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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



                                   FORM 10-K/A
                                 AMENDMENT NO. 1


[X]     ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
        EXCHANGE ACT OF 1934

                      For the year ended December 31, 1999

                         Commission file number 0-27824
                                SPAR GROUP, INC.

Delaware 33-0684451 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
580 WHITE PLAINS ROAD, SIXTH FLOOR, TARRYTOWN, NY 10591 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (914) 332-4100 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to section 12(g) of the Act: Common Stock, par value $.01 per share Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES[X] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[ ] The aggregate market value of the Common Stock of the Registrant held by non-affiliates of the Registrant on March 30, 2000, based on the closing price of the Common Stock as reported by the Nasdaq SmallCap Market on such date, was approximately $56,797,963. [ ] The number of shares of the Registrant's Common Stock outstanding as of March 30, 2000 was 18,175,348 shares. DOCUMENTS INCORPORATED BY REFERENCE None. ================================================================================ INTRODUCTION On April 14, 2000, SPAR Group, Inc. ("SPAR" or the "Company"), filed with the Securities and Exchange Commission (the "Commission") its Annual Report on Form 10-K for its fiscal year December 31, 1999 (the "1999 Form 10-K") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The information called for by items 10, 11, 12 and 13 of Part III of Form 10-K was not included in the body of the 1999 Form 10K as filed, but was incorporated by reference to the Company's Proxy Statement, which was expected to be filed with the Commission within the requisite 120-day period. Because the Company is not in fact filing its Proxy Statement within such 120 day period, this Form 10-K/A amends the 1999 Form 10-K by deleting the caption and first paragraph from such form and substituting for such items the following replacements for Items 10, 11, 12 and 13. In addition, Item 14 is hereby deleted and replaced with Item 14 as filed herewith. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth certain information in connection with each person who is or was at December 31, 1999, an executive and/or director for SPAR.
NAME AGE POSITION WITH SPAR GROUP, INC. - ---- --- ------------------------------ Robert G. Brown 57 Chairman, Chief Executive Officer, President and Director William H. Bartels 56 Vice Chairman and Director Patrick W. Collins(1) 70 Director, (Resigned March 6, 2000) Robert O. Aders(2) 71 Director J. Christopher Lewis(1) (2) 43 Director Charles Cimitile 45 Chief Financial Officer and Secretary James H. Ross 66 Treasurer
- -------------------------- (1) Member of the Compensation Committee (2) Member of the Audit Committee Robert G. Brown serves as the Chairman, the Chief Executive Officer, the President and a Director of the Company and has held such positions since July 8, 1999 (the effective date of the Merger). Mr. Brown served as the Chairman, President and Chief Executive Officer of the SPAR Marketing Companies (SBRS since 1994, SINC since 1979, SMNEV since November 1993, and SMF since SMF acquired its assets and business in 1996). William H. Bartels serves as the Vice Chairman and a Director of the Company and has held such positions since July 8, 1999 (the effective date of the Merger). Mr. Bartels served as the Vice-Chairman, Secretary, Treasurer and Senior Vice President of the SPAR Marketing Companies (SBRS since 1994, SINC since 1979, SMNEV since November 1993 and SMF since SMF acquired its assets and business in 1996), and has been responsible for the Company's sales and marketing efforts, as well as for overseeing joint ventures and acquisitions. Patrick W. Collins served as a Director of SPAR since July 8, 1999 (the effective date of the Merger) and had been a member of the PIA Merchandising Services, Inc. Board since May 1998. Mr. Collins served as Chief Operating Officer of Ralphs Grocery Company for 18 years, 17 of which he served as President and one year as Vice Chairman. Mr. Collins also serves as a director of Catalina Marketing Corporation, a provider of in-store electronic marketing services, and New Bristol Farms, Inc., a gourmet food grocery chain. Mr. Collins resigned from his position of Director of SPAR Group, Inc., effective March 6, 2000. Robert O. Aders serves as a Director of the Company and has done so since July 8, 1999. Mr. Aders has served as Chairman of The Advisory Board, Inc., an international consulting organization since 1993, as President Emeritus of the Food Marketing Institute ("FMI") since 1993, and as counsel to Collier, Shannon, Rill & Scott, a Washington, D.C. law firm since 1993. Immediately prior to his election to the presidency of FMI in 1976, Mr. Aders was Acting Secretary of Labor in the Ford Administration. Mr. Aders was the Chief Executive Officer of FMI from 1976 to 1993. He also served in the Kroger Co., in various executive positions and was Chairman of the Board from 1970 to 1974. Mr. Aders also serves as a director of FMI, the Stedman Nutrition Foundation at Duke Medical Center, Checkpoint Systems, Inc., Coinstar, Inc., Source Information Systems and Telepanel Systems, Inc., and as a trustee of The National Urban League, Food Industry Crusade Against Hunger and St. Joseph Academy of Food Marketing. J. Christopher Lewis serves as a Director of the Company, holding such position since July 8, 1999 (the effective date of the Merger), and had been a member of the PIA Merchandising Services, Inc. Board since April 1997. Since 1981, Mr. Lewis has been general partner of Riordan, Lewis & Haden. Mr. Lewis also serves as a director of Tetra Tech, Inc., SM&A Corporation, California Beach Restaurants, Inc., an owner and operator of restaurants, and several privately-held companies. Charles Cimitile serves as the Chief Financial Officer and Secretary of the Company and has done so since November 24, 1999. Mr. Cimitile served as Chief Financial Officer for GT Bicycles from 1996 to 1999 and Cruise Phone, Inc. from 1995 through 1996. Prior to 1995, he served as the Vice President Finance, Treasurer and Secretary of American Recreation Company Holdings, Inc. and its predecessor company. James H. Ross serves as the Treasurer of the Company and has held such positions since July 8, 1999 (the effective date of the Merger). Mr. Ross has been the Chief Financial Officer of the SPAR Marketing Companies since 1991, and was the General Manager of SBRS from 1994-1999. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's directors and certain of its officers and persons who own more than 10% of SPAR Common Stock (collectively, "Insiders"), to file reports of ownership and changes in their ownership of SPAR Common Stock with the Commission. Insiders are required by Commission regulations to furnish SPAR with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Forms 5s were required for those persons, SPAR believes that Page 3 its Insiders complied with all applicable Section 16(a) filing requirements for fiscal 1999, with the exception of Mr. Charles Cimitile, who has not filed a Form 3, but does not own any stock. ITEM 11. EXECUTIVE COMPENSATION AND OTHER INFORMATION OF SPAR GROUP, INC. EXECUTIVE COMPENSATION The following table sets forth all compensation received for services rendered to SPAR in all capacities for the years ended December 31, 1999, December 31, 1998 and December 31, 1997. SUMMARY COMPENSATION TABLE(1)
LONG TERM ANNUAL COMPENSATION COMPENSATION AWARDS ------------------------------- ------------------------- SECURITIES ALL OTHER FISCAL UNDERLYING COMPENSATION NAME AND PRINCIPAL POSITIONS YEAR SALARY ($) BONUS ($) OPTIONS (#) (2)($) - -------------------------------------------- ---- ---------- --------- ----------- ------------ Robert G. Brown 1999 7,500 -- -- -- Chief Executive Officer, Chairman of 1998 125,000 -- -- 791 the Board, President, and Director 1997 46,756 -- -- 553 William H. Bartels 1999 16,307 -- -- -- Vice Chairman and Director 1998 75,000 -- -- 1,439 1997 85,089 -- -- 1,724 James H. Ross 1999 111,235 0 -- 2,187 Treasurer and Vice President 1998 80,535 1,710 -- 1,897 1997 106,660 1,295 -- 3,001
--------------------- (1) For accounting purposes, the Merger is treated as an acquisition of PIA Merchandising Services, Inc. ("Old PIA"), by the SPAR Companies. Accordingly, these figures represent the compensation paid by the Company since July 8, 1999, the effective date of the Merger, and the SPAR Companies prior to that date, but not compensation paid by Old PIA. See Item I, "Merger and Restructuring". Prior to the Merger, Terry R. Peets served as the Chief Executive Officer, the President and a Director of Old PIA, which is the same legal entity as the Company but not the same accounting entity. Subsequent to the Merger, Mr. Peets served as Vice-Chairman of SPAR until his resignation in September, 1999. Mr. Peets received $133,354 in compensation from the Old PIA prior to the Merger (which for accounting purposes was not compensation paid by the Company) and $124,558 in compensation (including severance payments) from SPAR after the Merger. (2) Other compensation represents the Company's 401k contribution. Page 4 STOCK OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth information regarding each grant of stock options made during the year ended December 31, 1999, to each of the Named Executive Officers. No stock appreciation rights ("SAR's") were granted during such period to such persons.
INDIVIDUAL GRANTS ------------------------------------------------------ PERCENT OF NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE AT SECURITIES OPTIONS EXERCISE EXPIRATION ASSUMED ANNUAL RATES OF STOCK UNDERLYING GRANTED TO PRICE DATE PRICE APPRECIATION FOR OPTION(4) OPTIONS EMPLOYEES IN ($/SH) -------------------------------- NAME GRANTED (#) PERIOD (%) 5% ($) 10% ($) - -------------------- ------------- ------------- ------------ --------------------------------------------- Robert G. Brown 382,986(1) 16.7 5.500 07/08/09 3,267,753 4,966,835 382,986(2) 16.7 5.500 07/08/09 3,267,753 4,966,835 William H. Bartels 235,996(1) 10.3 5.500 07/08/09 2,013,590 3,060,564 235,996(2) 10.3 5.500 07/08/09 2,013,590 3,060,564 Charles Cimitile 75,000(1) 3.3 3.500 11/24/09 407,224 618,961 James H. Ross 40,000(1) 1.7 5.000 07/08/09 310,266 471,590 52,665(3) 2.3 0.010 07/08/09 408,504 620,907 - ------------
(1) All such options vest over four-year periods at a rate of 25% per year, beginning on the first anniversary of the date of grant. (2) Options will vest in full at such time as the Company's stock price for the Company's common stock, as reported on the Nasdaq SmallCap market, equals a price of $10.00 per share. (3) These options are fully vested at December 31, 1999. (4) The potential realizable value is calculated based upon the term of the option (ten years) at its time of grant. It is calculated by assuming that the stock price on the date of grant appreciates at the indicated annual rate, compounded annually for the entire term of the option. AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES The following table sets forth the number and value of the exercisable and unexercisable options held by each of the Named Executive Officers at December 31, 1999. None of the Named Executive Officers exercised any options during the fiscal year ended December 31, 1999.
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT YEAR-END (#) FISCAL YEAR-END ($)(1) ---------------------------------- ------------------------------- NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - --------------------------------------------- ---------------- ---------------- ------------- ---------------- Robert G. Brown 0 765,972 0 0 William H. Bartels 0 471,992 0 0 Charles Cimitile 0 75,000 0 0 James H. Ross 52,665 40,000 177,481 0
- ------------ (1) The only in-the-money options at December 31, 1999, were owned by James H. Ross. The market value of SPAR common stock was $3.38 as of December 31, 1999, which was greater than the exercise price of $.01 per share. Page 5 COMPENSATION PLANS As a result of the reverse merger with PIA, SPAR Group, Inc., has three stock option plans: The 1990 Stock Option Plan ("1990 Plan"), the Amended and Restated 1995 Stock Option Plan ("1995 Plan") and the 1995 Director's Plan ("Director's Plan"). The 1990 plan is a nonqualified option plan providing for the issuance of up to 683,109 shares of common stock to officers, directors and key employees. The options have a term of ten years and one week and are either fully vested or will vest ratably no later than five years from the grant date. Since 1995, no options have been granted under this plan. The 1995 Plan provides for the granting of either incentive or nonqualified stock options to specified employees, consultants and directors of SPAR Group, Inc. for the purchase of up to 3,500,000 shares of SPAR's common stock. The options have a term of ten years, except in the case of incentive stock options granted to greater than 1% stockholders of the SPAR, for which the term is five years. The exercise price of nonqualified stock options must be equal to at least 85% of the fair market value of SPAR's common stock at the date of grant, the exercise price of incentive stock options must be equal to at least the fair market value of SPAR's common stock at the date of grant. At December 31, 1999, options to purchase 500,256 shares were available for grant under this plan. The Director's Plan is a stock option plan for nonemployee directors and provides for the purchase of up to 100,000 shares of SPAR's common stock. An option to purchase 1,500 shares of SPAR's common stock shall be granted automatically each year to each director, following SPAR's annual stockholder's meeting. The exercise price of options issued under this plan shall be not less than the fair market value of SPAR's common stock on the date of grant. Each option under this plan shall vest and become exercisable in full on the first anniversary of its grant date, provided the optionee is reelected as a director of SPAR. The maximum term of options granted under the plan is ten years and one day, subject to earlier termination following an optionee's cessation of service with SPAR. At December 31, 1999, options to purchase 86,500 shares were available for grant under this plan. Under the Nonemployee Directors Plan, an option to purchase 1,500 shares of SPAR common stock is granted to each Eligible Director immediately following each annual meeting of stockholders of SPAR. Each option vests and becomes exercisable in full at the next annual meeting of stockholders, provided that the optionee is reelected as a director of SPAR. The maximum term of options granted under the Nonemployee Directors Plan is ten years and one day, subject to earlier termination following an optionee's cessation of service with SPAR. The exercise price of stock options granted under the Nonemployee Directors Plan will be the fair market value of the SPAR common stock on the date of grant. COMPENSATION OF DIRECTORS During the year ended December 31, 1999, SPAR paid to Mr. Aders and to Mr. Collins, a former director, an aggregate of $3,000 and $6,000, respectively, for services as members of the SPAR Board. Mr. Lewis received no compensation for his services as a director (other than the grant of options as described in the following paragraphs). Messrs. Aders, Collins and Lewis were also reimbursed for certain expenses in connection with their attendance at SPAR Board and committee Page 6 meetings. During 1999, Mr. Aders was granted an option to purchase 10,000 shares of SPAR's common stock at an exercise price of $.01 per share. The options vest ratably over a four-year period. Mr. Lewis was granted an option to purchase 1,500 shares of SPAR common stock at an exercise price of $5.00 per share. These options have a one-year vesting period. SPAR 's Compensation Committee administers the Nonemployee Directors Plan. Each member of the SPAR Board who is not otherwise an employee or officer of SPAR or any subsidiary of SPAR (each, an "Eligible Director") is eligible to participate in the Nonemployee Directors Plan. Directors who are consultants of, but not otherwise employees or officers of, SPAR are Eligible Directors. Under the Nonemployee Directors Plan, an option to purchase 1,500 shares of SPAR common stock is granted to each Eligible Director immediately following each annual meeting of stockholders of SPAR. Each option vests and becomes exercisable in full at the next annual meeting of stockholders, provided that the optionee is reelected as a director of SPAR. The maximum term of options granted under the Nonemployee Directors Plan is ten years and one day, subject to earlier termination following an optionee's cessation of service with SPAR. The exercise price of stock options granted under the Nonemployee Directors Plan will be the fair market value of the SPAR common stock on the date of grant. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No member of the Compensation Committee was at any time during the year ended December 31, 1999, or at any other time an officer or employee of SPAR. No executive officer of SPAR serves as a member of the SPAR Board or compensation committee of any other entity, which has one or more executive officers serving as a member of the SPAR Board or Compensation Committee. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
NUMBER OF SHARES TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENTAGE - -------------- ------------------------------------ ------------------ ---------- Common Robert G. Brown(1) 7,591,965(2) 39.3% Shares Common William H. Bartels(1) 4,805,022 24.8% Shares Common J. Christopher Lewis 157,477(3) * Shares 300 S. Grand Avenue, Suite 2900 Los Angeles, California 90071 Common James H. Ross(1) 68,865(4) * Shares Common Patrick W. Collins(1) 7,500(5) * Shares Common Richard J. Riordan 1,209,922(6) 6.26% Shares 300 S. Grand Avenue, Suite 2900 Los Angeles, CA 90071
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NUMBER OF SHARES TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENTAGE - -------------- ------------------------------------ ------------------ ---------- Common Heartland Advisors, Inc. 1,522,500(7) 7.9% Shares 790 North Milwaukee Street Milwaukee, Wisconsin 53202 Common Executive Officers and Directors 12,630,829 65.4% Shares
* Less than 1% (1) The address of such owners is c/o SPAR Group, Inc. 580 White Plains Road, 6th Floor, Tarrytown, New York. (2) Includes 1,800,000 shares held by a grantor trust for the benefit of certain family members of Robert G. Brown over which Robert G. Brown, James R. Brown, Sr. and William H. Bartels is a trustee, and 180,000 shares held by a grantor trust for the benefit of certain other family members of Robert G. Brown over which each of Robert G. Brown, James R. Brown, Sr. and William H. Bartels is a trustee. (3) All information regarding share ownership is taken from and furnished in reliance upon the Schedule 13G (Amendment No. 1), dated February 10, 2000, filed by J. Christopher Lewis, Patrick C. Haden, Riordan Lewis & Haden, and RVM/PIA with the Securities and Exchange Commission on March 2, 2000. Includes 95,577 shares owned by Riordan Lewis & Haden ("RLH"). Mr. Lewis, a director of SPAR, may be deemed to share voting and investment power with respect to all such shares as a general partner of RLH. One other partner of RLH has voting power or investment power with respect to such shares. Also includes 7,000 shares issuable upon the exercise of options held by Mr. Lewis. (4) Includes 52,665 shares issuable by in the money options as of December 31, 1999. (5) Includes 7,500 shares issuable upon the exercise of options. (6) All information regarding share ownership is taken from and furnished in reliance upon the Schedule 13G, dated February 10, 2000 and filed by Richard J. Riordan with the Securities and Exchange Commission on February 14,2000. (7) All information regarding share ownership is taken from and furnished in reliance upon the Schedule 13G (Amendment No. 6), dated January 27, 2000, filed by Heartland Advisors, Inc. with the Securities and Exchange Commission on February 3, 2000. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Mr. Robert G. Brown, a director, the Chairman and the Chief Executive Officer of the Company, and Mr. William H. Bartels, a director and the Vice Chairman of the Company, are the sole stockholders and executive officers and directors of SPAR Marketing Services, Inc. ("SMS"), SPAR Management Services, Inc. ("SMSI"), SPAR Infotech, Inc. ("SIT"), and certain other companies. SMS and SMSI (through SMS) provided field representative (through its independent contractor field force) and field management services to the SPAR Marketing Companies at a total cost of $3.2 million in the fiscal year ended March 31, 1998, and at a total cost of $2.8 million to the SPAR Marketing Companies for the nine months ended December 31, 1998, and $4.1 million for the 12 months ended December 31, 1999. Under the terms of the Field Service Agreement, SMS will continue to provide the services of approximately 2,300 field representative and through SMSI will provide 37 regional and district managers to the SPAR Marketing Companies as they may request from time to time, for which SPAR has agreed to pay SMS for all of its costs of providing those Page 8 services plus 4%. However, SMS may not charge any SPAR Company for any past taxes or associated costs for which the SAI Principals have agreed to indemnify the SPAR Companies. SMS is currently engaged in a dispute with the Internal Revenue Service over the independent contractor status of its field personnel. See Note 8 the Financial Statements. SIT provided computer programming services to SMF at a total cost of $0 to SMF in the fiscal year ended March 31, 1998, and at a total cost of $0 to SMF for the nine months ended December 31, 1998 and $608,000 for the year ended December 31, 1999. Under the terms of the programming agreement between SMF and SIT effective as of October 1, 1998 (the "Programming Agreement"), SIT continues to provide programming services to SMF as SMF may request from time to time, for which SMF has agreed to pay SIT competitive hourly wage rates and to reimburse SIT's out-of-pocket expenses. See Note 10 to the Financial Statements. In July 1999, SMF, SMS and SIT entered into a Software Ownership Agreement with respect to Internet job scheduling software jointly developed by such parties. In addition, STM, SMS and SIT entered into trademark licensing agreements whereby STM has granted non-exclusive royalty-free licenses to SIT and SMS for their continued use of the name "SPAR" and certain other trademarks and related rights transferred to STM in connection with the Merger. In the event of any material dispute in the business relationships between SPAR, SMS, SMSI, or SIT, or in the course of pursuing SMS' independent contractor/employee dispute with the IRS, it is possible that Messrs. Brown and Bartels may have one or more conflicts of interest with respect to these relationships and dispute that could have a material adverse effect on SPAR Group, Inc. See Note 8 to the Financial Statements. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. 1. INDEX TO FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT:
Independent Auditors' Report F-1 Consolidated and Combined Balance Sheets as of December 31, 1999 and December 31, 1998 F-2 Consolidated and Combined Statements of Operations for the year ended December 31, 1999, for the nine month period ended December 31, 1998, and the year ended March 31, 1998 F-3 Consolidated and Combined Statements of Stockholders' Equity for the year ended December 31, 1999, for the nine month period ended December 31, 1998, and the year ended March 31, 1998 F-4 Consolidated and Combined Statements of Cash Flows for the year ended December 31, 1999, for the nine month period ended December 31, 1998, and the year ended March 31, 1998 F-5
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Notes to Financial Statements F-6 2. FINANCIAL STATEMENT SCHEDULES. Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 1999 the nine month period ended December 31, 1998, and the year ended March 31, 1998 F-39
Page 10 3. EXHIBITS.
EXHIBIT NUMBER DESCRIPTION ------ ----------- 3.1 Certificate of Incorporation of SPAR Group, Inc., as amended. (incorporated by reference to the Company's Registration Statement on Form S-1 (Registration No. 33-80429) as filed with the Securities and Exchange Commission on December 14, 1995 (the "Form S-1") and to Exhibit 3.1 to the Company's Form 10-Q for the 3rd Quarter ended September 30, 1999). 3.2 By-laws of PIA (incorporated by reference to the Form S-1). 4.1 Registration Rights Agreement entered into as of January 21, 1992 by and between RVM Holding Corporation. RVM/PIA, a California Limited Partnership, The Riordan Foundation and Creditanstalt-Bankverine (incorporated by reference to the Form S-1). 10.1 1990 Stock Option Plan (incorporated by reference to the Form S-1). 10.2 Amended and Restated 1995 Stock Option Plan (incorporated by reference of Exhibit 10.2 to the Company's Form 10-Q for the 2nd Quarter ended July 3, 1998). 10.3 1995 Stock Option Plan for Non-employee Directors (incorporated by reference to the Form S-1). 10.4+* Employment Agreement dated as of June 25, 1997 between PIA and Terry R. Peets (incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q for the 2nd Quarter ended June 30, 1997) 10.5+* Severance Agreement dated as of February 20, 1998 between PIA and Cathy L. Wood (incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q for the 1st Quarter ended April 30, 1998) 10.6* Severance Agreement dated as of August 10, 1998 between PIA and Clinton E. Owens (incorporated by reference to Exhibit 10.6 to the Company's Form 10-Q for the 3rd Quarter ended October 2, 1998) 10.7+* Amendment No. 1 to Employment Agreement dated as of October 1, 1998 between PIA and Terry R. Peets. 10.8+* Amended and Restated Severance Compensation Agreement dated as of October 1, 1998 between PIA and Cathy L. Wood. 10.9+ Loan and Security Agreement dated December 7, 1998 among Mellon Bank, N.A., PIA Merchandising Co., Inc., Pacific Indoor Display Co. and PIA. 10.10+ Agreement and Plan of Merger dated as of February 28, 1999 among PIA, SG Acquisition, Inc., PIA Merchandising Co., Inc., SPAR Acquisition, Inc., SPAR Marketing, Inc., SPAR Marketing Force, Inc., SPAR, Inc., SPAR/Burgoyne Retail Services, Inc., SPAR Incentive Marketing, Inc., SPAR MCI Performance Group, Inc. and SPAR Trademarks, Inc.
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10.11+ Voting Agreement dated as of February 28, 1999 among PIA, Clinton E. Owens, RVM/PIA, California limited partnership, Robert G. Brown and William H. Bartels. 10.12* Amendment No. 2 to Employment Agreement dated as of February 11, 1999 between PIA and Terry R. Peets (incorporated by reference to Exhibit 10.12 to the Company's Form 10-Q for the 2nd Quarter ended April 2, 1999). 10.13 Special Purpose Stock Option Plan (incorporated by reference to Exhibit 10.13 of the Company's Form 10-Q for the 2nd Quarter ended July 2, 1999. 10.14 Amendment No. 1 to Severance Agreement dated as of May 18, 1999 between the Company and Cathy L. Wood (incorporated by reference to Exhibit 10.14 of the Company's Form 10-Q for the 3rd Quarter ended September 30, 1999). 10.15++ Second Amended and Restated Revolving Credit, Term Loan and Security Agreement by and among IBJ Whitehall Business Credit Corporation with SPAR Marketing Force, Inc., SPAR Group, Inc., SPAR, Inc., SPAR/Burgoyne Retail Services, Inc., SPAR Incentive Marketing, Inc., SPAR Trademarks, Inc., SPAR MCI Performance Group, Inc., SPAR Marketing, Inc. (DE), SPAR Marketing, Inc. (NV), SPAR Acquisition, Inc., PIA Merchandising, Co., Inc., Pacific Indoor Display Co., Inc., and Pivotal Sales Company dated as of September 22, 1999. 10.16++ Waiver and Amendment No. 1 ("Amendment") is entered into as of December 8, 1999, by and between SPAR Marketing Force, Inc., SPAR, Inc., SPAR/Burgoyne Retail Services, Inc., SPAR Group, Inc., SPAR Incentive Marketing, Inc., SPAR Trademarks, Inc., SPAR Performance Group, Inc. (f/k/a SPAR MCI Performance Group, Inc.), SPAR Marketing, Inc. (DE), SPAR Marketing, Inc. (NV), SPAR Acquisition, Inc., PIA Merchandising Co., Inc., Pacific Indoor Display Co., Inc. and Pivotal Sales Company (each a "Borrower" and collectively, the "Borrowers") and IBJ Whitehall Business Credit Corporation ("Lender"). 10.17** Service Agreement dated as of January 4, 1999 by and between SPAR Marketing Force, Inc. and SPAR Marketing Services, Inc. 10.18** Business Manager Agreement dated as of July 8, 1999 by and between SPAR Marketing Force, Inc. and SPAR Marketing Services, Inc. 21.1++ Subsidiaries of the Company 23.1++ Consent of Ernst & Young LLP 27.1++ Financial Data Schedule
Page 12 + Previously filed with initial Form 10-K for the fiscal year ended January 1, 1999. ++ Previously filed with Form 10-K for the fiscal year ended December 31, 1999. * Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to applicable rules of the Securities and Exchange Commission. ** Filed herewith. (B) REPORTS ON FORM 8-K. Form 8-K dated July 8, 1999 and filed with the Commission on July 23, 1999. Form 8-K/A dated July 8, 1999 and filed with the Commission on September 20, 1999. Page 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. SPAR GROUP, INC. May 1, 2000 By: /s/ Charles Cimitile ----------------------- Charles Cimitile Chief Financial Officer Page 14 EXHIBIT INDEX ------------- EXHIBIT NUMBER DESCRIPTION ------ ----------- 3.1 Certificate of Incorporation of SPAR Group, Inc., as amended. (incorporated by reference to the Company's Registration Statement on Form S-1 (Registration No. 33-80429) as filed with the Securities and Exchange Commission on December 14, 1995 (the "Form S-1") and to Exhibit 3.1 to the Company's Form 10-Q for the 3rd Quarter ended September 30, 1999). 3.2 By-laws of PIA (incorporated by reference to the Form S-1). 4.1 Registration Rights Agreement entered into as of January 21, 1992 by and between RVM Holding Corporation. RVM/PIA, a California Limited Partnership, The Riordan Foundation and Creditanstalt-Bankverine (incorporated by reference to the Form S-1). 10.1 1990 Stock Option Plan (incorporated by reference to the Form S-1). 10.2 Amended and Restated 1995 Stock Option Plan (incorporated by reference of Exhibit 10.2 to the Company's Form 10-Q for the 2nd Quarter ended July 3, 1998). 10.3 1995 Stock Option Plan for Non-employee Directors (incorporated by reference to the Form S-1). 10.4+* Employment Agreement dated as of June 25, 1997 between PIA and Terry R. Peets (incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q for the 2nd Quarter ended June 30, 1997) 10.5+* Severance Agreement dated as of February 20, 1998 between PIA and Cathy L. Wood (incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q for the 1st Quarter ended April 30, 1998) 10.6* Severance Agreement dated as of August 10, 1998 between PIA and Clinton E. Owens (incorporated by reference to Exhibit 10.6 to the Company's Form 10-Q for the 3rd Quarter ended October 2, 1998) 10.7+* Amendment No. 1 to Employment Agreement dated as of October 1, 1998 between PIA and Terry R. Peets. 10.8+* Amended and Restated Severance Compensation Agreement dated as of October 1, 1998 between PIA and Cathy L. Wood. 10.9+ Loan and Security Agreement dated December 7, 1998 among Mellon Bank, N.A., PIA Merchandising Co., Inc., Pacific Indoor Display Co. and PIA. 10.10+ Agreement and Plan of Merger dated as of February 28, 1999 among PIA, SG Acquisition, Inc., PIA Merchandising Co., Inc., SPAR Acquisition, Inc., SPAR Marketing, Inc., SPAR Marketing Force, Inc., SPAR, Inc., SPAR/Burgoyne Retail Services, Inc., SPAR Incentive Marketing, Inc., SPAR MCI Performance Group, Inc. and SPAR Trademarks, Inc. 10.11+ Voting Agreement dated as of February 28, 1999 among PIA, Clinton E. Owens, RVM/PIA, California limited partnership, Robert G. Brown and William H. Bartels. 10.12* Amendment No. 2 to Employment Agreement dated as of February 11, 1999 between PIA and Terry R. Peets (incorporated by reference to Exhibit 10.12 to the Company's Form 10-Q for the 2nd Quarter ended April 2, 1999). 10.13 Special Purpose Stock Option Plan (incorporated by reference to Exhibit 10.13 of the Company's Form 10-Q for the 2nd Quarter ended July 2, 1999. 10.14 Amendment No. 1 to Severance Agreement dated as of May 18, 1999 between the Company and Cathy L. Wood (incorporated by reference to Exhibit 10.14 of the Company's Form 10-Q for the 3rd Quarter ended September 30, 1999). 10.15++ Second Amended and Restated Revolving Credit, Term Loan and Security Agreement by and among IBJ Whitehall Business Credit Corporation with SPAR Marketing Force, Inc., SPAR Group, Inc., SPAR, Inc., SPAR/Burgoyne Retail Services, Inc., SPAR Incentive Marketing, Inc., SPAR Trademarks, Inc., SPAR MCI Performance Group, Inc., SPAR Marketing, Inc. (DE), SPAR Marketing, Inc. (NV), SPAR Acquisition, Inc., PIA Merchandising, Co., Inc., Pacific Indoor Display Co., Inc., and Pivotal Sales Company dated as of September 22, 1999. 10.16++ Waiver and Amendment No. 1 ("Amendment") is entered into as of December 8, 1999, by and between SPAR Marketing Force, Inc., SPAR, Inc., SPAR/Burgoyne Retail Services, Inc., SPAR Group, Inc., SPAR Incentive Marketing, Inc., SPAR Trademarks, Inc., SPAR Performance Group, Inc. (f/k/a SPAR MCI Performance Group, Inc.), SPAR Marketing, Inc. (DE), SPAR Marketing, Inc. (NV), SPAR Acquisition, Inc., PIA Merchandising Co., Inc., Pacific Indoor Display Co., Inc. and Pivotal Sales Company (each a "Borrower" and collectively, the "Borrowers") and IBJ Whitehall Business Credit Corporation ("Lender"). 10.17** Service Agreement dated as of January 4, 1999 by and between SPAR Marketing Force, Inc. and SPAR Marketing Services, Inc. 10.18** Business Manager Agreement dated as of July 8, 1999 by and between SPAR Marketing Force, Inc. and SPAR Marketing Services, Inc. 21.1++ Subsidiaries of the Company 23.1++ Consent of Ernst & Young LLP 27.1++ Financial Data Schedule + Previously filed with initial Form 10-K for the fiscal year ended January 1, 1999. ++ Previously filed with Form 10-K for the fiscal year ended December 31, 1999. * Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to applicable rules of the Securities and Exchange Commission. ** Filed herewith.
                                                                  Exhibit 10.17

                                SERVICE AGREEMENT

                  THIS  SERVICE  AGREEMENT  dated as of  January 4, 1999 (as the
same may be supplemented,  modified,  amended, restated or replaced from time to
time in the manner provided herein,  this  "Agreement"),  is by and between SPAR
MARKETING FORCE, INC.  ("Marketing  Force"),  and SPAR MARKETING SERVICES,  INC.
("SMS").

                                    RECITALS
                                    --------

                  SMS has  previously  provided and currently  provides  certain
field  representative  and  management  services to Marketing  Force and others.
Marketing  Force and SMS desire to memorialize the terms and conditions on which
SMS will continue to provide,  on a nonexclusive  basis, the services  described
below on behalf of Marketing  Force with respect to in-store  merchandising  and
related services at the stores and other locations of the customers of Marketing
Force and such of Marketing Force's  affiliates as Marketing Force may from time
to time request  (collectively,  "Stores") within the continental  United States
and Canada (the "Territory").

                                    AGREEMENT
                                    ---------

                  NOW,  THEREFORE,  in  consideration of the mutual promises and
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged  by the parties,  the
parties hereto hereby agree as follows:

                  1. Term This  Agreement  shall  commence upon the date hereof,
and shall continue through December 31, 2000, and shall be automatically renewed
and continue for additional one year periods thereafter (the "Term"), unless (a)
either  party  gives  the other  written  notice at least  sixty  days  prior to
December  31 of any year  (commencing  in 2000) of its  desire to not renew this
Agreement,  or (b) this  Agreement  is sooner  terminated  pursuant to Section 5
hereof.

                  2. Merchandising,  Scheduling and Supervisory Services. During
the Term,  SMS shall (a) stock,  restock and replenish  merchandise  and perform
other  merchandising and related  activities and services requested from time to
time by Marketing  Force (the  "Merchandising  Services")  in Stores  within the
Territory on behalf of Marketing Force and such of Marketing Force's  affiliates
as Marketing  Force may from time to time request for the customers of Marketing
Force and such affiliates,  (b) operate and maintain the Internet job scheduling
and other  software  utilized by the field managers and personnel of SMS and the
field personnel of Marketing Force and such affiliates of Marketing Force as may
be requested from time to time by Marketing Force (the  "Scheduling  Services"),
and  (c)  manage  and  direct  the  field   personnel  of  SMS   performing  the
Merchandising  Services  and such field  personnel  of  Marketing  Force and its
affiliates  as may be  requested  from  time  to time by  Marketing  Force  (the
"Personnel  Services",   and  together  with  the  Merchandising   Services  and
Scheduling   Services,   the  "Services").   Any  merchandise   needed  for  the
Merchandising  Services  shall be  delivered  to the  Stores  (or at such  other
location as may be  mutually  agreed  upon by the  parties  with  respect to any
particular  task)  from  time to time by or on  behalf  Marketing  Force  or the
applicable customers, all at no cost and expense to SMS. Marketing Force and SMS
shall in good faith establish and implement mutually  acceptable  procedures for
the scheduling and coordination of the performance of the Services.

                  3. Cost Plus Compensation. Except as otherwise provided in the
second and third sentences of this Section 3, Marketing  Force shall  compensate
SMS for the  performance of the Services in an amount equal to (a) all costs and
expenses  reasonably incurred by SMS in performing the Services pursuant hereto,
including  (without  limitation)  any and all independent  contractor  payments,
wages and other employment costs of all personnel, travel and other reimbursable
field  and  administrative  out of  pocket  costs  and  expenses,  purchases  of
equipment and supplies,  depreciation  and  amortization,  courier,  postage and
special  mailing  charges,  rent,  utilities,  and other overhead (the "Services
Costs"),  plus (b) four  percent  of the sum of the items in clause  (a),  above
(collectively with the Services Costs, the "Services  Compensation");  provided,
however,  that the Services Costs shall include any payroll and employment taxes
payable to field  employees  with respect to Services  performed  after the date
hereof.  Marketing  Force and SMS  acknowledge  and agree  that it is  presently
anticipated   that  the   stockholders   of  SMS  will   enter  into  a  Limited
Indemnification Agreement substantially in the form attached hereto as Exhibit A
(the  "Indemnity   Agreement")  in  connection  with  the  consummation  of  the
transactions  contemplated  by the Merger  Agreement (as such term is defined in
the Indemnity  Agreement).  Notwithstanding  the provisions of this

                                      -1-



Section 3 or any other provision of this Agreement, Marketing Force shall not be
required to compensate SMS for or otherwise pay or reimburse (and Services Costs
shall not include) any amount with respect to which the  stockholders of SMS (i)
would have been required to indemnify, defend and hold harmless any Merger Party
(as such term is defined in the Indemnity  Agreement)  pursuant to the Indemnity
Agreement  were it executed and effective as of the date of this  Agreement,  or
(ii) are  required  to  indemnify,  defend and hold  harmless  any Merger  Party
pursuant to the Indemnity  Agreement after it is executed and becomes  effective
(collectively, "Indemnified Amounts").

                  4. Payments. Marketing Force shall pay to SMS by wire transfer
a monthly  retainer of  $250,000  (as  adjusted  from time to time by the mutual
agreement of the parties) on or before the first of each month on account of the
Services Compensation respecting the estimated administrative and overhead costs
of performing the Services (i.e., the Services Compensation other than the field
personnel  costs).  SMS  shall  invoice  Marketing  Force  weekly  for all field
management  and personnel  costs,  and such invoices  shall be paid by Marketing
Force by wire transfer to SMS within two business  days after  receipt  thereof.
SMS may from time to time,  and at least once per quarter  shall,  reconcile the
retainer  and field  personnel  payments  and  invoice  Marketing  Force for any
shortfall,  or credit Marketing  Force's future invoices for any excess,  in the
Services Compensation  received by SMS during the calculation period.  Marketing
Force  shall have the right at its own cost and  expense to audit such costs and
expenses  from time to time upon  reasonable  notice to SMS,  provided  that the
audit shall be  conducted  in a manner that is not  unreasonably  disruptive  of
SMS's business.

                  5. Early  Termination.  Notwithstanding  any  provision to the
contrary  contained herein,  either party shall have the right to terminate this
Agreement  (i) for any  reason or no reason  upon six (6) months  prior  written
notice at any time, (ii) upon ten (10) business days prior written notice to the
other party in the event such other party  material  breaches this Agreement and
fails to cure such breach  within  thirty (30) days after  notice of such breach
from the  terminating  party, or (iii) upon ten (10) business days prior written
notice  to the other  party in the event of any  voluntary  or  involuntary  (A)
petition or similar pleading under any bankruptcy or similar act is commenced by
or against such other party,  or (B)  proceeding  is  instituted in any court or
tribunal  to declare  either  such other  party  insolvent  or unable to pay its
debts.

                  6. Force  Majeure.  SMS shall not be liable for any failure to
perform or for delay in performance of its obligations  caused by  circumstances
beyond its reasonable control,  including (without  limitation)  communications,
computer and power outages, fire, flood, ice and show storms, earthquake,  other
natural disasters, war, insurrection,  riot, sabotage, epidemic, labor disputes,
acts of God, acts of any government or agency thereof, or judicial action.

                  7.  Independent   Contractor,   Non-exclusive   Status,   Etc.
Marketing Force  acknowledges and agrees that its sole  relationship with SMS is
that of independent contractor,  and that no term or provision of this Agreement
or any  related  document  is  intended  to  create,  nor shall any such term or
provision  be  deemed  or  construed  to  have  created,   any  joint   venture,
partnership,  trust,  agency or other fiduciary  relationship with SMS or any of
its affiliates.  No term or provision of this Agreement or any related  document
is intended, or shall be deemed or construed, to in any way (a) limit the power,
authority or  discretion of SMS to conduct its business in such manner as it may
choose,  or (b) confer upon  Marketing  Force any right,  power or  privilege to
control,  direct, approve or otherwise affect any manner chosen by SMS or any of
its  affiliates  to conduct  its  business,  irrespective  of whether any of the
Services may be involved in or affected by any such  conduct.  Without  limiting
the  generality  of the  foregoing,  SMS shall  have full and  exclusive  power,
authority and  discretion at any time and from time to time (i) to hire,  direct
and discharge from time to time any and all officers, employees, agents, brokers
and  other  representatives  of SMS  (including,  without  limitation,  the  its
stockholders), (ii) to engage such independent contractors, affiliates and other
subcontractors as it may deem necessary or appropriate in the performance of the
Services,  (iii) to exercise  or  otherwise  enforce any of its rights,  powers,
privileges,  remedies or interests in whole or in part,  (iv) to delay,  refrain
from or discontinue any such exercise or other  enforcement,  (v) to perform the
same or similar services for others and pursue any and all other continuing, new
or other business opportunities of any nature or description,  which may include
(without  limitation,)  one or more of the  business  activities  engaged  in by
Marketing Force or its affiliates or aspects thereof,  whether  independently or
for or with other persons,  and  irrespective of location,  and (vi) to allocate
the time and attention and the other resources of SMS among the Services and its
various  other  activities,  provided  that such  allocation  does not adversely
affect the  performance of SMS hereunder in any material  respect,  in each case
without  notice to  Marketing  Force  (except as  otherwise  expressly  required
hereunder),  for any reason or no reason whatsoever and whether intentionally or
otherwise.  Marketing Force shall not be required to use SMS exclusively for the

                                      -2-
                                                                Doc.  No. 342441


provision  of Services in any Stores or  otherwise  at any time and may purchase
Services from any affiliate or other person without limitation or restriction of
any kind.

                  8.  Indemnification.  (a) Marketing  Force, its affiliates and
their respective officers, employees,  independent contractors,  agents, brokers
and other representatives (a "MF Indemnified Person") each shall be indemnified,
reimbursed and held harmless by SMS upon demand,  and defended at the expense of
SMS with counsel selected by SMS (and reasonably acceptable to Marketing Force),
from and against any and all claims, liabilities,  expenses (including,  without
limitation, the disbursements,  expenses and reasonable fees of their respective
attorneys)  and other losses that may be imposed  upon,  incurred by or asserted
against any MF Indemnified  Person resulting from, arising out of or directly or
indirectly  related to any Service or other activity  performed by SMS or any of
its  representatives  or any  misrepresentation,  omission,  breach,  default or
wrongdoing by SMS or any of its representatives;  in each case other than to the
extent  occasioned  by the gross  negligence  or  willful  misconduct  of any MF
Indemnified  Person  as  finally  determined  pursuant  to  applicable  law by a
governmental authority having jurisdiction.

                  (b)  SMS,  its  affiliates  and  their  respective   officers,
employees, independent contractors, agents, brokers and other representatives (a
"SMS  Indemnified  Person")  each  shall  be  indemnified,  reimbursed  and held
harmless  by  Marketing  Force  upon  demand,  and  defended  at the  expense of
Marketing  Force with  counsel  selected  by  Marketing  Force  (and  reasonably
acceptable to SMS), from and against any and all claims,  liabilities,  expenses
(including, without limitation, the disbursements,  expenses and reasonable fees
of their  respective  attorneys)  and other  losses  that may be  imposed  upon,
incurred  by or asserted  against any SMS  Indemnified  Person  resulting  from,
arising  out of or  directly  or  indirectly  related  to any  Service  or other
activity performed  substantially in accordance with the directions of Marketing
Force or any of its  representatives or any product defect in or other condition
of any merchandise provided or any misrepresentation,  omission, breach, default
or wrongdoing by Marketing  Force or any of its  representatives,  but excluding
any Indemnified Amounts; in each case other than to the extent occasioned by the
gross negligence or willful  misconduct of any SMS Indemnified Person as finally
determined  pursuant  to  applicable  law  by a  governmental  authority  having
jurisdiction.

                  9. Successors and Assigns; Assignment. This Agreement and each
related  document  shall  be  binding  upon  and  inure  to the  benefit  of the
successors,   permitted  assigns  and  legal   representatives   of  each  party
(including,  without  limitation,  any  assignee  of  substantially  all  of the
business or assets of any party or any  successor by merger).  Neither party may
assign any of its rights or  obligations  under this  Agreement  or any  related
document to any other person  without the consent of the other party;  provided,
however,  that (i) either party may assign its rights and obligations  hereunder
in whole or in part to any of its affiliates  (without,  however,  relieving the
assignor of any of its  obligations  hereunder) by giving the other party a copy
of such  assignment,  (ii) SMS  acknowledges and agrees that Marketing Force may
request (for its account  hereunder) that SMS provide services for affiliates of
Marketing Force without the need to formally assign any rights or obligations of
Marketing  Force to such  affiliates,  and  (iii)  nothing  in this  Section  is
intended,  or shall be  deemed  or  construed,  to in any way  limit  the use of
independent contractors as field representatives or managers by SMS.

                                  [END OF PAGE]


                                      -3-

                                                                Doc.  No. 342441



                  10. Counterparts,  Notices,  Governing Law,  Amendments,  Etc.
This Agreement  shall be effective on the date as of which this Agreement  shall
be executed and delivered by the parties hereto.  This Agreement may be executed
in two or more  counterpart  copies of the entire document or of signature pages
to the  document,  each of which may be  executed  by one or more of the parties
hereto,  but all of  which,  when  taken  together,  shall  constitute  a single
agreement binding upon all of the parties hereto.  All notices that are required
or otherwise given in connection with this Agreement shall be in writing,  shall
be  given  to a party  at the  address  set  forth  below  (or as most  recently
specified  by it to the other party in writing)  by  personal  delivery,  United
States  express  or  certified  mail,  return  receipt  requested,  or  national
overnight courier,  in each case with postage or delivery prepaid,  and shall be
deemed to have been given on the day it was delivered or refused. This Agreement
and all related  documents shall be governed by and construed in accordance with
the applicable laws pertaining,  in the State of New York (other than those that
would  defer to the  substantive  laws of another  jurisdiction).  The  headings
contained in this Agreement or any related  document are for reference  purposes
only and shall not affect the meaning or interpretation of this Agreement or any
related  document.  Each and every supplement or modification to or amendment or
restatement  of this  Agreement or any related  document shall be in writing and
signed by all of the parties hereto, and each and every waiver of, or consent to
any  departure  from,  any term or  provision  of this  Agreement or any related
document  shall be in writing and signed by each  affected  party  hereto.  This
Agreement  and the other Merger  Documents  contain the entire  agreement of the
parties and  supersede all other  representations,  warranties,  agreements  and
understandings, oral or otherwise, among the parties with respect to the matters
contained herein.

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

SPAR MARKETING SERVICES, INC.,              SPAR MARKETING FORCE, INC.
    a Nevada corporation                            an Nevada corporation

By: /s/ Robert G. Brown                     By:/s/ Robert G. Brown
   ----------------------------------         ----------------------------------
   Robert G. Brown                            Robert G. Brown
   Chairman, Chief Executive Officer,         Chairman, Chief Executive Officer,
         and President                             and President



                                                                Doc.  No. 342441

                                                                Exhibit 10.18

                           BUSINESS MANAGER AGREEMENT
                           --------------------------

                                  INTRODUCTION
                                  ------------

                  THIS BUSINESS MANAGER AGREEMENT,  dated as of July 8, 1999 (as
the same may be supplemented,  modified, amended, restated or replaced from time
to time in the manner provided herein, this "Agreement"), is by and between SPAR
INFOTECH,  INC., a Nevada  corporation  currently having an address at 303 South
Broadway,  Suite 140,  Tarrytown,  New York 10591  ("Infotech"),  SPAR MARKETING
FORCE,  INC.,  a Nevada  corporation  currently  having an  address at 303 South
Broadway,  Suite 140, Tarrytown,  New York 10591 ("Marketing  Force"),  and SPAR
MARKETING  SERVICES,  INC., a Nevada corporation  currently having an address at
303 South  Broadway,  Suite 140,  Tarrytown,  New York 10591 ("SMS").  The above
entities  are  sometimes  referred  to  herein  individually  as a  "Party"  and
collectively as the "Parties".

                                    RECITALS
                                    --------

                  The efforts of the Parties prior to the date of this Agreement
resulted  in the  creation of certain  Confidential  Information,  Software  and
Program  Documentation  (collectively  referred to herein as the "Joint Works").
The Parties have  determined  that it is in their best  interests to resolve any
existing or potential  disputes  concerning their respective rights in the Joint
Works, all upon the terms and provisions and subject to the conditions set forth
in this Agreement.

                                    AGREEMENT
                                    ---------

                  In  consideration  of the foregoing,  the mutual covenants and
agreements hereinafter set forth, and other good and valuable consideration (the
receipt  and  adequacy  of which is hereby  acknowledged  by the  Parties),  the
Parties hereto hereby agree as follows:

                  Section 1. DEFINITIONS. Each use in this Agreement of a neuter
pronoun  shall be deemed to include  references  to the  masculine  and feminine
variations  thereof,  and vice versa,  and a singular pronoun shall be deemed to
include a reference to the plural  variation  thereof,  and vice versa,  in each
case as the  context  may  permit or  require.  As used in this  Agreement,  the
following capitalized terms and non-capitalized words and phrases shall have the
meanings respectively assigned to them below, which meanings shall be applicable
equally to the singular and plural forms of the terms so defined:

                  (a)  "Business  Competitive  With  Infotech"  shall  mean  any
substantial  business  activity in collecting,  analyzing  and/or  disseminating
scanner data, ex-factory shipment data and/or other similar information.

                  (b) "Business Competitive With Marketing Force" shall mean any
substantial  business activity  conducted by any person that is competitive with
any substantial  business activity  conducted by any SPAR Company or PIA Company
at the Merger Effective Time (whether or not such person's  activity is actually
conducted  in  competition  with any SPAR  Company or PIA  Company),  excluding,
however,  any Business Competitive With Infotech (whether or not so conducted by
any SPAR Company or PIA Company).

                  (c)  "Confidential  Information"  includes  all field and file
definitions   and  source  code   relating  to  the  Software  and  the  Program
Documentation (as each are hereinafter defined),  including (without limitation)
the designs,  methods,  layouts,  processing procedures,  programming techniques
used or employed by the Parties,  including combinations thereof, in conjunction
therewith,   and  encompass  interactive  data  entry,  file  handling,   report
generation and all other aspects of operation.

                  (d) "Merger  Effective  Time" shall mean the "Effective  Time"
under (and as defined in) the  Agreement and Plan of Merger dated as of February
28, 1999,  among the SPAR Companies and the PIA Companies (which is the time the
merger  thereunder  takes effect and the


                                      -1-                        DOC. NO. 425654





SPAR Companies and PIA Companies come under common control),  as the same may be
supplemented,  modified,  amended, restated or replaced from time to time in the
manner provided therein.

                  (e) "PIA Company" and "PIA Companies" shall  respectively mean
any one or more of PIA MERCHANDISING SERVICES, INC., a Delaware corporation,  SG
ACQUISITION, INC., a Nevada corporation (which is merging into SPAR Acquisition,
Inc.),  PIA  MERCHANDISING  CO.,  INC.,  a  California  corporation,  and  their
respective subsidiaries as of the Merger Effective Time.

                  (f) "Program Documentation" means the user manuals,  handbooks
and other written materials relating to the Software, and any subsequent updates
or revisions to such scheduling software.

                  (g)  "Representative"  of  any  Party  shall  mean  any of its
directors, officers, employees, attorneys, heirs, executors,  administrators, or
agents, any of such Party's sublicensees, affiliates, successors and assigns, or
any of  their  respective  directors,  officers,  employees,  attorneys,  heirs,
executors, administrators, or agents.

                  (h)  "Software"  means  the  application  software  program(s)
respecting the "Business  Manager" Internet  scheduling  software  consisting of
executable object code programs for such scheduling  software and related screen
formats programmed to operate on the systems of the Parties,  and any subsequent
updates or revisions to such scheduling software.

                  (i) "SPAR  Company" and "SPAR  Companies"  shall  respectively
mean  any one or more of SPAR  ACQUISITION,  INC.,  a Nevada  corporation,  SPAR
MARKETING,  INC.,  a  Delaware  corporation,  SPAR  MARKETING,  INC.,  a  Nevada
corporation,  SPAR MARKETING FORCE,  INC., a Nevada  corporation,  SPAR, INC., a
Nevada corporation,  SPAR/BURGOYNE  RETAIL SERVICES,  INC., an Ohio corporation,
SPAR INCENTIVE  MARKETING,  INC., a Delaware  corporation,  SPAR MCI PERFORMANCE
GROUP,  INC.,  a  Delaware  corporation,  and SPAR  TRADEMARKS,  INC.,  a Nevada
corporation.

                  Section 2. THE JOINT WORKS; FUTURE  DEVELOPMENT;  SUBLICENSES;
LIMITS ON USE.


                  (a)  The  Parties  as  Co-Owners   of  the  Joint  Works.   In
consideration  for the  promises  made to it under  this  Agreement,  each Party
hereby grants and conveys to the other any and all right,  title and interest in
and to the Joint  Works that it may have as may be  required to render any other
Party a co-owner of the Joint Works.  Each party hereby  acknowledges and agrees
that each party is now and at all times has been a co-owner of all right,  title
and  interest in and to the Joint Works,  including  (without  limitation),  the
United States and international  copyright  interests  therein,  and any and all
moral rights in the Joint Works  recognized  by  applicable  law,  such that the
Parties each has and shall each continue to have, for any and all purposes,  the
right to transfer,  develop,  license,  control and otherwise  exploit the Joint
Works,  in whole  or in any  part,  as each of them may see fit,  in any and all
media  subject to the terms and  conditions  set forth in this  Agreement.  Each
party covenants and agrees that it shall in all future publications of the Joint
Works,  refer to its author as "SPAR Infotech,  Inc., SPAR Marketing Force, Inc.
and SPAR  Marketing  Services,  Inc." and state its  copyright  as "(C) [Date of
Publication] SPAR Infotech,  Inc., SPAR Marketing Force, Inc. and SPAR Marketing
Services, Inc." "All rights reserved."

                  (b)  Waiver  of  Claims  and  Rights  of   Participation   and
Accounting.  Each of the  Parties  hereby  knowingly  and  intentionally  waives
whatever  claims it may now have or may ever have against the other  Parties and
their respective Representatives for any claim related to rights of exploitation
of the Joint Works,  including  (without  limitation)  claims for  authorship or
copyright  infringement.  Each of the Parties knowingly and intentionally waives
any and all claims or rights that it may have or may ever have against the other
Parties and their respective  Representatives for


                                      -2-                        DOC. NO. 425654


any right of  participation  in, or accounting  for, the revenues that the other
party may derive from its use or exploitation of the Joint Works, in whole or in
part, without limitation.

                  (c) Future Development. The Parties acknowledge and agree that
any Party may  engage any other  Party from time to time to provide  programming
services, system work and other assistance in developing, revising and improving
the  Software  and/or  the  Program  Documentation,  which  shall be deemed  and
construed  to be for the benefit of all of the Parties.  The Parties  agree that
their  respective   contributions  to  all  such  improvements,   revisions  and
developments  shall be included  within the scope of the term "Software" and the
term  "Program  Documentation,"  respectively,  as such  terms  are used in this
Agreement and shall not be the sole property of any Party hereto.

                  (d)  Sublicenses.  Each Party from time to time may add one or
more  subsidiaries  or  affiliates  (but only those under common  ownership  and
control  with  the  Parties)  as a  sublicensee  under  this  Agreement  (each a
"Sublicensee" and collectively "Sublicensees").  Each Sublicensee hereby assumes
and agrees to be bound by the terms,  provisions  and conditions as set forth in
this  Agreement as if it were a "Party"  hereunder.  In the event the control or
ownership of any Sublicensee,  its business or  substantially  all of its assets
are sold or transferred so that such Sublicensee, business or assets cease to be
under common ownership and control with the sublicensing  Party, such subsidiary
or affiliate shall  automatically  cease to be a Sublicensee  hereunder from and
after such sale or transfer,  without, however, relieving or otherwise affecting
any  of  the  obligations  of  such  former  Sublicensees  with  respect  to its
obligations  with  respect to actions  or events  arising  prior to such sale or
transfer.

                  (e) Certain Limits on Use by Parties. Neither Infotech nor any
of its Sublicensees  shall use the Software or the Program  Documentation in any
material  respect in any Business  Competitive With Marketing Force; and neither
Marketing Force nor SMS nor any of their respective  Sublicensees  shall use the
Software or the Program  Documentation  in any material  respect in any Business
Competitive  With  Infotech.   The  Parties  acknowledge  and  agree  that  such
limitation  shall not  preclude  any Party or its  Sublicensees  from  using the
Software and the Program Documentation for any other purpose whatsoever (subject
to the licensing limitations of Section 5 hereof).

                  (f) No  Unpermitted  Users.  No Party shall  cause,  suffer or
permit  any of its  affiliates  or cause or enable  any other  person to use the
Software or the Program Documentation in any material respect unless such person
is a permitted Licensee or Sublicensee hereunder.

                  Section  3.  TERM.  The  term  of  this  Agreement   shall  be
perpetual.

                  Section 4. MUTUAL EXCULPATION AND RELEASE. No Party nor any of
its  Representatives  shall incur any liability to any other Party or any of its
Representatives  for any acts or omissions arising out of or related directly or
indirectly  to  any of  the  Software,  Program  Documentation  or  Confidential
Information,  any license,  use or application thereof, or any claims or actions
(including,  without limitation, claims for malfunction or infringement) and any
resulting  losses or expenses with respect  thereto of any Party or any of their
respective  Representatives of any kind or nature  whatsoever,  whether known or
unknown, in law or equity or otherwise;  and each Party (on behalf of itself and
each of its  Representatives)  hereby  expressly waives any and all such claims,
actions,  losses  and  expenses  against  each of the  releasing  Party  and its
Representatives  ever had, now have or hereafter can, shall or may have, against
the each other Party and its  Representatives by reason of any matter,  cause or
thing whatsoever from the beginning to the end of the world; provided,  however,
that  the  foregoing  release  shall  not  apply  to  the  Parties'   respective
obligations set forth in this Agreement.

                  Section 5. THIRD  PARTY  LICENSING..  Subject to the terms and
conditions  herein  contained,  each Party (but not its  Sublicensees) may grant
licenses to make, use or sell the

                                      -3-                        DOC. NO. 425654


Software and Program  Documentation  (a  "License") to one or more third parties
(each a "Licensee" and collectively "Licensees") on such terms and conditions as
such Party may elect,  provided,  however, that (a) Infotech shall not grant any
License to make,  use or sell the Software or the Program  Documentation  to any
Licensee whose business is a Business  Competitive With Marketing Force; and (b)
neither Marketing Force nor SMS shall grant any License to make, use or sell the
Software  or the  Program  Documentation  to any  Licensee  whose  business is a
Business Competitive With Infotech.

                  Section  6.  REPRESENTATIONS  AND  WARRANTIES  RESPECTING  THE
PARTIES.  Each Party  represents  and warrants to the each of the other  Parties
that,  as of the  date  hereof  that:  (a)  such  Party  is a  corporation  duly
incorporated,  validly existing and in good standing under the laws its state of
incorporation;  (b) such  Party has the legal  capacity,  power,  authority  and
unrestricted  right to execute and deliver this  Agreement and to perform all of
its obligations hereunder;  (c) the execution and delivery by such Party of this
Agreement and the performance by such Party of all of its obligations  hereunder
will  not  violate  or be in  conflict  with any  term or  provision  of (i) any
applicable law, (ii) any judgment, order, writ, injunction, decree or consent of
any court or other judicial  authority  applicable to such Party or any material
part of such  Party's  assets and  properties,  (iii) any of its  organizational
documents,  or (iv) any material  agreement or document to which such Party is a
party or subject or that applies to any material part of such Party's assets and
properties;  (d) no consent,  approval  or  authorization  of, or  registration,
declaration  or filing  with,  any  governmental  authority  or other  person is
required as a condition precedent,  concurrent or subsequent to or in connection
with the due and valid execution, delivery and performance by such Party of this
Agreement or the legality,  validity, binding effect or enforceability of any of
the terms and provisions of this  Agreement;  and (e) this Agreement is a legal,
valid and binding  obligation of such Party,  enforceable  against such Party in
accordance with its terms and provisions.

                  Section  7.  RELATIONSHIP  AMONG  THE  PARTIES.   No  term  or
provision of this  Agreement  is intended to create,  nor shall any such term or
provision be deemed or construed to have created, any employment, joint venture,
partnership,  trust, agency or other fiduciary  relationship between the Parties
and no Party  shall be  considered  as an  employee,  joint  venturer,  partner,
trustee, agent or other representative for or of any other Party. No Party shall
not be entitled  or have any power or  authority  to bind or obligate  any other
Party in any  manner  whatsoever  or to hold  itself out as an  employee,  joint
venturer, partner, trustee, agent or other representative of any other Party.

                  Section  8.  WAIVER  OF JURY  TRIAL.  In any  action,  suit or
proceeding  in any  jurisdiction  brought  against any Party by any other Party,
each Party hereby irrevocably waives trial by jury.

                  Section 9. CONSENT TO NEW YORK  JURISDICTION  AND VENUE,  ETC.
Each Party hereby consents and agrees that the Supreme Court of the State of New
York for the County of Westchester  and the United States District Court for the
Southern  District of New York each shall have personal  jurisdiction and proper
venue  with  respect to any  dispute  between  the  Parties;  provided  that the
foregoing  consent shall not deprive any Party of the right in its discretion to
voluntarily  commence or participate in any other forum having  jurisdiction and
venue. In any dispute,  no Party will raise, and each Party hereby expressly and
irrevocably  waives,  any  objection or defense to any such  jurisdiction  as an
inconvenient forum.

                  Section 10. NOTICES.  Except as otherwise  expressly provided,
any notice,  request,  demand or other communication permitted or required to be
given  under this  Agreement  shall be in  writing,  shall be sent by one of the
following  means to the  addressee  at the  address  set forth above (or at such
other  address as shall be  designated  hereunder by notice to the other parties
and persons receiving copies, effective upon actual receipt) and shall be deemed
conclusively to have been given: (i) on the first business day following the day
timely deposited with Federal

                                      -4-                        DOC. NO. 425654


Express  (or other  equivalent  national  overnight  courier)  or United  States
Express  Mail,  with the cost of  delivery  prepaid  or for the  account  of the
sender;  (ii) on the fifth business day following the day duly sent by certified
or registered United States mail,  postage prepaid and return receipt requested;
or (iii) when otherwise actually received by the addressee on a business day (or
on the next business day if received after the close of normal business hours or
on any non-business day).

                  Section 11. FURTHER  ASSURANCES.  Each Party agrees to do such
further acts and things and to execute and deliver such statements, assignments,
agreements, instruments and other documents as the other Party from time to time
reasonably  may  request in order to  effectuate  the  purpose and the terms and
provisions  of this  Agreement,  each  in  such  form  and  substance  as may be
acceptable to the Parties.  Without  limiting the  generality of the  foregoing,
each Party hereto will provide each other Party  hereto,  at such other  Party's
request and  expense,  with  copies of the source or object code  version of the
Software and any and all related  documentation  to enable such requesting Party
to develop and enhance the Software and the Program Documentation.

                  Section 12. INTERPRETATION,  HEADINGS,  SEVERABILITY, ETC. The
Parties  acknowledge  and agree that the terms and  provisions of this Agreement
have been negotiated,  shall be construed  fairly as to all parties hereto,  and
shall not be  construed in favor of or against any party.  The section  headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation  of this Agreement.  In the event that any term or
provision  of this  Agreement  (other  than  Section 1 hereof)  shall be finally
determined  to  be  superseded,  invalid,  illegal  or  otherwise  unenforceable
pursuant to applicable law by a governmental  authority having  jurisdiction and
venue,  that  determination  shall not impair or otherwise  affect the validity,
legality or  enforceability  (a) by or before that  authority  of the  remaining
terms and  provisions  of this  Agreement,  which  shall be  enforced  as if the
unenforceable  term or provision  were  deleted or reduced  pursuant to the next
sentence,  as applicable,  or (b) by or before any other authority of any of the
terms  and  provisions  of this  Agreement.  If any  term or  provision  of this
Agreement  is held to be  unenforceable  because of the scope or duration of any
such provision, the Parties agree that any court making such determination shall
have the power, and is hereby requested, to reduce the scope or duration of such
term or provision to the maximum  permissible  under applicable law so that said
term or provision shall be enforceable in such reduced form.

                  Section  13.  SUCCESSORS  AND  ASSIGNS;  ASSIGNMENT;  INTENDED
BENEFICIARIES.  Whenever in this Agreement reference is made to any person, such
reference  shall be deemed to include the successors,  assigns,  heirs and legal
representatives  of such person,  and,  without  limiting the  generality of the
foregoing, all representations,  warranties, covenants and other agreements made
by or on behalf of any Party in this Agreement shall inure to the benefit of the
successors,  assigns,  heirs  and legal  representatives  of each  other  Party;
provided,  however,  that nothing  herein shall be deemed to authorize or permit
any Party to assign any of its rights or obligations under this Agreement to any
other  person,  and each Party  covenants  and agrees that it shall not make any
such  assignment,  except as otherwise  provided in Section 5 hereof or with the
prior written consent of the other Parties. The representations,  warranties and
other terms and  provisions of this  Agreement are for the exclusive  benefit of
the Parties hereto, and, except as otherwise expressly provided herein, no other
person  (including  creditors of any party hereto) shall have any right or claim
against any Party by reason of any of those terms and  provisions or be entitled
to enforce any of those terms and provisions against any Party.

                  Section  14. NO WAIVER BY ACTION,  ETC.  Any waiver or consent
respecting any representation,  warranty, covenant or other term or provision of
this  Agreement  shall be effective  only in the  specific  instance and for the
specific  purpose  for  which  given  and shall  not be  deemed,  regardless  of
frequency given, to be a further or continuing waiver or consent. The failure or
delay of a Party at any time or times to require  performance of, or to exercise
its rights with respect to, any representation, warranty, covenant or other term
or provision of this Agreement in

                                      -5-                        DOC. NO. 425654


no manner (except as otherwise expressly provided herein) shall affect its right
at a later time to  enforce  any such  provision.  No notice to or demand on any
Party in any case shall  entitle  such  Party to any other or further  notice or
demand  in the  same,  similar  or  other  circumstances.  All  rights,  powers,
privileges,  remedies and other interests of each Party hereunder are cumulative
and not alternatives, and they are in addition to and shall not limit (except as
otherwise expressly provided herein) any other right, power,  privilege,  remedy
or other interest of such Party under this Agreement or applicable law.

                  Section 15. COUNTERPARTS;  NEW YORK GOVERNING LAW; AMENDMENTS;
ENTIRE AGREEMENT. This Agreement shall be effective as of the date first written
above when executed by all of the Parties. This Agreement may have been executed
in two or more  counterpart  copies of the entire document or of signature pages
to the  document,  each of which may be  executed  by one or more of the Parties
hereto,  but all of  which,  when  taken  together,  shall  constitute  a single
agreement  binding  upon all of the  Parties  hereto.  This  Agreement  shall be
governed by and construed in accordance  with the applicable  laws pertaining in
the State of New York (other than those that would defer to the substantive laws
of another  jurisdiction).  Each and every  modification  and  amendment of this
Agreement  shall be in writing  and signed by all of the  Parties,  and each and
every waiver of, or consent to any departure from, any representation, warranty,
covenant or other term or  provision of this  Agreement  shall be in writing and
signed by each affected Party.  This Agreement  contains the entire agreement of
the parties and supersedes all prior and other  representations,  agreements and
understandings  (oral or  otherwise)  between  the parties  with  respect to the
matters contained herein.


                                      -6-                        DOC. NO. 425654



                 [Signature Page to Business Manager Agreement]

                  IN  WITNESS  WHEREOF,  the  Parties  have  duly  executed  and
delivered this Agreement as of the date first above written.

                                      SPAR INFOTECH, INC.

                                      By:/s/ Robert G. Brown
                                         -----------------------------
                                             Robert G. Brown
                                             Chief Executive Officer


                                      SPAR MARKETING FORCE, INC.

                                      By:/s/ Robert G. Brown
                                         -----------------------------
                                             Robert G. Brown
                                             Chief Executive Officer

                                      SPAR MARKETING SERVICES, INC.

                                      By: /s/ Robert G. Brown
                                         -----------------------------
                                              Robert G. Brown
                                              Chief Executive Officer


                                      -7-                        DOC. NO. 425654