Document:

Exhibit 10.72

 

THIS
PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THIS PROMISSORY NOTE HAS
BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY, AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE
EFFECTED UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, OR AN EXEMPTION FROM SUCH REGISTRATION STATEMENT REQUIREMENTS.

 

PROMISSORY NOTE

 

	
  Principal Amount:
  $1,410,000.00

  	
   

  	
  Dallas, Texas

  
	
  Interest Rate:
  8.00% per annum

  	
   

  	
  April 18, 2006

  

 

FOR VALUE RECEIVED, the undersigned, Crdentia Corp., a
Delaware corporation (“Crdentia”), Baker Anderson Christie, Inc., a
California corporation, Nurses Network, Inc., a California corporation,
New Age Staffing, Inc., a Delaware corporation, PSR Nurses, Ltd., a Texas
limited partnership, PSR Nurse Recruiting, Inc., a Texas corporation, PSR
Nurses Holdings Corp., a Texas corporation, CRDE Corp., a Delaware corporation,
Arizona Home Health Care/Private Duty, Inc., an Arizona corporation, Care
Pros Staffing, Inc, a Texas corporation, HIP Holding, Inc., a Delaware
corporation, Health Industry Professionals, L.L.C., a Michigan limited
liability company, Travmed USA, Inc., a North Carolina corporation, Prime
Staff, LP, a Texas limited partnership, Mint Medical Staffing Odessa, LP, a
Texas limited partnership, GHS Acquisition Corporation, a Delaware corporation
and Staff Search Acquisition Corp., a Texas corporation (each individually and
referred to collectively as “Issuer”), jointly and severally promise to pay to
Staff Search, Ltd., a Texas limited partnership, or any assignees of the Note (“Holder”),
by wire transfer to such account as Holder may from time to time designate
in writing, the principal amount of One Million Four Hundred Ten Thousand
Dollars ($1,410,000.00) (the “Principal Amount”) payable at such times as
specified in paragraph 1 below. Issuer also promises to pay interest on the
unpaid principal amount from the date of this Note until this Note is paid in
full, at the rate of eight percent (8.00%) per annum, at such times as
specified in this Agreement.

 

1. Principal Payment. The
Principal Amount shall be payable to Holder two business days (as defined
below) following the date of Crdentia’s receipt of written demand by Holder
requesting such payment (the “Maturity Date”). All payments shall be made in
immediately available funds in lawful currency of the United States of America,
without offset, deduction or counterclaim of any kind. A “business day” shall
mean any day except Saturday, Sunday or any day that is a legal holiday in the
State of Texas. Holder may make written demand by facsimile, email or
other usual means of communication between Holder and Crdentia.

 

 

2. Interest. Prior to the
Maturity Date or the occurrence of an Event of Default (as defined in paragraph
3 below), the unpaid Principal Amount periodically outstanding under this Note
shall bear simple interest at the rate of eight percent (8.00%) per annum,
calculated on the basis of a 365-day year, based on the actual number of days
elapsed (including the first day, but excluding the last day). All accrued and
unpaid interest on this Note shall be due and payable on the Maturity Date. After
the Maturity Date or upon the occurrence and during the continuation of any
Event of Default, any unpaid Principal Amount or accrued interest shall bear
interest at the rate of ten percent (10%) per annum until paid in full.

 

3. Events of Default. The
occurrence of any of the following events shall constitute an event of default
under this Note: (a) Issuer’s failure to pay the Principal Amount when due
and payable; (b) any Issuer making an assignment for the benefit of its
creditors; (c) any Issuer filing (or consenting to the filing of) any
petition or complaint pursuant to federal or state bankruptcy or insolvency
laws, seeking the appointment of a receiver or trustee for any of its assets,
seeking the adjudication of such Issuer as bankrupt or insolvent, seeking an “order
for relief” under such statutes, or seeking a reorganization of or a plan of
arrangement for Issuer; or (d) any default or breach by any Issuer of or
under any agreement for borrowed money, including loan agreements, or breach
under any capital equipment lease agreement, by which such Issuer is bound or
obligated following the expiration of any applicable grace period. Upon the
occurrence of an Event of Default, the entire Principal Amount then
outstanding, together with accrued and unpaid interest, shall become
immediately due and payable.

 

4. Subordination.
A. The indebtedness evidenced by this Note is expressly
junior and subordinate in right of payment to the prior payment in full of all
of Issuer’s indebtedness under (i) that certain Second Amended and
Restated Loan and Security Agreement — Revolving Loans, dated as of May 16,
2005, by and among Crdentia and its subsidiaries, on the one hand, and Bridge
Healthcare Finance, LLC, on the other hand (as the same may be amended or
modified from time to time, the “Revolving Loan Agreement”), and (ii) that
certain Amended and Restated Loan and Security Agreement — Term Loan, dated as
of May 16, 2005, by and among Crdentia and its subsidiaries, on the one
hand, and Bridge Opportunity Finance, LLC, on the other hand (as the same may be
amended or modified from time to time, the “Term Loan Agreement” and, together
with the Revolving Loan Agreement, the “Loan Agreement”). Notwithstanding
anything herein to the contrary, no payment of principal or interest shall be
made on this Note if there exists any default, or the existence of any event
which, with the giving of notice, would constitute a default, in the payment of
any indebtedness under the Loan Agreement, as determined by the terms of the
Loan Agreement. Holder agrees to execute all subordination documents reasonably
required by Bridge Healthcare Finance, LLC and/or Bridge Opportunity Finance,
LLC.

 

B.                                    The
indebtedness represented by this Note is expressly subordinated in right of
payment of principal and interest to the prior payment in full (by cash or
conversion) of the indebtedness represented by (i) the 8% Convertible
Debenture in the principal amount of $525,000 issued by the Issuer to Alpha
Captial AG on January 6, 2006; (ii) the 8% Convertible Debenture in
the principal amount of $100,000 issued by

 

 

the Issuer to Vestal
Venture Capital on January 6, 2006; (iii) the 8% Convertible
Debenture in the principal amount of $125,000 issued by the Issuer to Nite
Capital LP on January 6, 2006; (iv) the 8% Convertible Debenture in
the principal amount of $500,000 issued by the Issuer to Chestnut Ridge
Partners LP on January 6, 2006; and (v) the 8% Convertible Debenture
in the principal amount of $750,000 issued by the Issuer to Whalehaven Capital
Fund Limited on January 6, 2006.

 

5. Prepayment.
This Note may be prepaid, at the option of Issuer, in
whole or in part, at any time or from time to time, without penalty or premium;
provided, however, that any prepayment
shall be applied first to the Principal Amount then outstanding until paid in
full and then to accrued and unpaid interest as of the date of such prepayment.
In the event that Issuer sells any of the Collateral (as defined in the
Security Agreement), the net proceeds from such sale shall be applied as set
forth in the Security Agreement and, to the extent any proceeds are required to
be applied to the payment of the Principal Amount and interest hereunder, in
accordance with the preceding sentence.

 

6. Maximum
Rate of Interest. In no event shall any interest rate
provided for hereunder exceed the maximum rate legally chargeable by Holder
under applicable law. If at any time such laws would render usurious any amount
due under this Note, then it is the express intention of Holder and Issuer that
Issuer not be required to pay interest on this Note at a rate in excess of the
maximum lawful rate, that the provisions of this paragraph 6 shall control over
all other provisions of this Note which may be in apparent conflict, that
such excess amount shall be immediately credited to the principal balance owing
under this Note (or, if this Note has been fully repaid, refunded by Holder to
Issuer), and the provisions hereof shall be immediately reformed and the
amounts thereafter decreased, so as to comply with the then applicable usury
law, but so as to permit the recovery of the fullest amount otherwise due under
this Note. Any credit or refund shall not cure or waive any default by Issuer
under this Note. For the purposes of this paragraph 6, the term “applicable law”
means the laws of the State of Texas, as such laws now exist or may be
changed or amended or come into effect in the future.

 

7. Holder
Representations.

 

(a)                                  This
Note is being acquired for Holder’s own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part hereof in
violation of the Securities Act of 1933, as amended (the “1933 Act”), and
Holder has no present intention of selling, granting any participation in, or
otherwise distributing this Note in violation of the 1933 Act.

(b)                                 Holder
acknowledges that it can bear the economic risk of complete loss of its
investment in this Note and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in this Note. Holder acknowledges that there are substantial risks
incident to the ownership of this Note, and such investment is speculative and
involves a high degree of risk of loss by Holder of Holder’s entire investment
in the Issuer.

 

 

(c)                                  Holder
has had an opportunity to receive all information related to Issuer requested
and to ask questions of and receive answers from Issuer regarding Issuer and
its business. Holder has reviewed the reports and other documents filed by
Issuer with the Securities and Exchange Commission.

 

(d)                                 Holder
acknowledges and understands that this Note is a “restricted security” under
the 1933 Act.

 

(e)                                  Holder
is an “accredited investor” as defined by Rule 501 or Regulation D
promulgated under the 1933 Act.

 

8. No
Waiver. No extension of time for payment of any amount owing
hereunder shall affect the liability of Issuer or any person or entity, now or
at any time hereafter, liable for payment of the indebtedness evidenced hereby.
No delay by Holder in exercising any power or right hereunder shall operate as
a waiver of any power or right hereunder.

 

9. Attorneys’
Fees. If any action or proceeding is brought by Holder to
enforce payment of this Note, then the prevailing party shall be entitled to
recover its reasonable costs and expenses (including without limitation
attorneys’ fees, experts fees, etc.) associated therewith.

 

10. Waiver
of Presentment, etc. Each Issuer, for itself and its
respective successors and assigns, hereby expressly waive presentment, demand,
protest, notice of protest, dishonor, notice of dishonor and any other notice
of any type or nature. No waiver or modification of the terms of this Note
shall be valid unless in writing and signed by the holder hereof.

 

11. Severability.
If any provision of this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note shall remain in full force and effect. Any provision of this Note
held invalid or unenforceable only in part or degree shall remain in full
force and effect to the extent not held invalid or unenforceable.

 

12. Time
of Essence. Time is of the essence with regard to all dates
set forth in this Note.

 

13. Assignment
and Transfer. No Issuer may assign or otherwise transfer
its rights or obligations under this Note without the prior written consent of
Holder. Any purported assignment or transfer in contravention of this paragraph
13 shall be null and void. Subject to the foregoing, this Note shall be binding
upon the successors and assigns of Issuer, and shall inure to the benefit of
and be enforceable by the successors and assigns of Holder. Holder agrees that
it shall not transfer this Note (a) in violation of the 1933 Act or any
state securities laws and (b) unless pursuant to an effective registration
statement or an exemption from such registration statement requirements.

 

 

14. Governing
Law. This Note shall be construed in accordance with and
governed by the laws of the State of Texas, without regard to conflict of laws
principles.

 

[signature pages follow]

 

 

IN
WITNESS WHEREOF, the undersigned have executed this Note as of the date first
written above.

 

	
   

  	
  CRDENTIA
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BAKER
  ANDERSON CHRISTIE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /S/ JAMES D.
  DURHAM 

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NURSES
  NETWORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NEW AGE
  STAFFING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
									

 

 

	
   

  	
  PSR
  NURSES, LTD.

  
	
   

  	
   

  
	
   

  	
  By: PSR Nurses
  Holdings Corp.

  
	
   

  	
   

  
	
   

  	
  Its: General
  Partner

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PSR
  NURSE RECRUITING, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PSR
  NURSES HOLDINGS CORP.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D. Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CRDE
  CORP. 

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARIZONA
  HOME HEALTH 

  CARE/PRIVATE DUTY, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								

 

 

	
   

  	
  CARE
  PROS STAFFING, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HIP
  HOLDING, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham 

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEALTH
  INDUSTRY

  PROFESSIONALS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: Managing
  Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRAVMED
  USA, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PRIME
  STAFF, LP

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  CRDE Corp.

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: General
  Partner

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
										

 

 

	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MINT
  MEDICAL STAFFING 

  ODESSA, LP

  
	
   

  	
   

  
	
   

  	
  By: CRDE Corp.

  
	
   

  	
   

  
	
   

  	
  Its: General
  Partner

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GHS
  ACQUISITION CORPORATION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STAFF
  SEARCH ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James D.
  Durham 

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:Exhibit 10.1

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Amendment to Employment Agreement (this “Amendment”) is made and entered into this 17th
day of March, 2006, but effective January 1, 2006, by and between Thomas Group, Inc. (“TGI”), a Delaware
corporation, and Jimmy C. Houlditch (“Houlditch”
or “Employee”), an individual residing in Texas.

 

Recitals

 

TGI and Employee have previously entered into
an Employment Agreement dated August 12, 1996 and executed by TGI on June 5, 1996 and by Employee on June 10, 1996 (the “Employment Agreement”), pursuant to which
Employee was employed by TGI, which employment continues to this date, as
evidenced by various Amendments to the Employment Agreement the most recent
being the Amendment to Employment Agreement dated March 29, 2005, but effective
January 1, 2005.

 

TGI and Employee wish to amend certain terms
and provisions of the Employment Agreement as hereinafter provided.

 

NOW, THEREFORE, for and in consideration of
premises and other mutual covenants set forth herein, further good and valuable
consideration, the receipt and sufficiency hereby acknowledged, TGI and
Employee do hereby agree as follows:

 

1.             Effective as of January 1, 2006, Paragraph 1 “Employment”
of the Employment Agreement is hereby amended to read as follows:

 

2.             Employment and
Duties. TGI hereby employs Employee as President, North America.
Effective January 1, 2006, the “Duties” of Employment under Houlditch’s
Agreement is hereby amended to read as follows:

 

1

 

During the
calendar year 2006, Employee will serve as a fill-time employee of TGI, with
responsibilities for development of Government, Military and Aerospace
Contracts, reporting to the President/CEO of TGI. During the calendar year
2007, Employee will revert to a half-time employee in conjunction with the
change in compensation in 2007 under section 4 of this Agreement. In
addition, Houlditch will assist TGI in finding his replacement as President,
North America no later than December 31, 2006, including (i) monthly
reports to the President/CEO who will report to the Board of Directors and
(ii) effective January 1, 2007, or on such later date as his
replacement has reported for work, the relinquishment of his title as
President, North America to be replaced with a suitable title reflecting his
half-time status.

 

3.             Term of Employment.
Effective January 1, 2006, Paragraph 2 “Term” of the Employment Agreement is
hereby amended to read as follows:  The
term of this Agreement shall be two years commencing January 1, 2006, and
ending December 31, 2007, unless earlier terminated as provided below.

 

3.1           Termination;
Disability: Death; Change in Control.

 

Mr. Houlditch’s employment under this
Agreement may be terminated as described in this Section. In the event that Mr.
Houlditch’s employment is terminated, Mr. Houlditch shall be entitled to
receive the benefits described below that correspond with the manner of such
termination.

 

3.2           Termination Without
Cause. TGI may terminate Mr. Houlditch’s employment Without
Cause by written notice to Employee to that effect. Unless otherwise specified
in the notice, such termination shall be effective immediately.

 

3.3           Termination With
Cause. TGI may terminate the employment of

 

2

 

Mr. Houlditch With Cause by written notice to
Employee to that effect. Unless otherwise specified in the notice, such
termination shall be effective immediately. “Cause” means the termination by TGI of Employee’s
employment based upon a good faith determination by the Board of Directors of
TGI that Employee has committed an illegal act or an act of gross negligence or
willful misconduct or an act of disloyalty, that has or is reasonably expected
to have a material adverse effect on the business or affairs of TGI.

 

3.4           Termination for Good
Reason. Following the occurrence of an event constituting Good
Reason, upon provision of written notice to TGI within thirty (30) days of the
occurrence of the event Houlditch may terminate for Good Reason. “Good Reason”
shall exist under this Agreement if:

 

TGI or any successor

 

(i)            commits a material breach of this
Agreement,

 

(ii)           diminishes Mr. Houlditch’s Base
Salary (as defined herein) below $425,000 per year in calendar year 2006 or
$212,500.00 per year in calendar year 2007, or

 

(iii)          materially diminishes Mr. Houlditch’s
duties and responsibilities below those of President, North America during the
term of this agreement or at any time within one hundred and eighty (180) days
following a Change of Control.

 

If the occurrence or the effect of the
occurrence of the event may be cured, TGI shall have the opportunity to cure
any such occurrence or effect for a period of thirty (30) days following
receipt of Mr. Houlditch’s termination notice. The right of Mr. Houlditch to 

 

3

 

terminate his employment for Good Reason under this Section shall not
limit TGI’s ability to terminate Mr. Houlditch for Cause under this Section, if
Cause is determined to exist prior to the time Mr. Houlditch delivers to TGI
his written notice of termination for Good Reason.

 

3.5           Termination Without
Good Reason. Mr. Houlditch may voluntarily terminate his
employment without Good Reason upon written notice to TGI to that effect.

 

3.6           Disability.
Mr. Houlditch or TGI may terminate Mr. Houlditch’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; Mr. Houlditch and TGI may each select a
physician licensed to practice medicine in the State of Texas and the
determination as to any question as to Houlditch’s disability shall be made by
such physicians; provided, however,
that if the 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. Houlditch 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. Unless
otherwise specified in the notice, such termination shall be effective
immediately.

 

3.7           Death.
This Employment Agreement shall automatically terminate as 

 

4

 

of the date of Mr. Houlditch’s death.

 

3.8           Change in Control.
Following a Change in Control, as defined below, Mr. Houlditch 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 TGI or its successor or if the ninety days extends beyond December
31, 2007, in which case his employment will extend only until that date.

 

3.9           In the event Mr. Houlditch decides to resign or otherwise
voluntarily terminate his employment following the occurrence of a Change in
Control, Mr. Houlditch may do so by giving written notice to TGI or its
successor to that effect on or before one hundred and eighty (180) days after
the occurrence of the Change in Control. If Mr. Houlditch does not give such
notice to TGI or its successor, this Agreement will remain in effect until
otherwise terminated; provided, however,
that the failure of Mr. Houlditch to terminate this Agreement following the
occurrence of a Change in Control shall not be deemed a waiver of Mr. Houlditch’s
right to terminate his employment upon a further Change in Control in accordance
with the terms of this subsection.

 

A “Change in Control”
for purposes of this Agreement shall be defined as the occurrence of any of the
following events:

 

5

 

(1)           persons who served as members of the
Board of Directors of TGI immediately prior to a tender offer, merger, exchange
offer, election contest, or any combination of the foregoing, shall cease to
constitute a majority of the Board of Directors of TGI,

 

(2)           the effective date of (i) any merger,
consolidation, or reorganization in which TGI is not the surviving entity, (ii)
a complete liquidation or sale of TGI, or (iii) a sale or other disposition of
all or substantially all of the assets of TGI or to any person other than a
subsidiary of TGI. For purposes of this Agreement, a sale of all or
substantially all of the assets of TGI or shall be deemed to occur if any
person (as that term is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (“Person”)
acquires (or, during the 12-month period ending on the date of the most recent
acquisition by such Person, has acquired) gross assets of TGI having an
aggregate fair market value equal to at least fifty-one percent (51%) of the
fair market value of all of the gross assets of TGI or the Employer immediately
prior to such acquisition or acquisitions;

 

(3)           any individual, company or affiliated
group acquires ownership (including beneficial ownership) of in excess of 50%
of the outstanding capital stock of TGI.

 

(4)           any other transaction or series of
related transactions occurring which have substantially the same effect as the
transactions specified in any of the preceding causes of this Section.

 

6

 

Mr. Houlditch acknowledges and agrees that
the transaction between TGI, on the one hand, and General John T. Chain, Jr.
and Edward P. Evans, on the other, which consummated during 2002, does not
constitute a Change of Control under this Agreement, and further agrees that
any increase in share ownership by either General John T. Chain, Jr.
or Edward P. Evans or the two of them collectively will not constitute a
Change of Control under this Agreement.

 

3.10         Termination on Death or
Disability. This Agreement shall be automatically terminated on
the death of Employee or on the disability of Employee if he is no longer able,
with reasonable accommodation, to perform the essential functions of his
position with TGI. In the event of Employee’s disability, this Agreement shall
not terminate unless and until Employee has been unable to perform the
essential functions of his position hereunder for a period of three (3)
consecutive months as a result of Employee’s disability.

 

3.11         Termination Benefits.
In the event Mr. Houlditch’s employment terminates Without Cause, or for Good
Reason following a Change in Control, as defined above, Mr. Houlditch shall be
entitled to the compensation described and provided in Section 4 of this Agreement
for six months following termination of employment; provided,
however, that in the event such a termination occurs after June 30,
2007, Houlditch shall only be entitled to such compensation for the period of
time remaining until December 31, 2007. Any such compensation shall end and no
further payments shall be owed after December 31, 2007. Mr. Houlditch shall
execute a general release and separation agreement in a form acceptable to TGI or
its successor 

 

7

 

prior to the payment of any severance compensation
under this Section. In the event of a Termination for Good Reason or Without
Cause, Mr. Houlditch agrees and understands that all of his obligations and
agreements under Sections 6 and 7 below shall continue in full force and effect
in the manner and on the terms set forth herein, including, without limitation,
Mr. Houlditch’s obligations concerning confidential information,
non-competition and non-solicitation, and Mr. Houlditch’s agreement to execute
a general release and separation agreement.

 

4.             Compensation.
Effective January 1, 2006, the “Compensation” provisions of the
Employment Agreement are hereby amended to read as follows:

 

4.1           Base Salary.
During calendar year 2006, Employee shall be paid a salary at the annual rate
of $425,000 payable in equal monthly installments at the end of each month. During
calendar year 2007, Employee shall be paid a reduced salary at the annual rate
of $212,500 payable in equal monthly installments at the end of each month.

 

4.2           Commissions.
During calendar year 2006, Employee shall be entitled to receive commissions on
revenue earned on contracts with federal government agencies equal to five (5) percent
of revenues earned and for contracts entered into prior to January 1, 2005 and three
(3) percent of revenues earned on contracts entered into on or after January 1,
2005. During calendar year 2007, Employee shall be entitled to receive
commissions on revenues earned on contracts with federal government agencies equal
to two and one half (2-1/2) percent of revenues earned for contracts entered
into prior to January 1, 2005 and three (3) percent for contracts 

 

8

 

entered into between January 1, 2005 and
December 31, 2007. However, Houlditch is entitled to no commissions for
revenues earned after December 31, 2007.

 

5.             Incentive Compensation
Plan. Effective January 1, 2003, Paragraph 5 “Participation in TGI’s
Incentive Compensation Plan” is hereby amended to read as follows: “Participation
in TGI’s Incentive Compensation Plan. Houlditch acknowledges that during
the term of this Agreement, he is not entitled to participate in TGI’s
incentive compensation plan.”

 

6.             Business Interests and
Obligations.

 

6.1           Definitions.
The following definitions are used herein:

 

6.1.1      Trade Secrets
means any technical information and business information that generally
facilitates the sale of products, increases revenues, or provides an advantage
over the competition (hereinafter referred to collectively as Proprietary Information and is not
generally known, and is identified as such.

 

6.1.2      Know-How means all
factual knowledge and information related to TGI’s business which is not
capable of precise, separate description but which, in accumulated form, after
being acquired as a result of trial and error, gives to the one acquiring it
the ability to produce and market something which one would otherwise not have
known how to produce and market with the same accuracy or precision necessary
for commercial success, provided, however, that such knowledge and information
is not in the public domain or readily available to any third party other than
a limited number of persons who have agreed to keep that information secret.

 

9

 

6.1.3      Confidential Information
is information acquired by Employee in the course and scope of his activities
for TGI that is designated by Company as confidential or that TGI indicates
through its policies, procedures, or other instructions should not be disclosed
to anyone outside TGI except through controlled means. Confidential Information
need not be a Trade Secret, Proprietary Information or Know-How to be protected
under this Agreement. The Parties specifically agree that, regardless of its
affect on trade secret status, the controlled and limited disclosure of
Confidential Information to third parties for legitimate business purposes and
the availability of the Confidential Information to others outside TGI through
independent investigation and effort will not remove it from protected status
as Confidential Information under this Agreement if Employee was first
entrusted with the Confidential Information while employed with TGI.

 

6.1.4      Company Information
means Trade Secrets, Proprietary Information, Know-How and Confidential
Information (recognizing that certain information and material will fall into
multiple categories), including, without limitation, the information gathering
techniques and processes of TGI and its affiliates, information concerning TGI’s
customers and suppliers,  internally
created client lists and associated sales data and pricing arrangements, and TGI’s
strategic plans, financial and personnel records, but not including information
that is intentionally disclosed to the general public by TGI.

 

6.1.5      Intellectual Property
means all compositions, articles of 

 

10

 

manufacture, processes, apparatus
(collectively the Inventions); data, writings and other works of authorship
(including, without limitation, software, protocols, program codes, audiovisual
effects created by program code, and documentation related thereto, drawings);
mask works; and certain tangible items (including, without limitation,
materials, samples, components, tools, and operating devices, e.g., board
assemblies, and engineering models); and Intellectual
Property Rights means patents, trademarks, copyrights, mask rights,
Trade Secrets, and Know-How covering the Intellectual Property.

 

6.2           Ancillary Company
Covenants. Within thirty (30) days from the effective date of
this Agreement, and as deemed necessary by TGI thereafter, TGI will do one or
more of the following: (a) provide Houlditch with TGI Information, or access to
such information; (b) provide Houlditch with specialized training; or, (c)
provide Houlditch with goodwill support such as expense reimbursements in
accordance with TGI policy limits, TGI Information, and/or contact with
clients, customers or business associates, in order to help Houlditch develop
goodwill for TGI. The foregoing is not contingent upon continued employment of Houlditch
for any length of time, but is contingent upon Houlditch not working for or
assisting a Competing Business and Houlditch’s full compliance with the
restrictions in this Agreement.

 

6.3           Ancillary Employee Covenants.
Houlditch agrees not to, directly or indirectly, participate in the
unauthorized use, disclosure or conversion of any TGI Information. Specifically,
Houlditch agrees not to use TGI Information for his sole benefit, or for the
benefit of a competitor or in any other way that harms TGI or 

 

11

 

diminishes the value of TGI information to TGI.
Houlditch also agrees to use the specialized training, goodwill and contacts
developed with TGI’s customers and contractors for the exclusive benefit of TGI,
and agrees not to use these items in a way that would harm the business
interests of TGI during Employment and for a period of at least eighteen (18)
months thereafter.

 

7.             Protective Covenants.
Houlditch agrees that the following covenants are reasonable and necessary
agreements for the protection of the business interests covered in the fully
enforceable, ancillary agreements set forth above:

 

7.1           Definitions.
“Competing Business” means any
person or entity that provides services or products that would compete with or
displace any services or products sold or being developed for sale by TGI
during Houlditch’s employment, or engages in any other activities so similar in
nature or purpose to those of TGI that they would displace business
opportunities or customers of TGI. “Covered
Clients and Customers” means those persons or entities (a) that TGI
has provided services to and (b) that Houlditch either had contact with,
supervised Houlditch who had contact with, or received Proprietary  Information about; within the last
twenty-four (24) month period that Houlditch was employed with TGI.

 

7.2           Restriction on
Interfering with Employees and Independent Contractor Relationships.
Houlditch agrees that for a period of 18 months following the termination of his
employment with TGI, he will not, either directly or indirectly, participate in
recruiting or hiring away any employees or independent Contractors of TGI, or
encourage or induce any employees, agents, independent contractors or investors
of TGI to terminate their relationship with TGI.

 

12

 

7.3           Restriction on
Interfering with Client and Customer Relationships. Houlditch
agrees that during his employment with TGI, he will not induce or attempt to
induce any Covered Client or Customer to diminish, curtail, divert or cancel
its business relationship with TGI. Houlditch agrees that for a period of eighteen
(18) months following the termination of his employment with TGI, Houlditch
will not, directly or indirectly service, call on, solicit, divert or take
away, any Covered Clients or Customers of TGI with whom he/she had contacts or
communications on behalf of TGI at any time during his employment with TGI,
which the parties stipulate is reasonable because of the scope of TGI’s
operations and Houlditch’s activities.

 

7.4           Restriction on Unfair
Competition. Houlditch agrees that during his  employment with TGI, he will not participate
in or assist a Competing Business. Houlditch agrees that for a period of 18 months
following the termination of employment with TGI, he will not work for,
supervise, assist, or participate in, a Competing Business in any capacity (as
owner, employee, consultant, contractor, officer, director, lender, investor,
agent, or otherwise), unless given the prior written consent of TGI’s Chief
Executive Officer to do so. This paragraph is geographically limited to any
county or territory in which Employee sold or solicited sales on behalf of TGI
during the period of twenty-four months prior to his termination of employment,
which the parties stipulate is a reasonable geographic area because of the
scope of TGI’s operations and Houlditch’s activities. This paragraph creates a
narrowly tailored advance approval requirement in order to avoid unfair
competition and irreparable harm to TGI and is not intended or to be construed
as a general restraint from engaging in a lawful profession or a general
covenant against 

 

13

 

competition.

 

7.5           Survival of Covenants.
Each restriction set forth in Section 7 hereof shall survive the
termination of Houlditch’s employment with TGI. The existence of any claim or
cause of action of Houlditch against TGI whether predicated on this Agreement
or otherwise shall not constitute a defense to that enforcement by TGI of said
covenant. In the event an enforcement remedy is sought under Paragraph 7.6,
the time periods provided for in Paragraphs 7.3 and 7.4 shall be extended
by one day for each day Houlditch fails to comply with the restriction at
issue.

 

7.6           Remedies. In
the event of breach or threatened breach by Houlditch of any provision of Section
7 hereof, TGI shall be entitled to (i) injunctive relief by temporary
restraining order, temporary injunction, and/or permanent injunction, (ii)
recovery of all attorneys’ fees and costs incurred by TGI in obtaining such
relief, and (iii) any other legal and equitable relief to which it may be
entitled, including without limitation any and all monetary damages which TGI
may incur as a result of said breach or threatened breach. An agreed amount for
the bond to be posted if an injunction is sought by TGI is One Thousand Dollars
($1,000.00). TGI may pursue any remedy available, including declaratory relief,
concurrently or consecutively in any order as to any breach, violation, or
threatened breach or violation, and the pursuit of one such remedy at any  time will not be deemed an election of
remedies or waiver of the right to pursue any other remedy.

 

8.             Effective Date.
This Amended Agreement  shall be
effective as of January 1, 2006. Except as amended hereby, the Employment
Agreement remains in full force and effect -

 

14

 

9.             Notices. All
notices, requests, consents, and other communications under this Agreement
shall be in writing and shall be deemed to have been delivered on the date
personally delivered or on the date deposited in a receptacle maintained by the
United States Postal Service for such purpose, postage prepaid, by certified
mail, return receipt requested, or by express mail addressed to the address
indicated under the signature block for that party provided below. Either party
may designate a different address by providing written notice of a new address
to the other party.

 

10.           Execution. This
Amended Agreement  may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute one and the same instrument.

 

11.           Choice of Law.
This Amendment and the rights and obligations of the parties hereunder shall be
governed by, and construed in accordance with, the laws of the State of Texas,
and each party hereto submits to the non-exclusive jurisdiction of the state
and federal courts within the State of Texas.

 

12.           SEVERABILITY. The Parties
acknowledge that each covenant and/or provision of this Agreement shall be
enforceable independently of every other covenant and/or provision. Furthermore,
Houlditch and TGI acknowledge that, in the event any covenant and/or provision
of this Agreement is determined to be unenforceable for any reason, the
remaining covenants and/or provisions will remain effective, binding and
enforceable.

 

15

 

WHEREFORE, the Parties hereto have knowingly
and voluntarily executed this Amendment this 17th day of March 2006.

 

	
   

  	
  Thomas Group, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James T.
  Taylor

  	
   

  
	
   

  	
   

  	
   

  	
  James T.
  Taylor

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Jimmy C.
  Houlditch

  	
   

  
	
   

  	
   

  	
   

  	
  Jimmy C.
  Houlditch

  
						

 

16

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