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Exhibit 10.26    
    

 
 

SEVERANCE AGREEMENT    
    

        This Severance Agreement, dated as of February 19, 2004 ("Agreement"), by and between Thomas
Group, Inc., a Delaware corporation (the "Company") and Toby Marion ("Employee"). 

WITNESSETH:  

        WHEREAS, Employee and the Company are parties to that certain Employment Agreement, dated January 14, 2002, as supplemented by a letter dated
October 9, 2001 and a letter dated November 21, 2002 (as supplemented, the "Employment Agreement"); 

        WHEREAS,
Employee and the Company wish to terminate Employee's relationship with the Company and the Employment Agreement and any and all written or oral agreements between them; 

        WHEREAS,
the Employment Agreement, as the same may have been amended from time to time, provides for the payment of severance pay to Employee; and 

        WHEREAS,
in lieu of payment of such severance payments, the parties wish to enter into this Agreement and a consulting agreement (the "Consulting
Agreement"). 

        NOW,
THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and the covenants and agreements set forth herein, the receipt and sufficiency of which are
acknowledged by the execution and delivery hereof, the parties agree as follows: 

        1.     Severance. The Company agrees to pay Employee the sum of $131,250, payable in three (3) installments of $43,750.00
per month during the Term (as defined herein), payable on the last day of each such month. In the event the Company fails to make a payment within fifteen (15) days of the date a payment is
due, the remaining unpaid amounts due during the Term shall become due and payable immediately. The Company shall make such payments by wire transfer to an account specified by Employee to the Company
in writing. 

        2.     Continuation of Covenants. 

        (a)   Employee
acknowledges and agrees that the ancillary covenants of the Company and Employee set forth in Sections 4, 5, 6, 7 and 9 of the Employment Agreement remain in
full force and effect during the Term; provided, however, that the two (2) year periods set forth
in Sections 9(a), 9(b) and 9(c) shall be deemed to end on January 31, 2006. 

        (b)   Employee
has carefully read and considered the provisions of the Employment Agreement, which remain in full force and effect and, having done so, agrees that the
restrictions set forth in the Employment Agreement contain reasonable limitations as to time, geographical area, scope of activity to be restrained, and do not impose a greater restraint than is
necessary to protect the goodwill or other legitimate business interests of the Company. Employee further understands and agrees that, if at some later date, a court of competent jurisdiction
determines that the scope, duration or geographic area of any covenant set forth in this Employment Agreement is overbroad or unenforceable for any reason, these covenants shall be reformed by the
court and enforced to the maximum extent permissible under applicable law. 

        (c)   If
Employee violates any restrictive covenant contained in the Consulting Agreement (as defined below) or the Employment Agreement, then the term of such restrictive
covenant will be extended by adding to it the number of days that Employee's violation continues. 

        3.     Term. The term of this Agreement shall commence on February 1, 2004, and shall continue thereafter until
5:00 p.m., central standard time, on April 30, 2004 (the "Term"). The provisions of  Section 3 shall survive the end of the Term. 

        4.     Expenses. The Company shall reimburse Employee for all reasonable and ordinary direct
out-of-pocket business expenses Employee reasonably incurs in the performance of his remaining duties 

 

to
the Company. Employee must receive the prior written approval of the President of the Company for any expenses in excess of $500. 

        5.     Termination and Release. Employee acknowledges and agrees that Employee and the Company have, in part, entered into this
Agreement and are entering into the Consulting Agreement to satisfy all of the Company's obligations to Employee pursuant to the Employment Agreement, and Employee agrees that (i) except for
the provisions of the Employment Agreement set forth in paragraph 2 hereof, which are to continue, the Company will have performed all of its
obligations to Employee under the Employment Agreement and any oral or written modifications or purported modifications thereof by either party, (ii) Employee is not entitled to any further
severance benefits or payments (other than payments pursuant to the Consulting Agreement), and (iii) Employee releases the Company from any further obligations to Employee pursuant to the
Employment Agreement. The parties agree that the Employment Agreement is hereby terminated and shall be of no further force or effect, other than Sections 4, 5, 6, 7 and 9 of the Employment Agreement,
which continue in full force and effect pursuant to Section 2(a) hereof. 

        6.     Resignation. Employee resigns as the President of the Asia/Pacific Region and any other officer or director positions of
any subsidiary or affiliate of the Company held by Employee, effective February 1, 2003, and shall execute and deliver to the Company his written resignation and such other documentation
relating to such resignation as the Company may reasonably request. 

        7.     Assignment. All covenants and agreements hereunder shall inure to the benefit of and be enforceable by said successors or
assigns; provided, however, that Employee may not assign, without the Company's prior written consent,
this Agreement, or any right or obligation hereunder, and any and all assignments without such prior written consent shall be null and void. 

        8.     Miscellaneous. 

        (a)   Notices. Any notice to be given hereunder is to be given in writing by either party to the other and delivered or sent by
prepaid airmail post or facsimile transmission addressed to the address or the addresses set forth opposite each party's name below or such other address as may be notified by one party to the other
for such purposes and shall be deemed to be served in the case of airmail post three (3) days after posting and in the case of facsimile transmission immediately upon successful transmission. 

        (b)   Headings; Pronouns. The headings of the paragraphs of this Agreement are for convenience of reference only and are not to
be considered and construed in this Agreement. When the context so requires in this Agreement, the masculine gender includes the feminine and neuter, and the singular number includes the plural, and
vice versa. 

        (c)   Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this agreement will be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provisions had never been contained herein. 

        (d)   Choice of Law. The parties hereto acknowledge and agree 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. 

        (e)   Counterparts. This Agreement may be executed in multiple counterparts, all of which shall be deemed originals, but which
counterparts shall constitute one and the same instrument. 

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        (f)    Binding Agreement. This Agreement shall inure to the benefit of and be binding upon the parties and their respective
successors and assigns. Whenever a reference to any party is made herein, such reference shall be deemed to include a reference to the heirs, executors, legal representatives, successors and assigns
of such party. 

        (g)   Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the subject
matter hereof. No variations, modifications or changes herein or hereof shall be binding upon any party unless set forth in a written document duly executed by or on behalf of such party. 

        (h)   Amendments. This Agreement may not be modified, altered, amended, waived or terminated, unless in writing signed by the
parties hereto. 

        (i)    Irreparable Harm. Employee agrees that any breach of this Agreement by Employee will cause irreparable damage to the
Company and that in the event of such breach the Company shall have, in addition to any and all remedies of law, the right to an injunction, specific performance or other equitable relief to prevent
the violation of Employee's obligations hereunder. 

[signature page follows]

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        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and date above first written. 

	 	 	Employee:
	

 	
 	

/s/ G. Toby Marion
 Toby Marion
	

 	
 	

Address:	
 	

  
  
  

	 	 	 	 	 	Phone:	 	  

	 	 	 	 	 	Facsimile:	 	  

	

 	
 	
Company:
	

 	
 	

THOMAS GROUP, INC.
	

 	
 	

By:	

/s/ James T. Taylor

	 	 	Name:	James T. Taylor	 	 
	 	 	Title:	President	 	 
	

 	
 	

Address:	
 	

5221 North O'Connor Boulevard

Suite 500

Irving, Texas 75039-3753

Attn: James T. Taylor
	 	 	 	 	 	Phone:	 	972-869-3400
	 	 	 	 	 	Facsimile:	 	972-443-1742

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Exhibit 10.26

SEVERANCE AGREEMENTQuickLinks
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Exhibit 10.27    
    

 
 

THOMAS GROUP, INC.
  APPRECIATION RIGHTS AGREEMENT

        This
APPRECIATION RIGHTS AGREEMENT (this "Agreement") is made this 13th day of December 2003, to be effective April 8, 2003,
between THOMAS GROUP, INC., a Delaware corporation (the "Company") and JAMES T. TAYLOR, an executive officer of the Company and an individual
resident of the state of Texas ("SAR Holder"). 

W
I T N E S S E T H: 

        WHEREAS,
the Company desires to afford to SAR Holder an opportunity to obtain the benefit of appreciation in the value of the equity of the Company, as herein provided; and 

        WHEREAS,
the Compensation Committee (the "Compensation Committee") of the Board of Directors of the Company (the
"Board") has recommended to the Board and the Board has determined that, it is in the best interests of the Company to award SAR Holder 99,351 SARs (as
defined herein). 

        NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth and in consideration of services rendered to the Company by SAR Holder, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 

        1.    Grant of Appreciation Rights.    The Company hereby grants 99,351 appreciation rights
("SARs"), exercisable immediately, to SAR Holder entitling SAR Holder to obtain, on the terms and conditions set forth herein, a cash payment equal to
the product of (a) the excess of the Fair Market Value (as defined herein) of a share of common stock, par value $0.01 per share (the "Common
Stock"), of the
Company, as determined pursuant to Section 4, over $0.42, and (b) the number of SARs being exercised (such product at the time of exercise
being referred to herein as the "SAR Value"). 

        2.    Exercise.    The SARs in full or in part may be exercised at any time until the earlier to occur of
(a) three (3) months following the date upon which SAR Holder ceases to be an employee of the Company if the SAR Holder ceases to be an employee of the Company  other than by reason of death,
Retirement or Disability (as each such term is defined in the Company's 1997 Stock Option Plan (the
"Plan")) or (b) if the SAR Holder ceases to be an employee due to death, Retirement or Disability, the dates set forth in Article 9 of the
Plan. 

        3.    Procedure for Exercise.    In order to exercise the SARs, SAR Holder shall deliver to the Company at its
principal office at 5221 North O'Connor Blvd., Suite 1500, Irving, Texas 75039, or at such other office as shall be designated by the Company pursuant to the terms hereof, a written notice of SAR
Holder's election to exercise a SAR, which election notice shall state the number of SARs to be exercised. Following receipt thereof, the Company shall, in accordance with the terms hereof, deliver to
SAR Holder the SAR Value relating to such exercise. 

        4.    Determination of Fair Market.    The "Fair Market Value" of a
share of Common Stock on any date of reference shall mean the Closing Price (as defined below) on the last business day of each calendar quarter, unless the Audit Committee, in its sole discretion,
shall determine otherwise in a fair and uniform manner. The Closing Price shall be adjusted at the end of each calendar quarter. Any exercise of a SAR shall be made with reference to the Closing Price
at the end of the quarter immediately preceding the quarter in which such exercise occurs. For purposes of this Agreement, the "Closing Price" of the
Common Stock on any business day shall be: 

        (a)   if
the Common Stock is listed or admitted for trading on any United States national securities exchange or included in the National Market System of the National
Association of Securities Dealer Automated Quotation System ("NASDAQ"), the last reported sale price of Common Stock on such exchange or system, as
reported in any newspaper of general circulation; 

 

        (b)   if
the Common Stock is not quoted on NASDAQ but is quoted on any similar system of automated dissemination of quotations of securities prices in common use, the mean
between the closing high bid and low asked quotations of securities prices in common use, the mean between the closing high bid and low asked quotations for such day of the Common Stock on such
system; 

        (c)   if
neither clause (a) nor (b) is applicable, the mean between the
high bid and low asked quotations for Common Stock as reported by the National Quotation Bureau, Incorporated if at least two securities dealers have inserted both bid and asked quotations for Common
Stock on at least five of the ten preceding days; or 

        (d)   if
none of clause (a), (b) or  (c) apply, if actual transactions in the Common Stock are reported on a
consolidated transaction reporting system, the last sale price of the Common
Stock for such day and on such system. 

        5.    Closing and Payment of SAR Value.    The SAR Value payable at the closing of the exercise of the SAR shall be
payable within five (5) days of the final determination of the SAR Value pursuant to the terms hereof. On the closing of the exercise of a SAR, the Company shall pay the SAR Value in cash, in
immediately available funds (subject to Section 7 and Section 9) and SAR Holder shall execute a receipt evidencing the receipt of such
payment and confirming the number of SARs not exercised and still held by SAR Holder. 

        6.    Condition to Exercise.    SAR Holder acknowledges it is a condition to the exercise of all or any portion of the
SARs granted hereunder that, simultaneously with the exercise of any SARs, SAR Holder shall exercise a like percentage of the 75,649 options to purchase Common Stock that were also granted pursuant to
the Company's 1997 Stock Option Plan to SAR Holder in connection with this SAR grant. 

        7.    Adjustment of Number of SARs.    The number of SARs shall be subject to adjustment from time to time as follows: 

        (a)   If
the Company shall at any time after the date hereof but prior to the expiration of the SARs subdivide its outstanding Common Stock, by split-up,
spin-off, or otherwise, or combine its outstanding Common Stock, the number of SARs granted hereunder and exercisable as of the date of such subdivision, split-up,
spin-off or combination shall forthwith be proportionately increased in the case of a subdivision, or proportionately decreased in the case of a combination. 

        (b)   If
at any time after the date hereof the Company declares a dividend or other distribution on its Common Stock payable in Common Stock or other securities or rights
convertible into or exchangeable for Common Stock ("Common Stock Equivalents"), without payment of any consideration by holders of Common Stock for the
additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or conversion thereof), then the number of SARs granted
hereunder shall be increased as of the record date (or the date of such dividend distribution if no record date is set) for determining which holders of Common Stock shall be entitled to receive such
dividends, in proportion to the increase in the number of outstanding shares
(and shares of Common Stock issuable upon conversion of all such securities convertible into Common Stock) of Common Stock as a result of such dividend. 

        8.    Continuing Obligation.    If, upon an exercise of a SAR, the Company is unable to pay the full SAR Value payable
at such time due to contractual restrictions, the SAR Value shall be paid from time to time, to the extent the Company is permitted to do so, and the obligations of the Company under this Agreement
will be a continuing obligation until the Company's payment in full of the SAR Value payable to SAR Holder with respect to such exercise, which payment must be made within twelve (12) months of
receipt by the Company of the notice specified in Section 3. Any SAR Value due to 

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SAR
Holder upon such exercise but not paid by the Company, shall accrue interest at the rate of 10% per annum. 

        9.    Withholding Taxes.    Whenever the Company is required to pay SAR Holder a SAR Value upon exercise of a SAR,
such payments shall be net of an amount sufficient to satisfy any withholding tax liability. 

        10.    Governing Law.    This Agreement is intended to be performed in the State of Texas and shall be construed and
enforced in accordance with and governed by the laws of such state. SAR Holder hereby irrevocably submits to the jurisdiction of the courts of the State of Texas for purposes hereof. 

        11.    Severability.    Wherever possible, each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 

        12.    Parties.    This Agreement shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto; provided, however, that the Company may not assign or delegate any of its
rights or obligations hereunder without the consent of SAR Holder and SAR Holder may not assign or delegate any of its rights or obligations hereunder. 

        13.    Notices.    All notices, requests, consents, approvals or demands to or upon the respective parties hereto
shall be given or made as follows: 

	If to SAR Holder:	 	James T. Taylor
	

 	
 	

	

 	
 	

	

 	
 	

	

If to the Company:	
 	

Thomas Group, Inc.

5221 North O'Connor Blvd.

Suite 1500

Irving, TX 75069

Attn: James T. Taylor

        Unless
otherwise specified herein, all such notices, requests, consents, approvals and demands given or made in connection with the terms and provisions of this Agreement shall be deemed
to have been given or made when personally delivered, or, if mailed, upon the earlier of actual receipt by the addressee or three (3) days after sent by registered or certified mail, postage
prepaid, or, in the case of overnight courier service (which may be utilized hereunder), when delivered by the overnight courier company to the respective address specified above, or, in the case of
telecopy or facsimile transmission (which may be utilized hereunder), within the first business hour (9:00 a.m. to 5:00 p.m., local time for the recipient, on any business day) after
receipt by the respective addressee. Any party may change the address or transmission number to which notices shall be directed hereunder by giving ten (10) days written notice of such change
to the other parties. 

        14.    Counterparts.    This Agreement may be executed in a number of identical counterparts, each of which, for all
purposes, is to be deemed an original, and all of which collectively constitute one agreement, but in making proof of this Agreement, it shall not be necessary to produce or account for more than one
such counterpart. A facsimile or photocopy of an executed counterpart of this Agreement shall be sufficient to bind the party or parties whose signature(s) appear thereon. 

[Signature Page Follows]

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        IN
WITNESS WHEREOF, the parties have hereunto set their hands as of the day and year first above written. 

	 	 	THOMAS GROUP, INC.
	

 	
 	

By:	

/s/ John R. Hamann

	 	 	Name:	John R. Hamann

	 	 	Title:	President, CEO

	

 	
 	

/s/ James T. Taylor
 JAMES T. TAYLOR

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Exhibit 10.27

THOMAS GROUP, INC. APPRECIATION RIGHTS AGREEMENT

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