SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT

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Exhibit 10.31

SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
REVOLVING CREDIT LOAN AGREEMENT

        THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT (this " Amendment "), dated as of February 2, 2004, is between THOMAS GROUP, INC., a Delaware corporation (the " Borrower ") and COMERICA BANK (" Lender "), successor by merger with Comerica Bank-Texas.

RECITALS:

        The Borrower and the Lender have entered into that certain Second Amended and Restated Revolving Credit Loan Agreement dated as of November 26, 2002 (as the same has been or may hereafter be amended, restated or otherwise modified from time to time, the " Agreement ").

        The Borrower and the Lender now desire to amend the Agreement as more specifically described herein.

        NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows (all provisions of this Amendment being effective as of February 2, 2004 (the " Effective Date ") unless otherwise stated herein):

ARTICLE I
 
Definitions

        Section 1.1     Definitions.     Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby.

ARTICLE II
 
Amendments and Ratifications

        Each of the following amendments is effective as of the date of this Amendment, unless otherwise stated herein.

        Section 2.1     Amendments to Section 1 (Definitions) of the Agreement.     The following definitions in Section 1 of the Agreement are amended and restated in their entirety to read as follows, or are added to the Agreement, as applicable.

        " Revolving Credit Termination Date " shall mean the earlier to occur of (i) February 28, 2005, subject to prior acceleration upon the occurrence of an Event of Default and the expiration of any applicable cure period, or (ii) the date on which all Loans are paid in full.

        " Term Loan Termination Date " shall mean the earlier to occur of (i) February 28, 2005, subject to prior acceleration upon the occurrence of an Event of Default and the expiration of any applicable cure period, or (ii) the date on which all Loans are paid in full.

        " Term Note " shall mean that certain Second Amended and Restated Variable Rate-Installment Note dated February 2, 2004 in the original aggregate principal amount of $2,800,000 executed by Borrower, payable to the order of Lender as the same may be renewed, extended, modified, increased or restated from time to time.

        Section 2.2     Amendment to Section 9.1.3.     Section 9.1.3 of the Agreement is amended and restated in its entirety to read as follows:

        9.1.3     Quarterly Compliance Certificate.     Furnish to the Lender not later than forty five (45) days after the close of each fiscal quarter of the Borrower (beginning with the fiscal quarter ending March 31, 2004) a Compliance Certificate, dated as of the end of the fiscal quarter

immediately prior to the due date for such Certificate, in a form acceptable to the Lender in its sole discretion, certifying that, as of the date thereof, no Default or Event of Default shall have occurred and be continuing, or if any Default or Event of Default shall have occurred and be continuing, specifying in detail the nature and period of existence thereof and any action taken or proposed to be taken by Borrower with respect thereto, and also certifying as to whether Borrower is in compliance with the financial covenants contained herein (which certificate shall set forth, in reasonable detail, the calculations and the resultant ratios and financial tests determined thereunder).

        Section 2.3     Amendment to Section 9.9.     Section 9.9 of the Agreement is amended and restated in its entirety to read as follows:

        9.9     Amendment Fee.     The Borrower shall pay to the Lender for the account of the Lender an amendment fee (the " Amendment Fee ") in connection with the execution of the amendments preceding this Agreement in accordance with the following terms:

        (a)   The Amendment Fee shall be an amount of up to $100,000, subject to being earned by the Lender, and subject to being reduced, as provided in the following subparagraphs (b) through (d) of this Section 9.9 .

        (b)   The Amendment Fee will be earned by the Lender and will cumulate without interest in increments of $20,000 on the last day of each month commencing August 31, 2004, and continuing on September 30, 2004, October 31, 2004, November 30, 2004 and December 31, 2004 (for a total of $100,000). The total Amendment Fee of $100,000 will be due and payable in full on December 31, 2004, without notice or demand by the Lender.

        (c)   Notwithstanding the foregoing provisions, if on or after August 31, 2004, there should occur a Refinancing (as defined below), the Amendment Fee will be only one-half ( ¹ / 2 ) of the earned amount of such Amendment Fee as of the date that the Refinancing occurs, and it is the resulting reduced amount that must be paid to the Lender. For example, if a Refinancing occurs on November 10, 2004, the total Amendment Fee due and payable to the Lender would be $30,000 ( ¹ / 2 of three-months earned amount at $20,000 per month). As used herein, "Refinancing" means the payment in full of all Indebtedness by the Borrower by means of funds originating from a source other than the Lender or any Affiliate of the Lender, when done in connection with the delivery to the Lender of (x) a written statement from the Borrower in form and content satisfactory to the Lender terminating the Agreement, and releasing the Lender, its officers, directors, employees, agents, independent contractors, attorneys and agents from any and all claims and liabilities of Borrower and its Domestic Subsidiaries and their officers, directors, employees, independent contractors, attorneys and agents, and (y) a written agreement that the Lender has no continuing commitment to lend to the Borrower. A Refinancing will be considered to have "occurred" for purposes of this Section 9.9 on the day on which the last of the actions occurs as set forth in the preceding definition of "Refinancing".

        (d)   For avoidance of doubt, and notwithstanding the foregoing provisions, there is no Amendment Fee due and payable if a Refinancing occurs before August 31, 2004.

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        Section 2.4     Amendments to Sections 9.12, 9.13, and 9.14.     Sections 9.12, 9.13, and 9.14 of the Agreement are amended and restated in their entirety to read as follows:

        9.12     Tangible Net Worth.     Borrower (on a consolidated basis) shall maintain a Tangible Net Worth of not less than the respective amounts set forth below, to be tested on the last day of each fiscal quarter of the Borrower, commencing March 31, 2004:

        9.13     Debt Ratio.     Borrower (on a consolidated basis) shall maintain a Debt Ratio of not more than the respective ratios set forth below, to be tested on the last day of each fiscal quarter of the Borrower, commencing March 31, 2004:

        9.14     Minimum EBITDA.     Borrower (on a consolidated basis) shall generate a minimum EBITDA of not less than the respective amounts set forth below, to be tested on the last day of each fiscal quarter of the Borrower, commencing March 31, 2004:

ARTICLE III
 
Conditions Precedent

        Section 3.1     Conditions.     The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:

        (a)   Lender shall have received each of the following, which, in the case of documents, shall be dated (unless otherwise indicated) the date of this Amendment, in form and substance satisfactory to the Lender:

(i)

this Amendment executed by the Borrower and the Lender;

(ii)

the Term Note executed by the Borrower and payable to the order of the Lender;

(iii)

Resolutions of the Board of Directors of the Borrower certified by its Secretary or Assistant Secretary which authorize the execution, delivery, and performance by the Borrower of this Amendment, the Term Note, and other Loan Documents executed in connection herewith;

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(iv)

Resolutions of the Board of Directors of each Domestic Subsidiary certified by each of its respective Secretaries or Assistant Secretaries which authorize the execution, delivery, and performance by each Domestic Subsidiary of this Amendment, and other Loan Documents executed in connection herewith; and

(v)

such other documents, instruments, and agreements as Lender may require.

        (b)   No Default or Event of Default (other than the Existing Specified Defaults) shall have occurred and be continuing;

        (c)   All of the representations and warranties contained in Article IV of the Agreement, as amended hereby and in the other Loan Documents, shall be true and correct on and as of the date of this Amendment with the same force and effect as if such representations and warranties had been made on and as of such date, except to the extent such representations and warranties speak to a specific date.

ARTICLE IV

Ratifications, Representations and Warranties

        Section 4.1     Ratifications Generally.     The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Agreement and except as expressly modified and superseded by this Amendment, the terms and provisions of the Agreement and any notes relating hereto, the Loan Documents, and all other documents executed in connection with the Agreement are hereby ratified and confirmed and shall continue in full force and effect. Borrower, each Domestic Subsidiary, and Lender agree that the Agreement, as amended hereby, the other Loan Documents, as amended hereby, and all other documents executed in connection with the Agreement or this Amendment to which Borrower or any Domestic Subsidiary is a party shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.

        Section 4.2     Ratifications by Domestic Subsidiaries.     Each Domestic Subsidiary hereby ratifies and reaffirms all of its obligations under its respective Guaranty and acknowledges that such Domestic Subsidiary's respective Guaranty is not subject to any claims, defenses or offsets. Each Domestic Subsidiary also hereby agrees that nothing contained in the Agreement and the Loan Documents, as hereby amended, shall adversely affect any right or remedy of the Lender under the Guaranties and that the execution and delivery of this Amendment and the Loan Documents shall in no way change or modify such Domestic Subsidiaries' obligations under such Domestic Subsidiaries' respective Guaranty and shall not constitute a waiver by the Lender of any of its rights against such Domestic Subsidiary.

        Section 4.3     Representations and Warranties.     Borrower and each Domestic Subsidiary hereby represent and warrant to Lender that (a) the execution, delivery and performance of this Amendment and any and all other Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite action on the part of the Borrower and each Domestic Subsidiary and will not violate the certificate of incorporation or bylaws of the Borrower or any Domestic Subsidiary, or otherwise violate any other agreement to which Borrower or any Domestic Subsidiary or any of their respective properties is bound, (b) the certificate of incorporation and bylaws of Borrower and each Domestic Subsidiary has not been amended or revoked since the date of the Agreement and each of the Borrower's and each Domestic Subsidiary's certificate of incorporation and bylaws is in full force and in effect, and (c) the representations and warranties contained in the Agreement, as amended hereby, and any other Loan Documents executed in connection therewith or herewith are true and correct on and as of the date hereof as though made on and as of the date hereof except to the extent such representations and warranties speak to a specific date or, (d) no Default has occurred and is continuing, and (e) Borrower is in full compliance with all covenants and agreements contained in the Agreement as amended hereby. Borrower represents and warrants to Lender that each of Thomas

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Group of Louisiana, Inc. and Innovative Leadership Company Limited has deregistered in its respective jurisdiction of organization and is no longer a legally existing entity in any jurisdiction.

ARTICLE V

Miscellaneous

        Section 5.1     Survival of Representations and Warranties.     All representations and warranties made in this Amendment or any other document executed in connection herewith shall survive the execution and delivery of this Amendment, and no investigation by Lender or any closing shall affect the representations and warranties or the right of Lender to rely upon them.

        Section 5.2     Reference to Agreement.     Each of the Agreement, the other Loan Documents and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Agreement as amended hereby, are hereby amended so that any reference in such documents to the Agreement and the other Loan Documents shall mean a reference to the Agreement and the other Loan Documents, each as amended hereby.

        Section 5.3     Expenses of Lender.     As provided in the Agreement, Borrower (and each Domestic Subsidiary) agrees to pay on demand all reasonable costs and expenses incurred by Lender in connection with the preparation, negotiation, and execution of this Amendment and any other documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including without limitation the costs and reasonable fees of Lender's legal counsel, and all costs and expenses incurred by Lender in connection with the enforcement or preservation of any rights under the Agreement, as amended hereby, or any other document executed in connection therewith, including without limitation the costs and reasonable fees of Lender's legal counsel.

        Section 5.4     Severability.     Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.

        Section 5.5     Applicable Law.     This Amendment and all other documents executed pursuant hereto shall be deemed to have been made and to be performable in Dallas, Dallas County, Texas and shall be governed by and construed in accordance with the laws of the State of Texas.

        Section 5.6     Successors and Assigns.     This Amendment is binding upon and shall inure to the benefit of Lender, Borrower and its successors and assigns, except Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of Lender.

        Section 5.7     No Waiver.     No consent or waiver, express or implied, by Lender to or for any breach of or deviation from any covenant, condition or duty by any Borrower or any obligated party shall be deemed a consent or waiver to or of any other future breach of the same or any other covenant, condition or duty.

        Section 5.8     Headings.     The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

        Section 5.9     Counterparts; Facsimiles.     This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Further, any facsimile copy, other copy or reproduction of a signed counterpart original of this Amendment shall be as fully effective and binding as the original signed counterpart of this Amendment.

        Section 5.10      RELEASE AND COVENANT NOT TO SUE.      BORROWER AND EACH DOMESTIC SUBSIDIARY (IN ITS OWN RIGHT AND ON BEHALF OF ITS RESPECTIVE DIRECTORS,

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OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS) (THE " RELEASING PARTIES ") JOINTLY AND SEVERALLY RELEASE, ACQUIT, AND FOREVER DISCHARGE LENDER AND ITS DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS, AND ATTORNEYS (THE " RELEASED PARTIES "), TO THE FULLEST EXTENT PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND ALL ACTS AND OMISSIONS OF THE RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, COUNTERCLAIMS, DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS, BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES, OBJECTIONS, AND EXECUTIONS OF ANY NATURE, TYPE, OR DESCRIPTION WHICH THE RELEASING PARTIES HAVE AGAINST THE RELEASED PARTIES, INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, USURY, DECEIT, MISREPRESENTATION, CONSPIRACY, UNCONSCIONABILITY, DURESS, ECONOMIC DURESS, DEFAMATION, CONTROL, INTERFERENCE WITH CONTRACTUAL AND BUSINESS RELATIONSHIPS, CONFLICTS OF INTEREST, MISUSE OF INSIDER INFORMATION, CONCEALMENT, DISCLOSURE, SECRECY, MISUSE OF COLLATERAL, WRONGFUL RELEASE OF COLLATERAL, FAILURE TO INSPECT, ENVIRONMENTAL DUE DILIGENCE, NEGLIGENT LOAN PROCESSING AND ADMINISTRATION, WRONGFUL SETOFF, VIOLATIONS OF STATUTES AND REGULATIONS OF GOVERNMENTAL ENTITIES, INSTRUMENTALITIES AND AGENCIES (BOTH CIVIL AND CRIMINAL), RACKETEERING ACTIVITIES, SECURITIES AND ANTITRUST LAWS VIOLATIONS, TYING ARRANGEMENTS, DECEPTIVE TRADE PRACTICES, BREACH OR ABUSE OF ANY ALLEGED FIDUCIARY DUTY, BREACH OF ANY ALLEGED SPECIAL RELATIONSHIP, COURSE OF CONDUCT OR DEALING, ALLEGED OBLIGATION OF FAIR DEALING, ALLEGED OBLIGATION OF GOOD FAITH, AND ALLEGED OBLIGATION OF GOOD FAITH AND FAIR DEALING, WHETHER OR NOT IN CONNECTION WITH OR RELATED TO THE LOAN DOCUMENTS AND THIS AGREEMENT, AT LAW OR IN EQUITY, IN CONTRACT IN TORT, OR OTHERWISE, KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED UP TO AND INCLUDING THE DATE OF THIS AGREEMENT (THE " RELEASED CLAIMS "). THE RELEASING PARTIES FURTHER AGREE TO LIMIT ANY DAMAGES THEY MAY SEEK IN CONNECTION WITH ANY CLAIM OR CAUSE OF ACTION, IF ANY, TO EXCLUDE ALL PUNITIVE AND EXEMPLARY DAMAGES, DAMAGES ATTRIBUTABLE TO LOST PROFITS OR OPPORTUNITY, DAMAGES ATTRIBUTABLE TO MENTAL ANGUISH, AND DAMAGES ATTRIBUTABLE TO PAIN AND SUFFERING, AND THE RELEASING PARTIES DO HEREBY WAIVE AND RELEASE ALL SUCH DAMAGES WITH RESPECT TO ANY AND ALL CLAIMS OR CAUSES OF ACTION WHICH MAY ARISE AT ANY TIME AGAINST ANY OF THE RELEASED PARTIES. THE RELEASING PARTIES REPRESENT AND WARRANT THAT NO FACTS EXIST WHICH COULD PRESENTLY OR IN THE FUTURE COULD SUPPORT THE ASSERTION OF ANY OF THE RELEASED CLAIMS AGAINST THE RELEASED PARTIES. THE RELEASING PARTIES FURTHER COVENANT NOT TO SUE THE RELEASED PARTIES ON ACCOUNT OF ANY OF THE RELEASED CLAIMS, AND EXPRESSLY WAIVE ANY AND ALL DEFENSES THEY MAY HAVE IN CONNECTION WITH THEIR DEBTS AND OBLIGATIONS UNDER THE LOAN DOCUMENTS AND THIS AGREEMENT. THIS PARAGRAPH IS IN ADDITION TO AND SHALL NOT IN ANY WAY LIMIT ANY OTHER RELEASE, COVENANT NOT TO SUE, OR WAIVER BY THE RELEASING PARTIES IN FAVOR OF THE RELEASED PARTIES.

        Section 5.11      INDEMNIFICATION.      BORROWER AND EACH DOMESTIC SUBSIDIARY HEREBY AGREE TO INDEMNIFY, DEFEND AND SAVE LENDER HARMLESS FROM ANY AND ALL CLAIMS, LOSSES, COSTS, DAMAGES, LIABILITIES, OBLIGATIONS AND EXPENSES, INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES (WHETHER INSIDE OR OUTSIDE COUNSEL IS USED), INCURRED BY LENDER BY REASON OF ANY DEFAULT OR EVENT OF DEFAULT, IN COMMERCIALLY REASONABLE ACTIONS TO DEFEND OR PROTECT THE LIENS WHICH SECURE OR PURPORT TO SECURE ALL OR ANY PORTION OF THE

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INDEBTEDNESS, WHETHER EXISTING UNDER ANY LOAN DOCUMENTS OR OTHERWISE OR THE PRIORITY THEREOF, OR IN COMMERCIALLY REASONABLE ACTS TO ENFORCE THE OBLIGATIONS OF BORROWER, ANY DOMESTIC SUBSIDIARY, OR ANY OTHER PERSON UNDER OR PURSUANT TO ANY LOAN DOCUMENT, OR IN THE PROSECUTION OR DEFENSE OF ANY ACTION OR PROCEEDING CONCERNING ANY MATTER GROWING OUT OF OR CONNECTED WITH THE COLLATERAL OR ANY LOAN DOCUMENTS, INCLUDING ANY CLAIMS, LOSSES, COSTS, DAMAGES, LIABILITIES, OBLIGATIONS, AND EXPENSES RESULTING FROM LENDER'S OWN NEGLIGENCE, EXCEPT AND TO THE EXTENT BUT ONLY TO THE EXTENT CAUSED BY LENDER'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

        Section 5.12      ENTIRE AGREEMENT.      THE AGREEMENT, THIS AMENDMENT AND ALL OTHER INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THE AGREEMENT OR THIS AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

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        Executed as of the date first written above.

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Joinder

        By execution of this Joinder each Domestic Subsidiary hereby expressly (i) acknowledges and accepts the terms of this Amendment, (ii) affirms the representations and warranties attributable to each of them in Section 4.3 of the Amendment, (iii) ratifies and affirms its obligations under its respective Guaranty Agreement