UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 1, 2004
SPAR Group, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-27824 33-0684451
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
580 White Plains Road, Tarrytown, New York 10591
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (914) 332-4100
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(Former Name or Former Address, if Changed Since Last Report)
Item 10. Amendments to the Registrant's Code of Ethics.
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On May 3, 2004, with the approval and recommendation of its Audit Committee, the
Board of Directors of SPAR Group, Inc. (i.e., the registrant), approved and
adopted the following codes of ethical conduct as required under the rules of
the Nasdaq Stock Market, Inc.: (1) the SPAR Group Code of Ethical Conduct for
its Directors, Senior Executives and Employees Dated (as of) May 1, 2004, which
is attached to this Current Report on Form 8-K (this "Report") as Exhibit 14.1;
and (2) and the SPAR Group Statement of Policy Regarding Personal Securities
Transaction in SGRP Stock and Non-Public Information Dated, Amended and Restated
as of May 1, 2004, which is attached to this Report as Exhibit 14.2, and which
amends, restates and completely replaces its existing similar statement of
policy.
The information in this Report, including the exhibits, shall not be deemed to
be "filed" for the purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities of that Section. It
shall not be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, except as shall be expressly set forth by specific
reference in such a filing.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPAR Group, INC.
Date: May 3, 2004 By: /s/ Charles Cimitile
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Charles Cimitile
Chief Financial Officer
EXHIBIT INDEX
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Exhibit
Number Description
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14.1 Code of Ethical Conduct for the Directors, Senior Executives and
Employees, of SPAR Group, Inc., dated May 1, 2004.
14.2 Statement of Policy Regarding Personal Securities Transaction in
Company Stock and Non-Public Information, as amended and
restated on May 1, 2004.
Exhibit 14.1
SPAR Group
Code of Ethical Conduct
for its
Directors, Senior Executives and Employees
Dated (as of) May 1, 2004
I. Introduction
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1. Purpose. The Board of Directors (the "Board") and the Governance
Committee of SPAR Group, Inc. ("SGRP"), have adopted this Code (as defined
below) in order to:
(a) promote and reward honest and ethical conduct by each Covered Person (as
defined below) in his or her position with the Company, including (to the
extent applicable):
(i) the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships;
(ii) full, fair, accurate, timely, and understandable disclosure in
accordance with applicable law in reports and documents that the
Company files with, or submits to, the Securities and Exchange
Commission and in other public communications made by the Company;
(iii) compliance with applicable governmental laws, rules and
regulations; and
(iv) honest and ethical behavior among peers and subordinates,
including prompt internal reporting to the appropriate person of
any violation by anyone of this Code or any other applicable
ethics code or policy of the Company; and
(b) deter wrongdoing by any Covered Person and provide for accountability for
adherence to this Code and any other applicable ethics code or policy of
the Company.
2. Penalty for Violation of Code. Any Covered Person violating this Code or
any other applicable ethics code or policy of the Company in any material
respect (as determined by the Board) will be subject to disciplinary action, and
(depending on the circumstances and severity) may be terminated by the Company.
Please note that acts or omissions of a Covered Person in violation of this Code
also may violate applicable law and subject the Covered Person to possible civil
or criminal liability, whether or not the Company may take any such disciplinary
action.
3. Certain Definitions:
(a) "Approved Activity" shall mean any activity (i) for which an express
exception, exclusion or statement of inapplicability is contained in this
Code, any other policy of the Board or the Company, or any resolution of
the shareholders of SGRP, the Board, the Governance Committee or the
Audit Committee, or (ii) that may have been approved (specifically or by
type) by the shareholders of SGRP, the Board, the Governance Committee,
the Audit Committee or (in the case of a more junior Senior Executive or
Employee) his or her Superior Officer.
(b) "Audit Committee" shall mean the Audit Committee of the Board.
(c) "Articles" shall mean the Certificate of Incorporation of SGRP filed on
November 29, 1995, with the Secretary of State of the State of Delaware,
as amended and as the same may be amended or restated from time to time
in the manner provided therein and under applicable law.
(d) "By-Laws" shall mean the By-Laws of SGRP, including (without limitation)
the charters of the Audit Committee, Compensation Committee and the
Governance Committee, as the same may have been and hereafter may be
adopted, supplemented, modified, amended or restated from time to time in
the manner provided therein.
(e) "Code" shall mean this SPAR Group Code of Ethical Conduct for its
Directors, Senior Executives and Employees Dated (as of) May 1, 2004, as
the same may be supplemented, modified, amended, restated or replaced
from time to time in the manner provided herein.
(f) "Company" shall mean each of SGRP, the SPAR Companies and (to the extent
they have agreed to adopt this Code and apply it to their respective
Covered Persons) the SPAR Affiliates. SGRP has asked SMS, SMSI and SIT
(the three SPAR Affiliates currently providing services to the SPAR
Companies) to adopt this Code to apply to their respective Covered
Employees as if SMS, SMSI and SIT were SPAR Companies, and each has done
so. Accordingly, such SPAR Affiliates shall be included as part of the
Company for purposes of this Code.
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(g) "Competitor" shall mean any Person (other than any SPAR Company or SPAR
Affiliate) that competes or seeks to compete for or with the products,
services or business of any SPAR Company or SPAR Affiliate.
(h) "Covered Person" shall mean any Outside Director, Senior Executive or
Employee.
(i) "Customer" shall mean any Person (other than any SPAR Company or SPAR
Affiliate) to whom any SPAR Company or SPAR Affiliate provides or seeks
to provide any products or services.
(j) "Employee" shall mean any officer or employee of the Company who is not a
Senior Executive.
(k) "Family Member" of a Covered Person shall mean any of the following: (i)
the Covered Person's spouse, (ii) the parents, brothers, sisters and
children of the Covered Person, whether by blood, marriage or adoption
(which includes in-laws), and (iii) anyone else residing in the Covered
Person's home.
(l) "Governance Committee" shall mean the Governance Committee of the Board.
(m) "Nominal Value" shall mean the fair market value for any product or
service that is in an immaterial amount under the circumstances, taking
into account the economic circumstances of the giver and receiver, and
subject to such guidance as the Board, Governance Committee, Compensation
Committee or Audit Committee may provide from time to time.
(n) "Outside Director" shall mean any director of the Company who is not a
Senior Executive or Employee.
(o) "Person" shall include (without limitation) any manner of association,
business, business trust, company, corporation, enterprise, estate,
governmental or other authority, group (including one under Section
13(d)(3) of the Securities Exchange Act of 1934, as amended), joint
venture, limited or unlimited liability company, limited liability or
general partnership, natural person (i.e., human being), syndicate, trust
or other entity.
(p) "SEC" shall mean the Securities and Exchange Commission of the United
States of America.
(q) "Senior Executive" shall mean any of the following: (i) the Chairman,
Vice Chairman, Chief Executive Officer, President, Secretary, Treasurer,
Chief Financial Officer, Controller and each other executive officer of
SGRP; and (ii) and each other Person performing similar functions for the
Company as determined from time to time by the Board, the Governance
Committee or the Audit Committee, provided that such Person is given
notice of such determination (directly or through any public filing).
(r) "SIT" shall mean SPAR Infotech, Inc., a Nevada Corporation.
(s) "SMS" shall mean SPAR Marketing Services, Inc., a Nevada corporation.
(t) "SMSI" shall mean SPAR Management Services, Inc., a Nevada Corporation.
(u) "SPAR Affiliate" shall mean SMS, SMSI, SIT or any other Person (other
than any SPAR Company or any natural Person) controlling, controlled by
or under common control with any such corporation.
(v) "SPAR Company" shall mean any of SGRP and its direct and indirect
subsidiaries.
(w) "SPAR Group" shall mean SGRP and its direct and indirect subsidiaries and
each SPAR Affiliate that has adopted this Code (including, without
limitation, SMS, SMSI and SIT).
(x) "SPAR Representative" shall mean any shareholder, partner, equity holder,
member, director, officer, manager, employee, consultant, agent,
attorney, accountant, financial advisor or other representative of any
SPAR Company or SPAR Affiliate.
(y) "Superior Officer" shall mean (i) a Senior Executive in the case of an
Employee, (ii) the Chief Executive Officer or Chief Financial Officer of
SGRP in the case of a more junior Senior Executive, (iii) the Chief
Executive Officer of SGRP, the Board, the Governance Committee or the
Audit Committee in the case of the Chief Financial Officer of SGRP, and
(iv) the Board, the Governance Committee or the Audit Committee in the
case of the Chief Executive Officer or an Outside Director of SGRP.
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(z) "Vendor" shall mean any Person (other than any SPAR Company or SPAR
Affiliate) that provides or seeks to provide any products or services to
any SPAR Company or SPAR Affiliate.
II. Business Practices and Ethics
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1. Proper Business Practices and Ethical Behavior. It is the policy of
the Company that the Company and each Covered Person conduct his or her
activities for the SPAR Group in accordance with generally accepted proper
business practices, including (without limitation) generally accepted ethical
standards for the conduct of business.
2. Examples of Certain Possible Prohibited Conduct by Covered Persons. As
an aid to identify potentially improper or unethical business practices by any
Covered Person on behalf of the SPAR Group, each of the following situations in
the conduct of his or her activities for the SPAR Group may (depending upon the
circumstances) be considered to be a violation of the Company's policy of proper
and ethical business practices (as set forth in Section 1 of this Article) by
any Covered Person (other than any Approved Activity), and accordingly should
not be undertaken by any Covered Person without discussion of the matter with
his or her Superior Officer and (in the case of a Senior Executive or Outside
Director) counsel to the SPAR Group:
(a) any financial reporting conduct prohibited (under the circumstances) by
Section 2 of Article III of this Code (other than any Approved Activity);
(b) any violation of applicable law prohibited (under the circumstances) by
Section 2 of Article IV of this Code (other than any Approved Activity);
(c) any conflict of interest prohibited (under the circumstances) by Section
2 or Section 4 of Article V of this Code (other than any Approved
Activity);
(d) any personal or improper use of use any of the funds or other assets or
properties of any SPAR Company, any SPAR Affiliate, any SPAR
Representative, any Customer or any Vendor;
(e) any intentional waste or destruction of any asset or property of any SPAR
Company, any SPAR Affiliate, any SPAR Representative, any Customer or any
Vendor;
(f) making or offering to a Competitor, Customer or Vendor (or their
respective officers, employees or other representatives) any gifts,
gratuities, free products or services, payments not for products or
services, discounts, travel, excessive entertainment, or loans or other
credit, whether personally or by on behalf of any SPAR Company or SPAR
Affiliate, other than in a Nominal Amount;
(g) making or offering any donation, gift, loan or use of any funds, assets
or properties of any SPAR Company, directly or indirectly to, for or
against the benefit of any political party, campaign, committee, or
candidate, other than in a Nominal Amount to the extent permitted by
applicable law;
(h) making or offering any bribe, payoff, kickback or similar quid pro quo
payment to any Person for the purpose of maintaining or directing
business to or from any such Person, whether personally or by on behalf
of any SPAR Company or SPAR Affiliate; and
(i) paying or granting any rebates or discounts by the SPAR Group in
violation of this policy or any other approved policy concerning this
subject (i.e., sales policies, etc.) or in violation of applicable law.
3. Examples of Certain Non-Violations. As an aid to identify situations
not likely to be considered improper or unethical business practices by any
Covered Person on behalf of the SPAR Group, each of the following situations
will not be considered to be a violation of the Company's policy of proper and
ethical business practices (as set forth in Section 1 of this Article) by any
Covered Person (each of which is an Approved Activity, and without limiting any
other applicable Approved Activity):
(a) rebates, discounts, free samples, make goods and similar accommodations
given to Customers so long as made in the normal course of business in
accordance with applicable law pursuant to bona fide, arm's-length
negotiations with Customers (i) on a bid-and-asked basis, including time
or unit pricing, (ii) given in reasonable response to claims and disputes
over products and services already delivered (in whole or in part), or
(iii) formula based discount or refund programs that have been reviewed
and approved (in advance of implementation) by the Company to not violate
applicable law;
(b) making or providing any gifts, gratuities, free products or services,
favors, travel, or entertainment, provided that all of the following
criteria are met:
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(i) the item is consistent with normal and accepted business practice
and does not violate applicable law;
(ii) either (A) the item is reasonable and not excessive if a favor,
travel or entertainment, or is otherwise of Nominal Value, or (B)
where local or industry custom is so strong that to not provide
such a gift or other item would preclude doing the contemplated
business and the Board, the Governance Committee, the Audit
Committee or a Superior Officer has approved it;
(iii) the item cannot be reasonably construed as a bribe, payoff,
kickback or similar payment, other than where local or industry
custom is so strong that to not provide such a gift or other item
would preclude doing the contemplated business and the Board, the
Governance Committee, the Audit Committee or a Superior Officer
has approved it;
(iv) the item is fully and timely reported to the Company on the
appropriate expense or other form; (v) public disclosure would not
embarrass the Company or be reasonably likely to cause legal
action; and (vi) the item is not a gift of cash.
(c) any action taken by any Covered Person in good faith and in reasonable
reliance on the advice of the accountants, counsel or other professional
advisors to any SPAR Company or SPAR Affiliate; or
(d) any other action taken by any Covered Person in good faith and without
any intent to violate or evade any of the provisions of this Code.
4. Cash Gifts. Gifts of cash should never be given or accepted under any
circumstance.
5. Excessive Gifts. Gifts received by a Covered Person or his or her
Family Member having a reasonably fair market value in excess of Nominal Value
shall on demand be turned over to the applicable Company and become its
property.
III. Financial Reporting
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1. Proper Financial Reporting. It is the policy of the Company that it
provide full, fair, accurate, timely, and understandable disclosure in
accordance with applicable law in reports and documents that SGRP files with, or
submits to, the SEC and in other public communications made by the Company.
Accordingly, it is the policy of the Company that each Covered Person in the
conduct of his or her activities for the Company provide to the Company such
information as is known to him or her (on a full, fair, accurate, timely, and
understandable basis), and take or refrain from such bookkeeping or similar
actions appropriate to his or position, as are reasonably required in order that
(i) the book entries of the SPAR Group fairly reflect the applicable items and
amounts in accordance with generally accepted accounting principles consistently
applied, the significant accounting policies of the Company and the requirements
of applicable law (which in some instances are more stringent than generally
accepted accounting principles), and (ii) the information in reports and
documents that SGRP files with, or submits to, the SEC and in other public
communications made by the Company provides full, fair, accurate, timely, and
understandable disclosure in accordance with applicable law. 2. Examples of
Certain Prohibited Conduct by Senior Executives and Employees. As an aid to
identify likely improper financial reporting practices by any Senior Executive
or Employee in the conduct of his or her activities for the SPAR Group, each of
the following situations would (depending upon the circumstances) likely be
considered to be a violation of the Company's policy of proper financial
reporting (as set forth in Section 1 of this Article) by any Senior Executive or
Employee (other than any Approved Activity):
(a) knowingly making any false or materially misleading entries in any of the
books and records of the SPAR Group;
(b) knowingly using, approving, applying or delivering any funds, asset or
property in more than an immaterial amount from the SPAR Group:
(i) without supporting documentation reasonably adequate on its face,
(ii) in any amount or kind not reasonably described in its supporting
documentation,
(iii) for any purpose not reasonably described in its supporting
documentation, or
(iv) without such item being timely and reasonably identified and
recorded the books and records of the SPAR Group in accordance
with generally accepted accounting principles and the significant
accounting policies of the SPAR Group;
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(c) approving any agreement with any consultant, agent or sales
representative that provides for any fees of more than an immaterial
amount to be paid without reasonably identifying such fees by amount,
formula or otherwise;
(d) using any accounting practice in clear contravention of generally
accepted accounting principles to knowingly disguise the source or
application of funds, such as (without limitation) the use of inflated or
duplicate billings, misclassification of expenditures, unrecorded cash
funds, duplicate or fictitious accounts, and misuse of reserve or
intercompany transfers; or
(e) any other knowing or deliberate failure in any material respect to
falsify or otherwise properly record, identify or classify any asset,
liability, receipt, expenditure or other item of the SPAR Group of more
than an immaterial amount in their books and records in clear
contravention of generally accepted accounting principles or the
significant accounting policies of the SPAR Group.
3. Examples of Certain Non-Violations. As an aid to identify situations
not likely to be considered improper financial reporting by any Senior Executive
or Employee on behalf of the SPAR Group, each of the following situations in the
conduct of his or her activities for the SPAR Group will not be considered to be
a violation of the Company's policy of proper financial reporting (as set forth
in Section 1 of this Article) by any Senior Executive or Employee (each of which
is an Approved Activity, and without limiting any other applicable Approved
Activity):
(a) any estimation, classification or other determination under or
application of generally accepted accounting principles or the
significant accounting policies of the SPAR Group made by any Senior
Executive or Employee in good faith based upon the information available
to such executive, whether or not the Company's independent accountants
agree;
(b) any accrual, recordation, identification or classification of any asset,
liability, receipt, expenditure or other item of the SPAR Group in their
books and records in good faith based on the documentation submitted to
him or her, whether or not the Company's independent accountants agree;
(c) any accrual, recordation, identification or classification of any asset,
liability, receipt, expenditure or other item of the SPAR Group in their
books and records reasonably consistent with past practice, whether or
not the Company's independent accountants agree;
(d) any accrual, reasonable interpretation of generally accepted accounting
principles or the significant accounting policies of the SPAR Group made
by any Senior Executive or Employee in good faith, whether or not the
Company's independent accountants agree;
(e) any action taken by any Senior Executive or Employee in good faith and in
reasonable reliance on the advice of the accountants, counsel or other
professional advisors to any SPAR Company or SPAR Affiliate, whether or
not the Company's independent accountants agree; or
(f) any other action taken by any Senior Executive or Employee in good faith
and without any intent to violate or evade any of the provisions of this
Code, whether or not the Company's independent accountants agree.
IV. Compliance with Applicable Law
1. Compliance with Applicable Law. It is the policy of the Company that
the Company and each Covered Person comply in all material respects with all
applicable governmental laws, rules and regulations in the conduct of his or her
activities for the SPAR Group that if violated would under the circumstances
constitute a crime (for the purposes of this Article IV, "applicable law").
2. Examples of Certain Prohibited Conduct by Covered Persons. As an aid
to identify likely violations of law by any Covered Person in the conduct of his
or her activities for the SPAR Group, each of the following situations would
(depending upon the circumstances) likely be considered to be a violation of the
Company's policy of compliance with applicable law (as set forth in Section 1 of
this Article) by any Covered Person (other than any Approved Activity):
(a) commission of any theft or misappropriation of any funds, asset or
property of any SPAR Company, any SPAR Affiliate, any SPAR
Representative, any Customer or any Vendor;
(b) commission of fraud against any SPAR Company, any SPAR Affiliate, any
SPAR Representative, any Customer or any Vendor;
(c) any unlawful use or application of any of the funds or other assets or
properties of any SPAR Company, any SPAR Affiliate, any SPAR
Representative, any Customer or any Vendor, including (without
limitation) any use or application of any of the funds or other assets or
properties of any SPAR Company, directly or indirectly, for
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(i) any illegal bribe, payoff, kickback or similar payment,
(ii) any illegal loan, gift, donation or contribution to, for or
against the benefit of any political party, campaign, committee,
or candidate, including (without limitation) (i) any use or
application of any such funds, assets or properties to indemnify
or reimburse any other Person for any such loan, gift, donation or
contribution, (ii) uncompensated use of any such funds, assets or
properties, and (iii) any loan, loan guaranty or support, or other
extension of credit, or
(iii) any violation of the Foreign Corrupt Practices Act of 1977, as
amended;
(d) knowingly and deliberately taking any action that violates any applicable
law pertaining to equal employment opportunities, including (without
limitation) laws pertaining to
(i) discrimination on the basis of race, color, sex, age, religion,
national origin, ethnicity, veteran status, disability or
handicapped status, or
(ii) sexual, racial, religious or other harassment;
(e) knowingly and deliberately taking any action that violates any applicable
law pertaining to anti-trust or related matters, including (without
limitation)
(i) discussion of prices, terms and conditions of sale, discounts,
credit terms or similar subjects with any Competitor;
(ii) "signaling" any Competitor regarding pricing strategies, directly
or through any Customer or other Person; or
(iii) agreeing with any Competitor to stay out of each other's markets
or to stay away from each other's customers; or
(f) knowingly or deliberately violating in any material respect any
applicable criminal law.
3. Examples of Certain Possible Prohibited Conduct by Covered Persons. As
an aid to identify problem areas and possible violations of law by any Covered
Person on behalf of the SPAR Group, each of the following situations in the
conduct of his or her activities for the SPAR Group might (depending upon the
circumstances) be considered to be a violation of the Company's policy of
compliance with any applicable law pertaining to anti-trust or related matters,
and accordingly should not be undertaken by any Covered Person without
discussion of the matter with his or her Superior Officers and counsel to the
SPAR Group, in each case other than any Approved Activity:
(a) participation in benchmarking or statistical reporting of competitive
information with any Competitor;
(b) discussion of current or future output, costs, marketing strategies or
other competitively-sensitive information with any Competitor;
(c) agreeing with any Customer or Vendor to take or not take any action
vis-a-vis another Customer or Vendor, respectively; or
(d) agreeing with any Competitor not to deal with, buy from or sell to
another Customer or any Vendor.
4. Examples of Certain Non-Violations. As an aid to identify situations
not likely to be considered violations of applicable law by any Covered Person
on behalf of the SPAR Group, each of the following situations in the conduct of
his or her activities for the SPAR Group will not be considered to be a
violation of the Company's policy of compliance with applicable law (as set
forth in Section 1 of this Article) by any Covered Person (each of which is an
Approved Activity, and without limiting any other applicable Approved Activity):
(a) any disclosure or other communication made pursuant to a confidentiality
agreement or arrangement entered into with a Competitor or other Person
to permit consideration of a potential acquisition, disposition, merger
or other transaction where the recipient agrees to not use the disclosed
confidential information for any other purpose for a reasonable period of
time;
(b) any action taken by any Covered Person in good faith and in reasonable
reliance on the advice of the accountants, counsel or other professional
advisors to any SPAR Company or SPAR Affiliate; or
(c) any other action taken by any Covered Person in good faith and without
any intent to violate or evade any of the provisions of this Code.
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V. Conflicts of Interest
---------------------
1. Conflicts Prohibited. Each Covered Person of the Company is prohibited
from engaging in any business activity that conflicts with his or her duties to
the Company, and each Covered Person should avoid any activity or interest that
is inconsistent with the best interests of the SPAR Group, in each case except
for any Approved Activity. The activities that may create a potential conflict
of interest are often impossible to identify in advance for all situations. If a
Covered Person is in doubt as to whether such a situation exists, the Covered
Person should discuss the matter with his or her Superior Officer or counsel the
SPAR Group.
2. Examples of Certain Possible Conflicts. As an aid to identify possible
conflicts of interest with the SPAR Group, each of the following situations may
(depending upon the circumstances) be considered to be a conflict of interest
between a Covered Person and the SPAR Group if such Covered Person or his or her
Family Member (other than in any Approved Activity):
(a) benefits personally (other than as a shareholder, director, officer or
employee of any member of the SPAR Group) from (i) any transaction by the
Company with any Vendor or Customer, or (ii) from actions taken or
associations made in the course of the Senior Executive's performance of
his or her duties with the Company;
(b) seeks or accepts from a Competitor, Customer or Vendor (or their
respective officers, employees or other representatives) in the conduct
of his or her activities for the Company any gift, gratuity, free product
or service, payment, discounts, travel, entertainment, or loans or other
credit of more than Nominal Value;
(c) in the case of a Senior Executive or Employee, serves as a director,
officer or employee of or consultant to any Competitor, Customer or
Vendor;
(d) in the case of a Senior Executive or Employee, has any financial or other
interest in any Competitor, Customer or Vendor; or
(e) uses (other than for the benefit of any SPAR Company or SPAR Affiliate)
or reveals (without proper authorization other than to a SPAR
Representative) any confidential product, financial or other proprietary
information concerning the plans, decisions, or activities of any SPAR
Company or SPAR Affiliate that is not available to the general public,
including (without limitation) confidential financial information that
could be of some importance in deciding whether to buy or sell common
stock of SGRP.
3. Examples of Certain Non-Conflicts. As an aid to identify situations
not likely to be potential conflicts of interest with the SPAR Group, each of
the following situations will not be considered to be a conflict of interest
between a Covered Person and the SPAR Group (each of which is an Approved
Activity, and without limiting any other applicable Approved Activity):
(a) loans or other credit extended to any Covered Person or his or her
Family Member from any Vendor or Customer that is a regulated financial
institution;
(b) gifts (other than cash), gratuities, free products or services,
discounts, travel and related accommodations, or entertainment to any
Covered Person or his or her Family Member from any Customer or Vendor
(i) having a Nominal Value, (ii) if such travel and related
accommodations are in the best interest of the Company, and the Board,
the Governance Committee, the Audit Committee or a Superior Officer has
approved it, or (iii) where local custom is so strong that to refuse a
gift or not to reciprocate with a gift would be considered a damaging
insult, and the Board, the Governance Committee, the Audit Committee or
a Superior Officer has approved it;
(c) participation in benefit programs sponsored by or for the SPAR Group by
any Covered Person or his or her Family Member, including purchases
pursuant to publicized discount purchasing programs maintained by the
SPAR Group or for the SPAR Group by its Vendors or Customers;
(d) accrual of airline mileage for future personal use, provided that the
Covered Person utilizes reasonably cost effective and efficient flights
(taking into account comparable travel times);
(e) ownership interests by any Covered Person or his or her Family Member
in Competitors, Customers and Vendors where (i) such interest has been
disclosed in writing to and approved by the Board, the Governance
Committee, the Audit Committee or a Superior Officer, and (ii) such
interest is (1) comprised of securities in widely held corporations
whose securities are regularly and publicly traded in nationally
recognized United States securities markets and (2) not in excess of 5
percent of the outstanding stock or other securities of any such
corporation;
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(f) serving as a director, officer or employee of or consultant to any
other SPAR Company or SPAR Affiliate or having any Family Member do so;
(g) in the case of an Outside Director, serving as a director, officer or
employee of or consultant to any Competitor, Customer, Vendor or other
Person or having any Family Member do so; or
(h) any other activity disclosed in writing to and approved by the Board,
the Governance Committee or the Audit Committee.
4. Non-SPAR Business Activities. It also may (depending upon the
circumstances) be considered to be a conflict of interest between a Senior
Executive or Employee and the SPAR Group if the Senior Executive or Employee
spends time during working hours (other than during customary breaks or
non-working hours in the case of a part-time Employee) on any business activity
other than for or on behalf of any SPAR Company or SPAR Affiliate, unless the
Senior Executive or Employee has received prior written authorization from the
Board, the Governance Committee, the Audit Committee or a Superior Officer.
Authorization will normally be granted to a Senior Executive or Employee to
devote working time to charitable activities and community affairs where the
time involved is not unreasonable. Business activities by a Senior Executive or
Employee that are not for or on behalf any SPAR Company or SPAR Affiliate will
nevertheless not be considered to be conflicts of interest (and hence are
Approved Activities) if such activities (i) are not for or on behalf of any
Competitor, Customer or Vendor, (ii) do not occupy the employee's time during
his or her normal working hours, (iii) do not violate any of the other
provisions of this Code, (iv) are not otherwise inconsistent with the interests
of the SPAR Group, and (v) do not interfere with the performance of his or her
duties.
5. Certain Approved SPAR Affiliate Transactions.
(a) Mr. Robert G. Brown, a Director of each SPAR Company, the Chairman,
President and Chief Executive Officer of each SPAR Company (and
accordingly also a Senior Executive and a Covered Person), and a major
stockholder of SGRP, and Mr. William H. Bartels, a Director of each SPAR
Company, the Vice Chairman of each SPAR Company (and accordingly also a
Senior Executive and a Covered Person), and a major stockholder of SGRP,
are currently executive officers and the sole stockholders and directors
of the SPAR Affiliates, including (without limitation) SMS, SMSI and SIT.
Mr. Brown and Mr. Bartels also own an indirect minority equity interest
in Affinity Insurance Ltd., which provides certain insurance to the SPAR
Group.
(b) SMS and SPAR Marketing Force, Inc, a subsidiary of SGRP ("SMF"), are
parties to an Amended and Restated Field Service Agreement dated as of
January 1, 2004 (as executed, and as the same may have been or hereafter
may be supplemented, modified, amended, restated or replaced from time to
time in the manner provided therein, the "Restated Merchandiser
Agreement"), pursuant to which SMS will continue provide all or
substantially all of the Company's field representatives through SMS's
independent contractor field force. The Restated Merchandiser Agreement
amends, restates and completely replaces the field representative
functions dealt with in the corresponding agreement executed in July 1999
(as the same may have been supplemented, modified, amended, restated or
replaced from time to time in the manner provided therein, the "Original
Merchandiser Agreement"), which also dealt with field management
functions.
(c) SMSI and SMF are parties to an Amended and Restated Field Management
Agreement dated as of January 1, 2004 (as executed, and as the same may
have been or hereafter may be supplemented, modified, amended, restated
or replaced from time to time in the manner provided therein, the
"Restated Management Agreement"), pursuant to which SMSI will continue to
provide all or substantially all of the Company's field management of the
SMS field representatives. The Restated Management Agreement amends,
restates and completely replaces the management functions dealt with in
the Original Merchandiser Agreement
(d) SMF and SIT are parties to an Amended and Restated Programming and
Support Agreement (as executed, and as the same may have been or
hereafter may be supplemented, modified, amended, restated or replaced
from time to time in the manner provided therein, the "Restated
Programming Agreement"), pursuant to which SIT will likely continue to
provide all or substantially all of the Internet and other computer
programming, management, support and other technology services to the
Company. The Restated Management Agreement amends, restates and
completely replaces the existing programming agreement between SMF and
SIT executed in July 1999 (as the same may have been may have been
supplemented, modified, amended, restated or replaced from time to time
in the manner provided therein, the "Original Programming Agreement"),
pursuant to which SIT provided all or substantially all of the Internet
and other computer programming services to the SPAR Group.
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(e) SMF, SMS and SIT are parties to a Software Ownership Agreement (as
executed in July 1999, and as the same may have been or hereafter may be
supplemented, modified, amended, restated or replaced from time to time
in the manner provided therein, the "Scheduling Agreement") with respect
to the joint ownership of Internet job scheduling software jointly
developed by such parties.
(f) SPAR Trademarks, Inc., a subsidiary of the Company ("STM"), is a party to
separate trademark licensing agreements with each of SMS and SIT (as
executed in July 1999, and as the same may have been or hereafter may be
supplemented, modified, amended, restated or replaced from time to time
in the manner provided therein, each a "Trademark Agreement"), pursuant
to which STM has granted non-exclusive royalty-free licenses to SIT, SMS
and (through SMS) SMSI for their continued use of the name "SPAR" and
certain other trademarks and related rights transferred of the SPAR
Group.
(g) Approved Activities shall include (without limitation) each of (i) the
agreements, transactions, positions and activities described in
subsections (a) through (f) of this Section, (ii) any other position that
any Senior Executive, any Employee or any of his or her Family Members
from time to time may have with any SPAR Company or SPAR Affiliate, and
(iii) any financial or other benefit to any Senior Executive, any
Employee or his or her Family Members from any such agreements,
transactions, positions and activities.
(h) The Original Merchandiser Agreement, Original Programming Agreement,
Scheduling Agreement and Trademark Agreement were originally approved by
the Board (including its independent and disinterested directors) in
1999, and the Restated Merchandiser Agreement, Restated Management
Agreement and Restated Programming Agreement were approved by the Board
and Audit Committee at their respective meetings on February 25, 2004,
effective as of January 1, 2004. The Restated Merchandiser Agreement,
Restated Management Agreement, Restated Programming Agreement, Scheduling
Agreement and Trademark Agreement are subject to periodic review and
approval by the Board and Audit Committee (in the case of the Audit
Committee as provided in its charter). Those agreements and the material
benefits to Mr. Brown and Mr. Bartels under them are and will continue to
be described (as and to the extent required) in SGRP's annual report on
form 10-K as filed with the SEC and other filings.
VI. Covered Person's Responsibilities
1. Knowledge and Promotion of Code. Each Covered Person is responsible to
be aware of this policies contained in this Code and for its enforcement and
compliance.
2. Acknowledgment of Code. Each new Covered Person will be asked to
acknowledge in writing that he or she has read and understood and will comply
with this Code.
3. Confirming Applicability. There may be situations not listed in this
Code that would be reasonably likely to conflict with or violate the policies of
the Company enumerated in this Code or the Company's other policies. It is the
responsibility of each Covered Person to determine whether a such a conflict or
violation would be reasonably likely to exist or ask for clarification of the
situation from a Superior Officer or counsel to the Company (and if applicable
from the other party) if any uncertainty reasonably exists.
4. Reporting Code Violations. Each Covered Person shall promptly report
to his or her immediate Superior Officer any actual, proposed or contemplated
conduct of any person (including such executive) that the employee reasonably
believes may constitute a violation of this Code or any other ethics code or
policy of the Company in any material respect. If not resolved within a
reasonable period of time, the persons making and receiving such report shall
promptly forward such report to the Chairman of the Board and the Chairmen of
the Governance Committee.
5. No Retaliation. No Covered Person will be subject to any discipline,
penalty or other retaliation for any good faith satisfaction of his or her
reporting obligations under this Code. 6. Questions and Assistance. Any Covered
Person having any questions about or needing any assistance respecting any of
the policies and other matters covered by this Code shall contact a Superior
Officer or counsel to the Company.
VII. Miscellaneous
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1. Waiver. Any waiver of any provision of this Code: (a) shall be
effective only if approved by the Board; (b) shall be filed with the SEC and
publicized to the extent required by applicable law; and (c) shall be effective
only in the specific instance and for the specific purpose for which given.
2. Approval. Any approval contemplated under any provision of this Code:
(a) shall be effective only if (i) in writing and signed by the Company or (ii)
approved by the Governance Committee, the Audit Committee, the Board or the
shareholders of the Company; (b) shall be filed with the SEC and
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publicized to the extent required by applicable law and deemed a "waiver" under
the circumstances; and (c) shall be effective only in the specific instance and
for the specific purpose for which given.
3. No Waiver by Action. No waiver or approval shall be deemed, regardless
of frequency given, to be a further or continuing waiver or consent except as
otherwise expressly provided in such waiver. The failure or delay of the Company
at any time or times to require compliance with any provision of this Code in no
way shall affect the Company's right at a later time to enforce any such
provision.
4. Amendment. This Code may be amended, restated, replaced or repealed,
and a new or restated Code may be adopted, at any time and from time to time by
action of the Board.
5. Pronouns. Each use in this Code 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.
6. Headings. The section and other headings contained in this Code are
for reference purposes only and shall not affect the meaning or interpretation
of this Code.
7. Including. The terms "including", "including, but not limited to",
"including (without limitation)" and similar phrases (i) mean that the items
specifically listed after such term are examples of the provision preceding such
term and are not intended to be all inclusive, (ii) shall not in any way limit
(or be deemed or construed to limit) the generality of the provision preceding
such term, and (iii) shall not in any way preclude (or be deemed or construed to
preclude) any other applicable item encompassed by the provision preceding such
term.
8. Severability. In case any one or more of the provisions contained in
this Code should be held invalid, illegal or unenforceable in any respect
pursuant to applicable law by a governmental authority having jurisdiction and
venue, that termination shall not impair or otherwise affect the validity,
legality or enforceability of any of the remaining terms and provisions of this
Code, which shall be enforced as if the unenforceable term or provision were
deleted.
9. Articles and Applicable Law. The terms and provisions of this Code are
each subject to the relevant terms and provisions of the Articles and applicable
law, and in the event that any term or provision of this Code conflicts or is
inconsistent with any term or provision of the Articles or applicable law, the
term or provision of the Articles or applicable law shall control and be given
effect.
10. No Implied Amendments or Employment Agreement, Cumulative Provisions,
Etc. This Code is not intended, and shall not be deemed or construed, to: (a)
limit, restrict or otherwise modify or amend any term or provision of any
Confidentiality and Non-Competition Agreement with any Senior Executive or
Employee; (b) limit, restrict or otherwise modify or amend any term or provision
of any employment agreement that exists from time to time with any Senior
Executive or Employee, except that any violation of this Code may be an
additional reason for termination "For Cause" under such any such agreement; and
(c) create (absent an employment agreement to the contrary) any employment
agreement or employment period or other terms, as such employment (absent an
employment agreement to the contrary) is "at will" and modifiable from time to
time and terminable at any time, for any reason or no reason, and without notice
or benefit of any kind. Likewise, nothing in any such agreement is intended, or
shall be deemed or construed, to limit, modify, define or replace any term or
provision of this Code. Each obligation of a Covered Person and each right,
power, privilege, remedy or other interest of the SPAR Group under this Code,
any other policy of the Company, any such agreement applicable under the
circumstances and applicable law are separate, cumulative and not alternatives,
and they are in addition to and shall not limit (except as otherwise expressly
provided herein) each and every other right, power, privilege, remedy or other
interest of the SPAR Group under this Code, any such agreement applicable under
the circumstances or applicable law.
11. No Additional Personal Liability. This Code is not intended, and
shall not be deemed or construed, to create or impose any personal liability on
any Covered Person in addition to that (if any) imposed by applicable law.
12. No Third Party Rights. The terms and provisions of this Code are for
the exclusive benefit of the Company, and no other Person (including, without
limitation, any Competitor, Customer or Vendor or any shareholder or creditor of
any SPAR Company or SPAR Affiliate) shall have any right or claim against the
Company, any other SPAR Company, any SPAR Affiliate, any Covered Person or any
SPAR Representative by reason of any of those terms or provisions or be entitled
to enforce any of those terms and provisions against any party (whether or not
purportedly on behalf of the Company).
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Exhibit 14.2
SPAR GROUP
STATEMENT OF POLICY REGARDING
PERSONAL SECURITIES TRANSACTIONS IN SGRP STOCK AND
NON-PUBLIC INFORMATION
Dated, Amended and Restated as of May 1, 2004
The Board of Directors and Governance Committee of SPAR Group, Inc. ("SGRP"),
have adopted this SPAR Group Statement of Policy Regarding Personal Securities
Transactions in SGRP Stock and Non-Public Information Dated, Amended and
Restated as of May 1, 2004 (as the same may be modified, amended, restated or
replaced from time to time in the manner provided herein, this "Policy").
"Company" shall mean each of SGRP, each of its subsidiaries and (to the extent
they have agreed to adopt this Policy and apply it to their Covered Persons)
each of SGRP's other affiliates. SGRP has asked SPAR Marketing Services, Inc.,
SPAR Management Services, Inc., and SPAR Infotech, Inc. (the three SGRP
affiliates currently providing services to SGRP and its subsidiaries) to adopt
this Policy to apply to their respective Covered Employees as if they were SGRP
subsidiaries, and each has done so. Accordingly, such SPAR affiliates shall be
included as part of the Company for purposes of this Policy.
1. Non-Public Information - Introduction
Each officer, director or employee of the Company may from time to time receive
or become aware of material, non-public information regarding the Company that
may be of significance to the securities markets. Material information is any
information that an investor would consider important in a decision to buy, hold
or sell a security. While it is impossible to provide a detailed list of all
generic types of material information, the following list illustrates events
that are often considered material: internal non-public financial reports and
forecasts; mergers or acquisitions, increases or decreases in revenues or
profits, important new contracts or projects and important financing
developments. Non-public information is information that has not been generally
known or available to the investing community for at least two full trading
days.
Under the Insider Trading and Securities Fraud Enforcement Act of 1988, it is
illegal for any person to trade securities based on material, non-public
information ("insider trading") or to give such information to someone else who
then makes a trade ("tipping"). Under federal law, penalties for insider
violations include disgorgement of profits, civil penalties of three times the
amount of profit gained or loss avoided, criminal fines of up to $1,000,000 and
jail terms of up to ten years.
In addition, the Securities and Exchange Commission ("SEC") may seek penalties
of up to $1,000,000 or three times the amount of profit gained or loss avoided
(whichever is greater) against "controlling persons" for failing to take proper
steps to prevent insider trading or tipping violations by those under their
supervision. Under current law, controlling persons may include the Company, its
directors and its officers.
2. Policy and Procedures - No Trading on or Disclosure of Non-Public
Information, Etc.
The Company is committed to the maintenance of its reputation for ethical
conduct as well as to full compliance with applicable laws. In order to help
ensure that trading in securities of SGRP does not result in violations of law,
the Company has implemented the following policies and procedures applicable to
each director, officer and employee of the Company, each of its subsidiaries and
each of its affiliates providing services to the Company (each a "Covered
Person"), except as otherwise noted in item 3, below.
It is the Company's policy that a Covered Person shall not under any
circumstances use any non-public information with respect to the Company for his
or her benefit or trade in any securities related to such information.
Company personnel should not discuss or disclose non-public information to
anyone else within the Company unless such person has a clear right and need to
know such information in order to fulfill his or her job responsibilities.
Company personnel should not discuss or disclose such information under any
circumstance with anyone outside the Company, including (without limitation) any
family member, relative or business or social acquaintance. If you are unsure
whether certain information should be considered
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inside information, you should resolve any doubt by assuming that it is such
inside information. Questions concerning what is or is not inside information
should be directed to the Chief Financial Officer of the Company.
3. Blackout Period on SGRP Securities for Specified Restricted Persons
The Company has determined that the individuals holding any of the following
positions (each a "Restricted Person") may not under any circumstance trade in
securities of SGRP in which they have a beneficial interest (except as otherwise
provided below) during a period that (i) begins on the tenth day of the third
month of any fiscal quarter (i.e., March 10, June 10, September 10 and December
10), and (ii) ends on that date which is two full trading days after the
announcement of financial results for the applicable period (i.e., the first,
second or third fiscal quarter or the fiscal year, respectively).
The Restricted Persons are:
o Each member of the Board of Directors;
o The Chairman, Vice-Chairman, President, Treasurer, Secretary, Controller
and each other executive manager of the Company;
o Any assistant controller, director of accounting services or other similar
financial staff member of the Company;
o Any other person receiving copies (whether hard copy, electronic or
otherwise) of internal non-public financial reports, forecasts or similar
materials; and
o Any Related Person (as defined below).
The prohibition against trading by a Restricted Person during such a blackout
period in securities issued by the Company shall not apply to: (a) any private
purchase or sale by a Restricted Person from or to an accredited investor not
involving a market transaction so long as such accredited investor acknowledges
such status and releases the Company and the Restricted Person from any
potential liability relating to insider trading or knowledge; (b) any cash or
cashless exercise by such individual of any employee, director or affiliate
stock option; (c) any purchase in the market through any 401k, employee or
consultant stock purchase plan or other employee benefit plan for the benefit of
such individual in accordance with any directions given by such individual
outside of any blackout period; (d) any sale to (and purchase by), any gift to
or any other transfer to or from (1) such individual's spouse, children, or
grandchildren, (2) any trust, rollover account or other plan for the benefit of
such individual and/or such other persons, or (3) any partnership, limited
liability company or other entity in which such individual and/or such other
persons are the only equity holders, in each case so long as such sale, purchase
or other transfer is not made in a market transaction; (e) any purchase
permitted under Rule 10b-18 promulgated by the SEC under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any other similar statutory,
regulatory or interpretive safe harbor or exception; or (f) any trade permitted
at the time under any applicable emergency order issued by the SEC and its
related extensions and interpretations, including (without limitation) those
issued pursuant to Section 12(k)(2) of the Exchange Act.
However, no Restricted Person (or other Covered Person) shall at any time or
under any circumstance trade in any securities issued by SGRP using material
non-public information, even if such a prohibition period is not then in effect.
4. Beneficial Interests and Responsibility for Related Persons
A Covered Person will generally be deemed to have a beneficial interest in the
securities issued by SGRP when (among other things): (a) the Covered Person has
the power to vote or direct the vote of such securities; (b) the Covered Person
has to power to sell or direct the sale of such securities; (c) the Covered
Person has the right to profit or share in any profit from such securities; (d)
the Covered Person owns options, warrants, convertible securities or other
rights to acquire securities issued by SGRP; or (e) any Related Person (to the
Covered Person) owns any securities issued by SGRP or any options, warrants,
convertible securities or other rights to acquire them.
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A "Related Person" includes (i) any 401k, benefit plan, stock purchase plan or
other plan for the benefit of a Covered Person, (ii) any trust where a Covered
Person is a trustee, (iii) any corporation, limited liability company,
partnership or other entity owned or controlled by a Covered Person, (iv) the
spouse of any Covered Person, and (v) any family member of a Covered Person or
his or her spouse who lives with either of them. A Covered Person also may under
certain circumstances be deemed to have a beneficial interest in the securities
issued by SGRP that are held by other family members, trusts and affiliates.
Covered Persons include (without limitation) all Restricted Persons.
A Covered Person may be liable for any violation of this Policy by his or her
Related Person(s).
5. Recommended Notice Before Each Purchase or Sale of SGRP Securities
For their own protection, the Company recommends that each Restricted Person
notify the Chief Financial Officer before or contemporaneously with any purchase
or sale by such Restricted Person or his or her Related Person of any securities
issued by SGRP.
6. Penalty for Violation of Policy
Any Covered Person violating this Policy in any material respect (as determined
by the Board) will be subject to disciplinary action, and (depending on the
circumstances and severity) may be terminated by the Company.
Please note that acts or omissions of a Covered Person in violation of this
Policy also may violate applicable law and subject the Covered Person to
possible civil or criminal liability, whether or not the Company may take any
such disciplinary action.
7. Questions Regarding this Policy
Questions concerning this Policy should be referred to the Chief Financial
Officer. If any person believes that they inadvertently violated the law or this
policy in connection with purchase or sale of securities, such person should
consult with their own counsel before discussing the details thereof with the
Chief Financial Officer.
8. Code of Ethical Conduct Provisions Incorporated by Reference
This Policy is part of the Company's codes of ethical conduct, including
(without limitation) the SPAR Group, Inc., Code of Ethical Conduct for its
Directors, Senior Executives and Employees Dated (as of) May 1, 2004 (as the
same may be supplemented, modified, amended, restated or replaced from time to
time in the manner provided therein, the "Code"). This Policy shall be governed
by and construed in accordance with the provisions contained in Article VI
(entitled "Covered Person's Responsibilities") and Article VII (entitled
"Miscellaneous") of the Code (and any successor provisions, however numbered),
which provisions are incorporated by reference into this Policy as if such
provisions were fully set forth in this Policy and this Policy were the "Code"
referred to in such incorporated provisions.
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