8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): March 09, 2010

Thomas Group, Inc.

(Exact name of registrant as specified in its charter)

	Delaware		0-22010		72-0843540
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

5221 N. O’Connor Blvd., Suite 500
	Irving, Texas		75039
(Address of principal executive offices)		(Zip Code)

Registrant’s Telephone Number, including area code: (972) 869-3400

	Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 9, 2010, Thomas Group, Inc. (the “Company”) entered into a second amendment to the employment agreement with Mr. Michael E. McGrath, the Company’s Executive Chairman, President and Chief Executive Officer (“Mr. McGrath”).  Pursuant to this amendment, Mr. McGrath has agreed to continue in his roles of Executive Chairman, President and Chief Executive Officer for 2010 at his existing annual salary of $330,000.  The amendment provides that Mr. McGrath devote substantially all of his business time and energy to his duties with Thomas Group. The amendment also increases from $35,000 to $50,000 the maximum amount that Mr. McGrath may be reimbursed during a 12-month period for the actual cost of airfare for travel from his residences in Maine or Boston to Dallas for Company business. It also provides that Mr. McGrath will no longer be eligible for up to a $200,000 performance-based cash bonus as provided in his previous employment agreement.

On March 9, 2010, the Company granted to Mr. McGrath a Restricted Share Award entitling him to receive an aggregate of up to 600,000 restricted shares of the Company’s common stock in four equal installments under the 2008 Omnibus Stock and Incentive Plan for Thomas Group, Inc. (the “Plan”).  Pursuant to this award, he will receive 150,000 shares at the end of each calendar quarter of 2010 provided he continues to be employed by the Company in the roles of Executive, Chairman, President and Chief Executive Officer on the last day of such quarter.  Upon delivery, the shares will be free of restrictions, except as may otherwise be required by law.

On March 9, 2010, Mr. McGrath and the Company agreed to cancel the Performance Share Award previously granted on March 1, 2008 under which Mr. McGrath was eligible to receive up to 350,000 performance shares under the Plan, subject to the achievement of certain performance targets for 2008, 2009, and 2010.

Item 9.01  Financial Statements and Exhibits

(d) Exhibits

Exhibit Number	Description
10.1	Second Amendment to Employment Agreement, executed March 9, 2010, by and between Thomas Group, Inc. and Michael E. McGrath.
10.2	Restricted Share Award under the 2008 Omnibus Stock and Incentive Plan for Thomas Group, Inc., dated March 9, 2010.
10.3	Cancellation of Performance Share Award under the 2008 Omnibus Stock and Incentive Plan for Thomas Group, Inc., dated March 9, 2010.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Thomas Group, Inc.
	(Registrant)
Date:  March 11, 2010	By:	/s/ Frank Tilley
		Frank Tilley,
		Chief Financial Officer

3

EX-10.1

Exhibit 10.1

March 2, 2010

Mr. Michael E. McGrath

15116 Vizcaya Drive

Dallas, TX 75248

Re:  Second Amendment to Terms and Conditions of Employment

Dear Michael:

This letter will evidence the terms and conditions relating to an amendment of the letter agreement entered into by Thomas Group, Inc. (the “Company”) and you dated February 19, 2008, as previously amended by the Amendment to Terms and Conditions of Employment  entered into by the Company and you and dated March 3, 2009 (the Employment Letter” ).

The Employment Letter is hereby amended so that Section 1(c) of the Employment Letter shall read in its entirety as follows:

1.Time Commitment.  The Employment Letter is hereby amended so that Section 1 (c) of the Employment Letter shall read in its entirety as follows:

(c)   Time Commitment.  You shall devote substantially all of your business time and energy to your duties as Executive Chairman, Chief Executive Officer and President.

2.Compensation.   The Employment Letter is hereby amended so that Section 1 (d) of the Employment Letter shall read in its entirety as follows:

(d) Compensation.  Your base salary for the 2010 annual period shall be $330,000.   This shall be payable in accordance with the Company’s standard policies and subject to standard withholdings and deductions.

3.Restricted Share Award

The Compensation and Corporate Governance Committee of the Board of Directors of the Company has approved a grant to you of a total of up to 600,000 shares of restricted stock to be distributed to you over the course of 2010.  In accordance with and subject to the terms of the Restricted Share Award agreement governing such award, you will receive 150,000 shares on the last day of each quarter of 2010, provided that you remain employed by the Company in the roles of Executive Chairman, President and Chief Executive Officer on the last day of each quarter of 2010.

Initials EE/MM

5221 N. O’Connor Blvd., Suite 500 Irving, TX 75039

4.Annual Bonus.

Notwithstanding Section 2(c) of the Employment Letter, you will no longer be eligible for an annual bonus.

5.Business Expenses.

The Company will continue to reimburse you for the travel, entertainment and other business expenses incurred by you in the performance of your duties in accordance with the Company’s policies applicable to senior executives as in effect from time to time.  The Company agrees to increase your reimbursement for the actual cost of first-class commercial airline fares for travel from your residences in Maine or Boston to Dallas, not to exceed $50,000 in a 12-month period.

6.Ratification.

Except as amended or modified by this letter, the Employment Letter is hereby ratified by each of the parties hereto and shall remain in full force and effect in accordance with its terms.

7.Counterparts.

This letter may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

If you agree that the foregoing terms and conditions accurately evidence our agreement, please initial each page and sign and return this letter.

My best regards,

THOMAS GROUP, INC.

By:	/s/ Edward P. Evans
	Edward P. Evans.
	Director and Chairman of the Compensation and Corporate
	Governance Committee

ACCEPTED AND AGREED:

/s/ Michael E. McGrath	March 9, 2010
Michael E. McGrath	Date

Initials EE/MM

EX-10.2

Exhibit 10.2

RESTRICTED SHARE AWARD

UNDER THE

2008 OMNIBUS STOCK AND INCENTIVE PLAN

for

THOMAS GROUP, INC.

Effective as of the date executed below (“Date of Grant”), a Restricted Share Award (“Award”) is granted by Thomas Group, Inc. (the “Company”) to Michael E. McGrath (the “Holder”), provided that this Award is in all respects subject to the terms and provisions of the 2008 Omnibus Stock and Incentive Plan for Thomas Group, Inc. (the “Plan”), all of which are incorporated herein by reference, except to the extent otherwise expressly provided in this Award.  Capitalized terms used herein without definition shall have the respective meanings specified in the Plan.

WITNESSETH

WHEREAS, the Holder assumed the additional roles of President and Chief Executive Officer on December 21, 2009 in addition to his role as Executive Chairman, and

WHEREAS, the Holder has agreed to devote substantially all of his time to these roles at the Company for 2010, an increase from the one-third of his time required by the role of Executive Chairman, and

WHEREAS, the Holder has agreed to do so for his existing cash salary of $330,000 per year for calendar year 2010, and

WHEREAS, the purpose of this Award is to advance the interests of the Company and increase shareholder value by providing additional incentive to retain and motivate the Holder, and

WHEREAS, the Company desires to grant to Holder an award which entitles the Holder to receive up to 600,000 Restricted Shares subject to certain conditions described herein;

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows:

1.Restricted Share Award. The Company hereby issues to the Holder the right to receive an aggregate of up to 600,000 Restricted Shares (the “Restricted Shares”) under the Plan upon the terms and subject to the conditions set forth in this Award.

2.Delivery of Shares.  The Restricted Shares shall be delivered to the Holder in separate installments at the each of the following dates:

a.	March 31, 2010	150,000 shares
b.	June 30, 2010	150,000 shares
c.	September 30, 2010	150,000 shares
d.	December 31, 2010	150,000 shares

3.Condition for Delivery of Restricted Shares.  The Holder shall be entitled to receive an installment of Restricted Shares only if as of the delivery date specified above with respect to such installment he continues to be employed by the Company in the roles of Executive Chairman, President and Chief Executive Officer.

4.Restriction on Shares to be Removed upon Delivery.  Upon delivery, all restrictions will be removed and the delivered Shares will be unrestricted, except as may otherwise be required by law.

5.Authority to Deliver Shares.  The Vice President of Human Resources and the Chief Financial Officer jointly shall be authorized to execute such documents as may be required to effect delivery of the Shares on each of the dates set forth above if the condition for delivery of Restricted Shares specified in Section 3 above has been met.

6.Withholding.  On each date on which the Shares are delivered, the Holder shall be required to pay to the Company, in cash, the amount which the Company reasonably determines to be necessary in order for the Company to comply with applicable Federal or state income tax withholding requirements and the collection of employment taxes.

7.Status of the Holder with Respect to Shares.  The Holder shall have no rights, powers or privileges with respect to the Restricted Shares until such Shares are delivered to the Holder.

8.Representations and Warranties.  As a condition to the delivery of the Shares, the Board of Directors of Thomas Group, Inc. (the “Board”) may obtain such agreements or undertakings, if any, as the Board may deem necessary or advisable to assure compliance with any law or regulation including, but not limited to, the following:

a.a representation, warranty or agreement by the Holder to the Company that he is acquiring the Shares for investment and not with a view to, or for sale in connection with, the distribution of any such Shares; and

b.a representation, warranty or agreement to be bound by any legends that are, in the opinion of the Board, necessary to comply with the provisions of any securities

law deemed by the Board to be applicable to the issuance of the Shares and are endorsed upon the Share certificates.

9.Termination of the Award.  Without limitation, this Award shall automatically terminate and expire on the earlier of (i) the first date that an aggregate of 600,000 Restricted Shares shall have been delivered under this Award or (ii) the date of the Holder’s Separation, and upon the date of such termination of the Award all Restricted Shares which have not been delivered on or prior to such date will be permanently forfeited.

10.Interpretation of the Award Provisions.  The Committee shall have the authority to the full extent provided under the terms of the Plan to interpret all terms of the Plan and this Award, and to otherwise supervise the implementation of such terms.

11.Governing Law.  TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, THIS AWARD SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

12.Binding Effect.  This Award shall inure to the benefit of and be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.

13.Amendments.  This Award may only be amended by a written document signed by the Company and the Holder.

14.Severability.  If any provision of this Award is declared or found to be illegal, unenforceable or void, in whole or in part, the remainder of this Award will not be affected by such declaration or finding and each such provision not so affected will be enforced to the fullest extent permitted by law.

15.Counterparts.  This Award may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, the Company has caused these presents to be executed on its behalf and the Holder has unto set his hand, all on the day shown below.

THOMAS GROUP, INC.
By:	/s/ Edward P. Evans
Edward P. Evans, Chairman of the
Compensation and Corporate
Governance Committee
Date:		March 9, 2010

ACKNOWLEDGMENT

The Holder agrees to be bound by all the terms of this Award and of the Plan.

By:	/s/ Michael E. McGrath
Michael E. McGrath

EX-10.3

Exhibit 10.3

CANCELLATION OF

PERFORMANCE SHARE AWARD

UNDER THE

2008 OMNIBUS STOCK AND INCENTIVE PLAN

for

THOMAS GROUP, INC.

WHEREAS, Thomas Group, Inc. (the “Company”) previously granted to Michael E. McGrath (the “Holder”) a Performance Share Award, effective as of March 1, 2008 (the “Award”), entitling the Holder to receive up to 350,000 Performance Shares under the 2008 Omnibus Stock and Incentive Plan for Thomas Group, Inc. (the “Plan”), subject to the acheivement of certain performance targets,

WHEREAS, the performance targets for 2008 and for 2009 required to be achieved for the Award to vest with respect to such years were not met, and the target for “catch up” vesting in 2010 is also unlikely to be met, and under such circumstances the portions of the Award related to performance in 2008 and 2009 will not be earned,

WHEREAS, the Company is currently projected to be unprofitable for 2010 and under such circumstances the portion of the Award related to performance inr 2010 cannot be earned,

WHEREAS, the Plan permits the cancellation of awards granted pursuant to the Plan and upon cancellation the shares subject to such cancelled awards become available for future grants under the Plan,

WHEREAS, on behalf of the Company, the Compensation and Corporate Governance Committee of the Board of Directors of the Company has determined that it is in the best interest of the Company to cancel the Award, and the Holder is willing to consent to such cancellation,

NOW, THEREFORE, effective as of the last date set forth below, the Holderhereby consents to the cancellation of the Award in its entirety, and the Company confirms such cancellation.

HOLDER:
By:	/s/ Michael E. McGrath
Michael E. McGrath
Date:		March 9, 2010

Confirmed:
THOMAS GROUP, INC.
By:	/s/ Edward P. Evans
Edward P. Evans
Chairman, Compensation and Corporate Governance Committee
Date:		March 9, 2010