Sample Business Contracts


Employment Agreement - Thomas Group Inc. and J. Thomas Williams

Employment Forms

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                              EMPLOYMENT AGREEMENT


       This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of April
2, 1998 with an effective date of March 10th, by and between THOMAS GROUP, INC.,
a Delaware corporation ("Thomas Group") and J. Thomas Williams, an individual
residing in Washington, D.C. ("Employee").

                                    RECITALS

WHEREAS, Employee is the President and Chief Operating Officer of Thomas Group
reporting to the Chief Executive Officer and an integral part of its management
who participates in the decision-making process relative to short and long-term
planning and policy for Thomas Group; and

WHEREAS, Thomas Group has determined that it would be in the best interests of
Thomas Group and its stockholders to assure continuity in the management of
Thomas Group's operations by entering into an employment agreement to retain the
services of Employee; and

WHEREAS, Thomas Group wishes to assure itself of the continued services of
Employee for the period hereinafter provided, and Employee is willing to be
employed by Thomas Group for said period, upon the terms and conditions set
forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the obligations undertaken
by the parties pursuant hereto and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Thomas Group and
Employee agree as follows:

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

          1.1 Affiliate. "Affiliate" shall mean any corporation over which
Employee or Thomas Group, as the case may be, can exercise effective management
and control.

          1.2 Board of Directors. "Board" or the "Board of Directors" shall mean
the Board of Directors of Thomas Group or any committee of the Board empowered
to act or make decisions or determinations with respect to this Agreement.

          1.3 Cause. "Cause" shall mean that, as determined in good faith by the
Board of Directors, Employee has engaged in any act of gross misconduct which is
materially injurious to Thomas Group or its business.

          1.4 Change in Control. "Change in Control" shall mean:

<PAGE>   2

              (a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person" which, for purposes of this
definition, excludes Employee or any of his Affiliates) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of shares
of common stock or other securities of Thomas Group resulting in the beneficial
ownership by such individual, entity or group of 40% or more of either (1) the
then-outstanding shares of common stock of Thomas Group (the "Outstanding Thomas
Group Common Stock") or (2) the combined voting power of the then-outstanding
voting securities of Thomas Group entitled to vote generally in the election of
directors (the "Outstanding Thomas Group Voting Securities"); or

              (b) if individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute more than fifty
percent of the members of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election or nomination
for election by Thomas Group's stockholders was approved by a vote of at least
two-thirds of the directors then constituting the Incumbent Board, shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest
subject to Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or

              (c) approval by the stockholders of Thomas Group of a
reorganization, merger or consolidation unless following such reorganization,
merger or consolidation (1) more than 40% of, respectively, the then-outstanding
shares of common stock of the corporation resulting from such reorganization,
merger or consolidation (the "Outstanding Survivor Common Stock"), and the
combined voting power of the then-outstanding voting securities of such
corporation entitled to vote generally in the election of directors (the
"Outstanding Survivor Voting Securities"), is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Thomas Group Common
Stock and Outstanding Thomas Group Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same proportions as
their ownership immediately prior to such reorganization, merger or
consolidation, of the Outstanding Thomas Group Common Stock and Outstanding
Thomas Group Voting Securities, as the case may be (for purposes of determining
whether such percentage test is satisfied, there shall be excluded from the
number of shares of Outstanding Survivor Common Stock and Outstanding Survivor
Voting Securities owned by Thomas Group's stockholders, but not from the total
number of shares of Outstanding Survivor Common Stock and Outstanding Survivor
Voting Securities, any shares or voting securities received by any such
stockholder in respect of any consideration other than shares or voting
securities of Thomas Group), (2) no Person (excluding Thomas Group, any employee
benefit plan (or related trust) of Thomas Group, any qualified employee benefit
plan of such Surviving Corporation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 40% or more of the Outstanding Thomas Group Common Stock or
Outstanding Thomas Group Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 40% or more of, respectively, the shares of
Outstanding Survivor Common


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<PAGE>   3

Stock or the Outstanding Survivor Voting Securities, and (3) more than 50% of
the members of the board of directors of the Surviving Corporation were members
of the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation; or

              (d) (1) approval by the stockholders of Thomas Group of a complete
liquidation or dissolution of Thomas Group or (2) the first to occur of (i) the
sale or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of Thomas Group, or (ii)
the approval by the stockholders of Thomas Group of any such sale or
disposition, other than, in each case, any such sale or disposition to a
corporation with respect to which immediately thereafter (x) more than 40% of,
respectively, the shares of Outstanding Survivor Common Stock and the
Outstanding Survivor Voting Securities is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Thomas Group Common
Stock and Outstanding Thomas Group Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other disposition of the
Outstanding Thomas Group Common Stock and Outstanding Thomas Group Voting
Securities, as the case may be (for purposes of determining whether such
percentage test is satisfied, there shall be excluded from the number of shares
of Outstanding Survivor Common Stock and Outstanding Survivor Voting Securities
owned by Thomas Group's stockholders, but not from the total number of shares of
Outstanding Survivor Common Stock and Outstanding Survivor Voting Securities of
the surviving corporation, any shares or voting securities received by any such
stockholder in respect of any consideration other than shares or voting
securities of Thomas Group), (y) no Person (excluding Thomas Group and any
employee benefit plan (or related trust) of Thomas Group, any qualified employee
benefit plan of such transferee corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or indirectly, 40%
or more of the Outstanding Thomas Group Common Stock or Outstanding Thomas Group
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 40% or more of, respectively, the shares of Outstanding Survivor
Common Stock and the Outstanding Survivor Voting Securities and (z) more than
50% of the members of the board of directors of the surviving corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the board providing for such sale or other disposition of
assets of Thomas Group.

          1.5 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.

          1.6 Common Stock. "Common Stock" shall mean the common stock of Thomas
Group, par value $.01 per share.

          1.7 Disability. "Disability" shall mean the inability of Employee to
perform his material managerial duties and responsibilities as contemplated
under Section 3 during the Term of Employment, as determined in accordance with
Section 6.1(e).


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<PAGE>   4

          1.8 Good Reason. "Good Reason" shall mean Employee's decision to
terminate his employment under this Agreement if Thomas Group or any successor
thereto commits any material breach of this Agreement.

          1.9 Term of Employment. "Term of Employment" shall mean the period of
time commencing on the effective date of this Agreement and continuing until the
fifth anniversary date of this Agreement; provided, however, that Employee and
Thomas Group can agree, in writing, to extend the Term of Employment for an
additional five years, unless terminated earlier pursuant to the terms hereof.

       2. Termination of Prior Agreements. Thomas Group and Employee hereby
acknowledge and agree that this Agreement supersedes any prior agreements.

       3. Employment. Thomas Group employs Employee and Employee accepts
employment by Thomas Group as President and Chief Operating officer of Thomas
Group for the Term of Employment on the terms and conditions and for the
compensation hereinafter set forth. Subject to the authority of the Board of
Directors, Employee 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
Operating Officer, with all of the rights, powers and decision-making discretion
appertaining thereto. Employee shall devote his full time and effort to the
discharge of his duties as Thomas Group's President and Chief Operating Officer.

       4. Compensation and Benefits During the Term of Employment.

          4.1 Base Compensation. Employee shall receive base compensation ("Base
Compensation") in the amount determined by the Compensation and Stock Option
Committee of the Board of Directors (the "Compensation Committee"). The amount
of Employee's Base Compensation shall initially be $370,000 annually and shall
be reviewed and adjusted as appropriate at least annually by the Compensation
Committee. Base Compensation shall be paid in equal monthly installments by
Thomas Group to Employee.

          4.2 Incentive Compensation Arrangement.

              (a) In further consideration of Employee's performance of services
under Section 3 hereof, Thomas Group agrees to compensate Employee under the
incentive compensation arrangement ("Incentive Compensation") set forth in
Section 4.2(b). Except as specifically provided herein, the computation of
annual incentive compensation will be based upon the audited financial results
of Thomas Group.

              (b) (1) General. Employee's Incentive Compensation is initially
based upon 25% (the "Entitled Percent") of the dollar value derived from a
formula sharing ratio of Thomas Group's revenues. The sharing ratio is based
upon Thomas Group's percentage increase in cumulative income before tax and
incentive compensation ("IBTIC") for the current fiscal year compared to Thomas
Group's cumulative IBTIC for the prior fiscal year, and upon certain targeted
levels of Thomas Group's IBTIC. For purposes of determining IBTIC, Incentive
Compensation


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<PAGE>   5
includes CEO and other officer Incentive Compensation. The Compensation
Committee may review the percent stated above from time to time and make
appropriate changes. The performance goals for this assignment are shown in
Exhibit 2.

                  (2) Incentive Compensation Calculation. The formula for
determining incentive compensation is as follows: Incentive Compensation equals
the product of Thomas Group revenues for the applicable fiscal year multiplied
by the income growth sharing ratio expressed as a percentage ("IGSR") for the
fiscal year, the result multiplied by the Entitled Percent. The ISGR is
determined with reference to the following table:

                           INCOME GROWTH SHARING RATIO



     Income Before Tax and
    Incentive Compensation            Less
      as a % of Revenues            than 5%*          5%-9.99%*        10%-14.99%*        15%-24.99%*    Over 25%*
      ------------------            --------          ---------        -----------        -----------    ---------
                                                                                         
           0 - 8.99%                    0                 0                 0                 .2%           .3%

        9.00% - 14.99%                 .3%               .4%               .5%                .6%           .7%

        15.00% - 19.25%                .5%               .6%               .8%               1.0%          1.2%

          Over 19.25%                  .8%              1.0%              1.3%               1.6%          1.8%


*IBTIC Growth Rate

ISGR is determined by first determining the IBTIC as a percent of revenue for
the current fiscal year and then entering the table along that line until the
appropriate IBTIC Growth Rate is reached; the ISGR is shown at that intersection
in the table.

For purposes of this table, IBTIC Growth Rate for each applicable fiscal year is
derived from the following formula:

                    IBTIC[Current Fiscal Year] minus 1 x 100
                    --------------------------
                      IBTIC[Prior Fiscal Year]

         In the event that either the IBTIC Growth Rate or the IBTIC, as
computed above, is zero or negative for a particular fiscal year, it shall be
treated as zero for purposes of the foregoing computation for such year.

Note: In the case of good performance an additional bonus of $50K for that year
will be granted and applied to reduce the loan from Thomas Group Inc., to J.
Thomas Williams.


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<PAGE>   6

                  (3) If Incentive Compensation, as calculated in accordance
with Section 4.2(b) hereof, exceeds 70 percent of Base Compensation in a fiscal
year, the excess of Incentive Compensation, as calculated, over 70 percent of
Base Compensation will not be paid to Employee but will be used to calculate the
award of a stock option to Employee. The number of shares to be awarded under
such option is determined using the following formula:

                        N = Excess Incentive Compensation
                            -----------------------------
                                          P

Where:
N = Number of shares subject to such option
P = Market price of the Company's stock on the date of award
Excess Incentive Compensation = Excess of Incentive Compensation as calculated
minus 55 percent of base compensation in a fiscal year.

         Options granted hereunder shall be granted pursuant to the
Corporation's Stock Option Plans and shall be subject to all limitations of such
plans, including the aggregate number of options which may be granted. Options
granted pursuant to this Section 4.2(b)(3) shall contain an option price equal
to the market price (average of the day's high and low prices) on the date of
award, shall be fully vested, and shall expire 10 years following date of grant.
This stock option award shall not preclude the Board of Directors from granting
additional options to Employee as it deems appropriate. Options granted pursuant
to this Agreement shall be administered by the Compensation Committee. A initial
grant increasing current options to 80,000 will be made as of the effective date
of this Agreement (current 45,000 plus new 35,000) and will vest as EPS targets
(as in Exhibit 2) are achieved at 7,000 per year for the five year period.

                  (4) Partial Fiscal Years. The computations set forth in
Section 4.2(b)(2) above shall be adjusted to take into account eligibility for
partial fiscal years by computing them based upon the entire fiscal year and
multiplying these results by the ratio of the number of days of such partial
fiscal year to the number of days in the complete fiscal year. This is
calculated at the completion of the fiscal year.

                  (5) (i) Payments. Thomas Group shall pay the Incentive
Compensation to Employee on or before the fifteen (15) days after the completion
of the audit of Thomas Group's financial statements by Thomas Group's certified
public accountants.

                      (ii) Eligibility Under Other Plans. Employee's
eligibility for bonuses or incentive compensation payments under plans in effect
prior to effectiveness of this Agreement shall terminate upon the effectiveness
of this Agreement.

          4.3 Travel Costs. Thomas Group shall reimburse Employee for all travel
costs incurred by Employee in connection with Thomas Group's business, together
with all other business expenses of Employee in performing his duties hereunder.


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<PAGE>   7

          4.4 Automobile Expenses. Thomas Group shall provide automobile
transportation to employee for Employee's use in connection with Thomas Group's
business.

          4.5 Pension and Insurance Benefit Plan Participation; No Other Bonus
Plan Participation. Employee shall be entitled to participate in Thomas Group's
401(k) plan, subject to the terms and conditions of such plans. Thomas Group
also shall provide medical, disability and life insurance coverage to Employee
on the terms and conditions of each of the plans Thomas Group maintains with
respect thereto. Employee will be covered by $1M of term insurance paid by
Thomas Group and payable to employees estate in the case of death while in the
employment of Thomas Group Inc.


       5. Term of the Agreement. The term of this Agreement, unless terminated
sooner pursuant to Section 5, shall be for the Term of Employment.

       6. Termination; Disability; Death, Change in Control.

          6.1 Basis. Employee's employment under this Agreement may be
terminated as described in this Section 6.1. In the event that Employee's
employment is terminated in accordance with this Section 6.1, Employee shall be
entitled to receive the benefits described in Section 6.2 that correspond with
the manner of such termination.

              (a) Termination Without Cause. Thomas Group may terminate
Employee's employment hereunder without Cause by written notice to Employee to
that effect. Unless otherwise specified in the notice, such termination shall be
effective immediately.

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

              (c) Good Reason. Upon the occurrence of an event constituting
Good Reason as described in Section 1.10 hereof, Employee may terminate his
employment hereunder for Good Reason within 30 days thereafter upon written
notice to Thomas Group to that effect. If the effect of the occurrence of the
event described in Section 1.10 may be cured, Thomas Group shall have the
opportunity to cure any such effect for a period of 30 days following receipt of
Employee's termination notice. The right of Employee to terminate his employment
for Good Reason under this Section 6.1(c) shall not limit Thomas Group's ability
to terminate Employee for Cause under Section 6.1(b) hereof if Cause is
determined to exist prior to the time Employee delivers his written notice of
termination for Good Reason to Thomas Group.

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


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<PAGE>   8

              (e) Disability. Employee or Thomas Group may terminate Employee's
employment by reason of Disability upon written notice to the other party to
that effect. If the parties hereto are unable to agree as to the existence of
Disability or as to the date of commencement of Disability, each of Employee and
Thomas Group shall select a physician licensed to practice medicine in the
United States and the determination as to any such question shall be made by
such physicians; provided, however, that if such two physicians are unable to
agree, they shall mutually select a third physician licensed to practice
medicine in the United States and the determination as to any such question
shall be made by a majority of such physicians. Any determination made by
physicians in accordance with the provisions of the immediately foregoing
sentence shall be final and binding on the parties hereto. Employee agrees to
submit to any and all reasonable medical examinations or procedures and to
execute and deliver any and all consents to release of medical information and
records or otherwise as shall be reasonably required by any of the physicians
selected in accordance with this Section 6.1(e). Unless otherwise specified in
the notice, such termination shall be effective immediately.

              (f) Death. This Employment Agreement shall automatically terminate
as of the date of Employee's death during the Term of Employment.

              (g) Change in Control. If a Change in Control occurs during the
Term of Employment, Thomas Group shall promptly give written notice to Employee
thereof. Following a Change in Control, Employee shall be required to continue
his employment hereunder for 90 days after the date of such Change in Control,
unless his employment is terminated sooner by Thomas Group as set forth in
Section 6.1(h). In the event that Employee decides to resign or otherwise
voluntarily terminate his employment following the occurrence of a Change in
Control, Employee may do so by giving written notice to Thomas Group to that
effect on or before 180 days after the occurrence of the Change in Control,
which notice shall be effective on the later to occur of (i) 180 days after the
occurrence of the Change in Control or (ii) 90 days after the date of such
notice. If Employee does not give such notice to Thomas Group, this Agreement
will remain in effect; provided, however, that the failure of Employee to
terminate this Agreement following the occurrence of a Change in Control shall
not be deemed a waiver of Employee's right to terminate his employment upon a
subsequent occurrence of a Change in Control in accordance with the terms of
this subsection.

              (h) Notwithstanding that Employee has given notice of termination
pursuant to subsections (d) or (g) of this Section 6.1, Thomas Group may, in its
sole discretion, thereafter require Employee to terminate his employment prior
to the expiration of the applicable notice period.

          6.2 Benefits Upon Termination. Employee shall receive the benefits
described in the subsection below that corresponds with the manner of
termination of Employee's employment under Section 6.1.

              (a) Without Cause. In the event Thomas Group terminates Employee's
employment hereunder without Cause during the Term of Employment, Employee shall
be entitled to the payments and benefits set forth on Exhibit I.


                                      -8-
<PAGE>   9

              (b) With Cause. In the event Employee's employment is terminated
with Cause, no further payments or benefits shall be paid or provided by Thomas
Group to Employee hereunder except for reimbursement for expenses incurred prior
to the date of termination, or the payment of Incentive Compensation that has
become due and payable to Employee on or before the date of such termination
under Section 4.2 hereof. In addition, Employee shall be entitled to exercise
any vested but unexercised stock options for a period of 90 days following the
effective date of the termination of Employee for Cause, and if any such options
remain unexercised upon the expiration of such 90-day period, they shall be
determined forfeited by Employee and have no further force and effect.

              (c) Good Reason. In the event Employee terminates his employment
for Good Reason during the Term of Employment, Employee shall be entitled to the
payments and benefits set forth on Exhibit I.

              (d) Without Good Reason. In the event Employee terminates his
employment without Good Reason pursuant to Section 6.1(d) hereof, Employee shall
be entitled to the benefits or payments provided for in Section 6.2(b) hereof.

              (e) Disability. In the event that Employee's employment is
terminated by reason of Disability, Employee shall be entitled to the payments
and benefits set forth on Exhibit I.

              (f) Death. In the event Employee's employment is terminated by
reason of his death, Thomas Group shall not be required to make any payments or
provide any benefits hereunder, except for (a) reimbursement for expenses
incurred prior to such termination date, (b) payment of Incentive Compensation
through such termination date as provided in Section 4.2, (c) the use by Thomas
Group of its best efforts to remove any guaranties by Employee of indebtedness
of Thomas Group, and provided, however, that nothing contained herein shall
limit or diminish any rights of Employee's estate or any other person to
payments under any life insurance policy maintained by Thomas Group for the
benefit of Employee or his beneficiaries or any health, disability, pension or
other benefit plan provided pursuant to Section 4.7, in each case in accordance
with the terms thereof. If Employee's employment is terminated by reason of his
death, the benefits provided under this Section 6.2(f) shall be paid to the
beneficiary or beneficiaries designated in writing by Employee and delivered
during Employee's lifetime to an officer of Thomas Group; however, if no such
beneficiary designation is made by Employee during his lifetime, the benefits
hereunder shall be paid to his estate. In addition, Employee's estate shall be
entitled to exercise any vested but unexercised stock options for a period of
180 days following the date of Employee's death, and if any such options remain
unexercised upon the expiration of such 180-day period, they shall be determined
forfeited by Employee's estate and have no further force and effect.

              (g) Change in Control. In the event Employee terminates his
employment as provided in Section 6.1(g) following the occurrence of a Change in
Control, Employee shall be entitled to the payments and benefits provided in
Exhibit I.


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<PAGE>   10

       7. Non-Competition, Non-Solicitation, and Confidentiality Covenants.

          7.1 Non-competition Covenant.

              (a) In consideration for the execution of this Agreement by Thomas
Group and the payments for services to be rendered by Employee hereunder,
Employee agrees that during the Term of Employment and, in the case of a
termination Without Good Reason or for Cause, for a period of three years after
the date of such termination, Employee shall not engage in competition with
Thomas Group in any manner or capacity (e.g., as an advisor, principal, agent,
partner, officer, director, shareholder, employee, member of any association or
otherwise) that materially adversely affects Thomas Group, including without
limitation, rendering time based management counseling services, soliciting
customers of Thomas Group for any competitor of Thomas Group, or soliciting any
employee of Thomas Group to leave the employ of Thomas Group to work for or on
behalf of any competitor of Thomas Group (the "Prohibited Activities"). Employee
further agrees that, during the Term of Employment, and, in the case of a
termination Without Good Reason or for Cause, for a period of three years after
the date of such termination, Employee will not assist or encourage any other
person in carrying out any activity that would be one of the Prohibited
Activities if such activity were carried out by Employee and, in particular,
Employee agrees that he will not induce any employee of Thomas Group to carry
out any such activity.

              (b) The obligations of Employee under this Section 7.1 shall apply
to any geographic area in which Thomas Group is operating. In addition to the
exclusion from Prohibited Activities set forth in Section 7.1(a) hereof,
ownership by Employee, as a passive investment, of less than 5% of the
outstanding shares of capital stock of any corporation listed on a national
securities exchange or publicly traded in the over-the-counter market shall not
constitute a breach of this Section 7.1.

          7.2 Right to Work Product and Confidentiality.

              (a) Thomas Group and Employee each acknowledge that performance of
this Agreement may result in the discovery, creation or development of
inventions, combinations, methods, formulae, techniques, processes,
improvements, software designs, computer programs, strategies, specific
computer-related know-how, course materials, seminar materials, computer models,
customer lists, data and original works of authorship (collectively, the "Work
Product"). Employee agrees that Employee will promptly and fully disclose to
Thomas Group any and all Work Product generated, conceived, reduced to practice
or learned by Employee, either solely or jointly with others, during the Term of
Employment, which in any way relates to the business of Thomas Group. Employee
further agrees that neither Employee, nor any party claiming through Employee
will, other than in the performance of this Agreement, make use of or disclose
to others any proprietary information relating to the Work Product.


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<PAGE>   11

              (b) Employee agrees that, whether or not the services performed by
Employee hereunder 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. Except as
specifically set forth in writing and signed by both Thomas Group and Employee,
Employee agrees that Thomas Group shall have all copyright and patent rights
with respect to any Work Product discovered, created, or developed under this
Agreement without regard to the origin of the Work Product.

              (c) If and to the extent that Employee may, under applicable law,
be entitled to claim any ownership interest in the Work Product, Employee hereby
transfers, grants, conveys, assigns and relinquishes exclusively to Thomas Group
any and all right, title and interest it now has or may hereafter acquire in and
to the Work Product under patent, copyright, trade secret and trademark law in
perpetuity or for the longest period otherwise permitted by law. Employee
further agrees, as to the Work Product, to assist Thomas Group in every
reasonable way to obtain and, from time to time, enforce patents, copyrights,
trade secrets and other rights and protection relating to said Work Product, and
to that end, Employee will execute all documents for use in applying for and
obtaining such patents, copyrights, trade secrets and other rights and
protection with respect to such Work Product as Thomas Group may desire,
together with any assignments thereof to Thomas Group or persons designated by
it. Employee's obligations to assist Thomas Group in obtaining and enforcing
patents, copyrights, trade secrets and other rights and protection relating to
the Work Product shall continue beyond the Term of Employment.

              (d) If and to the extent that any preexisting rights of Employee
are embodied or reflected in the Work Product, Employee hereby grants to Thomas
Group the irrevocable, perpetual, non-exclusive, worldwide, royalty-free right
and license to (i) use, execute, reproduce, display, perform and distribute
copies of and prepare derivative works based upon such preexisting rights and
any derivative works thereof and (ii) authorize others to do any or all of the
foregoing.

              (e) Employee acknowledges that much, if not all, of the material
and information related to the products, consulting techniques, or other
business affairs of Thomas Group and its Affiliates, including, without
limitation, any and all Work Product discovered or created pursuant to this
Agreement, and the business affairs of Thomas Group's clients and customers
which have or will come into Employee's possession or knowledge in connection
with the performance of this Agreement, consists of confidential and proprietary
data of Thomas Group and its Affiliates (collectively, "Confidential
Information"), disclosure of which to, or use by, third parties would be
damaging to Thomas Group or its clients. Employee agrees to hold such
Confidential Information in strictest confidence and agrees not to release such
information to any other Thomas Group employee unless such employee has a need
for such knowledge. Employee further agrees not to make use of Confidential
Information for Employee's own benefit or for the benefit of any third parties,
other than for the performance of this Agreement, and not to release or disclose
the Confidential Information to any other party either during or after the Term
of Employment. In the event of any breach of this confidentiality obligation,
Employee acknowledges that Thomas Group would have no adequate remedy at law,
since the harm caused by such a breach


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<PAGE>   12

would not be easily measured and compensated for in the form of damages, and
hereby waives its right to contest any equitable relief sought by Thomas Group,
though not Employee's right to contest the question of whether a breach has
occurred, and Employee waives the requirement of any bond being posted as
security for such equitable relief.

       8. General Provisions.

          8.1 Notices. All notices, requests, demands, or other communications
with respect to this Agreement shall be in writing and shall be personally
delivered, telecopied, 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):

              Employee:     J. Thomas Williams
                            5215 North O'Connor Boulevard
                            Suite 2500
                            Irving, TX 75039

              Thomas Group: Thomas Group, Inc.
                            5215 North O'Connor Boulevard
                            Suite 2500
                            Irving, TX 75039

         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 telecopied, (ii) on the third day following the date mailed, or
(iii) 24 hours after shipment by such courier service.

          8.2 Entire Agreement. This Agreement, together with the exhibits
hereto, supersedes any and all other agreements, either oral or written between
the parties hereto with respect to the employment of Employee by Thomas Group
and contains all of the covenants and agreements between the parties with
respect to such employment. Any modification of this Agreement will be effective
only if it is in writing signed by each of the parties hereto.

          8.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

          8.4 Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach.

          8.5 Severability. The provisions of this Agreement are severable, and
if any one or more provisions may be determined to be judicially unenforceable
and/or invalid by a court of competent jurisdiction, in whole or in part, the
remaining provisions shall nevertheless be binding, enforceable and in full
force and effect.


                                      -12-
<PAGE>   13

          8.6 Titles and Headings. The titles and headings of the various
sections hereof are intended solely for convenience of reference and not
intended for any purpose whatsoever to explain, modify or place any construction
upon any of the provisions of this Agreement.

          8.7 Attorney's Fees. In the event any one or more of the parties
hereto bring suit against any other part hereto, based upon or arising out of a
breach or violation of this Agreement, each party hereto agrees that each party
who is successful on the merits, upon final adjudication from which no further
appeal can be taken or is taken within the time allowed by law, shall be
entitled to recover his or its reasonable attorneys' fees and expenses from the
party or parties which is or are (as the case may be) not successful.

          8.8 Benefit and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns;
provided, however, that nothing contained in this Section 8.8 shall impair
Employee's rights under Section 6.2(g), if the successor or assign of Thomas
Group became such upon the occurrence of a Change in Control. Notwithstanding
anything herein to the contrary, Employee shall not assign any of his rights or
obligations under this Agreement.

          8.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
together constitute one agreement.

          8.10 Reliance on Authority of Person Signing Agreement. Each
individual signing this Agreement on behalf of a corporation warrants that such
execution has been duly authorized by the corporation for which he or she is
signing. The execution and performance of this Agreement by each party has been
duly authorized by all applicable laws and regulations and (in the case of a
corporation) all necessary corporate action, and this Agreement constitutes the
valid and enforceable obligation of each party in accordance with its terms.

          8.11 Amendments. Amendments to any section of this Agreement shall not
be effective unless agreed to in writing by the parties hereto. This Agreement,
including this provision against oral modification, shall not be amended,
modified or terminated except in a writing signed by each of the parties to this
Agreement, and no waiver of any provision of this Agreement shall be effective
unless in a writing duly signed by the party sought to be bound.

          8.12 Waiver. No waiver of any provision of this Agreement shall be
deemed to operate as waiver of any past or future right.

       9. Renewal Discussions. Unless Employee's employment hereunder has been
earlier terminated, the parties hereto agree that they will use their reasonable
best efforts to enter into discussions six months prior to the fifth anniversary
of the effective date of this Agreement with respect to whether and on what
terms Employee's employment after such date, and the terms thereof, this
Agreement shall automatically terminate on such fifth anniversary.


                                      -13-
<PAGE>   14

       10. Certain Tax Provisions. Employee acknowledges and agrees that all
payments and benefits made or provided to Employee pursuant to the terms hereof
which are required by applicable federal, state or local laws to be subject to
withholding for income taxes, shall be so subject.

       11. RESOLUTION OF CERTAIN CONTROVERSIES. In the event of any controversy
or claim arising out of or related to the provisions concerning the use and
protection of Confidential Information or the non-solicitation prohibitions, or
the breach thereof, the parties agree that Thomas Group may seek equitable and
other relief. In the event of any controversy or claim arising out of or related
to the other provisions of this Agreement, the parties agree first to try in
good faith to settle the dispute by non-binding mediation administered by the
American Arbitration Association under its Commercial Mediation Rules. In the
event that mediation does not resolve the dispute, such dispute shall be settled
exclusively by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association in Dallas, Texas, and judgment may be
entered in any court having jurisdiction thereof.

       IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement effective as of the date first above written.

                                    EMPLOYEE: J. Thomas Williams

                                    ----------------------------------------
                                    J. Thomas Williams

                                    THOMAS GROUP, INC.

                                    By:
                                       -------------------------------------
                                    Name:  PHILIP R. THOMAS
                                    Title: Chairman and Chief Executive Officer


                                      -14-
<PAGE>   15

                                    EXHIBIT I

                           SEVERANCE BENEFIT PAYMENTS


       1. A lump sum payment in cash, not later than 20 days after the
termination of Employee's employment, in an amount equal to eighteen (18) months
at Employee's average "Annualized Includible Compensation" (Annualized
Includible Compensation is defined as the total cash paid in Base Compensation,
salary and incentive compensation to Employee during the period consisting of
the preceding full taxable year, after the date of this Agreement).

       2. The unvested portion of stock options granted to Employee shall become
fully vested and immediately exercisable on the effective date of such
termination and shall be exercisable for the maximum period specified in such
options.


                                      -15-

<PAGE>   16

                                    EXHIBIT 2



This minimum performance goals for this assignment and 3 years into the
potential extension period are shown in the following table.






YEAR                   1998        1999         2000        2001         2002        2003         2004        2005
-------------        --------    --------     --------    --------     --------    --------     --------    --------
                                                                                   
FULL YEAR EPS
HURDLE                $1.30       $ 1.49       $ 1.71      $ 1.96       $ 2.25      $ 2.58       $ 2.96      $ 3.40

FULL YEAR
REVENUES
HURDLE (IN
$MILLION)             $91.1       $104.8       $120.5      $138.6       $159.4      $183.4       $210.9      $242.5



                                      -16-

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