Document:

Exhibit
10.1

AMENDED AND RESTATED EMPLOYMENT
AGREEMENT

This
Amended and Restated Employment Agreement (this “Agreement”)
is entered into on February 14, 2007 to be effective January 1, 2007, by and
between Thomas Group. Inc. (“Thomas Group”),
a Delaware corporation, and James T. Taylor (“Taylor”).  Thomas Group and Taylor shall be referred to
jointly herein as the “Parties.”

WHEREAS, the Parties are parties to that certain Second Amended
Employment Agreement, executed on February 14, 2005 and effective August 1,
2004 (the “Former Agreement”) setting forth the
terms and conditions of Taylor’s employment with Thomas Group and pursuant to
which Taylor is currently serving as the President and Chief Executive Officer
of 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 this Agreement to retain the
services of Taylor; and

WHEREAS, the Parties desire to amend and restate the Former Agreement
to set forth the terms and conditions pursuant to which Taylor will be employed
by Thomas Group.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree that the Former
Employment Agreement is hereby amended and restated in its entirety as follows:

1.                                       Definitions.  The defined terms used in this
Agreement shall have the meanings ascribed to them in this Section 1.

1.1                                 Board of Directors.  “Board of Directors” means 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.

1.2                                 Cause.  “Cause”
means that any of the following: (a) Taylor has engaged in any act of gross
misconduct that is injurious to Thomas Group or its business; (b) any act by
Taylor of dishonesty, misconduct, fraud, misappropriation, embezzlement, theft,
moral turpitude or the like; (c) the refusal by Taylor to perform the duties or
responsibilities properly assigned to him by Thomas Group, or the dereliction
of duty by Taylor; (d) a material breach of this Agreement by Taylor or a
violation of any material provision of this Agreement by Taylor; (e) a failure
by Taylor to provide good faith, accurate and complete informational updates to
the entire Board regarding any material development in respect of Thomas Group’s
business promptly following the occurrence of such material development; or (f)
a failure by Taylor to provide good faith, accurate and complete informational
updates to any member of the Board regarding such matters relating to Thomas
Group’s business as are requested by such Board member promptly following such
Board member’s request therefor.

1.3                                 Change in Control.  A “Change in Control” shall occur if any of the following
occurs:

(a)                                  if stockholders of Thomas Group approve a
merger, consolidation, or reorganization of Thomas Group with or into another
corporation or other legal person and, as a result of such merger,
consolidation or reorganization, the holders of Thomas Group’s outstanding
common stock immediately prior to such transaction do not have the same
proportionate ownership of the

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outstanding
common stock of the surviving entity immediately after such transaction; or

(b)                                 if stockholders of Thomas Group approve a
sale or disposition of all or substantially all of Thomas Group’s assets to any
other corporation or other legal person, as a result of such transaction, the
holders of Thomas Group’s outstanding common stock immediately prior to such
transaction do not have the same proportionate ownership of the outstanding
common stock of the surviving entity immediately after such transaction.

1.4                                 Compensation Committee.  “Compensation Committee” means the Compensation and Corporate
Governance Committee of the Board of Directors or any other committee of the
Board performing the function of a compensation committee.

1.5                                 Disability.  “Disability”
means the inability of Taylor to perform his material managerial duties and
responsibilities as contemplated under Section 3 during his employment with
Thomas Group, with or without a reasonable accommodation, for a consecutive
period of three (3) months or a non-consecutive period of six months within any
12-month period.  Thomas Group will
comply with the requirements of the Americans with Disabilities Act with
respect to attempting to reach a reasonable accommodation.

1.6                                 Good Reason.  “Good Reason”
means Taylor’s decision to terminate his employment under this Agreement if
Thomas Group or any successor commits any material breach of this Agreement, or
diminishes Taylor’s Base Salary (as defined herein) below $500,000, or
diminishes Taylor’s duties and responsibilities below those of President and
Chief Executive Officer.

1.7                                 Severance.  “Severance
Payment” means a cash amount 
equal (x) $500,000,  to be divided
into 12 equal installments and paid monthly beginning with the first full month
following the Termination Date, plus (y) an Incentive Payment in such amount,
if any, as determined by the Compensation Committee in its sole discretion, to
be paid within 15 days following completion of an audit of Thomas Group’s
financial statements by Thomas Group’s certified public accountants for the
year ending December 31, 2007, and no later than April 15, 2008; provided, that the Compensation Committee shall take into
account Thomas Group’s actual performance prior to the Termination Date as
compared to the threshold amounts set forth in Exhibit A, pro rated as
appropriate to reflect the portion of the fiscal year completed as of the
Termination Date.

2.                                       Employment.

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

2.2                                 Personal Services.  All
services to be provided by Taylor under this Agreement shall be performed by
Taylor personally.  During the term of
this Agreement, Taylor shall devote his entire business time, attention,
energies, skills, learning and best efforts to the business operations of
Thomas Group, and shall not (without the prior written consent of the Chairman
of the Board of Directors) (i) undertake or accept any duties under which there
is a conflict of interest between Taylor’s responsibilities towards Thomas
Group or Taylor’s responsibilities to any customer

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of Thomas Group, 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.

3.                                       Compensation and Benefits During the Term of
Employment.

3.1                                 Base Salary.  Taylor shall receive base
compensation (“Base Salary”) at the annual rate
of $500,000.  Thomas Group shall pay Base
Salary to Taylor in equal monthly installments.

3.2                                 Incentive Compensation. 
Taylor shall be paid a cash incentive (the “Incentive
Payment”) as described in Exhibit A hereto.

3.3                                 Reimbursement of Expenses.  During the Term of Employment, Thomas Group will
reimburse Taylor for reasonable expenses incurred by Taylor in furtherance of
or in connection with the performance of his duties hereunder, in accordance
with Thomas Group’s expense reimbursement policy in effect from time to time.

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

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

3.6                                 Certain Tax Provisions. 
Taylor acknowledges and agrees that all payments and benefits which are
required by applicable federal, state or local laws to be subject to
withholding for income taxes, shall be so subject. Taylor understands and
agrees that he is an exempt employee as that term is applied for purposes of
Federal or State wage and hour laws, and further understands that he shall not
be entitled to any compensatory time off or other compensation for overtime.

4.                                       Term of the Agreement.  The
term of this Agreement, unless terminated sooner pursuant to Section 5, shall
commence on January 1, 2007 and continue until December 31, 2007 (“Term of Employment”).

5.                                       Termination. Upon the effective date of termination of Taylor’s employment with
Thomas Group (the “Termination
Date”), Taylor will not be eligible for further compensation,
benefits or perquisites under Section 3, other than any compensation, benefits
or perquisites that have already accrued as, and the reimbursement for expenses
incurred prior to, the Termination Date, except as described in this Section 5.

5.1                            Termination Without Cause. 
Thomas Group may terminate Taylor’s employment without Cause by written
notice to Taylor to that effect.  Unless
otherwise specified in the notice, such termination shall be effective
immediately. If Thomas Group terminates Taylor’s

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employment
without Cause, Taylor shall be entitled to the Severance Payment; provided, however, that Taylor shall execute a general
release and separation agreement in a form acceptable to the Thomas Group prior
to the payment of any Severance Payment.

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

5.3                           Voluntary Termination by Taylor. 
Taylor may voluntarily terminate his employment upon no less than 15
days written notice of such termination submitted to the Board of Directors,
specifying the Termination Date.

5.4                           Termination Due to Disability. Taylor or Thomas Group may terminate Taylor’s
employment by reason of Disability by written notice to the other party to that
effect.  Unless otherwise specified in
the notice, such termination shall be effective immediately. If Taylor’s
employment is terminated due to Disability, Taylor shall be entitled to the
Severance Payment.  Any disagreement as
to the existence or date of commencement of a Disability shall be determined by
two physicians licensed to practice medicine in the State of Texas, one
selected by Taylor and one by Thomas Group; provided, however,
that if such physicians are unable to agree, they shall mutually select a third
physician licensed to practice medicine in the State of Texas and the
Disability determination shall be made by a majority of such physicians and
shall be final and binding on the Parties. 
Taylor agrees to submit to any and all reasonable medical examinations
or procedures and to execute and deliver any and all consents to release of
medical information and records or otherwise as shall be reasonably required by
any of the physicians selected in accordance with this Section 5.4.  Taylor, his estate, beneficiary or legal
representative shall be entitled to any available disability benefits under
benefit plans maintained by Thomas Group at the time of such Disability.

5.5                                 Termination Due to Death.  This
Agreement shall automatically terminate as of the date of Taylor’s death.  This Agreement shall not limit any rights of
Taylor’s estate or any other person to payments under any life insurance policy
maintained by Thomas Group for the benefit of Taylor or his beneficiaries or
any health, disability or other benefit plan provided pursuant to Section 3.5,
in each case in accordance with the terms of such plan.  Any payments made pursuant to this Section
5.5 shall be paid to the beneficiary or beneficiaries designated in writing by
Taylor and delivered to an officer/manager of Thomas Group, or if none has been
designated, to his estate.

5.6                           Termination following a Change in Control.  If,
within 12 months following the effective date of a Change of Control, Taylor’s
employment is terminated by Thomas Group without Cause or by Taylor for Good
Reason, Thomas Group shall, within 30 days following the date of termination
and receipt by Thomas Group of a signed release of any claims against Thomas
Group in a form acceptable to Thomas Group, pay Taylor a lump-sum cash amount
equal to $1 million plus any Incentive Payment earned as of the Termination
Date, if any, as determined by the Compensation Committee in its sole
discretion.

6.                                       Non-Compete; Work Product; Confidentiality.

6.1                                 Non-Compete.  Without the prior written
consent of Thomas Group, during employment with Thomas Group and for a period
of 18 months following termination of employment, Taylor shall not (a) engage
in or perform services for any business which provides the same or
substantially similar products and services as those provided by Thomas Group
during Taylor’s employment, including but not limited to management consulting
services to improve the cycle time of business processes of any business
organization or (b) solicit, induce or attempt to solicit or induce

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any employee or consultant of Thomas Group who was an employee or
consultant at any time during the 12 months preceding Taylor’s termination of
employment, to terminate his/her employment with Thomas Group and/or accept
employment elsewhere.  This restriction
is limited to the geographic area(s) in which Taylor performed services for
Thomas Group, including, but not limited to, the Dallas-Forth Worth
metroplex.  Taylor agrees that the scope
of the restrictions in this Section is reasonable and necessary to protect
Thomas Group’s business goodwill, Confidential Information and other legitimate
business interests.

6.2                                 Assignment of Work Product.

(a)                                  The Parties 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”).  Taylor agrees that he will promptly and fully
disclose to Thomas Group any and all Work Product generated, conceived, reduced
to practice or learned by him, either solely or jointly with others, during his
employment with Thomas Group, which in any way relates to the business of
Thomas Group. Taylor further agrees that neither he, nor any party claiming
through him will, other than in the performance of this Agreement, make use of
or disclose to others any proprietary information relating to the Work Product.

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

6.3                                 Confidential Information.

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

(b)                                 Taylor understands and acknowledges that such
Confidential Information gives Thomas Group a competitive advantage over others
who do not have this

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information,
and that Thomas Group would be harmed if the Confidential Information were
disclosed.  Taylor agrees that he will
hold all Confidential Information in trust and will not use the information for
any purpose other than the benefit of Thomas Group, or disclose to any person
or entity any Confidential Information except as necessary during Taylor’s
employment with Thomas Group to perform services on behalf of Thomas Group.
Taylor will also take reasonable steps to safeguard such Confidential
Information and prevent its disclosure to unauthorized persons.

7.                                       General Provisions.

7.1                                 Notices.  All notices, requests,
demands, or other communications with respect to this Agreement shall be in
writing and shall be personally delivered, sent via facsimile, 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): (a) if to Taylor: James T. Taylor, 5230
Westgrove Drive, Dallas, Texas 75248 with a copy to Stuart Blaugrund, Gardere
Wynn, Sewell, LLP, 3000 Thanksgiving Tower, Dallas, Texas 75201 Beth Drive,
Plano, Texas 75093 Facsimile: (214) 999-3787 and (b) if to Thomas Group: Thomas
Group, Inc., 5221 North O’Connor Boulevard, Suite 500, Irving, TX 75039,
Attention: Chairman of the Board of Directors, Facsimile: (972) 443-1742.  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 facsimile, (ii) on the third
day following the date mailed, or (iii) 24 hours after shipment by such courier
service.

7.2                                 Entire Agreement.  This
Agreement, together with the exhibits hereto, supersedes any and all other
agreements, either oral or written between the Parties with respect to the
employment of Taylor by Thomas Group, including the Former Employment
Agreement; provided, however, that any incentive
compensation earned pursuant to Section 4.5 of the Former Employment in respect
of the year ending December 31, 2006 shall be paid to Taylor in accordance
therewith and on the terms and subject to the conditions thereof.

7.3                                 Governing Law; Venue; Arbitration.  The
Parties acknowledge that the laws of the State of Texas will govern the interpretation,
validity and effect of this Agreement without regard to its conflicts of laws
provisions.  The Parties agree that the
state and federal courts situated in Dallas County, Texas, shall have personal
jurisdiction over Thomas Group and Taylor to hear disputes concerning this
Agreement, and that venue for any such disputes shall be exclusively in the
state or federal courts in Dallas County, Texas.  In the event of any controversy or claim
arising out of or related to the provisions contained in Section 6, 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 that it shall be settled by final and binding arbitration to be
held in Dallas, Texas in accordance with the National Rules for the Resolution
of Employment Disputes then in effect of the American Arbitration
Association.  A neutral arbitrator will
be selected from a panel provided by JAMS/Endispute (“JAMS”)
and that JAMS shall schedule any arbitration and appoint a neutral arbitrator,
if the Parties cannot agree on the selection of the arbitrator.  The decision of the arbitrator, which shall
be in writing, shall be final, conclusive and binding.  Judgment may be entered on the arbitrator’s
decision in any court having jurisdiction. 
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 JAMS, the arbitration panel’s fee, and costs associated with the facilities
for the arbitration, and the arbitration panel shall not apportion these costs.

7.4                                 Partial Invalidity; Reformation.  In
the event any court of competent jurisdiction or arbitrator with authority
pursuant to Section 7.5 holds any provision of this Agreement to be invalid,

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the
remaining provisions shall not be affected or invalidated and shall remain in
full force and effect.  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.

7.5                                 Binding Effect.  This
Agreement is for the sole and exclusive benefit of, and shall be binding upon
Taylor, and his legal representatives and Thomas Group and any subsidiaries,
affiliated companies, successors or assigns of Thomas Group.  This Agreement is not assignable by Taylor.  No person shall be deemed a third-party
beneficiary of this Agreement except as described in Sections 3.5 and 5.5
hereof.

7.6                                 Amendments.  This Agreement shall not be
amended or modified except in a writing signed by each of the Parties, 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.

7.7                                 Survival of Provisions.  The
covenants and obligations (i) of Thomas Group to make payments pursuant to
Section 5 and (ii) of Taylor contained in Section 6 of this Agreement shall, in
each case, survive and continue in effect following the termination of this
Agreement.

7.8                                 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.

*                                         *                                         *                                         *                                         *

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IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written to be effective January 1, 2007.

	
   

  	
   

  	
  TAYLOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James T.
  Taylor

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T. Taylor, individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THOMAS GROUP:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THOMAS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John T.
  Chain

  	
   

  
	
   

  	
   

  	
   

  	
  Name: General John T. Chain, Jr.

  
	
   

  	
   

  	
   

  	
  Title: Chairman, Board of Directors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Approved by:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David B.
  Mathis

  	
   

  
	
   

  	
   

  	
   

  	
  Name: David B. Mathis

  
	
   

  	
   

  	
   

  	
  Title: Chairman, Compensation and

  
	
   

  	
   

  	
  Corporate Governance Committee

  
						

 

 8

Exhibit A

Incentive Payment Calculation

The
Incentive Payment has three components: Revenue Amount, Corporate Governance
Amount and Operating Profit Amount.  The
Incentive Payment will be equal to the Revenue Amount plus the Corporate
Governance Amount plus the Operating Profit Amount (A + B + C) as described
below.  The target Incentive Payment
payable will be 100% of Base Salary (“Target”) and
the maximum Incentive Payment will be 300% of Base Salary.

The
maximum Revenue Amount, Corporate Governance Amount and Operating Profit Amount
payable are as follows:

	
  Incentive Payment Component

  	
   

  	
  Maximum Amount Payable

  Under Each Component

  
	
  Revenue Amount
  (A)

  	
   

  	
  331¤3%
  of Target

  
	
  Corporate
  Governance Amount (B)

  	
   

  	
  331¤3%
  of Target

  
	
  Operating Profit
  Amount (C)

  	
   

  	
  331¤3%
  of Target

  

 

Revenue Amount

	
  Thresholds

  	
   

  	
  Revenue

  	
   

  	
  Revenue Amount Payable (A)

  
	
  Minimum

  	
   

  	
  $                 59,000,000

  	
   

  	
  20% of maximum
  Revenue Amount

  
	
  Target

  	
   

  	
  $                 73,000,000

  	
   

  	
  100% of maximum
  Revenue Amount

  
	
  Maximum

  	
   

  	
  $                 85,000,000

  	
   

  	
  300% of maximum
  Revenue Amount

  

“Revenue”
for purposes of calculating the Incentive Payment means “consulting revenue
before reimbursements” as reflected on Thomas Group’s audited consolidated
statement of operations for the fiscal year ended December 31, 2007.

Corporate Governance
Amount

The Corporate Governance
Amount payable (B) will be determined by the Compensation Committee in its sole
discretion.

Operating Profit Amount

	
  Thresholds

  	
   

  	
  Operating Profit

  	
   

  	
  Operating Profit Amount Payable (C)

  
	
  Minimum

  	
   

  	
  $                 16,395,000

  	
   

  	
  20% of maximum
  Operating Profit Amount

  
	
  Target

  	
   

  	
  $                 19,527,000

  	
   

  	
  100% of maximum
  Operating Profit Amount

  
	
  Maximum

  	
   

  	
  $                 21,553,000

  	
   

  	
  300% of maximum
  Operating Profit Amount

  

“Operating
Profit” means the total of (x) “total revenue,” minus (y) “total
cost of sales,” minus (z) “selling, general and administrative” expenses, in
each case, as defined by U.S. generally accepted accounting principles and as
reflected in Thomas Group’s audited consolidated statement of operations for
the fiscal year ended December 31, 2007; provided, however,
that the following shall be excluded for purposes of calculating the Incentive
Payment: restructuring charges, foreign exchanges gains/losses, closing costs
of non-US subsidiaries, cumulative translation adjustments, expenses related to
termination benefits agreements agreed to by Board of Directors prior to Taylor’s
employment as CEO (January 13, 2004) and any other nonrecurring or unusual
income or expense to be mutually agreed upon between Taylor and the
Compensation Committee.

 9
 

The
Revenue Amount and Operating Profit Amount shall be calculated by comparing
Thomas Group’s audited financial results to the threshold amounts set forth in
the tables above.  If Thomas Group
achieves Revenue or Operating Profit that is less than the applicable minimum
threshold, then no amount shall be payable with respect to the Revenue Amount
or the Operating Profit Amount, as appropriate. 
If Thomas Group achieves Revenue or Operating Profit that is between two
thresholds, then the respective payment amount will be an appropriate
percentage of the Revenue Amount or Operating Profit Amount, as applicable,
between the two thresholds as determined by the Compensation Committee in its
sole discretion.

The
computation of the Incentive Payment will be based upon the audited financial
results of Thomas Group for the fiscal year ending December 31, 2007.  Thomas Group shall pay the Incentive Payment
to Taylor within 15 days following the certification of Thomas Group’s audited
financial statements by Thomas Group’s certified public accountants, and no
later than April 15, 2008.

 10Exhibit 10(o)

Excerpts from Marrinan September
18, 1990 Employment Offer Letter

(operative portions remaining in effect)

Pension:

Per Corporate Plan as previously submitted to you

Additionally, Snap-on Tools Corporation will pay
you an additional monthly lifetime benefit in the following amounts provided
you retire on, or after, age 62:

	
  at Age 62:

  	
   

  	
  $6,015

  
	
   

  	
   

  	
   

  
	
  at Age 65:

  	
   

  	
  $7,181

  

 

This amount is fixed and will be payable to you only
and will be in addition to benefits payable under the Company’s Pension
Plans.  This additional monthly payment
is based on providing you 7 1/2 years of additional credited service above your
actual service and projected earnings at age 62 and 65, using a base starting
salary of $140,000, increase 6% annually, with a projected annual Officer
Incentive compensation payout of 50%.

This additional monthly life time benefit shall be
binding upon and be enforceable by you only against the Company and any
successor organization.

Employee Severance Agreement:

Your employment may be terminated for any reason
whatsoever or no reason at all, subject to twelve-months notice, or
severance equivalent to your base salary at that time in lieu of notice for
each month or portion thereof that the notice is less than twelve months.  In the event that Snap-on Tools
Corporation implements a policy for its Officers in the future which would
afford you equivalent job security and economic protection, this Employee
Severance Agreement will expire.

This Employee Severance Agreement, with all its rights
and obligations, shall be binding upon, and inure to the benefit of, and be
enforceable by you and your heirs, beneficiaries and personal representatives
against Snap-on Tools Corporation and any successor organization.

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