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Exhibit 10.34

THOMAS GROUP, INC.

JAMES T. TAYLOR

SECOND AMENDED EMPLOYMENT AGREEMENT

Dated January    , 2005

(Effective as of August 1, 2004)

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TABLE OF CONTENTS

 
 
 
  Page

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1. Novation and Settlement of Rights   1   1.1 Novation   1   1.2 1999 Incentive
Plan   1 2. Definitions   1   2.1 Board of Directors   1   2.2 Cause   2   2.3
Change in Control   2   2.4 Commercial Revenue   3   2.5 Common Stock   3   2.6
Disability   3   2.7 Exchange Act   3   2.8 Good Reason   3   2.9 Operating
Profit   3   2.10 Term of Employment   4 3. Employment   4   3.1 Employment   4
  3.2 Personal Services   4 4. Compensation and Benefits During the Term of
Employment   4   4.1 Base Compensation   4   4.2 Bonus for Prior Performance   4
  4.3 Incentive Compensation Arrangement   5   4.4 Travel Costs   5   4.5
Automobile Expenses   5   4.6 Insurance; Benefit Plan Participation   5   4.7
Stock Options   6   4.8 Stock Appreciation Rights   6   4.9 Certain Tax
Provisions   6 5. Term of the Agreement   6 6. Termination; Disability; Death;
Change in Control   6   6.1 Basis   6   6.2 Benefits Upon Termination   7 7.
Restrictive Covenants; Work Product; Confidentiality   10   7.1 Restrictive
Covenants   10   7.2 Right to Work Product; Confidentiality   10 8. General
Provisions   11   8.1 Notices   11   8.2 Entire Agreement   12   8.3 Governing
Law and Venue   12   8.4 Voluntary Agreement   12   8.5 Resolution of Certain
Controversies   12   8.6 Partial Invalidity   12   8.7 Reformation   12   8.8
Binding Effect   12   8.9 Amendments   13   8.10 Survival of Provisions   13  
8.11 Approval   13 Exhibit A—Jim Taylor Incentive Plan   14 Exhibit B—Severance
Compensation and Benefits   15

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SECOND AMENDED EMPLOYMENT AGREEMENT

This Second Amended Employment Agreement (this "Agreement") is entered into
this    day of January, 2005 to be effective August 1, 2004, by and between
Thomas Group. Inc. ("Thomas Group" or the "Company"), a Delaware corporation,
and James T. Taylor ("Mr. Taylor") (the signatories to this Agreement shall be
referred to jointly as the "Parties"), to amend, modify and restate the terms
and conditions of that certain First Amended Employment Agreement executed by
and between Mr. Taylor and Thomas Group on or about December 21, 2002 (the
"Employment Agreement").

        WHEREAS, Mr. Taylor is presently serving as the President and Chief
Executive Officer of Thomas Group, reporting to the Board of Directors, and is
an integral part of its management team who participates in the decision-making
process relative to short and long-term planning and policy for Thomas Group;
and

        WHEREAS, Thomas Group determined that it would be in the best interests
of Thomas Group and its stockholders to assure continuity in the management of
Thomas Group's operations by entering into an amended employment agreement to
retain the services of Mr. Taylor; and

        WHEREAS, the Parties entered into the Employment Agreement on or about
December 21, 2002 and the Parties have decided to amend, modify and restate the
Employment Agreement; and

        WHEREAS, Thomas Group wishes to assure itself of the continued and
valuable services of Mr. Taylor, and Mr. Taylor is willing to remain employed by
Thomas Group, upon the terms and conditions set forth in this First Amended
Employment Agreement.

        NOW, THEREFORE, in consideration of the premises and the obligations
undertaken by the Parties herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Thomas Group and
Mr. Taylor agree as follows:

        1.     Novation and Settlement of Rights.

        1.1   Novation. In exchange for the promises set forth herein,
Mr. Taylor agrees that (a) except as otherwise provided herein, this Agreement
will replace any existing employment agreement between the Parties and, thereby,
acts as a novation, (b) all Confidential Information (as defined herein) or Work
Product (as defined herein) developed by Mr. Taylor during past employment with
Thomas Group and all goodwill developed with the Company's clients, customers
and other business contacts by Mr. Taylor during past employment with the
Company is now the exclusive property of the Company, and (c) that all of the
Confidential Information and specialized training received by Mr. Taylor during
past employment with Company will be used only for the benefit of Thomas Group
as described above, whether previously so agreed or not. Mr. Taylor waives and
releases any claim or allegation that he should be able to use client and
customer goodwill, specialized Company training, or Work Product, or
Confidential Information, that was previously received or developed by him while
working for Thomas Group for the benefit of any competing person or entity.

        1.2   1999 Incentive Plan. Without limiting the effect of the provisions
of Section 1.1 above, it is specifically agreed that Mr. Taylor shall not
participate in (i) the Company 1999 Incentive Plan or (ii) other bonus, profit
sharing or incentive plans of the Company not specifically provided for herein.

        2.     Definitions. The defined terms used in this Agreement shall have
the meanings ascribed to them in this Section 2.

        2.1   Board of Directors. "Board" or the "Board of Directors" shall mean
the Board of Directors of Thomas Group or any committee of the Board empowered
to act or make decisions or determinations with respect to this Agreement.

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        2.2   Cause. "Cause" shall mean that any of the following:
(a) Mr. Taylor has engaged in any act of gross misconduct that is injurious to
Thomas Group or its business: (b) any act by Mr. Taylor of dishonesty,
misconduct, fraud, misappropriation, embezzlement, theft, moral turpitude or the
like; (c) the refusal by Mr. Taylor to perform the duties or responsibilities
properly assigned to him by the Company, or the dereliction of duty by
Mr. Taylor; or (d) a material breach of this Agreement by Mr. Taylor or a
violation of any material provision of this Agreement by Mr. Taylor.

        2.3   Change in Control. A "Change in Control" shall occur if any of the
following occurs:

        (a)   if any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing (i) with respect to
options granted pursuant to the 1992 Stock Option Plan, 50 percent or more of
the combined voting power of the Company's then outstanding securities, or
(ii) with respect to options granted pursuant to the 1997 Stock Option Plan, 20%
or more of the combined voting power of the Company's then outstanding
securities, or (iii) with respect to Section 5.2(a) hereof, 40% or more of the
combined voting power of the Company's then outstanding securities; provided,
however, that the term "Person" shall not include (A) the Company, (B) any
employee benefits plan of the Company, (C) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company and acting in such
capacity, (D) a Subsidiary (as that term is defined in the 1997 Stock Option
Plan) of the Company of a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of voting securities of the Company, (E) any other person whose
acquisitions of shares of voting securities is approved in advance by a majority
of the Continuing Directors (as that term is defined in the 1997 Stock Option
Plan), or (F) General John T. Chain, Jr. or Edward P. Evans;

        (b)   if individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute more than 50 percent
of the members of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election or nomination for election
by the Company's stockholders was approved by a vote of at least two-thirds of
the directors then constituting the Incumbent Board, shall be considered as
though such individual were a member of the Incumbent Board;

        (c)   if stockholders of the Company approve a merger, consolidation, or
reorganization of the Company with or into another corporation or other legal
person and, as a result of such merger, consolidation or reorganization,
(i) with respect to options granted pursuant to the 1992 Stock Option Plan, less
than 51% of the combined voting power of the then outstanding securities of the
remaining corporation or legal person or its ultimate parent immediately after
such transaction is owned by persons who were stockholders of the Company
immediately prior to such merger, consolidation, or reorganization, or (ii) with
respect to the options granted pursuant to the 1997 Stock Option Plan, if, as a
result of such transaction, the holders of the Company's Common Stock
immediately prior to such transaction do not have the same proportionate
ownership of the common stock of the surviving entity immediately after such
transaction;

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        (d)   if stockholders of the Company approve a sale or disposition of
all or substantially all of the Company's assets to any other corporation or
other legal person and, (i) with respect to options granted pursuant to the 1992
Stock Option Plan as a result of such sale, less than 51% of the combined voting
power of the then outstanding securities of such corporation or legal person or
its ultimate parent immediately after such transaction is owned by persons who
were stockholders of the Company immediately prior to such sale or disposition,
or (ii) with respect to the options granted pursuant to the 1997 Stock Option
Plan, if, as a result of such transaction, the holders of the Company's Common
Stock immediately prior to such transaction do not have the same proportionate
ownership of the common stock of the surviving entity immediately after such
transaction;

        (e)   if stockholders of the Company approve a plan of liquidation or
dissolution of the Company;

        (f)    with respect to options granted under the 1992 Stock Option Plan,
a public announcement is made of a tender or exchange offer by any Person for
fifty percent or more of the outstanding Voting Securities of the Corporation,
and the Board of Directors approves or fails to oppose that tender or exchange
offer in its statements in Schedule 14D-9 under the Exchange Act; or

        (g)   with respect to options granted pursuant to the 1997 Stock Option
Plan, if, in a Title 11 Bankruptcy Proceeding, the appointment of a trustee or
the conversion of a case involving the Company to a case under Chapter 7.

        2.4   Commercial Revenue. "Commercial Revenue" shall mean any revenue,
as recognized under GAAP, from a source that is not part of the United States
Department of Defense.

        2.5   Common Stock. "Common Stock" shall mean the common stock of Thomas
Group, par value $.01 per share.

        2.6   Disability. "Disability" shall mean the inability of Mr. Taylor to
perform his material managerial duties and responsibilities as contemplated
under Section 3 during his employment with Thomas Group, with or without a
reasonable accommodation, for a consecutive period of three (3) months or a
non-consecutive period of six (6) months within any twelve- (12) month period.
The Company will comply with the requirements of the Americans with Disabilities
Act with respect to attempting to reach a reasonable accommodation. The
existence of Disability and the date of commencement of Disability shall be
determined in accordance with Section 6.1(e).

        2.7   Exchange Act. The Securities Exchange Act of 1934, as amended.

        2.8   Good Reason. "Good Reason" shall mean Mr. Taylor's decision to
terminate his employment under this Agreement if Thomas Group or any successor
commits any material breach of this Agreement, or diminishes Mr. Taylor's Base
Salary (as defined herein) below $435,000, or diminishes Mr. Taylor's duties and
responsibilities below those of President and Chief Executive Officer, or at any
time within one hundred and eighty (180) days following a Change of Control.

        2.9   Operating Profit. "Operating Profit" is determined by following
formula:

As defined by GAAP and audited annually by independent accountants:

Revenue
Less: Cost of Sales
Less: S, G&A expenses

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Excluding: restructuring charges, foreign exchanges gains/losses, closing costs
of non-US subsidiaries, cumulative translation adjustments, expenses related to
termination benefits agreements agreed to by Board prior to Mr. Taylor's
employment as CEO (January 13, 2004) and any other nonrecurring or unusual
income or expense to be mutually agreed upon between Mr. Taylor and the
compensation committee.

        2.10 Term of Employment. "Term of Employment" shall mean the period of
time commencing on August 1, 2004 and continuing until December 31, 2006;
provided, however, that Mr. Taylor and Thomas Group can agree, in writing, to
extend the Term of Employment.

        3.     Employment.

        3.1   Employment. Thomas Group agrees to employ Mr. Taylor and
Mr. Taylor accepts employment by Thomas Group as President and Chief Executive
Officer of Thomas Group for the Term of Employment on the terms and conditions
and for the compensation set forth in this Agreement. Subject to the authority
of the Board of Directors, Mr. Taylor shall be responsible for the overall
operations of Thomas Group in the ordinary course of its business with all such
powers as may be reasonably incident to such responsibilities as its President
and Chief Executive Officer. Mr. Taylor shall devote his full time and effort to
the discharge of his duties as Thomas Group's President and Chief Executive
Officer.

        3.2   Personal Services. All services to be provided by Mr. Taylor under
this Agreement shall be performed by Mr. Taylor personally. During the term of
this Agreement, Mr. Taylor shall devote his entire business time, attention,
energies, skills, learning and best efforts to the business operations of the
Company, and shall not (without the prior written consent of the Chairman of the
Board of Directors) (i) undertake or accept any duties under which there is a
conflict of interest between Mr. Taylor's responsibilities towards the Company
or Mr. Taylor's responsibilities to any customer of the Company, on the one
hand, and any other interest, on the other hand; or (ii) as a partner, officer,
director, stockholder, employee or consultant of any entity, association,
agency, organization or institution, engage in any other business or profession
which would necessitate the giving of any significant portion of his business
time, attention, energies, skills, learning and best efforts to such activity.

        4.     Compensation and Benefits During the Term of Employment.

        4.1   Base Compensation. Mr. Taylor shall receive base compensation
("Base Salary") in the amount determined by the Compensation Committee of the
Board of Directors (the "Compensation Committee"). The amount of Mr. Taylor's
Base Salary shall initially be at the annual rate of $435,000 beginning
August 1, 2004 and shall be reviewed annually by the Compensation Committee, no
later than March 30 of each year. Thomas Group shall pay Base Salary to
Mr. Taylor in equal monthly installments. Mr. Taylor understands and agrees that
he is an exempt employee as that term is applied for purposes of Federal or
State wage and hour laws, and further understands that he shall not be entitled
to any compensatory time off or other compensation for overtime

        4.2   Bonus for Prior Performance. Pursuant to prior discussions Thomas
Group shall pay Mr. Taylor a cash bonus in the amount of $225,000 based on his
performance prior performance as Chief Financial Officer and Chief Executive
Officer, such bonus to be paid immediately.

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        4.3   Incentive Compensation Arrangement. Mr. Taylor shall be paid a
cash incentive, calculated annually, based upon two criteria as defined in this
agreement; Commercial Revenue and Operating Profit. The starting point for the
incentive calculation is 70% of Base Compensation, called the Target Incentive
("Target"). The two criteria represent the following percentages of the Target:

 
  2004

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  2005*

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  2006*

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Commercial Revenue   70%   50%   0% Operating Profit   30%   50%   100%

The incentive for each criteria begins at 20% of Target upon reaching a minimum
annual threshold and is capped at 200% of Target upon reaching a maximum annual
threshold. The annual thresholds and their corresponding percentages of Target
are:

2004 Threshold

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  Commercial
Revenue

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  Operating
Profit

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  % of Target

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  Minimum   $ 3,000,000   $ 1,500,000   20 % Target   $ 4,000,000   $ 1,700,000
  100 % Maximum   $ 7,000,000   $ 2,700,000   200 %

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*The 2005 & 2006 targets and thresholds will be mutually agreed upon between the
Board and Mr. Taylor at a future date.

        Attached hereto as Exhibit A is a sample calculation of the Incentive
Compensation.

        The computation of annual incentive compensation will be based upon the
audited financial results of Thomas Group. Thomas Group shall pay the incentive
compensation to Mr. Taylor within fifteen (15) days following completion of an
audit of Thomas Group's financial statements by the Company's certified public
accountants, and no later than April 15 of each year. Mr. Taylor must be on the
Company's active payroll at the end of the year in question (December 31st ) in
order to be eligible to receive an award for that year.

        4.4   Travel Costs. Thomas Group shall reimburse Mr. Taylor for all
reasonable travel costs incurred by Mr. Taylor in connection with Thomas Group's
business, together with all other reasonable business expenses of Mr. Taylor in
performing his duties.

        4.5   Automobile Expenses. Thomas Group shall provide Mr. Taylor a
monthly car allowance in the amount of $900, which includes all costs including
insurance. Such allowance shall be prorated for partial months.

        4.6   Insurance; Benefit Plan Participation. Mr. Taylor shall be
entitled to participate in Thomas Group's 401(k) and deferred compensation
plans, subject to the terms and conditions of such plans. Thomas Group also
shall provide medical, disability and life insurance coverage to Mr. Taylor on
the terms and conditions of each of the plans Thomas Group maintains. Thomas
Group will purchase term insurance covering Mr. Taylor, payable to Mr. Taylor's
designated beneficiaries (or to his estate) in the case of death while in the
employment of Thomas Group. Such term insurance will have a face value of
$1 million, and Thomas Group will pay the annual premiums so long as Mr. Taylor
is employed by Thomas Group.

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        4.7   Stock Options. During his employment with the Company, Thomas
Group has granted Mr. Taylor options to purchase 255,649 shares of Thomas Group
Common Stock, as follows:

Grant Date

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  Plan

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  Shares

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March 1, 2001   1992 Stock Option Plan   30,000 December 14, 2001   1992 Stock
Option Plan   75,000 April 16, 2002   1992 Stock Option Plan   36,554 April 16,
2002   1992 Stock Option Plan   38,446 November 11, 2002   1997 Stock Option
Plan   75,649        

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        255,649

        Mr. Taylor shall be entitled to receive additional stock options as may
be granted by the Company.

        4.8   Stock Appreciation Rights. During his employment with the Company,
Thomas Group and Mr. Taylor entered into an Appreciation Rights Agreement dated
December 13, 2003, effective April 2, 2003 with respect to 99,351 shares of
Common Stock of Thomas Group. Mr. Taylor shall be entitled to receive additional
Stock Appreciation Rights as may be granted by the Company.

        4.9   Certain Tax Provisions. Mr. Taylor acknowledges and agrees that
all payments and benefits which are required by applicable federal, state or
local laws to be subject to withholding for income taxes, shall be so subject.

        5.     Term of the Agreement. The term of this Agreement, unless
terminated sooner pursuant to Section 6, shall be for the Term of Employment.

        6.     Termination; Disability; Death; Change in Control.

        6.1   Basis. Mr. Taylor's employment under this Agreement may be
terminated as described in this Section 6.1. In the event that Mr. Taylor's
employment is terminated, Mr. Taylor shall be entitled to receive the benefits
described in Section 6.2 that correspond with the manner of such termination.

        (a)   Termination Without Cause. Thomas Group may terminate Mr. Taylor's
employment without Cause by written notice to Mr. Taylor to that effect. Unless
otherwise specified in the notice, such termination shall be effective
immediately.

        (b)   Termination With Cause. Thomas Group may terminate the employment
of Mr. Taylor for Cause by written notice to Mr. Taylor to that effect. Unless
otherwise specified in the notice, such termination shall be effective
immediately.

        (c)   Good Reason. Upon the occurrence of an event constituting Good
Reason as described in Section 2.7, Mr. Taylor may terminate his employment for
Good Reason within thirty (30) days of the occurrence of the event upon
provision of written notice to Thomas Group. If the occurrence or the effect of
the occurrence of the event described in Section 2.7 may be cured, Thomas Group
shall have the opportunity to cure any such occurrence or effect for a period of
thirty (30) days following receipt of Mr. Taylor's termination notice. The right
of Mr. Taylor to terminate his employment for Good Reason under this
Section 6.1(c) shall not limit Thomas Group's ability to terminate Mr. Taylor
for Cause under Section 6.1(b), if Cause is determined to exist prior to the
time Mr. Taylor delivers to Thomas Group his written notice of termination for
Good Reason.

        (d)   Without Good Reason. Mr. Taylor may voluntarily terminate his
employment without Good Reason upon written notice to Thomas Group to that
effect.

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        (e)   Disability. Mr. Taylor or Thomas Group may terminate Mr. Taylor's
employment by reason of Disability immediately upon written notice to the other
party to that effect. If the parties are unable to agree as to the existence of
Disability or as to the date of commencement of Disability, each of Mr. Taylor
and Thomas Group shall select a physician licensed to practice medicine in the
State of Texas and the determination as to any such question shall be made by
such physicians; provided, however, that if such two physicians are unable to
agree, they shall mutually select a third physician licensed to practice
medicine in the State of Texas and the determination as to any such question
shall be made by a majority of such physicians. Any determination made by such
physicians in accordance with the provisions of the immediately foregoing
sentence shall be final and binding on the Parties. Mr. Taylor agrees to submit
to any and all reasonable medical examinations or procedures and to execute and
deliver any and all consents to release of medical information and records or
otherwise as shall be reasonably required by any of the physicians selected in
accordance with this Section 6.1(e). Unless otherwise specified in the notice,
such termination shall be effective immediately.

        (f)    Death. This Employment Agreement shall automatically terminate as
of the date of Mr. Taylor's death.

        (g)   Change in Control. Following a Change in Control, Mr. Taylor shall
be required to continue his employment under this Agreement for ninety (90) days
after the date of such Change in Control, unless his employment is terminated
sooner by Thomas Group as set forth in Section 6.1(h). In the event that
Mr. Taylor decides to resign or otherwise voluntarily terminate his employment
following the occurrence of a Change in Control, Mr. Taylor may do so by giving
written notice to Thomas Group to that effect on or before one hundred and
eighty (180) days after the occurrence of the Change in Control. If Mr. Taylor
does not give such notice to Thomas Group, this Agreement will remain in effect;
provided, however, that the failure of Mr. Taylor to terminate this Agreement
following the occurrence of a Change in Control shall not be deemed a waiver of
Mr. Taylor's right to terminate his employment upon a subsequent occurrence of a
Change in Control in accordance with the terms of this subsection. Mr. Taylor
acknowledges and agrees that the transaction between the Company, on the one
hand, and General John T. Chain, Jr. and Edward P. Evans, on the other,
consummated during 2002, does not constitute a Change of Control under this
Agreement.

        (h)   Notwithstanding that Mr. Taylor has given notice of termination
pursuant to Section 6.1(g), Thomas Group may, in its sole discretion, thereafter
require Mr. Taylor to terminate his employment prior to the expiration of the
applicable notice period.

        6.2   Benefits Upon Termination. Mr. Taylor shall receive the benefits
described in this Section 6.2 that corresponds with the manner of termination of
Mr. Taylor's employment under Section 6.1.

        (a)   Without Cause. In the event Thomas Group terminates Mr. Taylor's
employment without Cause, Mr. Taylor shall be entitled to the compensation
and/or benefits set forth on Exhibit B; provided, however, that Mr. Taylor shall
execute a general release and separation agreement in a form acceptable to the
Thomas Group prior to the payment of any severance compensation under this
Section 6.2(a). In the event of a Termination Without Cause under Section 6.1,
Mr. Taylor agrees and understands that all of his obligations and agreements
under Section 7 below (including, without limitation, Mr. Taylor's obligations
concerning confidential information, non-competition and non-solicitation, and
Mr. Taylor's agreement to execute a general release and separation agreement)
shall continue in full force and effect in the manner and on the terms set forth
herein.

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        (b)   With Cause. In the event Mr. Taylor's employment is terminated
with Cause, no further payments or benefits shall be paid or provided by Thomas
Group to Mr. Taylor except for reimbursement for expenses incurred prior to the
date of termination, or the payment of incentive compensation that has become
due and payable to Mr. Taylor on or before the date of such termination under
Section 4.3. In addition, Mr. Taylor shall be entitled to exercise any vested
but unexercised stock options for a period of ninety (90) days following the
effective date of the termination for Cause, and if any such options remain
unexercised upon the expiration of such 90-day period, they shall be determined
forfeited.

        (c)   Good Reason. In the event Mr. Taylor terminates his employment for
Good Reason, Mr. Taylor shall be entitled to the compensation and/or benefits
set forth on Exhibit B, unless Mr. Taylor terminates his employment for Good
Reason within one hundred and eighty (180) days following a Change in Control,
in which event the compensation and/or benefits of 6.2(g) shall apply.

        (d)   Without Good Reason. In the event Mr. Taylor terminates his
employment without Good Reason pursuant to Section 6.1(d), Mr. Taylor shall be
entitled to the benefits or payments provided for in Section 6.2(b).

        (e)   Disability. In the event that Mr. Taylor's employment is
terminated by reason of Disability, Mr. Taylor shall be entitled to the payments
and benefits set forth on Exhibit B. Additionally, Mr. Taylor or the estate,
beneficiary or legal representative of Mr. Taylor shall be entitled to
disability benefits available under benefit plans maintained by the Company at
the time of such Disability.

        (f)    Death. In the event Mr. Taylor's employment is terminated by
reason of his death, Thomas Group shall not be required to make any payments or
provide any benefits, except for (a) reimbursement for expenses incurred prior
to such termination date and (b) payment of incentive compensation that has
become due and payable to Mr. Taylor on or before the date of such termination
under Section 4.2, provided, however, that nothing contained herein shall limit
or diminish any rights of Mr. Taylor' s estate or any other person to payments
under any life insurance policy maintained by Thomas Group for the benefit of
Mr. Taylor or his beneficiaries or any health, disability or other benefit plan
provided pursuant to Section 4.6, in each case in accordance with the terms of
such plan. If Mr. Taylor's employment is terminated by reason of his death, the
benefits provided under this Section 6.2(f)shall be paid to the beneficiary or
beneficiaries designated in writing by Mr. Taylor and delivered to an
officer/manager of Thomas Group; however, if no such beneficiary designation is
made by Mr. Taylor during his lifetime, the benefits hereunder shall be paid to
his estate. In addition, Mr. Taylor's estate shall be entitled to exercise any
vested but unexercised stock options for a period of one hundred eighty
(180) days following the date of Mr. Taylor's death, and if any such options
remain unexercised upon the expiration of such 180-day period, they shall be
determined forfeited.

        (g)   Change in Control. In the event Mr. Taylor's employment is
terminated as provided in Section 6.1(g) following the occurrence of a Change in
Control, Mr. Taylor shall be entitled to the payments and benefits provided
herein.

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          (i)  Severance Benefits. If, within twenty four (24) months of the
effective date of a Change of Control, Mr. Taylor's employment is terminated by
the Company without Cause or by Mr. Taylor, for Good Reason, Mr. Taylor shall,
within thirty (30) days following the date of termination and receipt by the
Company of a signed release of any claims against the Company in a form
acceptable to the Company, receive the following severance benefits: (a) the
Company shall pay Mr. Taylor a lump sum amount equal to two (2) times the sum of
his Base Salary as set or approved by the Board, plus an additional amount equal
to the greater of (i) two (2) times the incentive compensation actually paid to
Mr. Taylor for the Company's prior Fiscal Year or (ii) two times the target
incentive compensation for the current Fiscal Year, such lump sum payment to be
subject to applicable tax withholdings; and (b) the vesting and exercisability
of all unvested, outstanding options to purchase Common Stock then held by
Mr. Taylor shall be fully accelerated. If any of such options remain unexercised
ninety (90) days after Termination of employment they shall be determined
forfeited.

         (ii)  Tax Gross-up Payment. In the event it shall be determined, either
by the Company or by a final determination of the Internal Revenue Service, that
any payment, distribution or benefit by or from the Company to or for the
benefit of Mr. Taylor pursuant to Section 6.2(g)(i) or otherwise (the "Payment")
would cause Mr. Taylor to become subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then the Company shall pay to or
for the benefit of Mr. Taylor, within the later of ninety (90) days of the
termination date of Mr. Taylor's employment or ninety (90) days of the date of
determination referred to above, an additional amount (the "Gross-Up Payment")
in an amount that shall fund the payment by Mr. Taylor of any Excise Tax on the
Payment, as well as any income taxes imposed on the Gross-Up Payment, any Excise
Tax imposed on the Gross-Up Payment and any interest or penalties imposed with
respect to taxes on the Gross-Up Payment or any Excise Tax. For purposes of
determining the amount of the Gross-Up Payment, Mr. Taylor shall be deemed to
pay federal, state and local income taxes at the highest nominal marginal rate
of such federal, state and local income taxation in the calendar year in which
the Gross-Up Payment is due, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes. In
the event that Excise Tax is subsequently determined to be less than the amount
taken into account to determine the amount of the Gross-Up Payment, then
Mr. Taylor shall repay to the Company at that time the portion of the Gross-Up
Payment attributable to such reduction (plus an amount equal to any tax
reduction, whether of the Excise Tax, any applicable income tax, or any
applicable employment tax, which Mr. Taylor has received as a result of such
initial repayment). In the event that the Excise Tax is subsequently determined,
whether by the Company or by a final determination of the Internal Revenue
Service, to be more than the amount taken into account to determine the amount
of the Gross-Up payment, then the Company shall pay to Mr. Taylor an additional
amount, which shall be determined using the same methods as were used for
calculating the Gross-Up Payment, with respect to such excess. For purposes of
this Section 6.2(g), a determination of the Internal Revenue Service as to the
amount of Excise Tax for which Mr. Taylor is liable shall not be treated as
final until the time that either (i) the Company agrees to acquiesce to the
determination of the Internal Revenue Service or (ii) the determination of the
Internal Revenue Service has been upheld in a court of competent jurisdiction
and the Company decides not to appeal such judicial decision or such decision is
not appeasable. If the Company chooses to contest the determination of the
Internal Revenue Service, then all costs, attorneys' fees, charges assessed and
other expenses shall be borne and paid when due by the Company.

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        7.     Restrictive Covenants; Work Product; Confidentiality.

        7.1   Restrictive Covenants. Without the prior written consent of Thomas
Group, Mr. Taylor shall not:

        (a)   During employment with Thomas Group and for a period of eighteen
(18) months following termination of employment, engage in or perform services
for a Competing Business. For purposes of this Agreement a "Competing Business"
is one which provides the same or substantially similar products and services as
those provided by Thomas Group during Mr. Taylor's employment, including but not
limited to management consulting services to improve the cycle time of business
processes of any business organization. This restriction is limited to the
geographic area(s) in which Mr. Taylor performed services for Thomas Group,
including, but not limited to, the area within a 50-mile radius of any office or
facility of Thomas Group.

        (b)   During employment with Thomas Group and for a period of eighteen
(18) months following the termination of employment, solicit business from,
attempt to do business with, or do business with any client of Thomas Group with
whom Thomas Group did business within the preceding twelve (12) months, and with
whom Mr. Taylor became acquainted as a result of his employment with Thomas
Group. This restriction applies also to prospective clients of Thomas Group for
whom Thomas Group has performed an analysis or assessment. This restriction
applies only to business that is in the scope of a Competing Business as defined
in this Agreement. The geographic area for purposes of this restriction is the
area where the client/prospective client is located and/or does business.

        (c)   For a period of eighteen (18) months following the termination of
employment, solicit, induce or attempt to solicit or induce any employee or
consultant of Thomas Group to terminate his/her employment with Thomas Group
and/or accept employment elsewhere.

        (d)   Mr. Taylor agrees that the scope of the restrictions in this
Section is reasonable and necessary to protect Thomas Group's business goodwill,
Confidential Information and other legitimate business interests.

        7.2   Right to Work Product; Confidentiality.

        (a)   Thomas Group and Mr. Taylor each acknowledge that performance of
this Agreement may result in the discovery, creation or development of
inventions, combinations, methods, formulae, techniques, processes,
improvements, software designs, computer programs, strategies, specific
computer-related know-how, course materials, seminar materials, computer models,
customer lists, data and original works of authorship (collectively, the "Work
Product"). Mr. Taylor agrees that he will promptly and fully disclose to Thomas
Group any and all Work Product generated, conceived, reduced to practice or
learned by him, either solely or jointly with others, during his employment with
Thomas Group, which in any way relates to the business of Thomas Group.
Mr. Taylor further agrees that neither he, nor any party claiming through him
will, other than in the performance of this Agreement, make use of or disclose
to others any proprietary information relating to the Work Product.

        (b)   Mr. Taylor agrees that, whether or not the services performed by
him under this Agreement are considered works made for hire or an employment to
invent, all Work Product discovered, created or developed under this Agreement
shall be and remain the sole property of Thomas Group and its assigns.
Mr. Taylor agrees that Thomas Group shall have all copyright and patent rights
with respect to any Work Product discovered, created, or developed under this
Agreement without regard to the origin of the Work Product.

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        (c)   Thomas Group agrees to provide Mr. Taylor with specialized
knowledge and training regarding the business in which Thomas Group is involved,
and to provide Mr. Taylor with initial and ongoing confidential information and
trade secrets of Thomas Group ("Confidential Information"). For purposes of this
Agreement, Confidential Information includes: information regarding the use and
application of Total Cycle Time methodologies and other information and concepts
developed by Thomas Group to improve the business processes of corporations and
other organizations; software or other technology developed by Thomas Group and
any research data or other documentation related to the development of such
software/technology; client lists and prospects lists developed by Thomas Group;
information regarding Thomas Group's clients which Mr. Taylor acquires as a
result of employment with Thomas Group, including client contracts, work
performed for clients, client contacts, client requirements and needs, data used
by Thomas Group to formulate client bids, client financial information, and
other information regarding the client's business; information related to Thomas
Group's business, including but not limited to marketing strategies and plans,
sales procedures, operating policies and procedures, pricing and pricing
strategies, business plans, sales, profits, and other business and financial
information of the Company; training materials developed by and utilized by
Thomas Group; and any other information which Mr. Taylor acquired as a result of
his employment with Thomas Group and which Mr. Taylor has a reasonable basis to
believe Thomas Group would not want disclosed to a business competitor or to the
general public.

        (d)   Mr. Taylor understands and acknowledges that such Confidential
Information gives Thomas Group a competitive advantage over others who do not
have this information, and that Thomas Group would be harmed if the Confidential
Information were disclosed. Mr. Taylor agrees that he will hold all Confidential
Information in trust and will not use the information for any purpose other than
the benefit of Thomas Group, or disclose to any person or entity any
Confidential Information except as necessary during Mr. Taylor's employment with
Thomas Group to perform services on behalf of Thomas Group. Mr. Taylor will also
take reasonable steps to safeguard such Confidential Information and prevent its
disclosure to unauthorized persons.

        8.     General Provisions.

        8.1   Notices. All notices, requests, demands, or other communications
with respect to this Agreement shall be in writing and shall be personally
delivered, sent via telecopy, or mailed, postage prepaid, certified or
registered mail, or delivered by a nationally recognized express courier
service, charges prepaid, to the following addresses (or such other addresses as
the parties may specify from time to time in accordance with this Section 8.1):

Taylor:
 
James T. Taylor
5924 Beth Drive
Plano, Texas 75093
Thomas Group:
 
Thomas Group, Inc.
5221 North O'Connor Boulevard
Suite 500
Irving, TX 75039
Attention: Chairman of the Board of Directors

Any such notice shall, when sent in accordance with the preceding sentence, be
deemed to have been given and received (i) on the day personally delivered or
sent via telecopy, (ii) on the third day following the date mailed, or
(iii) 24 hours after shipment by such courier service.

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        8.2   Entire Agreement. This Agreement, together with the exhibits
hereto, supersedes any and all other agreements, either oral or written between
the parties hereto with respect to the employment of Mr. Taylor by Thomas Group,
including the Employment Agreement, and contains all of the covenants and
agreements between the parties with respect to such employment. Any modification
of this Agreement will be effective only if it is in writing signed by each of
the parties hereto.

        8.3   Governing Law and Venue. The Parties acknowledge that the laws of
the State of Texas will govern the interpretation, validity and effect of this
Agreement without regard to the place of execution or the place for performance
thereof, it being stipulated by the Parties that Texas has a compelling state
interest in the subject matter of this Agreement and that Mr. Taylor has or will
have regular contact with Texas in the performance of this Agreement. With
respect to any dispute or claims arising out of this Agreement or Mr. Taylor's
employment relationship with the Company, the Parties agree that the state and
federal courts situated in Dallas County, Texas, shall have personal
jurisdiction over the Company and Mr. Taylor to hear disputes concerning such
claims, and that venue for any such disputes shall be exclusively in the state
or federal courts in Dallas County, Texas.

        8.4   Voluntary Agreement. The Parties acknowledge that each has had an
opportunity to consult with an attorney or other counselor concerning the
meaning, import, and legal significance of this Agreement, and each has read
this Agreement, as signified by their respective signatures hereto, and each is
voluntarily executing the same after, if sought, advice of counsel for the
purposes and consideration herein expressed.

        8.5   Resolution of Certain Controversies. In the event of a breach of
this Agreement by Mr. Taylor, Thomas Group shall be entitled to all appropriate
equitable and legal relief, including, but not limited to: (a) injunction to
enforce this Agreement or prevent conduct in violation of this Agreement;
(b) damages incurred by Thomas Group as a result of the breach; and
(c) attorneys' fees and costs incurred by Thomas Group in enforcing the terms of
this Agreement. Additionally, any period or periods of breach of Section 7 of
this Agreement shall not count toward the restrictive period, but shall instead
be added to the restrictive period. In the event of any controversy or claim
arising out of or related to the provisions concerning the use and protection of
Confidential Information or the restrictive covenants, Thomas Group shall be
entitled to seek equitable and other relief. In the event of any controversy or
claim arising out of or related to the other provisions of this Agreement, the
parties agree first to try in good faith to settle the dispute by non-binding
mediation administered by the American Arbitration Association under its
Commercial Mediation Rules. In the event that mediation does not resolve the
dispute, such dispute shall be settled exclusively by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association in
Dallas, Texas, and judgment may be entered in any court having jurisdiction
thereof. Each party is responsible for its own attorneys' fees and costs of
preparing for and presenting its case at the arbitration. However, Thomas Group
shall pay the fee of the American Arbitration Association, the arbitration
panel's fee, and costs associated with the facilities for the arbitration, and
the arbitration panel shall not apportion these costs.

        8.6   Partial Invalidity. In the event any court of competent
jurisdiction holds any provision of this Agreement to be invalid, the remaining
provisions shall not be affected or invalidated and shall remain in full force
and effect.

        8.7   Reformation. In the event any court of competent jurisdiction
holds any restrictions in this Agreement to be unreasonable and/or unenforceable
as written, the court may reform the Agreement to make it enforceable, and the
Agreement shall remain in full force and effect as reformed by the court.

        8.8   Binding Effect. This Agreement is for the sole and exclusive
benefit of, and shall be binding upon Mr. Taylor, and his legal representatives
and Thomas Group and any subsidiaries, affiliated companies, successors or
assigns of Thomas Group. This Agreement is not assignable by Mr. Taylor.

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        8.9   Amendments. Amendments to any Section of this Agreement shall not
be effective unless agreed to in writing by the parties to this Agreement. This
Agreement, including this provision against oral modification, shall not be
amended, modified or terminated except in a writing signed by each of the
parties to this Agreement, and no waiver of any provision of this Agreement
shall be effective unless in a writing duly signed by the party sought to be
bound.

        8.10 Survival of Provisions. The covenants and obligations in Section 7
of this Agreement shall survive and continue in effect following the termination
of this Agreement.

        8.11 Approval. This Agreement shall not be effective until signed by
Mr. Taylor and the Company and approved by both the Chairman of the Board of
Directors and the Chairman of the Compensation Committee.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written to be effective August 1, 2004.

    TAYLOR:
 
 

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James T. Taylor, individually
 
 
THOMAS GROUP, INC.
 
 
By:
 

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    Name: Jimmy C. Houlditch     Title: Vice President
 
 
Approved by:
 
 
By:
 

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    Name: General John T. Chain, Jr.     Title: Chairman, Board of Directors
 
 
By:
 

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    Name: David B. Mathis     Title: Chairman, Compensation Committee

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EXHIBIT A

Jim Taylor Incentive Plan
Assuming Base Compensation of $435,000
From Dave Mathis 8/20/04 e-mail based on discussion with Chain/Taylor/Mathis

2004 If Revenue is:   The incentive is: Not over $3.0m   $0 Between $3.0m and
$3,999,999   $42630, plus $0.17052 x every dollar over $3.0m Between $4.0m and
$6,999,999   $213150, plus $0.07105 x every dollar over $4.0m Over $7.0m  
$426,300 If Operating Profit is:   The incentive is: Not over $1.5m   $0 Between
$1.5m and $1,699,999   $18270, plus $0.3654 x every dollar over $1.5m Between
$1.7m and $2,699,999   $91350, plus $0.091315 x every dollar over $1.7m Over
$2.7m   $182,700

*No incentive is earned below minimum threshold

 
  2004
100%
Incentive

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  2004
70%
Commercial revenue

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  2004
30%
Operating Profit

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Floor incentive is 20% of target if minimum threshold is reached*   $ 60,900   $
42,630   $ 18,270 Target incentive is 70% of base salary of $435,000   $ 304,500
  $ 213,150   $ 91,350 Ceiling incentive is 200% of target if maximum threshold
is reached   $ 609,000   $ 426,300   $ 182,700
Thresholds:

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  Minimum         $ 3,000,000   $ 1,500,000 Target         $ 4,000,000   $
1,700,000 Maximum         $ 7,000,000   $ 2,700,000
Incentive payout per dollar:

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  Minimum         $ 0.142   $ 0.0122 Target         $ 0.170520   $ 0.3654000
Maximum         $ 0.071050   $ 0.091350

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EXHIBIT B

Severance Compensation and Benefits

[Termination—Without Cause 6.2(a)]

[Termination—Good Reason 6.2(c)]

[Termination—Disability 6.2(e)]

        1.     A lump sum payment in cash, not later than twenty (20) days after
the termination of Mr. Taylor's employment, in an amount equal to the total of
(a) 1.5 times Mr. Taylor's then-current base compensation, plus (b) eighteen
(18) months of incentive compensation at the target incentive compensation of
50% of base compensation.

        2.     The unvested portion of any stock options granted to Mr. Taylor
shall become fully vested and immediately exercisable on the effective date of
such termination and shall be exercisable for the maximum period specified in
such options.

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QuickLinks

Exhibit 10.34

TABLE OF CONTENTS
SECOND AMENDED EMPLOYMENT AGREEMENT
EXHIBIT A
EXHIBIT B Severance Compensation and Benefits