8-K

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): September 29, 2006

_______________________

PRG-SCHULTZ INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

_________________________

Georgia	000-28000	58-2213805
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

600 Galleria Parkway, Suite 100, Atlanta, Georgia 30339-5949

(Address of principal executive office) (zip code)

Registrant’s telephone number, including area code: (770) 779-3900

_____________________________________________________________

(Former name or former address, if changed since last report)

_________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01Entry into a Material Definitive Agreement

On September 29, 2006, PRG-Schultz International, Inc. (the “Company”) entered into an Option Termination Agreement (the “Agreement”) with its President, Chief Executive Officer and Chairman of the Board, James B. McCurry. Under the Agreement, Mr. McCurry voluntarily surrendered for cancellation his option to purchase 200,000 shares of Company common stock, after giving effect to the Company’s 1-for-10 reverse stock split effected on August 14, 2006, which option was granted on July 29, 2005, as part of his initial employment package.

The cancellation of the referenced stock option will accelerate share-based compensation expense that otherwise would be recorded in future periods under Statement of Financial Accounting Standards (“SFAS”) No. 123(R). The Company estimates that this action will result in an aggregate acceleration of approximately $1.7 million in the Company’s share-based compensation expense, which would have been amortized over the relevant vesting periods of the option.

The transaction has the effect of returning 200,000 shares to the Company’s unrestricted reserve of common stock, which shares may be used for general corporate purposes. Mr. McCurry voluntarily offered the option to the Company for cancellation and did not request or receive any payment from the Company in connection with the cancellation.

The material terms of the cancelled option were disclosed in the Company’s Form 8-K which was filed with the U.S. Securities and Exchange Commission on July 25, 2005, the contents of which are incorporated herein by reference. The cancelled option had an exercise price of $31.60 per share. The vesting of the time-vesting tranche of the option (50,000 shares) was subsequently accelerated in anticipation of the Company’s adoption of SFAS No. 123(R). The remaining tranches of the option (150,000 shares) would have vested only upon the achievement (and maintenance for 45 consecutive trading days) of closing market prices of the Company’s common stock ranging from $45 to $80 per share.

The description above is qualified in its entirety by reference to the full text of the Agreement. A copy of the Agreement is incorporated herein by reference and attached hereto as Exhibit 10.1.

Mr. McCurry has no material relationships with the Company or any of its affiliates, other than as a holder of Company’s securities and a director and officer of the Company, and as previously disclosed in the Company’s periodic reports on file with the U.S. Securities and Exchange Commission.

Item 1.02Termination of a Material Definitive Agreement.

See Item 1.01 above regarding the cancellation of Mr. McCurry’s stock option, the contents of which are incorporated hereunder by reference.

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits.

10.1 Option Termination Agreement with James B. McCurry dated September 29, 2006.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, PRG-Schultz International, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PRG-SCHULTZ INTERNATIONAL, INC.
Date:   October 5, 2006	By: /s/ Victor A. Allums
	Victor A. Allums
	Senior Vice President, Secretary and General Counsel

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EX-10.1

EXHIBIT 10.1

OPTION TERMINATION AGREEMENT

This Option Termination Agreement (this “Agreement”) is entered into as of this September 29, 2006, by and among PRG-Schultz USA, Inc., (the “Company”), PRG-Schultz International, Inc. (“PRGX”) and James B. McCurry (“Optionholder”).

The parties agree as follows:

1.Termination of Options and Option Agreements. Effective as of September 29, 2006, the following shall terminate and cease to have any further force or effect:

(a)that certain stock option agreement (the “Option Agreement”) granted pursuant to Section 4(c) of the Employment Agreement (the “Employment Agreement”) entered into on July 20, 2005 effective July 25, 2005, by and among the parties hereto;

(b)each of the options to purchase shares of the Company (the “Options”) granted thereunder; and

(c)the respective rights and obligations of the parties hereto under the Stock Incentive Plan of PRGX (the “Plan”) with respect to the Options.

Each of the parties hereto is hereby released and discharged from any and all obligations and liabilities under the Options and the Option Agreement, as well as (insofar as they relate to the Options) the Employment Agreement and the Plan.

2.Release. The Optionholder hereby releases, remises, acquits and discharges PRGX and the Company, its successors and assigns from any and all claims, known or unknown, and however denominated, which he, his successors or assigns has or may have against any such releasees, and any and all liability such releasees may have to the Optionholder, in each case arising from or relating to the Options or the Option Agreement. This release is for any relief, no matter how denominated, including but not limited to injunctive relief, compensatory damages, punitive damages or rescissory damages. The Optionholder further agrees that he will not file or permit to be filed on his behalf any such claim. Notwithstanding the foregoing, this release shall not apply to any claims the Optionholder may have arising from or relating to his employment or any other options or awards granted pursuant to the Plan.

3.Miscellaneous. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of Georgia without giving effect to its principles or rules of conflict of laws to the extent such principles or rules are not mandatorily applicable by statute and would require or permit the application of the laws of another jurisdiction. This Agreement and the rights and obligations set forth herein shall inure to the benefit of, and be binding upon, the parties hereto, and each of their respective successors, heirs, and assigns. This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters. This Agreement may not be amended orally, but only by a writing duly executed by the parties hereto. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, all as of September 29, 2006.

PRG-SCHULTZ INTERNATIONAL, INC.

PRG-SCHULTZ USA, INC.

By:   /s/ Victor A. Allums

         Name:  Victor A. Allums

         Title:  Senior Vice President, Secretary and General Counsel

JAMES B. McCURRY

/s/ James B. McCurry

Name:  James B. McCurry

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