SPAR INCENTIVE MARKETING, INC.



STIMULYS, Inc.                                                September 10, 2004
Performance Holdings, Inc.
2245 Keller Way
Carrollton, Texas 75006

Attention:  Mr. Thomas Hunter, President

  RE:   PAYOFF AND RELEASE UNDER REVOLVING LOAN, GUARANTY AND SECURITY AGREEMENT
        ------------------------------------------------------------------------

Gentlemen:

     You,  STIMULYS,  INC.,  a  Delaware  corporation  formerly  known  as  SPAR
Performance  Group,  Inc.  ("SI"),  and PERFORMANCE  HOLDINGS,  INC., a Delaware
corporation ("Holdings",  and together with SI, each a "you" or "Loan Party" and
collectively  "you" or the "Loan  Parties"),  and we, SPAR INCENTIVE  MARKETING,
INC. ("we" or the  "Lender"),  are parties to a Revolving  Credit,  Guaranty and
Security  Agreement  dated  as of June 30,  2002  (as the  same  may  have  been
supplemented,  modified,  amended, restated or replaced from time to time in the
manner provided therein, the "Revolving Loan Agreement"),  under which SI is the
"Borrower" and Holdings is the "Guarantor",  and pursuant to which SI issued its
$2,000,000.00 Revolving Promissory Note (as the same may have been supplemented,
modified, amended, restated or replaced from time to time in the manner provided
therein, the "Revolving Note").  Capitalized terms and non-capitalized words and
phrases  used  and  not  otherwise   defined  herein  shall  have  the  meanings
respectively assigned to them in the Revolving Loan Agreement.

     The Loan Parties and the Lender have agreed to terminate their relationship
under the  Revolving  Loan  Agreement,  all upon the terms  and  provisions  and
subject to the conditions hereinafter set forth.

     1. Payoff and Payoff  Date.  The Loan  Parties  have  proposed to repay the
Loans  outstanding  and restate the letter of credit  reimbursement  obligations
under the Revolving Loan  Agreement on September 10, 2004 (the "Proposed  Payoff
Date"), by the issuance of the Lender's  Promissory Note in the principal amount
of  U.S..$764,271.00  (the "New  Note"),  supported  by the Guaranty (as defined
therein) (the "New Guaranty").

     2.  Termination  of Credit  Availability  and  Release  of Liens:  Upon our
receipt of your fully executed original copies of the New Note, the New Guaranty
and this letter agreement:  (a) your credit availability shall be deemed to have
been forever  extinguished  under the Revolving  Loan  Agreement and you have no
remaining   rights  under  the  Revolving  Loan  Agreement  or  any  other  Loan
Instrument;  (b) except as otherwise  provided in sections 3(b),  3(c), 4 and 8,
below,  the Revolving  Loan Agreement and Revolving Note are hereby deemed fully
paid and  satisfied  (or  restated  and  continued  in the case of the letter of
credit  reimbursement  obligations),  extinguished  and of no  further  force or
effect;  and (c) subject to section 4, below, any and all security interests and
liens that you have heretofore  granted to us under the Revolving Loan Agreement
("Collateral")  are  hereby  released  and  terminated.  If and  to  the  extent
requested  by you, we will  execute and deliver to you a  termination  statement
under  the  Uniform  Commercial  Code for  filing  in each  office  in which any
financing statement  respecting the Collateral has been filed, each in such form
and  substance as may be  acceptable  to us. Any and all such  actions  shall be
without any recourse to or representation or warranty by us whatsoever and shall
be at your sole cost and expense.

     3. Release and Discharge.  You  acknowledge  and agree that (a) you have no
claim,  counterclaim,  injury or other cause of action or determination  arising
out of, or directly or indirectly related to, the Revolving Loan Agreement,  any
other Loan  Instrument,  the Collateral,  the Purchase  Agreement,  any Purchase
Document,  or  the  maintenance,  administration,  enforcement  or  adjudication
thereof, against us, any of our affiliates, successors, assigns, participants or
designees,  or any of our or their respective  directors,  officers,  employees,
attorneys,   agents   or   other   representatives,    (b)   your   exculpation,
indemnification  and similar  agreements  under the  Revolving  Loan  Agreement,
together with the applicable provisions of Articles VIII and IX of the Revolving
Loan Agreement, shall continue in full force and effect after the Repayment Date
as and to the  extent  contemplated  herein,  and (c)  this  acknowledgment  and
release is not  intended  (and shall not be deemed or  construed)  to in any way
qualify, condition, diminish, restrict, limit or otherwise affect any (and is in
addition to each) other release, waiver, consent,  acknowledgment,  exculpation,



<PAGE>

indemnification  or  other  similar  term or  provision  of the  Revolving  Loan
Agreement or any other Loan Instrument.

     4. Release of Claims Against Lender. Each Loan Party hereby  intentionally,
knowingly,   expressly,   unconditionally   and  irrevocably  forever  releases,
discharges and acquits the Lender, each of the Lender's affiliates,  successors,
assigns,  participants  or designees,  and each of their  respective  directors,
officers,  employees,  attorneys,  agents  or  other  representatives,  from and
respecting each and every Claim or Loss (as such terms are hereinafter  defined)
respecting,  arising under or out of, or directly or indirectly  related to, any
event or circumstance  occurring or otherwise existing prior to the date hereof,
including  (without  limitation) any such event or  circumstance  pertaining to,
arising  under or out of, or directly or  indirectly  related to, the  Revolving
Loan Agreement,  any other Loan Instrument,  the Collateral,  the Stock Purchase
Agreement or any other Stock Purchase  Document,  or the creation,  maintenance,
administration,  enforcement  or  adjudication  thereof.  "Claim" shall mean any
claim, counterclaim,  right of recoupment or abatement,  injury, harm, exposure,
action,  suit,  investigation,  proceeding,  demand or other  cause of action or
determination,  in each  case  whether  known  or  unknown  and  whether  now or
hereafter existing,  arising or determined.  "Loss" shall mean any loss, damage,
injury, harm, detriment,  decline in value, lost opportunity,  liability, Claim,
settlement,  judgment,  award, fine, penalty, Tax (as hereinafter defined), fee,
charge,  cost or expense (including any disbursement,  expense or reasonable fee
or other reasonable  amount paid to any attorney or other  professional  advisor
and any costs of  investigation),  in each case  whether  known or  unknown  and
whether  now or  hereafter  existing.  "Tax"  shall  mean  (i) any tax or  other
governmental  assessment,  levy or imposition  of any kind or nature,  including
(without limitation) (A) any income tax, franchise tax, capital gains tax, gross
receipts  tax,  capital tax,  goods and services tax,  value added tax,  surtax,
excise tax, ad valorem tax, land or other  transfer tax,  stamp tax,  sales tax,
use or consumption tax, property tax, inventory tax,  occupancy tax,  employment
tax, labor tax, Social Security,  Medicare,  Medicaid,  withholding tax, payroll
tax, gift tax, estate tax,  inheritance  tax, health or drug tax or premium,  or
poll tax, or (B) any Social  Security,  Medicare,  Medicaid,  insurance or other
retirement,  health or drug tax, assessment, levy, imposition,  premium or other
payment mandated by Applicable Law, or (ii) any interest,  fine, penalty, fee or
expense on or related to any of the foregoing;  in each case whether domestic to
the United States of America or foreign,  whether  federal,  provincial,  state,
county or local,  whenever  arising or  asserted,  and  whether or not  accrued,
acknowledged  or  contested.  Each Loan Party  hereby  acknowledges,  certifies,
represents and warrants to and covenants and agrees with the Lender that: (a) as
of the  date  hereof,  none of the  Loan  Parties  nor any of  their  respective
directors, officers, employees, attorneys, agents or other representatives knows
or has reason to know of any such Claim or Loss or any such underlying  event or
circumstance;  (b) this  release,  discharge and acquittal has been given by the
Loan Parties to induce the Lender to enter into this letter agreement and accept
the New Note and New  Guaranty and is not intended by the parties (and shall not
be deemed or construed) to be any admission or evidence of any Claim against the
Lender or liability on the part of the Lender or any of its  representatives for
any Claim or Loss; and (c) this release, discharge and acquittal is not intended
(and  shall  not be  deemed  or  construed)  to in any way  qualify,  condition,
diminish,  restrict,  limit or otherwise affect any (and is in addition to each)
other release, waiver, consent, acknowledgment,  exculpation, indemnification or
other  similar  term or  provision of the New Note and New Guaranty and of those
continuing  under the Revolving  Loan Agreement as provided in sections 3(b) and
3(c), above.

     5.  Reinstatement.  In  the  event  any  payment  of  the  Loans  or  other
Obligations,  or any part thereof, at any time is rescinded or must otherwise be
restored or returned by us upon the insolvency,  bankruptcy or reorganization of
you or any co-obligor,  guarantor,  surety or pledgor under the Loan Instruments
(whether  by  order  of  any  court  or  other  governmental  authority,  by any
settlement or  otherwise),  then the terms and  provisions of the Revolving Loan
Agreement  and  other  Loan  Instruments  to  which  you  are a party  shall  be
reinstated to the extent of the  payment(s) so rescinded,  restored or returned,
all as though such payment had never been made.

     6.  Relationship  of the Loan Parties and the Lender,  Etc. Each Loan Party
acknowledges,  certifies,  represents  and warrants to and  covenants and agrees
with the Lender that:  (a) the Lender is acting solely in the capacity of lender
respecting this letter;  (b) the sole  relationship of the Loan Parties with the
Lender is that of debtor and creditor, respectively, and no term or provision of
this letter agreement or any other  transaction  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  or  advisory
relationship  with  any  Loan  Party,  any  Surety  or any of  their  respective
affiliates  or  representatives;  (c)  each  Loan  Party is  experienced  in the
ownership,  operation  and financing of its current and  contemplated  business,
assets and properties;  (d) each Loan Party has received and  independently  and
fully  reviewed and evaluated  this letter  agreement and the other  transaction
documents,   the  obligations  and  transactions   contemplated   hereunder  and
thereunder and the potential effects of such obligations and transactions on the
assets,  business,  cash  flow,  expenses,  income,   liabilities,   operations,
properties,   prospects,   reputation,



                                       -2-
<PAGE>

taxation and condition (financial or otherwise) of each of the Loan Parties, the
Sureties and their respective affiliates,  if any (each a "Business Attribute"),
which review and  evaluation  was made  together  with legal counsel and (to the
extent deemed  prudent by such Loan Party)  financial and other advisors to such
Loan Party, (e) no Loan Party or Surety has received or is relying upon any oral
or written advice,  analysis,  representation or warranty,  counsel,  promise or
assurance of any kind whatsoever  from the Lender,  any of its affiliates or any
of their respective officers,  attorneys or other representatives  (whether with
respect to any Business Attribute or otherwise), including (without limitation),
any tax,  accounting or legal advice or counsel;  (f) no Loan Party or Surety is
relying  upon  any  expertise,  business  acumen,  industry  knowledge  or other
guidance of any kind whatsoever of or from the Lender,  any of its affiliates or
any of their respective officers,  attorneys or other  representatives  (whether
with  respect  to any  Business  Attribute  or  otherwise),  including  (without
limitation) any aspect of the ownership,  operation,  development,  financing or
taxation  of any  thereof;  and  (g) no  counsel  to the  Lender  has in any way
provided any tax or other legal  counsel,  analysis,  advice or assurance to, or
has in any way otherwise represented, any Loan Party, any Surety or any of their
respective affiliates or other  representatives,  whether in connection with any
transaction document or otherwise, and each such counsel may rely on this clause
(g) as if directly  addressed  to such  counsel  and is an intended  third party
beneficiary hereof.

     7. Pay-Off Letter  Terminates.  If we have not received your fully executed
original  copies of the New Note, the New Guaranty and this letter  agreement by
September 13, 2004, this pay-off letter  agreement shall be null and void and of
no further force or effect.

     8. Miscellaneous.  This letter agreement (a) may be executed in two or more
counterpart copies of the entire document or of signature pages to the document,
(b) shall take effect upon execution by you and us, which  execution  copies may
be delivered by telecopy or other electronic  transmission  (with hard copies to
follow), (c) is a "Loan Instrument" under (and as defined in) the Revolving Loan
Agreement,  and (d) shall be governed by and  construed in  accordance  with the
applicable  terms and  provisions  of the  Revolving  Loan  Agreement as if this
letter  agreement  were the  "Agreement"  referred to  therein,  which terms and
provisions  are  incorporated  herein by  reference as if fully set forth herein
(and which  shall not be  affected  by the  termination  of the  Revolving  Loan
Agreement provided above).

     If the foregoing  correctly sets forth our agreement with you,  please sign
and return the enclosed copy of this letter to acknowledge your agreement.

                                Very truly yours,

                                SPAR INCENTIVE MARKETING, INC.


                                By: /s/ James R. Segreto
                                    --------------------------------------------
                                    James R. Segreto, Vice President, Controller

STIMULYS, INC.
     (f/k/a known as SPAR Performance Group, Inc.)

By: /s/ Thomas Hunter
    -------------------------------------
    Thomas Hunter, President


PERFORMANCE HOLDINGS, INC.


By: /s/ Thomas Hunter
    ---------------------------------------
    Thomas Hunter, President


                                      -3-
<PAGE>


STATE OF TEXAS     )
                   :  SS.:
COUNTY OF DALLAS   )


     On this 13th day of  September,  2004,  before me  personally  came  THOMAS
HUNTER,  to me known,  who, being by me duly sworn,  did depose and say: that he
resides at 2601 Wake Forest Drive,  Plano, TX 75093; that he is the PRESIDENT of
STIMULYS,  INC.,  the  corporation  described  in and which  executed  the above
instrument;  and that he (or she)  signed his (or her) name  thereto by order of
the board of directors of said corporation.

                                     /s/ Staci B. Harper
                                     -------------------------------------------
                                        (Signature and office of individual
                                            taking acknowledgment.)




STATE OF TEXAS     )
                   :  SS.:
COUNTY OF DALLAS   )


     On this 13th day of  September,  2004,  before me  personally  came  THOMAS
HUNTER,  to me known,  who, being by me duly sworn,  did depose and say: that he
resides at 2601 Wake Forest Drive,  Plano, TX 75093; that he is the PRESIDENT of
PERFORMANCE HOLDINGS,  INC., the corporation described in and which executed the
above  instrument;  and that he signed his name thereto by order of the board of
directors of said corporation.


                                     /s/ Staci B. Harper
                                     -------------------------------------------
                                        (Signature and office of individual
                                            taking acknowledgment.)




STATE OF NEW YORK          )
                           :  SS.:
COUNTY OF WESTCHESTER      )


     On this 13th day of September,  2004,  before me  personally  came JAMES R.
SEGRETO,  to me known,  who, being by me duly sworn, did depose and say: that he
resides at 126 Middleton Place, Bronxville,  New York 10708; that he is the VICE
PRESIDENT,  CONTROLLER  of  SPAR  INCENTIVE  MARKETING,  INC.,  the  corporation
described  in and which  executed the above  instrument;  and that he signed his
name thereto by order of the board of directors of said corporation.

                                     /s/ Mindy Asiedu
                                     -------------------------------------------
                                        (Signature and office of individual
                                            taking acknowledgment.)

<PAGE>
                                  ATTACHMENT A

    PAYOFF AND RELEASE UNDER REVOLVING LOAN, GUARANTY AND SECURITY AGREEMENT
                                       AND
                                 PROMISSORY NOTE

     Notwithstanding anything to the contrary in this Promissory Note or Payoff
     and Release Under Revolving Loan, Guaranty and Security Agreement, the
     parties agree that the amount of the Promissory Note will be reduced by
     mutual agreement of the parties after examination of certain amounts.

The Promissory Note will be reduced by:

A.       Any amount by which the General Ledger of SPAR is less than $1,301,332
         on June 30, 2002 or less than $791,303 on July 31, 2004. STIMULYS will
         be allowed to send in auditors to verify this number and all expenses
         will be borne by STIMULYS. The maximum reduction for A will be
         $90,000.

B.       Any charges for any unused line fees and Letter of Credit fees included
         in the Promissory Note that are not valid under the Revolving Credit,
         Guaranty and Security Agreement among SPAR Performance Group, Inc.,
         Performance Holdings, Inc. and SPAR Incentive Marketing, Inc. dated as
         of June 30, 2002 ("the Revolving Credit Agreement"). Notwithstanding
         the Revolving Credit Agreement, if SPAR did not incur unused line fees
         and/or Letter of Credit fees with Webster bank during the same time
         period the Promissory Note will be reduced by any amount included for
         unused line fees and Letter of Credit fees. The maximum adjustment for
         B will be $60,000.

C.       Any amount included in the Promissory Note for medical expenses paid by
         SPAR after July 31, 2002 for medical claims submitted prior to July 31,
         2002 or for medical claims submitted by persons who elected COBRA prior
         to July 31, 2002 and paid monthly COBRA insurance to SPAR to the extent
         such amounts were included in the promissory note and to the extend
         that payments on behalf of people on COBRA exceeded the amounts paid to
         SPAR for the COBRA. The maximum adjustment for C will be $63,000.

The parties further agree that the amount to be paid in twenty days following
the execution of the promissory note is $422,000. Any remaining balance in
excess of (i) amount in the Promissory Note for J&G legal bills for the Texas
litigation (approximately $31,000) and (ii) for the ARC Letter of Credit
($70,000) (both (i) and (ii) will be paid within 90 days of this signing of the
promissory note) will be paid on the following timetable with interest at 6% per
annum with interest not paid on (i) and (ii):

     a.   Any  amount  up to  $50,000  will be paid six  calendar  months  after
          signing the Promissory Note;

<PAGE>

     b.   Any amount  greater than $50,000 but less than  $100,000  will be paid
          twelve months after signing the Promissory Note;
     c.   Any amount over $100,000 will be paid twenty-four months after signing
          the Promissory Note;
     d.   Any outstanding balance may be pre-paid without penalty.


Any amounts not paid as scheduled will be charged an interest of 18% per year.