10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2004
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from             to

Commission File Number 0-28000

PRG-Schultz International, Inc.

(Exact name of registrant as specified in its charter)

Georgia	58-2213805
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
600 Galleria Parkway Suite 100 Atlanta, Georgia (Address of principal executive offices)	30339-5986 (Zip Code)

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

      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 þ          No o

      Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act).     Yes þ          No o

      Common shares of the registrant outstanding at April 30, 2004 were 61,763,345.

PRG-SCHULTZ INTERNATIONAL, INC.

FORM 10-Q

For the Quarter Ended March 31, 2004

INDEX

			Page No.
Part I.	Financial Information
	Item 1.	Financial Statements (Unaudited)		1
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2004 and 2003		1
		Condensed Consolidated Balance Sheets as of March 31, 2004 and December 31, 2003		2
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and 2003		3
		Notes to Condensed Consolidated Financial Statements		4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		23
	Item 4.	Controls and Procedures		23
Part II.	Other Information
	Item 1.	Legal Proceedings		24
	Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities		24
	Item 3.	Defaults Upon Senior Securities		24
	Item 4.	Submission of Matters to a Vote of Security Holders		24
	Item 5.	Other Information		24
	Item 6.	Exhibits and Reports on Form 8-K		24
Signatures				26
EX-2.1 PURCHASE AGREEMENT, JANUARY 16, 2004
EX-10.1 EMPLOYMENT AGREEMENT, JAMES E. MOYLAN
EX-10.2 AGREEMENT AND RELEASE, DONALD E. ELLIS
EX-10.3 FIFTH AMENDMENT TO CREDIT AGREEMENT
EX-10.4 SIXTH AMENDMENT TO CREDIT AGREEMENT
EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
EX-32.1 SECTION 906 CERTIFICATION OF THE CEO & CFO

PART I.     FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

			Three Months Ended
			March 31,
			2004			2003
Revenues			$	87,649		$	96,593
Cost of revenues				57,629			59,034
Selling, general and administrative expenses				33,206			28,793
	Operating income (loss)			(3,186	)		8,766
Interest (expense), net				(2,096	)		(2,212	)
	Earnings (loss) from continuing operations before income taxes and discontinued operations			(5,282	)		6,554
Income taxes				(2,007	)		2,440
	Earnings (loss) from continuing operations before discontinued operations			(3,275	)		4,114
Discontinued operations (Note B):
	Earnings from discontinued operations, net of income tax expense of $168 in 2003			—			231
	Gain on disposal of discontinued operations, including operating results for phase-out period, net of income tax expense of $5,401 in 2004 and $216 in 2003			8,122			324
	Earnings from discontinued operations			8,122			555
		Net earnings	$	4,847		$	4,669
Basic earnings (loss) per share:
	Earnings (loss) from continuing operations before discontinued operations		$	(0.05	)	$	0.07
	Discontinued operations			0.13			—
		Net earnings	$	0.08		$	0.07
Diluted earnings (loss) per share (Note C):
	Earnings (loss) from continuing operations before discontinued operations		$	(0.05	)	$	0.07
	Discontinued operations			0.13			—
		Net earnings	$	0.08		$	0.07
Weighted-average shares outstanding (Note C):
	Basic			61,693			62,382
	Diluted			61,693			78,910

See accompanying Notes to Condensed Consolidated Financial Statements.

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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)

				March 31,			December 31,
				2004			2003
ASSETS
Current assets:
	Cash and cash equivalents (Note F)			$	20,109		$	26,658
	Restricted cash				156			5,758
	Receivables:
		Contract receivables, less allowance for doubtful accounts of $3,447 in 2004 and $3,236 in 2003			53,163			53,185
		Employee advances and miscellaneous receivables, less allowance of $4,430 in 2004 and $4,760 in 2003			2,905			3,573
			Total receivables		56,068			56,758
	Funds held for client obligations				23,190			18,690
	Prepaid expenses and other current assets				3,572			3,779
	Deferred income taxes				9,211			9,211
	Current assets of discontinued operations				—			3,179
			Total current assets		112,306			124,033
Property and equipment:
	Computer and other equipment				57,014			54,482
	Furniture and fixtures				7,466			7,531
	Leasehold improvements				8,654			8,543
					73,134			70,556
	Less accumulated depreciation and amortization				43,223			41,090
			Property and equipment, net		29,911			29,466
Goodwill					170,650			170,619
Intangible assets, less accumulated amortization of $3,030 in 2004 and $2,683 in 2003					31,270			31,617
Deferred income taxes					63,240			65,370
Other assets					3,109			3,152
Long-term assets of discontinued operations					—			1,792
				$	410,486		$	426,049
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Current installments of long-term debt			$	6,500		$	31,600
	Obligations for client payables				23,190			18,690
	Accounts payable and accrued expenses				24,924			25,780
	Accrued payroll and related expenses				41,552			40,256
	Deferred revenue				6,282			4,601
	Current liabilities of discontinued operations				—			1,391
			Total current liabilities		102,448			122,318
Convertible notes, net of unamortized discount of $2,381 in 2004 and $2,605 in 2003					122,619			122,395
Deferred compensation					3,231			3,695
Other long-term liabilities					4,312			4,511
			Total liabilities		232,610			252,919
Shareholders’ equity (Notes G and H):
	Preferred stock, no par value. Authorized 500,000 shares; no shares issued or outstanding in 2004 and 2003				—			—
	Participating preferred stock, no par value. Authorized 500,000 shares; no shares issued or outstanding in 2004 and 2003				—			—
	Common stock, no par value; $.001 stated value per share. Authorized 200,000,000 shares; issued 67,527,870 shares in 2004 and 67,489,608 shares in 2003				68			67
	Additional paid-in capital				493,018			492,878
	Accumulated deficit				(266,649	)		(271,496	)
	Accumulated other comprehensive income				317			616
	Treasury stock at cost, 5,764,525 shares in 2004 and 2003				(48,710	)		(48,710	)
	Unearned portion of restricted stock				(168	)		(225	)
			Total shareholders’ equity		177,876			173,130
Commitments and contingencies (Note H)
				$	410,486		$	426,049

See accompanying Notes to Condensed Consolidated Financial Statements.

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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands)

					Three Months Ended
					March 31,
					2004			2003
Cash flows from operating activities:
	Net earnings				$	4,847		$	4,669
	Gain on disposal of discontinued operations					(8,122	)		(324	)
	Earnings from discontinued operations					—			(231	)
	Earnings (loss) from continuing operations					(3,275	)		4,114
	Adjustments to reconcile earnings (loss) from continuing operations to net cash provided by operating activities:
		Depreciation and amortization				4,431			4,427
		Restricted stock compensation expense				(25	)		22
		Gain (loss) on sale of property and equipment				21			(1	)
		Deferred compensation expense				(464	)		(478	)
		Deferred income taxes				(3,286	)		1,198
		Income tax benefit relating to stock option exercises				—			35
	Changes in operating assets and liabilities:
			Restricted cash securing letter of credit obligation			5,463			—
			Receivables			870			12,028
			Prepaid expenses and other current assets			(41	)		314
			Other assets			(17	)		(88	)
			Accounts payable and accrued expenses			(1,206	)		56
			Accrued payroll and related expenses			1,312			(11,569	)
			Deferred revenue			1,794			2,424
			Other long-term liabilities			(199	)		(10	)
				Net cash provided by operating activities		5,378			12,472
Cash flows from investing activities:
	Purchases of property and equipment					(4,141	)		(3,234	)
	Proceeds from sale of certain discontinued operations					19,116			—
				Net cash provided by (used in) investing activities		14,975			(3,234	)
Cash flows from financing activities:
	Net repayments of debt					(25,100	)		(509	)
	Payments for issuance costs on convertible notes					—			(9	)
	Net proceeds from common stock issuances					223			210
	Purchase of treasury shares					—			(5,028	)
				Net cash used in financing activities		(24,877	)		(5,336	)
Net cash provided by (used in) discontinued operations						(1,391	)		356
Effect of exchange rates on cash and cash equivalents						(634	)		105
				Net change in cash and cash equivalents		(6,549	)		4,363
Cash and cash equivalents at beginning of period						26,658			14,860
Cash and cash equivalents at end of period					$	20,109		$	19,223
Supplemental disclosure of cash flow information:
	Cash paid during the period for interest				$	107		$	275
	Cash paid during the period for income taxes, net of refunds received				$	1,107		$	1,232

See accompanying Notes to Condensed Consolidated Financial Statements.

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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2004 and 2003

(Unaudited)

Note A — Basis of Presentation

      The accompanying Condensed Consolidated Financial Statements (Unaudited) of PRG-Schultz International, Inc. and its wholly owned subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.

      Disclosures included herein pertain to the Company’s continuing operations unless otherwise noted.

      Certain reclassifications have been made to 2003 amounts to conform to the presentation in 2004. These reclassifications include the reclassification of Communications Services as discontinued operations (See Note B(2)).

      For further information, refer to the Consolidated Financial Statements and Footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2003.

(1) Employee Stock Compensation Plans

      At March 31, 2004, the Company had three stock compensation plans: two stock option plans and an employee stock purchase plan (the “Plans”). The Company accounts for the Plans under the provisions of Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. As such, compensation expense is measured on the date of grant only if the current market price of the underlying stock exceeds the exercise price. The options granted generally vest and become fully exercisable on a ratable basis over four or five years of continued employment. In accordance with APB Opinion No. 25 guidance, no compensation expense has been recognized for the Plans in the accompanying Consolidated Statements of Operations except for compensation amounts relating to grants of certain restricted stock issued in 2000. The Company recognizes compensation expense over the indicated vesting periods using the straight-line method for its restricted stock awards.

      Pro forma information regarding net earnings and earnings per share is required by Statements of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. The following pro forma information has been determined as if the Company had accounted for its employee stock options as an operating expense under the fair value method of SFAS No. 123. The fair value of these options was estimated as of the date of grant using the Black-Scholes option valuation model.

      The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, it is management’s opinion that existing models do not necessarily provide a reliable single measure of the fair value of the Company’s employee stock options. For purposes of pro forma disclosures below, the estimated fair value of the options is amortized to expense over the options’ vesting periods.

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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company’s pro forma information for the three months ended March 31, 2004 and 2003 for continuing and discontinued operations, combined, is as follows (in thousands, except for pro forma net earnings per share information):

			Three Months Ended
			March 31,
			2004			2003
Numerator for basic and diluted pro forma net earnings per share:
	Net earnings before pro forma effect of compensation expense recognition provisions of SFAS No. 123		$	4,847		$	4,669
	Pro forma effect of compensation expense recognition provisions of SFAS No. 123			(1,309	)		(2,935	)
	Pro forma net earnings		$	3,538		$	1,734
Denominator for diluted pro forma net earnings per share:
	Weighted-average shares outstanding, as reported for basic earnings per share			61,693			62,382
	Effect of dilutive securities:
		Employee stock options		—			444
		Denominator for pro forma diluted earnings per share		61,693			62,826
Pro forma net earnings per share:
	Basic — as reported		$	0.08		$	0.07
	Basic — pro forma		$	0.06		$	0.03
	Diluted — as reported		$	0.08		$	0.07
	Diluted — pro forma		$	0.06		$	0.03

      The number of employee stock options that are dilutive for pro forma purposes may vary from period to period from those under APB No. 25, due to the timing difference in recognition of compensation expense under APB No. 25 compared to SFAS No. 123.

      In applying the treasury stock method to determine the dilutive impact of common stock equivalents, the calculation is performed in steps with the impact of each type of dilutive security calculated separately. For each of the three-month periods ended March 31, 2004 and 2003, 16.1 million shares related to the convertible notes were excluded from the computation of pro forma diluted earnings per share calculated using the treasury stock method, due to their antidilutive effect.

(2) New Accounting Standards

      There have been no new accounting standards issued that have not been adopted by the Company.

Note B — Discontinued Operations

(1) Sale of Discontinued Operations — Logistics Management Services

      On October 30, 2001, the Company consummated the sale of its Logistics Management Services business to Platinum Equity, a firm specializing in acquiring and operating technology organizations and technology-enabled service companies worldwide. The transaction yielded initial gross sale proceeds, as adjusted, of

5

PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

approximately $9.5 million with up to an additional $3.0 million payable in the form of a revenue-based royalty over four years, of which $1.4 million had been cumulatively received through March 31, 2004.

      During the first quarters of 2004 and 2003, the Company recognized a gain on the sale of discontinued operations of approximately $0.1 million and $0.3 million, respectively, net of tax expenses of approximately $0.1 million and $0.2 million, respectively, related to the receipt of a portion of the revenue-based royalty from the sale of the Logistics Management Services business in October 2001, as adjusted for certain expenses accrued as part of the estimated loss on the sale of that business.

(2) Sale of Communications Services

      During the fourth quarter of 2003, the Company declared its remaining Communications Services operations, formerly part of the Company’s then-existing Other Ancillary Services segment, as a discontinued operation. On January 16, 2004, the Company consummated the sale of the remaining Communications Services operations to TSL (DE) Corp., a newly formed company whose principal investor is One Equity Partners, the private equity division of Bank One. The operations were sold for approximately $19.1 million in cash paid at closing, plus the assumption of certain liabilities of Communications Services. The Company recognized a gain on disposal of approximately $8.3 million, net of tax expense of approximately $5.5 million, subject to possible adjustments for final determination of the sale-date working capital transferred and finalization of the effective tax rate to be applied. Operating results for Communications Services during the phase-out period were a loss of $(0.5) million, net of an income tax benefit of $(0.2) million.

      Summarized financial information for discontinued operations is as follows (in thousands):

	Three Months
	Ended
	March 31,
	2004			2003
Revenues	$	115		$	4,052
Operating income (loss)		(546	)		399

Note C — Diluted Earnings (Loss) Per Share

      The following table sets forth the computations of basic and diluted earnings (loss) per share for the three months ended March 31, 2004 and 2003 (in thousands, except per share data):

			Three Months Ended
			March 31,
			2004			2003
Numerator for diluted earnings (loss) per share:
	Earnings (loss) from continuing operations before discontinued operations		$	(3,275	)	$	4,114
	After-tax interest expense, including amortization of discount on convertible notes			—			1,041
		Earnings (loss) for purposes of computing diluted earnings (loss) per share from continuing operations		(3,275	)		5,155
	Discontinued operations			8,122			555
		Earnings for purposes of computing diluted earnings (loss) per share	$	4,847		$	5,710

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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

				Three Months Ended
				March 31,
				2004			2003
Denominator:
	Denominator for basic earnings (loss) per share — weighted-average shares outstanding				61,693			62,382
	Effect of dilutive securities:
		Employee stock options			—			378
		Convertible notes			—			16,150
		Denominator for diluted earnings (loss) per share			61,693			78,910
Diluted earnings (loss) per share:
	Earnings (loss) from continuing operations before discontinued operations			$	(0.05	)	$	0.07
	Discontinued operations				0.13			—
			Net earnings	$	0.08		$	0.07

      For the three months ended March 31, 2004 and 2003, 6.3 million and 2.4 million stock options, respectively, were excluded from the computation of diluted earnings per share calculated using the treasury stock method, due to their antidilutive effect.

      Additionally, for the three months ended March 31, 2004, 16.1 million shares related to the convertible notes were excluded from the calculation of diluted earnings (loss) per share due to their antidilutive effect.

Note D — Operating Segments and Related Information

      The Company has two reportable operating segments, Accounts Payable Services (including the Channel Revenue business) and Meridian VAT Reclaim (“Meridian”).

Accounts Payable Services

      The Accounts Payable Services segment consists of services that entail the review of client accounts payable disbursements to identify and recover overpayments. This operating segment includes accounts payable services provided to retailers and wholesale distributors (the Company’s historical client base) and accounts payable services provided to various other types of business entities. The Accounts Payable Services segment conducts business in North America, South America, Europe, Australia, Africa and Asia.

Meridian VAT Reclaim

      Meridian is based in Ireland and specializes in the recovery of value-added taxes (“VAT”) paid on business expenses for corporate clients located throughout the world.

Corporate Support

      Corporate support represents the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to Accounts Payable Services or Meridian.

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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company evaluates the performance of its operating segments based upon revenues and operating income. The Company does not have any intersegment revenues. Segment information for the three months ended March 31, 2004 and 2003 is as follows (in thousands):

		Accounts
		Payable				Corporate
		Services		Meridian		Support			Total
Three Months Ended March 31, 2004
	Revenues	$	79,079	$	8,570	$	—		$	87,649
	Operating income (loss)		10,271		772		(14,229	)		(3,186	)
Three Months Ended March 31, 2003
	Revenues	$	84,862	$	11,731	$	—		$	96,593
	Operating income (loss)		15,790		4,919		(11,943	)		8,766

Note E — Comprehensive Income

      The Company applies the provisions of SFAS No. 130, Reporting Comprehensive Income. This Statement establishes items that are required to be recognized under accounting standards as components of comprehensive income. SFAS No. 130 requires, among other things, that an enterprise report a total for comprehensive income in condensed financial statements of interim periods issued to shareholders. For the three-month periods ended March 31, 2004 and 2003, the Company’s consolidated comprehensive income was $4.5 million and $5.0 million, respectively. The difference between consolidated comprehensive income, as disclosed here, and traditionally determined consolidated net earnings, as set forth on the accompanying Condensed Consolidated Statements of Operations (Unaudited), results from foreign currency translation adjustments.

Note F — Cash Equivalents

      Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less. The Company places its temporary cash investments with high credit quality financial institutions. At times, certain investments may be in excess of the Federal Deposit Insurance Corporation insurance limit.

      At March 31, 2004 and December 31, 2003, the Company had cash equivalents of approximately $7.6 million and $3.4 million, respectively. At March 31, 2004, the Company had $5.1 million in cash equivalents at U.S. banks. The Company did not have any cash equivalents at U.S. banks at December 31, 2003. At March 31, 2004 and December 31, 2003, certain of the Company’s international subsidiaries held $2.5 million and $3.4 million, respectively, in temporary investments, the majority of which were at banks in the United Kingdom.

Note G — Shareholders’ Equity

      From time to time, the Company has historically purchased its common shares on the open market or in privately negotiated transactions, depending on market conditions, business opportunities and other factors. During the first quarter of 2003, the Company purchased 0.7 million shares of its outstanding common stock on the open market at a cost of $5.0 million. Purchases by the Company of its outstanding common stock have been prohibited by the Company’s Credit Agreement, as amended, since November 12, 2003.

      On August 14, 2000, the Company issued 286,000 restricted shares of its common stock to certain employees (the “Stock Awards”). Of the total restricted shares issued, 135,000 restricted shares were structured to vest on a ratable basis over five years of continued employment. The remaining 151,000 restricted shares were structured to vest at the end of five years of continued employment. At March 31, 2004,

8

PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

there were 40,500 shares of this common stock which were no longer forfeitable and for which all restrictions had accordingly been removed. Additionally, as of March 31, 2004, former employees had cumulatively forfeited 182,000 shares of the restricted common stock. Over the remaining life of the Stock Awards (as adjusted at March 31, 2004 to reflect cumulative forfeitures to date), the Company will recognize $168 thousand in compensation expense before any future forfeitures. The Company recognized $(25) thousand and $22 thousand of compensation expense related to the Stock Awards for the three months ended March 31, 2004 and 2003, respectively. Additionally, the Company reduced unamortized compensation expense for forfeitures of Stock Awards by $81 thousand and $48 thousand for the three months ended March 31, 2004 and 2003, respectively.

      The Company has issued no preferred stock through March 31, 2004, and has no present intentions to issue any preferred stock, except for any potential issuance of participating preferred stock (500,000 shares authorized) pursuant to the Company’s Shareholder Protection Rights Agreement. The Company’s remaining, undesignated preferred stock (500,000 shares authorized) may be issued at any time or from time to time in one or more series with such designations, powers, preferences, rights, qualifications, limitations and restrictions (including dividend, conversion and voting rights) as may be determined by the Company’s Board of Directors, without any further votes or action by the shareholders.

Note H — Commitments and Contingencies

(1) Legal Proceedings

      Beginning on June 6, 2000, three putative class action lawsuits were filed against the Company and certain of its present and former officers in the United States District Court for the Northern District of Georgia, Atlanta Division. These cases were subsequently consolidated into one proceeding styled: In re Profit Recovery Group International, Inc. Sec. Litig., Civil Action File No. 1:00-CV-1416-CC (the “Securities Class Action Litigation”). On November 13, 2000, the Plaintiffs in these cases filed a Consolidated and Amended Complaint (the “Complaint”). In that Complaint, Plaintiffs allege that the Company, John M. Cook, Scott L. Colabuono, the Company’s former Chief Financial Officer, and Michael A. Lustig, the Company’s former Chief Operating Officer, (the “Defendants”) violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by allegedly disseminating false and misleading information about a change in the Company’s method of recognizing revenue and in connection with revenue reported for a division. Plaintiffs purport to bring this action on behalf of a class of persons who purchased the Company’s stock between July 19, 1999 and July 26, 2000. Plaintiffs seek an unspecified amount of compensatory damages, payment of litigation fees and expenses, and equitable and/or injunctive relief. On January 24, 2001, Defendants filed a Motion to Dismiss the Complaint for failure to state a claim under the Private Securities Litigation Reform Act, 15 U.S.C. § 78u-4 et seq. The Court denied Defendant’s Motion to Dismiss on June 5, 2001. Defendants served their Answer to Plaintiffs’ Complaint on June 19, 2001. The Court granted Plaintiffs’ Motion for Class Certification on December 3, 2002. Discovery is currently ongoing. The Company believes the alleged claims in this lawsuit are without merit and intends to defend this lawsuit vigorously. Due to the inherent uncertainties of the litigation process and the judicial system, the Company is unable to predict the outcome of this litigation. If the outcome of this litigation is adverse to the Company, it could have a material adverse effect on the Company’s business, financial condition, and results of operations.

      In the normal course of business, the Company is involved in and subject to other claims, contractual disputes and other uncertainties. Management, after reviewing with legal counsel all of these actions and proceedings, believes that the aggregate losses, if any, will not have a material adverse effect on the Company’s financial position or results of operations.

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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(2) Indemnification and Consideration Concerning Certain Future Asset Impairment Assessments

      The Company’s Meridian unit and an unrelated German concern named Deutscher Kraftverkehr Euro Service GmbH & Co. KG (“DKV”) are each a 50% owner of a joint venture named Transporters VAT Reclaim Limited (“TVR”). Since neither owner, acting alone, has majority control over TVR, Meridian accounts for its ownership using the equity method of accounting. DKV provides European truck drivers with a credit card that facilitates their fuel purchases. DKV distinguishes itself from its competitors, in part, by providing its customers with an immediate advance refund of the value-added taxes (“VAT”) they pay on their fuel purchases. DKV then recovers the VAT from the taxing authorities through the TVR joint venture. Meridian processes the VAT refund on behalf of TVR for which it receives a percentage fee. In April 2000, TVR entered into a financing facility with Barclays Bank plc (“Barclays”), whereby it sells the VAT refund claims to Barclays with full recourse. Effective August 2003, Barclays exercised its contractual rights and unilaterally imposed significantly stricter terms for the facility, including markedly higher costs and a series of stipulated cumulative reductions to the facility’s aggregate capacity. As of March 31, 2004, the facility’s aggregate capacity was 21.1 million Euro ($26.0 million at March 31, 2004 exchange rates). During March 2004, TVR repaid all amounts owing to Barclays. Accordingly, at March 31, 2004 the amount drawn down under this facility stood at zero. However, the finance facility has not been terminated. As a result of prior changes to the facility occurring during the second half of 2003, Meridian has begun to experience a reduction in the processing fee revenues it derives from TVR as DKV previously transferred certain TVR clients to another VAT service provider.

      As a condition of the financing facility between TVR and Barclays, Meridian has provided an indemnity to Barclays for any losses that Barclays may suffer in the event that Meridian processes any fraudulent claims on TVR’s behalf. Meridian has not been required to remit funds to Barclays under this indemnity and the Company believes the probability of the indemnity clause being invoked is remote. Meridian has no obligation to Barclays as to the collectibility of VAT refund claims sold by TVR to Barclays unless fraudulent conduct is involved.

      Should Barclays continue to reduce the facility’s aggregate capacity each month and should DKV continue to transfer TVR clients to another VAT service provider as a result thereof, Meridian’s future revenues from TVR for processing TVR’s VAT refunds, and the associated profits therefrom, would be further reduced and may possibly even be eliminated. (Meridian’s revenues from TVR were $0.4 million and $1.0 million for the three months ended March 31, 2004 and 2003, respectively.) Moreover, if the more stringent Barclays financing terms and conditions are such that they eventually cause a marked deterioration in TVR’s future financial condition, Meridian may be unable to recover some or all of its long-term investment in TVR which stood at $2.0 million at March 31, 2004 exchange rates. This investment is included in Other Assets on the Company’s March 31, 2004 and December 31, 2003 Consolidated Balance Sheets.

(3) Standby Letter of Credit

      On March 8, 2004, the Company entered into a Standby Letter of Credit (“Letter of Credit”) under its senior bank credit facility in the face amount of 4.5 million Euro ($5.5 million at March 31, 2004 exchange rates). The Letter of Credit serves as assurance to VAT authorities in France that the Company’s Meridian unit will properly and expeditiously remit all French VAT refunds it receives in its capacity as intermediary and custodian to the appropriate client recipients. The current annual interest rate of the Letter of Credit was 2.5% at March 31, 2004. There were no borrowings outstanding under the Letter of Credit at March 31, 2004.

(4) Client Bankruptcy

      On April 1, 2003, one of the Company’s larger domestic Accounts Payable Services clients filed for Chapter 11 Bankruptcy Reorganization. During the quarter ended March 31, 2003, the Company received $5.5 million in payments on account from this client. A portion of these payments might be recoverable as

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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

“Preference payments” under United States bankruptcy laws. It is not possible at this point to estimate whether a claim for repayment will ever be asserted, and, if so, whether and to what extent it may be successful. Accordingly, the Company’s Consolidated Statements of Operations for the three-month periods ended March 31, 2004 and 2003 do not include any expense provision with respect to this matter. Should a preference payment claim be subsequently asserted against the Company, the Company will vigorously defend against it.

(5) Industrial Development Authority Grants

      During the period of May 1993 through September 1999, Meridian received grants from the Industrial Development Authority of Ireland (“IDA”) in the sum of 1.4 million Euro ($1.7 million at March 31, 2004 exchange rates). The grants were paid primarily to stimulate the creation of 145 permanent jobs in Ireland. As a condition of the grants, if the number of permanently employed Meridian staff in Ireland falls below 145, then the grants are repayable in full. This contingency expires on September 23, 2007. Meridian currently employs 176 permanent employees in Dublin, Ireland. The European Union has currently proposed legislation that will remove the need for suppliers to charge VAT on the supply of services to clients within the European Union. The effective date of the proposed legislation is currently unknown. Management estimates that the proposed legislation, if enacted as currently drafted, would have a material adverse impact on Meridian’s results of operations from providing value-added tax recovery services. If Meridian’s results of operations were to decline as a result of the enactment of this legislation, it is possible that the number of permanent employees that Meridian employs in Ireland could fall below 145 prior to September 2007. Should such an event occur, the full amount of the grants previously received by Meridian will need to be repaid to IDA. As any potential liability related to these grants is not currently determinable, the Company’s Consolidated Statement of Operations for the three-month period ended March 31, 2004 does not include any expense related to this matter. Management is monitoring this situation, and if it appears probable Meridian’s permanent staff in Ireland will fall below 145 and that grants will need to be repaid to the IDA, the Company will recognize an expense at that time.

      The Company’s current intention is to redirect most of Meridian’s employees who would be made redundant by the proposed legislation to provide services to its core Accounts Payable Services business. The Company believes that this redirection will significantly enhance its Accounts Payable Services business internationally as well as provide the peripheral benefit of mitigating the risk of a future IDA grant repayment.

(6) Warranty Claims Pertaining to a Business Sold in 2001

      On December 14, 2001, the Company consummated the sale of its French Taxation Services business, as well as certain notes payable due to the Company, to Chequers Capital, a Paris-based private equity firm. In connection with this sale, the Company provided the buyer with certain warranties and accrued $2.0 million as an estimate of the ultimate amount due under those warranties. The buyer has asserted certain indemnification claims pursuant to the sale agreement. The Company is in discussions with the buyer in an attempt to resolve such indemnification claims. The Company is in the process of evaluating such claims, but believes that it is unlikely that any payments to the buyer will exceed the accrued liability established for such claims at the time of the sale, by an amount that would be material to the Company’s financial position, results of operations or liquidity.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

      Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s Condensed Consolidated Financial Statements (Unaudited), which have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations updates the information provided in and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

Overview

      PRG-Schultz International, Inc. and subsidiaries (the “Company”) is the leading provider of recovery audit services to large and mid-size business having numerous payment transactions with many vendors.

      In businesses with large purchase volumes and continuously fluctuating prices, some small percentage of erroneous overpayments to vendors is inevitable. Although these businesses process the vast majority of payment transactions correctly, a small number of errors do occur. In the aggregate, these transaction errors can represent meaningful “lost profits” that can be particularly significant for businesses with relatively narrow profit margins. The Company’s trained, experienced industry specialists use sophisticated proprietary technology and advanced recovery techniques and methodologies to identify overpayments to vendors. In addition, these specialists review clients’ current practices and processes related to procurement and other expenses in order to identify solutions to manage and reduce expense levels, as well as apply knowledge and expertise of industry best practices to assist clients in improving their business efficiencies.

Revenue Recognition

      The Company’s revenues are based on specific contracts with its clients. Such contracts generally specify (a) time periods covered by the audit, (b) nature and extent of audit services to be provided by the Company, (c) the clients’ duties in assisting and cooperating with the Company, and (d) fees payable to the Company, generally expressed as a specified percentage of the amounts recovered by the client resulting from liability overpayment claims identified.

      In addition to contractual provisions, most clients also establish specific procedural guidelines that the Company must satisfy prior to submitting claims for client approval. These guidelines are unique to each client and impose specific requirements on the Company, such as adherence to vendor interaction protocols, provision of advance written notification to vendors of forthcoming claims, securing written claim validity concurrence from designated client personnel and, in many cases, securing written claim validity concurrence from the involved vendors. Approved claims are processed by clients and generally taken as a recovery of cash from the vendor or a reduction to the vendor’s accounts payable balance.

      The Company recognizes revenue on the invoice basis except with respect to its Meridian VAT Reclaim business unit (“Meridian”) and Channel Revenue, a division of Accounts Payable Services. Clients are invoiced for a contractually specified percentage of amounts recovered when it has been determined that they have received economic value (generally through credits taken against existing accounts payable due to the involved vendors or refund checks received from those vendors), and when the following criteria are met: (a) persuasive evidence of an arrangement exists; (b) services have been rendered; (c) the fee billed to the client is fixed or determinable; and (d) collectibility is reasonably assured.

      The Company’s Meridian and Channel Revenue units recognize revenue on the cash basis in accordance with guidance issued by the Securities and Exchange Commission in Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements. Based on the guidance in SAB No. 101, Meridian defers recognition of revenues to the accounting period in which cash is both received from the foreign governmental agencies reimbursing value-added tax (“VAT”) claims and transferred to Meridian’s clients.

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Channel Revenue defers recognition of revenues to the accounting period in which cash is received from its clients as a result of overpayment claims identified.

      The Company derives an insignificant amount of revenues on a “fee-for-service” basis whereby billing is based upon a flat fee, or fee per hour, or fee per unit of usage. The Company recognizes revenue for these types of services as they are provided and invoiced and when criteria (a) through (d) as set forth above are met.

Strategic Business Initiatives for the Accounts Payable Services Business

      During the fourth quarter of 2003, the Company finalized its strategy to revitalize the business and respond to the changing competitive environment. The Company’s strategic plan focuses on a series of initiatives designed to maintain its dedicated focus on the Company’s clients and rekindle its growth. Specifically, the Company plans to (1) Focus on the core Accounts Payable Services business; (2) Evolve the service model; (3) Grow the domestic Accounts Payable Services business; (4) Grow the international Accounts Payable Services business; (5) Develop new business; and (6) Maintain high client retention rates.

      The Model Evolution work will initially concentrate on the U.S. Accounts Payable Services business and domestic corporate support functions. The Company will be conducting the U.S.-based aspect of its work through most of 2004 and continues to drive towards a goal of annualized cost savings of approximately $16.0 million to $20.0 million upon completion of the U.S.-based work effort. A significant portion of these expected cost savings are being targeted for reinvestment to fund the cost of new growth initiatives, including significant additional financial commitments to international Accounts Payable Services expansion and new business development. In conducting this service model initiative, the Company is incurring significant expenses for items such as employee severances, the closure of certain offices and the fees of outside advisors.

Critical Accounting Policies

      The Company’s significant accounting policies have been fully described in Note 1 of Notes to Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. Certain of the accounting policies are considered “critical” to the portrayal of the Company’s financial position and results of operations, as they require the application of significant judgment by management; as a result, they are subject to an inherent degree of uncertainty. These “critical” accounting policies are identified and discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, management evaluates its estimates and judgments, including those considered “critical”. The development, selection and evaluation of accounting estimates, including those deemed “critical,” and the associated disclosures in this Form 10-Q have been discussed with the Audit Committee of the Board of Directors.

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Results of Operations

      The following table sets forth the percentage of revenues represented by certain items in the Company’s Condensed Consolidated Statements of Operations (Unaudited) for the periods indicated:

			Three Months
			Ended March 31,
			2004			2003
Revenues				100.0	%		100.0	%
Cost of revenues				65.7			61.1
Selling, general and administrative expenses				37.9			29.8
	Operating income (loss)			(3.6	)		9.1
Interest (expense), net				(2.4	)		(2.3	)
	Earnings (loss) from continuing operations before income taxes and discontinued operations			(6.0	)		6.8
Income taxes				(2.3	)		2.5
	Earnings (loss) from continuing operations before discontinued operations			(3.7	)		4.3
Discontinued operations:
	Earnings from discontinued operations, net of income tax			0.0			0.2
	Gain on disposal of discontinued operations, including operating results for phase-out period, net of income taxes			9.2			0.3
	Earnings from discontinued operations			9.2			0.5
		Net earnings		5.5	%		4.8	%

      The Company has two reportable operating segments, the Accounts Payable Services segment and Meridian VAT Reclaim (see Note D of Notes to Condensed Consolidated Financial Statements (Unaudited) included in Item 1. of this Form 10-Q).

Quarter Ended March 31, 2004 Compared to the Corresponding Period of the Prior Year

     Accounts Payable Services

      Revenues. Accounts Payable Services revenues for the three months ended March 31, 2004 and 2003 were as follows (in millions):

		2004		2003
Domestic Accounts Payable Services revenues:
	Retail	$	41.2	$	45.9
	Commercial		9.9		11.8
			51.1		57.7
International Accounts Payable Services revenues			28.0		27.2
	Total Accounts Payable Services revenues	$	79.1	$	84.9

      For the quarter ended March 31, 2004 compared to the quarter ended March 31, 2003, the Company experienced a decline in revenues for domestic retail Accounts Payable Services. This decline was primarily the result of changes in the claims approval and processing patterns in some of the Company’s largest retail accounts whereby the elapsed time between claim identification by the Company and claim recovery by our clients has been elongated and some claims have even lapsed as unrecoverable due to additional challenges associated with the passage of time, and reduced claims due to improvements in some clients’ internal recovery capabilities. The Company believes that well-publicized inquiries during 2003 by the United States Securities and Exchange Commission into the accounting by retailers for vendor-supplied promotional

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allowances have caused many of its largest clients to slow the approval and processing of claims against vendors as related policies and procedures are re-examined. The Company believes that this trend will most likely continue throughout 2004. A few of the Company’s larger domestic retail Accounts Payable Services clients began to re-examine their claims approval and processing guidelines during the first quarter of 2003, but the majority that ultimately made substantive guideline changes did so in the second and third quarters of that year.

      Revenues from the Company’s domestic commercial Accounts Payable Services clients also declined during the first quarter of 2004 compared to the same period of 2003. The quarter-over-quarter decrease was largely due to fewer audit starts as a result of the nature of the commercial audit cycle, as discussed further below. Also contributing to the decrease in revenues from commercial clients is the maturing of the market for providing “basic-scope” recovery audit services (which typically entails acquisition from the client of limited purchase data and an audit focus on a select few recovery categories) to commercial entities in the United States. To date, “basic-scope” audit recovery services have tended to be either “one-time” with no subsequent repeat or rotational in nature with different divisions of a given client often audited in pre-arranged annual sequences. Accordingly, revenues derived from a given client may change markedly from period to period. The Company believes that the market for providing “basic-scope” recovery audit services to commercial entities in the United States is reaching maturity with the existence of many competitors and increasing pricing pressures. Until and unless the Company can convert a substantial number of its current domestic commercial Accounts Payable Services clients to “broad-scope” audits (which typically entail a vast expansion of recovery categories reviewed by the Company’s auditors), or sell and deliver such services to new clients, revenues derived from domestic commercial Accounts Payable Services clients are likely to continue to decline due to intense and ongoing competitive pressures with respect to the historical “basic-scope” service model.

      The increase in revenues from the international portion of the Company’s Accounts Payable Services in the first quarter of 2004 compared to the first quarter of 2003 was primarily attributable to increased revenues generated by the Company’s Canadian, European and Asian operations partially offset by a decrease in revenues from one large client acquired as part of the January 24, 2002 acquisitions of the businesses of HSA-Texas and affiliates for which the Company provides airline ticket revenue recovery audit services. The Company’s Canadian operations experienced increased revenues quarter-over-quarter as a result of a strengthening of the local currency to the U.S. dollar when compared to currency rates for the same period of the prior year. The net increase in revenues from European accounts was primarily due to an expansion of revenue generated primarily from the client base in Sweden as a result of a period-over-period change in client mix as well as the strengthening of the local currency relative to the U.S. dollar during the first quarter of 2004 when compared to currency rates for the same period of the prior year. Partially offsetting the increase in the revenues of the Company’s European operations were decreases attributable to a delay in commercial audit starts to the second quarter of 2004 within the United Kingdom, as well as a decrease in revenues generated from the existing client base in Germany as a result of a quarter-over-quarter change in client mix. The increase in quarter-over-quarter revenues for the Company’s Asian operations resulted from a strengthening of the local currency to the U.S. dollar when compared to currency rates for the same period of the prior year.

      Cost of Revenues (“COR”). COR consists principally of commissions paid or payable to the Company’s auditors based primarily upon the level of overpayment recoveries, and compensation paid to various types of hourly workers and salaried operational managers. Also included in COR are other direct costs incurred by these personnel, including rental of non-headquarters offices, travel and entertainment, telephone, utilities, maintenance and supplies and clerical assistance. A significant portion of the components comprising COR for the Company’s domestic Accounts Payable Services operations are variable and will increase or decrease with increases and decreases in revenues. The COR support bases for domestic retail and domestic commercial operations are not separately distinguishable and are not evaluated by management individually. The Company’s international Accounts Payable Services also have a portion of their COR, although less than domestic Accounts Payable Services, that will vary with revenues.

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      Accounts Payable Services COR for the three months ended March 31, 2004 and 2003 were as follows (in millions):

		2004		2003
Domestic Accounts Payable Services		$	31.6	$	36.1
International Accounts Payable Services			20.2		17.6
	Total Accounts Payable Services COR	$	51.8	$	53.7

      The dollar decrease in cost of revenues for domestic Accounts Payable Services was primarily due to lower revenues during the first three months of 2004 when compared to the same period of the prior year. On a percentage basis, COR as a percentage of revenues from domestic Accounts Payable services decreased to 61.8% for the three months ended March 31, 2004, down from 62.7% in 2003.

      On a dollar basis, cost of revenues for the Company’s international Accounts Payable Services increased over the same period of the prior year primarily due to increases attributable to currency fluctuations in the countries in which the Company operates partially offset by decreases in COR associated with airline ticket revenue recovery audit services currently provided to one large client. The decrease in COR for international Accounts Payable Services with airline ticket revenue recovery audit services currently provided to one large client directly related to decreased revenues derived from this client, as discussed above, when compared to the same period of the prior year.

      Internationally, COR as a percentage of revenues for international Accounts Payable Services for the quarter ended March 31, 2004 was 72.3%, up from 64.7% in the comparable period of 2003. The increase in COR as a percentage of revenues for international Accounts Payable Services for the quarter ended March 31, 2004, as compared with the same period of the prior year, was predominately due to the Company’s European operations. As a result of decreased local currency revenues, the Company’s European operations experienced a decrease in the variable cost component of COR. However, the European operations continue to incur certain fixed costs that are a component of COR. As revenues decrease, these fixed costs constitute a larger percentage of COR and result in a higher overall COR as a percentage of revenues. Although the Company believes that its local currency European revenues will grow in 2004 over levels achieved in 2003, if those revenues were to remain at lower than historical levels, COR as a percentage of revenues for the Company’s international Accounts Payable Services operations will remain at a higher level than in prior periods.

      Selling, General, and Administrative Expenses (“SG&A”). SG&A expenses include the expenses of sales and marketing activities, information technology services and the corporate data center, human resources, legal, accounting, administration, currency translation, headquarters-related depreciation of property and equipment and amortization of intangibles with finite lives. The SG&A support bases for domestic retail and domestic commercial operations are not separately distinguishable and are not evaluated by management individually. Due to the relatively fixed nature of the Company’s SG&A expenses, these expenses as a percentage of revenues can vary markedly period-to-period based on fluctuations in revenues.

      Accounts Payable Services SG&A for the three months ended March 31, 2004 and 2003 were as follows (in millions):

		2004		2003
Domestic Accounts Payable Services		$	9.5	$	9.2
International Accounts Payable Services			7.5		6.2
	Total Accounts Payable Services SG&A	$	17.0	$	15.4

      On a dollar basis, the first quarter of 2004 increase in SG&A expenses for the Company’s domestic Accounts Payable Services operations, when compared to the same period of 2003, was primarily the result of increased support costs.

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      The increase in SG&A expenses, on a dollar basis, for the quarter ended March 31, 2004 compared to the quarter ended March 31, 2003 for international Accounts Payable Services resulted primarily from increased SG&A expenses experienced by the Company’s European and Asian operations, partially offset by lower SG&A expenses incurred by the Company’s Latin American operations. The Company’s European and Asian operations experienced an increase in SG&A expenses due to increased support costs and fluctuations of the local currency for various countries of operations relative to the U.S. dollar when compared to currency rates for the same period of the prior year. SG&A from the Company’s Latin American operations was lower for the quarter ended March 31, 2004 when compared to the same period of 2003 primarily due to reduced support costs.

Meridian

      Meridian’s operating income for the three months ended March 31, 2004 and 2003 was as follows (in millions):

		2004		2003
Revenues		$	8.5	$	11.7
Cost of revenues			5.8		5.3
Selling, general and administrative expenses			2.0		1.5
	Operating income	$	0.7	$	4.9

      Revenues. Meridian recognizes revenue on the cash basis in accordance with SAB No. 101. Based on the guidance in SAB No. 101, Meridian defers recognition of revenues to the accounting period in which cash is both received from the foreign governmental agencies reimbursing VAT claims and transferred to Meridian’s clients. Since Meridian has minimal influence over when the foreign governmental agencies make their respective VAT reimbursement payments, Meridian’s revenues can vary markedly from period to period.

      Revenue generated by Meridian decreased for the three months ended March 31, 2004 when compared to the first quarter of 2003 primarily due to an unusually high volume of refunds being received in the first three months of 2003 from certain European VAT authorities for claims that had been outstanding for an extended period of time. The timing of reimbursement of VAT claims by the various European tax authorities with which Meridian files claims can differ significantly by country. During the first six months of 2003, the tax authorities for various countries paid claims that, in some cases, had been outstanding in excess of two years. Also, there was a decrease in revenues generated from Meridian’s joint venture (Transporters VAT Reclaim Limited (“TVR”)) with an unrelated German concern named Deutscher Kraftverkehr Euro Service GmbH & Co. KG (“DKV”). Meridian experienced a decrease in TVR revenues of $0.6 million for the three months ended March 31, 2004 compared to the three months ended March 31, 2003. The Company believes that this trend of decreasing TVR revenues will continue throughout 2004 (see Note H of Notes to Condensed Consolidated Financial Statements (Unaudited) included in Item 1. of this Form 10-Q).

      COR. COR consists principally of compensation paid to various types of hourly workers and salaried operational managers. Also included in COR are other direct costs incurred by these personnel, including rental of offices, travel and entertainment, telephone, utilities, maintenance and supplies and clerical assistance. COR for the Company’s Meridian operations are largely fixed and, for the most part, will not vary significantly with changes in revenue.

      For the three months ended March 31, 2004 compared to the three months ended March 31, 2003, on a dollar basis, COR for the Company’s Meridian operations increased primarily as a result of increased payroll costs relating to higher headcount. COR as a percentage of revenues for the Company’s Meridian operations was 67.3% for the quarter ended March 31, 2004, compared to 45.2% of revenues for the same period of 2003. The increase in COR as a percentage of revenues for Meridian was the result of a significant decrease in revenues as discussed above combined with increased COR on a dollar basis.

      SG&A. Meridian’s SG&A expenses include the expenses of marketing activities, administration, professional services, property rentals and currency translation. Due to the relatively fixed nature of the

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Company’s SG&A expenses, these expenses as a percentage of revenues can vary markedly period-to-period based on fluctuations in revenues.

      On a dollar basis, the increase in Meridian’s SG&A for the quarter ended March 31, 2004 compared to 2003 was primarily the result of increased professional fees in addition to increased support costs.

Corporate Support

      SG&A. SG&A expenses include the expenses of sales and marketing activities, information technology services associated with the corporate data center, human resources, legal, accounting, administration, currency translation, headquarters-related depreciation of property and equipment and amortization of intangibles with finite lives. Due to the relatively fixed nature of the Company’s SG&A expenses, these expenses as a percentage of revenues can vary markedly period-to-period based on fluctuations in revenues. Corporate support represents the unallocated portion of corporate SG&A expenses not specifically attributable to Accounts Payable Services or Meridian and totaled the following for the three months ended March 31, 2004 and 2003 (in millions):

	2004		2003
Selling, general and administrative expenses	$	14.2	$	11.9

      The quarter-over-quarter increase in SG&A for corporate support for the first quarter of 2004 compared to 2003, on a dollar basis, was primarily the result of the increase in expenses incurred by the Company during 2004 relating to its strategic business initiatives previously discussed and a substantial severance payment made to the Company’s former chief financial officer.

Discontinued Operations

      During the fourth quarter of 2003, the Company declared its remaining Communications Services operations, formerly part of the Company’s then existing Other Ancillary Services segment, as a discontinued operation. On January 16, 2004, the Company consummated the sale of the remaining Communications Services operations to TSL (DE) Corp., a newly formed company whose principal investor is One Equity Partners, the private equity division of Bank One. The sale resulted in a gain of $8.3 million, net of tax expense of $5.5 million. The Company also recognized losses relating to the phase-out period for the Communications Services operations during the first quarter of 2004 in the amount of $(0.3) million, net of an income tax benefit of $(0.2) million. Additionally, during the first quarter of 2004, the Company recognized a gain on the sale of discontinued operations of approximately $0.1 million, net of tax expense of approximately $0.1 million, related to the receipt of a portion of the revenue-based royalty from the sale of the Logistics Management Services segment in October 2001.

      During the first quarter of 2003, the Company recognized a gain on the sale of discontinued operations of approximately $0.3 million, net of tax expense of approximately $0.2 million, related to the receipt of a portion of the revenue-based royalty from the sale of the Logistics Management Services segment in October 2001, as adjusted for certain expenses accrued as part of the estimated loss on the sale of the segment.

Other Items

      Interest (Expense), Net. Interest (expense) was $2.1 million and $2.2 million for the three months ended March 31, 2004 and 2003, respectively. The Company’s interest expense for the three months ended March 31, 2004 was comprised of interest expense and amortization of the discount related to the convertible notes and interest on borrowings outstanding under the senior bank credit facility. Interest expense for the three months ended March 31, 2003 was comprised of interest expense and amortization of the discount related to the convertible notes, interest on borrowings outstanding under the senior bank credit facility and interest on debt acquired as part of the acquisitions of the businesses of HSA-Texas and affiliates. The decrease in interest expense for the first quarter of 2004 compared to the same period of 2003 was due to the debt acquired as part of the acquisitions of the businesses of HSA-Texas and affiliates that was ultimately paid off during the second quarter of 2003.

18

      Income Tax Expense (Benefit). The provisions for income taxes for the quarters ended March 31, 2004 and 2003 consist of federal, state and foreign income taxes at the Company’s effective tax rate. The Company’s effective tax rate approximated 38% and 37% for the three months ended March 31, 2004 and 2003, respectively.

Liquidity and Capital Resources

      Net cash provided by operating activities was $5.4 million in the first quarter of 2004, compared to $12.5 million in the first quarter of 2003. Cash provided by operations for the first quarter of 2004 was primarily attributable to the substitution of a standby letter of credit for $5.5 million of cash which was previously in restricted escrow. Cash provided by operating activities during the three months ended March 31, 2003 was the result of earnings from continuing operations and an overall reduction in accounts receivable balances, partially offset by cash used in operations resulting from a reduction in accrued payroll and related expenses. The overall 2003 change in accounts receivable balances and accrued payroll and related expenses was the result of normal operations.

      Net cash provided by (used in) investing activities was $15.0 million in the first quarter of 2004 and $(3.2) million in the first quarter of 2003. Cash provided by investing activities during the first quarter of 2004 was the result of proceeds received from the sale of certain discontinued operations of $19.1 million, offset by capital expenditures of $4.1 million. During the first quarter of 2003, the Company had capital expenditures of approximately $3.2 million.

      Net cash used in financing activities was $24.9 million in the first quarter of 2004 versus $5.3 million in the first quarter of 2003. The net cash used in the three months ended March 31, 2004 related primarily to net repayments of debt. The net cash used in financing activities during the three months ended March 31, 2003 related primarily to the purchase of treasury shares.

      Net cash provided by (used in) discontinued operations was $(1.4) million and $0.4 million during the three months ended March 31, 2004 and 2003, respectively. Cash used in discontinued operations during the quarter ended March 31, 2004 was the result of losses generated by the Communications Services operations prior to its sale on January 16, 2004 offset by the receipt of a portion of the revenue-based royalty from the former Logistics Management Services segment that was sold in October 2001. Cash provided by discontinued operations during the quarter ended March 31, 2003 was the result of earnings generated from the Communications Services operations combined with the receipt of a portion of the revenue-based royalty from the former Logistics Management Services segment that was sold in October 2001.

      The Company maintains a senior bank credit facility with an indicated face value of $38.0 million (the “Credit Agreement”) syndicated between three banking institutions (the “Banking Syndicate”) led by Bank of America, N.A. as agent for the group. Borrowings under the credit facility are subject to limitations based primarily upon the Company’s eligible accounts receivable. Additionally, the credit facility contains customary covenants, including maintaining certain financial ratios. The Company is not required to make principal payments under the senior bank credit facility until its maturity on December 31, 2004 unless the Company violates its debt covenants and the violations are not waived. The occurrence of other stipulated events, as defined in the Credit Agreement, including, but not limited to, the Company’s outstanding facility borrowings exceeding the prescribed borrowing base, would also require accelerated principal payments. As of March 31, 2004, the Company was in compliance with the debt covenants contained in the Credit Agreement, as amended. The credit facility is secured by substantially all assets of the Company and interest on borrowings is tied to either the prime rate or the London Interbank Offered Rate (“LIBOR”) at the Company’s option. The credit facility requires a fee for committed but unused credit capacity of .50% per annum. The Company’s weighted-average interest rate at March 31, 2004 approximated 3.8%.

      On November 12, 2003, the Company and the Banking Syndicate entered into an amendment to the Credit Agreement (the “4th Amendment”). The 4th Amendment, among other stipulations, (1) served to re-establish and relax certain financial ratio covenants applicable to the third and fourth quarters of 2003 and each of the quarters of 2004, (2) prohibits acquisitions of other businesses, (3) prohibits the Company from purchasing its outstanding common stock or paying cash dividends, (4) required the Company to temporarily

19

maintain $10.0 million in cash as an unrestricted compensating balance, and (5) limited borrowing capacity on and after November 12, 2003 to a more stringent quarterly-determined borrowing base calculation that equaled the sum of eligible accounts receivable of the Company and the above-mentioned compensating balance.

      The Company reduced outstanding borrowings under the Credit Agreement by the $17.0 million of net cash proceeds received from the January 16, 2004 sale of its Communications Services operations (see Note B(2) of Notes to Condensed Consolidated Financial Statements (Unaudited) included in Part I. Item 1. of this Form 10-Q). In conjunction with the reduction in outstanding borrowings, the facility’s maximum capacity was permanently reduced from $55.0 million to $38.0 million. Along with the reduction in the facility, the requirement for the Company to maintain $10.0 million in cash as an unrestricted compensating balance was eliminated. Outstanding commitments under the Credit Agreement, as amended, were $12.3 million on March 31, 2004, consisting of outstanding borrowings of $6.5 million and two standby letters of credit totalling $5.8 million. The Company’s borrowing base at March 31, 2004 (maximum borrowing capacity) was $29.8 million, thus producing borrowing availability of approximately $17.5 million as of such date.

      On March 4, 2004, the Company and the Banking Syndicate entered into an additional amendment to the Credit Agreement (the “5th Amendment”). The 5th Amendment, in part, serves to exclude the fourth quarter 2003 pre-tax impairment charge of $3.0 million related to the Company’s trade name and the fourth quarter 2003 pre-tax impairment charge of $1.8 million related to the abandonment of certain internally-developed audit software from future period financial ratio covenant calculations.

      The Company currently anticipates that it will satisfy the revised financial ratio covenants of the Credit Agreement, as amended, for the next three calendar quarters, the duration of the agreement. Notwithstanding the Company’s current forecasts, no assurances can be provided that financial ratio covenant violations of the Credit Agreement, as amended, will not occur in the future or that, if such violations occur, the Banks will not elect to pursue their contractual remedies under the Credit Agreement, including requiring the immediate repayment in full of all amounts outstanding. There can also be no assurance that the Company can secure adequate or timely replacement financing to repay the Banking Syndicate in the event of an unanticipated repayment demand.

      During the quarter ended March 31, 2003, the Company purchased 0.7 million shares of its outstanding common stock on the open market at a cost of $5.0 million. Purchases by the Company of its outstanding common stock have been prohibited by the Company’s Credit Agreement, as amended, since November 12, 2003.

      The Company has adopted a strategic plan to revitalize the business and respond to the changing competitive environment. The strategic plan focuses on a series of initiatives designed to maintain the Company’s dedicated focus on its clients and to rekindle the Company’s growth. Specifically, the Company plans to (1) Focus on the core Accounts Payable Services business; (2) Evolve the service model; (3) Grow the domestic Accounts Payable Services business; (4) Grow the international Accounts Payable Services business; (5) Develop new business; and (6) Maintain high client retention rates.

      The Company has begun implementation of the strategic plan but remains in the intermediate stages of that process. Each of the initiatives requires sustained management focus, organization and coordination over time, as well as success in building relationships with third parties. The results of the strategy and implementation will not be known until some time in the future. If the Company is unable to implement the strategy successfully, results of operations and cash flows could be adversely affected. Successful implementation of the strategy may require material increases in costs and expenses.

      The Company anticipates capital expenditures in 2004 to total approximately $15.0-$17.0 million.

      The Company faces various commitments and contingencies (see Note H of Notes to Condensed Consolidated Financial Statements (Unaudited) included in Item 1. of this Form 10-Q). Any of the matters set forth in Note H could adversely affect the Company’s future liquidity.

20

      The Company believes that its working capital, current availability under its senior bank credit facility, as amended, which matures on December 31, 2004, and cash flows generated from future operations will be sufficient to meet the Company’s working capital and capital expenditure requirements through December 30, 2004 unless it is required to make accelerated debt repayments due to future unanticipated violations of the Credit Agreement, as amended, that are not waived by the Banking Syndicate. If a future credit ratio covenant violation under the Credit Agreement does occur, and if the Banking Syndicate declares the then-outstanding principal to be immediately due and payable, there can be no assurance that the Company will be able to secure additional financing that will be required to make such a rapid repayment. Additionally, if such a Banking Syndicate accelerated repayment demand is subsequently made and the Company is unable to honor it, cross-default language contained in the indenture underlying the Company’s separately-outstanding $125.0 million convertible notes issue, due November 26, 2006, could also be triggered, potentially accelerating the required repayment of those notes as well. In such an instance, there can likewise be no assurance that the Company will be able to secure additional financing that would be required to make such a rapid repayment.

      The Credit Agreement, as amended, matures on December 31, 2004. The Company intends to work with the Banking Syndicate to extend the current credit facility or negotiate a new credit facility. While the Banking Syndicate has historically displayed its willingness to provide financing to the Company, there can be no assurance that the Company will be able to successfully establish an extended or replacement credit facility. If the Company is not able to successfully negotiate an extended or replacement credit facility with the current Banking Syndicate, the Company will have to seek alternative measures of financing. There can be no assurance that these efforts will be successful. If the Company is unable to secure financing for periods subsequent to December 30, 2004, its liquidity, including its ability to fund operations and make necessary capital expenditures, could be materially and adversely affected.

Forward Looking Statements

      Some of the information in this Form 10-Q contains forward-looking statements which look forward in time and involve substantial risks and uncertainties including, without limitation, (1) statements that contain projections of the Company’s future results of operations or of the Company’s financial condition, (2) statements regarding the adequacy of the Company’s current working capital and other available sources of funds, and (3) statements regarding goals and plans for the future. All statements that cannot be assessed until the occurrence of a future event or events should be considered forward-looking. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue” or similar words. Risks and uncertainties that may potentially impact these forward looking statements include, without limitation, the following:

•  potential timing issues or changes in the Company’s clients’ claims approval processes that could delay revenue recognition;

•  if the recent economic recovery does not continue, the Company’s clients may not return to previous purchasing levels, and as a result, the Company may be unable to recognize anticipated revenues;

•  modifications to auditor compensation models may negatively impact employee productivity and retention, and therefore, our ability to generate revenues;

•  the possibility of clients who have filed for bankruptcy, including one large client that paid the Company approximately $5.5 million in the first quarter of 2003, asserting a claim against the Company for preference payments;

•  the bankruptcy of any of the Company’s larger clients, or vendors who supply them, could impair then-existing accounts receivable and reduce expected future revenues from such clients;

•  the Company may not achieve anticipated expense savings;

•  the Company’s past and future investments in technology may not benefit our business;

21

•  the Company’s Accounts Payable Services businesses may not grow as expected and may not be able to increase the number of clients, particularly commercial clients utilizing broad-scope audits;

•  the Company’s international expansion may prove unprofitable or may take longer to accomplish than we anticipate;

•  the Company’s reorganization of the U.S. Accounts Payable Services operations in connection with the Company’s current strategic business initiatives may adversely affect the Company’s ability to generate anticipated revenues and profits, and may not be successful or may require more time, management attention or expense than we currently anticipate;

•  the Company has violated its debt covenants in the past and may inadvertently do so in the future;

•  violation of our debt covenants could result in an acceleration of our outstanding bank debt (totaling $6.5 million at March 31, 2004) as well as debt under our convertible notes (totaling $125.0 million in gross principal balance at March 31, 2004), and we may not be able to secure sufficient liquid resources to pay the accelerated debt;

•  our bank credit facility is scheduled to expire on December 31, 2004 and there can be no assurance that we will be successful in extending or replacing it;

•  we may continue to experience revenue losses or delays as a result of our U.S. retailing clients’ actual and/or potential revision of claim approval and claim processing guidelines;

•  the possibility of an adverse judgment in pending securities litigation;

•  the impact of certain accounting pronouncements by the Financial Accounting Standards Board or the United States Securities and Exchange Commission, including, without limitation, the potential impact of any goodwill impairment that may be required by ongoing impairment testing under SFAS No. 142;

•  future weakness in the currencies of countries in which the Company transacts business;

•  changes in economic cycles;

•  competition from other companies;

•  changes in governmental regulations applicable to us;

•  the Meridian VAT Reclaim operating segment may require additional time and effort of Company executives and may therefore distract management from its focus on the Company’s core Accounts Payable Services business;

•  proposed legislation and regulatory initiatives concerning the mechanisms of European value-added taxation, if finalized as currently drafted, would reduce material portions of the revenues of Meridian VAT Reclaim;

•  other risk factors detailed in the Company’s Securities and Exchange Commission filings, including the Company’s Form 10-K for the year ended December 31, 2003, as filed with the Securities and Exchange Commission on March 5, 2004.

      There may be events in the future, however, that the Company cannot accurately predict or over which the Company has no control. The risks and uncertainties listed in this section, as well as any cautionary language in this Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of any of the events denoted above as risks and uncertainties and elsewhere in this Form 10-Q could have a material adverse effect on our business, financial condition and results of operations.

22

Item 3. Quantitative and Qualitative Disclosures About Market Risk

      Foreign Currency Market Risk. Our functional currency is the U.S. dollar although we transact business in various foreign locations and currencies. As a result, our financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we provide services. Our operating results are exposed to changes in exchange rates between the U.S. dollar and the currencies of the other countries in which we operate. When the U.S. dollar strengthens against other currencies, the value of nonfunctional currency revenues decreases. When the U.S. dollar weakens, the functional currency amount of revenues increases. We are a receiver of currencies other than the U.S. dollar and, as such, benefit from a weaker dollar. We are therefore adversely affected by a stronger dollar relative to major currencies worldwide.

      Interest Rate Risk. Our interest income and expense are most sensitive to changes in the general level of Prime and LIBOR interest rates. In this regard, changes in interest rates affect the interest earned on our cash equivalents as well as interest paid on our debt. At March 31, 2004, we had approximately $6.5 million of long-term variable-rate debt outstanding. Additionally, at March 31, 2004, we had fixed-rate convertible notes outstanding with a principal amount of $125.0 million which bear interest at 4.75% per annum. For the variable rate component of debt, a hypothetical 100 basis point change in interest rates with respect to the three months ended March 31, 2004 would have resulted in approximately a $48 thousand change in pre-tax income.

      Derivative Instruments. The Company has in place a formal policy concerning its use of derivative financial instruments and intends to utilize these instruments prospectively to manage its foreign currency market risk. As of March 31, 2004, the Company had no derivative financial instruments outstanding.

Item 4. Controls and Procedures

      As of March 31, 2004, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chairman and Chief Executive Officer (“CEO”) and the Executive Vice President and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (“Disclosure Controls”) pursuant to Rule 13a-15 promulgated pursuant to the Securities Exchange Act of 1934, as amended.

      The Company’s management, including the CEO and CFO, does not expect that its Disclosure Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdown can occur because of simple error or mistake. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

      Based upon the Company’s Disclosure Controls evaluation, the CEO and CFO have concluded that as of March 31, 2004, the Company’s Disclosure Controls provide reasonable assurance to ensure that the information required to be disclosed by the Company in its periodic reports is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding disclosure and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

      There were no significant changes in the Company’s internal controls or in other factors that could significantly affect those controls during the quarter ended March 31, 2004, including without limitation, any corrective actions with regard to significant deficiencies or material weaknesses.

23

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

      See Note H(1) of Notes to Condensed Consolidated Financial Statements (Unaudited) included in Part I. Item 1. of this Form 10-Q.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

      On November 12, 2003, the Company entered into the 4th Amendment to the Credit Agreement. The 4th Amendment, among other stipulations, prohibits the Company from paying cash dividends or repurchasing its common stock.

Item 3. Defaults Upon Senior Securities

      None.

Item 4. Submission of Matters to a Vote of Security Holders

      None.

Item 5. Other Information

      None.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit
Number		Description
	2.1	Asset Purchase Agreement between PRG-Schultz USA, Inc., PRGRS, Inc., PRG-Schultz International, Inc. and TSL (DE) Corp., dated as of January 16, 2004.
	3.1	Restated Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to Registrant’s Form 10-Q for the quarter ended June 30, 2002).
	3.2	Restated Bylaws of the Registrant (incorporated by reference to Exhibit 99.1 to Registrant’s Form 8-K/A filed April 3, 2002).
	4.1	Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Registrant’s Form 10-K for the year ended December 31, 2001).
	4.2	See Restated Articles of Incorporation and Bylaws of the Registrant, filed as Exhibits 3.1 and 3.2, respectively.
	4.3	Second Amendment to Shareholder Protection Rights Agreement dated as of August 16, 2002 between the Registrant and Rights Agent (incorporated by reference to Exhibit 4.3 to Registrant’s Form 10-Q for the quarter ended September 30, 2002).
	10.1	Form of Employment Agreement between Mr. James E. Moylan, Jr. and Registrant, dated as of March 5, 2004.
	10.2	Agreement and Release, dated March 10, 2004, to Employment Agreement between Mr. Donald E. Ellis, Jr. and Registrant.
	10.3	Fifth Amendment to Credit Agreement among PRG-Schultz USA, Inc., PRG-Schultz International, Inc., each of the domestic subsidiaries of the Registrant, the Lenders party thereto and Bank of America, N.A., dated as of March 4, 2004.
	10.4	Sixth Amendment to Credit Agreement among PRG-Schultz USA, Inc., PRG-Schultz International, Inc., each of the domestic subsidiaries of the Registrant, the Lenders party thereto and Bank of America, N.A., dated as of March 25, 2004.
	31.1	Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended March 31, 2004.

24

Exhibit
Number		Description
	31.2	Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended March 31, 2004.
	32.1	Certification of the Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended March 31, 2004.

(b) Reports on Form 8-K

      The registrant filed two reports on Form 8-K during the quarter ended March 31, 2004:

      (1) Form 8-K filing previously issued press releases under Item 5 and Item 7 thereof, was filed on January 16, 2004.

      (2) Form 8-K filing previously issued press releases under Item 7 and Item 12 thereof, was filed on February 23, 2004.

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SIGNATURES

      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.

PRG-SCHULTZ INTERNATIONAL, INC.

May 7, 2004	By: /s/ JOHN M. COOK John M. Cook President, Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
May 7, 2004	By: /s/ JAMES E. MOYLAN, JR. James E. Moylan, Jr. Executive Vice President — Finance, Chief Financial Officer and Treasurer (Principal Financial Officer)

26

EX-2.1

                                                                    EXHIBIT 2.1

                            ASSET PURCHASE AGREEMENT

         THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of this 16th
day of January, 2004 by and between PRG-Schultz USA, Inc., a Georgia corporation
("PRGUSA"), PRGRS, Inc., a Delaware corporation ("PRGRS"), PRG-Schultz
International Inc., a Georgia corporation ("Parent"), and TSL (DE) Corp., a
Delaware corporation ("Purchaser").

                              W I T N E S S E T H:

         WHEREAS, the parties hereto desire that PRGUSA sell to Purchaser and
that Purchaser purchase substantially all of the assets of PRGUSA used or held
for use in PRGUSA's TSL division ("TSL") for providing the following services
(collectively, the "Business"):

         (i)      Telecommunications and information technology cost control
                  services;

         (ii)     Telecommunications consulting services and professional
                  services for telecommunications-related services;

         (iii)    Telecommunications billing verification services and
                  optimization;

         (iv)     Call accounting and IT/telecommunications chargeback services;

         (v)      Telecommunications software and software services (e.g., ASP
                  Service Provider; Internet Hosting Services, Development,
                  etc.);

         (vi)     Managed telecommunications invoice processing services;

         (vii)    Other telecommunications-related managed services (e.g.,
                  moves, adds and changes and billing help desk); and

         (viii)   Professional technical temporary staffing for
                  telecommunications-related services.

         WHEREAS, notwithstanding the foregoing, PRGUSA has advised Purchaser
that the assets of the former Invoice & Tariff Management Group, LLC, The Right
Call, Inc. and The Right Answer, Inc. are not part of the Business and they are
not now primarily related to or primarily used in the Business; and

         WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the consummation of the transactions contemplated herein and
certain additional agreements related thereto.

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



                                   ARTICLE 1.
                      PURCHASE AND SALE OF PURCHASED ASSETS

         1.1      ASSETS TO BE ACQUIRED. Subject to and upon the terms and
conditions set forth herein, Purchaser agrees to purchase from PRGUSA, and
PRGUSA agrees to sell, transfer, convey and assign to Purchaser, free and clear
of all claims, liens, encumbrances, security interests and similar interests of
any kind or nature whatsoever, except for Permitted Encumbrances (as defined in
Section 4.4), the Purchased Assets, the Business and the goodwill related
thereto for the Purchase Price specified in Section 2.1. For purposes of this
Agreement, "Purchased Assets" shall mean all of PRGUSA's properties, assets,
goodwill and rights of every kind, nature and description existing on the
Closing Date (as hereinafter defined), primarily related to or primarily used in
the conduct of the Business as a going concern, wherever such assets are located
and whether real, personal or mixed, tangible or intangible, and whether or not
any of such assets have any value for accounting purposes or are carried or
reflected on or specifically referred to in its books or financial statements,
except for the Excluded Assets (as defined in Section 1.2), including, without
limitation, all of PRGUSA's right, title and interest in and to the following,
as the same may exist on the Closing Date, to the extent primarily related to or
primarily used in the Business:

                  (a)      all of the assets and properties reflected in the
Interim Statement of Net Assets (as defined in Section 4.7 herein) under the
heading "Assets" and all of the assets and properties of TSL (other than
Excluded Assets, as defined herein) acquired in the ordinary course of business
after December 31, 2003 by PRGUSA, primarily related to or primarily used in the
conduct of the Business, except for those disposed of after such date in the
ordinary course of business and not in violation of this Agreement;

                  (b)      all machinery, appliances, equipment, including
computer hardware, tools, supplies, leasehold improvements, construction in
progress, furniture and fixtures and assets subject to outstanding purchase
orders ("Fixed Assets");

                  (c)      all right, title and interest under all contracts
with clients or customers ("Client Contracts"), agreements with auditors,
independent contractor agreements, software development agreements,
arrangements, licenses, purchase orders, invoices and all other agreements and
contracts, whether oral or written, except for contracts and agreements which
are Excluded Assets (collectively, "Contracts");

                  (d)      all trade and accounts receivables (including,
without limitation custodial receivables for amounts advanced by PRGUSA on
behalf of one client of TSL as described in Section 3.10 hereof), notes
receivable, employee advances of PRGUSA (collectively, "Accounts Receivable")
and all work in progress (collectively, the "Work in Progress");

                  (e)      all of PRGUSA's right, title and interest in, and
benefits accruing to PRGUSA as lessee under all written and oral leases of
personal property (collectively, the "Personal Property Leases");

                                       2


                  (f)      all of PRGUSA's right, title and interest in, and
benefits accruing to PRGUSA under all leaseholds and subleaseholds relating to
real property (collectively, the "Real Property Leases");

                  (g)      all rights in Intellectual Property (as defined in
Section 4.11(k)) used or held for use in TSL's business, including without
limitation all Intellectual Property set forth on Schedule 4.11 hereto;

                  (h)      all franchises, licenses, consents, permits,
variances, certifications and approvals, orders and registrations of
governmental agencies or quasi-governmental or non-governmental third persons;

                  (i)      all claims, security and other deposits, refunds,
prepaid expenses, causes of action, choses in action, judgments, rights of
recovery, warranty rights, rights of set off, credits, guarantees, indemnities
and similar rights (collectively, the "Deposits and Other Rights");

                  (j)      client and supplier lists, client files, files
related to employees and auditors, computer data bases, books, records, manuals,
documents, pricing and cost information, books of account, correspondence, sales
and credit reports, subscription lists, mailing lists, literature, brochures,
marketing or promotional material and the like, including, without limitation,
all discs, tapes and other media storing data and other information and all of
the software and information management systems, and other business records;

                  (k)      all right, title and interest in and to the telephone
numbers and the white and yellow page directory listings for such telephone
numbers used in the conduct of the Business;

                  (l)      that certain bank account ("Custodial Account") used
exclusively for services provided by TSL to The McGraw-Hill Companies
("McGraw-Hill") pursuant to an agreement described on Schedule 4.9 attached
hereto and all bank deposits held by TSL in connection with its services on
behalf of McGraw-Hill (collectively, "Custodial Funds") including the Custodial
Account set forth Schedule 1.1(l);

                  (m)      all prepaid items and expenses, advance payments,
security or similar deposits, investments, deferred charges and claims for
refund;

                  (n)      all goodwill associated with TSL; and

                  (o)      all other tangible personal property.

Provided, however, that if any affiliate of PRGUSA (including PRGRS) owns or
leases any of the Purchased Assets, PRGUSA shall cause such affiliate to convey
all of such affiliate's right, title and interest in such Purchased Assets to
Purchaser pursuant to the terms of this Agreement.

                                       3


         1.2      EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in Section 1.1 hereof, Purchaser shall not acquire and PRGUSA shall
not transfer to Purchaser the following (collectively, "Excluded Assets"):

                  (a)      cash, bank deposits and cash equivalents (except for
the items referred to in Sections 1.1(l) and 1.1(m), which shall be Purchased
Assets);

                  (b)      the name "PRG-Schultz," "Profit Recovery Group" or
any related or similar trade names, trademarks, service marks or logos to the
extent the same incorporate the name(s) "PRG-Schultz," "Profit Recovery Group"
or any variation thereof;

                  (c)      rights, claims or causes of action against third
parties to the extent relating to the Excluded Assets or Excluded Liabilities;

                  (d)      those contracts or agreements entered into as a part
of any business acquisition transaction to which PRGUSA or any of its affiliates
is a party or a beneficiary and which are listed in Schedule 1.2 attached
hereto;

                  (e)      all contracts of insurance and any prepaid premiums
with respect to such insurance;

                  (f)      all corporate minute books and stock transfer books
and the corporate seal of PRGUSA;

                  (g)      all employment, retention, bonus, severance and other
compensation contracts and arrangements with employees of TSL including, without
limitation, the Employee Agreements entered into by TSL employees in favor of
PRGUSA;

                  (h)      all rights to claims for refunds of any income taxes
for which PRGUSA is or was entitled;

                  (i)      except as provided in Section 3.9(b), all assets
under or relating to any Employee Benefit Plan (as defined below);

                  (j)      those assets listed on Schedule 1.2 attached hereto.

For the avoidance of doubt, PRGUSA has advised Purchaser that the assets of the
former Invoice & Tariff Management Group, llc, The Right Call, Inc. and The
Right Answer, Inc. are not a part of the Business and they are not now primarily
related or primarily used in the Business, and do not constitute a portion of
the Purchased Assets.

         1.3      CONVEYANCE OF ASSETS. The conveyance, transfer and delivery of
the Purchased Assets shall be made by PRGUSA and accepted by Purchaser as of the
Closing Date as follows:

                  (a)      PRGUSA shall execute and deliver to Purchaser a bill
of sale in the form of Exhibit 1.3(a) attached hereto and made a part hereof
(the "Bill of Sale");

                                       4


                  (b)      PRGUSA and Purchaser shall execute and deliver an
Assignment and Assumption Agreement in the form of Exhibit 1.3(b) attached
hereto and made a part hereof (the "Assignment and Assumption Agreement") with
respect to the Assumed Liabilities (as hereinafter defined);

                  (c)      PRGRS shall execute and deliver to Purchaser an
assignment to Purchaser of the Intellectual Property owned by it in the form of
Exhibit 1.3(c) attached hereto and made a part hereof ("Intellectual Property
Assignment");

                  (d)      PRGUSA shall deliver to Purchaser evidence reasonably
satisfactory to Purchaser that the liens against the Purchased Assets under the
Credit Agreement dated as of December 31, 2001 among Parent and certain of its
affiliates, the lenders party thereto and Bank of America, N.A., as
administrative agent, have been or at the Closing will be released;

                  (e)      Counsel to PRGUSA shall deliver to Purchaser an
opinion of counsel to PRGUSA, dated the Closing Date, in the form of Exhibit
1.3(e) attached hereto;

                  (f)      PRGUSA shall deliver to Purchaser the notices to, and
consents and approvals of third parties listed on Schedule 1.3(f), to the extent
obtained prior to the Closing Date;

                  (g)      PRGRUSA shall execute and deliver to Purchaser a
certificate stating that PRGUSA is not a foreign person in accordance with
Sections 897 and 1445 of the Code;

                  (h)      PRGUSA and Purchaser shall execute and deliver a
Transition Services Agreement in the form of Exhibit 1.3(h) attached hereto;

                  (i)      PRGUSA and Purchaser shall execute and deliver the
Subcontractor Agreements in the form of Exhibit 1.3(i) attached hereto;

                  (j)      PRGUSA, Parent and Purchaser shall execute and
deliver a Noncompetition and Nonsolicitation Agreement in the form of Exhibit
1.3(j) attached hereto;

                  (k)      PRGUSA shall deliver to Purchaser a certificate of
good standing issued by the Secretary of State of the State of Georgia dated not
more than five days before the Closing Date, certifying that PRGUSA is a
corporation in good standing in such state;

                  (l)      PRGUSA shall deliver to Purchaser a certificate,
dated as of the Closing Date, in form and substance reasonably satisfactory to
Purchaser, of the Secretary or an Assistant Secretary of Purchaser certifying
(i) that attached thereto is a complete and correct copy of the articles of
incorporation of PRGUSA, as amended to date, (ii) that attached thereto is a
complete and correct copy of the Bylaws of PRGUSA, as amended to date, (iii)
that attached thereto is a complete and correct copy of resolutions adopted by
the board of directors of PRGUSA, authorizing the execution, delivery and
performance of this Agreement and all other agreements executed in connection
herewith by PRGUSA and the transfer of the Purchased Assets to

                                       5


Purchaser hereunder, and that such resolutions, approvals and consents have not
been amended or modified in any respect and remain in full force and effect as
of the date thereof, and (iv) that the persons named therein are duly elected,
qualified and acting officers of PRGUSA and that set forth therein is a genuine
signature or true facsimile thereof for each such officer;

                  (m)      PRGUSA shall execute and deliver such additional
instruments of sale, transfer, conveyance and assignment as of the Closing Date
as shall, in the reasonable opinion of Purchaser and its counsel, be necessary
or appropriate to vest in Purchaser good, valid and marketable title to the
Purchased Assets in accordance with Section 1.1;

                  (n)      [Intentionally omitted];

                  (o)      Purchaser shall deliver to PRGUSA a certificate,
dated as of the Closing Date, in form and substance reasonably satisfactory to
PRGUSA, of the secretary or an assistant secretary of Purchaser certifying that
(i) attached thereto is a complete and correct copy of the Certificate of
Incorporation of Purchaser, as amended to date, (ii) attached thereto is a
complete and correct copy of the Bylaws of Purchaser, as amended to date, (ii)
attached thereto is a complete and correct copy of resolutions adopted by the
Board of Directors of Purchaser, authorizing the execution, delivery and
performance of this Agreement and all other agreements executed in connection
herewith by Purchaser and the purchase of the Purchased Assets by Purchaser
hereunder, and that such resolutions, approvals and consents have not been
amended or modified in any respect and remain in full force and effect as of the
date thereof, and (iv) that the persons named therein are duly elected,
qualified and acting officers of Purchaser and that set forth therein is a
genuine signature or true facsimile thereof for each such officer;

                  (p)      Purchaser shall wire transfer the cash payment to or
for the account of PRGUSA in accordance with instructions delivered to Purchaser
prior to Closing; and

                  (q)      Purchaser shall execute and deliver such additional
documents as of the Closing Date as shall, in the reasonable opinion of Seller
and its counsel, be necessary or appropriate to consummate the transactions
contemplated by this Agreement.

In addition, at the Closing PRGUSA will notify Bank of America that the bank
account at Bank of America named "PRG-Schultz TSL Lockbox" shall come under the
control of Purchaser from and after the Closing Date; provided that all deposits
in such account at the close of business on the Closing Date shall be retained
by PRGUSA. After the Closing, Purchaser may change signatures on such account to
those persons selected by Purchaser.

         1.4      CLOSING. The closing of the transactions contemplated herein
(the "Closing") shall take place on January 16, 2004 by the exchange of
documents and instruments by mail, courier, telecopy and wire transfer to the
extent mutually acceptable to the parties hereto upon compliance with the terms,
conditions and contingencies contained herein or on such other date as is
mutually agreed upon by the parties hereto (such date to be herein referred to
as the "Closing Date"). All computations, adjustments, and transfers for the
purposes hereof shall be effective as of the close of business on the Closing
Date.

                                       6


         1.5      CERTAIN CONSENTS. Nothing in this Agreement shall be construed
as an attempt to assign any contract, agreement, permit, franchise, or claim
included in the Purchased Assets which is by its terms or in law nonassignable
without the consent of the other party or parties thereto, unless such consent
shall have been given, or as to which all the remedies for the enforcement
thereof enjoyed by PRGUSA would not, as a matter of law, pass to Purchaser as an
incident of the assignments provided for by this Agreement. In order, however,
to provide Purchaser the full realization and value of every contract,
agreement, permit, franchise and claim of the character described in the
immediately preceding sentence, each of PRGUSA and Purchaser agrees that on and
after the Closing, subject to the other terms and conditions of this Agreement
and the Subcontractor Agreement, it will take all commercially reasonable action
as shall be necessary or proper (a) to assure that the rights of PRGUSA under
such contracts, agreements, permits, franchises, and claims shall be preserved
for the benefit of Purchaser and (b) to facilitate receipt of the consideration
to be received by PRGUSA in and under every such contract, agreement, permit,
franchise, and claim, which consideration shall be held for the benefit of, and
shall be delivered to, Purchaser. Nothing in this Section shall in any way
diminish or increase PRGUSA's obligations hereunder to obtain all consents and
approvals as elsewhere set forth in this Agreement. Nothing contained in this
Section shall require PRGUSA to pay money or incur additional liabilities.

                                   ARTICLE II
                    PURCHASE PRICE; ASSUMPTION OF LIABILITIES

         2.1      PURCHASE PRICE; PAYMENTS AT CLOSING.

                  (a)      Subject to adjustment pursuant to Section 2.3, the
purchase price for the Purchased Assets will be an amount equal to Nineteen
Million One Hundred Thousand Dollars ($19,100,000) (the "Cash Purchase Price"),
payable at Closing by wire transfer to PRGUSA, plus the assumption of certain
liabilities of PRGUSA in accordance with Section 2.2 (collectively, the
"Purchase Price").

                  (b)      The Cash Purchase Price shall be payable as follows:
on the Closing Date, Purchaser shall pay to PRGUSA by wire transfer (w)
$19,100,000 plus (x) the amount, if any, by which Estimated Net Working Capital
is greater than $1,700,000, less (y) the amount, if any, by which Estimated Net
Working Capital is less than $1,700,000 (collectively, the "Cash Payment").

         2.2      ASSUMPTION OF LIABILITIES.

                  (a)      Assumed Liabilities. At the Closing, Purchaser shall
assume and agree to discharge and perform when due only the following
liabilities and obligations of PRGUSA, Parent or PRGRS relating to TSL as the
same shall exist on the Closing Date (collectively, the "Assumed Liabilities"):

                           (i)      any liabilities and obligations reflected on
the Closing Statement of Net Assets (as defined in Section 2.3), each to the
extent such liability or obligation is reflected on such statement;

                                       7


                           (ii)     PRGUSA's obligations and liabilities under
the Contracts, Real Property Leases and Personal Property Leases arising from
and after the Closing (excluding any liabilities or obligations for any breach
or default which occurred prior to the Closing);

                           (iii) all liabilities and obligations of PRGUSA
(including the obligations to make payments) resulting
from facts or circumstances first arising from and after the Closing under all
governmental licenses, permits, approvals, certificates of occupancy and
operating rights held in connection with the Purchased Assets to the extent such
licenses, permits, approvals, certificates of occupancy and operating rights are
included in the Purchased Assets (excluding any liabilities or obligations for
any breach or default which occurred prior to the Closing); and

                           (iv)     any other liabilities of PRGUSA set forth on
Schedule 2.2(a).

To the extent that any of the Assumed Liabilities are paid by PRGUSA, Purchaser
shall reimburse PRGUSA for the amount of such payment by PRGUSA promptly after
receiving evidence of the payment by PRGUSA. Except for the Assumed Liabilities,
Purchaser shall not assume any debts or liabilities of PRGUSA, Parent or PRGRS
of any kind or nature whatsoever (the "Excluded Liabilities").

                  (b)      Excluded Liabilities. Notwithstanding anything herein
to the contrary, PRGUSA shall retain and Purchaser shall not assume or be liable
for the following liabilities and obligations of PRGUSA, Parent or PRGRS:

                           (i)      all federal, state, local, foreign and other
income taxes imposed on PRGUSA or Parent;

                           (ii)     any liabilities or obligations of PRGUSA,
contingent or otherwise, for any borrowed money or any capital leases;

                           (iii)    any Environmental Liabilities (as defined in
Section 6.1);

                           (iv)     any liabilities or obligations existing
immediately prior to Closing of TSL or the Business to PRGUSA, Parent, PRGRS or
any of their Affiliates; and

                           (v)      any other liability or obligation of PRGUSA,
Parent, PRGRS or any of their Affiliates (as defined below) arising prior to
Closing including any liability or obligation directly or indirectly arising out
of or relating to the operation of the Business or ownership of the Purchased
Assets prior to the Closing, whether contingent or otherwise, fixed or absolute,
known or unknown, matured or unmatured, present, future or otherwise, except for
the Assumed Liabilities.

                                       8


         2.3      WORKING CAPITAL ADJUSTMENT.

                  (a)      As used herein, "Working Capital" means all Current
Assets included in the Purchased Assets as of the Closing Date (and excluding
the value of any Excluded Assets), less all Current Liabilities of the Business
as of the Closing Date (and excluding the value of any Excluded Liabilities)
determined in accordance with generally accepted accounting principles applied
on a basis consistent with PRGUSA's past practice (the "Accounting Principles");
"Current Assets" means assets of the character that would be reflected as
current assets on a balance sheet prepared on a basis consistent with the
Accounting Principles; and "Current Liabilities" means liabilities of the
character that would be reflected as current liabilities on a balance sheet
prepared on a basis consistent with the Accounting Principles. Purchaser and
PRGUSA agree that employer contributions to the PRGUSA 401(k) Plan (as defined
below) shall not be included as a Current Liability reducing Working Capital,
and shall accordingly not be an Assumed Liability.

                  (b)      The "Baseline Working Capital" shall be $1,700,000.

                  (c)      The "Closing Working Capital" shall be the Working
Capital as of the close of business on the Closing Date, as set forth in a
closing statement of Working Capital (the "Closing Statement of Net Assets").
The Closing Statement of Net Assets shall be prepared consistent with the
Accounting Principles in accordance with the procedure set forth in Sections
2.3(d) and, if applicable, 2.3(e).

                  (d)      A preliminary and nonbinding estimate of Closing
Working Capital ("Estimated Closing Working Capital") shall be prepared by
PRGUSA in good faith and delivered to Purchaser before the Closing and, subject
to the approval of the Estimated Closing Working Capital by Purchaser, the cash
paid at Closing shall be increased by the amount that the Estimated Closing
Working Capital exceeds the Baseline Working Capital and decreased by the amount
that the Estimated Closing Working Capital is less than the Baseline Working
Capital. The Estimated Closing Working Capital shall be calculated by PRGUSA in
accordance with the Accounting Principles. Within 90 days following the Closing
Date, Purchaser shall revise the Estimated Closing Working Capital amount
prepared by PRGUSA, and shall prepare a statement (the "Purchaser Revised
Statement") of the actual Closing Working Capital and shall deliver to PRGUSA
the Purchaser Revised Statement. Purchaser shall also deliver or promptly make
available to PRGUSA reasonably detailed schedules supporting the Purchaser
Revised Statement and access to personnel and materials appropriate to verify
the Purchaser Revised Statement. The Purchaser Revised Statement shall be
prepared in accordance with the Accounting Principles. PRGUSA and Purchaser
shall reasonably cooperate in good faith with each other in connection with
calculating the Closing Working Capital which shall include, without limitation,
the prompt sharing of any reasonably requested books and records and related
information. If, within forty-five (45) days after the delivery of the Purchaser
Revised Statement and supporting schedules, PRGUSA determines in good faith that
the Purchaser Revised Statement has not been prepared in accordance with the
Accounting Principles, is not mathematically accurate or has not been calculated
or prepared in accordance with this Section 2.3, PRGUSA shall deliver to
Purchaser within such period written notice (the "Dispute Notice") specifying in
reasonable detail all disputed items and the basis therefor (collectively, the
"Disputed Items"). The failure by

                                       9


PRGUSA to provide a Dispute Notice within such forty-five (45) day period to
Purchaser will constitute PRGUSA's acceptance of the Purchaser Revised
Statement, except that such forty-five (45) day period shall be tolled for the
duration of any delay in Purchaser's delivery to PRGUSA of any information
reasonably requested by PRGUSA to calculate the Closing Working Capital. PRGUSA
shall be deemed to have agreed with all items and amounts included in the
Purchaser Revised Statement except if such items are specifically disputed in
the Dispute Notice. If PRGUSA provides Purchaser with a timely Dispute Notice,
Purchaser and PRGUSA shall, within forty-five (45) days (or such longer period
as mutually agreed upon by Purchaser and PRGUSA) following the delivery of such
Dispute Notice to Purchaser (the "Resolution Period"), negotiate in good faith
to resolve the Disputed Items to their mutual satisfaction. At the conclusion of
the Resolution Period, Purchaser and PRGUSA shall refer all unresolved Disputed
Items to the Neutral Accountant in accordance with Section 2.3(e) below. If
during the Resolution Period, Purchaser and PRGUSA agree in writing as to the
final Closing Working Capital amount then such Closing Working Capital amount
shall be final and binding upon the parties hereto.

                  (e)      If a dispute arises under Section 2.3(d) above as to
determination of the Closing Working Capital and such dispute is not resolved
within the time period set forth therein, then each issue in dispute shall be
submitted to arbitration before the offices of Deloitte & Touche, LLP, located
in Atlanta, Georgia or such other accounting firm as may be acceptable to the
parties (the "Neutral Accountant"). The parties agree to cooperate with one
another in the engagement of the Neutral Accountant for such purposes. The
Neutral Accountant shall follow the terms and provisions of this Agreement in
resolving any issues in dispute and making its determination, which
determination shall be made on the sole basis of whether the Purchaser Revised
Statement has been prepared in accordance with the Accounting Principles and the
principles set forth in this Section 2.3. The Neutral Accountant shall
determine, based solely on presentations by the Purchaser and PRGUSA and their
respective representatives, and not by independent review, only those issues in
dispute and shall prepare a revised calculation of Closing Working Capital and
render a written report as to the dispute and the resulting calculation of
Closing Working Capital which shall be conclusive and binding upon the parties.
In resolving any disputed item, the Neutral Accountant shall not assign a value
to any item greater than the greatest value for such item claimed by either
party or less than the smallest value for such item claimed by either party. All
costs of the Neutral Accountant shall be shared equally between Purchaser and
PRGUSA. The decision of the Neutral Accountant shall be made not later 30 days
following the submission of all relevant materials to the Neutral Accountant and
shall be binding and conclusive on the parties hereto.

                  (f)      Upon determination of the Closing Working Capital:

                           (i)      In the event that Closing Working Capital is
greater than the Estimated Closing Working Capital, Purchaser shall pay PRGUSA
an aggregate amount equal to such excess in cash within five (5) business days
of the determination of Closing Working Capital pursuant to this Section 2.3.

                           (ii)     In the event that Closing Working Capital is
less than the Estimated Closing Working Capital, PRGUSA and Parent shall pay
Purchaser an aggregate

                                       10


amount equal to such deficiency in cash within five (5) business days of the
determination of Closing Working Capital pursuant to this Section 2.3.

                           (iii)    In the event of a payment pursuant to either
2.3(f)(i) or (ii), such payment shall include interest thereon from the Closing
Date to the date of actual payment at a variable rate equal to the prime rate
(as reported in the Wall Street Journal "Money Rates") from and including the
Closing Date to, but not including, the date of payment. PRGUSA and Parent shall
not be required to indemnify the Purchaser Indemnitees pursuant to Article 6 of
this Agreement to the extent and in the dollar amount such matter is recorded as
a specific reserve or as a current liability in the final Closing Statement of
Net Assets.

                                   ARTICLE III
                              ADDITIONAL COVENANTS

         3.1      EMPLOYMENT MATTERS. Concurrently with or as soon as
practicable after the Closing, Purchaser will offer employment to all employees
of TSL identified on Schedule 3.1 attached hereto (collectively, the "TSL
Employees"); provided, that, with respect to those TSL Employees identified on
Schedule 3.1 as being on leave, Purchaser will offer employment to such
employees concurrently with or as soon as practicable after the time PRGUSA
notifies Purchaser that such employees have returned from leave. Such offer of
employment shall initially include employee benefits which, in the aggregate,
are substantially comparable to the employee benefits provided to the TSL
Employees by PRGUSA immediately prior to the Closing. Purchaser acknowledges
that all or substantially all TSL Employees have covenanted in favor of PRGUSA
not to, without limitation, engage in certain activities competitive with the
business of PRGUSA or disclose or use confidential information of PRGUSA. PRGUSA
hereby waives the covenants made by the TSL Employees in favor of PRGUSA (or any
of its Affiliates) not to engage in competition with PRGUSA or any of its
Affiliates (including any non-competition, non-solicitation of customers and
non-solicitation of employees covenant), but PRGUSA does not hereby waive any
other covenants made by any of the TSL Employees in favor of PRGUSA including,
without limitation, covenants for the protection of confidential information and
covenants to protect the ownership by PRGUSA of all ideas, discoveries,
inventions, contributions and improvements which relate to the business of
PRGUSA. Except for the TSL Employees, between the date hereof and the first
anniversary of the date of this Agreement, Purchaser shall not directly or
indirectly solicit (except through general solicitations and advertising not
directed to employees of PRGUSA), employ, retain as a consultant, attempt to
entice away or hire any persons who are then currently employees of PRGUSA or
who have been within the preceding twelve months employees of PRGUSA. This
Section shall survive the expiration or termination of this Agreement and the
Closing.

         3.2      CONSENTS. Promptly after execution of this Agreement and until
the Closing Date, PRGUSA will apply for or otherwise seek, and use its
reasonable efforts (which shall not require PRGUSA to pay money or incur
obligations) to obtain, all consents, releases and approvals required to enable
PRGUSA or its affiliates, as the case may be, to effect the transactions
contemplated hereby and required for the assignment of the rights of PRGUSA or
any of its applicable affiliates under any of the Purchased Assets. To the
extent that any of the consents identified on Schedule 1.3(f) hereto shall have
not been obtained prior to the Closing

                                       11


Date, PRGUSA will continue to use its reasonable efforts (which, except as set
forth in the proviso below, shall not require PRGUSA to pay money or incur
obligations) to obtain such consents (the "Omitted Consents") to the extent
reasonably requested by Purchaser and to the extent PRGUSA reasonably has the
ability to facilitate obtaining such consents; provided, that, PRGUSA shall
reimburse Purchaser upon request for Purchaser's reasonable out-of-pocket costs
actually incurred upon obtaining any such Omitted Consents up to $3,000 for each
such Omitted Consent obtained after Closing.

         3.3      NONCOMPETITION AND NONSOLICITATION AGREEMENT. Concurrently
with the Closing, in consideration of the acquisition of Purchased Assets as
contemplated herein, PRGUSA and Parent shall enter into a noncompetition and
nonsolicitation agreement with Purchaser, in the form of Exhibit 1.3(j),
attached hereto and made a part hereof (the "Noncompetition and Nonsolicitation
Agreement").

         3.4      TAX INFORMATION. Within 30 days following the final
determination of Closing Working Capital, Purchaser shall declare to PRGUSA a
proposed allocation of the consideration for the Purchased Assets. Within 30
days thereafter, PRGUSA shall provide Purchaser with any proposed changes to
such allocation. Purchaser and PRGUSA shall attempt, in good faith, to resolve
any disputes with respect to the proposed allocation within 15 days after
PRGUSA's delivery of any disputed items. PRGUSA and Purchaser agree that they
will each prepare and file an IRS Form 8594 reflecting their respective
allocation of the consideration to be paid by Purchaser to PRGUSA hereunder
(including the assumption of the Assumed Liabilities) to the Purchased Assets,
and that a portion of the consideration shall be allocated to the Intellectual
Property Purchased Assets acquired from PRGRS. The parties shall provide each
other a completed copy of their respective IRS Form 8594 with respect to this
transaction prior to filing such form with the Internal Revenue Service.

         3.5      PUBLIC ANNOUNCEMENTS.

                  (a)      PRGUSA may issue a press release reasonably
acceptable to Purchaser announcing the transactions contemplated hereby.

                  (b)      Except for any public announcement relating to the
transactions contemplated herein as may be required by law or stock exchange
rules or as provided in this Section, PRGUSA and Purchaser agree that until the
press release contemplated in Section 3.5(a) hereof is issued, each of such
parties have not, and have directed its directors, officers, employees,
representatives and agents who have knowledge of the transactions not to,
disclose to any person who is not a participant in discussions concerning the
transactions (other than persons whose consent is required to be obtained
hereunder), any of the terms, conditions or other facts with respect to the
transactions contemplated herein, including, without limitation, the fact that
negotiations are taking place.

         3.6      COVENANT REGARDING TAX MATTERS.

                  (a)      As used in this Agreement, the following terms have
the specified meanings:

                                       12


                           (i)      "Tax Authority" shall mean any United States
federal, foreign, national, state, county or municipal or other local
government, any subdivision, agency, commission or authority thereof, or any
quasi-governmental body exercising any taxing authority or any other authority
exercising tax regulatory authority.

                           (ii)     "Tax Return" shall mean any return, amended
return, estimated return, information return and statement (including any
related or supporting information) filed or to be filed with any Tax Authority
in connection with the determination, assessment, collection or administration
of any Tax.

                           (iii)    "Tax" or "Taxes" shall mean all taxes,
charges, fees, interest, fines, penalties, additions to tax or other assessments
of any kind whatsoever, including without limitation, income, excise,
environmental, property, sales, gross receipts, gains, transfer, occupation,
privilege, employment (including social security and unemployment), use, value
added, capital stock or surplus, franchise taxes, advance corporate tax and
customs duties imposed by any Tax Authority, payable by PRGUSA and relating to
or chargeable against TSL.

                  (b)      Subject to Section 3.6(c) hereof, and except to the
extent included in the Assumed Liabilities, PRGUSA shall be solely responsible
for and shall pay, without any cost to Purchaser, any and all Taxes assessed
against and payable by PRGUSA, arising from the operations of TSL or use of the
Purchased Assets prior to Closing (regardless of whether the filing of any Tax
Return with respect thereto or payment of any amount in respect thereof is
filed, paid or due prior to, on or after the Closing Date).

                  (c)      Except as otherwise provided in this Agreement, the
parties hereby agree that each of them shall cooperate with the other in
executing or causing to be executed any required document and by making
available to the other, as promptly as practicable, all work papers, records and
notes of any kind at all reasonable times for the purpose of allowing the
appropriate party to complete Tax Returns, participate in a proceeding, obtain
refunds, make any determination required under this Agreement or defend or
prosecute Tax claims. For purposes of clarification and without limiting the
preceding sentence, Purchaser shall provide PRGUSA, as promptly as practical,
with such information requested by PRGUSA regarding TSL that may be necessary or
desirable with respect to any Pre-Closing Tax Return, including, without
limitation, personnel and other records necessary or desirable in connection
with any federal or state tax credit (including, without limitation, the
research and development tax credit under Section 41 of the Code).
Notwithstanding anything to the contrary contained herein, PRGUSA shall have
sole and exclusive authority to prepare and file all Tax Returns concerning
PRGUSA related to activities occurring prior to the Closing, including, without
limitation, its operation of the business of TSL and its use of the Purchased
Assets and all matters under agreements not being assumed by Purchaser
(regardless of when such return is filed) (the "Pre-Closing Tax Returns").
Purchaser will not take a tax reporting position inconsistent with or contrary
to a position taken on any such PRGUSA return.

                                       13


                  (d)      At its sole expense, PRGUSA shall promptly pay any
and all sales and transfer taxes, levied, imposed or assessed by any Tax
Authority as a result of the sale, transfer, assignment and conveyance of the
Purchased Assets to Purchaser by PRGUSA.

                  (e)      Purchaser and PRGUSA agree that they will follow the
standard procedure of Rev. Proc. 96-60, 1996-2 C.B. 399, whereby each shall be
solely responsible for employment tax reporting for employees who may be
employed by each of them in the calendar year that includes the Closing Date.
PRGUSA shall provide Purchaser with such employment tax information as Purchaser
shall reasonably request in connection with Purchaser's employment tax reporting
obligations for the portion of the calendar year following the Closing.

         3.7      TRANSACTION EXPENSES. All of the expenses incurred by
Purchaser in connection with the authorization, negotiation, preparation,
execution and performance of this Agreement and other agreements referred to
herein and the consummation of the transactions contemplated hereby, including,
without limitation, all fees and expenses of agents, representatives, brokers,
counsel and accountants for Purchaser, shall be paid by Purchaser ("Purchaser
Transaction Expenses"). All expenses incurred by PRGUSA in connection with the
authorization, negotiation, preparation, execution and performance of this
Agreement and the other agreements referred to herein and the consummation of
the transactions contemplated hereby, including without limitation, all fees and
expenses of agents, representatives, brokers, counsel and accountants, shall be
paid by PRGUSA ("PRGUSA Transaction Expenses").

         3.8      ACCESS TO BOOKS AND RECORDS. After the Closing, PRGUSA and
Purchaser shall each preserve all of the records and books, client records, and
any other records to the extent relevant to the operations of TSL prior to the
Closing until the fifth anniversary of the Closing Date, and, until such time,
make them available, during normal business hours, to the other party and its
designees, counsel, accountants, and others authorized by them for inspection
and the making of copies thereof to the extent either party reasonably requires
the foregoing for purposes of any tax, audit, accounting, litigation,
governmental investigation, or governmental enforcement matter or for any other
purpose arising under this Agreement including, without limitation, enforcement
of this Agreement. The inspecting party shall bear all reasonable cost of
photocopying and other out of pocket expenses of the other party hereto.

         3.9      EMPLOYEE BENEFITS.

                  (a)      Health Care Coverage. Any coverage provided by
Purchaser under its group health and dental plan to any TSL Employee and their
dependents shall be applied without any waiting periods or preexisting condition
or other limitations.

                  (b)      401(k) Plan. As contemplated by the Transition
Services Agreement (i) PRGUSA shall cause the PRGUSA 401(k) Plan to transfer, in
a plan-to-plan transfer in accordance with Section 414(l) of the Code, the
assets and liabilities of such plan attributable to the transferred TSL
Employees to a 401(k) plan maintained by and designated by Purchaser, and (ii)
Purchaser shall cause its 401(k) plan to accept a plan-to-plan transfer of the
assets and liabilities of the PRGUSA 401(k) Plan attributable to TSL Employees
as soon as reasonably practicable following the Closing Date. Until such
plan-to-plan transfer is made, if requested by

                                       14


PRGUSA, Purchaser shall take such reasonable actions as are necessary to
maintain any plan loan that any TSL Employee may have outstanding from the
PRGUSA 401(k) Plan ("PRGUSA Plan Loan") in good standing with repayment terms
comparable to the repayment terms of such PRGUSA Plan Loan in effect prior to
the Closing Date including, without limitation, facilitating repayment of such
PRGUSA Plan Loans by means of payroll deduction from salary paid by Purchaser.
As of the Closing Date, PRGUSA shall vest any unvested account balance of TSL
Employees in the PRGUSA 401(k) Plan. On or before the earlier of (i) March 15,
2004 and (ii) the date of the plan-to-plan transfer contemplated by this
Section, PRGUSA shall make or cause to be made the employer contribution to the
PRGUSA 401(k) Plan for the transferred TSL Employees with respect to the plan
year ending December 31, 2003.

                  (c)      Credit for Service with PRGUSA. All TSL Employees
shall be given credit, under and in accordance with the applicable employee
benefit plans of Purchaser, towards eligibility and vesting for the period of
time prior to the Closing Date during which such TSL Employees were employees of
PRGUSA if such period of time would otherwise qualify for eligibility and
vesting, respectively, under Purchaser's benefit plans that provide the same or
similar types of benefits.

          3.10    AGENT FOR MCGRAW-HILL.

                  (a)      Purchaser agrees to expend the Custodial Funds
delivered to Purchaser at Closing in accordance with and to the extent permitted
by that certain OOB/ISDN Billing Support Services Schedule between TSL, a
division of PRG-Schultz and The McGraw-Hill Companies, Inc., dated August 6,
2003. Effective as of the Closing, PRGUSA shall transfer to Purchaser the
Custodial Account and shall cooperate with Purchaser to (i) add those
representatives of Purchaser as Purchaser shall designate as the exclusive
signatories to such Custodial Account (the "Designated Signatories"), (ii)
remove any employee of PRGUSA who is not a Designated Signatory as a signatory
to such Custodial Account and (iii) otherwise transfer control of such Custodial
Account to Purchaser. Immediately upon the addition of such Designated
Signatories to such Custodial Account, Purchaser shall have the sole authority
to accept funds and disburse all funds from such accounts on behalf of
McGraw-Hill.

                  (b)      From and after the Closing, PRGUSA will promptly
remit to Purchaser any and all checks or other funds it receives on behalf of
McGraw-Hill for payment of TSL bills. From and after the Closing, PRGUSA will
provide Purchaser with copies of any and all bank statements for periods both
before and after the Closing in respect of any Custodial Account. PRGUSA agrees
to execute and deliver, both before and after the Closing, any additional
documents, agreements, authorization or instruments contemplated hereby and/or
necessary or appropriate to effect and consummate the transactions described
herein and to effect an orderly transition of the Custodial Account to Purchaser
following the Closing.

         3.11     CERTAIN CLIENT CONTRACTS. PRGUSA agrees to engage Purchaser as
a subcontractor under the agreements referenced in Schedule 3.11 to perform
Business services pursuant to written agreements ("Subcontractor Agreement") in
the forms of Exhibit 1.3(i) attached hereto for government clients and
commercial clients, respectively. The Management

                                       15


Fee (as defined in the Subcontractor Agreement) for each of such agreements
shall be at the rate set forth in Schedule 3.11.

         3.12     ACCOUNTS RECEIVABLE TRANSITION. To the extent PRGUSA or any of
its affiliates receives payment of amounts (including Accounts Receivable or
Custodial Funds) or receives assets included in the Purchased Assets after
Closing, PRGUSA shall promptly transfer such payments or assets to Purchaser and
Purchaser may deposit any funds so transferred into Purchaser's accounts. To the
extent Purchaser receives checks made payable to PRGUSA or any of its Affiliates
which such checks are part of the Purchased Assets, PRGUSA hereby grants to
Purchaser a power of attorney to endorse such checks.

         3.13     LIMITED LICENSE TO USE PRGUSA'S MARKS. PRGUSA hereby grants
Purchaser a nonexclusive limited, royalty free license to continue to use any
and all trademarks, service marks, trade names and associated goodwill, slogans
and other like property owned by PRGUSA that are not included in the Purchased
Assets ("PRGUSA's Marks") until six months after Closing, but only to the extent
that such PRGUSA's Marks are incorporated in or printed on any products,
supplies (not including letterhead), printed materials, training materials or
other assets included in the Purchased Assets and without any right to create
any new products, supplies, printed materials, training materials or other
assets depicting any PRGUSA's Mark, or any variations thereof or any confusingly
similar name or mark, except to the extent that such creation cannot be
terminated without undue expense or delay. Purchaser shall cease use of PRGUSA's
Marks not later than the six month anniversary of the Closing Date.

         3.14     TRANSITION SERVICES. Purchaser and PRGUSA shall enter into a
transition services agreement in the form attached hereto as Exhibit 1.3(h)
("Transition Services Agreement").

         3.15     BULK TRANSFERS. The parties hereto waive compliance with the
requirements of the Bulk Sales law of any jurisdiction in connection with the
sale of the Purchased Assets to Purchaser, and PRGUSA and Parent agree to
indemnify Purchaser against and to hold Purchaser harmless from any consequences
of such non-compliance.

         3.16     INTERCOMPANY ACCOUNTS. PRGUSA shall cause the cancellation
and/or settlement in full of all intercompany and intracompany accounts existing
immediately prior to Closing involving TSL, on the one hand, and PRGUSA or any
of its affiliates (other than TSL), on the other hand.

         3.17     RESTRICTION ON REAL PROPERTY LEASE RENEWALS OR EXPANSIONS.
Purchaser covenants and agrees in favor of PRGUSA and Parent that it will not
extend the term of either of the Real Property Leases or expand the premises
leased under either of the Real Property Leases without first causing PRGUSA
and, if applicable, Parent to be released from any direct or indirect liability
with respect to such extended term or expanded premises. Purchaser agrees to
cause any of its assignees with respect to either of the Real Property Leases to
enter into the foregoing covenant in favor of PRGUSA and Parent.

                                       16


                                   ARTICLE IV
                    REPRESENTATIONS AND WARRANTIES OF PRGUSA

In order to induce Purchaser to enter into this Agreement and consummate the
transactions contemplated hereby, PRGUSA represents and warrants to Purchaser:

         4.1      ORGANIZATION AND AUTHORITY OF PRGUSA. PRGUSA is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia. PRGUSA is duly qualified as a foreign corporation in all
jurisdictions in which the conduct of its business or the ownership of its
properties requires such qualification (except where the failure to do so would
not have a Material Adverse Effect (as defined in Section 4.4 hereof) on
PRGUSA). PRGUSA has all necessary corporate power and authority to own, lease
and operate Purchased Assets and conduct operations of TSL as they are currently
being conducted.

         4.2      CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. Each of
PRGUSA and PRGRS has full corporate power and authority to execute and deliver
this Agreement and each of the PRGUSA Transaction Documents to which PRGUSA or
PRGRS is or will be a party and to consummate the transactions contemplated
hereby. "PRGUSA Transaction Documents" means each of the agreements, documents
and instruments referenced in this Agreement to be executed and delivered by
PRGUSA. The execution, delivery and performance of this Agreement and the PRGUSA
Transaction Documents has been duly authorized by all necessary action of the
part of PRGUSA. This Agreement and the PRGUSA Transaction Documents have been
duly executed and delivered by PRGUSA and this Agreement and the PRGUSA
Transaction Documents constitutes a valid and binding agreement of PRGUSA or
PRGRS, as applicable, in each case enforceable in accordance with its terms,
subject to laws of general application in effect affecting creditors' rights and
subject to the exercise of judicial discretion in accordance with general
equitable principles.

         4.3      TITLE TO ASSETS; SUFFICIENCY OF ASSETS.

                  (a)      Except as set forth on Schedule 4.3 attached hereto
(the "Permitted Encumbrances"), PRGUSA or PRGRS, as applicable, has good, valid
and marketable title to all of the Purchased Assets (and a valid and enforceable
leasehold interest in all of its assets subject to Leases), free and clear of
any mortgages, liens, pledges, security interests, encumbrances, claims or
similar rights of every kind and nature (collectively, the "Encumbrances"). None
of the Purchased Assets is owned jointly with any other person, including any
affiliates of PRGUSA. At the Closing, Purchaser will obtain good and marketable
title to the Purchased Assets free and clear of all Encumbrances other than the
Permitted Encumbrances and such Encumbrances, if any, as have been created by
Purchaser.

                  (b)      Except for the services to be provided pursuant to
the Transition Services Agreement and as set forth on Schedule 4.3 attached
hereto, the Purchased Assets (i) constitute in all material respects all of the
assets and rights of any nature which PRGUSA currently uses to conduct the
Business, and (ii) are sufficient to enable Purchaser to conduct the Business in
all material respects in the same manner after the Closing as the Business was
conducted by PRGUSA prior to the Closing.

                                       17


         4.4      NO CONFLICT; REQUIRED CONSENTS. Except as identified on
Schedule 4.4, the execution and delivery by PRGUSA, Parent or PRGRS, as
applicable, of this Agreement and the PRGUSA Transaction Documents, and the
consummation by PRGUSA, Parent or PRGRS, as applicable, of the transactions
contemplated hereby and thereby do not and will not (a) require the consent,
approval or action of, or any filing with or notice to, any public, governmental
or judicial authority; (b) violate the terms of any Material Contract (as
defined in Section 4.9) or Material Lease (as defined in Section 4.10) or be in
conflict with, or result in a breach of or constitute (upon the giving of notice
or lapse of time or both) a default under such Material Contract or Material
Lease, in each case except where such violation, conflict, breach or default
will not have a Material Adverse Effect (as defined below); (c) result in the
creation of any lien upon any of the Purchased Assets; (d) violate PRGUSA's,
PRGRS's or Parent's, as applicable, Articles of Incorporation or Bylaws; or (e)
violate any order, writ, injunction, decree, judgment, ruling, law, rule or
regulation of any federal, state, county, municipal, or foreign court or
governmental authority applicable to PRGUSA, PRGRS, Parent or the Business. The
term "Material Adverse Effect" means any change or effect or combination of
changes and effects, that individually or in the aggregate with all other
changes and effects, has or could reasonably be likely to have a material
adverse change or effect upon the financial condition, assets, liabilities,
results of operations, business, or the operations of TSL, the Business or the
use of the Purchased Assets, taken as a whole; provided, however, that Material
Adverse Effect shall exclude any effect resulting from or related to changes or
developments involving conditions generally applicable to the United States
economy, including changes in interest rates; and provided, further, that for
purposes of determining whether a breach of a representation or warranty under
this Agreement has a Material Adverse Effect, the effect of such a breach shall
be considered cumulatively with the effect of all other breaches (or
circumstances which, but for materiality or Material Adverse Effect qualifiers,
would be breaches) of other representations and warranties, in each case,
determined without regard to any materiality or Material Adverse Effect
qualifiers.

         4.5      COMPLIANCE WITH LAWS. Except as may be set forth on Schedule
4.5, (a) PRGUSA is in compliance in all material respects with all laws, orders,
rules and regulations of all governmental bodies and agencies applicable to TSL,
the Purchased Assets or the Business; and (b) since December 31, 2002, PRGUSA
has not received written notice of any noncompliance with the foregoing.

         4.6      LICENSES AND PERMITS. PRGUSA holds and is in compliance in all
material respects with all of the licenses, permits, approvals and
authorizations necessary or required for the operation of TSL (collectively, the
"Licenses and Permits"). Since December 31, 2002, PRGUSA has not received
written notice of any material violations in respect of any such Licenses and
Permits or with respect to an alleged failure to hold any license, permit,
approval or authorization. No proceeding is pending or, to the knowledge of
PRGUSA, is threatened, which seeks revocation or limitation of any Licenses and
Permits.

         4.7      FINANCIAL INFORMATION. The books of account and related
records of PRGUSA for the Business are correct and complete in all material
respects and fairly reflect in reasonable detail its assets, liabilities and
transactions relating to the Business in accordance with GAAP.

                                       18


Attached hereto as Schedule 4.7 are copies of unaudited statements of assets and
liabilities of the Business as of December 31, 2003 and December 31, 2002 (the
"Interim Statements of Net Assets") and the related unaudited statements of
income for the twelve months then ended ("Interim Statements of Income")
(collectively, the "Interim Statements"). The Interim Statements of Net Assets
and the Interim Statements of Income have been compiled from and are in
accordance with PRGUSA's books and records, fairly present in all material
respects the financial condition, assets and liabilities of the Business as of
their respective dates and the results of operations of the Business for the
respective periods then ended, in each case, except as set forth on Schedule
4.7, as if the Business had been conducted as an independent entity and were not
affiliated with any other entity or business, and have been prepared in
accordance with the Accounting Principles, consistently applied, except for the
absence of notes.

         4.8      TAX LIENS. There are no liens for Taxes on business of TSL or
the Purchased Assets, except liens for current Taxes not yet due or payable, nor
are there any such liens which are pending or, to the best knowledge of PRGUSA,
threatened.

         4.9      MATERIAL CONTRACTS. Schedule 4.9 attached hereto is a true,
correct and complete list of all "Material Contracts" with respect to TSL which,
for purposes hereof, means, collectively, (i) any Contracts (other than Client
Contracts) with respect to TSL, the Business or the Purchased Assets which
involves an aggregate annual expenditure by PRGUSA or payments to PRGUSA of
$50,000 or more, (ii) any Contract with clients from which TSL received revenues
in excess of $190,000 for the year ending December 31, 2003, (iii) any Contract
relating to indebtedness for borrowed money, (iv) any Contract relating to
investments, loans or advances by TSL or the Business (excluding ordinary course
advances of business expenses to employees and independent contractors), (v) any
Contract that creates or obligates the Business to participate in any joint
venture, limited liability company, partnership agreements, shareholders
arrangement or other similar arrangement, (vi) any Contract between TSL or the
Business, on the one hand, and PRGUSA or any Related Party of PRGUSA, on the
other hand, and (vii) agreements not to compete which materially restrict the
operation of the Business after the Closing, the last of which are separately
identified in Schedule 4.9. As used herein, "Material Contract" means each of
the Material Contracts, individually. PRGUSA has provided or made available to
Purchaser true, correct and complete copies of all written Material Contracts,
including any and all amendments and waivers thereto. Each Material Contract is
valid, legally binding and enforceable against PRGUSA, and to the knowledge of
PRGUSA, the other parties thereto, in accordance with its terms (subject to laws
of general application in effect affecting creditors' rights and subject to the
exercise of judicial discretion in accordance with general equitable principles)
and is in full force and effect. PRGUSA has performed in all material respects
all obligations required to be performed by it under, and is not in default in
any material respect under, any Material Contract, and no other event has
occurred which, with notice or lapse of time, or both, would constitute such a
default. To the knowledge of PRGUSA, each of the other parties to each Material
Contract has performed in all material respects all obligations required to be
performed by it under, and is not in default in any material respect under, such
Material Contract, and no other event has occurred which, with notice or lapse
of time, or both, would constitute such a default. PRGUSA has not received any
written claim from any other party to any Material Contract that it has breached
any obligations to be performed by it thereunder, or is otherwise in default or
delinquent in performance thereunder.

                                       19


         4.10     MATERIAL LEASES. Schedule 4.10 attached hereto is a list,
true, correct and complete in all material respects, of all "Material Leases,"
which means, for purposes hereof, all Personal Property Leases with respect to
TSL which involve an aggregate annual expenditure by PRGUSA of $50,000 or more
and all Real Property Leases. PRGUSA has delivered to Purchaser true, correct
and complete copies of all of the Material Leases, together with all amendments,
addenda and supplements thereto. Except as specifically set forth on Schedule
4.10, with respect to each Material Lease:

                  (a)      the Material Lease is legal, valid, binding and
enforceable against PRGUSA and, to the knowledge of PRGUSA, the other parties
thereto, in accordance with its terms (subject to laws of general application in
effect affecting creditors' rights and subject to the exercise of judicial
discretion in accordance with general equitable principles) and in full force
and effect;

                  (b)      PRGUSA has performed in all material respects all
obligations required to be performed by it under, and is not in default in any
material respect under, any Material Lease, and no other event has occurred
which, with the giving of notice or lapse of time, would constitute such a
default or permit termination, modification or acceleration thereunder by any
other party thereto; and, to the knowledge of PRGUSA, each of the other parties
to each Material Lease has performed in all material respects all obligations
required to be performed by it under, and is not in default in any material
respect under, such Material Lease, and no other event has occurred which, with
notice or lapse of time, or both, would constitute such a default;

                  (c)      neither PRGUSA nor, to PRGUSA's knowledge, any other
party to the Material Lease repudiated in writing any provision thereof; and

                  (d)      PRGUSA has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold of the
Material Lease.

         4.11     INTELLECTUAL PROPERTY.

                  (a)      Schedule 4.11, attached hereto, sets forth a true and
correct list of all of the Intellectual Property relating to TSL owned by PRGUSA
or PRGRS (the "Owned Intellectual Property"), specifying as to each such item,
as applicable: (i) the owner of the item, (ii) the jurisdictions in which the
item is issued or registered or in which any application for issuance or
registration has been filed, (iii) the respective issuance, registration, or
application number of the item, and (iv) the date of application or issuance or
registration of the item. Except as described in Schedule 4.11 or Schedule 4.3,
PRGUSA or PRGRS exclusively owns the Owned Intellectual Property free and clear
of any liens or encumbrances. Any patents and registered copyrights, trade
marks, service marks, trade dress, and domain names set forth on Schedule 4.11
are in full force and effect, are held of record in the name of PRGUSA or PRGRS,
and are not the subject of any cancellation or reexamination proceeding or any
other proceeding challenging their extent or validity.

                                       20


                  (b)      Schedule 4.11 sets forth all licenses, sublicenses,
consents and other agreements (whether written or otherwise) (i) pertaining to
any Intellectual Property (as defined in Section 4.11(k)) (other than standard,
commercially available off-the-shelf software) used or held for use by TSL, or
(ii) by which any third party is licensed or otherwise authorized to use
Intellectual Property relating to TSL. Except as set forth on Schedule 4.11,
PRGUSA and, to the knowledge of PRGUSA, each other party thereto have performed
in all material respect all obligations required to be performed by them under,
and are not in default in any material respect under any such license or other
agreement, and each such license or other agreement is now in full force and
effect.

                  (c)      Except for the services to be provided pursuant to
the Transition Services Agreement and as set forth on Schedule 4.3, the
Intellectual Property (i) constitutes in all material respects all of the
Intellectual Property which PRGUSA currently uses to conduct the Business, and
(ii) is sufficient to enable Purchaser to conduct the Business in all material
respects in the same manner after Closing as the Business was conducted by
PRGUSA prior to Closing.

                  (d)      PRGUSA does not know of any material royalties,
honorariums or fees payable by PRGUSA or PRGRS to other persons by reason of
PRGUSA's or PRGRS's ownership or use of Intellectual Property, except as
otherwise noted on Schedule 4.11.

                  (e)      To the knowledge of PRGUSA, the business operations
of TSL as they are currently conducted or proposed to be conducted do not and
will not immediately following the Closing infringe, dilute, misappropriate or
otherwise violate the Intellectual Property of any third party, constitute
unfair competition or trade practices under the laws of any jurisdiction, or
violate any right of privacy. There is no pending or, to the knowledge of
PRGUSA, threatened claim or litigation against PRGUSA or PRGRS contesting the
validity of or right to use any Intellectual Property used or held for use by
TSL, nor has PRGUSA or PRGRS received any written notice that any Intellectual
Property used or held for use by TSL, or the operation or proposed operation of
TSL, conflicts, or will conflict, in any material respect, with the asserted
rights of others. The representations and warranties set forth in Sections
4.11(e) and (f) are the only representations and warranties made by PRGUSA or
PRGRS (either in this Agreement or in any document executed or delivered by
PRGUSA or PRGRS in connection herewith) with respect to non-infringement of
Intellectual Property and nothing contained elsewhere in this Agreement or in
any document executed or delivered in connection herewith shall be construed as
a representation or warranty with respect thereto.

                  (f)      To the knowledge of PRGUSA, no third party is
infringing, misappropriating, or otherwise violating any Intellectual Property
used or held for use in the conduct of the TSL's business.

                  (g)      Neither PRGUSA nor PRGRS owns any patents, patent
rights, or inventions, and neither has made any applications for patent
protection, with respect to TSL.

                  (h)      Schedule 4.11 contains a complete and accurate list
of all Software (as defined in Section 4.11(k)) that relates to TSL and that is
owned or licensed to third parties by PRGUSA or PRGRS including, without
limitation the programs marketed under the names

                                       21


Technology On-Line Management System ("TOMS"), Internet Reporting Tool ("IRT"),
and eTranslate (collectively, "TSL Software"). Except as set forth on Schedule
4.11 or Schedule 4.3, PRGUSA or PRGRS owns all right, title and interest in and
to the TSL Software, free and clear of any liens or encumbrances, including
without limitation claims or rights of joint owners and employees, agents,
consultants or other parties involved in the development, creation, marketing,
maintenance or enhancement of such computer software. The TSL Software consists
entirely of material (i) which was created as a work for hire (as defined under
U.S. copyright law) by a person or persons who were at the time of creation the
regular, full-time, salaried employees of PRGUSA or PRGRS, the copyright in
which is now owned by PRGUSA or PRGRS, or (ii) the copyright ownership of which
was fully and irrevocably transferred to PRGUSA or PRGRS pursuant to a written
agreement executed by the author or authors.

                  (i)      Schedule 4.11 sets forth a complete and accurate list
of all escrow agreements by which the source code for any TSL Software may be
delivered or otherwise transferred to a third party.

                  (j)      To the knowledge of PRGUSA and subject to repairs,
replacements and upgrades of the type and at an aggregate expense generally
consistent with that experienced or undertaken by TSL in prior periods: (i) the
information technology systems owned, licensed, leased, operated on behalf of,
or otherwise held for use in the Business (including all computer hardware,
software, firmware and telecommunications systems), perform reliably and in
material conformance with the appropriate specifications or documentation for
such systems, and (ii) the information technology systems used by TSL are fully
available for use by TSL and, as applicable, the customers and clients of TSL on
a continuous basis. TSL has not experienced any service outages related to its
information technology systems, except for such outages which would not
reasonably be expected to have a Material Adverse Effect.

                  (k)      As used herein, "Intellectual Property" means,
collectively, any and all of the following in any jurisdiction throughout the
world: (i) patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue, re-examination,
utility, model and design patents, patent applications, patent registrations and
applications for patent registrations, (ii) copyrights and registrations and
applications for registration of copyrights, (iii) computer software and
databases (including without limitation source code and object code, firmware,
middleware, programs, utilities, subroutines or routines), documentation,
programmers' logs, flowcharts, descriptions and other work product that is used
to plan, organize, develop and modify the foregoing (collectively, "Software"),
(iv) trade secrets and legal rights therein, (v) trademarks, service marks,
trade dress, logos, slogans, trade names, business names, and corporate names
(whether or not registered), including all variations, derivations,
combinations, registrations and applications for registration of the foregoing
and all goodwill associated therewith, (vi) Internet domain names and
registrations and applications for registration thereof, (vii) all proprietary
rights similar to those described in the preceding clauses of this subsection,
and (viii) all remedies against past, present and future infringement or other
violation of any of the foregoing rights and rights of protection of interest
therein under the laws of all jurisdictions.

                                       22


         4.12     BENEFIT PLANS AND ERISA.

                  (a)      Schedule 4.12 is a true and complete list of each
"employee benefit plan," as defined in Section 3(3) of Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), bonus, incentive, deferred
compensation, excess benefit, employment contract, stock purchase, stock
ownership, stock option, supplemental unemployment, vacation, sick-day, legal
services arrangement, training arrangement, health care account, automobile
purchase program, severance or other material employee benefit plan, program,
policy or arrangement (other than those required to be maintained by law),
whether written or unwritten, qualified or nonqualified, funded or unfunded,
foreign or domestic, (i) maintained by, or contributed to by PRGUSA or any of
its ERISA Affiliates, in respect of any current or former TSL Employees (or
their beneficiaries), or (ii) with respect to which PRGUSA or any of its ERISA
Affiliates has any liability in respect of any current or former TSL Employee
(or their beneficiaries) (each such plan is hereinafter referred to as an
"Employee Benefit Plan", and collectively, the "Employee Benefit Plans"). "ERISA
Affiliate" is hereby defined to mean any trade or business, whether or not
incorporated, other than PRGUSA, which has employees who are treated pursuant to
Section 4001(a)(14) of ERISA and/or Section 414 of the Code as employees of a
single employer which includes PRGUSA.

                  (b)      A true and complete copy of each Employee Benefit
Plan and related trust agreements, (to the extent applicable) a copy of each
Employee Benefit Plan's current summary plan description, and, in the case of an
unwritten Employee Benefit Plan, a written description thereof, has been
provided or made available to Purchaser. In addition, to the extent applicable,
PRGUSA has made available to Purchaser a copy of the most recent Internal
Revenue Service ("IRS") determination letter issued to each Employee Benefit
Plan and a copy of the most recent IRS Form 5500 filed on behalf of each
Employee Benefit Plan.

                  (c)      Except for payment of premiums for medical and dental
employee benefits as provided in the Transition Services Agreement, Purchaser
shall not: (i) become liable for any material contribution, tax, lien, penalty,
cost, interest, claim, loss, damage, cost assessment or other type of liability
or expense with regard to any Employee Benefit Plan, or (ii) be or become a
party to any Employee Benefit Plan.

                  (d)      The 401(k) plan sponsored by PRGUSA in which current
and former TSL Employees participate (the "PRGUSA 401(k) Plan") is in material
compliance with all applicable law, including ERISA and the Code. The PRGUSA
401(k) Plan has received a valid, current determination letter from the IRS to
the effect that the form of the PRGUSA 401(k) Plan qualifies under Section 401
of the Code and that the form of any trust maintained pursuant thereto qualifies
for the exemption from federal income tax under Section 501 of the Code. All
amendments required to bring the PRGUSA 401(k) Plan into conformity with
applicable law have been timely adopted or the applicable deadlines for making
such amendments have not expired.

                  (e)      No Employee Benefit Plan is now or at any time has
been subject to Part 3, Subtitle B of Title I of ERISA or Title IV of ERISA.
Neither PRGUSA nor any ERISA Affiliate has ever contributed to, or been required
to contribute to any "multiemployer plan"

                                       23


(within the meaning of Section 3(37) of ERISA) and neither PRGUSA nor any ERISA
Affiliate has any liability (contingent or otherwise) relating to the withdrawal
or partial withdrawal from a multiemployer plan. Neither PRGUSA nor any ERISA
Affiliate has incurred any liability which could subject Purchaser or any asset
to be acquired by Purchaser pursuant to this Agreement to liability under
Section 4062, 4063, 4064 or 4069 of ERISA.

                  (f)      No asset of PRGUSA which is to be acquired by
Purchaser pursuant to this Agreement, is subject to any lien under Code sections
401(a)(20) or 412(n), or ERISA sections 302(f), 4068 or 4301(b).

         4.13     LITIGATION; JUDGMENTS. There is no action, proceeding or
investigation pending or, to PRGUSA's knowledge, threatened against or involving
the Business, the Purchased Assets or PRGUSA relating to the Purchased Assets or
the operation of TSL, nor is there any action, claim, suit or proceeding pending
or, to the knowledge of PRGUSA, threatened before any court, tribunal or
governmental body seeking to restrain or prohibit or to obtain damages or other
relief in connection with the consummation of the transactions contemplated by
this Agreement, or PRGUSA's ability to consummate the transactions contemplated
by this Agreement and the PRGUSA Transaction Documents. There are presently no
outstanding judgments, orders or decrees entered in any lawsuit or proceeding
relating to the Business, the Purchased Assets or the operation of TSL.

         4.14     BROKER'S FEES. Except for Avondale Partners, LLC ("Avondale")
(whose fee will be paid by PRGUSA) and amounts which may be payable by PRGUSA to
employees of PRGUSA, PRGUSA has not retained or engaged the services of any
broker, finder or intermediary, or paid or agreed to pay any fee or commission
to any other person or entity for or on account of the transactions contemplated
hereby.

         4.15     ABSENCE OF MATERIAL CHANGES. Except as set forth in Schedule
4.15 attached hereto, from November 30, 2003, to the date of this Agreement,
with respect to TSL and the Business:

                  (a)      there has not been any Material Adverse Effect (as
defined in Section 4.4 hereof);

                  (b)      PRGUSA has in all material respects operated TSL and
the Business in the ordinary course and has not sold, assigned, or transferred
any of the material assets used in operations of TSL or the Business;

                  (c)      there has been no amendment, cancellation,
termination, or waiver of any right of PRGUSA, TSL or the Business under any
contract, governmental license or permit that is material to the Purchased
Assets or operations of TSL;

                  (d)      PRGUSA has not made any material changes in the
customary methods of operation of TSL;

                                       24


                  (e)      (except in respect of ordinary trade payables)
neither PRGUSA nor TSL incurred any indebtedness or guaranteed any indebtedness,
except for borrowings under existing loans or lines of credit in the ordinary
course of business consistent with past practice;

                  (f)      PRGUSA has not taken any action other than in the
ordinary course of business and in a manner consistent with past practices with
respect to increasing the compensation of any auditor or employee of PRGUSA with
respect to TSL;

                  (g)      to the knowledge of PRGUSA, there has not been any
material change or any threat of any change in any of its relations with, or any
loss or threat of loss of, any of the suppliers, distributors, clients or
customers of the Business;

                  (h)      there have not been any write-offs as uncollectible
of any notes or accounts receivable of PRGUSA with respect to the Business or
write-downs of the value of any assets by any PRGUSA with respect to the
Business other than in immaterial amounts or in the ordinary course of business
consistent with past practice;

                  (i)      with respect to the Business, there has not been any
material change by PRGUSA in any method of accounting or keeping its books of
account or accounting practices, or any material change in existing credit,
collection and payment policies and practices with respect to the Business;

                  (j)      there has not been any material disposition of or
material failure to keep in effect any rights in, to or for the use of any
patent, trademark, service mark, trade name or copyright of the Business; or

                  (k)      agreed, whether in writing or otherwise, to take any
of the actions specified in this Section 4.15.

         4.16     ENVIRONMENTAL MATTERS. Except as set forth on Schedule 4.16
attached hereto: (a) there is no action, suit, inquiry, proceeding or
investigation under any common law or law, rule, regulation of any United
States, federal, state, local or foreign government or agency thereof relating
to environmental matters (including the handling, treatment, management,
storage, Release of any hazardous, toxic or polluting substances, materials,
contaminants or waste ("Hazardous Materials")) (collectively, "Environmental
Laws") by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the knowledge of PRGUSA or
PRGRS, threatened against or involving PRGUSA or any of its directors, officers
or employees which, if determined or resolved adversely to the PRGUSA or such
party, could reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect; (b) PRGUSA is not subject to any agreement, judgment,
order or decree under or relating to Environmental Laws which could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; (c) to the knowledge of PRGUSA, there is no reasonable basis for
any such action, suit, inquiry, proceeding or investigation that would impose
any liability or obligation that could, individually or in the aggregate, have
or could reasonably be expected to have a Material Adverse Effect; (d) during
or, to the knowledge of PRGUSA, prior to the period of its ownership, operation
or participation of the management of any of their

                                       25


(or their predecessors) respective current or former facilities or properties,
there was no Release or threatened Release of Hazardous Materials in, on, under,
from or affecting any such property or any off-site location which could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and (e) PRGUSA is not subject to any agreement, order, judgment,
decree, letter or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any material liability or obligations
pursuant to or under any Environmental Law which affects the Business. PRGUSA
has provided Purchaser copies of, or access to, all environmental reports,
studies, audits, tests, correspondence, permits and all other materials in its
possession or control (or which they could reasonably be expected to obtain)
regarding any environmental matter or any property currently or formerly owned,
leased, operated or uses by PRGUSA or any of its predecessors which affects the
Business.

         4.17     EMPLOYEES. Except as disclosed in Schedule 4.17: (i) no TSL
Employee is represented by any union, collective bargaining or similar labor
agreement, (ii) there is no unfair labor practice charge pending or to the
knowledge of PRGUSA threatened or reasonably anticipated against PRGUSA relating
to any of the TSL Employees; (iii) there is no labor strike or stoppage relating
to any of the TSL Employees actually pending, or to the knowledge of PRGUSA
threatened against or involving PRGUSA; (iv) no labor grievance relating to any
of the TSL Employees is pending or, to the knowledge of PRGUSA, threatened; (v)
PRGUSA has not in the past three years experienced any work stoppage relating to
any of the TSL Employees; (vi) PRGUSA does not have labor negotiations in
process with any labor union or other labor organization relating to the
Business; and (vii) to PRGUSA's knowledge, there are no efforts in process by
unions to organize any TSL Employees who are not now represented by recognized
collective bargaining agents.

         4.18     RELATED-PARTY TRANSACTIONS. Except as set forth in Schedule
4.18 attached hereto, no Related Party (as defined below), as of the date
hereof: (i) has any contractual or other claim, express or implied, or of any
kind whatsoever against the Business, TSL or any of the Purchased Assets; (ii)
has any interest in the Business, TSL or any of the Purchased Assets; or (iii)
is engaged in any other transaction with the Business, TSL or any of the
Purchased Assets. As used herein, "Related Party" means any subsidiary or
division of Parent (other than the TSL), any officer or director of Parent or of
any subsidiary of Parent, any immediate family member of any such officers or
directors, or any Affiliate of the foregoing. As used herein, "Affiliate" of a
party means any party controlling, controlled by or under common control with
such party.

         4.19     INSURANCE. Attached hereto as Schedule 4.19 is a complete and
correct list of all policies of insurance covering any of the Purchased Assets
or the Business (excluding any Employee Benefit Plans), indicating for each
policy the carrier, the insured, type of coverage, the amounts of coverage,
deductible, and expiration date. All such policies are in full force and effect
and will remain so until the Closing. Except as set forth on Schedule 4.19, all
commercial general liability policies maintained by or for the benefit of the
PRGUSA or any of its affiliates with respect to the Business during the last
five years have been "occurrence" policies and not "claims made" policies.

         4.20     ACCOUNTS RECEIVABLE. All of the trade accounts and notes
receivable of the Business included in the Purchased Assets represent amounts
receivable for merchandise

                                       26


actually delivered or services actually provided (or, in the case of non-trade
accounts or notes, represent amounts receivable in respect of other bona-fide
business transactions), have arisen in the ordinary course of business, are to
the knowledge of PRGUSA not subject to any counterclaims or offsets in excess of
any allowance recorded in respect thereof and have been billed. To the knowledge
of PRGUSA, the allowance for doubtful accounts recorded on the Interim Statement
of Net Assets of the Business as of December 31, 2003 is adequate to reflect the
net realizable value of the accounts receivable recorded on such Interim
Statement of Net Assets.

                                    ARTICLE V
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

In order to induce PRGUSA to enter into this Agreement and consummate the
transactions contemplated hereby, Purchaser represents and warrants to PRGUSA as
follows:

         5.1      ORGANIZATION OF PURCHASER. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to own its property and to
carry on its business as now being conducted by it.

         5.2      CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. Purchaser
has full corporate power and authority to execute and deliver this Agreement and
each of the other agreements, documents and instruments referenced in this
Agreement to which Purchaser is or will be a party (the "Purchaser Transaction
Documents") and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and the Purchaser
Transaction Documents has been duly authorized by all necessary action on the
part of Purchaser. This Agreement and the Purchaser Transaction Documents have
been duly executed and delivered by Purchaser and each of this Agreement and the
Purchaser Transaction Documents constitutes a valid and binding agreement of
Purchaser, enforceable against Purchaser in accordance with its terms, subject
to laws of general application in effect affecting creditors' rights and subject
to the exercise of judicial discretion in accordance with general equitable
principles.

         5.3      NO CONFLICT; CONSENTS. The execution and delivery by Purchaser
of this Agreement, the Purchaser Transaction Documents and the consummation by
Purchaser of the transactions contemplated hereby and thereby do not and will
not (a) require the consent, approval or action of, or any filing or notice to,
any corporation, firm, person or other entity or any public, governmental or
judicial authority; (b) violate the terms of any instrument, document or
agreement to which Purchaser is a party, or by which Purchaser or the property
of Purchaser is bound, or be in conflict with, result in a breach of or
constitute (upon the giving of notice or lapse of time, or both) a default under
any such instrument, document or agreement; (c) violate Purchaser's Articles of
Incorporation or Bylaws; or (d) violate any order, writ, injunction, decree,
judgment, ruling, law or regulation of any federal, state, county, municipal, or
foreign court or governmental authority applicable to Purchaser, or the business
or assets of Purchaser.

                                       27


         5.4      BROKERS FEES AND EXPENSES. Except for Mooreland Partners
(whose fee will be paid by Purchaser), Purchaser has not retained or engaged the
services of any broker, finder, or intermediary, or paid or agreed to pay any
fee or commission to any other person or entity for or on account of the
transactions contemplated hereby.

         5.5      RELIANCE ON CERTAIN MATTERS. In connection with Purchaser's
decision to enter into this Agreement and except as expressly provided or
specified in this Agreement, Purchaser has not relied upon any verbal or written
representation as to financial projections or other forward-looking statements
(including, without limitation, any such information, financial or otherwise,
contained in any offering memorandum or similar document prepared by PRGUSA or
Avondale) made by PRGUSA or any of its subsidiaries or affiliates, or any of
their respective directors, officers, employees, agents or representatives
(including Avondale).

                                   ARTICLE VI
                                 INDEMNIFICATION

         6.1      INDEMNIFICATION BY PRGUSA AND PARENT. In addition to any other
indemnification obligation of PRGUSA and Parent under any other provision
hereof, each of PRGUSA and Parent, jointly and severally, indemnifies and holds
Purchaser, and its affiliates, directors, officers, shareholders and employees
(collectively, the "Purchaser Indemnitees") harmless from and against any and
all claims, liabilities, lawsuits, costs, penalties, fines, interest, damages or
expenses (including, without limitation, reasonable attorneys' and other
professional fees and expenses incurred in litigation or otherwise)
(collectively, "Damages") arising out of and sustained by any of them due to or
relating to:

                  (a)      any misrepresentation or breach of any representation
or warranty contained in this Agreement or any PRGUSA Transaction Document (it
being understood and agreed that under this Article VI, for purposes of
determining whether there has been any such misrepresentation or breach of
warranty and for purposes of calculating the amount of Damages arising
therefrom, the representations and warranties of PRGUSA shall be deemed not to
be qualified by any concept of "material", "materiality", "Material Adverse
Effect" or similar qualification);

                  (b)      any breach, nonfulfillment of, or failure to perform,
any covenant, obligation or agreement of PRGUSA contained in this Agreement or
any PRGUSA Transaction Document;

                  (c)      any "Environmental Liabilities," which shall mean any
and all claims, liabilities, lawsuits, costs, damages or expenses actually
incurred (including, without limitation, reasonable attorneys' fees and expenses
incurred in litigation or otherwise), whether known or unknown, foreseen or
unforeseen, contingent or otherwise, or fixed or absolute to the extent they
arise out of or relate to any of the following events, activities or conditions
first arising or occurring on or before the Closing: (i) environmental
contamination caused by PRGUSA in connection with the operation of the Business
or any Purchased Asset or Excluded Asset (including on-site or off-site, or in
connection with the Purchased Assets or Excluded Assets ); (ii) any violation by
PRGUSA of any Environmental Law; or (iii) the release, spill, leak,

                                       28


discharge, disposal, emission, injection, leaching, migration, dumping or
allowed to escape of any Hazardous Materials ("Release" or "Released") or threat
of Release of Hazardous Materials in each instance due to the acts of PRGUSA;

                  (d)      any and all Excluded Liabilities; and

                  (e)      any enforcement of this Section by any Purchaser
Indemnitees.

         6.2      INDEMNIFICATION BY PURCHASER. In addition to any other
indemnification obligation of Purchaser hereunder, Purchaser hereby indemnifies
and holds PRGUSA, Parent, and each of PRGUSA's and Parent's affiliates,
directors, officers and employees (collectively, "PRGUSA Indemnitees") harmless
from and against all Damages arising out of and sustained by any of them due to
or relating to:

                  (a)      any misrepresentation or breach of any representation
or warranty contained in this Agreement or any of the Purchaser Transaction
Documents;

                  (b)      any breach, nonfulfillment of or failure to perform
any covenant, obligation or agreement of Purchaser contained in this Agreement
or any Purchaser Transaction Document;

                  (c)      any Assumed Liabilities;

                  (d)      any liability or obligation incurred by PRGUSA
relating to the operation of TSL by Purchaser, or the ownership or use of the
Purchased Assets by Purchaser, from or after the Closing Date, other than the
Excluded Liabilities; and

                  (e)      any enforcement of this Section by any PRGUSA
Indemnitees.

         6.3      PROVISIONS REGARDING INDEMNIFICATION.

                  (a)      In the event that any party incurs or suffers any
Damages with respect to which indemnification may be sought by such party
pursuant to this Article VI or in the event of any claim, demand, action or
proceeding for which indemnification will or may be sought under this Article
VI, the indemnified party (or parties) shall promptly notify the indemnifying
party (or parties) of the foregoing in reasonable detail based upon information
available to the indemnified party, and shall provide all pleading and other
documentation relating to such claim, demand, action or proceeding. The failure
of the indemnified party to give such notice shall not relieve the indemnifying
party of any liability for indemnification under this Article VI, except to the
extent that the indemnifying party is actually prejudiced thereby. If such
claim, demand, action or proceeding is a third party claim, demand, action or
proceeding (a "Third Party Claim"), subject to the terms of Section 6.3(b), the
indemnifying party will have the right, at its expense, to assume and control
the defense thereof. At its own expense, the indemnified party shall have the
right to participate in, but not control, the defense of any Third Party Claim.
In connection with any Third Party Claim, Purchaser and PRGUSA shall cooperate
with each other.

                                       29


No Third Party Claim shall be settled without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed
by the indemnified party.

                  (b)      As a condition to the indemnifying party assuming and
controlling the defense of any Third Party Claim, the following conditions must
be satisfied (except to the extent waived by the indemnified party): (i) the
principal relief sought by such Third Party Claim shall be monetary in nature;
(ii) the indemnifying party shall agree in writing that, solely as between the
indemnifying party and the indemnified party, the indemnifying party shall be
solely obligated to satisfy and discharge such Third Party Claim; and (iii) if
reasonably requested to do so by the indemnified party, the indemnifying party
shall have made reasonably adequate provision to ensure the indemnified party of
the financial ability of the indemnifying party to satisfy the full amount of
any adverse monetary judgment that may reasonably result from such Third Party
Claim. In the event that the foregoing conditions to the assumption and control
of the defense of a Third Party Claim are not satisfied, except as provided in
the following sentence, the indemnified party will assume and control the
defense of such Third Party Claim at the expense of the indemnifying party;
provided, that, the indemnified party shall not settle such Third Party Claim
without the prior written consent of the indemnifying party, which consent shall
not unreasonably withheld or delayed by the indemnifying party. In the event
that the foregoing conditions to the assumption and control of the defense of a
Third Party Claim by the indemnifying party are not satisfied, then, at the
option of the indemnifying party, the indemnifying and indemnified parties shall
jointly undertake, conduct and control the defense and settlement of the Third
Party Claim and each party shall cooperate with the other in good faith in
connection therewith and shall use reasonable best efforts to agree on joint
counsel at the expense of the indemnifying party; provided that if the parties
cannot agree on joint counsel or, in the reasonable opinion of counsel to either
party, a conflict or potential conflict exists under the applicable rules of
professional responsibility for attorneys between the indemnifying party and the
indemnified party that would make separate representation required under such
rules, then each party shall be entitled to be represented by separate counsel
at the expense of the indemnifying party, provided that the parties shall
jointly undertake, conduct and control, through such separate counsel, such
defense to the greatest extent practicable and to the extent no conflict or
potential conflict exists between the indemnifying party and the indemnified
party.

         6.4      SURVIVAL AND TERMINATION OF INDEMNIFICATION. The obligations
to indemnify and hold harmless an indemnified party pursuant to Sections 6.1(a)
and 6.2(a) shall terminate when the representation or warranty that is the
subject of the indemnification claim terminates. The representations and
warranties contained in this Agreement shall terminate on the first (1st)
anniversary of the Closing Date and shall thereafter cease to be of any force
and effect, except (a) representations and warranties contained in Sections 4.1,
4.2, 4.3(a) and 4.14, which shall survive without expiration, (b)
representations and warranties contained in Sections 4.8 and 4.12, which shall
survive until 60 days following the expiration of the applicable statute of
limitations and (c) any representation or warranty as to which the indemnified
party shall have, before the expiration of the applicable period, previously
made a claim and provided a reasonably detailed notice in accordance with
Section 6.3 hereof. The obligations to indemnify and hold harmless an
indemnified party pursuant to the other clauses of Sections 6.1 and 6.2 shall
not terminate. The rights under Section 6.1 shall not be assignable without the
consent of PRGUSA (which may be granted or withheld in the sole discretion of
PRGUSA); provided, however, that Purchaser may,

                                       30


without the consent of PRGUSA, but with notice to PRGUSA, assign all or a part
of its rights and obligations under this Agreement (including Section 6.1
hereof) to any of its Affiliates or any successor to all or substantially all of
the Business and may collaterally assign this Agreement (including Section 6.1
hereof) to any of its lenders.

         6.5      LIMITATIONS.

                  (a)      Notwithstanding anything to the contrary contained
herein except Section 6.5(c), Purchaser will not assert a claim against PRGUSA
or Parent under Section 6.1(a) with respect to an individual matter or series of
reasonably related matters until the total of all Damages under Section 6.1(a)
with respect to such individual matter or series of reasonably related matters
exceeds in the aggregate $20,000 (the "Mini-Basket Amount"), at which time, (i)
all Damages under Section 6.1(a) for such individual matter or series of
reasonably related matters may be claimed in full (without regard to the
Mini-Basket Amount) and, if indemnifiable under this Article 6, shall be
indemnified in full and shall count towards, or be included in, the Base Amount.

                  (b)      Notwithstanding anything to the contrary contained
herein except Section 6.5(c), (i) Purchaser Indemnitees will not assert a claim
against PRGUSA or Parent under Section 6.1(a) until the total of all Damages
under Section 6.1(a) exceeds in the aggregate $191,000 (the "Base Amount"), at
which time, all Damages under Section 6.1(a) in excess of such Base Amount may
be claimed in full and, if indemnifiable under this Article 6, shall be
indemnified in full and (ii) PRGUSA Indemnitees will not assert a claim against
Purchaser under Section 6.2(a) until the total of all Damages under Section
6.2(a) exceeds in the Base Amount, at which time, all Damages under Section
6.2(a) in excess of such Base Amount may be claimed in full and, if
indemnifiable under this Article 6, shall be indemnified in full.

                  (c)      In no event will PRGUSA and Parent be liable for
aggregate Damages under Section 6.1(a) exceeding $3,820,000 (the "Cap Amount")
and in no event will Purchaser be liable for aggregate Damages under Section
6.2(a) exceeding the Cap Amount. Notwithstanding the foregoing (i) the
limitations of liability set forth in Sections 6.4, 6.5(a), 6.5(b) and 6.5(c)
shall not apply (A) to any fraudulent, intentional or willful breach or failure
of any representation or warranty of PRGUSA, Parent or Purchaser or (B) to any
misrepresentation or breach of any representation or warranty contained in
Sections 4.1, 4.2, 4.3(a), 4.14, 4.18, 5.1, 5.2 and 5.4 hereof, and (ii) if
aggregate Damages under Section 6.1(a) with respect to a claim for a
misrepresentation or breach of Section 4.11 of this Agreement remain unrecovered
(the "Unrecovered Damages") after the Cap Amount has been reached, then the Cap
Amount on such Unrecovered Damages (and only such Unrecovered Damages) shall be
increased by $5,730,000.

                  (d)      The provisions of this Article 6 shall be the sole
and exclusive remedy at law and in equity of PRGUSA and Purchaser from and after
the Closing Date for any claims, liabilities, lawsuits, costs, damages or
expenses resulting from any breach of this Agreement or any of the PRGUSA
Transaction Documents (other than the Noncompetition and Nonsolicitation
Agreement); provided, that nothing stated in this Section shall in any way limit
or foreclose the availability to the parties of specific performance or other
equitable remedies.

                                       31


                  (e)      In no event shall any party hereto be liable to the
other for punitive damages arising out of any breach of the provisions of this
Agreement, except for such damages which are recoverable or have been recovered
in a third party claim subject to indemnification hereunder.

                                   ARTICLE VII
                            MISCELLANEOUS PROVISIONS

         7.1      SURVIVAL. Subject to the terms and conditions hereof, all
representations, warranties, covenants and agreements of Purchaser and PRGUSA
contained in this Agreement or any exhibit or schedule hereto or any certificate
or other document delivered pursuant to this Agreement shall survive the Closing
and shall remain in full force and effect, regardless of any investigation made
or information or knowledge obtained by or on behalf of Purchaser and PRGUSA, as
applicable, at any time.

         7.2      SEVERABILITY. If any provision of this Agreement is prohibited
by the laws of any jurisdiction as those laws apply to this Agreement, that
provision shall be ineffective to the extent of such prohibition and/or shall be
modified to conform with such laws, without invalidating the remaining
provisions hereto.

         7.3      MODIFICATION. This Agreement may not be changed or modified
except in writing specifically referring to this Agreement and signed by each of
the parties hereto.

         7.4      ASSIGNMENT. This Agreement may not be assigned without the
prior written consent of the other party hereto; provided, however, that
Purchaser may, without the consent of PRGUSA, but with notice to PRGUSA, assign
all or a part of its rights and obligations under this Agreement (including
Section 6.1 hereof) to any of its Affiliates or any successor to all or
substantially all of the Business and may collaterally assign this Agreement
(including Section 6.1 hereof) to any of its lenders.

         7.5      BINDING AGREEMENT. The terms and conditions hereof shall inure
to the benefit of and be binding upon the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns.

         7.6      COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         7.7      NOTICES. All notices, requests, demands, claims or other
communications (collectively, "Notices") hereunder will be in writing and shall
be deemed duly given if personally delivered, sent by telefax, sent by a
recognized overnight delivery service which guarantees next-day delivery
("Overnight Delivery") or mailed by certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient, as set forth below:

                                       32


         If to Purchaser:                   TSL (DE) Corp.
                                            500 Lanidex Plaza
                                            Parsippany, New Jersey 07054
                                            Attention: Robert Svec
                                            Telefax: (973) 952-5515

         with a copy to:                    Dechert LLP
                                            4000 Bell Atlantic Tower
                                            1717 Arch Street
                                            Philadelphia, Pennsylvania 19103
                                            Attention: Carmen J. Romano, Esq.
                                            Telefax: (215) 655-2971

         If to PRGUSA:                      PRG-Schultz USA, Inc.
                                            600 Galleria Parkway, Suite 100
                                            Atlanta, GA 30339
                                            Attention: Clinton McKellar, Jr.
                                                       Senior Vice President &
                                                       General Counsel
                                            Telefax: (770) 779-3034

         with a copy to:                    Arnall Golden Gregory LLP
                                            2800 One Atlantic Center
                                            1201 West Peachtree Street
                                            Atlanta, Georgia  30309-3400
                                            Attention: Jonathan Golden, Esq.
                                            Telefax: (404) 873-8701

or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by U.S.
Mail, will be deemed received three (3) business days immediately following the
date sent. For purposes of this Agreement, a "business day" is a day on which
U.S. national banks are open for business and shall not include a Saturday or
Sunday or legal holiday. Notwithstanding anything to the contrary in this
Agreement, no Notices shall be required of the parties hereto except on a
business day and in the event a Notice is required to be given on a day which is
not a business day, such Notice shall be required to be given on the next
succeeding day which is a business day.

         7.8      ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement, together with the Exhibits and Schedules attached hereto, constitutes
the entire agreement and supersedes any and all other prior agreements,
representations and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. All such other prior
agreements, representations and undertakings are hereby terminated and shall be
of no force or effect. Except as otherwise expressly provided herein, this
Agreement is not intended to confer

                                       33


upon any person other than PRGUSA and Purchaser and their respective successors
or permitted assigns any rights or remedies hereunder.

         7.9      FURTHER ASSURANCES. The parties to this Agreement agree to
execute and deliver, both before and after the Closing, any additional
information or documents or agreements contemplated hereby and/or necessary or
appropriate to effect and consummate the transactions contemplated hereby.
PRGUSA agrees to provide to Purchaser, both before and after the Closing, such
information as Purchaser may reasonably request in order to consummate the
transactions contemplated hereby and to effect an orderly transition of TSL
following Closing.

         7.10     GOVERNING LAW. This Agreement, any PRGUSA Transaction Document
and any Purchaser Transaction Document shall be governed by and construed under
the laws of the State of Georgia, without reference to principles of conflict of
laws.

         7.11     ARBITRATION. Except for disputes, controversies or claims
which involve a consolidation, cross-claim or like proceeding in connection with
any third party claim, demand, action or proceeding, and except for disputes,
controversies or claims where a party is seeking specific performance or other
equitable relief, following the Closing, any controversy, claim or question of
interpretation or dispute between PRGUSA and Purchaser (each being referred to
as "Party") arising out of or relating to this Agreement or the breach thereof
shall be finally settled by arbitration in Washington, D.C. by one arbitrator
under the then-effective Commercial Arbitration Rules (the "Rules") of the
American Arbitration Association ("AAA") with pre-hearing discovery rights in
accordance with the Federal Rules of Civil Procedure, and otherwise as modified
by this Agreement, and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction. The award rendered by the arbitrator
shall be final and binding on the Parties and not subject to further appeal.
Such arbitration can be initiated by written notice by either Party to the other
party. The arbitrator shall be selected by the Parties in accordance with the
Rules and shall be a practicing attorney or a retired judge having at least
twenty (20) years of experience in matters relating to business and commercial
transactions. Each party agrees to pay an equal part of the deposit fixed by the
AAA or the arbitrator. The arbitrator shall award to the prevailing party, if
any, as determined by the arbitrator, all costs of the proceeding, including the
fees and expenses of the arbitrator and the reasonable attorneys fees and
expenses of the prevailing party. If the arbitrator determines that there is not
a prevailing party, each party shall bear its own costs and pay one-half of the
fees and expenses of the arbitrator.

         7.12     KNOWLEDGE. As used herein, the term "knowledge" means the
actual knowledge of the executive officers of the party in question and, with
respect to PRGUSA, shall also include (a) John Cook, Donald E. Ellis, Allison
Aden, Robert J. Svec and Veronica Moschella with respect to this entire
Agreement and (b) Lou Takacs and Samuel Walters with respect to Section 4.11 of
this Agreement. For purposes of the foregoing, "actual knowledge" shall be
deemed to include knowledge which such party would acquire assuming due inquiry
and knowledge of matters of which such party has received written notification
as evidenced by the books and records of such party.

                                       34


         7.13     PRONOUNS. All personal pronouns in this Agreement, whether
used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular.

         7.14     AMENDMENT AND WAIVER. The parties may by mutual agreement
amend this Agreement in any respect, and any party, as to such party, may (a)
extend the time for the performance of any of the obligations of any other
party, (b) waive any inaccuracies in representations by any other party, (c)
waive compliance by any other party with any of the agreements contained herein
and performance of any obligations by such other party, and (d) waive the
fulfillment of any condition that is precedent to the performance by such party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the party against whom
enforcement of the same is sought.

                                       35


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

                                      PRGUSA:

                                      PRG-SCHULTZ USA, INC.

                                      By: /s/ Donald E. Ellis, Jr.
                                         ---------------------------------------
                                      Name: Donald E. Ellis, Jr.
                                      Its: Executive Vice President-Finance,
                                           Chief Financial Officer and Treasurer

                                      PRGRS, INC.

                                      By: /s/ Clinton McKellar, Jr.
                                         ---------------------------------------
                                      Name: Clinton McKellar, Jr.
                                      Its: Senior Vice President and Secretary

                                      PRG-SCHULTZ INTERNATIONAL, INC.

                                      By: /s/ Donald E. Ellis, Jr.
                                         ---------------------------------------
                                      Name: Donald E. Ellis, Jr.
                                      Its: Executive Vice President-Finance,
                                           Chief Financial Officer and Treasurer

                                      PURCHASER:

                                      TSL (DE) CORP.

                                      By: /s/ Ethan D. Ayer
                                         ---------------------------------------
                                      Name: Ethan D. Ayer
                                      Its: Vice President

                                       36


                         LIST OF SCHEDULES AND EXHIBITS

                        
Schedule 1.1(1)*           Bank Information About the Custodial Account
Schedule 1.2*              Excluded Assets
Schedule 1.3(f)*           Required Consents
Schedule 2.2(a)            Other Assumed Liabilities
Schedule 3.1*              TSL Employees
Schedule 3.11              Certain Client Contracts
Schedule 4.3*              Title to Assets; Sufficiency of Assets
Schedule 4.4               Consents
Schedule 4.5*              Compliance with Law
Schedule 4.7               Interim Statements
Schedule 4.9*              Material Contracts
Schedule 4.10*             Material Leases
Schedule 4.11*             Intellectual Property
Schedule 4.12*             Benefit Plans
Schedule 4.15              Material Changes
Schedule 4.16*             Environmental Matters
Schedule 4.17*             Employees
Schedule 4.18*             Related-Party Transactions
Schedule 4.19*             Insurance

Exhibit 1.3(a)*            Form of Bill of Sale
Exhibit 1.3(b)*            Form of Assignment and Assumption Agreement
Exhibit 1.3(c)*            Form of Intellectual Property Assignment
Exhibit 1.3(e)*            Form of Opinion of Counsel to PRGUSA
Exhibit 1.3(h)             Form of Transition Services Agreement
Exhibit 1.3(i)             Form of Subcontractor Agreement
Exhibit 1.3(j)             Form on Noncompetition and Nonsolicitation Agreement



* This schedule is omitted in accordance with Item 601(b)(2) of Regulation S-K.
  PRG-Schultz International, Inc. agrees to furnish a copy of any omitted
  schedule, on a supplemental basis, to the Commission upon request.


                                       37


         Capitalized terms used in the disclosure schedules which are defined in
the Asset Purchase Agreement between PRG-Schultz USA, Inc., PRGRS, Inc.,
PRG-Schultz International, Inc., and TSL (DE) Corp., dated January 16, 2004
("Agreement") shall have the meanings assigned to such terms in the Agreement
unless otherwise defined in the disclosure schedule. The inclusion of any
description or document in a disclosure schedule is not intended, nor shall it
be deemed to imply necessarily, that the matters referred to or contained in
such disclosure schedule are (i) material or not in the ordinary course of
business, or (ii) required to be disclosed in such disclosure schedule. Nothing
in the disclosure schedules constitutes an admission of any liability of PRGUSA
to any party or an admission against interest. Any matter, event or condition
specifically disclosed in any section or portion of this disclosure schedule
shall be deemed a disclosure on any other disclosure schedule(s) where the
relevance of a disclosure on such other disclosure schedule is reasonably
apparent on the face of such disclosure that such disclosure would be applicable
to such other section or portion of the disclosure schedule or provision(s) of
the Agreement. Where any representation or warranty contained herein is limited
or qualified by the materiality of the matters as to which the representation or
warranty is given, the inclusion of any matter in a disclosure schedule does not
constitute a determination by PRGUSA that such matter is material or would
necessarily have a Material Adverse Effect.

                                       1

                                 SCHEDULE 2.2(a)
                            OTHER ASSUMED LIABILITIES


1.       Any Damages related to the failure to obtain the consent or approval to
         the assignment of any Contracts, Personal Property Leases or Real
         Property Leases from PRGUSA to Purchaser; provided however, that this
         sentence shall not reduce or otherwise affect the liability of PRGUSA
         or Parent for breach of any representation contained in Article IV of
         the Agreement.

2.       Any Damages related to failure, prior to Closing, of PRGUSA to file
         state sales tax returns and/or to make sales tax payments related to
         ASP software sales.

3.       The costs, fees and expenses associated with obtaining software
         licenses for the Enterprise Software (as defined on Schedule 4.11
         hereof).

                                       2


                                  SCHEDULE 3.11
                            CERTAIN CLIENT CONTRACTS

1.       Professional Services Agreement, dated November 5, 2002, between
         PRG-Schultz USA, Inc. and Cooper-Standard Automotive, Inc. (Management
         Fee = 5%).

2.       Professional Services Agreement, dated September 3, 2002, between
         PRG-Schultz (Commercial Division) and Steelcase, Inc. (Management Fee =
         5%).

3.       Professional Services Agreement, dated April 25, 2002, between The
         Profit Recovery Group USA, Inc. and Cargill, Incorporated. (Management
         Fee = 5%).

4.       Professional Services Agreement, dated November 26, 2001, between The
         Profit Recovery Group USA, Inc. and PGA Tour, Inc. (Management Fee =
         5%).

5.       Profit Recovery Group International Incorporated contract with the
         General Services Administration (Federal Supply Schedule Contract
         Number GS-23F-814OH). (Management Fee = 5%).

6.       Profit Recovery Group International, Inc. contract with the Bureau of
         the Public Department (Department of Treasury) (FedSource Contract #
         TPD-99-C-0015 - requesting government agency is the DISA). (Management
         Fee = 5%).

7.       General Services Agreement between Bank of America and PRG-Schultz USA,
         Inc., dated as of September 1, 2001 (agreement number 23676-001-001),
         and an addendum to same dated December 23, 2002 (effective December 12,
         2002). (Management Fee = 5%).

8.       Professional Services Agreement between PRG-Schultz USA, Inc. and
         Metavante Corporation dated July 26, 2001 (effective July 17, 2001),
         and an addendum to same dated August 20, 2002. (Management Fee = 5%).


                                       3


                                  SCHEDULE 4.4
                                    CONSENTS

1.       PRGUSA's lenders, a bank syndicate led by Bank of America, have a
         security interest in all of the Purchased Assets. Lien releases will be
         provided by Bank of America with respect to the Purchased Assets at the
         Closing; provided, however, that partial termination statements will
         not be filed. The consent of the bank syndicate is required for PRGUSA
         to consummate the transactions contemplated by the Agreement and has
         been obtained pursuant to that certain Fourth Amendment to Credit
         Agreement and Waiver, dated as of November 12, 2003, by and among
         PRGUSA, Parent, each of the domestic subsidiaries of the Parent, the
         lenders party thereto and Bank of America, N.A., as Administrative
         Agent.

2.       Master Services Agreement between AT&T Solutions, Inc., a wholly owned
         subsidiary of AT&T Corp., and TSL, a division of PRG-Schultz, Inc.,
         dated June 19, 2002.

3.       Office Lease between Transwestern Lanidex, L.L.C. and PRG-Schultz USA,
         Inc., dated May 30, 2002 (500 Lanidex Plaza, Parsippany, NJ).

4.       Lease Agreement between The Profit Recovery Group USA, Inc. and 2201
         Broadway Investments, LLC, dated December 22, 2000 (2201 Broadway
         Office Building, Oakland, CA).

5.       Subordination, Non Disturbance and Attornment Agreement between Morgan
         Guaranty Trust Company of New York and The Profit Recovery Group USA,
         Inc., dated November 6, 2001 (in connection with the Oakland, CA
         lease).

6.       Letter of Agreement between TSL and SG&W, Integrated Marketing
         Communications, dated February 22, 2003.

7.       CSR Logic Services Agreement between CSR Logic, LLC and TSL, a division
         of PRG-Schultz, dated July 24, 2003.

         -        Mutual Nondisclosure and Non-Solicitation Agreement between
                  CSR Logic, LLC and TSL, a division of PRG-Schultz, dated March
                  31, 2003.

8.       Agreement between Maltz Associates, LP and TSL, a division of
         PRG-Schultz International, Inc., dated September 2, 2003.

         9.       Products & Services Agreement between Broadwing
                  Telecommunications, Inc. and PRG dated November 28, 2001 and
                  the following associated addendums and attachments:

         -        Business Markets Responsible Organization 8XX Letter of
                  Agency;

         -        Internet Services Supplement;


                                       4


         -        Broadwing Voice and Data Service Supplement;

         -        Service Level Agreement, Dedicated IP Services;

         -        Customer Premise Equipment Services Supplement;

         -        Voice Quality Addendum;

         -        Preferred PLUS Long Distance Program; and

         -        Letter of Agency.

10.      e-business Hosting Agreement between International Business Machines
         Corporation and TSL, a division of PRG-Schultz, dated February 8, 2002.

11.      Agreements with Perimeterwatch Technologies, Inc.

         -        Enterprise Support Agreement for "TSL Networks", dated April
                  8, 2002

         -        Enterprise Support Agreement for "TSL - a division of
                  PRG-Schultz, Inc.", dated November 4, 2003

         -        Enterprise Management Agreement for "TSL - a division of
                  PRG-Schultz, Inc.", dated October 29, 2003

         -        Service Level Agreement Definition

12.      The licenses for the software listed on Schedule 4.11 under the heading
         "Software used, including operating systems and utilities" and the
         contracts listed on Schedule 4.11 under the heading "Other Intellectual
         Property Used that is Owned by Others."

                     Consultant and Subcontractor Agreements

13.      Letter Agreement with Technology Titans, Inc. (on TSL letterhead, only
         signed by Technology Titans), dated May 31, 2001 (contract is silent
         regarding assignment).

14.      Consulting Agreement between PRG Communications Division and Barry
         Melvin (undated) (contract is silent regarding assignment).

15.      Letter Agreement with Odyssey Media Incorporated (on TSL letterhead,
         only signed by Odyssey), dated August 21, 2000 (contract is silent
         regarding assignment).

16.      Independent Subcontractor Agreement between TSL, a division of
         PRG-Schultz and Mr. William Donaldson (Black Diamond Software), dated
         October 1, 2002 (contract is silent regarding assignment).



                                       5

17.      Consulting Agreement between Maltz Associates, L.P. and TSL, a division
         of PRG-Schultz International, Inc., dated April 22, 2003 (contract is
         silent regarding assignment).

18.      Independent Contractor Agreement between TSL, a division of PRG-Schultz
         and Alan Maltz, dated June 7, 2002 (contract is silent regarding
         assignment).

19.      Master Subcontractor Agreement between TSL, a division of PRG-Schultz
         and Digital Reliance, dated May 16, 2002 (effective May 14, 2002).

20.      Independent Subcontractor Agreement between TSL, a division of
         PRG-Schultz and MaryAnn Carfaro, dated October 1, 2002 (contract is
         silent regarding assignment).

21.      Independent Contractor Agreement between TSL, a division of PRG-Schultz
         and On Pointe, dated September 5, 2002 (contract is silent regarding
         assignment).

22.      Master Subcontractor Agreement between TSL, a division of PRG-Schultz
         and DJM Networking Services, dated September 2, 2003 (effective August
         14, 2003).

23.      Agreement for Telecom Bill Auditing Services between Faircloth &
         Blackwelder and TSL, dated May 27, 1998.

24.      Master Subcontractor Agreement dated April 3, 2003 (effective March 19,
         2003) between TSL, a division of PRG-Schultz and Telecom Solutions
         Group, LLC (agreement is inactive but has certain restrictive covenants
         contained in Section 7 of the agreement that survive termination).

25.      Master Subcontractor Agreement dated May 7, 2003 (effective March 19,
         2003) between TSL, a division of PRG-Schultz and The Long Valley Group,
         LLC (agreement is inactive but has certain restrictive covenants
         contained in Section 7 of the agreement that survive termination).

                                Client Contracts

26.      JP Morgan Chase

         -        Agreement for Professional Services between Morgan Guaranty
                  Trust Company of New York and TSL, a division of Brite Voice
                  Systems, Inc., dated, November 1, 1995.

                  a.       Memo of Understanding (JPMC Agreement No. 62608)
                           regarding MAC billing rates terms and conditions,
                           dated January __, 2003 between TSL, a division of
                           PRG-Schultz International and JPMorgan Chase Bank.

         -        Memo of Understanding regarding TSL Services, Billing Rates
                  and Terms, dated May 24, 2002 between TSL, a division of
                  PRG-Schultz International and JPMorgan Chase (silent with
                  respect to assignment).



                                       6

         -        Letter Agreement dated July 30, 1996 between Telecom Services
                  Limited, a division of Brite and Chase Manhattan Bank (silent
                  with respect to assignment).

                  a.       Letter agreement dated May 21, 2003 between TSL and
                           J.P. Morgan Chase & Co. amending July 30, 1996 Letter
                           Agreement (silent with respect to assignment).

         -        Statement of Work (JPMChase-UK), undated, between JPMChase and
                  TSL (silent with respect to assignment).

27. IBM
         -        Master Agreement (Agreement # 4900T20002), dated as of
                  January 31, 2000 between International Business Machines
                  Corporation and PRGUSA, assignee of TSL Services, Inc., an
                  EPS Solutions Company, and related statements of work.

28. Wells Fargo/Norwest

         -        Master Services Agreement dated October 1, 2001 between Wells
                  Fargo Services Company and The Profit Recovery Group.

                  a.       Amendment 1 - Pricing, dated effective May 1, 2003
                           between Wells Fargo Services Company and
                           PRG-Schultz, Inc.

                  b.       Statement of Work - 1 (Telecommunications Invoice
                           Auditing Project), dated effective January 1, 2003.

                  c.       Statement of Work - 2 (Charge Back Support), dated
                           effective January 1, 2003.

                  d.       Statement of Work - 3 (MCI/WorldCom Billing
                           Analysis), dated effective January 1, 2003.

                  e.       Statement of Work - 4 (Qwest Billing Analysis), dated
                           effective April 15, 2003.


         -        Master Services Agreement dated March 20, 2000, between Wells
                  Fargo Services Company and The Profit Recover Group USA, Inc.
                  (as assigned by TSL, Inc. via Amendment 01 dated June 30,
                  2000).

                  a.       Amendment 02, dated June 25, 2002, between Wells
                           Fargo Services Company and Profit Recovery Group USA,
                           Inc. - relates solely to work performed by TSL under
                           an exhibit with the heading "Proposal to Review Wells
                           Fargo Service Company's (WFSC) MCI Billing During
                           Contract Conversion".


                                       7


                  b.       All work by TSL under this Master Services Agreement
                           has been completed.

29.      Charles Schwab

         -        Consulting Services Agreement dated March 19, 2002 between
                  TSL, a division of PRG-Schultz USA, Inc. and Charles Schwab &
                  Co., Inc. (silent with respect to assignment)

30.      Bank of New York - each of the below Bank of New York contracts is
         silent with respect to assignment

         -        Memo of Understanding regarding Confirmation of Professional
                  Services, dated September 6, 2002, between TSL, a division of
                  PRG-Schultz International and Bank of New York.

         -        Memo of Understanding regarding TSL Services, Billing Rates
                  and Terms, dated May 28, 2002, between TSL, a division of
                  PRG-Schultz International and Bank of New York.

31.      Chase Bank of Texas - the below Chase Bank contract is silent with
         respect to assignment

         -        Proposal to Chase for SMDR Polling and Delivery Services dated
                  June 25, 1999 between Chase Bank and TSL Services, Inc.

32.      Guardian Life

         -        Memo of Understanding regarding TOMS ASP billing rates, terms
                  and conditions, dated July 8, 2002 between TSL, a division of
                  PRG-Schultz International and Guardian Life Insurance (this
                  Memo of Understanding is silent with respect to assignment).

         -        Services Agreement dated as of January 9, 2002 between Profit
                  Recovery Group USA, Inc. and The Guardian Life Insurance
                  Company of America. Agreement has expired and TSL is in the
                  process of obtaining a month to month agreement until a full
                  renewal is negotiated.

         -        Service Bureau (Call Accounting) Agreement dated September 16,
                  2002 between TSL Software Services, Inc. and The Guardian Life
                  Insurance Company.

33.      State of CA

         -        Standard Agreement (Contract # 96E1115) dated May 1, 1997
                  between the State of California (acting through the Director
                  of the Stephen P. Teale Data Center) and Telecom Services
                  Limited (including MSA 5-96-70-26).



                                       8


         -        Letter dated June 27, 2002 between State of California, 9-1-1
                  and TSL, a division of PRG-Schultz, regarding contract
                  5-96-70-26 and continued pursuit by TSL of open claims
                  thereunder despite expiration of the contract. This letter is
                  silent with respect to consent.

         No further work for the State of California or any of its departments
         is currently under contract to be conducted other than the pursuit of
         open claims to the client that were identified prior to expiration of
         the contract.

34.      Citicorp - the below Citicorp agreement is silent with respect to
         assignment

         -        Letter Agreement dated April 10, 1996 between Telecom Services
                  Limited, a division of Brite, and Citibank, N.A.

35.      Consolidated Edison

         -        Agreement for Telecommunications Invoice Processing Management
                  Services between Brite Voice Systems, Inc., TSL Division, and
                  the Consolidated Edison Company of New York, Inc., dated
                  January 12, 1998, as modified January 8, 2003 to extend for
                  two years (Purchase Order Modification Copy is not signed by
                  Consolidated Edison).

36.      City of NY

         -        Agreement dated October 25, 2002 between City of New York
                  acting by and through the Department of Information Technology
                  and Telecommunications and The Profit Recovery Group, Inc.
                  This contract is currently expired.

37.      AT&T & AMS

         -        Agreement No. 12642 between TSL Services, Inc. and AT&T Corp.
                  dated December 23, 1998 (not signed by TSL).

                  a.       Amendments 1-3 each extended the agreement by one
                           year.

                  b.       Agreement Amendment (No.4) between TSL, a division of
                           PRG-Schultz, Inc. and AT&T Corp., dated January 13,
                           2003 (changes agreement end date to December 31, 2003
                           and modifies a provision of the agreement).

                  a.       Agreement Amendment (No. 5) between TSL, a division
                           of PRG-Schultz, Inc. and AT&T Corp, dated December
                           30, 2003 (changes agreement end date to December 31,
                           2004).

38.      Intel

         -        Intel Corporation Purchase Agreement - Services (agreement #
                  10194), dated effective as of March 1, 2000, between Intel
                  Corporation and PRGUSA, assignee of TSL Services, as amended.


                                       9

39.      Bear Stearns & Company

         -        General Terms and Conditions, dated as of January 27, 2003
                  between Bear, Stearns & Co., Inc. and TSL, a division of
                  PRGUSA, and related statements of work.

40.      Lexmark (AT&T Solutions)

         -        Master Services Agreement between AT&T Solutions, Inc., a
                  wholly owned subsidiary of AT&T Corp., and TSL, a division of
                  PRG-Schultz, Inc., dated June 19, 2002.

41.      Independence Blue Cross

         -        Services Agreement effective April 17, 2003 between
                  TSL, a division of PRG-Schultz and Independence Blue Cross.

42.      Pepsi - the below Pepsi agreement is silent with respect to assignment

         -        Letter Agreement dated May 28, 1996 between Telecom Services
                  Limited, a division of Brite, and Pepsico, Inc.

43.      Fidelity Investments

         -        Services Agreement No. 70002109 dated as of June 24, 2002
                  between Fidelity Investments Institutional Services Company
                  acting through its Fidelity Investments Systems Company
                  Division, and TSL, a division of PRG-Schultz International,
                  Inc.

44.      McGraw Hill

         -        Master Services Agreement, dated effective as of July 1, 2002,
                  between The McGraw Hill Companies, Inc. and TSL, a division of
                  PRGUSA.

         -        OOB/ISDN Billing Support Services Schedule between TSL, a
                  division of PRG-Schultz and The McGraw-Hill Companies, Inc.,
                  dated August 6, 2003 (silent with respect to assignment).

                  Consents/notices required in connection with the Overlap
                  Client Contracts:

1.       Professional Services Agreement, dated November 5, 2002, between
         PRG-Schultz USA, Inc. and Cooper-Standard Automotive, Inc.

2.       Professional Services Agreement, dated September 3, 2002, between
         PRG-Schultz (Commercial Division) and Steelcase, Inc. (agreement is
         silent regarding assignment/subcontracting).


                                       10


3.       Professional Services Agreement, dated April 25, 2002, between The
         Profit Recovery Group USA, Inc. and Cargill, Incorporated. (agreement
         is silent regarding assignment/subcontracting).

4.       Professional Services Agreement, dated November 26, 2001, between The
         Profit Recovery Group USA, Inc. and PGA Tour, Inc. (agreement is silent
         regarding assignment/subcontracting).

5.       Profit Recovery Group International Incorporated contract with the
         General Services Administration (Federal Supply Schedule Contract
         Number GS-23F-814OH).

6.       Profit Recovery Group International, Inc. contract with the Bureau of
         the Public Department (Department of Treasury) (FedSource Contract #
         TPD-99-C-0015 - requesting government agency is the DISA).

7.       General Services Agreement between Bank of America and PRG-Schultz USA,
         Inc., dated as of September 1, 2001 (agreement number 23676-001-001),
         and an addendum to same dated December 23, 2002 (effective December 12,
         2002).

8.       Professional Services Agreement between PRG-Schultz USA, Inc. and
         Metavante Corporation dated July 26, 2001 (effective July 17, 2001),
         and an addendum to same dated August 20, 2002. (agreement is silent
         regarding assignment/subcontracting).



                                       11

                                  SCHEDULE 4.7
                              FINANCIAL INFORMATION


                   TSL Statement of Net Assets and Liabilities



                                                  DECEMBER 31,      DECEMBER 31,
                                                      2002             2003
                                                   -----------      -----------
                                                              
       ASSETS
CURRENT ASSETS
      A/R Trade ..............................     $ 2,763,931      $ 3,150,931
      Allowance for Doubtful Accounts ........        (206,078)         (62,180)
      Prepaid Expenses .......................          51,032           90,975
                                                   -----------      -----------
TOTAL CURRENT ASSETS .........................       2,608,885        3,179,726

PROPERTY PLANT AND EQUIPMENT
      Property Plant and Equipment at Cost ...       3,008,744        3,969,933
      Less: Accumulated Depreciation .........      (1,570,725)      (2,259,998)
                                                   -----------      -----------
TOTAL PROPERTY PLANT AND EQUIPMENT ...........       1,438,019        1,709,935

      Other Long-term Assets - Security
      Deposits ...............................          83,377           53,006
      Other Long-term Assets - Non-Competes ..          48,327           28,327

                                                   -----------      -----------
TOTAL ASSETS .................................     $ 4,178,608      $ 4,970,994
                                                   ===========      ===========

      LIABILITIES
CURRENT LIABILITIES
      Accounts Payable and Accrued Expenses ..     $   131,372      $   328,139
      Sales Taxes Payable ....................           4,294            7,248
      Accrued Payroll and Related Expenses ...       1,443,045          602,751
      Deferred Revenue .......................         174,988          138,815
                                                   -----------      -----------
TOTAL CURRENT LIABILITIES ....................       1,753,699        1,076,953

LONG-TERM LIABILITIES
      Other Long-term Liabilities ............         148,404          249,274
                                                   -----------      -----------
TOTAL LIABILITIES ............................       1,902,103        1,326,227
                                                   -----------      -----------

                                                   -----------      -----------
NET BOOK VALUE ...............................     $ 2,276,505      $ 3,644,767
                                                   -----------      -----------



                                       12



                               TSL Profit and Loss



                                                  YEAR TO DATE      YEAR TO DATE
                                                     ACTUAL             ACTUAL
                                                   DECEMBER 31,     DECEMBER 31,
                                                      2002             2003
                                                  ------------      -----------
                                                              
REVENUE .....................................     $ 16,406,926      $ 16,967,096

EXPENSES
      FIELD OPERATIONS
         Payroll Expenses ...................        6,876,489         7,228,945
         Other Employee Costs ...............           56,437            36,248
         Marketing and Advertising ..........            9,280             8,323
         Taxes ..............................          413,669           484,852
         Utilities and Maintenance ..........          103,077           165,748
         Supplies ...........................          178,550           107,815
         Purchased Services .................        1,879,240         1,668,963
         Other Expenses .....................          180,977           203,159
         Travel & Entertainment .............          116,607           116,336
         Communications .....................          219,177           161,812
         Insurance ..........................          405,636           472,653
         Depreciation .......................          720,122           689,273
         Equipment Rentals ..................           52,652            47,018
         Real Property Rentals ..............          424,105           498,849
                                                  ------------      ------------
      TOTAL FIELD OPERATIONS ................       11,636,018        11,889,994
                                                  ------------      ------------
         GROSS PROFIT .......................        4,770,908         5,077,102
                                                  ------------      ------------

      SELLING, GENERAL, AND ADMINISTRATIVE
         Payroll Expenses ...................        1,988,015         1,527,207
         Other Employee Costs ...............          129,099            63,892
         Marketing and Advertising ..........          187,075           308,740
         Taxes ..............................          131,353           118,719
         Utilities and Maintenance ..........           19,842            21,709
         Supplies ...........................           16,269            17,887
         Purchased Services .................          106,461           103,145
         Other Expenses .....................           14,425            23,286
         Travel & Entertainment .............          121,987           126,604
         Communications .....................           41,927            47,288
         Insurance ..........................          117,343           108,378

         Depreciation .......................               --                --
         Amortization .......................           20,000            20,000

         Professional Services ..............           (6,279)               --
         Donations ..........................            1,900             9,490
         Bad Debts ..........................         (415,534)           (9,448
         Equipment Rentals ..................           21,808            24,828
         Real Property Rentals ..............          233,078           134,051
                                                  ------------      ------------
      TOTAL SG&A ............................        2,728,769         2,645,776
                                                  ------------      ------------
TOTAL EXPENSES ..............................       14,364,787        14,535,770
                                                  ------------      ------------

                                                  ------------      ------------
      OPERATING INCOME ......................     $  2,042,139      $  2,431,326
                                                  ============      ============



                                       13


  Items not contained in the interim statements disclosed on this Schedule 4.7
         because the Business is not conducted as an independent entity

         -        The costs related to certain services, including employee
                  benefits, liability insurance, human resources and payroll
                  processing, are charged or allocated to the Business by PRGUSA
                  pro-rata based upon the total of such costs incurred by
                  PRGUSA. PRGUSA makes no assurances that such services may be
                  procured by Purchaser for the Business at the same or similar
                  costs.

         -        The Business, as a division of PRGUSA, has access to other
                  PRGUSA corporate resources for which the Business pays little
                  or no costs. These corporate resources include, legal
                  services, tax services and advice, marketing services, and
                  accounting/finance/CFO services. After Closing the Business
                  may need to procure such services from a third party that will
                  charge the Business amounts that are materially different from
                  those charged by PRGUSA to the Business.

         -        With respect to the Enterprise Software (defined on Schedule
                  4.11 hereof), after Closing, the Business will need to obtain
                  its own software licenses from the applicable vendors and
                  PRGUSA makes no assurances that such licenses may be procured
                  by Purchaser for the Business at the same or similar costs as
                  charged to PRGUSA.


                                       14


                                  SCHEDULE 4.15
                                MATERIAL CHANGES

1.   Intel has recently consolidated and brought "in house" the personal
     services billing service that was provided by TSL (approximately $9,000 of
     revenue per month) and may bring all processing "in house".

2.   JPMChase has recently entered into an outsourcing agreement with IBM and
     the impact upon TSL's business with JPMChase or IBM is unknown.

3.   The STI processing services provided for Warner Lambert may be brought in
     house by Pfizer (Pfizer recently acquired Warner Lambert).

4.   Key Bank has recently indicated that it may no longer be requiring the
     FraudChek services (approximately $7,000 of revenue per month).

5.   The Business, from time to time in the ordinary course of its business (STI
     service), will directly purchase Pollcats (the SMDR collection devices used
     to obtain CDR information) and sell them back to the client.

                                       2

                                 EXHIBIT 1.3(h)

                          TRANSITION SERVICES AGREEMENT

         TRANSITION SERVICES AGREEMENT, dated as of January 16, 2004 (this
"Agreement"), between PRG-SCHULTZ USA, INC., a Georgia corporation ("PRGUSA"),
and TSL (DE) CORP. a Delaware corporation ("Purchaser").

                              W I T N E S S E T H:

         WHEREAS, the parties hereto have entered into that certain Asset
Purchase Agreement of even date herewith (the "Asset Purchase Agreement")
pursuant to which Purchaser is purchasing from PRGUSA substantially all of the
assets of TSL (as defined in the Asset Purchase Agreement) as a going concern;
and

         WHEREAS, in connection with the transactions contemplated by the Asset
Purchase Agreement, the parties wish to enter into this Agreement, Purchaser
desires to cause PRGUSA to provide the Services set forth on Schedule A to
Purchaser, and PRGUSA is willing to provide such Services; and

         NOW, THEREFORE, the parties hereto, in consideration of the premises
and the mutual covenants contained herein, agree as follows:

1. Definitions. As used in this Agreement, the following terms have the
respective meanings set forth below:

         "Applicable Rate" shall mean the rate of interest per annum announced
from time to time by Citibank, N.A. as its prime lending rate plus 1% per annum.

         "Bankruptcy Event" with respect to a party shall mean the filing of an
involuntary petition in bankruptcy or similar proceeding against such party
seeking its reorganization, liquidation or the appointment of a receiver,
trustee or liquidator for it or for all or substantially all of its assets,
whereupon such petition shall not be dismissed within sixty (60) days after the
filing thereof, or if such party shall (i) apply for or consent in writing to
the appointment of a receiver, trustee or liquidator of all or substantially all
of its assets, (ii) file a voluntary petition or admit in writing its inability
to pay its debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or an answer seeking reorganization
or an arrangement with its creditors or take advantage of any insolvency law
with respect to itself as debtor, or (v) file an answer admitting the material
allegations of a petition filed against it in any bankruptcy, reorganization,
insolvency proceedings or any similar proceedings.

         "Business" means the services performed prior to the date hereof by the
TSL division of PRGUSA, which are described in the first recital of the Asset
Purchase Agreement.

         "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banks in New York, New York are authorized or obligated by law or
executive order to close.

         "Loss" shall mean any damage, claim, loss, charge, action, suit,
proceeding, deficiency, tax, interest, penalty and reasonable costs and expenses
(including reasonable attorneys' fees).

         "Person" shall mean any natural person, corporation, business trust,
limited liability company, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.



         "Services" shall mean those transitional services to be provided by
PRGUSA to Purchaser set forth on Schedule A hereto to temporarily assist
Purchaser in operating the Business.

         Capitalized terms used herein but not defined herein shall have the
meaning ascribed to them in the Asset Purchase Agreement.

2. Services. PRGUSA shall provide to Purchaser each of the Services for the term
set forth opposite the description of such Services in Schedule A. In performing
the Services, PRGUSA shall provide substantially the same level of service and
use substantially the same degree of care, skill and diligence as it provided
and used in providing such Services to the Business prior to the date hereof,
subject in each case to any provisions set forth on Schedule A with respect to
each Service. PRGUSA agrees that (i) the Services will be performed in a
professional, timely and workmanlike manner, (ii) the Services will be of the
same quality and in the same manner of performance as such Services were
performed immediately prior to the Closing to the Business and (iii) the level
and scope of resources, including personnel, utilized by PRGUSA to provide the
Services shall be no less than those that were utilized immediately prior to the
Closing. It will be at PRGUSA's discretion as to whether enhancements or
modifications to PRGUSA's systems will be made available to Purchaser, provided,
however, the foregoing will not reduce or relieve Purchaser's obligations under
this Section 2. Purchaser will reasonably cooperate with PRGUSA to facilitate
PRGUSA's performance hereunder. EXCEPT AS SPECIFIED IN THIS AGREEMENT, ALL
SERVICES PROVIDED UNDER THIS AGREEMENT ARE PROVIDED ON AN "AS IS" BASIS. EXCEPT
AS SPECIFIED IN THIS AGREEMENT, NEITHER PRGUSA NOR ANY OF ITS AFFILIATES,
EMPLOYEES, OFFICERS, DIRECTORS, AGENTS OR LICENSORS WARRANTS THAT THE SERVICES
PROVIDED PURSUANT TO THIS AGREEMENT WILL BE UNINTERRUPTED OR ERROR FREE. EXCEPT
AS SPECIFIED IN THIS AGREEMENT, PRGUSA AND ITS AFFILIATES, EMPLOYEES, OFFICERS,
DIRECTORS, AGENTS AND LICENSORS MAKE NO WARRANTY, GUARANTEE OR REPRESENTATION
EITHER EXPRESS OR IMPLIED REGARDING THE MERCHANTABILITY, TITLE, OR FITNESS FOR A
PARTICULAR PURPOSE OF ANY SERVICES PROVIDED UNDER THIS AGREEMENT.

3. Payment. Purchaser shall pay to PRGUSA the fees set forth on Schedule A in
consideration for the provision of the Services. Purchaser shall reimburse
PRGUSA for all reasonable and necessary out-of-pocket costs and expenses (except
for postage and other delivery costs, telephone, telecopy and duplicating
expenses, employee salary and benefit allocations for PRGUSA personnel and
similar internal administrative or overhead costs, expenses and allocations)
incurred by PRGUSA with respect to third parties in connection with the
provision of the Services to Purchaser pursuant to the terms of this Agreement
or paid by PRGUSA on behalf of Purchaser. PRGUSA will invoice Purchaser in U.S.
dollars as set forth below for any (i) fees payable by Purchaser for Services
listed on Schedule A provided pursuant to the terms of this Agreement during
such month (prorated on a daily basis for any partial month); (ii) amounts
payable by Purchaser for any out-of-pocket costs and expenses incurred during
the immediately preceding month to the extent PRGUSA has received an invoice
from such third party; and (iii) taxes (excluding income taxes) or other
out-of-pocket expenses (such as, without limitation, payments to cover payroll
and premiums for medical and dental benefits) payable in connection with the
provision of Services for Purchaser during such month. PRGUSA shall deliver or
cause to be delivered to Purchaser each such invoice within thirty (30) days
following the last day of the calendar month to which such invoice relates.
Purchaser shall pay each such invoice received by electronic funds transfer as
follows: in the case of clauses (i) and (ii), within twenty (20) Business Days
of the date on which such invoice was received, and in the case of clause (iii),
provided that PRGUSA delivers such invoice five (5) or more Business Days
(except in the case of payroll expenses and premiums for medical and dental
benefits, in which case such invoice shall be delivered two (2) or more Business
Days) prior to the due date for such out-of-pocket payments, not later than one
(1) Business Day prior to such due date (and if PRGUSA does not timely receive
the necessary funds, PRGUSA shall not be obligated to make the

                                       2


corresponding payment). Any amount not paid when due shall be subject to a late
payment fee computed daily at a rate equal to the Applicable Rate. Purchaser
agrees to pay PRGUSA's reasonable attorneys' fees and other costs incurred in
collection of any amounts owed to PRGUSA hereunder and not paid when due.
Notwithstanding anything to the contrary contained herein, in the event
Purchaser fails to make a payment when due hereunder, and such failure continues
for a period of five (5) Business Days following delivery of written notice to
Purchaser of such failure, PRGUSA shall have the right to cease provision of
Services to Purchaser until such overdue payment (and any applicable late
payment fee accrued with respect thereto) is paid in full. Such right of PRGUSA
shall not in any manner limit or prejudice any of PRGUSA's other rights or
remedies in the event of Purchaser's failure to make payments when due
hereunder. In the event of a termination of Services pursuant to this Section,
with respect to the calendar month in which such services cease to be provided,
Purchaser shall be obligated to pay a pro rata share of the fee for such Service
set forth on Schedule A equal to the product of (x) the fee set forth on
Schedule A multiplied by (y) a fraction, the numerator of which is the number of
days in the calendar month in which such services cease to be provided preceding
and including the last date on which such Services are provided, and the
denominator of which is thirty (30).

4. Limitation of Liability. IN NO EVENT SHALL PRGUSA OR PURCHASER HAVE ANY
LIABILITY FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES EXCEPT
IN THE CASE OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PARTY.

5. Indemnification.

         (a) Purchaser shall indemnify PRGUSA, and shall hold PRGUSA harmless
against, any Loss which PRGUSA may sustain or incur arising out of PRGUSA's
performance of the Services or PRGUSA's acts or omissions in connection with its
performance of such Services unless such Loss arises out of a breach by PRGUSA
of this Agreement. This Section shall survive the termination of this Agreement.

         (b) PRGUSA shall indemnify Purchaser, and shall hold Purchaser harmless
against, any Loss which Purchaser may sustain or incur arising out of a breach
by PRGUSA of this Agreement. This Section shall survive the termination of this
Agreement.

6. Confidentiality. The parties acknowledge that in the course of performance of
their respective obligations pursuant to this Agreement, each may obtain certain
confidential and/or proprietary information of the other or its affiliates or
customers, including the terms and conditions of this Agreement. Each party
hereby agrees that all information communicated to it by the other, its
affiliates or customers, whether before or after the date hereof, was received
in strict confidence and shall be kept in strict confidence and shall be used
only in accordance with this Agreement, and shall not be disclosed by the other
party, its agents or employees without the prior written consent of the first
party. In the event that either party either determines on the advice of its
counsel that it is required to disclose any information pursuant to applicable
law, or receives any demand under lawful process to disclose or provide
information of the other party that is subject to the confidentiality provisions
hereof, such party shall notify the other party prior to disclosing and
providing such information and shall cooperate at the expense of the requesting
party in seeking any reasonable protective arrangements requested by such other
party. Subject to the foregoing, the party that receives such request may
thereafter disclose or provide information to the extent required by such law
(as so advised by counsel) by lawful process. Furthermore, the parties shall
take reasonable steps necessary to ensure that all information and records
relating to the business of PRGUSA and the Purchaser are kept strictly
confidential. Notwithstanding the above, this Agreement imposes no obligation on
either party with respect to information that is already in such party's
possession without a duty to the other party to maintain the confidentiality of
such

                                        3


information, is or becomes a matter of public knowledge through no fault of that
party, is rightfully obtained by either party from a third party not in
violation of any duty of confidentiality, or is independently developed by
either party without reference to any proprietary or confidential information of
the other party. Notwithstanding anything herein to the contrary, any party to
this Agreement (and any employee, representative or other agent of any party to
this Agreement) may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of the transactions contemplated by
this Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure; provided, however, that such disclosure may not be made to the extent
required to be kept confidential to comply with any applicable federal or state
securities laws; and provided further that (to the extent not inconsistent with
the foregoing) such disclosure shall be made without disclosing the names or
other identifying information of any party.

7. Term and Termination.

         (a) This Agreement shall commence on the date hereof and shall continue
with respect to the Services until the expiration of the period the Services are
being provided as set forth on Schedule A or until terminated in accordance with
this Section 7.

         (b) Termination of Services by Purchaser. Each party acknowledges that
the purpose of this Agreement is for PRGUSA to provide Services to Purchaser on
an interim basis to facilitate Purchaser's transition to operating the Business
as a going concern without substantial interruption in connection with the
change of ownership pursuant to the Asset Purchase Agreement and the agreements
contemplated thereby. Purchaser may notify PRGUSA that Purchaser does not wish
to receive one or more Services, in which event such Service(s) shall be deleted
from Schedule A effective as of the termination date contained in such notice
and any payment obligations for such Services pursuant to Section 3 shall
terminate.

         (c) Early Termination by PRGUSA. PRGUSA may terminate this Agreement by
giving written notice to Purchaser under the following circumstances: (a) if
Purchaser shall materially default in the performance of any of its material
obligations under, or materially breach any of its material warranties set forth
in, this Agreement, and such default or breach shall continue and not be
remedied for a period of five (5) Business Days with respect to any payment
obligations hereunder (including without limitation any payment obligations
pursuant to Section 3) or a period of thirty (30) days with respect to any other
obligations hereunder, after PRGUSA has given written notice to Purchaser
specifying such default or breach and requiring it to be remedied; (b) if a
Bankruptcy Event has occurred with respect to Purchaser; or (c) if Purchaser
should assign or subcontract, or attempt to assign or subcontract, any interest
in all or any part of this Agreement without the prior written consent of
PRGUSA, except as set forth in Section 11.

         (d) Suspension Due to Force Majeure. In the event PRGUSA's performance
hereunder is interrupted or interfered with by reason of any cause beyond its
reasonable control including, but not limited to, fire, storm, flood,
earthquake, explosion, war, strike or labor disruption, rebellion, insurrection,
quarantine, act of God, boycott, embargo, shortage or unavailability of
supplies, riot, or governmental law, regulation or edict (collectively, the
"Force Majeure Events"), PRGUSA shall not be deemed to be in default of this
Agreement by reason of its nonperformance due to such Force Majeure Event, but
shall give notice to Purchaser of the Force Majeure Event. PRGUSA will be
excused from performance of its obligations only to the extent and for such time
as the cause which prevents performance continues.

         (e) Consequences of Termination. In the event this Agreement expires or
is terminated in accordance with this Section 7, then (a) all Services to be
provided will promptly cease, (b) each of


                                       4


PRGUSA and Purchaser shall promptly return all confidential information received
from the other party in connection with this Agreement (including the return of
all information received with respect to the Services or products of PRGUSA or
Purchaser, as the case may be) and (c) each of PRGUSA and Purchaser shall honor
all credits and make any accrued and unpaid payment to the other party as
required pursuant to the terms of this Agreement, and no rights already accrued
hereunder shall be affected.

8. Records. Each of the parties shall provide reasonable access to the books
maintained in connection with the provision of the Services, and all other
records relevant to this Agreement, and upon reasonable notice from the other
party shall make available for inspection and copy by such other party's agents
such records during reasonable business hours.

9. Severability. If any provision of this Agreement is prohibited by the laws of
any jurisdiction, as those laws apply to this Agreement, that provision shall be
ineffective to the extent of such prohibition and/or shall be modified to
conform with such laws, without invalidating the remaining provisions hereto.

10. Modification. This Agreement may not be changed or modified except in
writing specifically referring to this Agreement and signed by each of the
parties hereto.

11. Assignment. Neither PRGUSA nor Purchaser may assign or subcontract, or
attempt to assign or subcontract, any of its rights or obligations hereunder, in
whole or in part, by operation of law or otherwise, except with the prior
written consent of the other party; it being understood that such consent shall
not be unreasonably withheld; provided, that Purchaser may, without the consent
of PRGUSA, assign its rights under this Agreement to any of its affiliates and
may assign its rights under this Agreement as collateral security to any lender.
Any attempted assignment or delegation not in compliance with the forgoing shall
be null and void and of no effect.

12. Notices. All notices, requests, demands, claims or other communications
hereunder will be in writing and shall be deemed duly given if personally
delivered, sent by telefax, sent by a recognized overnight delivery service
which guarantees next-day delivery ("Overnight Delivery") or mailed by certified
mail, return receipt requested, postage prepaid and addressed to the intended
recipient, as set forth below:

         If to Purchaser:    TSL (DE) Corp.
                             500 Lanidex Plaza
                             Parsippany, New Jersey 07054
                             Attention: Robert Svec
                             Telefax: (973) 952-5515

         with a copy to:     Dechert LLP
                             4000 Bell Atlantic Tower
                             1717 Arch Street
                             Philadelphia, Pennsylvania 19103
                             Attention:  Carmen J. Romano, Esq.
                             Telefax:    (215) 655-2971

         If to PRGUSA:       PRG-Schultz USA, Inc.
                             600 Galleria Parkway, Suite 100
                             Atlanta, GA  30339
                             Attention: Clinton McKellar, Jr.
                                        Senior Vice President & General Counsel
                             Telefax:   (770) 779-3034

                                       5




         with a copy to:     Arnall Golden & Gregory, LLP
                             2800 One Atlantic Center
                             1201 West Peachtree Street
                             Atlanta, Georgia  30309-3400
                             Attention: Jonathan Golden, Esq.
                             Telefax:   (404) 873-8701

or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first Business Day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by U.S.
Mail, will be deemed received three (3) Business Days immediately following the
date sent.

13. Entire Agreement; Binding Effect; No Third Party Beneficiaries. This
Agreement, together with the Schedule attached hereto, constitutes the entire
agreement and supersedes any and all other prior agreements, representations and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. All such other prior agreements,
representations and undertakings are hereby terminated and shall be of no force
or effect. This Agreement shall be binding upon the parties hereto and their
respective successors and permitted assigns, if any, and except as provided
herein, shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns, if any. Except as otherwise expressly provided
herein, this Agreement is not intended to confer upon any Person other than
PRGUSA and Purchaser any rights or remedies hereunder.

14. Governing Law. This Agreement shall be governed by and construed under the
laws of the State of Georgia, without reference to principles of conflict of
laws.

15. Arbitration. All disputes, controversies or claims arising out of or
relating to this Agreement shall be resolved by agreement among the parties or,
if notice is given by any of the parties as provided herein and the matter is
not otherwise resolved, by resort to arbitration in accordance with the
arbitration provisions contained in the Asset Purchase Agreement.

16. No Agency or Partnership. Nothing in this Agreement will create, or will be
deemed to create, a partnership or the relationship of principal and agent or of
employer and employee between the parties.

17. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

18. Warranties. PRGUSA hereby represents and warrants that it has full legal
right and authority to provide each Service to be provided hereunder and that it
has and will continue to have or cause to be provided the necessary skills,
facilities and resources to fulfill its obligations hereunder on the same basis
as provided prior to Closing.

                                       6




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


                               PRGUSA:


                               PRG-SCHULTZ USA, INC.

                               By:   /s/ Donald E. Ellis, Jr.
                                  ----------------------------------------------
                               Name:     Donald E. Ellis, Jr.
                                    --------------------------------------------
                               Its:      Executive Vice President-Finance, Chief
                                         Financial Officer and Treasurer


                               PURCHASER:

                               TSL (DE) CORP.

                               By:   /s/ Ethan D. Ayer
                                  ----------------------------------------------
                               Name:     Ethan D. Ayer
                                    --------------------------------------------
                               Its:      Vice President


                                       7




                                   SCHEDULE A

            TRANSITION SERVICES AGREEMENT ("AGREEMENT") - SCHEDULE A




- -----------------------------------------------------------------------------------------------------------------------------------
      Service                Service Description                  Term                           Comments
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                   
Medical and Dental    Provide Medical and Dental Benefits      1-3 months   Benefits conditioned upon completion of appropriate
 Benefits             for former TSL employees hired by TSL                 elections. Purchaser will coordinate and manage
                      (DE) Corp. via COBRA paid by TSL (DE)                 completion of elections by employees and shall pay
                      Corp.                                                 premiums for these benefits in accordance with the
                                                                            Agreement. Purchaser expects to have a replacement plan
                                                                            in place within one month.
- -----------------------------------------------------------------------------------------------------------------------------------
Payroll Services      Continue to pay former TSL personnel     2 payroll    PRGUSA will consider in good faith the extension of
                      and process payroll taxes                cycles       payroll services for one additional payroll cycle under
                                                                            extraordinary circumstances if requested by Purchaser.
                                                                            PRGUSA will not deduct benefits against employee
                                                                            compensation. Direct deposits will cease and checks will
                                                                            be sent to employees. Purchaser will advance to PRGUSA
                                                                            the amount necessary for all payrolls in accordance with
                                                                            the Agreement.
- -----------------------------------------------------------------------------------------------------------------------------------
401K Plan             Continue to maintain 401K plan until a   Not more     Purchaser will have in place its 401K plan within three
                      new plan can be established.             than 3       months to receive plan-to-plan transfer or 401K
                                                               months       accounts under $5,000 may get cashed out. The plan-to-
                                                                            plan transfer will be made after PRGUSA makes the
                                                                            employer matching contribution with respect to the plan
                                                                            year ending December 31, 2003, which will be made by
                                                                            PRGUSA on or before March 15, 2004.
- -----------------------------------------------------------------------------------------------------------------------------------
PRG Facilities        Desk, workspace, phone, internet         2 months
  in Atlanta          access for TSL FET employees.
- -----------------------------------------------------------------------------------------------------------------------------------
E-mail forwarding     Legacy e-mail addresses route through    3 months
                      PRG's e-mail server
- -----------------------------------------------------------------------------------------------------------------------------------






- -------------------------------------------------------------------------------
                 Fees for PRG Services - Payable to PRG monthly
- -------------------------------------------------------------------------------
                                                   
           Month                                       Amount
- -------------------------------------------------------------------------------
          January                                      $5,000
- -------------------------------------------------------------------------------
         February                                      $3,000
- -------------------------------------------------------------------------------
           March                                       $1,000
- -------------------------------------------------------------------------------


Notes:

Fees are for PRG services only. All out-of-pocket direct costs including rents,
payroll expenses (including ADP processing fees and the COBRA 2% administrative
fee) will be passed through to TSL (DE) Corp. without markup and will be paid
directly by TSL (DE) Corp.

Monthly fees will be paid January 31st, February 29th, and March 31st


                                                                  EXHIBIT 1.3(i)

                             COMMERCIAL SUBCONTRACT

                                   SUBCONTRACT

         THIS SUBCONTRACT (this "Subcontract") is made as of the ____ day of
January, 2004 between PRG-SCHULTZ USA, INC., a Georgia corporation ("PRG"), and
TSL (DE) Corp., a Delaware corporation ("Subcontractor").

                                    RECITALS

         A.       In accordance with ____________ (the "Client Contract"), PRG
has contracted to provide certain services to the party (the "Client")
identified in the Client Contract. As used herein, the term "Client Contract"
shall mean and include (a) the Client Contract identified in this Recital
together with all task orders, modifications, amendments, extensions and waivers
issued under the Client Contract prior to the date hereof and (b) all future
task orders, modifications, amendments, extensions and waivers of the Client
Contract made with Subcontractor's written approval. A complete copy of the
Client Contract as it exists on the date of this Subcontract is attached hereto
at Exhibit A for reference.

         B.       The following services ("Services") under the Client Contract
have historically been performed by PRG's TSL division ("Division"):

                  (1)      Telecommunications and information technology cost
                           control services;

                  (2)      Telecommunications consulting services and
                           professional services for telecommunications-related
                           services;

                  (3)      Telecommunications billing verification services and
                           optimization;

                  (4)      Call accounting and IT/telecommunications chargeback
                           services;

                  (5)      Telecommunications software and software services
                           (e.g., ASP Service Provider; Internet Hosting
                           Services, Development, etc.);

                  (6)      Managed telecommunications invoice processing
                           services;

                  (7)      Other telecommunications-related managed services
                           (e.g., moves, adds and changes and billing help
                           desk); and

                  (8)      Professional technical temporary staffing for
                           telecommunications-related services.

         C.       In accordance with that certain Asset Purchase Agreement (the
"Purchase Agreement") dated as of ______________, 2004, between PRG and
Subcontractor, PRG has sold to Subcontractor substantially all of the assets of
PRG used in the Division.



         D.       To provide for uninterrupted services to the Client under the
Client Contract, PRG and Subcontractor desire to enter into this Subcontract for
the performance of that portion of the work under the Client Contract which has
historically been performed by the Division.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, PRG and the Subcontractor agree as follows:

         1.       Scope of Services. Subcontractor agrees to provide the
Services to the extent that they were historically provided by the Division
under the Client Contract and all additional services related to
telecommunications recovery auditing of Client payments that may be added to the
Client Contract in accordance with Section 3 hereof (the "Subcontractor
Services"). "Subcontractor Services" will include exercising the rights and
performing obligations under the Client Contract related to the Subcontractor
Services.

         2.       Representations and Warranties. Except for the notices and
consents set forth on Exhibit B attached hereto, PRG represents and warrants to
Subcontractor that nothing contained herein shall (a) conflict in any way with,
(b) require any consent, authorization or approval under or (c) result in any
breach of, any agreement to which PRG is a party or of which PRG has knowledge,
relating to the Client Contract.

         3.       Contract Administration. Except as expressly set forth in this
Subcontract, as between PRG and Subcontractor, PRG shall be solely responsible
for issuing invoices (with copies of such invoices sent concurrently to
Subcontractor upon their issuance to Client) on behalf of Subcontractor in the
amount provided to PRG from Subcontractor in connection with the Client Contract
and collecting payments included in such invoices from the Client. During the
term of this Subcontract, Subcontractor will not seek to effect its own billings
or collect payments in connection with the Client Contract without the prior
written approval of PRG except as expressly provided in this Subcontract. PRG
shall not approve any amendment, modification, extension or waiver of the Client
Contract which affects the Subcontractor Services without the prior approval of
the Subcontractor. PRG shall keep Subcontractor apprised of any material
developments concerning the Client Contract which affect the Subcontractor
Services and shall promptly provide to Subcontractor copies of any written
documentation affecting the Subcontractor or the Subcontractor Services,
including, without limitation, any amendment or modification of the Client
Contract which affects the Subcontractor Services. PRG and Subcontractor shall
cooperate with each other in good faith so as to facilitate the performance of
their respective portion of the services to be provided under the Client
Contract.

         4.       Standard of Care. Subcontractor acknowledges that it has
received a copy of the Client Contract and is familiar with the terms and
provisions of the Client Contract. To the extent required by the terms and
provisions of the Client Contract, Subcontractor shall provide a comparable
level of service and exercise comparable care in the performance of the
Subcontractor Services as the TSL division of PRG exercised with respect to the
Subcontractor Services prior to the date of this Subcontract. PRG agrees to
comply with the terms and provisions of the Client Contract. Subcontractor
agrees to comply with the terms and provisions of the Client Contract to the
extent that it relates to the provision of Subcontractor Services.


                                       2


         5.       Term and Termination.

                  (a)      Term. This Subcontract shall continue for so long as
the Client Contract continues with respect to the Subcontractor Services,
including any extensions of the Client Contract which may come into effect at
the option of the Client. It being understood that PRG shall neither extend nor
amend the Client Contract without the prior written consent of Subcontractor as
such extension or amendment relates to the Subcontractor Services. PRG and the
Subcontractor may agree in the exercise of their respective sole discretion to
extend the term of this Subcontract for any other extension of the duration of
the Subcontractor Services under the Client Contract. The parties currently
intend that Subcontractor will seek to obtain a separate contract to provide
Subcontractor Services to Client upon completion of the Subcontractor Services
under the Client Contract, provided that during the term of the Subcontract,
Subcontractor will take no action which interferes with the Client Contract
including, without limitation, seeking to reduce the scope of services under the
Client Contract.

                  (b)      Termination for Convenience. PRG reserves the right
to terminate this Subcontract for its convenience if the Client has terminated
the Client Contract (other than a termination of the Client Contract with the
consent or waiver of PRG) insofar as it relates to the Subcontractor Services.
In the event of such termination, (i) the Subcontractor shall immediately stop
all work hereunder and shall immediately cause any and all of its subcontractors
to cease work and (ii) to the extent the Client Contract allows for damages or
costs to be received in connection with such termination, PRG will use its
commercially reasonable efforts to collect such amounts from the Client on
Subcontractor's behalf and promptly remit the portion of such amounts relating
to the Subcontractor Services, less the Management Fee, of any amounts received
by PRG to Subcontractor.

                  (c)      PRG Termination for Cause. PRG may terminate this
Subcontract for cause in the event of any material breach by the Subcontractor
of the terms and conditions of this Subcontract and such breach has not been
cured within thirty (30) days of the date Subcontractor received written notice
from PRG describing the breach with reasonable specificity.

                  (d)      Subcontractor Termination for Cause. Subcontractor
may terminate this Subcontract for cause in the event of the occurrence of
either of the following:

                           (i)      if PRG fails to pay Subcontractor in full
within five (5) days of the date payments due to Subcontractor are received by
PRG pursuant to Section 7 hereof and such failure has not been cured within five
(5) days of the date PRG received written notice from Subcontractor describing
the breach with reasonable specificity; or

                           (ii)     if (A) PRG makes an assignment for the
benefit of creditors, (B) PRG files a petition of bankruptcy, (C) a petition is
filed against PRG under any bankruptcy, reorganization or insolvency law and
such involuntary petition is not dismissed within sixty (60) days after filing,
or (D) all or substantially all of PRG's property is levied upon or sold in a
judicial proceeding.

                  (e)      Continuing Obligations. Except for the continuing
provision of the Subcontractor Services by Subcontractor following termination,
no termination of this


                                       3


Subcontract shall release either party from its other obligations arising under
or in connection with this Subcontract.

         6.       Restrictive Covenants. PRG agrees that, during the term of
this Subcontract and for a period of one year after expiration or termination of
this Subcontract, PRG will neither directly nor indirectly provide to the Client
any Subcontractor Services nor refer a third party to the Client to provide any
Subcontractor Services unless this Subcontract shall have been validly
terminated by PRG under Section 4(c) of this Subcontract. In the event of any
valid termination of this Subcontract under Section 4(c) of this Subcontract,
PRG may either provide Subcontractor Services to the Client directly or
indirectly through the services of a third party or refer a third party to
Client to provide Subcontractor Services for the duration of the term of the
Client Contract. Notwithstanding the first sentence of this Section, in
connection with accounts payable audits performed by PRG or its affiliates which
are not limited to services related to telecommunications bills, but rather
audits of accounts payable in general, PRG and its affiliates may conduct
incidental telecommunications bill auditing on a post-payment basis only, which
is limited to auditing for duplicate payments, data entry mistakes, and other
disbursement errors including missed discounts, and other services which have
been historically provided by, and are customary in connection with, PRG's
accounts payable audit business.

         7.       Fees.

                  (a)      PRG shall collect all fees and other charges
(collectively, the "Client Payments") payable by the Client under the Client
Contract for the Subcontractor Services performed from and after the date of
this Subcontract. In the event that any Client Payment remains unpaid by the
Client longer than ten (10) days after the invoice due date, then PRG shall
submit a written inquiry to the Client regarding such failure to make the Client
Payment ("First Follow-up Inquiry"). In the event that Client Payment remains
still unpaid after an additional twenty (20) days, then PRG and Subcontractor
shall cooperate jointly to follow up with Client to obtain payment ("Second
Follow-up Inquiry"). In the event the any Client Payment remains unpaid by the
Client longer than the sixty (60) day period following the Second Follow-up
Inquiry, Subcontractor shall have the right to pursue such Client Payment
directly from the Client. PRG shall have no obligation to bring suit, terminate
services or take any other action to collect Client Payments other than those
actions which are normal, customary and commercially reasonable under the
circumstances.

                  (b)      PRG shall promptly (and in any event within five (5)
days after receipt of any Client Payment) report to Subcontractor the Client
Payment and remit to Subcontractor the Client Payment less 5% of such Client
Payment (the "Management Fee") which shall be retained by PRG as its fees for
administering the Client Contract under this Subcontract. Except for the
obligation of PRG to remit to Subcontractor the Client Payment less the
Management Fee (the "Subcontractor Amount") out of sums actually collected from
the Client for Subcontractor Services, PRG shall have no liability or obligation
to make payments to Subcontractor for Subcontractor Services.

                  (c)      In the event that an invoice ("Bundled Invoice")
delivered to the Client includes both a Client Payment and other amounts due and
owing PRG and the payment received by PRG ("Partial Payment") with respect to
such invoice is for less than the full amount of such invoice, (i) if the Client
provided written notice to PRG setting forth which services caused the


                                       4


reduction in the amount due pursuant to the Bundled Invoice, PRG shall pay
Subcontractor the Client Payment less any disputed amount specifically and
solely relating to the Subcontractor Services provided in such notice and (ii)
if the Client does not provide such a notice, PRG shall pay Subcontractor (x)
the Client Payment multiplied by (y) the quotient of (A) the Partial Payment
divided by (B) full amount set forth in the Bundled Invoice.

                  (d)      Subcontractor Amounts not received by Subcontractor
within five (5) business days of the due date provided in Section 7(b) hereof
shall be subject to a late charge equal to the greater of (i) $100.00 or (ii) an
amount calculated at a rate of 25% per annum on a daily basis on the unpaid
Subcontractor Amount for the number of days elapsed from the fifth day after the
due date until paid.

         8.       Indemnification.

                  (a)      PRG shall indemnify the Subcontractor from and
against any damage, claim, loss, charge, action, suit, proceeding, costs and
expenses (including, without limitation, reasonable attorneys' fees) incurred by
the Subcontractor by reason of any breach by PRG of its duties under this
Subcontract.

                  (b)      Subcontractor shall indemnify PRG from and against
any damage, claim, loss, charge, action, suit, proceeding, costs and expenses
(including, without limitation, reasonable attorneys' fees) arising out of or
related to any damages payable to the Client with respect to the Subcontractor
Services and any out-of-pocket costs related thereto that are incurred by PRG by
reason of any breach by Subcontractor of its duties under this Subcontract with
respect to the Subcontractor Services.

                  (c)      The indemnified party shall promptly notify the
indemnifying party of any matter concerning which the indemnified party may seek
indemnification hereunder, provided that the failure to notify the indemnifying
party shall not release the indemnifying party from its obligations hereunder
except to the extent that the failure to so notify has materially prejudiced the
indemnifying party in its ability to resolve and defend the indemnification
claim. To the extent that any matter subject to indemnification involves a third
party claim, the indemnifying party shall have the right to appoint legal
counsel and control the defense and settlement of any such claim provided any
such settlement includes a complete release of the indemnified party and does
not adversely affect the indemnified party. In the event that the indemnified
party controls the defense and settlement of any such claim, the indemnified
party shall not settle such claim without the written consent of the
indemnifying party (which consent shall not be unreasonably withheld or
delayed). Each of the indemnified party and indemnifying party shall cooperate
with the other in connection with any indemnification claims.

         9.       Limitation of Liability. In no event shall either party have
any liability to the other party for any special, indirect, incidental or
consequential damages.

         10.      Records. Each of the parties shall create and maintain until
the fifth anniversary of the termination of this Subcontract (or such longer
period as may be reasonably required by a party in connection with the purposes
set forth below provided that prior to the fifth anniversary of the termination
of this Subcontract such party has requested in writing that the other party
maintain such records beyond such fifth anniversary) full and accurate books in
connection with


                                       5


the provision of the services under this Subcontract, and all other records
relevant to this Subcontract, and upon reasonable notice from the other party
shall make available for inspection and copy by such other party's agents such
records during reasonable business hours to the extent such records are
necessary in the performance of such party under this Subcontract or either
party reasonably requires the foregoing for purposes of any tax audit,
accounting, litigation, governmental inquiry or investigation or governmental
enforcement action or for any other purpose arising under this Subcontract or
the Client Contract, including, without limitation, enforcement of this
Subcontract or the Client Contract.

         11.      Severability. If any provision of this Subcontract is
prohibited by the laws of any jurisdiction, as those laws apply to this
Subcontract, that provision shall be ineffective to the extent of such
prohibition and/or shall be modified to conform with such laws, without
invalidating the remaining provisions hereto.

         12.      Modification. This Subcontract may not be changed or modified
except in writing specifically referring to this Subcontract and signed by each
of the parties hereto.

         13.      Assignment. Except as otherwise prohibited or limited by the
Client Contract, this Subcontract may not be assigned without the prior written
consent of the other party hereto, which consent shall not be unreasonably
withheld; provided, however, that, except as otherwise prohibited or limited by
the Client Contract, either party may, without the consent of the other party,
but with notice to the other party, assign all or a part of its rights and
obligations under this Subcontract to any of its Affiliates or any successor to
all or substantially all of its assets or business and may collaterally assign
this Subcontract to any of its lenders. As used herein, an "Affiliate" of a
party means any party controlling, controlled by or under common control with
such party. Any attempted assignment or delegation not in compliance with the
forgoing shall be null and void and of no effect.

         14.      Notices. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a recognized overnight delivery
service which guarantees next-day delivery ("Overnight Delivery") or mailed by
certified mail, return receipt requested, postage prepaid and addressed to the
intended recipient, as set forth below:

        If to Subcontractor:    TSL (DE) Corp.
                                500 Lanidex Plaza
                                Parsippany, NJ 07054
                                Attention: Robert Svec
                                Telefax: (973) 952-5515

        If to PRG:              PRG-Schultz USA, Inc.
                                600 Galleria Parkway, Suite 100
                                Atlanta, GA  30339
                                Attention:  Clinton McKellar, Jr.
                                Senior Vice President & General Counsel
                                Telefax:  (770) 779-3034


                                       6


or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first Business Day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by U.S.
Mail, will be deemed received three (3) Business Days immediately following the
date sent.

         15.      Entire Agreement; Binding Effect; No Third Party
Beneficiaries. This Subcontract, together with the Exhibits attached hereto,
constitutes the entire agreement and supersedes any and all other prior
agreements, representations and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof. All such
other prior agreements, representations and undertakings are hereby terminated
and shall be of no force or effect. This Subcontract shall be binding upon the
parties hereto and their respective successors and permitted assigns, if any,
and except as provided herein, shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns, if any. Except as
otherwise expressly provided herein, this Subcontract is not intended to confer
upon any person other than PRG and Subcontractor any rights or remedies
hereunder.

         16.      Governing Law. This Subcontract shall be governed by and
construed under the laws of the State of Georgia, without reference to
principles of conflicts of law.

         17.      Arbitration. All disputes, controversies or claims arising out
of or relating to this Subcontract shall be resolved by agreement among the
parties or, if notice is given by any of the parties as provided below and the
matter is not otherwise resolved, by resort to arbitration in accordance with
the arbitration provisions contained in the Purchase Agreement. Pending
resolution of any such dispute, controversy or claim by arbitration or
otherwise, the parties shall proceed diligently with performance.

         18.      No Agency or Partnership. Nothing in this Subcontract will
create, or will be deemed to create, a partnership or the relationship of
principal and agent or of employer and employee between the parties.

         19.      Counterparts. This Subcontract may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         20.      Service Coordinators. PRG and Subcontractor will each
designate a representative to act as the primary contact person with respect to
the accomplishment of the services and transactions contemplated by this
Subcontract (the "Service Coordinators"). The initial Service Coordinators shall
be Jeff Meaux of PRG and Robert J. Effenberger for Subcontractor.


                                       7



         IN WITNESS WHEREOF, the parties have executed this Subcontract as of
the date herein first above written.

                                      PRG:

                                      PRG-SCHULTZ USA, INC.


                                      By:
                                         --------------------------------------
                                      Name:
                                           ------------------------------------
                                      Its:
                                          -------------------------------------


                                      SUBCONTRACTOR:

                                      TSL (DE) CORP.


                                      By:
                                         --------------------------------------
                                      Name:
                                           ------------------------------------
                                      Its:
                                          -------------------------------------







                                    EXHIBIT A

                                 Client Contract









                                    EXHIBIT B

                              Notices and Consents





                                 EXHIBIT 1.3(j)

                  NONCOMPETITION AND NONSOLICITATION AGREEMENT

         This NONCOMPETITION AND NONSOLICITATION AGREEMENT ("Agreement"),
entered into as of the 16th day of January, 2004 (the "Effective Date"), is made
by and among TSL (DE) CORP., a Delaware corporation ("Purchaser"), PRG-SCHULTZ
USA, INC., a Georgia corporation ("PRGUSA") and PRG-SCHULTZ INTERNATIONAL, INC.,
a Georgia corporation ("PRGX").

                                   WITNESSETH:

         WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
even date herewith, by and between PRGUSA and Purchaser (the "Purchase
Agreement"), Purchaser acquired substantially all of the assets of PRGUSA with
respect to the Business;

         WHEREAS, PRGX is the sole shareholder of PRGUSA; and

         WHEREAS, in order to induce Purchaser to enter into and consummate the
Purchase Agreement, which PRGUSA hereby acknowledges will benefit it, PRGUSA and
PRGX have agreed to accept certain restrictions as set forth herein.

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

         1.       DEFINITIONS. The following definitions shall apply to this
Agreement:

                  (a)      "Affiliate" of a party shall mean (i) an entity
controlling, controlled by, or under common control with such party, and (ii) to
the extent involved in day-to-day management of a party, entities which control,
are controlled by, or under common control with any entity described in the
foregoing clause (i).

                  (b)      "Business" shall mean the following services as such
services have been conducted by TSL (as defined in the Purchase Agreement) prior
to the date hereof:

                           (i)      Telecommunications and information
                                    technology cost control services;

                           (ii)     Telecommunications consulting services and
                                    professional services for
                                    telecommunications-related services;

                           (iii)    Telecommunications billing verification
                                    services and optimization;

                           (iv)     Call accounting and IT/telecommunications
                                    chargeback services;

                           (v)      Telecommunications software and software
                                    services (e.g., ASP Service Provider;
                                    Internet Hosting Services, Development,
                                    etc.);

                           (vi)     Managed telecommunications invoice
                                    processing services;

                           (vii)    Other telecommunications-related managed
                                    services (e.g., moves, adds and changes and
                                    billing help desk); and





                           (viii)   Professional technical temporary staffing
                                    for telecommunications-related services.

                  (c)      "Competing Business" means any Person, concern, or
entity that is engaged in or conducts or competes in any portion of the
Business, excluding the following:

                           (i)      in connection with accounts payable audits
                                    performed by PRGUSA, PRGX or either of their
                                    Affiliates which are not limited to services
                                    relating to telecommunications bills, but
                                    rather audits of any client's accounts
                                    payable in general, PRGUSA, PRGX and their
                                    Affiliates may conduct incidental
                                    telecommunications bill auditing on a post
                                    payment basis only which is limited to
                                    auditing for duplicate payments, data entry
                                    mistakes, and other disbursement errors
                                    including missed discounts, and other
                                    services which have been historically
                                    provided by, and are customary in connection
                                    with PRGUSA's accounts payable audit
                                    business;

                           (ii)     any business acquired by PRGUSA, PRGX or
                                    either of their Affiliates (an "Acquired
                                    Business") which would otherwise constitute
                                    a Competing Business if the competing
                                    portion of the Acquired Business is not more
                                    than an Incidental Portion of the Acquired
                                    Business' revenues, provided that this
                                    exclusion from the definition of a Competing
                                    Business shall remain in effect only for
                                    twelve months from the date of completion of
                                    the acquisition of the Acquired Business;
                                    and

                           (iii)    perform the duties and exercise the rights
                                    of PRGUSA explicitly expressed or authorized
                                    in the Subcontractor Agreement (as defined
                                    in the Purchase Agreement), as it may be
                                    modified from time to time.

                  (d)      "Confidential Information" means information relating
to the Business which is confidential or proprietary. Confidential Information
may include (i) the identity of customers and prospects, their specific
requirements, and the names, addresses and telephone numbers of individual
contacts at customers and prospects; (ii) prices, renewal dates and other
detailed terms of customer and supplier contracts and proposals; (iii) pricing
policies, marketing and sales strategies, methods of delivering products and
services, and product and service development projects and strategies; (iv)
source code, object code, formats, user manuals, technical manuals and other
documentation for software products; (vi) employment and payroll records; (vii)
forecasts, budgets and financial information; and (viii) expansion plans,
management policies, information about possible acquisitions or divestitures and
other business and acquisition strategies and policies. Confidential Information
shall not include information which (A) is public or otherwise becomes part of
the public domain through no fault of PRGUSA or PRGX, (B) is received by PRGUSA
or PRGX from a third person who had a lawful right to disclose such information,
(C) is required to be disclosed by any governmental body having jurisdiction or
in connection with the enforcement of any legal rights, or (D) primarily relates
to any of the businesses of PRGUSA or PRGX other than the Business.

                  (e)      "Incidental Portion" means that, with respect to any
Acquired Business, no more than 10% of the consolidated revenues of such
Acquired Business and no more than $5,000,000 in annual revenues for its most
recently completed fiscal year prior to the acquisition were derived from a
Competing Business.


                                       2


                  (f)      "Person" means and includes any individual,
partnership, association, corporation, limited liability company, trust,
unincorporated organization, or any other business entity or enterprise.

                  (g)      "Protected Employee" means any current or former
employee of the Business or Purchaser during the period in which the covenants
set forth in Section 2(c) are in effect, but excluding persons who have not been
employed by the Purchaser or the Business during the twelve month period
preceding the date on which a determination is made regarding whether a person
is a Protected Employee.

                  (h)      "Territory" means the continental United States,
which the parties acknowledge to be the geographic area in which PRGUSA conducts
the Business on the date hereof.

         2.       COVENANTS OF PRGUSA AND PRGX. The parties hereto acknowledge
that the Business is of a limited and unusual nature and the scope of the
Business is sufficiently broad so that these restrictions shall apply throughout
the Territory, and PRGUSA and PRGX agree that the Territory is reasonable under
the circumstances. PRGUSA acknowledges that Purchaser is purchasing the good
will of the Business and the covenants contained in this Agreement are essential
to the protection of Purchaser's investment in the Purchased Assets and the
Business and that Purchaser would not purchase the Purchased Assets but for such
covenants. Therefore, PRGUSA and PRGX agree to the following covenants and
agreements:

                  (a)      Neither PRGUSA, PRGX nor any of their respective
Affiliates shall, for a period of three (3) years from and after the Effective
Date, directly or indirectly, within the Territory (i) provide or perform
services for the benefit of, own, manage, operate, control, join or participate
in, a Competing Business, either on its own behalf or on behalf of any other
Person, whether as a shareholder, owner, partner, proprietor, agent, consultant,
independent contractor, lender or otherwise, or (ii) have a financial interest
in or be in any way connected with or affiliated with any Competing Business,
whether as a shareholder, owner, partner, proprietor, agent, consultant,
independent contractor, lender or operator or otherwise. Nothing contained
herein shall preclude PRGUSA or PRGX from having a passive investment in less
than two percent (2%) of the outstanding capital stock of any publicly traded
company. The foregoing notwithstanding, this Section 2(a) shall not apply to the
following or their respective Affiliates (collectively, a "Successor Business"):
(i) PRGUSA or the successor to PRGUSA resulting from a merger, consolidation or
similar business combination transaction (a "Business Combination") if (A)
PRGUSA is a party to a Business Combination, (B) another party (other than
PRGUSA or its Affiliates) to such Business Combination was engaged in a
Competing Business prior to such transaction, and (C) immediately after such
Business Combination, PRGX no longer directly or indirectly owns 50% or more of
the outstanding shares of voting stock of PRGUSA measured by voting power, and
(ii) PRGX or the successor to PRGX resulting from a Business Combination if (x)
PRGX is a party to a Business Combination and (y) another party (other than PRGX
or its Affiliates) to such Business Combination was engaged in a Competing
Business prior to such transaction.

                  (b)      For a period of three (3) years from and after the
Effective Date, each of PRGUSA and PRGX covenants and agrees that it will not,
and each will cause their respective Affiliates not to, except with the prior
written consent of Purchaser, directly or indirectly, contact, solicit or call
upon any person, firm, corporation or entity to which services of the Business
are being provided or have been provided within the twelve (12) month period
prior to the date hereof for purposes of carrying on a Competing Business. The
foregoing notwithstanding, this Section 2(b) shall not apply to a Successor
Business.

                  (c)      For a period of one (1) year from and after the
Effective Date, each of PRGUSA and PRGX covenants and agrees that it will not,
and will cause their respective Affiliates not to, solicit


                                       3


(except through general solicitations and advertising not directed to Protected
Employees), employ, retain as a consultant, attempt to entice away or hire from
Purchaser or its Affiliates or the Business, any Protected Employee.

                  (d)      From and after the Closing Date, except with
Purchaser's prior written consent, each of PRGUSA and PRGX shall not, directly
or indirectly, in any capacity communicate, publish or otherwise disclose, or
use, any Confidential Information. The foregoing notwithstanding, PRGUSA and
PRGX may use Confidential Information to the extent reasonably necessary to
perform its obligations under Sections 3.6 and 3.9 of the Purchase Agreement or
Sections 3 and 7 of the Subcontractor Agreements (as defined in the Purchase
Agreement).

         3.       TOLLING. The length of time for which the covenants contained
in Sections 2(a) and 2(b) of this Agreement shall be enforced and shall not
include (a) any period of time during which any material violation of such
covenants continues or (b) any period of time during which Purchaser has
commenced and there remains pending litigation which seeks to enforce such
covenants and during which any material violation of such covenants is
continuing.

         4.       SEVERABILITY. In the event that one or more of the words,
phrases, sentences, clauses, sections, subdivisions or subparagraphs contained
herein shall be held invalid, this Agreement shall be construed as if such
invalid portion had not been inserted, and if such invalidity shall be caused by
the length of any period of time, the number or location of clients, the size of
any area, or the scope of the Business set forth in any part hereof, such period
of time, number or location of clients, area, or scope, or any combination
thereof, shall be considered to be reduced to a period, number, location, area
or scope which would cure such invalidity and which will be effective, binding
and enforceable against PRGUSA and PRGX.

         5.       REMEDIES. Each of PRGUSA and PRGX agree that if it breaches
any provision of this Agreement, the damage to Purchaser would be difficult to
ascertain and that irreparable harm would be caused to Purchaser, and money
damages alone would not afford Purchaser an adequate remedy for any such breach.
Therefore, if PRGUSA or PRGX is in breach of this Agreement, the parties hereto
agree that Purchaser is entitled to specific performance, injunctive, and other
equitable relief to prevent or restrain a breach of this Agreement or otherwise
to specifically enforce the provisions of Section 2 of this Agreement. The
rights of Purchaser to enforce the covenants in this Agreement are in addition
to, and not in lieu of, any and all rights Purchaser may have at law and in
equity to protect its business interests.

         6.       RIGHTS ARE CUMULATIVE AND EFFECT OF WAIVER. The rights and
remedies of the parties to this Agreement are cumulative and not alternative.
Neither the failure nor any delay by any party in exercising any right, power or
privilege under this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement.

         7.       ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Purchase
Agreement constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersede all prior written and oral
agreements and understandings between Purchaser, on the one hand, and PRGUSA and
PRGX, on the other, with respect to the subject matter of this Agreement. No


                                       4


amendment or modification of this Agreement shall be valid or binding upon the
parties hereto unless made in writing and signed by a duly authorized officer of
each party, unless made in writing and signed by such each party, as
appropriate.

         8.       ASSIGNMENT. This Agreement may not be assigned without the
prior written consent of the other party hereto; provided, that Purchaser
without the consent of PRGUSA and PRGX may assign its rights under the Agreement
to any of its Affiliates and may collaterally assign its rights under the
Agreement to any lender. The terms and conditions hereof shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
personal representatives, successors and permitted assigns.

         9.       NOTICES. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a recognized overnight delivery
service which guarantees next-day delivery ("Overnight Delivery") or mailed by
certified mail, return receipt requested, postage prepaid and addressed to the
intended recipient as set forth below:

         If to Purchaser:            TSL (DE) Corp.
                                     500 Lanidex Plaza
                                     Parsippany, New Jersey 07054
                                     Attention: Robert Svec
                                     Telefax:   (973) 952-5515

         With a copy to:             Dechert LLP
                                     4000 Bell Atlantic Tower
                                     1717 Arch Street
                                     Philadelphia, Pennsylvania 19103
                                     Attention: Carmen J. Romano, Esq.
                                     Telefax:   (215) 655-2971

         If to PRGUSA or PRGX:       PRG-SCHULTZ USA, Inc.
                                     600 Galleria Parkway, Suite 100
                                     Atlanta, Georgia 30339
                                     Attention: Clinton McKellar, Jr.
                                     Senior Vice President and General Counsel
                                     Telefax: (770) 779-3034

         with a copy to:             Arnall Golden Gregory, LLP
                                     2800 One Atlantic Center
                                     1201 West Peachtree Street
                                     Atlanta, Georgia  30309-3450
                                     Attention: Jonathan Golden, Esq.
                                     Telefax:   (404) 873-8701

or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by
certified U.S. Mail, will be deemed received three (3) business days immediately
following the date sent. For purposes of this Agreement, a "business day" is a
day on which U.S. national banks are open for business and shall not include a
Saturday or Sunday or legal holiday.


                                       5


Notwithstanding anything to the contrary in this Agreement, no action shall be
required of the parties hereto except on a business day and in the event an
action is required on a day which is not a business day, such action shall be
required to be performed on the next succeeding day which is a business day.

         10.      COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         11.      GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Georgia, exclusive of the conflict of
laws provisions thereof.

         12.      CONSTRUCTION. All personal pronouns in this Agreement, whether
used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular, as the circumstances require. Unless otherwise expressly provided,
the word "including" does not limit the preceding words or terms.


                                       6


         IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed and delivered this Agreement as of the day and year first above
written.

                                   PRGUSA:

                                   PRG-SCHULTZ USA, INC.

                                   By: /s/ Donald E. Ellis, Jr.
                                       -----------------------------------------
                                   Name: Donald E. Ellis, Jr.
                                         ---------------------------------------
                                   Its:  Executive Vice President-Finance, Chief
                                         Financial Officer and Treasurer


                                   PRGX:

                                   PRG-SCHULTZ INTERNATIONAL, INC.

                                   By: /s/ Donald E. Ellis, Jr.
                                       -----------------------------------------
                                   Name: Donald E. Ellis, Jr.
                                         ---------------------------------------
                                   Its:  Executive Vice President-Finance, Chief
                                         Financial Officer and Treasurer


                                   PURCHASER:

                                   TSL (DE) CORP.

                                   By: /s/ Ethan D. Ayer
                                       -----------------------------------------
                                   Name: Ethan D. Ayer
                                         ---------------------------------------
                                   Its:  Vice President


                                       7




         IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed and delivered this Agreement as of the day and year first above
written.

                                     PRGUSA:

                                     PRG-SCHULTZ USA, INC.

                                     By: /s/ Donald E. Ellis, Jr.
                                        ---------------------------------------
                                     Name:   Donald E. Ellis, Jr.
                                           ------------------------------------
                                     Its:    Executive Vice President-Finance,
                                             Chief Financial Officer and
                                             Treasurer

                                     PRGX:

                                     PRG-SCHULTZ INTERNATIONAL, INC.

                                     By: /s/ Donald E. Ellis, Jr.
                                        ---------------------------------------
                                     Name:   Donald E. Ellis, Jr.
                                          -------------------------------------
                                     Its:    Executive Vice President-Finance,
                                             Chief Financial Officer and
                                             Treasurer

                                     PURCHASER:

                                     TSL (DE) CORP.

                                     By: /s/ Ethan D. Ayer
                                        ---------------------------------------
                                     Name:   Ethan D. Ayer
                                           ------------------------------------
                                     Its:    Vice President


                                       7

EX-10.1

                                                                    EXHIBIT 10.1

March 5, 2004

James Moylan, Jr.
2804 Andrews Drive
Atlanta, GA 30305

Dear Jim:

I am pleased to extend the terms and conditions of your full time employment
with PRG-Schultz USA, Inc. ("PRGS") as Executive Vice President, Chief Financial
Officer, reporting to John Cook, Chairman and CEO, conditioned upon your signing
this offer letter. We are very excited about your joining our organization and
the opportunities for our mutual success.

The following confirms the terms and conditions of your employment:

1.       Base Salary. Base salary of $375,000.00 per annum, paid $14,423.07
         bi-weekly. Your performance will be reviewed annually, on or near March
         1.

2.       Performance Bonus. You will be eligible for an incentive bonus
         ("Incentive Bonus") which will include payout potentials of 40% of your
         base pay for achievement of annual target performance goals and payout
         potentials of 80% of your base pay for achievement of annual maximum
         performance goals, in accordance with PRGS's incentive bonus plan.

3.       Options. You will be granted options to purchase 500,000 shares of
         Common Stock in PRG Schultz International, Inc. ("PRGX"). This grant
         will be made pursuant to the terms of your option agreement (ratably
         vesting over four years on each of four anniversaries of the date of
         issue).

         In the event of a change of control, any unvested stock options will
         vest immediately.

         For purposes of this Agreement, a "Change of Control" shall have
         occurred if:

                  (A) a majority of the directors of PRGX shall be persons other
                  than persons:


                                                                        04/16/04
                                                                     PRG Schultz

                           (1) for whose election proxies shall have been
                           solicited by the board; or

                           (2) who are then serving as directors appointed by
                           the board to fill vacancies on the board caused by
                           death or resignation, but not by removal, or to fill
                           newly-created directorships; or

                  (B) a majority of the outstanding voting power of PRGX shall
                  have been acquired or beneficially owned by any person (other
                  than PRGX or a subsidiary of PRGX) or any two or more persons
                  acting as a partnership, limited partnership, syndicate or
                  other group, entity or association acting in concert for the
                  purpose of voting, acquiring, holding or disposing of voting
                  stock of PRGX; or

                  (C) there shall have occurred:

                           (1) a merger or consolidation of PRGS with or into
                           another corporation, other than (1) a merger or
                           consolidation with a subsidiary of PRGX or (2) a
                           merger or consolidation in which the holders of
                           voting stock of PRGX immediately prior to the merger
                           as a class hold immediately after the merger at least
                           a majority of all outstanding voting power of the
                           surviving or resulting corporation or its parent; or

                           (2) a statutory exchange of shares of one or more
                           classes or series of outstanding voting stock of PRGX
                           for cash, securities or other property, other than an
                           exchange in which the holders of voting stock of PRGX
                           immediately prior to the exchange as a class hold
                           immediately after the exchange at least a majority of
                           all outstanding voting power of the entity with which
                           the PRGX stock is being exchanged; or

                           (3) the sale or other disposition of all or
                           substantially all of the assets of PRGX, in one
                           transaction or a series of transactions, other than a
                           sale or disposition in which the holders of voting
                           stock of PRGX immediately prior to the sale or
                           disposition as a class hold immediately after the
                           exchange at least a majority of all outstanding
                           voting power of the entity to which the assets of
                           PRGX are being sold; or

                           (4) the liquidation or dissolution of PRGX."

4.       Car Allowance. You will receive an annual car allowance in the amount
         of $20,000.00 paid $1,666.67 monthly.

                                       2


                                                                        04/16/04
                                                                     PRG Schultz

5.       Employee Benefits. You will be eligible for participation in PRGS'
         Personal Benefits Plan, which offers a full suite of benefit services.
         You will receive your benefits package at your home address prior to
         your eligibility date. Medical, dental, and flexible spending account
         eligibility begins the first of the month following 30 days of
         employment. PRGS also offers a 401(k) Savings Plan and Employee Stock
         Purchase Plan. You will be eligible to participate in the 401(k)
         Savings Plan at the beginning of the month following your start date
         (if age 21 or over), and you will be eligible to participate in the
         Employee Stock Purchase Plan at the beginning of the next purchase
         period after you have completed six (6) months of employment.

6.       Severance Payments.

         (a)      If your employment with PRGS is terminated for cause or if you
                  voluntarily resign, you will receive your base salary prorated
                  through the date of termination, payable in accordance with
                  PRGS' normal payroll procedure, and you will not receive any
                  bonus or any other amount in respect of the year in which
                  termination occurs or in respect of any subsequent years.

         (b)      If your employment with PRGS is terminated by PRGS without
                  cause you will receive your base salary and earned bonus for
                  the year in which such termination occurs prorated through the
                  date of such termination, plus a severance payment equal to
                  continuation of your base salary for twelve (12) months
                  payable bi-weekly conditioned upon signing an agreement and
                  release. Except as provided in the immediately preceding
                  sentence, you will not receive any other amount in respect of
                  the year in which termination occurs or in respect of any
                  subsequent years. The prorated base salary and severance
                  payments will be paid in accordance with PRGS' normal payroll
                  procedures.

         (c)      If your employment with PRGS is terminated by your death or
                  Retirement, you (or your legal representative in the case of
                  death) will receive base salary and bonus for the year in
                  which such termination occurs prorated through the date of
                  such termination and will not receive any other amount in
                  respect of the year in which termination occurs or in respect
                  of any subsequent years. The prorated base salary will be in
                  accordance with PRGS' normal payroll procedure and the
                  prorated bonus will be paid in a lump sum within ninety (90)
                  days after the end of the year to which it relates.

         (d)      If your employment with PRGS is terminated for Disability (as
                  defined above), you or your legal representative will receive
                  all unpaid base salary and bonus for the year in which such
                  termination occurs prorated through the date of termination

                                       3


                                                                        04/16/04
                                                                     PRG Schultz

                  with such prorated base salary payable in accordance with
                  PRGS' normal payroll procedure and the prorated bonus payable
                  in a lump sum within ninety (90) days after the end of the
                  year to which it relates.

         (e)      If you fail to observe or perform any of your duties and
                  obligations under Sections 3, 4, 5, 6 or 7 of the PRGS
                  Employee Agreement, you will forfeit any right to severance or
                  other termination payments of any amounts other than base
                  salary prorated through the date of termination and upon PRGS'
                  demand for same, you shall repay PRGS any severance or other
                  termination payments paid to you after the date of termination
                  of your employment with PRGS (other than such base salary).

7.       Successors and Assigns. You may not assign this Agreement. This
         Agreement may be assigned by PRGS to any affiliate of PRGS. The
         provisions of this Agreement will be binding upon your heirs and legal
         representatives.

8.       Notices. Any notice to be given under this Agreement shall be given in
         writing and may be effected by personal delivery or by placing such in
         the United States certified mail, return receipt requested and
         addressed as set forth below, or as otherwise addressed as specified by
         the parties by notice given in like manner:

If to PRGS:                                 PRG-Schultz USA, Inc.
                                            600 Galleria Parkway, Suite 100
                                            Atlanta, Georgia  30339
                                            Attention: General Counsel

If to you:                                  __________________________________
                                            __________________________________

9.       Withholdings. PRGS will deduct or withhold from all amounts payable to
         you pursuant to this Agreement such amount(s) as may be required
         pursuant to applicable federal, state or local laws.

10.      Entire Agreement. This Agreement, the Employee Agreement and such other
         documents as may be referenced by such documents (the "Referenced
         Documents"), constitute our entire agreement with respect to the
         subject matter hereof and, except as specifically provided herein or in
         the Employee Agreement and the Referenced Documents, supersedes all of
         our prior discussions, understandings and agreements. Any such prior
         agreements shall be null and void. This Agreement may not be changed
         orally, but only by an agreement in writing signed by the party against
         whom enforcement of any waiver, change, modification, extension or
         discharge is sought. Time is of the essence of this

                                       4


                                                                        04/16/04
                                                                     PRG Schultz

         Agreement and each and every Section and subsection hereof. In the
         event of any conflict between the form Employee Agreement, this
         agreement will supercede the form Employee Agreement.

Enclosed is our new hire package, which includes the forms to be completed and
returned to me at the Atlanta office - 600 Galleria Parkway, Suite 100, Atlanta,
GA 30339.

Please confirm your acceptance of this offer by signing and returning both this
letter and employee agreement to me within ten (10) days. If not returned by
that date, this offer is null and void.

Best wishes,

/S/ John Cook
- -----------------
John Cook
Chairman and CEO

Accepted and agreed:

/S/ James E. Moylan, Jr.                              3-8-04
- ----------------------------                    ----------------
James E. Moylan, Jr.                            Date

                                       5

EX-10.2

[PRG SCHULTZ LOGO]                                                  EXHIBIT 10.2

www.prgx.com  600 Galleria Parkway, Suite 100, Atlanta, Ga 30339
              Office 770.779 3900  Fax 770.779.3133

March 10, 2004

Mr. Donald E. Ellis, Jr.
607 Haddington Lane
Peachtree City, Georgia 30269

Dear Gene:

As you know, the Board of Directors and I are extremely grateful for your
numerous contributions to PRG-Schultz over the years and we hold you in the
highest esteem. Nevertheless, we believe that the operational challenges facing
our company are such that a different CFO skill set is needed at this time.
Accordingly, PRG-Schultz has recruited a replacement CFO and he will commence
employment on Wednesday, March 10, 2004.

Your current employment agreement with PRG-Schultz USA, Inc. in the capacities
as Executive Vice-President Finance, CFO and Treasurer of PRG-Schultz USA, Inc.
and PRG-Schultz International, Inc. (PRG-Schultz USA, Inc. and PRG-Schultz
International, Inc. hereinafter shall be referred to only as "PRGX") consists of
letters from me to you dated January 15, 2001 and June 18, 2003. Your current
employment in your capacities as Executive Vice-President Finance, CFO and
Treasurer of PRGX will conclude on March 10, 2004. Although you must sign a
standard company release in the form attached in order to receive your severance
benefits, your termination of employment from these positions will be treated by
PRGX as a termination "without cause" for the purpose of your receipt of
severance under section 9 of your employment letter of January 15, 2001.
Accordingly, upon termination of your employment in the capacities as Executive
Vice-President Finance, CFO and Treasurer of PRGX, you will be entitled to
receive severance payments as set forth in subsection 9(b) of your January 15,
2001 employment letter (as such subsection has been amended by your June 18,
2003 employment letter to reflect your current level of compensation and other
matters). You will also be entitled to any other benefits explicitly accorded to
you by any and all applicable agreements that you may have with PRGX.

With respect to your termination benefits:

         (1)  You (or your estate should you become deceased) will be paid the
              sum of $800,000 due to you under the above-referenced subsection
              9(b) on Friday, March 19, 2004, assuming that you execute PRGX's
              standard form release by no later than March 11, 2004 (and thereby
              voluntarily waive the twenty-one (21) day consideration period
              provided to you by law under the Older Workers' Benefits
              Protection Act). This amount consists of (A) two times the sum of
              (i) your



              current annual base salary ($325,000) and (ii) your current annual
              auto allowance ($25,000), plus (B) the amount of $100,000. PRGX
              does not believe that any amounts are due to you pursuant to
              subclauses 9(b)(iv) and 9(b)(v) of your January 15, 2001
              employment letter, but PRGX acknowledges its responsibility to
              subsequently pay such amounts should they be determined to apply
              to your employment termination benefits.

         (2)  You (or your estate should you become deceased) will be paid any
              earned but unused vacation/PTO time applicable to 2004 upon the
              final separation of your employment with PRGX in May 2004 (as
              hereinafter discussed).

         (3)  You (or your estate should you become deceased) will be paid the
              pro-rated portion of your 2004 minimum bonus when such bonus
              payments are made to other PRGX executives in the first quarter of
              2005. It is agreed that such prorated portion of your stipulated
              2004 minimum bonus will be deemed to be $16,667, calculated as
              $50,000 multiplied by [4 months/12 months].

         (4)  Since your employment termination is deemed to be a termination by
              PRGX "without cause", your "PRG NON-QUALIFIED STOCK OPTION
              AGREEMENT" dated October 26,2000 and pertaining to 250,000 option
              shares will continue to remain in full force and effect as
              provided in such agreement.

         (5)  Your "PRG-SCHULTZ NON-QUALIFIED STOCK OPTION AGREEMENT" dated
              March 3, 2003 and pertaining to 40,000 option shares will remain
              in full force and effect as provided in such agreement.

         (6)  The Indemnification Agreement dated October 26, 2000 between you
              and PRGX shall remain in full force and effect.

         (7)  You (or your estate should you become deceased) will be paid your
              2003 minimum bonus of $50,000 when such bonus payments are paid on
              March 19, 2004.

You have agreed to remain in the employ of PRG-Schultz in a non-officer capacity
through Friday, May 7, 2004 to assist with an orderly transition of your former
responsibilities. In this position, you will continue to be compensated at your
same base salary and will be eligible to participate in all employee benefit
plans, subject to any continuing eligibility requirements, during the period
from March 10, 2004 through May 7, 2004. You will also continue to be accorded
the benefit of first class airline travel for all PRG-Schultz business trips you
take during this period. You will cease to be an employee of PRG-Schultz as of
May 8, 2004.

Notwithstanding anything to the contrary contained in any agreement you may now
have with PRGX, I hereby reconfirm Section 14 of my employment letter to you
dated January 15, 2001, concerning further compensation that will be due to you
as an independent contractor for any post-employment-termination assistance you
may be called upon to provide to PRGX after May 7, 2004 (including, but not
limited to, any assistance prospectively requested by PRGX or its outside legal
counsel in connection with class action litigation involving PRGX and/or its
current and former executive officers).

In exchange for the foregoing, you shall execute PRGX's standard form release
(in the form attached as Exhibit A) of all claims as a condition precedent to
receiving any of the



consideration set forth herein. Furthermore, you agree that all non-disclosure,
non-solicitation and non-competition covenants provided by you to PRGX shall not
be impaired by your termination and shall continue according to their
terms.

Other than as set forth herein, your employment agreement with PRGX, as set
forth in my letters dated January 15, 2001 and June 18, 2003, and all
obligations of PRGX set forth in these letters will terminate as of March 10,
2004. Your employment during the transition period from March 10, 2004 through
May 7, 2004 will be on an "at will" basis, subject to PRGX's existing policies
and procedures.

If you have any questions regarding the terms of your separation, please contact
me at your earliest convenience.

Thank you again for all of your contributions to PRGX.

Sincerely,

/s/ John M. Cook

John M. Cook
Chairman and Chief Executive Officer
PRG-Schultz International, Inc.

CONSENTED TO, IN FORM AND IN
SUBSTANCE, HAVING READ AND
FULLY UNDERSTOOD ALL TERMS OF
THIS SEPARATION LETTER:

/s/ Donald E. Ellis, Jr.
- ---------------------------------
Donald E, Ellis, Jr.

Date: March 10, 2004



                                    EXHIBIT A

                              AGREEMENT AND RELEASE

         THIS AGREEMENT AND RELEASE ("Agreement") is entered into by and between
PRG-SCHULTZ USA, INC., a Georgia corporation ("PRG-Schultz") and Donald E.
Ellis, Jr. ("Employee"), as of the Effective Date of the Agreement as defined
below.

                                   WITNESSETH:

         WHEREAS, your employment relationship with PRG-Schultz in the positions
of Executive Vice-President Finance, Chief Financial Officer and Treasurer of
PRG-Schultz and PRG-Schultz International, Inc. ("PRGX") will be terminated,
subject to the terms hereof.

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

         1.       Termination. The parties hereto hereby acknowledge and agree
that Employee's employment with PRG-Schultz in the positions of Executive
Vice-President Finance, Chief Financial Officer and Treasurer of PRG-Schultz and
PRG-Schultz International, Inc. ("PRGX") will be terminated as of the close of
business on March 9, 2004. This Agreement therefore operates to cancel
Employee's existing employment agreements, as set forth in letters between
Employee and John M. Cook dated January 15, 2001 and June 18, 2003 as of the
close of business on March 9, 2004, regardless of when this Agreement is
executed by Employee.

         2.       Transition Services to be Performed by Employee. Employee
agrees to assist PRG-Schultz and PRGX in effectuating a smooth and orderly
transition of his responsibilities and complete assignments as directed by
PRG-Schultz and PRGX. Employee specifically agrees to remain employed in a
non-officer capacity by PRG-Schultz from March 10, 2004 through May 7, 2004. In
this non-officer and "at will" position, Employee will be compensated at his
regular base salary as of March 10, 2004 and will be eligible to participate in
all employee benefit plans, subject to any continuing eligibility requirements.
Employee, however, shall perform no services for PRG-Schultz or PRGX following
the close of business on May 7, 2004, at which time Employee shall be terminated
from all positions with PRG-Schultz and PRGX.

         3.       Consideration. In exchange for Employee executing the general
release set forth in paragraph 4 below, Employee shall receive the consideration
set forth in the letter agreement executed by Employee and John M. Cook, dated
March 10, 2004, and the consideration set forth in paragraph 2 above in the form
of continued employment through May 7, 2004. Employee acknowledges and agrees
that this consideration includes good and valuable consideration that he, in
whole or in part, would not have been entitled to receive from PRG-Schultz but
for his willingness to execute this Agreement.

         4.       General Release and Covenant. In consideration of the
covenants from PRG-Schultz to Employee set forth herein, the receipt and
sufficiency of which are hereby

                                        1



acknowledged, Employee, individually and for Employee's heirs, executors,
administrators, agents, assigns, receivers, attorneys, servants, legal
representatives, predecessors and successors in interest, regardless of form,
trustees in bankruptcy or otherwise, wards, and any other representative or
entity acting on Employee's or their behalf, pursuant to, or by virtue of the
rights of any of them, does hereby now and forever unconditionally release,
discharge, acquit and hold harmless PRG-Schultz and all of its present and
former officers, directors, employees, attorneys, parents (including PRGX), and
subsidiaries, (hereafter the "Released Parties"), from any and all claims,
rights, demands, actions, suits, damages, losses, expenses (including but not
limited to costs and attorneys' fees), liabilities, indebtedness, and causes of
action, of whatever kind or nature that existed from the beginning of time
through the execution of this Agreement by Employee, regardless of whether known
or unknown, arising from Employee's employment with PRG-Schultz, including, but
not limited to, claims under any federal, state or local statute or ordinance,
including but not limited to, the Civil Rights Act of 1866, the Age
Discrimination in Employment Act, the Older Workers' Benefits Protection Act,
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Family and Medical Leave Act, the Americans with Disabilities Act, the Fair
Labor Standards Act, the Employee Retirement Income Security Act and any other
employment discrimination or civil rights law, state or federal, as well as any
other claims based on constitutional, statutory, common law or regulatory
grounds, or under common law, including, but not limited to, claims arising out
of tort, contract, quasi-contract or unemployment compensation.

         Employee furthermore covenants and agrees not to file a lawsuit against
any of the Released Parties with respect to any claim or claims released
hereunder.

         5.       Return of Company Property and Proprietary Information.
Employee further promises, represents and warrants that Employee shall return to
Marie Neff, Executive Vice President of Human Resources, by no later than May 7,
2004 or at the earlier request of PRG-Schultz: (a) all property of PRG-Schultz,
including, but not limited to, any and all files, records, credit cards, keys,
identification cards/badges, computer access codes, computer programs,
instruction manuals, equipment (including computers) and business plans; (b) any
other property which Employee prepared or helped to prepare in connection with
Employee's employment with PRG-Schultz; and (c) all documents, including logs or
diaries, all tangible materials, including audio and video tapes, all intangible
materials (including computer files), and any and all copies or duplicates of
any such tangible or intangible materials, including any duplicates, copies, or
transcriptions made of audio or video tapes, whether in handwriting or
typewritten, that are in the possession, custody or control of Employee or his
attorneys, agents, family members, or other representatives, which are alleged
to support in any way any of the claims Employee has released under this
Agreement, including but not limited to, all audio and videotapes involving any
officer, director, shareholder, executive, manager, employee, agent,
representative or attorney of PRG-Schultz.

         The foregoing representation shall include all Proprietary Information
of PRG-Schultz, including, but not limited to, all Proprietary Information
required by the Employee for performance of Employee's obligations under
paragraph 2 hereof. As used herein, "Proprietary Information" means information
in written form or electronic media, including but not limited to technical and
non-technical data, lists, training manuals, training systems, computer based
training modules, formulas, patterns, compilations, programs, devices, methods,
techniques,

                                       2



drawings, processes and plans regarding PRG-Schultz or its affiliates, clients,
prospective clients, methods of operation, billing rates, billing procedures,
suppliers, business methods, finances, management, or any other business
information relating to PRG-Schultz or its affiliates (whether constituting a
trade secret or proprietary or otherwise) which has value to PRG-Schultz or its
affiliates and is treated by PRG-Schultz or its affiliates as being
confidential; provided; however, that Proprietary Information shall not include
any information that has been voluntarily disclosed to the public by PRG-Schultz
or its affiliates (except where such public disclosure has been made without
authorization) or that has been independently developed and disclosed by others,
or that otherwise enters the public domain through lawful means. Proprietary
Information also includes information which has been disclosed to PRG-Schultz or
its affiliates by a third party and which PRG-Schultz or its affiliates are
obligated to treat as confidential. Proprietary Information may or may not be
marked by PRG-Schultz or its affiliates as "proprietary" or "secret" or with
other words or markings of similar meaning, and the failure of PRG-Schultz to
make such notations upon the physical embodiments of any Proprietary Information
shall not affect the status of such information as Proprietary Information.

         6.       Warranty and Representation. Employee represents and warrants
that as of the date of execution hereof, Employee has not assigned or
transferred or purported to assign or transfer any of the claims released
herein. Employee hereby agrees to indemnify and hold harmless the Released
Parties against, without any limitation, any and all claims and causes of action
(including, but not limited to, costs and attorneys' fees), arising out of any
such transfer or assignment.

         7.       General Provisions.

                  (a)      This Agreement and the covenants, representations,
warranties and releases contained herein shall inure to the benefit of and be
binding upon Employee and PRG-Schultz and each of their respective successors,
heirs, assigns, agents, affiliates, parents, subsidiaries and representatives.

                  (b)      Each party acknowledges that no one has made any
representation whatsoever not contained herein concerning the subject matter
hereof to induce the execution of this Agreement. Employee acknowledges that the
consideration for signing this Agreement constitutes benefits to which Employee
would not have been entitled had Employee not signed this Agreement.

                  (c)      Employee agrees that Employee shall refrain from
making any disparaging remarks about PRG-Schultz, its management, directors or
about Employee's employment with PRG-Schultz; provided that Employee shall not
be restricted from providing information required by law or governmental or
judicial order. Employee will not assist in, cooperate or consult with, or
encourage any other parties or their attorneys to commence or prosecute any
present or future lawsuit or administrative proceeding against PRG-Schultz or
any of its subsidiaries, or any officers, directors or employees of same.
Nothing contained herein however shall prevent Employee from providing truthful
testimony in response to a subpoena or any written request from a governmental
agency.

                                       3



                  (d)      Employee acknowledges that, pursuant to the Older
Worker's Benefits Protection Act of 1990, Employee has the right to, and has
been advised by PRG-Schultz to, consult with an attorney before signing this
Agreement and that he either has consulted or consciously decided not to seek
legal counsel prior to executing this Agreement. Employee also acknowledges that
this Agreement releases only those claims which exist as of the date of his
execution of this Agreement. Employee further acknowledges Employee's
understanding that Employee has twenty-one (21) days to consider this Agreement
before signing it, that Employee or PRG-Schultz may revoke this Agreement within
seven (7) calendar days after signing it by delivering written evidence of such
revocation to the other within that seven (7) day period, and that this
Agreement will not be effective or enforceable until expiration of such seven
(7) day period.

                  The "Effective Date" of this Agreement shall be the eighth
(8th) day after the execution of the Agreement by Employee.

                  This Agreement does not constitute an admission of any
liability other than the obligations for the payments provided in the letter
agreement dated March 10, 2004.

                  The parties hereto and each of them agrees and acknowledges
that if any portion of this Agreement is declared invalid or unenforceable by a
final judgment of any court of competent jurisdiction, such determination shall
not affect the balance of this Agreement, which shall remain in full force and
effect. Any such invalid portion shall be deemed severable.

                  (e)      Neither this Agreement nor any provision hereof may
be modified or waived in any way except by an agreement in writing signed by
each of the parties hereto consenting to such modification or waiver.

                  (f)      Employee acknowledges and agrees that Employee is
bound by, and shall continue to be bound by, any post-termination
non-disclosure, non-solicitation and non-competition covenants executed by him
according to their terms.

                  (g)      Other than as expressly provided herein, the parties
hereto acknowledge and agree that this Agreement supercedes all prior agreements
or other arrangements by and between PRG-Schultz and Employee with respect to
compensation and benefits payable by PRG-Schultz to Employee, including all of
PRG-Schultz's payment obligations for compensation set forth in any employment
agreement between the parties, and that such prior agreements or arrangements
with respect to compensation and benefits payable by PRG-Schultz to Employee
shall, upon the execution and delivery hereof by the parties hereto, be null and
void and of no force and effect whatsoever, except that all obligations set
forth in the agreement dated March 10, 2004 shall survive and remain in effect.

                  (h)      This Agreement shall be governed by the laws of the
State of Georgia, without reference to principles of conflicts or choice of law
under which the laws of any other jurisdiction would apply.

                                       4



         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the Effective Date.

EMPLOYEE ATTESTS THAT S/HE UNDERSTANDS THAT THIS AGREEMENT INCLUDES A RELEASE OF
ALL KNOWN AND UNKNOWN CLAIMS.

EXECUTED THIS 10TH DAY OF MARCH, 2004.

EMPLOYEE: /s/ Donald E. Ellis, Jr.

Sworn to and subscribed before me this 10th day of March, 2004.

Notary Public, Cherokee County, Georgia
My Commission Expires August 22, 2005

Notary Public Sarah Drinnon

EXECUTED THIS 10TH DAY OF MARCH, 2004.

PRG-SCHULTZ: PRG-SCHULTZ USA, INC.

By: /s/ John Cook
    ---------------------------
Its: Chairman & CEO

                                       5

EX-10.3

                                                                    EXHIBIT 10.3

                       FIFTH AMENDMENT TO CREDIT AGREEMENT

         THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Agreement"), dated as
of March 4, 2004, is by and among PRG-SCHULTZ USA, INC. (formerly The Profit
Recovery Group USA, Inc.), a Georgia corporation (the "Borrower"), PRG-SCHULTZ
INTERNATIONAL, INC. (formerly The Profit Recovery Group International, Inc.), a
Georgia corporation (the "Parent"), each of the Domestic Subsidiaries of the
Parent (together with the Parent, the "Guarantors"), the Lenders party thereto
and BANK OF AMERICA, N.A., as Administrative Agent. All capitalized terms used
herein and not otherwise defined shall have the meanings provided in the Credit
Agreement (as defined below).

                                   WITNESSETH:

         WHEREAS, the Borrower, the Guarantors, the Lenders and the
Administrative Agent entered into that certain Credit Agreement dated as of
December 31, 2001 (as amended or modified from time to time, the "Credit
Agreement"): and

         WHEREAS, the Borrower has requested and the Lenders have agreed to
amend certain terms of the Credit Agreement as set forth below;

         NOW, THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the parties hereby agree as follows:

         1.       Amended Definitions.

                  (a)      The definition of Consolidated EBITDA set forth in
         Section 1.1 of the Credit Agreement is hereby amended to read as
         follows:

                           "Consolidated EBITDA" means, for any period, the sum
                  of (i) Consolidated EBIT for such period, plus (ii)
                  depreciation and amortization expense for such period (to the
                  extent deducted in calculating Consolidated Net Income for
                  such period).

                  (b)      The definition of Consolidated EBIT set forth in
         Section 1.1 of the Credit Agreement is hereby amended to read as
         follows:

                           "Consolidated EBIT' means, for any period, the sum of
                  (i) Consolidated Net Income for such period, plus (ii) an
                  amount which, in the determination of Consolidated Net Income
                  for such period, has been deducted for (A) Consolidated
                  Interest Expense and (B) total federal, state, local and
                  foreign income, value added and similar taxes, plus (iii) from
                  July 1, 2003 through December 31, 2004, all charges up to $12
                  million in the aggregate directly related to the Borrower's
                  corporate restructuring plan made during such period plus (iv)
                  for the period from October 1, 2003 until September 30, 2004,
                  all non-cash, non-recurring charges



                  (A) up to $3 million in the aggregate directly related to the
                  impairment of the Schultz trade name made during such period
                  and (B) up to $ 1.8 million in the aggregate directly related,
                  to impairment of the Beacon audit software code made during
                  such period, in each case of the Parent and its Subsidiaries
                  on a consolidated basis, as determined in accordance with
                  GAAP.

                  (c)      Subclause (a) in the proviso contained in the
         definition of Consolidated Net Income set forth in Section 1.1 of the
         Credit Agreement is hereby amended to read as follows:

                  (a) any net book loss realized in such period from the sale of
                  the Logistics Division, the Groupe Alma Business, the
                  Communications Division, the Meridian Business or the Ship &
                  Debit Division,

                  (d)      The definition of Meridian set forth in Section 1.1
         of the Credit Agreement is hereby amended to read as follows:

                           "Meridian" means Meridian Corporation Limited
         (formerly known as Meridian VAT Corporation Limited), a company
         incorporated in Jersey.

                  (e)      A new subclause (xi) is hereby added at the end of
         the definition of Permitted Liens and shall read as follows:

                  and (xi) Liens on Property of Meridian or any of its
                  Subsidiaries securing those obligations of Meridian or any of
                  its Subsidiaries permitted under Section 8.1(1).

         2.       Amendment to Section 1.3. The last sentence of Section 1.3 is
hereby amended to read as follows:

         Notwithstanding the foregoing, following the disposition of the
         Communications Division, the Meridian Business or the Ship & Debit
         Division, as applicable, the income statement items (whether positive
         or negative) attributable to such division or business shall be
         included in the calculation of the financial covenants set forth in
         Section 7.11 to the extent related to any period applicable in such
         calculation.

         3.       Amendment to Section 3.3(c). The second sentence in Section
3.3(c) of the Credit Agreement is hereby amended to read as follows:

         Notwithstanding the foregoing, the aggregate permanent reduction in the
         Revolving Committed Amount in connection with the prepayment of the
         Loans with Net Cash Proceeds from the Communications Division, the
         Meridian Business and the Ship & Debit Division shall not exceed $20
         million.

         4.       Amendments to Section 7.11(iv)

                                       2



         (a)      Subclause (a) in the second sentence of Section 7.11 (iv) of
the Credit Agreement is hereby amended to read as follows:

         (a) reduced by the amount of any net book losses realized from the sale
         of the Logistics Division, the Groupe Alma Business, the Communications
         Division, the Meridian Business or the Ship & Debit Division,

         (b)      A new subclause (h) is hereby added at the end of the second
sentence of Section 7.ll(iv) of the Credit Agreement and shall read as follows:

         and (h) reduced by all non-cash, non-recurring charges (i) up to $3
         million in the aggregate directly related to the impairment of the
         Schultz trade name and (ii) up to $1.8 million in the aggregate
         directly related to impairment of the Beacon audit software code.

         5.       Amendment to Section 8.1. A new subclause (1) is hereby added
at the end of Section 8.1 of the Credit Agreement and shall read as follows:

         and (1) obligations of Meridian or any of its Subsidiaries with respect
         to any letter of credit, bond or other surety provided for the account
         of Meridian or any of its Subsidiaries to support Meridian's or any of
         its Subsidiaries' obligations to the French VAT authorities; provided,
         that (i) the aggregate amount of such obligations shall not exceed
         $5,800,000 in the aggregate and (ii) such Indebtedness shall not have a
         cross-default to the Indebtedness arising under this Credit Agreement
         and the other Credit Documents.

         6.       Amendment to Section 8.5. A new subclause (c) is hereby added
at the end of subclause (vi) in Section 8.5 of the Credit Agreement and shall
read as follows:

         and (c) the sale of the Ship & Debit Division; provided that (A) the
         Borrower receives at least $1,000,000 in Net Cash Proceeds from the
         sale of such division and (B) the Borrower immediately prepays the
         Loans with such Net Cash Proceeds in accordance with the terms of
         Section 3.3(b)(ii).

         7.       Conditions Precedent. This Agreement shall become effective
immediately upon receipt by the Administrative Agent of each of the following,
each in form and substance satisfactory to the Administrative Agent:

                  (a)      counterparts of this Agreement duly executed by the
         Borrower, the Guarantors, the Administrative Agent and the Required
         Lenders; and

                  (b)      for the account of each Lender who executes and
         delivers this Agreement to the Administrative Agent on or before March
         4, 2004, an amendment fee equal to 0.25% of such Lender's Revolving
         Commitment.

                                       3



         8.       Miscellaneous.

                  (a)      The term "Credit Agreement" as used in each of the
         Credit Documents shall hereafter mean the Credit Agreement as amended
         by this Agreement. Except as herein specifically agreed, the Credit
         Agreement, and the obligations of the Credit Parties thereunder and
         under the other Credit Documents, are hereby ratified and confirmed and
         shall remain in full force and effect according to their terms.

                  (b)      The Credit Parties acknowledge and confirm (i) that
         the Administrative Agent, on behalf of the Lenders, has a valid and
         enforceable first priority security interest in the Collateral, (ii)
         that the Borrower's obligation to repay the outstanding principal
         amount of the Loans and reimburse the Issuing Lender for any drawing on
         a Letter of Credit is unconditional and not subject to any offsets,
         defenses or counterclaims, (iii) that the Administrative Agent and the
         Lenders have performed fully all of their respective obligations under
         the Credit Agreement and the other Credit Documents, and (iv) by
         entering into this Agreement, the Lenders do not waive or release any
         term or condition of the Credit Agreement or any of the other Credit
         Documents or any of their rights or remedies under such Credit
         Documents or applicable law or any of the obligations of any Credit
         Party thereunder.

                  (c)      The Credit Parties represent and warrant to the
         Lenders that (i) the representations and warranties of the Credit
         Parties set forth in Section 6 of the Credit Agreement are true and
         correct as of the date hereof and (ii) no event has occurred and is
         continuing which constitutes a Default or an Event of Default.

                  (d)      This Agreement may be executed in any number of
         counterparts, each of which when so executed and delivered shall be an
         original, but all of which shall constitute one and the same
         instrument. It shall not be necessary in making proof of this Agreement
         to produce or account for more than one such counterpart.

                  (e)      This Agreement shall be governed by and construed in
         accordance with, the laws of the State of Georgia.

                  (f)      This Agreement shall be binding upon and inure to the
         benefit of the parties hereto and their respective successors and
         assigns.

                  (g)      The Borrower and the Guarantors, as applicable,
         affirm the liens and security interests created and granted in the
         Collateral Documents and agree that this Agreement shall in no manner
         adversely affect or impair such liens and security interests.

                  (h)      Each Credit Party hereby represents and warrants as
         follows:

                           (i)      Each Credit Party has taken all necessary
                  action to authorize the execution, delivery and performance of
                  this Agreement.

                                       4



                           (ii)     This Agreement has been duly executed and
                  delivered by the Credit Parties and constitutes each of the
                  Credit Parties' legal, valid and binding obligations,
                  enforceable in accordance with its terms, except as such
                  enforceability may be subject to (A) bankruptcy, insolvency,
                  reorganization, fraudulent conveyance or transfer, moratorium
                  or similar laws affecting creditors' rights generally and (B)
                  general principles of equity (regardless of whether such
                  enforceability is considered in a proceeding at law or in
                  equity).

                           (iii)    No consent, approval, authorization or order
                  of, or filing, registration or qualification with, any court
                  or governmental authority or third party is required in
                  connection with the execution, delivery or performance by any
                  Credit Party of this Agreement.

                  (i)      The Guarantors (i) acknowledge and consent to all of
         the terms and conditions of this Agreement, (ii) affirm all of their
         obligations under the Credit Documents and (iii) agree that this
         Agreement and all documents executed in connection herewith do not
         operate to reduce or discharge the Guarantors' obligations under the
         Credit Agreement or the other Credit Documents.

                  (j)      This Agreement together with the other Credit
         Documents represent the entire agreement of the parties and supersedes
         all prior agreements and understandings, oral or written if any,
         relating to the Credit Documents or the transactions contemplated
         herein and therein.

                  [remainder of page intentionally left blank]

                                       5




         Each of the parties hereto has caused a counterpart of this Agreement
to be duly executed and delivered as of the date first above written.

BORROWER:            PRG-SCHULTZ USA, INC. (formerly The Profit Recovery.
                     Group USA, Inc.), a Georgia corporation

                     By: /s/ Donald E. Ellis, Jr.
                         -------------------------------------
                     Name:  Donald E. Ellis, Jr.
                     Title: Executive Vice President - Finance,
                            Chief Financial Officer and Treasurer

GUARANTORS:          PRG-SCHULTZ INTERNATIONAL, INC. (formerly The Profit
                     Recovery Group International, Inc.), a Georgia corporation

                     By: /s/ Donald E. Ellis, Jr.
                         -------------------------------------
                     Name:   Donald E. Ellis, Jr.
                     Title:  Executive Vice President - Finance,
                             Chief Financial Officer and Treasurer

                     PRGFS, INC.,
                     PRGLS, INC.,
                     each a Delaware corporation

                     By: /s/ Donald E. Ellis, Jr.
                         -------------------------------------
                     Name:  Donald E. Ellis, Jr.
                     Title: Executive Vice President - Finance

                     PRGRS, INC., a Delaware corporation

                     By: /s/ Mark L. Henry
                         ----------------------------------------
                     Name:  Mark L. Henry
                     Title: Vice President

                     PRG HOLDING CO. (FRANCE) NO.1, LLC,
                     PRG HOLDING CO. (FRANCE) NO.2, LLC,
                     each a Delaware limited liability company

                     By: /s/ Donald E. Ellis, Jr.
                         -------------------------------------
                     Name:  Donald E. Ellis, Jr.
                     Title: Executive Vice President - Finance,
                            Chief Financial Officer and Treasurer



GUARANTORS:          THE PROFIT RECOVERY GROUP ASIA, INC.,
                     PRG-SCHULTZ CANADA, INC. (formerly The Profit Recovery
                        Group Canada, Inc.),
                     THE PROFIT RECOVERY GROUP NEW ZEALAND, INC.,
                     THE PROFIT RECOVERY GROUP NETHERLANDS, INC.,
                     THE PROFIT RECOVERY GROUP MEXICO, INC.,
                     PRG-SCHULTZ FRANCE, INC. (formerly The Profit Recovery
                        Group France, Inc.)
                     PRG-SCHULTZ AUSTRALIA, INC. (formerly The Profit Recovery
                        Group Australia, Inc.),
                     PRG-SCHULTZ BELGIUM, INC. (formerly The Profit Recovery
                     Group Belgium, Inc.)
                     THE PROFIT RECOVERY GROUP GERMANY, INC.,
                     PRG INTERNATIONAL, INC.,
                     THE PROFIT RECOVERY GROUP SWITZERLAND, INC.,
                     THE PROFIT RECOVERY GROUP SOUTH AFRICA, INC.,
                     THE PROFIT RECOVERY GROUP SPAIN, INC.,
                     THE PROFIT RECOVERY GROUP ITALY, INC.,
                     PRG-SCHULTZ NORWAY, INC.
                     THE PROFIT RECOVERY GROUP PORTUGAL, INC.,
                     PRG-SCHULTZ JAPAN, INC. (formerly Payment Technologies,
                       Inc.)
                     THE PROFIT RECOVERY GROUP COSTA RICA, INC.,
                     PRG-SCHULTZ PUERTO RICO, INC. (formerly PRG, INC.,)
                     PRG USA, INC.,
                     each a Georgia corporation

                     By: /s/ Donald E. Ellis, Jr.
                         -------------------------------------
                     Name:  Donald E. Ellis, Jr.
                     Title: Executive Vice President - Finance,
                            Chief Financial Officer and Treasurer

                     HS&A ACQUISITION - UK, INC.,
                     a Texas corporation

                     By: /s/ Donald E. Ellis, Jr.
                         -------------------------------------
                     Name:  Donald E. Ellis, Jr.
                     Title: Executive Vice President - Finance,
                            Chief Financial Officer and Treasurer



ADMINISTRATIVE AGENT:          BANK OF AMERICA, N.A.

                               By: /s/ Laura B. Schmuck
                                   --------------------------------------
                               Name:  Laura B. Schmuck
                               Title: Agency Officer
                                      Assistant Vice President

LENDERS:                       BANK OF AMERICA, N.A.

                               By: /s/ Nancy S. Goldman
                                   --------------------------------------
                               Name:  Nancy S. Goldman
                               Title: Senior Vice President

                               LASALLE BANK, NATIONAL ASSOCIATION

                               By: /s/ Sara A. Huizinga
                                   --------------------------------------
                               Name:  Sara A. Huizinga
                               Title: Assistant Vice President

                               WACHOVIA BANK, NATIONAL ASSOCIATION
                               (formerly known as Wachovia Bank, N.A.)

                               By: /s/ Michael J. Romano
                                   --------------------------------------
                               Name:  Michael J. Romano
                               Title: Vice President

EX-10.4

                                                                    EXHIBIT 10.4

                                 SIXTH AMENDMENT
                               TO CREDIT AGREEMENT

         THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this "Agreement"), dated as
of March 25, 2004, is by and among PRG-SCHULTZ USA, INC. (formerly The Profit
Recovery Group USA, Inc.), a Georgia corporation (the "Borrower"), PRG-SCHULTZ
INTERNATIONAL, INC. (formerly The Profit Recovery Group International, Inc.), a
Georgia corporation (the "Parent"), each of the Domestic Subsidiaries of the
Parent (together with the Parent, the "Guarantors"), the Lenders party thereto
and BANK OF AMERICA, N.A., as Administrative Agent. All capitalized terms used
herein and not otherwise defined shall have the meanings provided in the Credit
Agreement (as defined below)

                                   WITNESSETH:

         WHEREAS, the Borrower, the Guarantors, the Lenders and the
Administrative Agent entered into that certain Credit Agreement dated as of
December 31, 2001 (as amended or modified from time to time, the "Credit
Agreement"); and

         WHEREAS, as part of a corporate reorganization, HS&A Acquisition-UK,
Inc., a wholly owned Domestic Subsidiary of the Parent ("HS&A") plans to sell
100% of the Capital Stock of Tamebond Limited ("Tamebond") to Meridian Corp-
oration Limited, a wholly owned Foreign Subsidiary of the Parent ("Meridian")
for (i) cash consideration totaling approximately 12,700,000 Euros and (ii)
shares of Capital Stock in Meridian in an amount to be determined. Meridian
intends to borrow up to 12,700,000 Euros from Meridian VAT Processing
(International) Limited, a wholly owned Subsidiary of Meridian ("Meridian
International") to fund the cash portion of the acquisition of the Tamebond
stock. As collateral for such loan, Meridian plans to pledge the Capital Stock
of Tamebond to Meridian International. The transactions described above may be
referred to collectively herein as the "Transaction"; and

         WHEREAS, the Borrower has requested and the Lenders have agreed to
amend certain terms of the Credit Agreement to permit the Transaction as set
forth below;

         NOW, THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the parties hereby agree as follows:

         1.       Amended Definitions.

                  (a)      Clause (xii) in the definition of Permitted
         Investments is renumbered as clause (xiii) and a new clause (xii) is
         hereby added to the definition of Permitted Investments in the
         appropriate order and shall read as follows:

                  and (xii) Investment by Meridian International in Meridian in
                  the form of the Meridian Loan.

                  (b)      Clause (x) in the definition of Permitted Liens is
         renumbered as (xi) and a new clause (x) is hereby added at the end of
         the definition of Permitted Liens in the appropriate order and shall
         read as follows:

                  and (x) Lien in favor of Meridian International on the Capital
                  Stock of Tamebond owned by Meridian which Lien secures the
                  Meridian Loan and



         2.       New Definitions. The following definitions are hereby added to
Section 1.1 of the Credit Agreement in the appropriate alphabetical order and
shall read as follows

                  "HS&A" means HS&A Acquisition UK, Inc., a Texas corporation.

                  "Meridian Loan" means the loan by Meridian International to
         Meridian in an aggregate amount not to exceed approximately 12,700,000
         Euros.

                  "Tamebond" means Tamebond Limited, a U.K. corporation.

         3.       Amendment to Section 8.1. A new subclause (m) is hereby added
at the end of Section 8.1 of the Credit Agreement and shall read as follows:

                  and (m) the Meridian Loan

         4.       Amendment to Section 8.5. A new subclause (vii) is hereby
added at the end of Section 8.5 of the Credit Agreement and shall read as
follows:

                  and (vii) the sale by HS&A of 100% of the Capital Stock of
         Tamebond to Meridian for (a) approximately $16,000,000 in cash and (b)
         shares of Capital Stock in Meridian in an amount to be determined;
         provided that (i) the Dollar equivalent of the approximately 12,700,000
         Euros in cash proceeds received by HS&A from such sale are immediately
         used to prepay the Loans in accordance with Section 3.3(b)(ii) and (ii)
         within 45 days of such sale, HS&A pledges and assigns to the
         Administrative Agent, for the benefit of the Lenders, 66% of such
         newly-issued Capital Stock of Meridian pursuant to a pledge agreement
         in a form acceptable to the Administrative Agent in its reasonable
         discretion and delivers such other documentation to the Administrative
         Agent as requested by the Administrative Agent in connection therewith,
         including without limitation, favorable opinions of counsel, all in
         form and substance reasonably satisfactory to the Administrative Agent.

         5.       Amendment to Section 8.8. A new sentence is hereby added at
the end of Section 8.8 of the Credit Agreement and shall read as follows:

         Notwithstanding the foregoing, HS&A is permitted to sell the Capital
Stock of Tamebond to Meridian in accordance with the terms of Section 8.5(vii)
and Meridian International is permitted to make the Meridian Loan.

         6.       Meridian Pledge Agreement. The Lenders hereby acknowledge and
agree (a) that the Administrative Agent and the Parent may make any amendments
to the pledge agreement presently governing the pledge of 66% of the Capital
Stock of Meridian to the Administrative Agent necessary to permit the issuance
of shares of Capital Stock of Meridian to HS&A and (b) the Administrative Agent
may release the Administrative Agent's security interest in the Capital Stock of
Tamebond presently held by the Administrative Agent on the date of the
consummation of the Transaction.

         7.       Revolving Committed Amount. Notwithstanding any provisions
hereof and any other provision in the Credit Agreement to the contrary, the
Lenders hereby agree that the Revolving Committed Amount shall not be reduced by
the amount of the prepayment required to be made by the Borrower pursuant to
Section 8.5(vii).

                                       2



         8.       Conditions Precedent. This Agreement shall become effective
immediately upon receipt by the Administrative Agent of counterparts of this
Agreement duly executed by the Borrower, the Guarantors, the Administrative
Agent and the Required Lenders, in form and substance satisfactory to the
Administrative Agent.

         9.       Miscellaneous.

                  (a)      The term "Credit Agreement" as used in each of the
         Credit Documents shall hereafter mean the Credit Agreement as amended
         by this Agreement. Except as herein specifically agreed, the Credit
         Agreement, and the obligations of the Credit Parties thereunder and
         under the other Credit Documents, are hereby ratified and confirmed and
         shall remain in full force and effect according to their terms.

                  (b)      The Credit Parties acknowledge and confirm (i) that
         the Administrative Agent, on behalf of the Lenders, has a valid and
         enforceable first priority security interest in the Collateral, (ii)
         that the Borrower's obligation to repay the outstanding principal
         amount of the Loans and reimburse the Issuing Lender for any drawing on
         a Letter of Credit is unconditional and not subject to any offsets,
         defenses or counterclaims, (iii) that the Administrative Agent and the
         Lenders have performed fully all of their respective obligations under
         the Credit Agreement and the other Credit Documents, and (iv) by
         entering into this Agreement, the Lenders do not waive or release any
         term or condition of the Credit Agreement or any of the other Credit
         Documents or any of their rights or remedies under such Credit
         Documents or applicable law or any of the obligations of any Credit
         Party thereunder.

                  (c)      The Credit Parties represent and warrant to the
         Lenders that (i) the representations and warranties of the Credit
         Parties set forth in Section 6 of the Credit Agreement are true and
         correct as of the date hereof and (ii) no event has occurred and is
         continuing which constitutes a Default or an Event of Default.

                  (d)      This Agreement may be executed in any number of
         counterparts, each of which when so executed and delivered shall be an
         original, but all of which shall constitute one and the same
         instrument. It shall not be necessary in making proof of this Agreement
         to produce or account for more than one such counterpart.

                  (e)      This Agreement shall be governed by and construed in
         accordance with, the laws of the State of Georgia.

                  (f)      This Agreement shall be binding upon and inure to the
         benefit of the parties hereto and their respective successors and
         assigns.

                  (g)      The Borrower and the Guarantors, as applicable,
         affirm the liens and security interests created and granted in the
         Collateral Documents and agree that this Agreement shall in no manner
         adversely affect or impair such liens and security interests.

                  (h)      Each Credit Party hereby represents and warrants as
         follows:

                           (i)      Each Credit Party has taken all necessary
                  action to authorize the execution, delivery and performance of
                  this Agreement.

                                       3



                           (ii)     This Agreement has been duly executed and
                  delivered by the Credit Parties and constitutes each of the
                  Credit Parties' legal, valid and binding obligations,
                  enforceable in accordance with its terms, except as such
                  enforceability may be subject to (A) bankruptcy, insolvency,
                  reorganization, fraudulent conveyance or transfer, moratorium
                  or similar laws affecting creditors' rights generally and (B)
                  general principles of equity (regardless of whether such
                  enforceability is considered in a proceeding at law or in
                  equity).

                           (iii)    No consent, approval, authorization or order
                  of, or filing, registration or qualification with, any court
                  or governmental authority or third party is required in
                  connection with the execution, delivery or performance by any
                  Credit Party of this Agreement.

                  (i)      The Guarantors (i) acknowledge and consent to all of
         the terms and conditions of this Agreement, (ii) affirm all of their
         obligations under the Credit Documents and (iii) agree that this
         Agreement and all documents executed in connection herewith do not
         operate to reduce or discharge the Guarantors' obligations under the
         Credit Agreement or the other Credit Documents.

                  (j)      This Agreement together with the other Credit
         Documents represent the entire agreement of the parties and supersedes
         all prior agreements and understandings, oral or written if any,
         relating to the Credit Documents or the transactions contemplated
         herein and therein.

                  [remainder of page intentionally left blank]

                                       4



         Each of the parties hereto has caused a counterpart of this Agreement
to be duly executed and delivered as of the date first above written:

BORROWER:                  PRG-SCHULTZ USA, INC. (formerly The Profit Recovery
                           Group USA, Inc.), a Georgia corporation

                           By: /s/ James E. Moylan, Jr.
                                ---------------------------------
                           Name: James E. Moylan, Jr.
                           Title: Executive Vice President - Finance,
                                  Chief Financial Officer and Treasurer

GUARANTORS:                PRG-SCHULTZ INTERNATIONAL, INC. (formerly The Profit
                           Recovery Group International, Inc.), a Georgia
                           corporation

                           By: /s/ James E. Moylan, Jr.
                                ---------------------------------
                           Name: James E. Moylan, Jr.
                           Title: Executive Vice President - Finance,
                                  Chief Financial Officer and Treasurer

                           PRGFS, INC.,
                           PRGLS, INC.,
                           each a Delaware corporation

                           By: /s/ James E. Moylan, Jr.
                                ---------------------------------
                           Name: James E. Moylan, Jr.
                           Title: Executive Vice President - Finance

                           PRGRS, INC., a Delaware corporation

                           By: /s/ Mark L. Henry
                                ---------------------------------
                           Name:  Mark L. Henry
                           Title: VP Assistant Secretary

                           PRG HOLDING CO. (FRANCE) NO. 1, LLC,
                           PRG HOLDING CO. (FRANCE) NO. 2, LLC,
                           each a Delaware limited liability company

                           By: /s/ James E. Moylan, Jr.
                                ---------------------------------
                           Name: James E. Moylan, Jr.
                           Title: Executive Vice President - Finance,
                                  Chief Financial Officer and Treasurer

                                                           PRG-SCHULTZ USA, INC.
                                                                 SIXTH AMENDMENT


GUARANTORS:         THE PROFIT RECOVERY GROUP ASIA, INC.,
                    PRG-SCHULTZ CANADA, INC. (Formerly The Profit Recovery
                      Group Canada, Inc.),
                    THE PROFIT RECOVERY GROUP NEW ZEALAND, INC.,
                    THE PROFIT RECOVERY GROUP NETHERLANDS, INC.,
                    THE PROFIT RECOVERY GROUP MEXICO, INC.,
                    PRG-SCHULTZ FRANCE, INC. (formerly The Profit Recovery
                      Group France, Inc.)
                    PRG-SCHULTZ AUSTRALIA, INC. (formerly The Profit Recovery
                      Group Australia, Inc.),
                    PRG-SCHULTZ BELGIUM, INC. (formerly The Profit Recovery
                      Group Belgium, Inc.)
                    THE PROFIT RECOVERY GROUP GERMANY, INC.,
                    PRG INTERNATIONAL, INC.,
                    THE PROFIT RECOVERY GROUP SWITZERLAND), INC.,
                    THE PROFIT RECOVERY GROUP SOUTH AFRICA, INC.,
                    THE PROFIT RECOVERY GROUP SPAIN. INC.,
                    THE PROFIT RECOVERY GROUP ITALY, INC.,
                    PRG-SCHULTZ NORWAY, INC.
                    THE PROFIT RECOVERY GROUP PORTUGAL, INC.,
                    PRG-SCHULTZ JAPAN, INC. (formerly Payment Technologies,
                      Inc.)
                    THE PROFIT RECOVERY GROUP COSTA RICA, INC.,
                    PRG-SCHULTZ PUERTO RICO, INC. (formerly PRG. INC.,)
                    PRG USA, INC.,
                    each a Georgia corporation

                    By: /s/ James E. Moylan, Jr.
                         ---------------------------------
                    Name: James E. Moylan, Jr.
                    Title: Executive Vice President - Finance,
                           Chief Financial Officer and Treasurer

                     HS&A ACQUISITION - UK, INC.,
                     a Texas corporation

                    By: /s/ James E. Moylan, Jr.
                         ---------------------------------
                    Name: James E. Moylan, Jr.
                    Title: Executive Vice President - Finance,
                           Chief Financial Officer and Treasurer

                                                           PRG-SCHULTZ USA, INC.
                                                                 SIXTH AMENDMENT


ADMINISTRATIVE AGENT:          BANK OF AMERICA, N.A.

                               By: /s/ Michael Brashler
                                   --------------------------------------
                               Name:   Michael Brashler
                               Title:  Vice President

LENDERS:                       BANK OF AMERICA, N.A.

                               By: /s/ Nancy S. Goldman
                                   --------------------------------------
                               Name:  Nancy S. Goldman
                               Title: Senior Vice President

                               LASALLE BANK, NATIONAL ASSOCIATION

                               By: /s/ Sara A. Huizinga
                                   --------------------------------------
                               Name:  Sara A. Huizinga
                               Title: Assistant Vice President

                               WACHOVIA BANK, NATIONAL ASSOCIATION
                               (formerly known as Wachovia Bank, N.A.)

                               By: /s/ J. Michael Wilson
                                   --------------------------------------
                               Name:  J. Michael Wilson
                               Title: Senior Vice President

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, John M. Cook, certify that:

      1. I have reviewed this Form 10-Q of PRG-Schultz International, Inc.;

      2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

      4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

      (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

      5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

      (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

      (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:  /s/ JOHN M. COOK

John M. Cook

President, Chairman of the Board and

Chief Executive Officer

(Principal Executive Officer)

May 7, 2004

28 EX-31.2 8 g88557exv31w2.htm EX-31.2 SECTION 302 CERTIFICATION OF THE CFO

EXHIBIT 31.2

CERTIFICATIONS

I, James E. Moylan, Jr., certify that:

      1. I have reviewed this Form 10-Q of PRG-Schultz International, Inc.;

      2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

      4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

      (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

      5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

      (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

      (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:  /s/ JAMES E. MOYLAN, JR.

James E. Moylan, Jr.

Executive Vice President — Finance,

Chief Financial Officer and Treasurer

(Principal Financial Officer)

May 7, 2004

29 EX-32.1 9 g88557exv32w1.htm EX-32.1 SECTION 906 CERTIFICATION OF THE CEO & CFO

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Quarterly Report of PRG-Schultz International, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John M. Cook, Chairman of the Board and Chief Executive Officer of the Company and I, James E. Moylan, Jr., Chief Financial Officer and Treasurer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of the undersigned’s knowledge: (1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:  /s/ JOHN M. COOK

John M. Cook

President, Chairman of the Board and

Chief Executive Officer

(Principal Executive Officer)

May 7, 2004

By:  /s/ JAMES E. MOYLAN, JR.

James E. Moylan, Jr.

Executive Vice President — Finance,

Chief Financial Officer and Treasurer

(Principal Financial Officer)

May 7, 2004

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EX-31.2

exv31w2

EX-32.1

exv32w1