Exhibit 10.1


 


 


 


THOMAS GROUP, INC.


 


DAVID E. ENGLISH


 


EMPLOYMENT AGREEMENT


 


 


Dated November 7, 2005


 


(To be effective June 29, 2005)


 





















 


TABLE OF CONTENTS


	
  1.

  	
  Novation and Settlement of
  Rights

  	
   

  
	
   

  	
  1.1

  	
  Novation

  	
   

  
	
   

  	
  1.2

  	
  1999
  Incentive Plan

  	
   

  
	
  2.

  	
  Definitions

  	
   

  
	
   

  	
  2.1

  	
  Board
  of Directors

  	
   

  
	
   

  	
  2.2

  	
  Cause

  	
   

  
	
   

  	
  2.3

  	
  Change
  in Control

  	
   

  
	
   

  	
  2.4

  	
  Common
  Stock

  	
   

  
	
   

  	
  2.5

  	
  Disability

  	
   

  
	
   

  	
  2.6

  	
  Exchange
  Act

  	
   

  
	
   

  	
  2.7

  	
  Good
  Reason

  	
   

  
	
   

  	
  2.8

  	
  Term
  of Employment

  	
   

  
	
  3.

  	
  Employment

  	
   

  
	
   

  	
  3.1

  	
  Employment

  	
   

  
	
   

  	
  3.2

  	
  Personal
  Services

  	
   

  
	
  4.

  	
  Compensation and Benefits
  During the Term of Employment

  	
   

  
	
   

  	
  4.1

  	
  Base
  Compensation

  	
   

  
	
   

  	
  4.2

  	
  Incentive Compensation
  Arrangement

  	
   

  
	
   

  	
  4.3

  	
  Travel
  Costs

  	
   

  
	
   

  	
  4.4

  	
  Insurance; Benefit Plan
  Participation

  	
   

  
	
   

  	
  4.5

  	
  Certain
  Tax Provisions

  	
   

  
	
  5.

  	
  Term
  of the Agreement

  	
   

  
	
  6.

  	
  Termination; Disability;
  Death; Change in Control

  	
   

  



 


i





















 


	
   

  	
  6.1

  	
  Basis

  	
   

  
	
   

  	
  6.2

  	
  Benefits Upon Termination

  	
   

  
	
  7.

  	
  Restrictive Covenants; Work
  Product; Confidentiality

  	
   

  
	
   

  	
  7.1

  	
  Restrictive
  Covenants

  	
   

  
	
   

  	
  7.2

  	
  Right to Work Product; Confidentiality

  	
   

  
	
  8.

  	
  General
  Provisions

  	
   

  
	
   

  	
  8.1

  	
  Notices

  	
   

  
	
   

  	
  8.2

  	
  Entire
  Agreement

  	
   

  
	
   

  	
  8.3

  	
  Governing
  Law and Venue

  	
   

  
	
   

  	
  8.4

  	
  Voluntary
  Agreement

  	
   

  
	
   

  	
  8.5

  	
  Resolution of Certain
  Controversies

  	
   

  
	
   

  	
  8.6

  	
  Partial
  Invalidity

  	
   

  
	
   

  	
  8.7

  	
  Reformation

  	
   

  
	
   

  	
  8.8

  	
  Binding
  Effect

  	
   

  
	
   

  	
  8.9

  	
  Amendments

  	
   

  
	
   

  	
  8.10

  	
  Survival
  of Provisions

  	
   

  
	
   

  	
  8.11

  	
  Approval

  	
   

  
	
  Exhibit
  A — Incentive Compensation Criteria

  	
   

  
	
  Exhibit B —
  Severance Compensation and Benefits

  	
   

  



 


ii





















 


EMPLOYMENT AGREEMENT


This
Employment Agreement (this “Agreement”) is entered into this 7th day
of November, 2005 to be effective June 29, 2005, by and between Thomas
Group. Inc. (“Thomas Group” or the “Company”), a Delaware corporation, and
David E. English (“Mr. English”) (the signatories to this Agreement
shall be referred to jointly as the “Parties”),.


                                WHEREAS,
Mr. English is presently serving as the Vice President and Chief Financial
Officer of Thomas Group, reporting to the Chief Executive Officer, 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 employment agreement to retain the services of
Mr. English; and


                                WHEREAS, the
Parties entered into the Employment Agreement on or about June 15, 2005; and


                                WHEREAS, Thomas
Group wishes to assure itself of the continued and valuable services of
Mr. English, and Mr. English is willing to remain employed by Thomas
Group, upon the terms and conditions set forth in this 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. English agree as
follows:


1.             Novation and Settlement of
Rights.


1.1           Novation.  In
exchange for the promises set forth herein, Mr. English 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. English during past employment with Thomas Group
and all goodwill developed with the Company’s clients, customers and other
business contacts by Mr. English 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. English
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. English
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. English
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.


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


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 E. 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;


(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           Common Stock. “Common Stock”
shall mean the common stock of Thomas Group, par value $.01 per share.





















 


2.5           Disability.  “Disability”
shall mean the inability of Mr. English 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).


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


2.7           Good Reason. 
“Good Reason” shall mean Mr. English’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. English’s Base Salary
(as defined herein), or diminishes Mr. English’s duties and
responsibilities below those of Vice President and Chief Financial Officer, or
at any time within one hundred and eighty (180) days following a Change of
Control.


2.8           Term of Employment. 
“Term of Employment” shall mean the period of time commencing on June
29, 2005 and continuing until December 31, 2006.


3.             Employment.


3.1           Employment. 
Thomas Group agrees to employ Mr. English and Mr. English
accepts employment by Thomas Group as Vice President and Chief Financial
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. English shall be responsible for the financial affairs of
Thomas Group in the ordinary course of its business with all such powers as may
be reasonably incident to such responsibilities as its Vice President and Chief
Financial Officer.  Mr. English
shall devote his full time and effort to the discharge of his duties as Thomas
Group’s Vice President and Chief Financial Officer.


3.2           Personal Services. 
All services to be provided by Mr. English under this Agreement
shall be performed by Mr. English personally.  During the term of this Agreement,
Mr. English 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 Chief Executive
Officer) (i) undertake or accept any duties under which there is a
conflict of interest between Mr. English’s responsibilities towards the
Company or Mr. English’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. English 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. English’s Base Salary
shall initially be at the annual rate of $165,000 beginning July 1, 2005 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. English in equal monthly installments.  Mr. English 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           Incentive
Compensation Arrangement. 
Mr. English shall be eligible to receive a minimum of 30% of Base
Salary, paid as a cash incentive and calculated annually, based on criteria in
Exhibit A of this document, attached hereto. Financial computations of the
annual incentive, if applicable, will be based upon the audited financial
results of Thomas Group.  Thomas Group
shall pay the incentive compensation to Mr. English 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. English 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.


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


4.4           Insurance; Benefit Plan
Participation.  Mr. English
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. English on the terms and conditions of each of the plans the
Company  maintains.  Mr. English shall be entitled to receive
additional stock options as may be granted by the Company, and may participate
in stock option programs offered to employees of the Company.


4.5           Certain Tax Provisions.  Mr. English 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. English’s employment under this Agreement may be terminated as
described in this Section 6.1.  In
the event that Mr. English’s employment is terminated, Mr. English
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. English’s employment without Cause by written notice to
Mr. English 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. English for Cause by written notice to
Mr. English 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. English 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. English’s termination
notice.  The right of Mr. English to
terminate his employment for Good Reason under this Section 6.1(c) shall
not limit Thomas Group’s ability to terminate Mr. English for Cause under
Section 6.1(b), if Cause is
determined to exist prior to the time Mr. English delivers to Thomas Group
his written notice of termination for Good Reason.


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


(e)           Disability.  Mr. English or Thomas Group may
terminate Mr. English’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. English 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. English 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. English’s death.


(g)           Change in Control.  Following a Change in Control,
Mr. English 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. English decides to resign or otherwise voluntarily terminate his
employment following the occurrence of a Change in Control, Mr. English
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. English does not
give such notice to Thomas Group, this Agreement will remain in effect; provided, however, that the failure of
Mr. English to terminate this Agreement following the occurrence of a
Change in Control shall not be deemed a waiver of Mr. English’s right to
terminate his employment upon a subsequent occurrence of a Change in Control in
accordance with the terms of this subsection. 
Mr. English acknowledges and agrees that the transaction between
the Company, on the one hand, and General John E. 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. English has given notice of termination pursuant to
Section 6.1(g), Thomas Group may, in its sole discretion, thereafter
require Mr. English to terminate his employment prior to the expiration of
the applicable notice period.


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


(a)           Without Cause.
In the event Thomas Group terminates Mr. English’s employment without
Cause, Mr. English shall be entitled to the compensation and/or benefits
set forth on Exhibit B; provided, however, that Mr. English 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. English agrees and understands that all of his
obligations and agreements under Section 7 below (including, without
limitation, Mr. English’s
obligations concerning confidential information, non-competition and non-solicitation,
and Mr. English’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.


(b)           With Cause.  In the event Mr. English’s employment is
terminated with Cause, no further payments or benefits shall be paid or
provided by Thomas Group to 





















 


Mr. English
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. English on or before the date of such termination under
Section 4.3.  In addition,
Mr. English 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. English terminates his employment for Good Reason,
Mr. English shall be entitled to the compensation and/or benefits set
forth on Exhibit B, unless Mr. English 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. English terminates his employment without Good
Reason pursuant to Section 6.1(d), Mr. English shall be entitled to
the benefits or payments provided for in Section 6.2(b).


(e)           Disability.  In the event that Mr. English’s
employment is terminated by reason of Disability, Mr. English shall be
entitled to the payments and benefits set forth on Exhibit B.  Additionally, Mr. English or the estate,
beneficiary or legal representative of Mr. English 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. English’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. English 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. English’ s estate or any other person to
payments under any life insurance policy maintained by Thomas Group for the
benefit of Mr. English 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. English’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. English and delivered to an officer/manager of Thomas Group; however,
if no such beneficiary designation is made by Mr. English during his
lifetime, the benefits hereunder shall be paid to his estate.  In addition, Mr. English’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. English’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. English’s employment is
terminated as provided in Section 6.1(g) following the occurrence of a Change in Control, Mr. English
shall be entitled to the payments and benefits provided herein.


 (i)           Severance
Benefits. If, within twenty four (24) months of the effective date of a
Change of Control, Mr. English’s employment is terminated by the Company
without Cause or by Mr. English, for Good Reason, Mr. English 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. English 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. English 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. English 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. English pursuant to
Section 6.2(g)(i) or otherwise (the “Payment”) would cause
Mr. English 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. English, within the later of ninety (90) days of
the termination date of Mr. English’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. English 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. English 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. English 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. English 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. English 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. English 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.





















 


7.             Restrictive Covenants; Work
Product; Confidentiality.


7.1           Restrictive Covenants.  Without the prior written consent of Thomas
Group, Mr. English 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. English’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. English 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. English 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. English
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. English 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. English 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. English 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. English
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. English 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.


(c)           Thomas Group agrees
to provide Mr. English with specialized knowledge and training regarding
the business in which Thomas Group is involved, and to provide Mr. English
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. English 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. English acquired as a result of his employment with Thomas Group and
which Mr. English has a reasonable basis to believe Thomas Group would not
want disclosed to a business competitor or to the general public.


(d)           Mr. English
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. English 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. English’s employment with Thomas Group to perform services on behalf
of Thomas Group.  Mr. English 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):


	
  English:

  	
   

  	
  David E. English

  
	
   

  	
   

  	
  2333 Sir Belin Dr

  
	
   

  	
   

  	
  Lewisville, TX 75056

  
	
   

  	
   

  	
   

  
	
  Thomas Group:

  	
   

  	
  Thomas Group, Inc.

  
	
   

  	
   

  	
  5221 North O’Connor Boulevard

  
	
   

  	
   

  	
  Suite 500

  
	
   

  	
   

  	
  Irving, TX 75039

  
	
   

  	
   

  	
  Attention: Chief Executive Officer

  



 


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.


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. English 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. English 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. English’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. English 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. English, 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. English, 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. English.


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. English and the
Company.


                                IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the date first above written to be
effective June 29, 2005.


	
   

  	
  ENGLISH:

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ David English

  
	
   

  	
  David English,
  individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THOMAS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James T. Taylor

  
	
   

  	
  Name:

  	
  James T. Taylor

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  



 





















Thomas
Group, Inc.


Incentive Criteria for CFO


 


	
  Annual

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Management of S,G&A
  expenses

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
  a

  	
   

  	
  Outside providers (lawyers, accountants,
  TPA, etc.)

  	
   

  
	
   

  	
   

  	
  b

  	
   

  	
  Risk management (adequacy & cost of
  insurance)

  	
   

  
	
   

  	
   

  	
  c

  	
   

  	
  Planning and management of office staff,
  tone of office

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Communication with Board and
  investment community

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Entity Management

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
  a

  	
   

  	
  Acquisitions, closure of subsidiaries

  	
   

  
	
   

  	
   

  	
  b

  	
   

  	
  Tax planning

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Budgeting Process

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
  a

  	
   

  	
  Sales Forecasting (N drive and G drive)

  	
   

  
	
   

  	
   

  	
  b

  	
   

  	
  Monthly update of plan

  	
   

  
	
   

  	
   

  	
  c

  	
   

  	
  Process of subsequent year planning &
  budgeting

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Current Year Projects

  	
   

  
	
   

  	
   

  	
  1

  	
   

  	
  SOX 404 implementation finished by Q4/05

  	
   

  	
  5

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  2

  	
   

  	
  Cash management, investment of excess cash

  	
   

  	
  5

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  3

  	
   

  	
  T&E system conversion

  	
   

  	
  5

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  4

  	
   

  	
  Job reporting

  	
   

  	
  5

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Total Current Year Projects

  	
   

  	
   

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100

  	
  %

  






















 


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. English’s employment, in an amount equal to the total of (a) 1.5 times Mr. English’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. English 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.