                                    1530 Wilson Boulevard
                                    Arlington, Virginia  22209

                                    Telephone No:  (703) 312-9855
                                    Attention: Stephen V.R. Whitman,
                                    Vice President and General Counsel

                           (b)      If to the Employee:

                                    Walter H. Vandaele
                                    3115 34th Street, NW
                                    Washington, DC  20008

                                    Telephone No:  (202) 363-3785

                                    And  at  the   Employee's   usual  place  of
business, if known by the Company.

                                    And a courtesy copy to:

                                    Michael Schlesinger, Esq.
                                    Tucker, Flyer & Lewis
                                    1615 L Street N.W., Suite 400
                                    Washington, DC  20036

Each party may  designate by notice in writing a new address to which any notice
or other  communication may thereafter be so given,  served or sent. Each notice
or other  communication  which  shall be mailed  or  transmitted  in the  manner
described above, shall be deemed sufficiently given, served, sent, delivered and
received for all purposes at such time as it is delivered to the addressee (with
the return  receipt,  the delivery  receipt or the affidavit of messenger  being
deemed  conclusive  evidence  of such  delivery)  or at such time as delivery is
refused by the addressee upon presentation.

11. Severability.

          If any part or any  provision  of this  Agreement  shall be invalid or
     unenforceable  under  applicable law, such part shall be ineffective to the
     extent of such  invalidity  or  unenforceability  only,  without in any way
     affecting the remaining parts of such provision or the remaining provisions
     of this Agreement.

12. Survival.

          It is the express  intention and agreement of the parties  hereto that
     all  covenants,  agreements  and  statements  made  by any  party  in  this
     Agreement shall survive the execution and delivery of this  Agreement,  and
     that  certain  covenants,  agreements  and  statements  shall  survive  the
     termination  or expiration of the Term to the extent  specified in Sections
     7, 8 and 9 hereof.

13. Waiver.

          Neither  the waiver of any of the  parties  hereto of any breach of or
     default under any of the provisions of this  Agreement,  nor the failure of
     any of  the  parties,  on  one or  more  occasion,  to  enforce  any of the
     provisions  of  this  Agreement  or to  exercise  any  right  or  privilege
     hereunder,  shall  thereafter  be construed  as a waiver of any  subsequent
     breach  or  default,  or as a waiver  of any such  provisions,  rights,  or
     privileges hereunder.

14. Binding Effect.

          This Agreement shall be binding upon and shall inure to the benefit of
     the parties  hereto  and,  subject to Section 19 hereof,  their  respective
     heirs, devisees, executors,  administrators,  legal representatives, and to
     the benefit of PHB Hagler Bailly as successor to the Company.

15. Entire Agreement.

          As of  immediately  prior to the  Effective  Time of the Merger,  this
     Agreement (a) represents the entire  understanding  and agreement among the
     parties  hereto with respect to the subject  matter hereof and  supersedes,
     cancels and terminates all other negotiations, agreements, arrangements and
     understandings, oral or written, between such parties with respect thereto,
     (b) constitutes the sole agreement between the parties with respect to this
     subject  matter,  and (c)  supersedes,  cancels  and  terminates  all prior
     negotiations, agreements, arrangements and understandings, oral or written,
     with respect to (i) the Employee's  employment with PHB or any affiliate of
     PHB, and (ii) any other  obligations or liabilities of PHB or any affiliate
     of PHB except as reflected in PHB's audited  financials  for 1997 or as set
     forth in Schedule B hereto.

16. Amendment.

          No amendment or modification of this Agreement and no waiver hereunder
     or thereunder  shall be valid or binding unless set forth in writing,  duly
     executed  by  the  party  against  whom   enforcement   of  the  amendment,
     modification or waiver is sought.

17. Governing Law.

          This  Agreement  shall be subject to and  governed  by the laws of the
     District of Columbia.

18. Forum.

          At all times during the Term, (a) Employee  irrevocably submits to the
     exclusive  jurisdiction  of any District of Columbia court or Federal court
     sitting in the District of Columbia,  in any action or  proceeding  arising
     out of or  relating  to this  Agreement  or the  transactions  contemplated
     hereby,  and Employee  irrevocably agrees that all claims in respect of any
     such action or proceeding  may be heard and  determined in such District of
     Columbia or Federal court; (b) Employee irrevocably consents to the service
     of any and all process in any such action or  proceeding  by the mailing of
     copies of such process to Employee at his address  specified in Section 10;
     (c)  Employee  irrevocably  confirms  that  service of process  out of such
     courts in such manner shall be deemed due service upon him for the purposes
     of such  action or  proceeding;  (d)  Employee  irrevocably  waives (i) any
     objection  he may  have to the  laying  of  venue  of any  such  action  or
     proceeding  in any of such courts,  or (ii) any claim that he may have that
     any such action or proceeding  has been brought in an  inconvenient  forum;
     and (e)  Employee  irrevocably  agrees  that a final  judgment  in any such
     action or  proceeding  shall be  conclusive  and may be  enforced  in other
     jurisdictions  by suit on the judgment or in any other  manner  provided by
     law.  Nothing in this Section 18 shall affect the right of any party hereto
     to serve legal process in any manner permitted by law.

19. Assignment.

          Except as  otherwise  provided  herein,  this  Agreement  shall not be
     assignable by either party hereto without the prior written  consent of the
     other party hereto.

20. Headings.

          Headings  contained in this Agreement are inserted for  convenience of
     reference only,  shall not be deemed to be a part of this Agreement for any
     purpose,   and  shall  not  in  any  way  define  or  affect  the  meaning,
     construction or scope of any of the provisions hereof.

21. Execution in Counterparts.

          This  Agreement may be executed in one or more  counterparts,  each of
     which shall be deemed an original  hereof,  and all of which together shall
     constitute one and the same instrument.

22. Termination of Merger Agreement.

          This  Agreement  shall  automatically  terminate and be of no force or
     effect upon the termination of the Merger Agreement.





                  IN WITNESS  WHEREOF,  the undersigned  have duly executed this
Employment  Agreement,  or have  caused  this  Employment  Agreement  to be duly
executed on their behalf, as of the day and year first hereinabove set forth.



                         PUTNAM, HAYES & BARTLETT, INC.


                                     By: /s/ William E. Dickenson
                                     Name:    William E. Dickenson
                                     Title:President and Chief Executive Officer


                                                     Walter H. A. Vandaele


                                                     /s/ Walter H. A. Vandaele