Exhibit 10.2


 


Execution Version


 


Thomas Group, Inc.


5221 N. O’Connor
Boulevard, Suite 500


Irving, Texas 75039-3714


 


PRIVATE &
CONFIDENTIAL


March 4, 2008


Mr. Earle Steinberg


313 Gentilly Place


Houston, TX 77024


 


                Re:  Terms and Conditions of Employment


 


Dear Mr. Steinberg:


 


This letter (this “Employment
Letter”) will evidence the terms and conditions relating to your employment by
Thomas Group, Inc. (the “Company”) and appointment to the office of
President and Chief Executive Officer. 
This Employment Letter shall be effective beginning on the date (the “Effective
Date”) that is the later of (i) the date that you execute and deliver this
Employment Letter to the Company and (ii) the date that this Employment
Letter and the terms hereof are approved by the Board of Directors and the
Compensation and Corporate Governance Committee of the Board of Directors (the “Compensation
Committee”).


 


1.  Terms of Employment


 


(a)                                  Appointment
as President and Chief Executive Officer.  You are being hired by the Company and being
appointed to the offices of President and Chief Executive Officer.  Unless otherwise agreed, the first day of
your employment in such capacity will be March 10, 2008 (the “Scheduled
Start Date”).


 


(b)                                 Duties;
Reporting.  You will
have such duties and responsibilities as are established by the Board of
Directors of the Company, commensurate with your position as President and
Chief Executive Officer. You shall exercise due diligence and reasonable care
in the performance of your duties and responsibilities and shall use your best
efforts to maintain and enhance the business and reputation of the
Company.  As President and Chief
Executive Officer, you will report to the Company’s Executive Chairman and the
Board of Directors of the Company and, at least annually, your performance will
be reviewed by the Board of Directors or the Compensation Committee.


 


(c)                                  Time
Commitment.  You shall devote substantially
your entire business time, energy and skills to your duties as President and
Chief Executive Officer while employed by the Company, and you will not accept
any directorship or engage in any other business activities without the prior
approval of the Board of Directors.


 


(d)                                 Compensation.  Your base salary shall be $512,000 if
annualized, beginning on the Scheduled Start Date, payable in such installments
as are determined by the Company, no less frequently than monthly, through the
term of your employment hereunder.  Your
base salary shall be payable in accordance with the Company’s standard payroll
policies and subject to standard 


 


 

















 


withholdings and deductions.  If your actual start date with the Company is
prior to the Scheduled Start Date, the Company shall compensate you pro-rata
based on the number of days worked prior the Scheduled Start Date divided by
366.


 


(e)                                  Employment Status; Termination.  Your employment shall be “at-will.”  Your employment may be terminated by the
Company by action of the Board of Directors at any time and for any or no
reason upon at least six months prior written notice, or immediately upon
written notice if such termination is for Cause.  Notwithstanding any notice period required by
the preceding sentence, the Company may terminate your employment by written
notice effective immediately or at any time during such six-month notice period
and pay you your base salary for the remaining portion of such six-month notice
period in lieu of your continued employment through the end of such notice
period.  Your employment may be
terminated by you with at least three months prior written notice to the Board
of Directors.  Upon your termination for
any reason, if requested by the Company, you agree to resign from all other
positions with the Company and its affiliates, including any director or officer
positions that you may hold with the Company or any of its subsidiaries.  As used herein, “Cause” shall mean: (1) your
conviction or plea of guilty or nolo contendere to a crime that involves
dishonesty, disloyalty, moral turpitude, sexual harassment or discrimination,
provides for a term of imprisonment or constitutes a felony; (2) the
willful and intentional failure or willful and intentional refusal to follow
reasonable and lawful instructions of the Company’s Board of Directors; (3) a
material act or omission involving intentional misconduct, malfeasance or gross
negligence in performance of duties to the Company or involving neglect of
duties in a manner that is materially damaging to the Company or an affiliate
of the Company; (4) a material breach or default in the performance of obligations
under your employment agreement with the Company; (5) a serious violation
of any of the Company’s policies to which officers of the Company are subject;
or (6) an act of misappropriation, embezzlement, fraud or similar conduct,
whether or not involving the Company.


 


2.  Share Awards; Bonus and other Benefits


 


(a)                                  Sign-On
Share Award.  Promptly
following your first day of employment under this Employment Letter, the
Compensation Committee shall cause the Company to issue you an award entitling
you to receive 50,000 restricted shares of the Company’s common stock, par
value $0.01 per share (the “Sign-on Shares”), upon the terms and subject to the
conditions set forth in the Sign-On Share Award agreement governing such award
as approved by the Compensation Committee (the “Sign-On Share Award”).  Except as otherwise provided in the Sign-On
Share Award, the Sign-On Shares will be issued under the 2005 Omnibus Stock and
Incentive Plan of the Company or such other plan as is determined by the
Compensation Committee and will vest and become deliverable to you upon the
one-year anniversary of your Scheduled Start Date.  As a condition to the issuance of such
Sign-On Shares, you agree to make such representations, warranties and
undertakings and execute such agreements, instruments and other documents as
the Company may deem necessary or advisable to assure compliance with any law
or regulation.


 


(b)                                 Performance
Share Award.  Promptly
following your first day of employment under this Employment Letter, the Compensation
Committee shall cause the Company to issue to you an award entitling you to
receive up to 380,000 shares of the Company’s common stock, par value $0.01 per
share (the “Performance Shares”), upon the terms and subject to the conditions
set forth in the Performance Share Award agreement governing such award as
approved by the Compensation Committee (the “Performance Share Award”).  The Performance Shares will be 


 

















issued under the 2008 Omnibus Stock and
Incentive Plan of the Company or such other plan as is determined by the
Compensation Committee.  As a condition
to the issuance of such Performance Shares, you agree to make such
representations, warranties and undertakings and execute such agreements,
instruments and other documents as the Company may deem necessary or advisable
to assure compliance with any law or regulation.


 


(c)                                  Restrictions
on Shares.  In addition
to any transfer restrictions set forth in the awards referenced above or in any
other applicable agreement, you will not be permitted to sell any shares of the
Company’s common stock that you receive, except (i) in compliance with
Company policies applicable to the Company’s executive officers and (ii) in
compliance with applicable securities laws.


 


(d)                                 Annual
Bonus.  For each calendar year that
you are employed hereunder, beginning in 2008, you will be eligible to receive
an annual performance bonus upon achievement of such performance objectives as
are established during the first quarter of the applicable year by the
Compensation Committee and communicated to you. 
The target amount for your annual performance bonus for calendar year
2008 and for each calendar year thereafter shall be $350,000 (subject to pro
rata reduction in 2008 based on the number of days in 2008 after the Scheduled
Start Date divided by 366).  The Company
agrees that for years after calendar 2008, the Compensation Committee will
consider the feasibility of paying bonus payments greater or lesser than the
target amount based on proportionate underachievement or overachievement of
your performance objectives.  Any bonus
payment shall be made in the Company’s sole discretion in accordance with the
policies established from time to time by the Compensation Committee and shall
be subject to standard withholdings and deductions.


 


(e)                                  Car
Allowance.  The Company
shall provide you a monthly car allowance not to exceed $1000, which shall be
inclusive of all costs including insurance.


 


(f)                                    Benefits.  You will be entitled to participate in all
employee benefit, fringe and perquisite plans, practices, programs, policies
and arrangements generally provided to executives of the Company at a level
commensurate with your position.


 


(g)                                 Business
Expenses.  The Company
will reimburse you for the travel, entertainment and other business expenses
incurred by you in the performance of your duties in accordance with the
Company’s policies applicable to senior executives as in effect from time to
time.  While you understand that the
Company’s headquarters are located in Irving, Texas, and that your services
will be provided primarily from such office, you have informed the Company that
you intend to maintain your primary residence in Houston, Texas.  The Company acknowledges that you intend to
travel by commercial airline between your home in Houston, Texas and Dallas,
Texas while employed by the Company and, with respect to such travel, the
Company agrees to reimburse you for the actual cost of commercial airline
travel, not to exceed a total of $12,000 in any 12-month period.  In addition, the Company agrees to reimburse
you for the actual cost of reasonable hotel accommodations in the Dallas, Texas
area for a period of two months after your actual start of employment with the
Company, not to exceed a total of $4,000. 
Reimbursement for such travel and hotel accommodations will be made in
accordance with the Company’s regular expense reimbursement processes following
presentment of appropriate documentation therefor.


 

















(h)                                 Amounts Payable Upon Termination Generally.  Upon termination of
your employment, the Company will pay you: (i) any earned but unpaid
annual base salary through the date of termination, (ii) any earned but
unpaid annual bonus for any preceding year, as solely determined in good faith
by the Compensation Committee, (iii) any unreimbursed business expenses
that are reimbursable hereunder and (iv) any other amounts due under the
terms of any of the Company’s benefit plans applicable to you.  All such payments shall be subject to
standard withholdings and deductions.


 


(i)                                     Amounts Payable Upon Termination Following
a Change in Control.  If within one year after a Change in Control
(as such term is defined in the Performance Share Award) either (A) the
Company terminates your employment with the Company without Cause, or (B) you
terminate your employment with the Company for Good Reason, then you will be
entitled to receive 12 months of base salary payable under paragraph 1(d) (which
shall be payable in accordance with paragraph 1(d)).  As used herein, “Good Reason” shall mean the
occurrence of either of the following circumstances without your consent: (1) a
material reduction in your base salary; or (2) a material diminution of
your duties, authority or responsibilities as in effect immediately prior to
such diminution.


 


(j)                                     Amounts
Payable Upon Termination Due to Death.  If your employment with the Company is
terminated due to your death, your estate will be entitled to receive (i) six
months of base salary payable under paragraph 1(d) (which shall be payable
in accordance with paragraph 1(d)) and (ii) in the sole discretion of the
Compensation Committee, such pro rata portion of the annual bonus, if any, that
the Compensation Committee determines should be payable based upon your
performance during the applicable year.


 


(k)                                  Amounts Payable Upon Termination
Due to Disability.  You or the
Company may terminate your employment by reason of Disability by written notice
to the other party to that effect. 
Unless otherwise specified in the notice, such termination shall be
effective immediately. If your employment is terminated due to Disability, you
will be entitled to receive (i) six months of base salary payable under
paragraph 1(d) (which shall be payable in accordance with paragraph 1(d))
and (ii) in the sole discretion of the Compensation Committee, such pro
rata portion of the annual bonus, if any, that the Compensation Committee
determines should be payable based upon your performance during the applicable
year.  As used herein, “Disability” shall
mean your present incapacity resulting from an injury or illness (either mental
or physical) which, in the reasonable opinion of the Compensation Committee
based on such medical evidence as it deems necessary, will result in death or
can be expected to continue for a period of at least twelve (12) months and
will prevent you from performing the normal services required of you by the
Company; provided, however, that such disability
did not result, in whole or in part:  (i) from
chronic alcoholism; (ii) from addiction to narcotics; (ii) from a felonious
undertaking; or (iv) from an intentional self inflicted wound.


 


3.  Miscellaneous Terms


 


(a)                                  Indemnification
and Employee Representations.  The Company will indemnify you to the fullest
extent permitted by law and the Company’s Certificate of Incorporation as in
effect as of the Effective Date with respect to your activities on behalf of
the Company.


 

















It is the policy and practice of the Company
to reasonably ensure that the Company and all new employees honor the terms of
any reasonable post-employment restrictions contained in agreements with prior
employers of such new employees. 
Furthermore, you will never be asked to share, utilize or disclose in
any way the proprietary or confidential information of a prior employer as part
of your duties on behalf of the Company. 
You agree to promptly notify the Board of Directors if you find yourself
in a position of possibly violating your contractual agreement(s) with
prior employers.


 


You will be covered under the Company’s
D&O liability insurance on the same basis as other senior level executives
of the Company.


 


(b)                                 Confidential
Information.  In order to
assist you with your duties, the Company agrees to provide you with specialized
knowledge and training regarding the business in which the Company is involved,
and to provide you with initial and ongoing confidential information and trade
secrets of the Company (“Confidential Information”).  For purposes of this Employment Letter,
Confidential Information includes, but is not limited to, information regarding
the use and application of Total Cycle Time methodologies and other information
and concepts developed by the Company to improve the business processes of
corporations and other organizations; software or other technology developed by
the Company and any research data or other documentation related to the
development of such software/technology; client lists and prospects lists
developed by the Company; information regarding the Company’s clients which you
acquire as a result of employment with the Company, including client contracts,
work performed for clients, client contacts, client requirements and needs,
data used by the Company to formulate client bids, client financial
information, and other information regarding the client’s business; information
related to the Company’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 the Company; and any other information which you acquire as
a result of your employment with the Company and which you have a reasonable
basis to believe the Company would not want disclosed to a business competitor
or to the general public.


 


You understand and acknowledge that such
Confidential Information gives the Company a competitive advantage over others
who do not have this information, and that the Company would be harmed if the
Confidential Information were disclosed. 
You agree that you will hold all Confidential Information in trust and
will not use the information for any purpose other than the benefit of the
Company, or disclose to any person or entity any Confidential Information
except as necessary during your employment with the Company to perform services
on behalf of the Company. You will also take reasonable steps to safeguard such
Confidential Information and prevent its disclosure to unauthorized persons.


 


(c)                                  Non-Competition.


 


(i)                                     As used herein,
the term “Non-Competition Period” shall mean the period beginning on the
Effective Date and continuing until the date that is 12 months after the date
of your termination of employment with the Company, regardless of the reason
for such termination.


 


(ii)                                  You and the
Company agree that this paragraph 3(c) is ancillary to the Company’s
promise to provide you with Confidential Information and your return promise
not to use or disclose the Confidential Information.  In consideration and for the protection of
the Confidential Information that the Company shall provide to you, during the
Non-Competition Period, you shall not (other than for the benefit of the
Company or its affiliates pursuant to this Employment Letter) directly or indirectly
render services to, assist, participate in the affairs of, or otherwise be
connected with any person or enterprise (other than the Company), which person
or enterprise is engaged in, or is planning to engage in, and shall not
personally engage in any business that is in any respect competitive with the
business of the Company, with respect to any services of the Company that were
within your management responsibility at any time within the twelve-month
period immediately prior to the termination of your employment with the
Company, in any capacity which would (i) utilize your services with
respect to such business within the United States of America or any country in
which the Company was conducting business at any time within such twelve-month
period; or (ii) utilize your services in providing any services similar to
the services of the Company to any person or entity to which the Company
provided or actively attempted to provide such services within the twelve-month
period immediately prior to the termination of your employment with the Company
(a “Competing Business”). 
Notwithstanding the foregoing, the Company agrees that you may own less
than 5% of the outstanding voting securities of any publicly traded company
that is a Competing Business so long as you do not otherwise participate in
such Competing Business in any way prohibited by this paragraph (ii).


 


(iii)                               During the
Non-Competition Period, you will not, and will not permit any of your
affiliates to, directly or indirectly, solicit or induce any customer or
client, prospective customer or client, or supplier of the Company to reduce or
terminate its business relationship with the Company, otherwise change its
relationship with the Company or establish any relationship with you, any of your
affiliates, or with a Competing Business that would in any way reduce or
diminish the business of the Company.


 


(iv)                              During the
Non-Competition Period, you will not, and will not permit any of your
affiliates to, directly or indirectly, hire, recruit, or otherwise solicit or
induce any employee of or contractor to the Company to terminate his or her
employment or contractor relationship with the Company, otherwise change his or
her relationship with the Company or establish any relationship with you, any of
your affiliates, or with a Competing Business for any business purpose deemed
competitive with the business of the Company.


 


(v)                                 You acknowledge
that the geographic boundaries, scope of prohibited activities, and time
duration described in the foregoing paragraphs of this section are reasonable
in nature and are no broader than are necessary to maintain the goodwill of the
Company and its affiliates and the confidentiality of their Confidential
Information, and to protect the other legitimate business interests of the
Company and its affiliates.


 


(vi)                              If any court
determines that any portion of this paragraph 3(c) is invalid or
unenforceable, the remainder of this paragraph 3(c) shall not thereby be
affected and shall be given full effect without regard to the invalid
provisions.  If any court construes any
of the provisions of this paragraph 3(c), or any part thereof, to be
unreasonable because of the 


 

















 


duration
or scope of such provision, such court shall have the power to reduce the
duration or scope of such provision and to enforce such provision as so
reduced.


 


(vii)                           You agree that
the Company may notify any person or entity employing you or evidencing an
intention of employing you of the existence and provisions of this Agreement.


 


(d)                                 Remedies
for Breach of Covenants of Non-Disclosure and Noncompetition.   In the event of a
breach or threatened breach of any of the covenants in paragraphs 3(b) and
(c), the Company shall have the right to seek monetary damages for any past
breach and equitable relief, including specific performance by means of an
injunction against you or against your partners, agents, representatives,
servants, employers, employees, family members and/or any and all persons
acting directly, indirectly, or otherwise in concert with you, to prevent or
restrain any such breach.


 


(e)                                  Intellectual
Property.  You acknowledge
and agree that all discoveries, inventions, designs, improvements, ideas,
writings, copyrights, publications, study protocols, study results, computer
data or programs, or other intellectual property, whether or not subject to
patent or copyright laws, which you conceive solely or jointly with others, in
the course or scope of your employment with the Company or in any way related
to the Company’s business, whether during or after working hours, or with the
use of the Company’s equipment, materials or facilities (collectively referred
to herein as “Intellectual Property”), shall be the sole and exclusive property
of the Company without further compensation to you.  For the avoidance of doubt, Intellectual
Property shall not include any general industry knowledge acquired or possessed
by you prior to the date hereof.  You
shall take such steps as are necessary or appropriate to maintain complete and
current records of the Intellectual Property conceived by you, and you shall
assign to the Company or its designees the entire right, title and interest in
said Intellectual Property and shall assist the Company, at the Company’s
expense, in obtaining, defending and enforcing the Company’s rights therein.
You hereby appoint the Company as your attorney-in-fact to execute on your
behalf any assignments or other documents deemed necessary by the Company to
protect or perfect its rights to any Intellectual Property.


 


(f)                                    Non-disparagement.  You agree not to, directly
or indirectly, disparage the Company or any of its affiliates or any of their
respective stockholders, affiliates, directors, officers, employees, agents or
representatives, or any of their financial records or operations, or any of
their products or practices, either orally or in writing.


 


(g)                                 Amendments;
Choice of Law.  This
Employment Letter can be amended only in writing signed by both you and the
Company.  The terms and conditions of
this Employment Letter shall be governed by and construed in accordance with
the internal laws of the State of Texas.


 


(h)                                 Notices.  For the purpose of this Employment Letter,
notices and all other communications provided for in this Employment Letter
shall be in writing and shall be deemed to have been duly given when delivered
personally or by overnight service or delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the Company at its executive office or to you at the address on
the records of the Company (provided that all notices to the Company shall be
directed to the attention of the Chairman of the Compensation 


 

















Committee) or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.


 


(i)                                     Survival;
Waiver and Counterparts.  If
any provision of this Employment Letter or any portion thereof is declared
invalid, illegal, or incapable of being enforced by any court of competent
jurisdiction, the remainder of such provisions and all of the remaining
provisions of this Employment Letter shall continue in full force and
effect.  Failure to insist upon strict
compliance with any of the terms, covenants, or conditions of this Employment
Letter shall not be deemed a waiver of such term, covenant, or condition, nor
shall any waiver or relinquishment of, or failure to insist upon strict
compliance with, any right or power hereunder at anyone or more times be deemed
a waiver or relinquishment of such right or power at any other time or
times.  This Employment Letter may be
executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.


 


(j)                                     Successors
and Assigns.  The Company
may assign its rights and obligations under this Employment Letter without your
consent to any successor to all or substantially all the assets of the Company,
by merger, stock or asset sale or otherwise, and may assign or encumber this
Employment Letter and its rights hereunder as security for indebtedness of the
Company and its affiliates.  All
representations, warranties, covenants, terms, conditions and provisions of
this Employment Letter shall be binding upon and inure to the benefit of, and
be enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the Company and you. 
Neither this Employment Letter nor any rights, interests or obligations
hereunder may be assigned by you without the prior written consent of the
Company.


 


(k)                                  Section 409A.  It is intended that this Employment Letter
will comply with Section 409A of the Internal Revenue Code and this
Employment Letter shall be interpreted in a manner consistent with such
intent.  If any provision of this
Employment Letter (or of any award of compensation, including deferred
compensation or benefits) would cause you to incur any additional tax or
interest under Section 409A or any regulations or Treasury guidance
promulgated thereunder, the Company shall reform such provision; provided that
the Company agrees to maintain, to the maximum extent practicable and without
additional cost to the Company, the original intent and economic benefit to you
of the applicable provision without violating the provisions of Section 409A;
provided, further, in no event shall you be required to defer the date on which
you are entitled to receive any payment or benefit hereunder for a period in
excess of six months.


 


(l)                                     Entire
Agreement.  The items
in this Employment Letter and the other items referred to above represent the
Company’s and your entire agreement with respect to the terms and conditions of
your employment following the Effective Date. 
Any contrary representations that may have been made to you at any time
are superseded by this Employment Letter. 
By signing below, you agree to the terms and conditions of employment
specified in this Employment Letter and the accompanying documents.


 


***Remainder of this Page Intentionally
Left Blank***


 


 

















 


If you agree that the
foregoing terms and conditions accurately evidence our agreement concerning
your employment after the Effective Date, please sign and return this
Employment Letter.


 


Very truly yours,


 


	
  /s/ Michael E. McGrath

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael E. McGrath

  	
   

  	
   

  	
   

  
	
  Executive Chairman

  	
   

  	
   

  	
   

  
	
  Thomas Group, Inc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACCEPTED:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Earle Steinberg

  	
   

  
	
   

  	
   

  	
  Earle Steinberg