<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1997
REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------
THOMAS GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 72-0843540
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
-----------------------
<TABLE>
<S> <C>
5215 N. O'CONNOR BOULEVARD ROGER A. CRABB
SUITE 2500 LEGAL COUNSEL AND SECRETARY
IRVING, TEXAS 75039-3714 5215 N. O'CONNOR BOULEVARD
(972) 869-3400 SUITE 2500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE IRVING, TEXAS 75039-3714
NUMBER, INCLUDING AREA CODE, (972) 869-3400
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
-----------------------
COPY TO:
DAVID H. ODEN
HAYNES AND BOONE, L.L.P.
3100 NATIONSBANK PLAZA
901 MAIN STREET
DALLAS, TEXAS 75202
(214) 651-5000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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========================================================================================================================
Proposed Maximum Proposed Maximum Amount Of
Title of Each Class of Securities Amount to Be Offering Price Per Aggregate Registration
To Be Registered Registered Unit (2) Offering Price Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 1,400,000 $10.625 $14,875,000 $4,508.00
========================================================================================================================
</TABLE>
(1) All of the 1,400,000 shares to be registered hereunder are being offered
by a selling stockholder of the Company.
(2) Estimated pursuant to paragraph (c) of Rule 457 promulgated under the
Securities Act of 1933, as amended, solely for purposes of calculating
the registration fee, based upon the average of the high and low sale
prices at which shares of Common Stock were sold on October 28, 1997 on
the NASDAQ National Market System.
-----------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE> 3
SUBJECT TO COMPLETION, DATED OCTOBER 29, 1997
PROSPECTUS
1,400,000 SHARES
Thomas Group, Inc.
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
This Prospectus relates to an aggregate of 1,400,000 shares (the
"Shares") of common stock, par value $0.01 per share (the "Common Stock"), of
Thomas Group, Inc. ("Thomas Group" or the "Company") which may be offered and
sold from time to time by one stockholder of the Company (the "Selling
Stockholder"). See "Selling Stockholder" and "Plan of Distribution."
The Shares may be sold by the Selling Stockholder directly or indirectly
through agents, dealers or underwriters from time to time in one or more
transactions on the NASDAQ National Market System or such exchanges on which
the Common Stock is then listed, or in privately negotiated transactions at
prices related to such market prices, at negotiated prices or at fixed prices.
The Company will not receive any proceeds from the sale(s) of Common Stock by
the Selling Stockholder. See "Plan of Distribution."
The Selling Stockholder will bear all discounts and commissions paid to
broker-dealers in connection with the sale of the Shares. Other offering
expenses will be borne by the Company.
The Selling Stockholder and any broker/dealers, agents or underwriters
that participate in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), and any commissions, discounts or concessions received
by them and any profit on the resale of the Shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
The Common Stock is listed on the NASDAQ National Market System under
the symbol "TGIS". On October 29, 1997, the closing sale price per share of
the Common Stock, as reported on the NASDAQ National Market System, was $10.25.
_________________________________
SEE "RISK FACTORS" WHICH BEGINS ON PAGE 7 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
INVESTORS.
_________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
_________________________________
The date of this Prospectus is , 1997.
<PAGE> 4
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in or incorporated by
reference in this Prospectus and, if given or made, such other information or
representation must not be relied upon as having been authorized by the
Company, the Selling Stockholder or any other person. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that the information herein is correct as of any time
subsequent to the date hereof nor that there has been no change in the affairs
of the Company since such date. This Prospectus does not constitute an offer
to sell or a solicitation of any offer to buy by anyone in any jurisdiction in
which such offer or solicitation is not qualified to be made, or to anyone to
whom it is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
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Page
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Available Information.................................................. 4
Incorporation of Certain Documents by Reference........................ 5
Special Note Regarding Forward-Looking Statements...................... 5
The Company............................................................ 6
Risk Factors........................................................... 7
Use of Proceeds........................................................ 9
Selling Stockholder.................................................... 9
Plan of Distribution................................................... 9
Legal Matters.......................................................... 9
Experts................................................................ 9
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also can be obtained from the
Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rates. Such reports, proxy statements and other information can also
be inspected at the offices of the National Association of Securities Dealers,
Inc. at 1735 K Street, N.W., Washington, D.C. 20006. The Commission maintains a
World Wide Web site that contains reports, proxy and information statements and
other information regarding registrants, such as the Company, that file
electronically with the Commission. The address of the site is
http://www.sec.gov.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the offering
of the Common Stock made hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement. Statements contained
in this Prospectus as to the contents of any contract or other document
referred to are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. A copy of the Registration Statement may be inspected without
charge at the offices of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and copies of all or any part thereof may be obtained from the
Public Reference Section of the Commission upon the payment of the
<PAGE> 5
fees prescribed by the Commission. In addition, copies of the Registration
Statement may be obtained from the Commission's World Wide Web site at
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the
Commission and are incorporated herein by reference (Commission File No. 1-
10441):
(i) The description of the Company's Common Stock, par value $.01 per
share, contained in the Company's Registration Statement on Form S-1
dated June 15, 1993 (Registration No. 33-64492), as amended by
Amendment No. 1 dated July 27, 1993, Amendment No. 2 dated August 12,
1993, Amendment No. 3 dated August 19, 1993 and Form 8-A filed July 1,
1993 (Registration No. 0-22010).
(ii) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
(iii) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1997.
(iv) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of the filing of this Registration
Statement and prior to the end of Offering of the Shares shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
dates of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
THIS PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (WITHOUT EXHIBITS,
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE) ARE AVAILABLE
WITHOUT CHARGE UPON REQUEST. REQUESTS FOR DOCUMENTS SHOULD BE DIRECTED TO
THOMAS GROUP, INC., 5215 N. O'CONNOR BOULEVARD, SUITE 2500, IRVING, TEXAS
75039-3714 (TELEPHONE: (972) 869-3400) ATTENTION: MELISSA MOORE.
__________________________
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Prospectus and in the documents
incorporated herein by reference that are not strictly historical are forward-
looking statements which should be considered as subject to the many
uncertainties that exist in the Company's operations and business environment.
These uncertainties, which include economic and business conditions that may
impact clients and the Company's performance-oriented fees, timing of contracts
and revenue recognition, competitive and cost factors, are set forth in the
Thomas Group, Inc. Form 10-K for the 1996 fiscal year filed with the
Commission.
<PAGE> 6
THE COMPANY
The Company was founded in 1978 by Mr. Philip R. Thomas, the Company's
largest stockholder, the Selling Stockholder and the principal developer of
Total Cycle Time(R) methodology. The Company was incorporated in Delaware in
1978. The Company's principal executive offices are located at 5215 N.
O'Connor Boulevard, Suite 2500, Irving, Texas 75039-3714, and its telephone
number is (972) 869-3400.
BUSINESS IMPROVEMENT SERVICES
The Company provides professional services that help company leaders
dramatically improve the competitive position of their organizations. Thomas
Group provides measurable results for its clients through the use of its
proprietary time-based management methodology, Total Cycle Time. Total Cycle
Time is the time elapsed from the moment a customer expresses a need until the
moment that need is fulfilled, and encompasses all of the macro processes
within the business. A Total Cycle Time program provides a single,
quantifiable context -- time -- that aligns all activities of an organization
with customer needs.
By reducing cycle times in its business processes, a Thomas Group client
improves customer responsiveness, accelerates new product time-to-market,
increases quality and productivity, and liberates resources tied up in areas
like inventory and accounts receivable.
Utilizing Total Cycle Time methodology, the Company's Resultants, mature
experienced professionals (many of whom have themselves run companies) analyze
a client's business, assess potential performance improvements, train a
client's senior management and employees, and work side-by-side with the client
to implement actions to improve operating performance. Total Cycle Time is
designed to enable the Company's clients to achieve quantifiable results, such
as improved profitability, greater productivity, more effective asset
utilization, and reduced time in developing and delivering new products to
market, thereby making clients more competitive. Total Cycle Time programs
typically span one to three years.
Due to the Company's prior success with and confidence in Total Cycle
Time services, the Company generally offers to receive a portion of its fees
based upon a percentage of achieved improvement. These performance-oriented
fees are based upon tangible results of improvement, such as various cycle-time
reductions, inventory and accounts receivable reductions, profit margin
enhancements and revenue increases. Client incentive measures are determined
jointly, following a rigorous assessment of the improvement opportunities.
The Company's clients are typically large, well-established companies,
or distinct business units of such companies, in North America, Western Europe
and Asia. The Company focuses its marketing efforts on companies with annual
revenues in excess of $200 million.
TECHNOLOGY SOLUTIONS
The Company's technology solutions business segment focuses on products
and services that can integrate and enhance the Company's business improvement
methodologies. The Company offers SalesWare(SM) which creates an advanced
opportunity management system that is easily embedded into a client's
information technology infrastructure.
Additionally, the Company provides paperless warehouse and distribution
systems, including software packages, customization, installation and training
services. Its product line includes a state-of the-art warehouse and
distribution management system featuring advanced real-time Radio Frequency
receiving and cycle counting applications.
<PAGE> 7
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be carefully considered by potential purchasers in evaluating an
investment in the Common Stock offered hereby.
QUARTERLY FLUCTUATIONS IN OPERATING RESULTS
The Company's quarterly results can fluctuate significantly due to
several factors, including the number of new programs initiated and variations
in revenue levels of existing programs during a given quarter. Performance-
oriented contracts sometimes result in reduced fees in the first months of a
contract. Factors such as a client's commitment to a Total Cycle Time program,
general economic and industry conditions and other issues could affect a
client's business performance, thereby affecting the Company's performance-
oriented fee revenues and quarterly earnings. Any of these factors may
substantially affect the Company's financial results in a given quarter, thus
affecting the price of the Common Stock. While the Company does not believe
that poor financial results in any one quarter would result in a significant
reduction in liquidity, consecutive periods of poor financial results could
negatively impact liquidity.
CLIENT CONCENTRATION/DEPENDENCE ON CERTAIN CLIENTS
The Company had revenues exceeding 10% of its revenues from one client
in 1994, totaling $18.3 million (35% of revenues), from one client in 1995
totaling $12.1 million (18% of revenues), from three clients in 1996 totaling
$24.8 million (34% of revenues) and from two clients in the six months ended
June 30, 1997 totaling $8.1 million (21% of revenues). The Company's contracts
generally provide for cancellation by the Company or the client upon 60 days
notice. The loss of any of the Company's large clients could have a material
adverse effect on the Company. The average duration of a client contract
ranges from 12 to 36 months.
NECESSITY OF CONTINUED CLIENT DEVELOPMENT
In order to maintain and increase its revenues, the Company will need to
add new clients or expand existing client relationships to include additional
divisions or business units of such clients. There can be no assurance that
this will occur. Failure to develop new client relationships or expand
existing client relationships would have a material adverse effect on the
Company.
PERFORMANCE-ORIENTED FEES
The Company enters into performance-oriented or "incentive fee"
contracts based on measures of improvement achieved, including cycle time
reduction, inventory reduction, accounts receivable reduction and profit
improvement. The Company believes that, in general, performance-oriented fee
arrangements offer the Company greater opportunities to secure contracts.
However, there is a risk that the Company may generate less revenue under
performance-oriented fee contracts than under fixed fee contracts. Incentive
fees accounted for $15.2 million in 1994 (29% of revenues), $18.1 million in
1995 (27% of revenues), $19.7 million in 1996 (27% of revenues), and $7.9
million in the first six months of 1997 (21% of revenues).
CONTROL OF THE COMPANY
The Company's current officers and directors and their affiliates
beneficially own approximately 38% of the outstanding Common Stock, of which
Mr. Thomas beneficially owns approximately 31% of the outstanding Common Stock.
If all of the shares of Common Stock referred to in this Prospectus are sold,
Mr. Thomas will beneficially own approximately 7% of the outstanding Common
Stock.
<PAGE> 8
COMPETITION
Although the Company considers its methodologies as proprietary trade
secrets, the Company does not hold any patents on any of the Total Cycle Time
rights. While the Company believes that the Total Cycle Time methodology
cannot be used to compete effectively by persons who have not been extensively
trained by the Company, there can be no assurance that the Company can
successfully prevent others from using substantially similar methodologies to
compete with the Company. The Company competes with a number of domestic and
international firms, many of which have greater financial resources and name
recognition than the Company.
INTERNATIONAL OPERATIONS AND FOREIGN CURRENCY RISKS
The Company had revenues attributable to European clients of $22.7
million in 1994 (43% of revenues), $27.1 million in 1995 (40% of revenues),
$18.4 million in 1996 (25% of revenues), and $6.6 million in the first six
months of 1997 (18% of revenues). Additionally, the Company had revenues
attributable to clients in the Asia/Pacific region of $1.2 million in 1996 (2%
of revenues) and $1.7 million in the first six months of 1997 (4% of revenues).
The Company expects that a substantial portion of its business and future
revenues will continue to be derived from international clients. Thus, the
Company will be subject to risks inherent in international operations,
including unexpected changes in regulatory requirements, political instability,
difficulties in staffing and managing international operations, longer payments
cycles, greater difficulty in accounts receivable collection, foreign taxation
and foreign currency fluctuations.
SOFTWARE SUBSIDIARIES
The Company has two subsidiaries in the software industry which have
experienced operating losses in recent quarters. The Company believes it has
taken the necessary steps to bring this business segment into profitability in
the near future; however, there can be no assurance that the Company will be
successful in doing so.
ANTITAKEOVER MATTERS
The Company is subject to Section 203 of the Delaware General
Corporation Law which restricts certain business combinations with any
"interested stockholder" as defined in such law. This statute may delay, defer
or prevent a change in control of the Company. In addition, upon a change in
control of the Company, options granted under the Company's stock options plans
become immediately exercisable and Mr. Thomas, Alex Young, President and Chief
Operating Officer, Mitchell Bohn, Executive Vice President and Chief Financial
Officer, and James Dykes, Executive Vice President of Corporate Development,
become entitled to certain benefits under their employment agreements.
EFFECT OF SALE OF THE SHARES
The Shares represent approximately 24% of the total 5.9 million shares
of Common Stock outstanding. As a result, the sale of the Shares in the public
market could adversely affect prevailing market prices for the Common Stock.
SHARES ISSUABLE UNDER STOCK OPTION PLANS
In addition to the shares of Common Stock outstanding as described
above, 1.5 million shares of Common Stock may be issued pursuant to outstanding
options granted under the Company's stock option plans as of August 31, 1997.
Additionally, options to purchase 0.8 million shares of Common Stock may be
granted under the Company's stock option plans as of August 31, 1997.
<PAGE> 9
USE OF PROCEEDS
The Selling Stockholder will receive all of the net proceeds from the
offering of the Shares hereby. Accordingly, the Company will not receive any
proceeds from the sale of the Shares.
SELLING STOCKHOLDER
The Shares are being offered for sale by Philip R. Thomas, Chairman and
Chief Executive Officer of the Company. Prior to the offering of the Shares
Mr. Thomas beneficially owned 1,833,305 shares of Common Stock. After the
completion of the offering and sale of all of the Shares, Mr. Thomas will
beneficially own 433,305 shares of Common Stock, constituting 7.4% of the total
outstanding shares.
PLAN OF DISTRIBUTION
The Selling Stockholder may from time to time sell all or a portion of
the Shares on the NASDAQ National Market System or on any other national
securities exchange on which the Common Stock is listed or traded, in
negotiated transactions or otherwise, at prices then prevailing or related to
the then current market price or at negotiated prices. The Shares may be sold
directly or through brokers or dealers, or in a distribution by one or more
underwriters on a firm commitment or best efforts basis. The methods by which
the Shares may be sold include (a) a block trade (which may involve crosses) in
which the broker or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction, (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this
Prospectus, (c) exchange distributions and/or secondary distributions in
accordance with the rules of the NASDAQ National Market System, (d) ordinary
brokerage transactions and transactions in which the broker solicits
purchasers, and (e) privately negotiated transactions.
The Selling Stockholder and any underwriters, broker/dealers or agents
that participate in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act and any profit on the
sale of the Shares by them and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker/dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.
All expenses of the registration of the Shares will be paid by the
Company, including, without limitation, Commission filing fees and expenses of
compliance with state securities or "blue sky" laws; provided, however, that
the Selling Stockholder will pay all underwriting discounts and selling
commissions, if any.
There can be no assurance that the Selling Stockholder will sell any or
all of the Shares offered hereby.
LEGAL MATTERS
Certain legal matters related to the shares of Common Stock offered
hereby are being passed upon for the Company by Haynes and Boone, L.L.P.
EXPERTS
The consolidated financial statements and schedules of Thomas Group,
Inc. incorporated by reference in this Prospectus have been audited by BDO
Seidman, LLP, independent certified public accountants, to the extent and for
the periods set forth in their reports incorporated herein by reference.
<PAGE> 10
Such consolidated financial statements and financial statement schedules are
incorporated by reference herein in reliance upon such report given upon the
authority of said firm as experts in accounting and auditing.
<PAGE> 11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM NUMBER
ITEM 14. OTHER EXPENSES OF REGISTRATION AND DISTRIBUTION.
The following table sets forth the estimated expenses of the Registrant
in connection with the offering described in this Registration Statement. All
amounts are estimates except the Securities and Exchange Commission
registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $ 4,508
Legal fees and expenses 5,000
Accounting 5,000
Duplicating and printing expenses 2,000
Miscellaneous 500
--------------
Total $ 17,008
</TABLE>
The Selling Stockholder is not paying any expenses related to this
registration statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL")
authorizes Delaware corporations to indemnify directors and officers in certain
circumstances against liabilities, including expenses, incurred while acting in
such capacities; provided, generally, that any such indemnified officer or
director acted in good faith and in a manner he or she reasonably believed to
be in the best interests of the corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The By-laws of the Company provide for indemnification of directors and
officers to the maximum extent permitted by the DGCL.
In addition, the Company has provided in its Amended and Restated
Certificate of Incorporation that it shall eliminate the personal liability of
its directors to the fullest extent permitted by the DGCL. The Company also
provides its directors and officers coverage under a director's and officer's
liability insurance policy.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
4.1 Specimen certificate for Common Stock of the Company, filed
as Exhibit 4.1 to the Company's Registration Statement on Form S-1
(Registration No. 33-64492) and incorporated by reference herein.
* 5.1 Opinion of Haynes and Boone, L.L.P.
*10.2 Employment Agreement of Mitchell D. Bohn, effective as of June 16,
1997.
*10.3 Employment Agreement of James E. Dykes, effective as of July 14,
1997.
</TABLE>
11
<PAGE> 12
<TABLE>
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*23.1 Consent of BDO Seidman, LLP.
*23.2 Consent of Haynes and Boone, L.L.P. (included in their opinion
filed as Exhibit 5.1)
*24 The power of attorney of officers and directors of the Company is
set forth on the signature page hereto.
* Filed herewith
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are made, a
post-effective amendment to include any material information
with respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof, and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provision described
under Item 17, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against pubic policy as expressed in the Act and is, therefore,
unenforceable. In the event that claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Irving, State of Texas, on the __th day of
October, 1997.
THOMAS GROUP, INC.
By: /s/ ALEX W. YOUNG
------------------------------------
Alex W. Young
President and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated.
THOMAS GROUP, INC.
By: /s/ PHILIP R. THOMAS
------------------------------------
Philip R. Thomas
Chairman of the Board and Chief
Executive Officer
By: /s/ ALEX W. YOUNG
------------------------------------
Alex W. Young
Director, President and Chief
Operating Officer
By: /s/ JAMES E. DYKES
------------------------------------
James E. Dykes
Director, Executive Vice President
By: /s/ DONALD J. ALMQUIST
------------------------------------
Donald J. Almquist
Director
By: /s/ J. FRED BUCY
------------------------------------
J. Fred Bucy
Director
By: /s/ HOLLIS L. CASWELL
------------------------------------
Hollis L. Caswell
Director
By: /s/ JOHN T. CHAIN, JR.
-----------------------------------
John T. Chain, Jr.
Director
By: /s/ PERRY E. ESPING
------------------------------------
Perry E. Esping
Director
By: /s/ RICHARD A. FREYTAG
------------------------------------
Richard A. Freytag
Director
By: /s/ MITCHELL D. BOHN
------------------------------------
Mitchell D. Bohn
Executive Vice President and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1 Specimen certificate for Common Stock of the Company, filed as Exhibit 4.1 to the Company's
Registration Statement on Form S-1 (Registration No. 33-64492) and incorporated by reference
herein.
* 5.1 Opinion of Haynes and Boone, L.L.P.
*10.2 Employment Agreement of Mitchell D. Bohn, effective as of June 16,
1997.
*10.3 Employment Agreement of James E. Dykes, effective as of July 14,
1997.
</TABLE>
<PAGE> 15
<TABLE>
<S> <C>
*23.1 Consent of BDO Seidman, LLP.
*23.2 Consent of Haynes and Boone, L.L.P. (included in their opinion
filed as Exhibit 5.1)
*24 The power of attorney of officers and directors of the Company is
set forth on the signature page hereto.
* Filed herewith
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[HAYNES AND BOONE, LLP LETTERHEAD]
October 24, 1997
Thomas Group, Inc.
5215 N. O'Connor boulevard
Suite 2500
Irving, Texas 75039-3400
Gentlemen:
We have acted as counsel to Thomas Group, Inc., a Delaware corporation (the
"Company"), in connection with the preparation of the Company's Registration
Statement on Form S-3, relating to the registration of an aggregate of
1,400,000 shares (the "Shares") of the Company's common stock, par value $.01.
Such Registration Statement (the "Registration Statement") is to be filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended.
In connection with the preparation of the Registration Statement, we have
examined (i) the Certificate of Incorporation and the Bylaws of the Company,
both as amended to date; (ii) minutes and records of the corporate proceedings
of the Company with respect to issuance of the Shares; (iii) the Registration
Statement and any and all exhibits thereto; and (iv) such other documents as we
have deemed necessary for the expression of the opinions contained herein.
In making the foregoing examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies. As to questions of fact material to this
opinion, where such facts have not been independently established, and as to
the content and form of the Certificate of Incorporation, Bylaws, minutes and
resolutions and other documents we have relied, to the extent we deemed
reasonably appropriate, upon representations or certificates of officers and
directors of the company, and certificates of governmental officials, without
independent check or verification of their accuracy.
Based upon the foregoing, and having due regard for such legal considerations
as we deem relevant, we are of the opinion that the Shares are duly authorized,
fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
reference to our firm under the caption "Legal Matters" in the Prospectus
forming part of such Registration Statement, and any amendment thereto.
Very truly yours,
/s/ HAYNES AND BOONE, L.L.P.
----------------------------------
HAYNES AND BOONE, L.L.P.
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of June
15, 1997, by and between THOMAS GROUP, INC., a Delaware corporation ("Thomas
Group") and Mitchell D. Bohn, an individual residing in Richardson, Texas
("Employee").
RECITALS
WHEREAS, Employee is the Executive Vice President and Chief Financial Officer
of Thomas Group 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:
(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
<PAGE> 2
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 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
<PAGE> 3
(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).
1.8 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.
- 3 -
<PAGE> 4
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 Executive Vice President and Chief
Financial 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
financial management of the business and affairs of Thomas Group in the
ordinary course of its business with all such powers with respect to such
financial management and control as may be reasonably incident to such
responsibilities, plus other responsibilities that may be assigned to him by
Thomas Group as its Vice President and Chief Financial 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 Executive Vice President and Chief Financial 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
$330,000.00 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 16.5% (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 includes CEO Incentive
Compensation. The Compensation Committee may review the percent stated above
from time to time and make appropriate changes..
(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
- 4 -
<PAGE> 5
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
<TABLE>
<CAPTION>
Income Before Tax and
Incentive Compensation Less
as a % of Revenues than 5%* 5%-9.99%* 10%-14.99%* 15%-24.99%* Over 25%*
------------------ -------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
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%
</TABLE>
*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.
(3) If Incentive Compensation, as
calculated in accordance with Section 4.2(b) hereof, exceeds 55 percent of Base
Compensation in a fiscal year, the excess of Incentive Compensation, as
calculated, over 55 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:
Excess Incentive Compensation
N = -----------------------------
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.
- 5 -
<PAGE> 6
Options granted hereunder shall be granted pursuant to the
Corporation's 1992 Stock Option Plan and shall be subject to all limitations of
such plan, 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.
(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.
(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, consistent with Thomas Group's past practices.
4.4 Automobile Expenses. Thomas Group shall provide
automobile transportation to employee for Employee's use in connection with
Thomas Group's business, consistent with Thomas Group's past practices.
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. In addition, Thomas Group shall continue to
pay premiums on all insurance policies on Employee's life which name either
Thomas Group or Thomas Group's creditors as beneficiary. Employee shall not be
entitled to participate in any other bonus arrangement instituted from time to
time by Thomas Group, unless approved in advance by the Board.
- 6 -
<PAGE> 7
4.6 Relocation Allowance. Actual expenses, not to exceed
$50,000 will be paid by Thomas Group to Employee to locate within a short
distance of the Las Colinas office.
4.7 Special Considerations. In consideration of bringing
Imation to TGI as an account with $25K per month for 18 months contracted
revenue ($450K)
TGI will buy out the $450K fixed fee portion of Imation contract for 50c. on
the dollar or $225K amortized over the 18 month revenue period. Mitchell D.
Bohn to support the program with Imation on his own time plus make best efforts
to bring Imation to TGI as a full TCT(R) client. The contract with Imation
covering both fixed fee and commission will be transferred or assigned to
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, as determined in the
good faith judgment of the Board of Directors, 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) Left Blank Intentionally.
(d) Without Good Reason. Employee may
voluntarily terminate his employment hereunder without Good Reason upon 360
days written notice to Thomas Group to that effect.
(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
- 7 -
<PAGE> 8
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.
(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
- 8 -
<PAGE> 9
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 (d) payment of premiums to continue the
medical and dental insurance coverage on Employee's spouse as in effect at and
as of the date of Employee's death for the remainder of spouse's life, if
available; 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.
7. Non-Competition, Non-Solicitation, and Confidentiality
Covenants.
7.1 Non-competition Covenant.
- 9 -
<PAGE> 10
(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.
(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
- 10 -
<PAGE> 11
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 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.
- 11 -
<PAGE> 12
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: Mitchell D. Bohn
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.
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,
- 12 -
<PAGE> 13
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.
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.
- 13 -
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement effective as of the date first above written.
EMPLOYEE:
------------------------------------
MITCHELL D. BOHN
THOMAS GROUP, INC.
By:
---------------------------------
Name: PHILIP R. THOMAS
Title: Chairman and
Chief Executive Officer
- 14 -
<PAGE> 15
Exhibit I, Page Solo
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 six (6) 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 Mitchell D. Bohn during the period
consisting of the preceding full taxable year, plus the year in which
termination occurred [on an annualized basis], all after 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.
<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
July 15, 1997, by and between THOMAS GROUP, INC., a Delaware corporation
("Thomas Group") and JAMES E. DYKES, an individual residing in Florida
("Employee").
RECITALS
WHEREAS, Employee is the Executive Vice President Corporate Development of
Thomas Group 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:
(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
<PAGE> 2
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 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
-2-
<PAGE> 3
(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).
1.8 Term of Employment. "Term of Employment" shall mean
the period of time commencing on the effective date of this Agreement and
continuing until the third 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.
- 3 -
<PAGE> 4
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 Executive Vice President Corporate
Development 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
Corporate Development management of the business and affairs of Thomas Group in
the ordinary course of its business with all such powers with respect to such
Corporate Development management and control as may be reasonably incident to
such responsibilities as its Executive Vice President Corporate Development,
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 Executive Vice President Corporate Development.
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
$330,000.00 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 16.5% (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 includes CEO Incentive Compensation. The Compensation
Committee may review the percent stated above from time to time and make
appropriate changes..
(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:
- 4 -
<PAGE> 5
INCOME GROWTH SHARING RATIO
<TABLE>
<CAPTION>
Income Before Tax and
Incentive Compensation Less
as a % of Revenues than 5%* 5%-9.99%* 10%-14.99%* 15%-24.99%* Over 25%*
------------------ -------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
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%
</TABLE>
*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.
(3) If Incentive Compensation, as calculated in
accordance with Section 4.2(b) hereof, exceeds 55 percent of Base Compensation
in a fiscal year, the excess of Incentive Compensation, as calculated, over 55
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:
Excess Incentive Compensation
N = -----------------------------
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.
- 5 -
<PAGE> 6
Options granted hereunder shall be granted pursuant to the
Corporation's 1992 Stock Option Plan and shall be subject to all limitations
of such plan, 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.
(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.
(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, consistent with Thomas Group's past practices.
4.4 Automobile Expenses. Thomas Group shall provide
automobile transportation to employee for Employee's use in connection with
Thomas Group's business, consistent with Thomas Group's past practices.
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. In addition, Thomas Group shall continue to
pay premiums on all insurance policies on Employee's life which name either
Thomas Group or Thomas Group's creditors as beneficiary. Employee shall not be
entitled to participate in any other bonus arrangement instituted from time to
time by Thomas Group, unless approved in advance by the Board.
4.6 First Year Living Allowance. Actual expenses, not to
exceed $100,000 will be paid by Thomas Group to Employee to live within a short
distance of the Las Colinas office.
- 6 -
<PAGE> 7
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, as determined in the
good faith judgment of the Board of Directors, 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) Left Blank Intentionally
(d) Without Good Reason. Employee may
voluntarily terminate his employment hereunder without Good Reason upon 360
days written notice to Thomas Group to that effect.
(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
- 7 -
<PAGE> 8
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.
(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.
- 8 -
<PAGE> 9
(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 (d) payment of premiums to continue the
medical and dental insurance coverage on Employee's spouse as in effect at and
as of the date of Employee's death for the remainder of spouse's life, if
available; 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.
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
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<PAGE> 10
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.
(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
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<PAGE> 11
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 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: James E. Dykes
5215 North O'Connor Boulevard
Suite 2500
Irving, TX 75039
Thomas Group: Thomas Group, Inc.
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<PAGE> 12
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.
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.
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<PAGE> 13
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.
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.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement effective as of the date first above written.
EMPLOYEE:
-----------------------------------
JAMES E. DYKES
THOMAS GROUP, INC.
By:
--------------------------------
Name: PHILIP R. THOMAS
Title: Chairman and
Chief Executive Officer
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<PAGE> 14
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 six (6) 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 James E. Dykes during the period
consisting of the preceding full taxable year, plus the year in which
termination occurred [on an annualized basis], all after 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.
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<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Thomas Group, Inc.
Irving, Texas
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated March 3,
1997, relating to the consolidated financial statements and schedules of Thomas
Group, Inc. appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO SEIDMAN, L.L.P.
-------------------
BDO Seidman, L.L.P.
Dallas, Texas
October 29, 1997
