-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ckbv3rAfASSTwxzarZKbmM9PqXFIvuJlPDbSGThK90Nh8p64nvf5mEZJNJwFkCEH 2QkgZ+qriUOKJtHhYpmlKg== 0000902664-05-002336.txt : 20051212 0000902664-05-002336.hdr.sgml : 20051212 20051212143401 ACCESSION NUMBER: 0000902664-05-002336 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20051212 DATE AS OF CHANGE: 20051212 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PRG SCHULTZ INTERNATIONAL INC CENTRAL INDEX KEY: 0001007330 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 582213805 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-48923 FILM NUMBER: 051257812 BUSINESS ADDRESS: STREET 1: 600 GALLERIA PARKWAY STREET 2: STE 100 CITY: ATLANTA STATE: GA ZIP: 30339-5949 BUSINESS PHONE: 7707793311 MAIL ADDRESS: STREET 1: 600 GALLERIA PARKWAY STREET 2: STE 100 CITY: ATLANTA STATE: GA ZIP: 30339-5949 FORMER COMPANY: FORMER CONFORMED NAME: PROFIT RECOVERY GROUP INTERNATIONAL INC DATE OF NAME CHANGE: 19960207 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TENOR CAPITAL MANAGEMENT Co., L.P. CENTRAL INDEX KEY: 0001346554 IRS NUMBER: 841641518 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 65 EAST 55TH STREET, 35TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212 546-7664 MAIL ADDRESS: STREET 1: 65 EAST 55TH STREET, 35TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 sc13d.txt PRG-SCHULTZ INTERNATIONAL SC 13D - ------------------------- ------------------------------------------------------ SEC POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM 1746 (11-02) ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER. - ------------------------- ------------------------------------------------------ -------------------------------- UNITED STATES OMB APPROVAL -------------------------------- SECURITIES AND EXCHANGE COMMISSION OMB Number: ------------------------------- WASHINGTON, D.C. 20549 Expires: ------------------------------- Estimated average burden hours per response . . . . . 11 ------------------------------- SCHEDULE 13D Under the Securities Exchange Act of 1934 PRG-SCHULTZ INTERNATIONAL, INC. ------------------------------------------------------------------- (Name of Company) Common Stock ------------------------------------------------------------------- (Title of Class of Securities) 69357C107 ------------------------------------------------------------------- (CUSIP Number of Class of Securities) Andre Weiss, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 (212) 756-2431 ------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 6, 2005 ------------------------------------------------------------------- (Date of Event which Requires Filing of this Schedule) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - --------------------- --------------------- CUSIP NO. 69357C107 PAGE 2 OF 10 PAGES - --------------------- --------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Tenor Opportunity Master Fund Ltd. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC, OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ----------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 533,591 shares issuable upon conversion of notes OWNED BY and payable as shares of interest under the EACH notes (see Item 3) REPORTING ----------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 0 ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 533,591 shares issuable upon conversion of notes and payable as shares of interest under the notes (see Item 3) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 533,591 shares issuable upon conversion of notes and payable as shares of interest under the notes (see Item 3) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) (see Item 5) 0.8% (see Item 5) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- SCHEDULE 13D - --------------------- --------------------- CUSIP NO. 69357C107 PAGE 3 OF 10 PAGES - --------------------- --------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Tenor Capital Management Co., L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC, OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ----------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 0 OWNED BY EACH REPORTING ----------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 0 ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 533,591 shares issuable upon conversion of notes and payable as shares of interest under the notes (see Item 3) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 533,591 shares issuable upon conversion of notes and payable as shares of interest under the notes (see Item 3) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) (see Item 5) 0.8% (see Item 5) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- SCHEDULE 13D - --------------------- --------------------- CUSIP NO. 69357C107 PAGE 4 OF 10 PAGES - --------------------- --------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Robin R. Shah - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC, OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ----------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 533,591 shares issuable upon conversion of notes OWNED BY and payable as shares of interest under the EACH notes (see Item 3) REPORTING ----------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 0 ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 533,591 shares issuable upon conversion of notes and payable as shares of interest under the notes (see Item 3) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) (see Item 5) 0.8% (see Item 5) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- SCHEDULE 13D - --------------------- --------------------- CUSIP NO. 69357C107 PAGE 5 OF 10 PAGES - --------------------- --------------------- ITEM 1. SECURITY AND COMPANY This statement on Schedule 13D relates to the shares of Common Stock (the "Shares") of PRG-Schultz International, Inc., a Georgia corporation (the "Company"), and is being filed pursuant to Rule 13d-1 under the Act. The principal executive office and mailing address of the Company is 600 Galleria Parkway, Suite 100, Atlanta, Georgia 30339-5986 ITEM 2. IDENTITY AND BACKGROUND (a) This statement is filed by: (i) Tenor Opportunity Master Fund Ltd., an exempted company organized under the laws of the Cayman Islands ("Tenor"), with respect to Shares of the Company beneficially owned by Tenor; (ii) Tenor Capital Management Co., L.P., a Delaware limited partnership (the "Advisor"), with respect to Shares beneficially owned by Tenor; and (iii) Robin R. Shah, with respect to Shares beneficially owned by Tenor and the Advisor. The foregoing persons are hereinafter collectively referred to as the "Reporting Persons". The Joint Statement of the Reporting Persons is attached hereto as Exhibit 1 and incorporated herein by reference. Any disclosures herein with respect to persons other than the Reporting Persons are made on information and belief after making inquiry to the appropriate party. (b) The address of the principal business office of each Reporting Person is 65 East 55th Street, 35th Floor, New York, NY 10022. (c) The principal business of the Reporting Persons is providing a full range of investment advisory and management services and acting as an investment manager and management company as the case may be, of investment funds and/or managed accounts. (d) During the past five years, none of the Reporting Persons has been convicted in a criminal proceeding. (e) During the past five years, none of the Reporting Persons was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. SCHEDULE 13D - --------------------- --------------------- CUSIP NO. 69357C107 PAGE 6 OF 10 PAGES - --------------------- --------------------- ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The Shares reported herein as being beneficially owned by the Reporting Persons are issuable upon conversion of the Company's 4 3/4% Convertible Subordinated Notes Due 2006 (the "Notes") in the principal amount of $4,130,000 held by Tenor. Such Notes were acquired at a net purchase price of $3,220,033.11 with investment funds in accounts under management. ITEM 4. PURPOSE OF TRANSACTION. On October 26, 2005 at the request of the Company, an Ad Hoc Committee (the "Ad Hoc Committee") of holders of the Notes was organized to consider strategic alternatives relating to the Company. On December 6, the Advisor entered into a confidentiality agreement with the Company and became a member of the Ad Hoc Committee. A copy of the confidentiality agreement is attached as an exhibit hereto and incorporated into this Item 4 by reference. The members of the Ad Hoc Committee are filing statements on Schedule 13D because they may be deemed to be part of a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended. The Reporting Persons intend to review their investment in the Company on a continuing basis. Although no Reporting Person has any specific plan or proposal to acquire or dispose of the Company's securities, consistent with its investment purpose, each Reporting Person at any time and from time to time may acquire additional securities of the Company or dispose of any or all of its investment in the Company depending upon an ongoing evaluation of the investment in the Company's securities, price and availability of securities of the Company, subsequent developments affecting the Company, its business and prospects, general prevailing market and economic conditions, tax considerations, other investment opportunities, liquidity requirements of the Reporting Person and/or other investment considerations and factors deemed relevant. In addition, each of the Reporting Persons may in the future take such actions with respect to its investment in the Company as it deems appropriate including, without limitation, seeking board representation, making proposals to the Company concerning changes to the capitalization, ownership structure or operations of the Company, engaging in short selling of or any hedging or similar transaction with respect to the Common Stock or changing its intention with respect to any and all matters referred to in Item 4. Also, consistent with the investment purpose, the Reporting Persons may engage in communications with one or more shareholders of the Company, one or more officers of the Company, one or more members of the board of directors of the Company and/or one or more representatives of the Company regarding the Company, including but not limited to its operations. The Reporting Persons may discuss ideas that, if effected may result in any of the following: the acquisition by persons of additional securities of the Company, an extraordinary corporate transaction involving the Company, and/or changes in the board of directors or management of the Company. SCHEDULE 13D - --------------------- --------------------- CUSIP NO. 69357C107 PAGE 7 OF 10 PAGES - --------------------- --------------------- Except as set forth above, the Reporting Persons have no oral or written agreements, understandings or arrangements with each other or any other person relating to acquiring, holding, voting or disposing of any securities of the Company or otherwise with respect to the Company. Although the foregoing represents the range of activities presently contemplated by the Reporting persons with respect to the Company, it should be noted that the possible activities of the Reporting persons are subject to change at any time. Except to the extent the foregoing may be deemed a plan or proposal, none of the Reporting Persons has any plans or proposals which relate to, or could result in, any of the matters referred to in paragraphs (a) through (j), inclusive, of the instructions to Item 4 of Schedule 13D. The Reporting Persons may, at any time and from time to time, review or reconsider their position and/or change their purpose and/or formulate plans or proposals with respect thereto. Each of the Reporting Persons expressly disclaim beneficial ownership of securities held by any person or entity other than, to the extent of any pecuniary interest therein, the various accounts under such Reporting Person's management and control. The securities reported herein as being beneficially owned by the Reporting Persons do not include any securities held by other members of Ad Hoc Committee (including but not limited to accounts or entities under its control or under common control with such other members) or any other person or entity other than the various accounts under the Reporting Persons' management and control. ITEM 5. INTEREST IN SECURITIES OF THE COMPANY. (a),(b) According to the Company's most recent Form 10-Q, there were 67,956,832 Shares issued and outstanding as of October 31, 2005. Based on such information, the Reporting Persons report beneficial ownership of 533,591 Shares held by Tenor, of which the Advisor shares the power to dispose and Mr. Shah shares the power to direct the vote. The 533,591 Shares represent 0.8% of the total issued and outstanding Shares. The Ad Hoc Committee may be deemed to be a group. (c) In the past sixty days, Tenor made the following transactions in the Shares and Notes, in each case through open market transactions with a broker-dealer counterparty: (i) Purchased $1,000,000 principal value of Notes for $892,881.94, including accrued interest paid, on October 18, 2005; (ii) Sold 4,904 Shares at $2.54 per share, net of commissions, on October 21, 2005; (iii) Sold $2,500,000 principal value of Notes for $2,229,166.67, including accrued interest received, on October 21, 2005; (iv) Sold $1,750,000 principal value of Notes for $1,557,366.32, including accrued interest received, on October 24, 2005; SCHEDULE 13D - --------------------- --------------------- CUSIP NO. 69357C107 PAGE 8 OF 10 PAGES - --------------------- --------------------- (v) Purchased 4,904 Shares for $1.27 per share, net of commissions, on October 25, 2005; (vi) Sold $400,000 principal value of Notes for $348,180.56, including accrued interest received, on October 26, 2005; (vii) Bought $760,000 principal value of Notes for $353,400.00, with no accrued interest paid, on November 10, 2005; and (viii) Bought $390,000 principal value of Notes for $192,075.00, with no accrued interest paid, on November 23, 2005. (d) and (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE COMPANY. None of the Reporting Persons is a party to any contract, arrangement, understanding or relationship with respect to any securities of the Company, including, but not limited to, the transfer or voting of any securities of the Company, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies, except as previously disclosed. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 1. Joint Filing Agreement dated December 12, 2005, signed by each of the Reporting Persons in order to confirm that this statement is being filed on behalf of each of the Reporting Persons, attached hereto as Exhibit A. 2. Confidentiality Agreement dated December 6, 2005, between the Advisor and the Company. SCHEDULE 13D - --------------------- --------------------- CUSIP NO. 69357C107 PAGE 9 OF 10 PAGES - --------------------- --------------------- SIGNATURES After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: December 12, 2005 TENOR OPPORTUNITY MASTER FUND, LTD. By: Tenor Opportunity Associates, LLC, its Investment Advisor By: /s/ Robin R. Shah ------------------------------- Name: Robin R. Shah Title: Member TENOR CAPITAL MANAGEMENT CO., L.P. By: /s/ Robin R. Shah ------------------------------- Name: Robin R. Shah Title: Partner By: /s/ Robin R. Shah ------------------------------- Name: Robin R. Shah SCHEDULE 13D - --------------------- --------------------- CUSIP NO. 69357C107 PAGE 10 OF 10 PAGES - --------------------- --------------------- EXHIBIT INDEX 1. Joint Filing Agreement dated December 12, 2005, signed by each of the Reporting Persons in order to confirm that this statement is being filed on behalf of each of the Reporting Persons, attached hereto as Exhibit A. 2. Confidentiality Agreement dated December 6, 2005, between the Advisor and the Company. EX-99 2 exhibit1.txt EXHIBIT 1 - JOINT FILING AGREEMENT EXHIBIT 1 JOINT FILING UNDERTAKING The undersigned, being duly authorized thereunto, hereby execute this agreement as an exhibit to this Schedule 13D to evidence the agreement of the below-named parties, in accordance with the rules promulgated pursuant to the Securities Exchange Act of 1934, to file this Schedule jointly on behalf of each such party. Dated as of December 12, 2005 TENOR OPPORTUNITY MASTER FUND, LTD. By: Tenor Opportunity Associates, LLC, its Investment Advisor By: /s/ Robin R. Shah --------------------------- Name: Robin R. Shah Title: Member TENOR CAPITAL MANAGEMENT CO., L.P. By: /s/ Robin R. Shah --------------------------- Name: Robin R. Shah Title: Partner By: /s/ Robin R. Shah --------------------------- Name: Robin R. Shah ` EX-99 3 exhibit2.txt EXHIBIT 2 - CONFIDENTIALITY AGREEMENT EXHIBIT 2 STRICTLY CONFIDENTIAL December 6, 2005 Tenor Capital Management Co., L.P. 65 East 55th Street, 35th Floor New York, NY 10022 Ladies and Gentlemen: The purpose of this agreement is to set forth the basis upon which PRG-Schultz International, Inc. (together with all of its affiliates, the "Company") proposes to provide you with Evaluation Material (as defined herein), as a member of the ad hoc committee of holders of the Company's 4 3/4% Convertible Subordinated Notes due 2006 (the "Notes" and such committee, the "Ad Hoc Noteholders Committee") for use in connection with discussions between the Company and the Ad Hoc Noteholders Committee regarding a possible transaction (a "Possible Transaction") involving the restructuring of the Notes. CONFIDENTIALITY OF EVALUATION MATERIALS: As a condition to your being furnished with such information, you agree to treat any information concerning the Company furnished to you by or on behalf of the Company after October 26, 2005 and regardless of the manner in which it is furnished, together with analyses, compilations, studies or other documents or records prepared by you or any of your directors, officers, employees, affiliates, agents or advisors (including, without limitation, attorneys, accountants, consultants, bankers, financial advisors and any representatives of your advisors) (collectively, "Representatives") to the extent that such analyses, compilations, studies, documents or records contain or otherwise reflect or are generated from such information (hereinafter collectively referred to as the "Evaluation Material"), in accordance with the provisions of this agreement. The term "Evaluation Material" does not include information which (i) was or becomes generally available to the public other than as a result of a disclosure by you or your Representatives in violation of this agreement, (ii) was or becomes available to you on a non-confidential basis from a source other than the Company or its advisors provided that such source is not known to you to be bound by a confidentiality agreement with the Company or otherwise not known to you to be prohibited from transmitting the information to you by a contractual, legal or fiduciary obligation, (iii) was within your possession prior to its being furnished to you by or on behalf of the Company, provided that the source of such information was not known to you to be bound by a confidentiality agreement with the Company or otherwise not known to you to be prohibited from transmitting the information to you by a contractual, legal or fiduciary obligation, or (iv) was independently developed by you using information that is not known to otherwise constitute Evaluation Material. Any combination of information shall not be deemed to be within the foregoing exceptions because individual features of the information are in the public domain. RESTRICTIONS ON DISCLOSURE AND USE: You agree that the Evaluation Material will be used solely for the purpose of evaluating and/or participating in a Possible Transaction, and not used for any other purpose, and that such Evaluation Material will be kept confidential by you and your Representatives; provided, however, that (a) such Evaluation Material may be disclosed to your Representatives who need to know such information for the purpose of evaluating any such Possible Transaction (it being understood that such Representatives shall have been informed by you of the confidential and proprietary nature of the Evaluation Material and shall have been advised by you of this agreement and whom you shall cause to comply with the provisions hereof), and (b) any disclosure of such Evaluation Material may be made to which the Company consents in writing prior to disclosure. In any event, you shall be responsible for any breach of this agreement by any of your Representatives and you agree, at your sole expense, to take all reasonable measures (including but not limited to court proceedings) to restrain your Representatives from prohibited or unauthorized disclosure or use of the Evaluation Material. You further agree that the Evaluation Material that is in written form shall not be copied or reproduced at any time without the prior written consent of the Company, except for distribution to your Representatives in accordance with and subject to the provisions of this agreement. You acknowledge that you are aware, and will advise each of your Representatives who is informed as to the matters that are the subject of this agreement, that the securities laws of the United States prohibit any person who or that has received from an issuer of securities material, non-public information from purchasing or selling securities of such issuer or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. In addition, except as required by any applicable law, rule or regulation, without the prior written consent of the Company, you will not, and will direct your Representatives not to, disclose to any person other than other members of the Ad Hoc Noteholders Committee, (i) the existence of this agreement and that the Evaluation Material has been made available to you or your Representatives, (ii) that discussions or negotiations are taking place concerning a Possible Transaction between the Company and you or (iii) any terms, conditions or other facts with respect to any such Possible Transaction, including the status thereof. For these purposes, it is understood and agreed that the members of the Ad Hoc Noteholders Committee may make securities filings under Section 13(d) of the Securities Exchange Act of 1934 in which the matters set forth in clauses (i) and (ii) above may be disclosed to the extent counsel for the Ad Hoc Noteholders Committee believes such disclosure is required by law. In the event that you or your Representatives are requested or required pursuant to any applicable law, rule or regulation (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or other process) to disclose any Evaluation Material or any other information regarding the existence of this agreement or discussions or negotiations concerning a Possible Transaction between the Company and you, it is agreed that you will provide the Company with prompt notice of any such request or requirement (written if practical) so that the Company may seek an appropriate protective order or waive your compliance with the provisions of this agreement. If, failing the entry of a protective order or the receipt of a waiver hereunder, you or your Representatives are legally compelled to disclose Evaluation Material, you or your Representatives may disclose only that portion of the Evaluation Material which you or your Representatives are legally compelled to disclose and will exercise reasonable efforts to obtain assurance that confidential treatment will be accorded to that portion of the Evaluation Material which is being disclosed. In any event, you or your Representatives will not oppose action by the Company to obtain an appropriate protective order 2 or other reliable assurance that confidential treatment will be accorded the Evaluation Material. In the event that you or your Representatives shall have complied with the provisions of this paragraph, the Company agrees that such disclosure may be made by you or your Representatives without any liability hereunder. NO WARRANTY: Subject to the terms and conditions of any definitive agreement providing for a transaction and without prejudice thereto, you understand and acknowledge that any and all information contained in the Evaluation Material is being provided without any representation or warranty, express or implied, as to the accuracy or completeness of the Evaluation Material, on the part of the Company. It is understood that the scope of any representations and warranties to be given by the Company will be negotiated along with other terms and conditions in arriving at a mutually acceptable form of definitive agreement should discussions between you and the Company progress to such a point. Notwithstanding anything in this agreement to the contrary, we represent and warrant that we may rightfully disclose or make available Evaluation Material to you without the violation of any contractual, legal, fiduciary or other obligation to any person. OWNERSHIP AND RETURN OF THE EVALUATION MATERIAL: All Evaluation Material disclosed by the Company shall be and shall remain the property of the Company. Upon the request of the Company, you shall, at your election, either return or destroy all documents thereof furnished to you by the Company, except one copy of such documents may be kept in your legal department for compliance purposes. Except to the extent a party is advised by counsel such destruction is prohibited by law, you will also, at your election, either return to the Company or destroy all written material, memoranda, notes, copies, excerpts and other writings or recordings whatsoever prepared by you or your Representatives based upon, containing or otherwise reflecting any Evaluation Material except one copy of such documents may be kept in your legal department or with your legal counsel for compliance purposes. Any destruction of materials shall be verified by you in writing by one of your duly authorized officers. Any Evaluation Material that is not returned or destroyed, including without limitation, any oral Evaluation Material, shall remain subject to the confidentiality obligations set forth in this agreement. NO OBLIGATION: You agree that unless and until a definitive agreement regarding a Possible Transaction between the Company and you has been executed, neither the Company nor you will be under any legal obligation of any kind whatsoever with respect to such a transaction by virtue of this agreement except for the matters specifically agreed to herein. You further acknowledge and agree that the Company reserves the right, in its sole discretion, to reject any and all proposals made by you or any of your Representatives with regard to a Possible Transaction, to terminate discussions and negotiations with you or your Representatives at any time and to conduct any process for a transaction involving the Company as it may determine. REMEDIES: It is understood and agreed that money damages would not be a sufficient remedy for any breach of this agreement and each party shall be entitled to seek specific performance and injunctive or other equitable relief as a remedy for any such breach and you further agree to waive any requirement for the security or posting of any bond in connection with such remedy. Such remedy shall not be deemed to be the exclusive remedy for breach of this agreement but shall be in addition to all other remedies available at law or equity. In the event of 3 litigation relating to this agreement, if a court of competent jurisdiction determines in a final, non-appealable order that either party or its Representatives have breached this agreement, then such party shall reimburse the other party for its reasonable legal fees and expenses incurred in connection with such litigation, including any appeals therefrom. GOVERNING LAW; JURISDICTION: This agreement shall be governed and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof. You agree, on behalf of yourself and your Representatives, to submit to the jurisdiction of any state or federal court of competent jurisdiction located in the state of Delaware to resolve any dispute relating to this agreement and waive any right to move to dismiss or transfer any such action brought in any such court on the basis of any objection to personal jurisdiction or venue. ENTIRE AGREEMENT: This agreement constitutes the entire agreement, and supersedes the Confidentiality Agreement (which is hereby terminated) and 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. TERM: Your obligations under this agreement shall expire on the earliest of (i) December 23, 2005, (ii) the date on which the Company files, or there is commenced against the Company, any petition for relief under Title 11 of the United States Code, (iii) the date on which the Company announces the acceptance of an offer from any party, other than an offer accepted or endorsed by the Ad Hoc Noteholders Committee, for any business combination, sale or similar extraordinary transaction involving the Company or all or substantially all of its assets (a "Significant Transaction"), and (iv) the date on which the Company announces its intent to conduct, or initiates the conduct of, an auction or similar process involving a Significant Transaction (provided that the provisions of this clause (iv) shall not apply to a limited market check involving prior participants in the Company's previously conducted auction) (the earliest of such dates, the "Termination Date"). Within five business days after the Termination Date, the Company shall publicly disclose, by press release, Securities and Exchange Commission filing or otherwise, an appropriate summary of the Evaluation Material that the Company believes, in its reasonable judgment, constitutes the then material non-public information contained in the Evaluation Material. If the Company fails to make such disclosure prior to such date, the Company, recognizing that time is of the essence, agrees that, at the Company's sole expense, you are authorized to make the Evaluation Material or any portion thereof available to the public generally, without any liability to the Company for such disclosure. 4 This agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Please confirm that the foregoing is in accordance with your understanding of our agreement by signing and returning to us a copy of this letter. Very truly yours, PRG-SCHULTZ INTERNATIONAL, INC. By: /s/ Clint McKellar ------------------------------------- Name: Clint McKellar Title: Senior Vice President and General Counsel Accepted and agreed as of the date first written above: TENOR CAPITAL MANAGEMENT CO., L.P. By: /s/ Robin Shah -------------------------------- Name: Robin Shah Title: Partner 5 -----END PRIVACY-ENHANCED MESSAGE-----