FINANCING AGREEMENT

                                                                    EXHIBIT 10.3


                               FINANCING AGREEMENT


     Financing   Agreement,   dated as of March 17, 2006, by and among PRG-SCHULTZ
INTERNATIONAL,   INC., a Georgia   corporation   (the "Parent"),   PRG-SCHULTZ   USA,
INC., a Georgia   corporation   (the   "Borrower"),   each   subsidiary of the Parent
listed as a "Guarantor" on the signature pages hereto (together with the Parent,
each a "Guarantor" and collectively,   jointly and severally,   the "Guarantors"),
the lenders,   from time to time, party hereto (each a "Lender" and collectively,
the   "Lenders"),   ABLECO   FINANCE   LLC, a   Delaware   limited   liability   company
("Ableco"), as collateral agent for the Lenders (in such capacity, together with
any   successor    collateral   agent,   the   "Collateral    Agent"),    and   THE   CIT
GROUP/BUSINESS   CREDIT,   INC., a New York corporation ("CIT"), as administrative
agent   for   the   Lenders   (in   such    capacity,    together   with   any   successor
administrative    agent,   the   "Administrative    Agent"   and   together   with   the
Collateral Agent, each an "Agent" and collectively, the "Agents").

                                    RECITALS

     The   Borrower   has   asked the   Lenders   to   extend   credit to the   Borrower
consisting of (a) a term loan in the aggregate   principal   amount of $25,000,000
and (b) a revolving   credit   facility in an   aggregate   principal   amount not to
exceed $20,000,000 at any time outstanding, which will include a subfacility for
the   issuance of letters of credit.   The proceeds of the term loan and the loans
made under the revolving   credit   facility   shall be used to refinance   existing
senior indebtedness of the Borrower, for general working capital purposes of the
Borrower and to pay fees and expenses related to this Agreement and the Exchange
Offer   Transaction   (as defined   below).   The letters of credit will be used for
general working capital purposes of the Borrower. The Lenders are severally, and
not jointly,   willing to extend such credit to the Borrower subject to the terms
and conditions hereinafter set forth.

     In consideration of the premises and the covenants and agreements contained
herein, the parties hereto agree as follows:

                                    ARTICLE I

                           DEFINITIONS; CERTAIN TERMS

     Section 1.01   Definitions.   As used in this Agreement,   the following terms
shall   have   the   respective   meanings   indicated   below,   such   meanings   to be
applicable equally to both the singular and plural forms of such terms:

     "Ableco"   has the meaning   specified   therefor in the   preamble   hereto and
shall include its permitted assigns and successors.



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     "Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account   Receivable,   chattel paper,   or a
general intangible.

     "Account   Receivable"   means,   with   respect   to any   Person,   all of   such
Person's now owned or hereafter acquired right, title, and interest with respect
to   "accounts"   (as that term is defined in Article 9 of the Code),   and any and
all   "supporting   obligations"   (as that term is defined in the Code) in respect
thereof.

     "Action" has the meaning specified therefor in Section 12.12.

     "additional amount" has the meaning specified therefor in Section 2.08(a).

     "Administrative   Agent" has the meaning specified   therefor in the preamble
hereto.

     "Administrative   Agent's   Account" means an account at a bank designated by
the   Administrative   Agent   from   time to time as the   account   into   which   the
Borrower shall make all payments to the Administrative   Agent for the benefit of
the Agents and the Lenders under this Agreement and the other Loan Documents.

      "Affiliate"   means,   with   respect to any   Person,   any other   Person   that
directly   or   indirectly   through   one   or   more   intermediaries,   controls,   is
controlled   by, or is under common   control with,   such Person.   For purposes of
this definition,   "control" of a Person means the power, directly or indirectly,
either to (i) vote 10% or more of the Capital Stock having ordinary voting power
for the   election   of   directors   of such   Person   or (ii)   direct   or cause the
direction of the   management   and policies of such Person whether by contract or
otherwise.   Notwithstanding   anything herein to the contrary,   in no event shall
any Agent or any Lender be considered an "Affiliate" of any Loan Party.

     "After   Acquired   Property"   means any fee-owned   interest in real property
acquired by the Parent or any of its   Subsidiaries   after the date hereof with a
Current Value in excess of $200,000.

     "Agent" and "Agents" have the respective meanings specified therefor in the
preamble hereto.

     "Agent Advances" has the meaning specified therefor in Section 10.08(a).

     "Agreement"   means this   Financing   Agreement,   including   all   amendments,
modifications   and   supplements   and any   exhibits   or   schedules   to any of the
foregoing,   and shall refer to the Agreement as the same may be in effect at the
time such reference becomes operative.

     "Albertsons   Receivables" means Accounts   Receivable owing from Albertsons,
Inc. with a due date no later than 60 days after the invoice date.



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     "Articles   of   Amendment"   means   the   articles   of   amendment   adopted   by
resolution   of the board of directors of the Parent on March 15, 2006   regarding
the Series A Preferred Stock and the Series B Preferred Stock.

     "Assignment and Acceptance" means an assignment and acceptance entered into
by an assigning Lender and an assignee,   in accordance with Section 12.07 hereof
and   substantially   in the   form   of   Exhibit   A-1   hereto   or such   other   form
acceptable to the Agents.

     "Authorized Officer" means, with respect to any Person, the chief executive
officer, chief financial officer,   president or executive vice president of such
Person.

     "Availability"   means,   at any time, the sum of (a) the difference   between
(i) the lesser of (A) the Borrowing   Base,   and (B) the Total   Revolving   Credit
Commitment,   and (ii) the sum of (A) the aggregate   outstanding principal amount
of all Revolving Loans, (B) all Letter of Credit Obligations, and (C) the excess
of (x) the aggregate   amount,   if any, of all trade payables of the Borrower and
the Domestic   Guarantors   which are past due by more than 30 days and are not in
dispute,   over   (y) 10% of   trade   payables   of the   Borrower   and the   Domestic
Guarantors at such time, and (b) Qualified Cash.

     "Bankruptcy   Code" means the United States   Bankruptcy Code (11 U.S.C.   ss.
101, et seq.),   the Bankruptcy   and Insolvency Act (Canada),   and the Companies'
Creditors Arrangement Act (Canada), each as amended, and any successor statutes.

     "Base LIBOR Rate" means the rate per annum,   determined   by   Administrative
Agent in accordance with its customary procedures, and utilizing such electronic
or other quotation   sources as it considers   appropriate   (rounded   upwards,   if
necessary,   to the   next   1/16%),   on the   basis of the   rates   at which   Dollar
deposits are offered to major banks in the London   interbank   market on or about
11:00   a.m.   (New York time) 3 Business   Days prior to the   commencement   of the
applicable Interest Period, for a term and in amounts comparable to the Interest
Period and amount of the LIBOR Rate Loan requested by the Borrower in accordance
with this Agreement,   which   determination shall be conclusive in the absence of
manifest error.

     "Board" means the Board of Governors of the Federal   Reserve   System of the
United States.

     "Borrower" has the meaning specified therefor in the preamble hereto.

     "Borrowing   Base"   means,   as of   any   date   of   determination,   an   amount
determined   by the   Administrative   Agent   in   the   exercise   of   its   Permitted
Discretion, with reference to the most recent Borrowing Base Certificate,   equal
to the   difference   between (a) the sum of (i) up to 85% of the value of the Net
Amount of Eligible Accounts Receivable, less the amount, if any, of the Dilution
Reserve,   plus (ii) the lesser of (A) up to 20% of the Eligible Backlog, and (B)
50% of the amount   determined   under clause (a)(i) of this   definition,   and (b)
without   duplication,   the sum of (i) the   Preliminary   Reserve,   plus (ii) such
reserves as the Administrative Agent may deem appropriate in the exercise of its
Permitted Discretion.


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     "Borrowing Base   Certificate"   means a certificate   signed by an Authorized
Officer of the Borrower and setting forth the   calculation of the Borrowing Base
in compliance with Section   7.01(a)(vii),   substantially   in the form of Exhibit
B-1.

     "Brazilian Pledge Agreement" has the meaning specified therefore in Section
5.03(a).

     "Business Day" means any day that is not a Saturday,   Sunday,   or other day
on which   banks are   authorized   or   required to close in the State of New York,
except that, if a   determination   of a Business Day shall relate to a LIBOR Rate
Loan,   the term   "Business   Day" also shall   exclude   any day on which banks are
closed for dealings in U.S. Dollar deposits in the London interbank market.

     "Canadian   Employee   Benefit   Laws"   shall   mean the   Canada   Pension   Plan
(Canada),   the Income Tax Act (Canada),   the Pension Benefits Standards Act 1985
(Canada),   the Employment Insurance Act (Canada), the Pension Benefits Act (Nova
Scotia), the Workers'   Compensation Act (Nova Scotia), the Labour Standards Code
(Nova Scotia),   the Occupational Health and Safety Act (Nova Scotia), the Health
and Sciences   Insurance Act (Nova   Scotia) and any federal,   provincial or local
counterparts or equivalents, in each case, as amended from time to time.

     "Canadian   Guarantee" means the general and continuing   guarantee   executed
and delivered by the Canadian   Guarantor in favor of Collateral   Agent,   for the
benefit   of   the   Agents,   and   Lenders,    in   form   and   substance    reasonably
satisfactory to the Agents.

     "Canadian    Guarantor"   means   PRG-Schultz   Canada   Corp.,   a   Nova   Scotia
unlimited liability company.

     "Canadian Pledge   Agreement" means the share pledge agreement   executed and
delivered   by   PRG-Schultz   Canada,   Inc.,   a Georgia   corporation,   in favor of
Collateral   Agent,   for the   benefit   of the   Agents   and   Lenders,   in form and
substance reasonably satisfactory to the Agents.

     "Canadian Security Agreement" means the general security agreement executed
and delivered by the Canadian   Guarantor,   in favor of Collateral Agent, for the
benefit of the Agents and Lenders, in form and substance reasonably satisfactory
to the Agents.

     "Capital   Expenditures"   means,   with respect to any Person for any period,
the   sum of (i)   the   aggregate   of all   expenditures   by   such   Person   and its
Subsidiaries   during such period that in   accordance   with GAAP are or should be
included in "property,   plant and equipment" or in a similar fixed asset account
on its balance sheet, whether such expenditures are paid in cash or financed and
including all Capitalized   Lease Obligations paid or payable during such period,
and (ii) to the extent not   covered by clause (i) above,   the   aggregate   of all
expenditures by such Person and its   Subsidiaries   during such period to acquire
by purchase or otherwise   the business or fixed assets of, or the Capital   Stock
of, any other Person.

     "Capital Guideline" means any law, rule, regulation,   policy,   guideline or
directive (whether or not having the force of law and whether or not the failure
to comply therewith would be unlawful) (i) regarding capital   adequacy,   capital


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<PAGE>

ratios,   capital   requirements,   the   calculation of a bank's capital or similar
matters,   or (ii)   affecting   the amount of capital   required   to be obtained or
maintained by any Lender,   any Person   controlling any Lender, or the L/C Issuer
or the manner in which any Lender, any Person controlling any Lender, or the L/C
Issuer allocates capital to any of its contingent liabilities (including letters
of credit), advances, acceptances, commitments, assets or liabilities.

     "Capitalized Lease" means, with respect to any Person, any lease of real or
personal   property by such Person as lessee   which is required   under GAAP to be
capitalized on the balance sheet of such Person.

     "Capitalized   Lease   Obligations"    means,   with   respect   to   any   Person,
obligations of such Person and its Subsidiaries under Capitalized   Leases,   and,
for purposes hereof,   the amount of any such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.

     "Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares,   interests,   participations   or other   equivalents   (however
designated and whether or not voting) of corporate   stock, and (ii) with respect
to any Person that is not a corporation, any and all partnership,   membership or
other equity interests of such Person.

     "Cash   Equivalents"   means   (i)   marketable   direct   obligations   issued or
unconditionally   guaranteed   by the United   States   Government   or issued by any
agency or instrumentality thereof and backed by the full faith and credit of the
United   States,   in each   case,   maturing   within   six   months   from the date of
acquisition   thereof;   (ii)   commercial   paper,   maturing not more than 270 days
after the date of issue rated P-1 by Moody's or A-1 by S & P; (iii) certificates
of deposit   maturing   not more than 270 days after the date of issue,   issued by
commercial   banking   institutions   and money market or demand   deposit   accounts
maintained at commercial banking institutions,   each of which is a member of the
Federal   Reserve   System and has a combined   capital and   surplus and   undivided
profits   of not   less   than   $500,000,000;   (iv)   repurchase   agreements   having
maturities   of not more   than 90 days   from the date of   acquisition   which   are
entered   into   with   banks   included   in   the   commercial   banking   institutions
described   in clause   (iii)   above and which are   secured by   marketable   direct
obligations   of the United States   Government or any agency   thereof,   (v) money
market   accounts   maintained   with   mutual   funds   having   assets   in   excess of
$2,500,000,000; (vi) tax exempt securities rated A or better by Moody's or A+ or
better by S&P, and (vii) with respect to Foreign Subsidiaries, investments which
are   comparable in term and credit   quality to those   described in the foregoing
clauses (i) - (vi).

     "CFC" means a controlled   foreign   corporation   (as that term is defined in
the IRC).

     "Change in Law" has the meaning specified therefor in Section 4.05(a).

     "Change of Control" means each occurrence of any of the following:

      (a) the acquisition by any person,   including any syndicate or group deemed
to be a "person"   under   Section   13(d)(3) of the   Exchange   Act, of   beneficial
ownership,   directly   or   indirectly,    through   a   purchase,   merger   or   other
acquisition   transaction   or series of   transactions,   of shares of the   Capital
Stock of the Parent   entitling   that person to exercise 50% or more of the total


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<PAGE>

voting power of all shares of such Capital Stock   entitled to vote   generally in
elections of directors,   other than any   acquisition   by the Parent,   any of its
Subsidiaries or any employee benefit plans of the Parent,

     (b) the Parent ceases to own and control,   directly or indirectly,   100% of
the shares of the Capital Stock of the Borrower,

     (c)   during   any   consecutive   two-year   period,   individuals   who   at   the
beginning   of that   two-year   period   constituted   the board of directors of the
Parent (together with any new directors whose election to the board of directors
of the Parent,   or whose   nomination   for   election by the   shareholders   of the
Parent,   was   approved   by a vote of a majority of the   directors   then still in
office   who were   either   directors   at the   beginning   of such   period or whose
election or nomination for election were   previously so approved)   cease for any
reason to constitute a majority of the board of directors then in office, or

     (d) the occurrence of an Indenture Change of Control.

     "CIT" has the meaning   specified   therefor in the preamble hereto and shall
include its permitted successors and assigns.

     "Claims Management System" means the database   repository of the Parent and
its   Subsidiaries   which   tracks   all   claims of   clients   of the Parent and its
Subsidiaries    through    the   claim   life   cycle   from    prospective    claim   to
work-in-process to approved for invoicing.

     "Code" means the New York Uniform   Commercial   Code, as in effect from time
to time;   provided,   however,   that in the event   that,   by reason of   mandatory
provisions   of   law,   any or all of the   attachment,   perfection,   priority,   or
remedies with respect to Collateral   Agent's Liens on any Collateral is governed
by the Uniform   Commercial Code as enacted and in effect in a jurisdiction other
than the State of New York,   the term "Code"   shall mean the Uniform   Commercial
Code as enacted and in effect in such other jurisdiction   solely for purposes of
the provisions   thereof relating to such attachment,   perfection,   priority,   or
remedies.

     "Collateral" means all of the property and assets and all interests therein
and proceeds thereof now owned or hereafter   acquired by any Person upon which a
Lien is granted or purported to be granted by such Person as security for all or
any part of the Obligations pursuant to the Loan Documents.

     "Collateral   Agent" has the   meaning   specified   therefor   in the   preamble
hereto.

     "Collection Account" and "Collection   Accounts" have the meanings specified
therefor in Section 8.01(a).

     "Collections" means all cash, checks, notes,   instruments,   and other items
of   payment   (including   insurance   proceeds,   proceeds   of cash   sales,   rental
proceeds, and tax refunds).

     "Commitments"   means, with respect to each Lender,   such Lender's Revolving
Credit Commitment and Term Loan Commitment.



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     "Consolidated EBITDA" means, with respect to any Person for any period, the
Consolidated   Net Income of such Person and its   Subsidiaries   for such   period,
plus without   duplication,   the sum of the following   amounts of such Person and
its   Subsidiaries   for such   period and to the extent   deducted   in   determining
Consolidated Net Income of such Person and its Subsidiaries for such period: (a)
Consolidated Net Interest Expense,   (b) net income tax expense, (c) depreciation
expense,   (d) amortization   expense,   and (e) to the extent actually paid during
such period,   fees and expenses   related to the consummation of the transactions
contemplated   to be closed on or about the Effective   Date under this   Agreement
(including the Exchange Offer Transaction).

     "Consolidated Net Income" means, with respect to any Person for any period,
the net income   (loss) of such   Person   and its   Subsidiaries   for such   period,
determined on a   consolidated   basis and in accordance   with GAAP, but excluding
from the determination of Consolidated Net Income (without   duplication) (a) any
non-cash extraordinary or non-recurring gains or losses or any non-cash gains or
losses   solely to the extent   that they will not   result in cash   charges in any
future period,   (b)   restructuring   charges in an aggregate amount not to exceed
$1,250,000 in any Fiscal Year or $5,000,000 in the aggregate   during the term of
this   Agreement;   provided   if the actual   amount of the   restructuring   charges
excluded   from   Consolidated   Net Income is less than   $1,250,000   in any Fiscal
Year, then the unused portion may be carried forward to subsequent   Fiscal Years
and excluded from   Consolidated   Net Income in such   subsequent   Fiscal Years so
long as the aggregate   amount excluded from   Consolidated   Net Income during the
term of this Agreement does not exceed   $5,000,000,   (c) effects of discontinued
operations, (d) interest that is paid-in-kind,   (e) interest income, and (f) any
tax refunds, net operating losses or other net tax benefits received during such
period on account of any prior period.

     "Consolidated   Net Interest   Expense" means, with respect to any Person for
any period,   gross cash interest expense of such Person and its Subsidiaries for
such period   determined   on a   consolidated   basis and in   accordance   with GAAP
(including interest expense paid to Affiliates of such Person), less (i) the sum
of (A) interest   income for such period and (B) gains for such period on Hedging
Agreements   (to the extent not   included   in   interest   income   above and to the
extent not deducted in the calculation of gross interest expense), plus (ii) the
sum of (A)   losses   for such   period on   Hedging   Agreements   (to the extent not
included in such gross   interest   expense) and (B) the upfront costs or fees for
such period   associated   with Hedging   Agreements (to the extent not included in
such gross interest expense),   in each case,   determined on a consolidated basis
and in accordance with GAAP.

     "Consolidated   Senior Debt"   means,   as of any date of   determination,   the
aggregate   principal   amount of all Revolving Loans and the aggregate   principal
amount of the Term Loan.

     "Contingent   Obligation"   means, with respect to any Person, any obligation
of such Person   guaranteeing or intended to guarantee any Indebtedness,   leases,
dividends or other obligations ("primary   obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,   including (i)
the direct or   indirect   guaranty,   endorsement   (other than for   collection   or
deposit   in the   ordinary   course   of   business),   co-making,   discounting   with
recourse or sale with   recourse by such   Person of the   obligation   of a primary
obligor,   (ii) the   obligation   to make   take-or-pay   or   similar   payments,   if
required,   regardless   of   nonperformance   by any other   party or   parties to an
agreement,   (iii) any obligation of such Person, whether or not contingent,   (A)


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to purchase any such primary obligation or any property   constituting   direct or
indirect security therefor,   (B) to advance or supply funds (1) for the purchase
or payment of any such primary   obligation or (2) to maintain working capital or
equity capital of the primary   obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (C) to purchase property, assets, securities or
services   primarily   for the purpose of assuring   the owner of any such   primary
obligation of the ability of the primary obligor to make payment of such primary
obligation   or (D)   otherwise   to assure   or hold   harmless   the   holder of such
primary obligation against loss in respect thereof; provided,   however, that the
term "Contingent   Obligation" shall not include any product warranties   extended
in the ordinary   course of   business.   The amount of any   Contingent   Obligation
shall be deemed to be an amount   equal to the stated or   determinable   amount of
the primary obligation with respect to which such Contingent   Obligation is made
(or,   if less,   the maximum   amount of such   primary   obligation   for which such
Person may be liable   pursuant to the terms of the   instrument   evidencing   such
Contingent Obligation) or, if not stated or determinable, the maximum reasonably
anticipated   liability with respect thereto (assuming such Person is required to
perform thereunder), as determined by such Person in good faith.

     "Control   Agreement"   means a   control   agreement,   in form   and   substance
reasonably   satisfactory to the Agents,   executed and delivered by the Parent or
one of   its   Subsidiaries,   Collateral   Agent,   Administrative   Agent,   and   the
applicable securities intermediary or commodities   intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).

     "Current Value" has the meaning specified therefor in Section 7.01(o).

     "Default"   means an event which,   with the giving of notice or the lapse of
time or both, would constitute an Event of Default.

     "Deposit Account" means any deposit account (as that term is defined in the
Code).

     "Dilution" means, as of any date of determination, a percentage, based upon
the   experience   of the   immediately   prior 12   months,   that is the   result   of
dividing the Dollar amount of (a) bad debt write-downs,   discounts,   advertising
allowances,   credits, or other dilutive items with respect to the Borrower's and
the Domestic   Guarantors'   Account   Receivables   during such period,   by (b) the
Borrower's   and the   Domestic   Guarantors'   billings   with   respect   to   Account
Receivables during such period (excluding extraordinary items).

     "Dilution   Reserve"   means,   as of any   date of   determination,   an   amount
sufficient to reduce the advance rate against   Eligible   Accounts   Receivable by
one percentage point for each percentage point by which Dilution is in excess of
5%.

     "Disposition"   means any   transaction,   or series of related   transactions,
pursuant   to   which   any   Person   or   any of its   Subsidiaries   sells,   assigns,
transfers or otherwise   disposes of any property or assets (whether now owned or
hereafter   acquired)   to any other   Person,   in each   case,   whether   or not the


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consideration therefor consists of cash, securities or other assets owned by the
acquiring Person.

     "Dissolved Subsidiaries" means PRGRS, Inc., a Delaware corporation,   PRGLS,
Inc.,   a   Delaware   corporation,   Cost   Recovery   Professionals   PTY,   Ltd.,   an
Australian   proprietary   company,   Profit   Recovery   Professionals   PTY, Ltd, an
Australian   proprietary company, PRG Holding Co. (France) No. 1, LLC, a Delaware
limited liability   company,   and PRG Holding Co. (France) No. 2, LLC, a Delaware
limited liability company.

     "Dollar,"   "Dollars"   and the   symbol "$" each   means   lawful   money of the
United States of America.

     "Domestic   Guarantor"   means any Guarantor   organized under the laws of the
United States or the District of Columbia (including the PR Partnership).

     "Domestic Loan Party" means any Loan Party that is organized under the laws
of the United States or the District of Columbia (including the PR Partnership).

     "Domestic   Subsidiary" means any Subsidiary of the Parent that is organized
under the laws of the United States or the District of Columbia   (including   the
PR Partnership).

     "Effective   Date" means the date, on or before March 31, 2006, on which all
of the   conditions   precedent   set forth in Section 5.01 are first   satisfied or
waived.

     "Eligible   Accounts   Receivable"   means   the   Accounts   Receivable   of   the
Borrower and the Domestic   Guarantors (other than the PR Partnership) which are,
and at all times continue to be, acceptable to the   Administrative   Agent in its
Permitted   Discretion.   In general,   an Account Receivable may, in the Permitted
Discretion of the Administrative Agent, be deemed to be eligible if:

     (a) delivery of the   merchandise   or the rendition of the services has been
completed with respect to such Account Receivable and the Account Receivable has
not resulted from a transaction   wherein goods are placed on   consignment or are
sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill
and hold,   or any other   terms by reason   of which the   payment   by the   Account
Debtor may be conditional;

     (b) no return, rejection, repossession or dispute has occurred with respect
to such   Account   Receivable,   the Account   Debtor has not   asserted any setoff,
defense or counterclaim with respect to such Account   Receivable,   and there has
not occurred any   extension of the time for payment with respect to such Account
Receivable   without the consent of the Administrative   Agent,   provided that, in
the case of any   dispute,   setoff,   defense or   counterclaim   with respect to an
Account   Receivable,   the portion of such Account Receivable not subject to such
dispute, setoff, defense or counterclaim will not be ineligible solely by reason
of this clause (b);

     (c) such Account Receivable is lawfully owned by the Borrower or one of the
Domestic   Guarantors   (other than the PR Partnership) free and clear of any Lien
other than in favor of the   Collateral   Agent for the   benefit of the Agents and


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the   Lenders   and   otherwise   continues   to   be   in   full   conformity   with   all
representations   and   warranties   made by the   Borrower   and the other   Domestic
Guarantors   (other than the PR   Partnership)   to the Agents and the Lenders with
respect thereto in the Loan Documents;

     (d) such Account Receivable is unconditionally payable in Dollars within 30
days from the invoice date (other than with respect to   Albertsons   Receivables,
Meijer Receivables,   Supervalu Receivables,   Toys R Us Receivables, and Wal Mart
Holdback   Receivables) and is not evidenced by a promissory note,   chattel paper
or any other instrument or other document unless such promissory   note,   chattel
paper or other instrument or document,   together with an appropriate   instrument
of transfer   executed in blank by the Borrower,   has been delivered to and is in
the possession of the Collateral Agent;

     (e) no more than 60 days have elapsed from the invoice due date and no more
than 90 days have   elapsed   from the invoice   date with   respect to such Account
Receivable;   provided   that (i) in the case of Albertsons   Receivables,   no more
than 90 days have   elapsed   from the   invoice due date and no more than 120 days
have elapsed from the invoice   date with   respect to such   Accounts   Receivable,
(ii) in the case of Meijer   Receivables,   no more than 75 days have elapsed from
the   invoice   due date and no more than 135 days have   elapsed   from the invoice
date with respect to such   Accounts   Receivable,   (iii) in the case of Supervalu
Receivables, no more than 120 days have elapsed from the invoice due date and no
more than 150 days have   elapsed   from the   invoice   date with   respect   to such
Accounts Receivable,   (iv) in the case of Toys R Us Receivables, no more than 75
days   have   elapsed   from the   invoice   due date and no more   than 135 days have
elapsed from the invoice date with respect to such Accounts Receivable,   and (v)
Wal Mart Holdback Receivables will not be ineligible under this clause (e);

     (f) such Account Receivable is not due from an Affiliate of the Borrower or
its Subsidiaries;

     (g) such Account Receivable does not constitute an obligation of the United
States or any other   Governmental   Authority   (unless all steps   required by the
Administrative   Agent in connection   therewith,   including   notice to the United
States Government under the Federal Assignment of Claims Act or any action under
any state statute   comparable to the Federal Assignment of Claims Act, have been
duly taken in a manner satisfactory to the Administrative   Agent;   provided that
from the   Effective   Date through and   including the date that is 120 days after
the Effective Date, Accounts Receivable owing from the Army & Air Force Exchange
in an aggregate   amount not to exceed   $250,000 (when   aggregated   with any U.S.
Retail Key Client WIP of the Army & Air Force   Exchange   that is not   ineligible
because   of clause   (b) of the   proviso in the   definition   of "U.S.   Retail Key
Client WIP") will not be ineligible   under this clause (g) regardless of whether
all steps   required   by the   Administrative   Agent to be taken under the Federal
Assignment   of   Claims   Act or   any   state   statute   comparable   to the   Federal
Assignment of Claims Act have been taken);

     (h) the Account   Debtor (or the   applicable   office of the Account   Debtor)
with respect to such Account   Receivable   is located in the   continental   United
States,   unless such   Account   Receivable   is supported by a letter of credit or
other   similar   obligation   satisfactory   to   the   Administrative   Agent   in its
Permitted Discretion;



                                       10
<PAGE>

     (i) the Account   Debtor with   respect to such Account   Receivable   is not a
supplier to or creditor of the Borrower or the Domestic   Guarantors   (other than
the PR   Partnership)   of goods or   services   in   excess   of   $50,000;   provided,
however,   that in the event that an Account   Debtor is a supplier to or creditor
of   the   Borrower   or   one   of   the   Domestic   Guarantors   (other   than   the   PR
Partnership)   such Account   Receivable will be eligible under this clause if the
Account    Debtor   has   executed   a   non-offset    letter    satisfactory    to   the
Administrative   Agent in its Permitted   Discretion;   provided further,   however,
that   if   such an   Account   Debtor   has not   executed   a   non-offset   agreement,
Administrative Agent, in its discretion,   may include as eligible the net amount
due from such Account Debtor to the Borrower or such Domestic   Guarantors (other
than the PR Partnership);

     (j) not more than 50% of the aggregate amount of all Accounts Receivable of
the Account Debtor with respect to such Account   Receivable have remained unpaid
60 days past the   invoice due date or 90 days past the   invoice   date;   provided
that   (i) in the   case of   Albertsons   Receivables,   not   more   than   50% of the
aggregate amount of all Albertsons   Receivable have remained unpaid 90 days past
the   invoice   due date or 120 days past the   invoice   date,   (ii) in the case of
Meijer   Receivables,   not more than 50% of the   aggregate   amount of all   Meijer
Receivable   have   remained   unpaid 75 days past the invoice due date or 135 days
past the invoice date, (iii) in the case of Supervalu Receivables, not more than
50% of the aggregate amount of all Supervalu Receivable have remained unpaid 120
days past the invoice due date or 150 days past the invoice date, or (iv) in the
case of Toys R Us Receivables,   not more than 50% of the aggregate amount of all
Toys R Us Receivables   have remained unpaid 75 days past the invoice due date or
135 days past the invoice date;

     (k) (i) the Account Debtor with respect to such Account   Receivable has not
filed a petition for bankruptcy or any other relief under the Bankruptcy Code or
any other law relating to bankruptcy,   insolvency,   reorganization   or relief of
debtors,   made an assignment for the benefit of creditors,   had filed against it
any petition or other   application   for relief under the Bankruptcy   Code or any
such other law, (ii) has not failed, suspended business operations,   or called a
meeting of its creditors   for the purpose of obtaining any financial   concession
or accommodation, or (iii) has not had or suffered to be appointed a receiver or
a trustee for all or a significant portion of its assets or affairs;

     (l) in the   case   of an   Account   Debtor   who is an   individual,   is not an
employee   of   the   Borrower   or   the   Domestic   Guarantors   (other   than   the PR
Partnership)   or any of   their   respective   Affiliates   and has not died or been
declared incompetent;

     (m) the   Administrative   Agent is, and continues to be,   satisfied with the
credit   standing   of the   Account   Debtor in   relation   to the   amount of credit
extended and the   Administrative   Agent believes,   in its Permitted   Discretion,
that the prospect of collection   of such Account   Receivable is not impaired for
any reason; and

     (n) the Account Receivable does not represent the right to receive progress
payments,   installment billings (other than Milestone   Accounts),   bill and hold
invoices,   retainage   invoices,   or other advance billings that are due prior to
the completion of performance by the Borrower or one of the Domestic   Guarantors
(other than the PR Partnership) of the subject contract for goods or services.



                                       11
<PAGE>

     "Eligible   Backlog"   means   as of any   date of   determination   and   without
duplication,   (a) the U.S.   Retail Key Client WIP as of the most   recent   fiscal
quarter   end   multiplied   by (b) the   lesser of (i) the U.S.   Retail   Key Client
Effective Fee Rate and (ii) 20 percent,   multiplied   by (c) the U.S.   Retail Key
Client Claim Retention Rate.

     "Employee Plan" means an employee   benefit plan (other than a Multiemployer
Plan) covered by Title IV of ERISA and maintained (or that was maintained at any
time   during the six (6)   calendar   years   preceding   the date of any   borrowing
hereunder) for employees of any Loan Party or any of its ERISA Affiliates.

     "Environmental   Actions" means any complaint,   summons,   citation,   notice,
directive, order, claim, litigation,   investigation,   judicial or administrative
proceeding,   judgment,   letter   or other   communication   from   any   Governmental
Authority   involving   violations of Environmental   Laws or Releases of Hazardous
Materials (i) from any assets, properties or businesses of any Loan Party or any
of   its   Subsidiaries   or any   predecessor   in   interest;   (ii)   from   adjoining
properties or businesses;   or (iii) onto any facilities which received Hazardous
Materials   generated   by any   Loan   Party   or any   of   its   Subsidiaries   or any
predecessor in interest.

     "Environmental   Laws"   means   the   Comprehensive    Environmental   Response,
Compensation   and   Liability Act (42 U.S.C.   ss. 9601,   et seq.),   the Hazardous
Materials   Transportation   Act (49   U.S.C.   ss.   1801,   et seq.),   the   Resource
Conservation   and Recovery Act (42 U.S.C.   ss. 6901, et seq.), the Federal Clean
Water Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et
seq.),   the Toxic   Substances   Control Act (15 U.S.C. ss. 2601 et seq.), as such
laws may be   amended   or   otherwise   modified   from time to time,   and any other
present or future   applicable   federal   (including   the   federal   government   of
Canada),   state,   provincial,    local   or   foreign   statute,    ordinance,   rule,
regulation,   order,   judgment,   decree, permit, license or other legally binding
determination of any Governmental   Authority   imposing liability or establishing
standards   of conduct for   protection   of the   environment   or other   government
restrictions   relating to the   protection   of the   environment   or the   release,
emission,   deposit,   discharge,   leaching,   migration or spill of any   Hazardous
Materials into the environment.

     "Environmental   Liabilities   and   Costs"   means all   liabilities,   monetary
obligations,   Remedial Actions, losses, damages, punitive damages, consequential
damages,   treble   damages,   costs and expenses   (including all reasonable   fees,
disbursements   and   expenses of counsel,   experts and   consultants   and costs of
investigations   and   feasibility   studies),   fines,   penalties,    sanctions   and
interest   incurred   as a result   of any   claim   or   demand   by any   Governmental
Authority   or any third party,   and which   relate to the   liability or potential
liability   of any Loan Party with   respect to any   environmental   condition or a
Release   of   Hazardous   Materials   from or onto (i) any   property   currently   or
formerly   owned by any Loan   Party or any of its   Subsidiaries   or (ii) any Real
Property which received Hazardous   Materials   generated by any Loan Party or any
of its Subsidiaries.

     "Environmental Lien" means any Lien in favor of any Governmental   Authority
for Environmental Liabilities and Costs.

     "ERISA"   means the Employee   Retirement   Income   Security   Act of 1974,   as
amended,    and   any   successor   statute   of   similar   import,    and   regulations
thereunder, in each case, as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.



                                       12
<PAGE>

     "ERISA Affiliate" means, with respect to any Person,   any trade or business
(whether or not incorporated)   which is a member of a group of which such Person
is a member   and which   would be deemed to be a   "controlled   group"   within the
meaning of Sections 414(b), (c), (m) and (o) of the IRC.

     "Event of Default" means any of the events set forth in Section 9.01.

     "Excess   Cash Flow" means,   with respect to any Person for any period,   (i)
Consolidated   Net Income of such Person and its   Subsidiaries   for such   period,
plus (ii) all   non-cash   items of such Person and its   Subsidiaries   deducted in
determining   Consolidated Net Income for such period,   less (iii) the sum of (A)
all non-cash gains of such Person and its   Subsidiaries   included in determining
Consolidated   Net Income for such   period,   (B) all cash   principal   payments on
Indebtedness (other than voluntary prepayments of the Term Loan made pursuant to
Section 2.05(b)(ii)) of such Person and its Subsidiaries made during such period
(but in the case of the Revolving   Loans or other revolving   credit   facilities,
only to the   extent   there is an   equivalent   permanent   reduction   of the Total
Revolving   Credit   Commitment or the commitment to provide such other   revolving
credit   facility) to the extent such   Indebtedness   is permitted to be incurred,
and such   payments are   permitted   to be made,   under this   Agreement,   (C) cash
payments of taxes by such Person and its   Subsidiaries   during such period,   (D)
loan servicing fees paid in cash during such period on Indebtedness permitted to
be incurred under this Agreement,   (E) the cash portion of Capital   Expenditures
made by such   Person   and its   Subsidiaries   during   such   period to the   extent
permitted to be made under this   Agreement,   (F) the excess,   if any, of Working
Investment at the end of such period over Working Investment at the beginning of
such period (or, if the difference   results in an amount that is less than zero,
minus the excess, if any, of Working   Investment at the beginning of such period
over Working   Investment at the end of such period),   and (G) cash restructuring
charges of such Person and its Subsidiaries   whether accrued in such period or a
prior period.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Exchange Offer   Transaction" has the meaning specified therefor in Section
5.01(k).

     "Exchange   Offer   Transaction   Documents"   means the   Indenture for the 10%
Senior   Convertible   Notes,   the Indenture for the 11% Senior Notes,   the Senior
Notes, the Senior   Convertible   Notes, the Articles of Amendment,   and the other
agreements   and   documents   executed or delivered in   connection   therewith,   as
amended or modified in accordance with the terms hereof and thereof.

     "Existing   Bridge   Facility"   means the credit   facility   evidenced by that
certain   Credit   Agreement,   dated as of   December   23,   2005,   by and among the
Parent,   certain   Subsidiaries   of the Parent   signatory   thereto,   the   lenders
signatory   thereto,   and the Existing Bridge Facility Agent,   and the agreements
related thereto.

     "Existing Bridge Facility Agent" means Blum Strategic Partners II, L.P.



                                       13
<PAGE>

     "Existing Bridge Facility   Lenders" means the lenders party to the Existing
Bridge Facility.

     "Existing   Credit   Facility"   means the credit   facility   evidenced by that
certain Amended and Restated Credit Agreement, dated as of November 30, 2004, by
and among the Parent,   certain Subsidiaries of the Parent signatory thereto, and
the Existing Credit Facility Lender, and the agreements related thereto.

     "Existing Credit Facility Lender" means Bank of America, N.A.

     "Existing   Indenture" means that certain Indenture dated as of November 26,
2001 between the Parent and SunTrust Bank, as trustee, as amended or modified in
accordance with the terms hereof and thereof.

     "Existing Notes" means the 4.75%   Convertible   Subordinated   Notes due 2006
issued by the Parent pursuant to the Existing Indenture.

     "Extraordinary   Receipts"   means any cash   received by the Parent or any of
its   Subsidiaries   not in the ordinary course of business (and not consisting of
proceeds of Dispositions or Indebtedness or any foreign, United States, state or
local tax   refunds),   including   (i) pension plan   reversions,   (ii) proceeds of
insurance (other than the proceeds of business   interruption   insurance),   (iii)
judgments,   proceeds   of   settlements   or   other   consideration   of any   kind in
connection with any cause of action,   (iv) condemnation   awards (and payments in
lieu thereof),   (v) indemnity   payments,   and (vi) any purchase price adjustment
received in connection with any purchase agreement and any amounts received from
escrow arrangements in connection with any purchase agreement.

     "Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal to, for each day during such   period,   the   weighted   average of the
rates on   overnight   Federal   funds   transactions   with   members of the   Federal
Reserve   System   arranged by Federal   funds   brokers,   as   published on the next
succeeding   Business Day by the Federal   Reserve   Bank of New York,   or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations   for such day on such   transactions   received   by the   Administrative
Agent from three Federal funds brokers of recognized standing selected by it.

     "Fee Letter" means that certain fee letter, dated as of even date herewith,
among the Borrower and the Administrative Agent.

     "Field Survey and Audit" means a field survey and audit of the Loan Parties
and   an   appraisal   of the   Collateral   performed   by   auditors,   examiners,   or
appraisers selected by the Administrative Agent, at the sole cost and expense of
the Borrower.

     "Filing   Authorization   Letter"   means a letter duly   executed by each Loan
Party   authorizing   the Collateral   Agent to file   financing   statements in such
office   or   offices   as may be   necessary   or,   in the   opinion   of the   Agents,
desirable   to perfect the   security   interests   purported   to be created by each
Security Agreement.



                                       14
<PAGE>

     "Final   Maturity   Date" means March 17, 2010, or such earlier date on which
(a) the Total   Revolving   Credit   Commitment is terminated for any reason or (b)
all or any portion of the Obligations   shall become due and payable   pursuant to
the terms of Section 9.01.

     "Financial   Statements" means (i) the audited consolidated balance sheet of
the Borrower and its   Subsidiaries   for the Fiscal Year ended December 31, 2004,
and the related consolidated   statement of operations,   shareholders' equity and
cash flows for the Fiscal Year then ended,   and (ii) the unaudited   consolidated
balance   sheet of the   Borrower   and its   Subsidiaries   for the 12 months   ended
December   31,   2005,   and the   related   consolidated   statement   of   operations,
shareholder's equity and cash flows for the 12 months then ended.

     "First   Test   Period"   means   the   period   ended   on   the   last   day of the
applicable Person's first fiscal quarter ended after the Effective Date.

     "Fiscal   Year"   means   the   fiscal   year of the   Parent   (or,   prior to the
Effective   Date, the Borrower) and its   Subsidiaries   ending on December 31st of
each year.

     "Fixed Charge   Coverage   Ratio"   means,   with respect to any Person for any
period,   the   ratio   of (a)   the   Consolidated   EBITDA   of such   Person   and its
Subsidiaries   for   such   period,   to   (b)   the   sum   of   (i)   all   principal   of
Indebtedness of such Person and its Subsidiaries scheduled to be paid or prepaid
during such period,   plus (ii) gross cash interest   expense on the   Consolidated
Senior Debt during such period,   plus (iii) all income tax   liabilities   of such
Person and its Subsidiaries   that accrued during such period, to the extent that
the amount of such liabilities is greater than zero, plus (iv) cash dividends or
distributions paid by such Person and its Subsidiaries   (other than, in the case
of the Parent, dividends or distributions paid to the Parent or its wholly-owned
Subsidiaries)   during such period,   plus (v) Capital   Expenditures   made by such
Person and its Subsidiaries during such period; provided that (A) for the Fiscal
Year 2007,   the principal   paid on the Term Loan in each fiscal quarter shall be
deemed to be   $1,000,000,   and (B) for the Fiscal   Year 2008 and the Fiscal Year
2009, the principal paid on the Term Loan in each fiscal quarter shall be deemed
to   be   $2,000,000.   In   determining   the   Fixed   Charge   Coverage   Ratio   for a
particular   period, the calculation of the income tax liabilities of such Person
and its   Subsidiaries   described in clause (ii)(C) of the immediately   preceding
sentence   shall   be   made   without   giving   effect   to   any   tax   refunds,    tax
receivables,   net operating   losses or other net tax benefits that were received
or receivable during such period on account of any prior periods.

     "Foreign   Guarantor"   means any Guarantor   that is not organized   under the
laws of any state of the United States or the District of Columbia.

     "Foreign   Subsidiary"   means   any   Subsidiary   of the   Parent   that   is not
organized   under the laws of any state of the United   States or the   District of
Columbia.

     "Funding    Losses"    has   the    meaning    specified    therefor   in   Section
2.04(f)(ii)(B).

     "Funds Flow Agreement"   means that certain Funds Flow   Agreement,   dated of
even date herewith, by and among the Administrative Agent, the Collateral Agent,
the Lenders, and each Loan Party.



                                       15
<PAGE>

     "GAAP" means generally accepted   accounting   principles in effect from time
to time in the United   States,   provided   that for the   purpose of Section   7.03
hereof and the definitions   used therein,   "GAAP" shall mean generally   accepted
accounting   principles   in effect on the date hereof and   consistent   with those
used in the preparation of the Financial Statements,   provided, further, that if
there   occurs   after   the date of this   Agreement   any   change in GAAP or in the
methodologies used thereunder that affects in any respect the calculation of any
covenant   contained in Section 7.03   hereof,   the Agents and the Borrower   shall
negotiate in good faith   amendments   to the   provisions of this   Agreement   that
relate to the   calculation   of such   covenant   with the   intent   of   having   the
respective   positions of the Lenders and the Borrower   after such change in GAAP
conform as nearly as possible to their   respective   positions   as of the date of
this   Agreement   and,   until any such   amendments   have been   agreed   upon,   the
covenants   in Section 7.03 hereof   shall be   calculated   as if no such change in
GAAP had occurred.

     "German   Guarantor"   means   PRG-Schultz    (Deutschland)    GmbH,   a   company
incorporated   under the laws of Germany   registered   in   commercial   register of
Neuss under registered number HRB 12404.

     "German   Pledge   Agreement" has the meaning   specified   therefor in Section
5.03(b).

     "German Security   Agreement" has the meaning specified   therefor in Section
5.03(b).

     "Governmental   Authority"   means any   nation or   government,   any   Federal,
(including   the federal   government   of Canada)   state,   province,   city,   town,
municipality,   county,   local or other political   subdivision thereof or thereto
and any department, commission, board, bureau, instrumentality,   agency or other
entity   exercising   executive,   legislative,   judicial,   taxing,   regulatory   or
administrative powers or functions of or pertaining to government.

     "Guaranteed   Obligations"   has the   meaning   specified   therefor in Section
11.01.

     "Guarantor" (i) has the meaning specified   therefor in the preamble to this
Agreement,   and (ii) means each other Person which   guarantees,   pursuant to the
requirements   of   Section   7.01(b)   or   otherwise,    all   or   any   part   of   the
Obligations.

     "Guaranty"   means (i) the guaranty of each Guarantor party hereto contained
in Article XI hereof,   and (ii) each other guaranty made by any other   Guarantor
in favor of the   Collateral   Agent for the benefit of the Agents and the Lenders
pursuant to the requirements of Section 7.01(b) or otherwise.

     "Hazardous   Materials" means (a) any element,   compound or chemical that is
defined,   listed or otherwise   classified   as a   contaminant,   pollutant,   toxic
pollutant,   toxic or   hazardous   substance,   extremely   hazardous   substance   or
extremely    hazardous    chemical,    hazardous   waste,   or   special   waste   under
Environmental   Laws,   including any   pollutant,   contaminant,   waste,   hazardous
waste,   toxic substance or dangerous good which is defined or identified as such
in any   Environmental   Law and   which   is   present   in the   environment   in such
quantity or state that it contravenes any   Environmental   Law; (b) petroleum and
its   refined   products;   (c)   polychlorinated    biphenyls;    (d)   any   substance
exhibiting    a    hazardous    waste    characteristic,     including    corrosivity,


                                       16
<PAGE>

ignitability,   toxicity or   reactivity as well as any   radioactive   or explosive
materials; and (e) any raw materials or building components containing hazardous
substances   (including   asbestos-containing   materials)   listed or classified as
such under Environmental Laws.

     "Hedging Agreement" means any interest rate, foreign currency, commodity or
equity swap, collar, cap, floor or forward rate agreement, or other agreement or
arrangement   designed   to protect   against   fluctuations   in   interest   rates or
currency,   commodity or equity values   (including any option with respect to any
of   the   foregoing   and   any    combination    of   the   foregoing    agreements   or
arrangements),   and any   confirmation   executed   in   connection   with   any   such
agreement or arrangement.

     "Highest Lawful Rate" means,   with respect to any Agent or any Lender,   the
maximum   non-usurious   interest   rate,   if any, that at any time or from time to
time   may be   contracted   for,   taken,   reserved,   charged   or   received   on the
Obligations   under   laws   applicable   to such   Agent or such   Lender   which   are
currently in effect or, to the extent allowed by law, under such applicable laws
which may hereafter be in effect and which allow a higher   maximum   non-usurious
interest rate than applicable laws now allow.

     "Inactive   Subsidiaries"   means   PRG   USA,   Inc.,   a   Georgia   corporation,
PRG-Schultz   Insurance Limited,   a Bermuda company,   Howard Schultz & Associates
(Asia)   Limited,   a   company   organized   under   the   laws   of   Singapore,    HS&A
International   PTE   LTD,   a   company   organized   under   the   laws of Hong   Kong,
PRG-Schultz   (Thailand)   Co.,   Limited,   a company   organized   under the laws of
Thailand, PRGDS, LLC, a Georgia limited liability company, and Howard Schultz de
Mexico, S.A. de C.V., a company organized in Mexico.

     "Indebtedness" means, with respect to any Person, without duplication,   (i)
all indebtedness of such Person for borrowed money; (ii) all obligations of such
Person for the deferred purchase price of property or services (other than trade
payables   or other   accounts   payable   incurred in the   ordinary   course of such
Person's   business and not outstanding for more than 90 days after the date such
payable was created);   (iii) all obligations of such Person   evidenced by bonds,
debentures,   notes or other similar   instruments or upon which interest payments
are customarily made; (iv) all   reimbursement,   payment or other obligations and
liabilities   of such Person   created or arising under any   conditional   sales or
other title   retention   agreement   with respect to property   used or acquired by
such Person, even though the rights and remedies of the lessor, seller or lender
thereunder   may be limited to   repossession   or sale of such   property;   (v) all
Capitalized   Lease   Obligations   of   such   Person;    (vi)   all   obligations   and
liabilities,   contingent or otherwise,   of such Person, in respect of letters of
credit,    acceptances   and   similar    facilities;    (vii)   all   obligations   and
liabilities,   calculated in accordance   with accepted   practice,   of such Person
under Hedging Agreements;   (viii) all Contingent Obligations;   (ix) all monetary
obligations   under   any   receivables   factoring,   receivable   sales   or   similar
transactions   and all   monetary   obligations   under   any   synthetic   lease,   tax
ownership/operating lease, off-balance sheet financing or similar financing; and
(x) all   obligations   referred to in clauses (i) through (ix) of this definition
of another Person secured by (or for which the holder of such   Indebtedness   has
an   existing   right,   contingent   or   otherwise,   to be secured   by) a Lien upon
property owned by such Person, even though such Person has not assumed or become


                                       17
<PAGE>

liable for the   payment of such   Indebtedness.   The   Indebtedness   of any Person
shall include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.

     "Indemnified Matters" has the meaning specified therefor in Section 12.15.

     "Indemnitees" has the meaning specified therefor in Section 12.15.

     "Indenture   Change of   Control"   has the   meaning   ascribed to a "Change in
Control" in the Indenture for the 10% Senior   Convertible Notes or the Indenture
for the 11% Senior Notes, as applicable.

     "Indenture   for   the 10%   Senior   Convertible   Notes"   means   that   certain
Indenture dated as of March 17, 2006 between the Parent and U.S. Bank,   National
Association,   as trustee,   as amended or modified in   accordance   with the terms
hereof and thereof.

     "Indenture for the 11% Senior Notes" means that certain   Indenture dated as
of March 17, 2006 between the Parent and U.S.   Bank,   National   Association,   as
trustee, as amended or modified in accordance with the terms hereof and thereof.

     "Insolvency   Proceeding"   means any proceeding   commenced by or against any
Person under any provision of the Bankruptcy Code or under any other   bankruptcy
or insolvency law, assignments for the benefit of creditors,   formal or informal
moratoria,   compositions, or extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.

     "Intercompany Subordination Agreement" means the Intercompany Subordination
Agreement,   dated as of the   Effective   Date,   duly executed by each of the Loan
Parties, substantially in the form of Exhibit I-1.

     "Interest   Period"   means,   with   respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan and ending 1, 2, or
3 month(s) thereafter;   provided, however, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest   Period shall be extended
(subject to clauses   (c)-(e)   below) to the next   succeeding   Business   Day, (b)
interest shall accrue at the applicable   rate based upon the LIBOR Rate from and
including the first day of each Interest   Period to, but   excluding,   the day on
which any Interest Period   expires,   (c) any Interest Period that would end on a
day that is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such
Interest   Period shall end on the next preceding   Business Day, (d) with respect
to an Interest   Period that begins on the last Business Day of a calendar   month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period),   the Interest Period shall end on the
last   Business Day of the calendar   month that is 1, 2, or 3 month(s)   after the
date on which the   Interest   Period   began,   and (e)   Borrower   may not elect an
Interest Period which will end after the Final Maturity Date.

     "IRC" means the Internal Revenue Code of 1986, as amended (or any successor
statute thereto) and the regulations thereunder.



                                       18
<PAGE>

     "L/C Issuer" means such bank as the Administrative   Agent may select in its
sole and absolute discretion.

     "L/C   Subfacility"   means   that   portion   of   the   Total   Revolving   Credit
Commitment equal to $5,000,000.

     "Lease"   means any lease of real property to which any Loan Party or any of
its Subsidiaries is a party as lessor or lessee.

     "Lender" has the meaning specified therefor in the preamble hereto.

     "Letter of Credit" has the meaning specified therefor in Section 3.01(a).

     "Letter   of Credit   Application"   has the   meaning   specified   therefor   in
Section 3.01(a).

     "Letter of Credit Collateral Account" has the meaning specified therefor in
Section 3.01(b).

     "Letter   of Credit   Fees" has the   meaning   specified   therefor   in Section
3.03(b).

     "Letter   of   Credit    Guaranty"    means   one   or   more   guaranties   by   the
Administrative   Agent in favor of the L/C   Issuer   guaranteeing   the   Borrower's
obligations to the L/C Issuer under a reimbursement agreement,   Letter of Credit
Application or other like document in respect of any Letter of Credit.

     "Letter of Credit Obligations" means, at any time and without   duplication,
the   sum of (i) the   Reimbursement   Obligations   at such   time,   plus   (ii)   the
aggregate   maximum   amount   available   for   drawing   under the Letters of Credit
outstanding   at such time,   plus (iii) all amounts for which the   Administrative
Agent may be liable to the L/C Issuer pursuant to any Letter of Credit Guaranty.

     "Liabilities" has the meaning specified therefor in Section 2.07.

     "LIBOR Deadline" has the meaning set forth in Section 2.04(f)(ii)(A).

     "LIBOR Notice" means a written notice in the form of Exhibit L-1.

     "LIBOR Option" has the meaning specified therefor in Section 2.04(f)(i).

     "LIBOR Rate" means,   for each Interest Period for each LIBOR Rate Loan, the
rate   per   annum   determined   by   Administrative    Agent   (rounded   upwards,   if
necessary,   to the next   1/16%) by   dividing   (a) the Base   LIBOR   Rate for such
Interest Period, by (b) 100% minus the Reserve   Percentage;   provided,   however,
that the LIBOR Rate shall be subject to a minimum rate of 4.25 percentage points
per annum, and, accordingly,   to the extent that the LIBOR Rate on any day would
be less than the foregoing   minimum rate,   the LIBOR Rate hereunder for such day
automatically   shall be deemed   increased to such minimum   rate.   Subject to the


                                       19
<PAGE>

minimum   rate for the LIBOR Rate   described in this   definition,   the LIBOR Rate
shall be   adjusted on and as of the   effective   day of any change in the Reserve
Percentage.

     "LIBOR   Rate Loan"   means each   portion of a Loan that bears   interest at a
rate determined by reference to the LIBOR Rate.

     "Lien"   means any   mortgage,   deed of trust,   pledge,   lien   (statutory   or
otherwise),   security   interest,   charge or other   encumbrance   or   security   or
preferential   arrangement of any nature, including any conditional sale or title
retention   arrangement,   any   Capitalized   Lease   and   any   assignment,   deposit
arrangement or financing lease intended as, or having the effect of, security.

     "Loan"   means   the Term   Loan or any   Revolving   Loan made by an Agent or a
Lender to the Borrower pursuant to Article II hereof.

     "Loan Account" means an account maintained   hereunder by the Administrative
Agent on its books of account at the   Payment   Office,   and with   respect to the
Borrower,   in which the   Borrower   will be   charged   with all Loans made to, all
Letters of Credit   issued for the benefit of or at the request of, and all other
Obligations incurred by, the Borrower.

     "Loan   Document"   means   this   Agreement,   the Funds   Flow   Agreement,   the
Intercompany   Subordination Agreement, any Guaranty, any Security Agreement, any
Mortgage, any Letter of Credit Application, any Filing Authorization Letter, the
Fee Letter, the Brazilian Pledge Agreement, the Canadian Guarantee, the Canadian
Security   Agreement,    the   Canadian   Pledge   Agreement,    the   German   Security
Agreement, the German Pledge Agreement, the Meridian Pledge Agreements,   and any
other agreement,   instrument, and other document executed and delivered pursuant
hereto or thereto or otherwise   evidencing   or securing any Loan,   any Letter of
Credit   Obligation or any other   Obligation;   provided that Loan Documents shall
not include any Hedging Agreement.

     "Loan Party" means the Borrower or any Guarantor.

     "Lockbox Bank" has the meaning specified therefor in Section 8.01(a).

      "Lockboxes" has the meaning specified therefor in Section 8.01(a).

     "Material Adverse Effect" means a material adverse effect on any of (i) the
operations, business, assets, properties, or financial condition of the Domestic
Loan   Parties   taken as a whole or the Loan Parties   taken as a whole,   (ii) the
ability   of any Loan   Party to   perform   any of its   obligations   under any Loan
Document to which it is a party, (iii) the legality,   validity or enforceability
of this Agreement or any other Loan Document, or (iv) the rights and remedies of
any Agent or any Lender under any Loan Document.

     "Material Contract" means, with respect to the Parent and its Subsidiaries,
(i) the contracts or agreements involving the top 15 customers based on revenues
of the Parent and its Subsidiaries for the most recent Fiscal Year, and (ii) all
other contracts or agreements the loss of which could   reasonably be expected to
result in a Material Adverse Effect to the Loan Parties taken as a whole.



                                        20
<PAGE>

     "Meijer   Receivables"   means   Accounts   Receivable   owing from Meijer Great
Lakes   Limited   Partnership   with a due date no   later   than 75 days   after   the
invoice date.

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

     "Meridian    Intercompany    Payable"   means   the   approximately    $4,700,000
intercompany   payable owed by Meridian and the UK   Subsidiaries to the Parent or
its   Subsidiaries   as of the date   hereof,   as   adjusted   from   time to time for
additional transfer pricing and payments thereon.

     "Meridian   Pledge   Agreements"   means   the   security   interest    agreements
executed and delivered by each of the Parent and HS&A   Acquisition - UK, Inc., a
Texas   corporation,   in favor of Collateral Agent, for the benefit of the Agents
and Lenders, each in form and substance reasonably satisfactory to the Agents.

     "Meridian   Subsidiaries" means Meridian and each of its direct and indirect
Subsidiaries.

     "Milestone   Accounts" shall mean Accounts   Receivable which satisfy each of
the following   criteria:   (i) they arise out of a contract between Borrower or a
Domestic Guarantor and a customer of Borrower or such Domestic Guarantor,   which
contract   provides for   services to be   performed   by such   Borrower or Domestic
Guarantor   to be divided   into   "units" or   "milestones"   and such   Borrower   or
Domestic Guarantor shall be entitled to collect and enforce payment in full from
the customer for such Account   Receivable   despite other "units" or "milestones"
under the contract   being not yet   completed;   (ii) the   applicable   Borrower or
Domestic   Guarantor shall have delivered an invoice for such Account   Receivable
and the   customer   shall have   accepted   such   invoice;   and (iii) such   Account
Receivable shall not be subject to any offset,   setoff or right of recoupment on
the part of the customer.

     "Moody's" means Moody's Investors Service, Inc. and any successor thereto.

     "Mortgage" means a mortgage,   deed of trust or deed to secure debt, in form
and substance   reasonably   satisfactory   to the Agents,   made by a Loan Party in
favor of the   Collateral   Agent for the   benefit of the Agents and the   Lenders,
securing the Obligations   and delivered to the Collateral   Agent pursuant to the
provisions hereof or otherwise.

     "Multiemployer   Plan"   means a   "multiemployer   plan" as defined in Section
4001(a)(3) of ERISA to which any Loan Party or any of its ERISA   Affiliates   has
contributed   to, or has been   obligated   to   contribute,   at any time during the
preceding six (6) years.

     "Net Amount of Eligible   Accounts   Receivable"   means the aggregate   unpaid
invoice amount of Eligible Accounts Receivable less, without duplication, sales,
excise or   similar   taxes,   returns,   discounts,   chargebacks,   claims,   advance
payments,   credits   and   allowances   of any   nature at any time   issued,   owing,
granted,   outstanding,   available   or   claimed   with   respect   to such   Eligible
Accounts Receivable.



                                       21
<PAGE>

     "Net Cash   Proceeds"   means,   (i) with   respect to any   Disposition   by any
Person or any of its   Subsidiaries,   the amount of cash   received   (directly   or
indirectly)   from time to time (whether as initial   consideration or through the
payment or disposition of deferred consideration) by or on behalf of such Person
or such Subsidiary,   in connection   therewith after deducting therefrom only (A)
the amount of any Indebtedness secured by any Permitted Lien on any asset (other
than   Indebtedness   assumed by the purchaser of such asset) which is required to
be, and is, repaid in connection with such Disposition   (other than Indebtedness
under this Agreement),   (B) reasonable expenses related thereto incurred by such
Person or such   Subsidiary in connection   therewith,   (C) transfer taxes paid to
any   taxing   authorities   by   such   Person   or   such   Subsidiary   in   connection
therewith,   and   (D)   net   income   taxes   to be paid   in   connection   with   such
Disposition (after taking into account any tax credits or deductions and any tax
sharing arrangements) and (ii) with respect to the issuance or incurrence of any
Indebtedness by any Person or any of its   Subsidiaries,   or the sale or issuance
by any Person or any of its Subsidiaries of any shares of its Capital Stock, the
aggregate   amount of cash received   (directly or   indirectly)   from time to time
(whether   as initial   consideration   or through the   payment or   disposition   of
deferred   consideration)   by or on behalf of such Person or such   Subsidiary   in
connection   therewith,   after deducting   therefrom only (A) reasonable   expenses
related   thereto   incurred   by such   Person   or such   Subsidiary   in   connection
therewith,   (B)   transfer   taxes   paid by such   Person   or   such   Subsidiary   in
connection therewith and (C) net income taxes to be paid in connection therewith
(after   taking into   account any tax credits or   deductions   and any tax sharing
arrangements);   in each case of clause (i) and (ii) to the   extent,   but only to
the extent, that the amounts so deducted are (x) actually paid to a Person that,
except in the case of reasonable   out-of-pocket expenses, is not an Affiliate of
such Person or any of its   Subsidiaries   and (y) properly   attributable   to such
transaction or to the asset that is the subject thereof.

     "New Lending Office" has the meaning specified therefor in Section 2.08(d).

     "Non-U.S. Lender" has the meaning specified therefor in Section 2.08(d).

     "North American Excess Cash Flow" means, with respect to any Person for any
period, (i) North American   Consolidated Net Income of such Person and its North
American   Subsidiaries   for such period,   plus (ii) all   non-cash   items of such
Person   and its   North   American   Subsidiaries   deducted   in   determining   North
American   Consolidated Net Income for such period, less (iii) the sum of (A) all
non-cash gains of such Person and its Subsidiaries included in determining North
American   Consolidated   Net   Income   for such   period,   (B) all   cash   principal
payments on Indebtedness (other than voluntary prepayments of the Term Loan made
pursuant   to   Section   2.05(b)(ii))   of   such   Person   and   its   North   American
Subsidiaries   made during such period (but in the case of the Revolving Loans or
other   revolving   credit   facilities,   only to the extent there is an equivalent
permanent   reduction of the Total Revolving Credit   Commitment or the commitment
to provide such other revolving credit facility) to the extent such Indebtedness
is permitted to be incurred,   and such payments are permitted to be made,   under
this Agreement,   (C) payments of taxes made in cash by such Person and its North
American   Subsidiaries   during such period, (D) loan servicing fees paid in cash
during   such   period   on   Indebtedness   permitted   to   be   incurred   under   this
Agreement,   (E) the cash portion of Capital Expenditures made by such Person and
its North American Subsidiaries during such period to the extent permitted to be
made under this   Agreement,   (F) the excess,   if any, of North American   Working


                                       22
<PAGE>

Investment at the end of such period over North American   Working   Investment at
the beginning of such period (or, if the difference results in an amount that is
less than zero, minus the excess,   if any, of North American Working   Investment
at the beginning of such period over North   American   Working   Investment at the
end of such period),   and (G) cash restructuring   charges of such Person and its
North American Subsidiaries whether accrued in such period or a prior period.

     "North American   Consolidated Net Income" means, with respect to any Person
for any   period,   the net income   (loss) of such   Person and its North   American
Subsidiaries   for   such   period,   determined   on a   consolidated   basis   and   in
accordance   with GAAP,   but excluding from the   determination   of North American
Consolidated Net Income (without duplication) (a) any non-cash   extraordinary or
non-recurring   gains or losses   or any   non-cash   gains or losses   solely to the
extent   that they will not   result in cash   charges in any   future   period,   (b)
restructuring   charges in an aggregate   amount not to exceed   $1,250,000   in any
Fiscal Year or $5,000,000 in the   aggregate   during the term of this   Agreement;
provided if the actual amount of the   restructuring   charges excluded from North
American   Consolidated   Net Income is less than   $1,250,000   in any Fiscal Year,
then the unused   portion may be carried   forward to subsequent   Fiscal Years and
excluded from North American   Consolidated Net Income in such subsequent   Fiscal
Years so long as the aggregate amount excluded from North American   Consolidated
Net Income during the term of this   Agreement   does not exceed   $5,000,000,   (c)
effects of   discontinued   operations,   (d) interest   that is   paid-in-kind,   (e)
interest income, and (f) any tax refunds,   net operating losses or other net tax
benefits received during such period on account of any prior period

     "North   American   Subsidiary"   means   any   Subsidiary   of a Person   that is
organized   under the laws of the United   States,   the District of   Columbia,   or
Canada.

     "North American   Working   Investment"   means, at any date of   determination
thereof, (i) the sum, for any Person and its North American Subsidiaries, of (A)
the unpaid face amount of all Accounts   Receivable   of such Person and its North
American   Subsidiaries as at such date of determination,   plus (B) the aggregate
amount of prepaid expenses of such Person and its North American Subsidiaries as
at such date of determination, minus (ii) the sum, for such Person and its North
American Subsidiaries,   of (A) the unpaid amount of all accounts payable of such
Person and its North   American   Subsidiaries   as at such date of   determination,
plus (B) the   aggregate   amount of all   accrued   expenses of such Person and its
North American Subsidiaries as at such date of determination (including deferred
compensation,   but,   excluding from accounts payable and accrued   expenses,   the
current portion of long-term debt and all accrued interest and taxes).

     "Notice   of   Borrowing"   has the   meaning   specified   therefor   in   Section
2.02(a).

     "Obligations" means all present and future indebtedness,   obligations,   and
liabilities   of each Loan Party to the Agents and the   Lenders,   or any of them,
under the Loan Documents, whether or not the right of payment in respect of such
claim is reduced   to   judgment,   liquidated,   unliquidated,   fixed,   contingent,
matured, disputed, undisputed, legal, equitable, secured, unsecured, and whether
or not such claim is discharged,   stayed or otherwise affected by any proceeding
referred to in Section 9.01.   Without   limiting the generality of the foregoing,
the   Obligations   of each Loan Party   under the Loan   Documents   include (a) the
obligation   (irrespective   of   whether   a   claim   therefor   is   allowed   in   any
Insolvency   Proceeding) to pay principal,   interest,   charges,   expenses,   fees,


                                       23
<PAGE>

reasonable   attorneys   fees and   disbursements,   indemnities   and other   amounts
payable by such Person under the Loan Documents,   and (b) the obligation of such
Person to reimburse any amount in respect of any of the foregoing that any Agent
or any Lender (in its sole   discretion) may elect to pay or advance on behalf of
such Person.

     "Other Taxes" has the meaning specified therefor in Section 2.08(b).

     "Parent" has the meaning specified therefor in the preamble hereto.

     "Participant   Register"   has the   meaning   specified   therefor   in   Section
12.07(g).

     "Payment   Office" means the   Administrative   Agent's office located at 1211
Avenue of the Americas, New York, New York or at such other office or offices of
the   Administrative   Agent as may be   designated in writing from time to time by
the Administrative Agent to the Collateral Agent and the Borrower.

     "PBGC" means the Pension   Benefit   Guaranty   Corporation   or any   successor
thereto.

     "Permits" has the meaning specified therefor in Section 6.01(n).

     "Permitted   Discretion"   means   a   determination   made in the   exercise   of
reasonable   (from the   perspective   of a secured   asset-based   lender)   business
judgment.

     "Permitted   Dispositions" means (a) Dispositions of obsolete,   worn-out, or
surplus equipment in the ordinary course of business,   (b) Dispositions of other
property or assets for cash in an aggregate amount not less than the fair market
value of such   property or assets,   provided   that the Net Cash Proceeds of such
Dispositions in the case of clauses (a) and (b) do not exceed   $1,000,000 in the
aggregate,   (c) the use or transfer of cash and Cash   Equivalents   by the Parent
and its   Subsidiaries   in a manner that is not   prohibited   by the terms of this
Agreement or the other Loan Documents,   (d) the licensing or sublicensing by the
Parent   and   its   Subsidiaries,   (i)   on   a   non-exclusive   basis,   of   patents,
trademarks,   copyrights,   and other intellectual property rights in the ordinary
course of business,   or (ii) on a   non-exclusive   or exclusive   basis,   patents,
trademarks,   copyrights,   and other   intellectual   property rights in connection
with a   Disposition   permitted   under   clause   (q) of this   definition,   (e) the
granting of leases or subleases to other Persons not materially interfering with
the conduct of business of any of the Loan Parties, (f) the abandonment or other
Disposition of patents,   trademarks,   copyrights or other intellectual   property
rights that are neither necessary nor economically desirable in the operation of
the Loan   Parties'   business,   (g) the   Disposition   of Accounts   Receivable   in
connection   with the collection or compromise   thereof in the ordinary course of
business and in a manner not inconsistent   with the provisions of this Agreement
(excluding any   securitization   or factoring or similar   transactions),   (h) the
sale or issuance of (i) the Capital Stock of any Subsidiary of the Parent to the
Borrower (so long as such sale or issuance is made subject to Collateral Agent's
Liens on such Capital   Stock),   (ii) the Borrower's   Capital Stock to the Parent
(so long as such sale or issuance is made subject to Collateral Agent's Liens on
such Capital Stock),   or (iii) the Parent's Capital Stock to any Person (so long
as a   Change   of   Control   would   not   result   therefrom),   (i)   sales   or other
Dispositions   of assets from the Parent or any of its   Subsidiaries   (other than
the   Borrower)   to the   Borrower,   to any   Domestic   Guarantor   (other   than the
Parent),   or to the Canadian   Guarantor,   (j) so long as no Event of Default has


                                       24
<PAGE>

occurred   and   is   continuing   or   would   result    therefrom,    sales   or   other
Dispositions   of assets from any   Foreign   Subsidiary   (other than the   Canadian
Guarantor) to any Foreign   Guarantor,   (k) sales or other Dispositions of assets
from any Subsidiary of the Parent that is not the Borrower or a Guarantor to the
Parent or any of its   Subsidiaries,   (l)   transfers   of   property   subject   to a
casualty   event upon receipt of the net cash proceeds of such casualty event and
application of such net cash proceeds to the   Obligations to the extent required
under Section   2.05(c),   (m) Liens expressly   permitted under Section 7.02(a) to
the extent constituting Dispositions,   (n) investments expressly permitted under
Section   7.02(e)   to the   extent   constituting   Dispositions,   (o)   Dispositions
expressly   permitted under Section   7.02(c)(ii),   (p) voluntary   terminations of
Hedging   Agreements,   and (q)   Dispositions   set   forth in that   certain   letter
agreement regarding   Dispositions dated as of the date hereof between the Agents
and Borrower.

     "Permitted Indebtedness" means:

     (a) any Indebtedness owing to any Agent and any Lender under this Agreement
and the other Loan Documents;

     (b) Indebtedness listed on Schedule 7.02(b), and any Permitted   Refinancing
thereof;

     (c) Indebtedness evidenced by Capitalized Lease Obligations entered into in
order to finance   Capital   Expenditures   made by the Loan Parties in   accordance
with the provisions of Section 7.03(d), which Indebtedness, when aggregated with
the   principal   amount of all   Indebtedness   incurred   under this clause (c) and
clause   (d)   of   this   definition,   does   not   exceed   $2,000,000   at   any   time
outstanding;

     (d) purchase money Indebtedness   incurred to enable a Loan Party to acquire
equipment in the ordinary course of its business,   and any Permitted Refinancing
thereof,   which   Indebtedness,   when aggregated with the principal amount of all
Indebtedness   incurred under this clause (c) and clause (d) of this   definition,
does not exceed $2,000,000 at any time outstanding;

     (e)   Indebtedness   of   Meridian   or any of its   Subsidiaries   in respect of
Meridian's   or   any   of   its    Subsidiaries'    obligations   to   the   French   VAT
authorities;   provided that such Indebtedness   shall not have a cross-default to
the Indebtedness arising under this Agreement and the other Loan Documents;

     (f) Indebtedness of the Parent or any of its Subsidiaries under any Hedging
Agreement   so long as such Hedging   Agreements   are used solely as a part of its
normal   business   operations   as a risk   management   strategy   or hedge   against
changes   resulting   from market   operations   and not as a means to speculate for
investment purposes on trends and shifts in financial or commodities markets;

     (g) Indebtedness   owed by any Subsidiary of the Parent to the Parent or any
of its   Subsidiaries   so long as the making of the   investment   by the Parent or
such   Subsidiary   that is   acting   as the   lender   is a   Permitted   Intercompany
Investment;



                                        25
<PAGE>

     (h)   solely   for the   period   from   and   after   the   Effective   Date to and
including   November   26,   2006,   Indebtedness   of the   Parent   evidenced   by the
Existing Notes in an aggregate principal amount not to exceed $6,250,000;

     (i)   Indebtedness   of the   Parent   evidenced   by   the   Senior   Notes   in an
aggregate principal amount not to exceed $50,000,000 plus the amount of interest
that has   accrued   as of the   Effective   Date on the   Existing   Notes   exchanged
pursuant   to the   Exchange   Offer   Transaction,   and any   Permitted   Refinancing
thereof;

     (j) Indebtedness of the Parent evidenced by the Senior Convertible Notes in
an aggregate   principal   amount not to exceed   $60,000,000   (not   including   any
paid-in-kind   interest   on   such   Indebtedness   pursuant   to   the   terms   of the
Indenture for the 10% Senior   Convertible Notes as of the date hereof),   and any
Permitted Refinancing thereof;

     (k) Subordinated Debt and any Permitted Refinancing thereof;

     (l) unsecured   Indebtedness in an aggregate amount not to exceed $1,000,000
at any time outstanding;

     (m)   Indebtedness   arising from the   honoring by a bank or other   financial
institution   of   a   check,    draft   or   similar   instrument   and   consisting   of
obligations   in respect   of cash   management   or   pooling   or netting   services,
overdraft   protections and similar   arrangements in each case in connection with
cash management and deposit accounts arising in the ordinary course of business;

      (n) Indebtedness   arising in connection with endorsement of instruments for
deposit in the ordinary course of business;

     (o)   Indebtedness   incurred in   connection   with the financing of insurance
premiums in the ordinary course of business in an aggregate amount not to exceed
$1,500,000 at any time outstanding;

     (p)   Indebtedness   securing Liens expressly   permitted by clause (f) of the
definition of "Permitted Liens";

     (q) Indebtedness incurred in connection with a Permitted Disposition solely
to the extent arising under agreements providing for customary   indemnification,
adjustments of the purchase price, or similar adjustments; and

     (r)   Contingent   Obligations   of the   Parent   in   respect   of   Indebtedness
permitted   to be   incurred   pursuant   to clauses   (a) - (f) or (m) - (q) of this
definition.

     "Permitted   Intercompany   Investments" means (a) investments   consisting of
loans (or,   solely if required by applicable law or thin   capitalization   rules,
contributions)   by any   Domestic   Loan Party or the   Canadian   Guarantor   to any
Foreign Guarantor (other than the Canadian Guarantor) so long as (i) all parties
to such transaction are party to the Intercompany   Subordination   Agreement, and
(ii) the aggregate   amount of such   investments   outstanding at any time (net of


                                       26
<PAGE>

any repayment thereof) does not exceed $3,000,000, (b) investments consisting of
loans (or,   solely if required by applicable law or thin   capitalization   rules,
contributions)   by any Loan   Party to any   Foreign   Subsidiary   (other   than any
Foreign Guarantor or the Meridian   Subsidiaries) so long as the aggregate amount
of such investments   outstanding at any time (net of any repayment thereof) does
not exceed   $5,000,000,   (c)   investments   consisting   of loans   (or,   solely if
required by applicable law or thin capitalization   rules,   contributions) by any
Loan Party to any Meridian   Subsidiary so long as the   aggregate   amount of such
investments   outstanding   at any time (net of any   repayment   thereof)   does not
exceed $6,000,000, (d) solely for the first 90 days following the Effective Date
(or   such   longer   period   as the   Collateral   Agent   shall   reasonably   agree),
investments   consisting   of loans by any   Subsidiary of the Parent to the Parent
(for the avoidance of doubt, it being understood and agreed that the proceeds of
such loans   (other than loans made by the   Borrower   to the Parent as   expressly
permitted   by Section   7.02(h))   shall be sent by the Parent to the Borrower for
deposit in the   Collection   Account in   accordance   with Section   8.01(b)),   (e)
investments   consisting of loans (or,   solely if required by   applicable   law or
thin   capitalization   rules,   contributions)   by the Parent to any Domestic Loan
Party or the Canadian   Guarantor,   and (f) investments   consisting of loans (or,
solely   if    required   by    applicable    law   or   thin    capitalization    rules,
contributions)   by any   Subsidiary   of the Parent that is not the   Borrower or a
Guarantor   to any other   Subsidiary   of the Parent that is not the Borrower or a
Guarantor.

     "Permitted Investments" means (a) investments in cash and Cash Equivalents,
(b)    Permitted    Intercompany    Investments,    (c)    Permitted    Reorganization
Transactions, (d) Hedging Agreements so long as such Hedging Agreements are used
solely as a part of normal business   operations as a risk management strategy or
hedge against   changes   resulting   from market   operations and not as a means to
speculate   for   investment   purposes   on   trends   and   shifts   in   financial   or
commodities   markets,   (e)   loans to one or more   directors,   officers   or other
employees   of the   Parent   or its   Subsidiaries   in   connection   with   any   such
director's,   officer's or employee's   acquisition   of shares of Capital Stock of
the   Parent   in an amount   not   greater   than the   purchase   price   paid by such
director,   officer   or   employee   for such   shares   of   Capital   Stock and in an
aggregate amount not to exceed $250,000 at any time outstanding, (f) investments
received   by the   Parent   or any of its   Subsidiaries   pursuant   to any   plan of
reorganization   or   liquidation   or   other   similar   arrangement   that   has gone
effective in an Insolvency   Proceeding   of any Person,   (g) the   endorsement   of
negotiable   instruments   held for collection in the ordinary course of business,
(h) deposits made in the ordinary   course of business to secure the   performance
of leases or to obtain utilities, (i) advances to employees of the Parent or its
Subsidiaries   made   in the   ordinary   course   of   business;   provided   that   the
aggregate   amount of such   advances   at any time   outstanding   shall not   exceed
$250,000,   (j) the   acquisition   by the   Borrower or any   Domestic   Guarantor of
Accounts Receivable held by the Parent or any of its Subsidiaries; provided that
(i) any such   acquisition   is in the ordinary   course of business,   and (ii) the
acquired   Accounts   Receivable are payable or   dischargeable   in accordance with
customary   terms,   (k)   Indebtedness   expressly   permitted   by clause (g) of the
definition of "Permitted   Indebtedness" (without duplication of any other clause
in this definition) or clause (r) of the definition of "Permitted Indebtedness",
in each case, solely to the extent constituting investments, (l) Liens expressly
permitted by clause (f) of the definition of "Permitted   Liens" or clause (q) of
the   definition   of   "Permitted   Liens",   in each   case,   solely   to the   extent
constituting   investments,   (m)   investments   expressly   permitted under Section
7.02(h),   (n) investments made by the Borrower or any of its Subsidiaries in the
form   of   non-cash   consideration   received   in   connection   with a   Disposition
described in clauses (c) - (p) of the   definition of   "Permitted   Dispositions",
and   (o)   other   investments   in an   aggregate   amount   not to   exceed   $250,000
outstanding at any time.



                                       27
<PAGE>

     "Permitted Liens" means:

     (a) Liens securing the Obligations;

     (b) Liens for taxes,   assessments,   levies,   or   governmental   charges   the
payment   of which is not   overdue   by more than 30 days and,   if overdue by more
than 30 days (i) such taxes,   assessments,   levies,   or   governmental   are being
contested in good faith by appropriate   proceedings for which adequate   reserves
have   been    established   in   accordance    with   GAAP,   or   (ii)   secure   taxes,
assessments,   levies,   or   governmental   charges in an   aggregate   amount not to
exceed $50,000.

     (c) Liens   imposed by law such as   carriers',   warehousemen's,   mechanics',
materialmen's and other similar Liens arising in the ordinary course of business
and securing   obligations   (other than Indebtedness for borrowed money) that are
not   overdue   by more than 30 days and,   if overdue by more than 30 days (i) are
being contested in good faith and by appropriate   proceedings promptly initiated
and diligently conducted,   and a reserve or other appropriate provision, if any,
as shall be   required   by GAAP shall   have been made   therefor,   or (ii)   secure
obligations in an aggregate amount not to exceed $50,000;

     (d)   Liens   described   on   Schedule   7.02(a),   and any   Lien   granted   as a
modification, renewal, extension, replacement, or substitute therefor so long as
such modification,   renewal, extension, replacement, or substitute therefor does
not extend coverage thereof to other property or assets;

     (e) Liens   arising   under   Capitalized   Leases or securing   purchase   money
Indebtedness permitted under the definition of Permitted Indebtedness; provided,
however,   that (A) no such Lien shall   extend to or cover any other   property of
any Loan Party or any of its Subsidiaries   (other than the proceeds and products
of the property that is the subject of the   Capitalized   Lease or purchase money
Indebtedness   and   accessions   thereto),   and (B) the   principal   amount   of the
Indebtedness   secured   by any such Lien   shall not   exceed   the   lesser the fair
market value or the cost of the property so held or acquired and customary   fees
incurred in connection therewith;

     (f)   deposits   and pledges of cash   securing   (i)   obligations   incurred in
respect of   workers'   compensation,   unemployment   insurance   or other   forms of
governmental   insurance   or benefits,   (ii) the   performance   of bids,   tenders,
leases,    contracts   (other   than   for   the   payment   of   money)   and   statutory
obligations, (iii) obligations on surety or appeal bonds, but only to the extent
such deposits or pledges are made or otherwise   arise in the ordinary   course of
business and secure   obligations not past due, or (iv) letters of credit or bank
guarantees to support payment of items set forth in this clause (f);

     (g)   easements,   zoning   restrictions   and   similar   encumbrances   on   real
property and minor   irregularities   in the title   thereto that do not (i) secure
obligations for the payment of money or (ii) materially impair the value of such
property or its use by any Loan Party or any of its   Subsidiaries   in the normal
conduct of such Person's business;



                                       28
<PAGE>

     (h) leases or subleases granted to other Persons not materially interfering
with the conduct of the business of the Parent or any of its Subsidiaries;

     (i) (i) non-exclusive   licenses or sub-licenses by the Parent or any of its
Subsidiaries of patents, trademarks,   copyrights, or other intellectual property
rights in the ordinary   course of business and not   interfering   in any material
respect   with the   ordinary   conduct of the business of the Parent or any of its
Subsidiaries, or (ii) exclusive or non-exclusive licenses or sub-licenses by the
Parent or any of its Subsidiaries of patents,   trademarks,   copyrights, or other
intellectual    property   rights   in   connection   with   a   Disposition   expressly
permitted by clause (q) of the definition of "Permitted Dispositions";

     (j) precautionary financing statement filings regarding operating leases or
consignments of goods;

     (k) Liens   arising out of the   existence   of judgments or awards not giving
rise to an Event of Default;

     (l)   statutory   and common law   landlords'   liens under leases to which the
Parent or any of its Subsidiaries is a party;

     (m) Liens securing refinancing   Indebtedness permitted to be incurred under
clauses   (b),   (c),   or (d)   of   the   definition   of   "Permitted   Indebtedness";
provided, that such Liens do not extend to any property or assets other than the
property or assets that served as collateral for the refinanced Indebtedness;

     (n)   bankers'   Liens,   rights of setoff and other   similar   Liens   existing
solely   with   respect   to Cash and Cash   Equivalents   on   deposit in one or more
accounts   maintained by Parent or any of its Subsidiaries,   in each case granted
in the ordinary   course of business of such Person in favor of the bank or banks
with which such accounts are maintained,   securing amounts owing to such bank or
its   affiliates    with   respect   to   cash    management   and   operating    account
arrangements,    including    those    involving    pooled    accounts    and   netting
arrangements;   provided   that in no case   shall any such   Liens   secure   (either
directly or indirectly) the repayment of any Indebtedness for borrowed money;

     (o)   Liens   (i) on   advances   of   Cash   or Cash   Equivalents   or   Permitted
Investments   in   favor   of the   seller   of any   property   to be   acquired   in an
investment permitted   hereunder,   (ii) on any earnest money deposits made by the
Parent or any of its   Subsidiaries   in   connection   with any letter of intent or
purchase agreement permitted hereunder, and (iii) consisting of any agreement to
dispose of property in a Disposition permitted under Section 7.02(c);

     (q) deposits and pledges of Cash and Cash Equivalents securing Indebtedness
permitted by clause (e) of the definition of "Permitted Indebtedness";   provided
that the amount of such deposits and pledges   outstanding   at any time shall not
exceed 10% of the gross value added tax refunds received by Meridian from France
calculated on a rolling 12 month basis;



                                       29
<PAGE>

     (r)   Liens   securing   Indebtedness   in an   aggregate   amount   not to exceed
$100,000   arising out of   conditional   sale,   title   retention,   consignment   or
similar   arrangements   for the sale of goods   entered   into by the Parent or its
Subsidiaries in the ordinary course of business; and

     (s) other Liens securing   Indebtedness in an aggregate amount not to exceed
$200,000.

     "Permitted   Merger"   means (a) the merger of a Domestic   Subsidiary   (other
than the   Borrower)   or the Canadian   Guarantor   with and into the Borrower or a
Domestic   Guarantor,   (b) the   merger of a Foreign   Subsidiary   (other   than the
Canadian   Guarantor) with and into a Foreign   Guarantor (other than the Canadian
Guarantor),   and (c) the merger of any   Subsidiary of the Borrower that is not a
Guarantor with and into the Borrower or another   Subsidiary of the Borrower,   in
the   case of each of   clauses   (a),   (b),   and   (c),   so long as (i) no Event of
Default   shall have   occurred or be   continuing   either   before or after   giving
effect to such merger, (ii) the Borrower gives the Agents at least 15 days prior
written notice of such merger,   (iii) (A) in the case of a merger   involving the
Borrower, the Borrower is the continuing or surviving Person, (B) in the case of
a   merger   involving   a   Domestic   Guarantor   (other   than   a   merger   involving
Borrower), such Domestic Guarantor is the continuing or surviving Person, (C) in
the case of a merger involving a Foreign   Guarantor,   such Foreign   Guarantor is
the continuing or surviving Person, and (v) the Agents' and Lenders' Lien in all
or any portion of the Collateral,   including without limitation,   the existence,
perfection, and priority of any Lien thereon, are not adversely affected by such
merger.

     "Permitted   Preferred   Stock" means and refers to (a) any   Preferred   Stock
issued by the Parent   (and not by one or more of its   Subsidiaries)   that is not
Prohibited   Preferred Stock, (b) the Series A Preferred Stock, or (c) the Series
B Preferred Stock.

     "Permitted Refinancing" means any extension,   refinancing,   or modification
of   any   Indebtedness;    provided   that   (i)   such   extension,    refinancing   or
modification   is   pursuant   to terms   that are not   less   favorable   to the Loan
Parties   and the   Lenders   than the terms of the   Indebtedness   being   extended,
refinanced or modified, (ii) after giving effect to such extension,   refinancing
or modification,   the amount of such Indebtedness is not greater than the amount
of Indebtedness outstanding immediately prior to such extension,   refinancing or
modification   plus accrued   interest thereon and the fees incurred in connection
with   the   extension,    refinancing,   or   modification,   (iii)   such   extension,
refinancing or modification   does not result in an increase in the interest rate
with respect to the Indebtedness so extended, refinanced, or modified, (iv) such
extension,   refinancing or   modification   does not result in a shortening of the
average   weighted   maturity of the   Indebtedness   so   extended,   refinanced,   or
modified, (v) if the Indebtedness that is extended,   refinanced, or modified was
subordinated   in   right of   payment   to the   Obligations,   then   the   terms   and
conditions   of   the   extension,    refinancing,    or   modification   must   include
subordination   terms and conditions that are at least as favorable to the Agents
and the Lenders as those that were   applicable to the extended,   refinanced,   or
modified   Indebtedness,   (vi)   the   covenants   and   events   of   default   of   the
Indebtedness that is extended,   refinanced or modified are not less favorable to
the Loan Parties, the Agents or the Lenders than the terms and conditions of the
Indebtedness being extended, refinanced, or modified, and (vii) the Indebtedness
that is extended,   refinanced, or modified is not recourse to any Person that is
liable on   account   of the   Obligations   other   than   those   Persons   which were
obligated with respect to the   Indebtedness   that was extended,   refinanced,   or
modified.



                                       30
<PAGE>

     "Permitted    Reorganization    Transaction"    means   (a)   the    dissolution,
liquidation,   or winding-up of any Domestic Subsidiary (other than the Borrower)
or the Canadian   Guarantor   so long as (i) the assets (if any) of such   Domestic
Subsidiary or the Canadian   Guarantor are   transferred to a Domestic Loan Party,
(ii)   no   Event   of   Default   shall   have   occurred   and   be   continuing   either
immediately before or after giving effect to such transaction, (iii) the Agents'
and   Lenders'   Lien   in   any   Collateral,   including,   without   limitation,   the
existence,   perfection   and   priority   of any Lien   thereon,   are not   adversely
affected by such   dissolution or   winding-up,   and (vi) such Domestic Loan Party
shall have   executed and delivered or   authorized,   as   applicable,   any and all
security    agreements,    financing    statements,    fixture   filings,   and   other
documentation   reasonably   requested   by any   Agent   in   order   to   include   the
transferred assets within the Collateral,   or (b) the dissolution,   liquidation,
or winding-up of any Foreign   Subsidiary (other than the Canadian   Guarantor) so
long as (i) the assets of such Foreign   Subsidiary are   transferred to a Foreign
Guarantor   (other than the Canadian   Guarantor)   or its parent   (other than with
respect to any Foreign   Subsidiary that is a Subsidiary of the Parent),   (ii) no
Event of Default shall have occurred and be continuing either immediately before
or after giving effect to such transaction, (iii) the Agents' and Lenders' Liens
in any Collateral,   including, without limitation, the existence, perfection and
priority of any Lien thereon,   are not adversely affected by such dissolution or
winding-up,   and (iv) the applicable   Foreign   Guarantor shall have executed and
delivered   or   authorized,   as   applicable,   any   and all   security   agreements,
financing   statements,   fixture   filings,   and   other   documentation   reasonably
requested   by any Agent in order to include the   transferred   assets   within the
Collateral.

     "Person"   means an   individual,   corporation,   limited   liability   company,
partnership,     association,     joint-stock    company,    trust,    unincorporated
organization,   joint   venture   or other   enterprise   or entity   or   Governmental
Authority.

     "Post-Default Rate" means a rate of interest per annum equal to the rate of
interest   otherwise   in effect   from time to time   pursuant to the terms of this
Agreement plus 2.0 percentage points, or, if a rate of interest is not otherwise
in effect, interest at the highest rate specified herein for any Loan (or in the
case of the Letter of Credit   Fee,   the highest   Letter of Credit Fee   specified
herein) prior to the Event of Default plus 2.0 percentage points.

     "PPSA" means the Personal Property Security Act of the applicable   Canadian
province or provinces in respect of the Canadian Guarantor, each as amended from
time to time.

     "PR   Partnership"   means   PRG-Schultz   Puerto Rico,   a foreign   partnership
organized under the laws of Puerto Rico.

     "Preferred Stock" means, as applied to the Capital Stock of any Person, the
Capital   Stock of any class or classes   (however   designated)   that is preferred
with respect to the payment of dividends,   or as to the   distribution   of assets
upon any voluntary or   involuntary   liquidation   or   dissolution of such Person,
over shares of Capital Stock of any other class of such Person.




                                       31
<PAGE>

     "Preliminary   Reserve"   means (a) during the period from and   including the
Effective Date through and including the date that the Borrower   delivers to the
Agents and Lenders the financial statements required to be delivered pursuant to
Section   7.01(a)(i)   for the fiscal   quarter   ending   March 31, 2006 (the "First
Period Financial Statements"), a reserve in the amount of $5,000,000, (b) during
the period from but   excluding   the date that the   Borrower   delivers   the First
Period   Financial   Statements   through and   including the date that the Borrower
delivers to Agents and Lenders the financial statements required to be delivered
pursuant to Section   7.01(a)(i) for the fiscal quarter ending June 30, 2006 (the
"Second Period Financial Statements"), (A) a reserve in the amount of $3,500,000
if Consolidated   EBITDA during the period covered by the First Period   Financial
Statements   was   greater   than or equal to   $2,400,000,   or (B) a reserve in the
amount of $5,000,000 if Consolidated   EBITDA of the Parent and its   Subsidiaries
during the period covered by the First Period Financial Statements was less than
$2,400,000,   and (c)   during   the period   from but   excluding   the date that the
Borrower delivers the Second Period Financial   Statements   through and including
the Final Maturity Date, $0;   provided that if the Borrower is not in compliance
with the   financial   covenants   set   forth in   Section   7.03 on the date that it
delivers the Second Period Financial Statements,   the amount of the "Preliminary
Reserve"   will be the   amount of the   reserve   set   forth in clause   (b) of this
definition   until the first date that the   Borrower   delivers   to the Agents and
Lenders a certified   calculation of the financial covenants set forth in Section
7.03   pursuant   to   Section   7.01(a)(v)   which   shows   that the   Borrower   is in
compliance with such financial covenants.

     "Prohibited Preferred Stock" means any Preferred Stock that by its terms is
mandatorily redeemable or subject to any other payment obligation (including any
obligation to pay dividends,   other than dividends of shares of Preferred   Stock
of the same class and series   payable in kind or   dividends   of shares of common
stock) on or before a date that is less than 6 months   after the Final   Maturity
Date,   or,   on or before   the date   that is less   than 6 months   after the Final
Maturity   Date, is   redeemable   at the option of the holder   thereof for cash or
assets or securities   (other than   distributions   in kind of shares of Preferred
Stock of the same class and series or of shares of common stock).

     "property"   means   any   right or   interest   in or to   property   of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.

     "Pro Rata Share" means:

     (a) with   respect to a Lender's   obligation   to make   Revolving   Loans,   to
participate   in Letters of Credit,   and to reimburse the L/C Issuer with respect
to Letters of Credit,   and right to receive   payments   of   interest,   fees,   and
principal with respect   thereto,   the   percentage   obtained by dividing (i) such
Lender's   Revolving   Credit   Commitment,   by (ii)   the   Total   Revolving   Credit
Commitment,   provided,   that, if the Total Revolving Credit   Commitment has been
reduced to zero, the numerator shall be the aggregate unpaid principal amount of
such   Lender's   Revolving   Loans   and   its   interest   in the   Letter   of   Credit
Obligations and the denominator   shall be the aggregate   unpaid principal amount
of all Revolving Loans and Letter of Credit Obligations,

     (b) with respect to a Lender's   obligation   to make the Term Loan and right
to receive payments of interest,   fees, and principal with respect thereto,   the
percentage obtained by dividing (i) such Lender's Term Loan Commitment,   by (ii)


                                       32
<PAGE>

the Total Term Loan Commitment,   provided that if the Total Term Loan Commitment
has been reduced to zero, the numerator shall be the aggregate   unpaid principal
amount of such Lender's   portion of the Term Loan and the   denominator   shall be
the aggregate unpaid principal amount of the Term Loan, and

     (c) with   respect   to all   other   matters   (including   the   indemnification
obligations   arising under Section 10.05),   the percentage   obtained by dividing
(i)   the   sum of such   Lender's   Revolving   Credit   Commitment   and   the   unpaid
principal   amount of such Lender's   portion of the Term Loan, by (ii) the sum of
the Total Revolving Credit   Commitment and the aggregate unpaid principal amount
of the Term Loan,   provided,   that, if such Lender's Revolving Credit Commitment
shall have been reduced to zero, such Lender's Revolving Credit Commitment shall
be deemed to be the aggregate unpaid principal amount of such Lender's Revolving
Loans and its   interest   in the   Letter of Credit   Obligations   and if the Total
Revolving Credit Commitment shall have been reduced to zero, the Total Revolving
Credit Commitment shall be deemed to be the aggregate unpaid principal amount of
all Revolving Loans and Letter of Credit Obligations.

     "Qualified   Cash"   means,   as of any date of   determination,   the amount of
unrestricted cash and Cash Equivalents of the Borrower and its Subsidiaries that
is subject to a control   agreement in favor of Collateral   Agent, upon which the
Collateral   Agent has a perfected   first   priority   Lien, and that is on deposit
with banks,   or in securities   accounts with securities   intermediaries,   or any
combination thereof.

     "Rating Agencies" has the meaning specified therefor in Section 2.07.

     "Reference   Bank" means   JPMorgan   Chase Bank,   N.A., its successors or any
other   commercial   bank designated by the   Administrative   Agent to the Borrower
from time to time.

     "Reference   Rate"   means the rate of   interest   publicly   announced   by the
Reference   Bank in New York,   New York from time to time as its reference   rate,
base rate or prime rate;   provided,   however,   that the Reference   Rate shall be
subject to a minimum rate of 7.0 percentage points per annum, and,   accordingly,
to the   extent   that   the   Reference   Rate on any day   would   be less   than   the
foregoing   minimum rate, the Reference Rate hereunder for such day automatically
shall be deemed increased to such minimum rate. The reference rate, base rate or
prime rate is determined   from time to time by the Reference   Bank as a means of
pricing some loans to its   Borrower and neither is tied to any external   rate of
interest or index nor necessarily   reflects the lowest rate of interest actually
charged by the Reference Bank to any particular   class or category of customers.
Subject to the minimum rate for the Reference Rate described in this definition,
each change in the Reference Rate shall be effective from and including the date
such change is publicly announced as being effective.

     "Reference Rate Loan" means a Loan that bears interest at a rate determined
by reference to the Reference Rate.

     "Register" has the meaning specified therefor in Section 12.07(d).

     "Registered Loan" has the meaning specified therefore in Section 12.07(d).



                                       33
<PAGE>

     "Regulation   T",   "Regulation   U" and   "Regulation   X" mean,   respectively,
Regulations T, U and X of the Board or any successor, as the same may be amended
or supplemented from time to time.

     "Reimbursement   Obligations"   means   the   obligation   of   the   Borrower   to
reimburse   the   Administrative   Agent or any Lender for   amounts   payable by the
Administrative   Agent or any Lender under a Letter of Credit Guaranty in respect
of any drawing made under any Letter of Credit,   together with interest   thereon
as provided in Section 2.04.

     "Reinvestment   Eligible Funds" means (a) Net Cash Proceeds   which,   but for
the application of Section   2.05(d)(iv),   would be required to be used to prepay
the   Loans   pursuant   to   Section   2.05(c)(vi)   or   (b)   Extraordinary   Receipts
consisting   of insurance or   condemnation   proceeds   paid as the result of loss,
destruction,    casualty,   condemnation   or   expropriation   which,   but   for   the
application of Section   2.05(d)(iv),   would be required to be used to prepay the
Loans pursuant to Section 2.05(c)(viii).

     "Reinvestment   Notice"   has the   meaning   specified   therefore   in   Section
2.05(d).

     "Related Fund" means a fund,   money market account,   investment   account or
other   account   managed   by a   Lender   or an   Affiliate   of such   Lender   or its
investment manager.

     "Related Party   Assignment" has the meaning   specified   therefor in Section
12.07(b).

     "Related   Party   Register" has the meaning   specified   therefore in Section
12.07(d).

     "Release"   means   any   spilling,    leaking,   pumping,   pouring,    emitting,
emptying,   discharging,    injecting,   escaping,   leaching,   seeping,   migrating,
dumping or disposing of any Hazardous   Material   (including   the   abandonment or
discarding of barrels,   containers and other closed   receptacles   containing any
Hazardous   Material)   into the   indoor or   outdoor   environment,   including   the
movement of Hazardous   Materials through or in the ambient air, soil, surface or
ground water, or property.

     "Remedial   Action"   means,   with   respect   to   the   presence   of   Hazardous
Materials at concentrations   exceeding those allowed by Environmental   Laws, all
actions   taken to (i) clean up,   remove,   remediate,   contain,   treat,   monitor,
assess,   evaluate   or in   any   other   way   address   Hazardous   Materials   in the
environment;   (ii)   prevent   or   minimize   a Release   or   threatened   Release of
Hazardous   Materials   so they do not migrate or endanger or threaten to endanger
public health or welfare or the environment;   (iii) perform pre-remedial studies
and investigations and post-remedial   operation and maintenance   activities;   or
(iv) any other actions authorized by 42 U.S.C. ss. 9601.

     "Reportable Event" means an event described in Section 4043 of ERISA (other
than an event not subject to the   provision   for 30-day notice to the PBGC under
the regulations promulgated under such Section).

     "Required Lenders" means   collectively,   (a) the Required Revolving Lenders
and (b) the Required Term Loan Lenders.



                                       34
<PAGE>

     "Required    Revolving    Lenders"    means   Lenders   whose   Pro   Rata   Shares
(calculated under clause (a) of the definition thereof) aggregate more than 50%.

     "Required    Term   Loan   Lenders"    means   Lenders   whose   Pro   Rata   Shares
(calculated under clause (b) of the definition thereof) aggregate more than 50%.

     "Reserve   Percentage"   means,   on any   day,   for any   Lender,   the   maximum
percentage prescribed by the Board (or any successor Governmental Authority) for
determining   the   reserve   requirements   (including   any   basic,    supplemental,
marginal, or emergency reserves) that are in effect on such date with respect to
eurocurrency   funding (currently   referred to as "eurocurrency   liabilities") of
that Lender.

     "Revolving   Credit   Commitment"   means,   with respect to each   Lender,   the
commitment of such Lender to make Revolving   Loans to the Borrower in the amount
set forth opposite such Lender's name in Schedule R-1 hereto, as such amount may
be terminated or reduced from time to time in accordance   with the terms of this
Agreement.

     "Revolving Loan" and "Revolving Loans" have the meaning specified   therefor
in Section 2.01(a)(i).

     "Revolving Loan Lender" means a Lender with a Revolving Credit Commitment.

     "Revolving   Loan   Obligations"   means any   Obligations   with respect to the
Revolving Loans (including the principal thereof,   the interest thereon, and the
fees and expenses specifically related thereto).

     "SEC" means the Securities and Exchange   Commission or any other similar or
successor agency of the Federal government administering the Securities Act.

     "Second   Test   Period"   means   the   period   ended   on the   last   day of the
applicable Person's second fiscal quarter ended after the Effective Date.

     "Securities   Act" means the   Securities   Act of 1933,   as   amended,   or any
similar   Federal   statute,   and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time.

     "Securities Account" means a securities account (as that term is defined in
the Code).

     "Securitization" has the meaning specified therefor in Section 2.07.

     "Securitization   Parties"   has the   meaning   specified   therefor in Section
2.07.

     "Security   Agreement"   means a Security   Agreement,   in form and   substance
reasonably   satisfactory   to the   Agents,   made by a Loan   Party in favor of the
Collateral   Agent for the benefit of the Agents and the   Lenders,   securing   the
Obligations and delivered to the Collateral Agent.



                                        35
<PAGE>

     "Senior   Convertible Notes" means the 10% Senior Convertible Notes due 2011
issued by the Parent   pursuant to the Indenture   for the 10% Senior   Convertible
Notes.

     "Senior   Notes"   means the 11% Senior   Notes due 2011   issued by the Parent
pursuant to the Indenture for the 11% Senior Notes.

     "Series   A   Preferred   Stock"   means   the 9%   senior   series A   convertible
participating Preferred Stock of the Parent.

     "Series B   Preferred   Stock"   means   the 10%   senior   series B   convertible
participating Preferred Stock of the Parent.

     "Settlement    Period"   has   the   meaning   specified    therefor   in   Section
2.02(d)(i) hereof.

     "Solvent"   means,   with respect to any Person on a particular date, that on
such date (a) such   Person is able to realize   upon its assets and pay its debts
and other   liabilities,   contingent   obligations   and other   commitments as they
mature in the normal course of business, (b) such Person does not intend to, and
does not believe that it will,   incur debts or liabilities   beyond such Person's
ability to pay as such debts and liabilities   mature, and (c) such Person is not
engaged in business or a transaction,   and is not about to engage in business or
a transaction,   for which such Person's   property would constitute   unreasonably
small capital.

     "Standard & Poor's" means Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Inc. and any successor thereto.

     "Subordinated   Debt" means   Indebtedness of the Parent that is on terms and
conditions   (including   payment   terms,   interest   rates,   covenants,   remedies,
defaults and other material   terms)   reasonably   satisfactory   to the Agents and
which has been expressly subordinated in right of payment to all Indebtedness of
the   Parent   under   the   Loan   Documents   by the   execution   and   delivery   of a
subordination   agreement,   in form and substance reasonably   satisfactory to the
Agents.

     "Subsidiary"    means,    with   respect   to   any   Person   at   any   date,   any
corporation,   limited or general partnership,   limited liability company, trust,
estate, association,   joint venture or other business entity (i) the accounts of
which   would   be   consolidated   with   those   of such   Person   in   such   Person's
consolidated   financial statements if such financial statements were prepared in
accordance   with   GAAP or (ii) of which   more   than   50% of (A) the   outstanding
Capital Stock having (in the absence of contingencies)   ordinary voting power to
elect a   majority   of the   board of   directors   or other   managing   body of such
Person,   (B) in the case of a   partnership   or limited   liability   company,   the
interest   in the   capital or profits of such   partnership   or limited   liability
company, or (C) in the case of a trust,   estate,   association,   joint venture or
other entity,   the   beneficial   interest in such trust,   estate,   association or
other entity   business   is, at the time of   determination,   owned or   controlled
directly or indirectly through one or more intermediaries, by such Person.

     "Supervalu   Receivables"   means Accounts   Receivables   owing from Supervalu
Inc. with a due date no later than 120 days after the invoice date.



                                       36
<PAGE>

     "Taxes" has the meaning specified therefor in Section 2.08(a).

     "Term Loan" has the meaning specified therefor in Section 2.01(a)(ii).

     "Term Loan Commitment"   means, with respect to each Lender,   the commitment
of such   Lender   to make its   portion   of the Term Loan to the   Borrower   in the
amount   set forth in   Schedule   R-1   hereto,   as the same may be   terminated   or
reduced from time to time in accordance with the terms of this Agreement.

     "Term Loan Lender" means a Lender with a Term Loan Commitment.

     "Term Loan Obligations" means any Obligations with respect to the Term Loan
(including   the   principal   thereof,   the   interest   thereon,   and the   fees and
expenses specifically related thereto).

     "Termination   Event"   means (i) a   Reportable   Event   with   respect   to any
Employee   Plan,   (ii) any event   that   causes any Loan Party or any of its ERISA
Affiliates to incur   liability   under Section 409,   502(i),   502(l),   515, 4062,
4063,   4064,   4069,   4201,   4204 or 4212 of ERISA or Section 4971 or 4975 of the
IRC, (iii) the filing of a notice of intent to terminate an Employee Plan or the
treatment of an Employee Plan   amendment as a termination   under Section 4041 of
ERISA,   (iv) the institution of proceedings by the PBGC to terminate an Employee
Plan, or (v) any other event or condition which might   constitute   grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Employee Plan.

     "Third   Test   Period"   means   the   period   ended   on   the   last   day of the
applicable Person's third fiscal quarter ended after the Effective Date.

     "Title   Insurance   Policy"   means a   mortgagee's   loan policy,   in form and
substance   satisfactory to the Collateral Agent,   together with all endorsements
made from   time to time   thereto,   issued   by or on behalf of a title   insurance
company   satisfactory   to the Collateral   Agent,   insuring the Lien created by a
Mortgage in an amount and on terms satisfactory to the Agents,   delivered to the
Collateral Agent.

     "Total   Commitment"   means the sum of the Total Revolving Credit Commitment
and the Total Term Loan Commitment.

     "Total   Revolving   Credit   Commitment"   means the sum of the amounts of the
Lenders'   Revolving   Credit   Commitments,   which amount is $20,000,000 as of the
Effective Date.

     "Total Term Loan   Commitment"   means the sum of the amounts of the Lenders'
Term Loan Commitments, which amount is $25,000,000 as of the Effective Date.

     "Toys R Us Receivables"   means Accounts   Receivables   owing from Toys R Us,
Inc. with a due date no later than 75 days after the invoice date.

     "Transferee" has the meaning specified therefor in Section 2.08(a).



                                       37
<PAGE>

     "TTM EBITDA" means, as of any date of   determination   and with respect to a
Person,   the Consolidated   EBITDA of such Person and its Subsidiaries for the 12
month period most recently ended; provided, however, that (a) in the case of the
First Test Period, TTM EBITDA shall be calculated as the Consolidated   EBITDA of
such Person and its   Subsidiaries   for the period from and after January 1, 2006
up to and including   the last day of the First Test Period,   times 4, (b) in the
case   of   the   Second   Test   Period,   TTM   EBITDA   shall   be   calculated   as the
Consolidated   EBITDA of such Person and its Subsidiaries for the period from and
after   January   1,   2006 up to and   including   the last day of the   Second   Test
Period,   times 2, (c) in the case of the Third Test Period,   TTM EBITDA shall be
calculated as the   Consolidated   EBITDA of such Person and its   Subsidiaries for
the period from and after   January 1, 2006 up to and   including   the last day of
the Third Test Period, times 1.3333.

     "UK   Subsidiaries"   means Tamebond   Limited,   a company organized under the
laws of the United Kingdom and PRG-Schultz UK Ltd, a company organized under the
laws of the United Kingdom.

     "U.S.   Retail Key Client   Claim   Retention   Rate"   means the sum of (a) the
net-approved claims of U.S. Retail Key Clients that are in the Claims Management
System as of most recent fiscal quarter and (b) changes to   work-in-process   for
U.S. Retail Key Clients for such fiscal quarter,   divided by the gross claims of
U.S. Retail Key Clients that are in the Claims Management System produced during
such fiscal quarter.

     "U.S.   Retail   Key   Client   Effective   Fee Rate"   means,   as of any date of
determination,   the revenue of the Borrower and the Domestic   Guarantors   (other
than the PR   Partnership)   from the U.S.   Retail Key Clients for the most recent
fiscal   quarter as determined in   accordance   with GAAP divided by   net-approved
claims of U.S. Retail Key Clients that are in the Claims   Management   System for
such fiscal quarter.

     "U.S.   Retail Key Client   WIP" means the claims of U.S.   Retail Key Clients
that are in the Claims   Management   System not yet approved for   invoicing,   but
presented to the client or vendor awaiting   approval;   provided that U.S. Retail
Key   Client WIP shall not   include   any claim (a) that is more than 6 months old
(determined   from the date that the payment   giving rise to the claim was made),
(b) that is in an amount less than $1,000.

     "U.S. Retail Key Clients" means, as of any date of   determination,   the top
40 United   States   retail   clients of the Borrower   and the Domestic   Guarantors
(other than the PR Partnership)   based on revenue recognized by the Borrower and
the Domestic   Guarantors   (other than the PR Partnership) for the 12 months most
recently   ended   (not   including   (a) any client   that has filed a petition   for
bankruptcy   or any   other   relief   under   the   Bankruptcy   Code or any other law
relating to bankruptcy, insolvency, reorganization or relief of debtors, made an
assignment   for the benefit of   creditors,   had filed   again it any   petition or
other application for relief under the Bankruptcy Code or any such other law, or
(b)   clients   that are the   United   States or any other   Governmental   Authority
(unless all steps required by the Administrative Agent in connection   therewith,
including notice to the United States Government under the Federal Assignment of
Claims Act or any   action   under any state   statute   comparable   to the   Federal
Assignment of Claims Act, have been duly taken in a manner   satisfactory   to the
Administrative   Agent;   provided   that   from   the   Effective   Date   through   and
including the date that is 120 days after the Effective   Date,   U.S.   Retail Key


                                       38
<PAGE>

Client WIP of the Army & Air Force Exchange in an aggregate amount not to exceed
$250,000 (when   aggregated with any Accounts   Receivable of the Army & Air Force
Exchange   that are not   ineligible   because of the   proviso in clause (g) of the
definition of "Eligible Accounts Receivable") shall not be ineligible under this
clause (b) regardless of whether all steps required by the Administrative   Agent
to be taken   under the   Federal   Assignment   of Claims Act or any state   statute
comparable to the Federal Assignment of Claims Act have been taken).

     "Wal Mart   Holdback   Receivables"   means   Accounts   Receivable   owing   from
Wal-Mart   Stores,   Inc.   equal to   $217,000   due in the   fiscal   quarter   ending
September 30, 2006 and $24,000 due in the fiscal   quarter   ending   September 30,
2007.

     "WARN" has the meaning specified therefor in Section 6.01(z).

     "Working   Investment" means, at any date of determination   thereof, (i) the
sum, for any Person and its   Subsidiaries,   of (A) the unpaid face amount of all
Accounts   Receivable   of such   Person   and its   Subsidiaries   as at such date of
determination,   plus (B) the aggregate amount of prepaid expenses of such Person
and its Subsidiaries as at such date of   determination,   minus (ii) the sum, for
such   Person   and its   Subsidiaries,   of (A) the unpaid   amount of all   accounts
payable of such Person and its   Subsidiaries   as at such date of   determination,
plus (B) the   aggregate   amount of all   accrued   expenses of such Person and its
Subsidiaries as at such date of determination   (including deferred compensation,
but,   excluding from accounts payable and accrued expenses,   the current portion
of long-term debt and all accrued interest and taxes).

     Section 1.02 Terms   Generally.   The definitions of terms herein shall apply
equally to the   singular   and plural   forms of the terms   defined.   Whenever the
context may require,   any pronoun   shall   include the   corresponding   masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without   limitation,"   whether or not so
expressly   stated in each such   instance   and the term   "or" has,   except   where
otherwise   indicated,   the inclusive meaning represented by the phrase "and/or."
The word "will"   shall be   construed   to have the same meaning and effect as the
word "shall." Unless the context   requires   otherwise,   (a) any definition of or
reference   to any   agreement,   instrument   or   other   document   herein   shall be
construed as referring to such   agreement,   instrument or other document as from
time to time amended,   restated,   supplemented or otherwise modified (subject to
any restrictions on such amendments, restatements,   supplements or modifications
set forth herein),   (b) any reference herein to any Person shall be construed to
include such Person's   successors and assigns,   (c) the words "herein," "hereof"
and   "hereunder,"   and words of similar   import,   shall be construed to refer to
this Agreement in its entirety and not to any particular   provision hereof,   (d)
all references   herein to Articles,   Sections,   Exhibits and Schedules   shall be
construed to refer to Articles and Sections of, and Exhibits and   Schedules   to,
this   Agreement and (e) the words "asset" and   "property"   shall be construed to
have the same   meaning   and   effect   and to   refer to any and all   tangible   and
intangible   assets and   properties,   including   cash,   securities,   accounts and
contract rights.   References in this Agreement to   "determination"   by any Agent
include   estimates   honestly   made by such   Agent   (in the case of   quantitative
determinations)   and   beliefs   honestly   held by   such   Agent   (in   the   case of
qualitative determinations).



                                       39
<PAGE>

     Section   1.03   Accounting   and   Other   Terms.   Unless   otherwise   expressly
provided   herein,   each accounting term used herein shall have the meaning given
it under GAAP. All terms used in this   Agreement   which are defined in Article 8
or Article 9 of the Code and which are not otherwise   defined   herein shall have
the same meanings herein as set forth therein.

     Section   1.04 Time   References.   Unless   otherwise   indicated   herein,   all
references   to time of day refer to Eastern   Standard   Time or Eastern   daylight
saving   time,   as in effect in New York City on such day.   For   purposes   of the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and   including"   and the words "to" and "until" each
means "to but excluding," provided,   however, that with respect to a computation
of fees or interest   payable to any Agent,   any Lender or the L/C   Issuer,   such
period shall in any event   consist of at least one full day. When the payment of
any obligation or the performance of any covenant,   duty or obligation is stated
to be due on a day   that   is not a   Business   Day   or   delivery   of any   notice,
document, certificate or other writing is stated to be required on a day that is
not a Business   Day,   the date of such   payment   (other than as described in the
definition of "Interest   Period"),   performance   or delivery shall extend to the
immediately succeeding Business Day.

                                   ARTICLE II

                                     THE LOANS

     Section 2.01 Commitments.

     (a)    Subject   to   the   terms   and    conditions    and    relying    upon   the
representations and warranties herein set forth:

     (i) each   Revolving   Loan Lender   severally   agrees to make loans (each,   a
"Revolving Loan" and,   collectively,   the "Revolving   Loans") to the Borrower at
any time and from time to time   from the   Effective   Date to the Final   Maturity
Date, or until the earlier   reduction of its Revolving Credit Commitment to zero
in   accordance   with the   terms   hereof,   in an   aggregate   principal   amount of
Revolving   Loans at any time   outstanding   not to exceed   the   lesser of (A) the
amount of such Lender's Revolving Credit Commitment,   and (B) the amount of such
Lender's Pro Rata Share of the then extant Borrowing Base; and

     (ii)   each   Term   Loan   Lender    severally   agrees   to   make   a   term   loan
(collectively,   the "Term Loan") to the Borrower on the   Effective   Date,   in an
aggregate   principal   amount   equal to the   amount   of such   Lender's   Term Loan
Commitment.

     (b) Notwithstanding the foregoing:

     (i) The aggregate   principal   amount of Revolving Loans   outstanding at any
time to the Borrower   shall not exceed the lower of (A) the   difference   between
(x) the Total Revolving Credit Commitment and (y) the aggregate Letter of Credit
Obligations and (B) the difference   between (x) the then current   Borrowing Base
and (y) the   aggregate   Letter   of   Credit   Obligations.   The   Revolving   Credit
Commitment of each Lender shall automatically and permanently be reduced to zero
on the Final   Maturity   Date.   Within the   foregoing   limits,   the   Borrower may
borrow,   repay and reborrow the Revolving   Loans, on or after the Effective Date
and prior to the Final   Maturity   Date,   subject   to the terms,   provisions   and
limitations set forth herein.



                                       40
<PAGE>

     (ii) The aggregate   principal amount of the Term Loan made on the Effective
Date shall not exceed the Total Term Loan   Commitment.   Any principal   amount of
the Term Loan that is repaid or prepaid may not be reborrowed.

     Section 2.02 Making the Loans.

     (a) The   Borrower   shall give the   Administrative   Agent   prior   telephonic
notice   (immediately   confirmed in writing, in substantially the form of Exhibit
2.01(b)(ii)   hereto (a "Notice of Borrowing")),   (i) in the case of a LIBOR Rate
Loan,   not later   than   12:00   noon   (New York City   time) on the date that is 3
Business Days prior to the date of the proposed Loan (or such shorter   period as
the Administrative Agent is willing, in its sole discretion, to accommodate from
time to time),   or (ii) in the case of a   Reference   Rate   Loan,   not later than
12:00 noon (New York City   time) on the of the   proposed   Loan (or such   shorter
period   as the   Administrative   Agent is   willing,   in its sole   discretion,   to
accommodate   from time to time).   Such Notice of Borrowing shall specify (A) the
principal   amount of the proposed   Loan,   and (B) the proposed   borrowing   date,
which must be a Business Day,   and,   with respect to the Term Loan,   must be the
Effective   Date, (C) whether the proposed Loan is to be a Reference Rate Loan or
a LIBOR   Rate   Loan,   and (D) in the   case of a LIBOR   Rate   Loan,   the   initial
Interest Period to be applicable   thereto,   which shall be a period contemplated
by the definition of the term "Interest   Period".   If no election as to the type
of Loan is specified, then the requested Loan shall be a Reference Rate Loan. If
no Interest   Period is specified with respect to any requested   LIBOR Rate Loan,
then the   Borrower   shall be deemed to have   selected an Interest   Period of one
month's   duration.   The   Administrative   Agent and the   Lenders   may act without
liability upon the basis of written, telecopied or telephonic notice believed by
the   Administrative   Agent in good   faith to be from the   Borrower   (or from any
Authorized Officer thereof   designated in writing   purportedly from the Borrower
to the   Administrative   Agent).   The Borrower hereby waives the right to dispute
the Administrative   Agent's record of the terms of any such telephonic Notice of
Borrowing.   The   Administrative   Agent and each Lender shall be entitled to rely
conclusively on any Authorized   Officer's   authority to request a Loan on behalf
of the Borrower until the   Administrative   Agent receives   written notice to the
contrary.   The Administrative Agent and the Lenders shall have no duty to verify
the authenticity of the signature appearing on any written Notice of Borrowing.

     (b) Each   Notice   of   Borrowing   pursuant   to this   Section   2.02   shall be
irrevocable   and the Borrower   shall be bound to make a borrowing in   accordance
therewith.   Except for Revolving Loans deemed made pursuant to Section   3.01(c),
each   Revolving   Loan shall be made in a minimum amount of $100,000 and shall be
in integral multiples of $100,000 in excess thereof.

     (c) (i) Except as   otherwise   provided in this Section   2.02(c),   all Loans
under   this   Agreement   shall   be   made   by   the   Lenders    simultaneously    and
proportionately   to   their   Pro   Rata   Shares   of   the   Total   Revolving   Credit
Commitment   and the   Total   Term Loan   Commitment,   as the case may be, it being
understood   that no Lender   shall be   responsible   for any   default by any other
Lender in that other Lender's   obligations   to make a Loan requested   hereunder,


                                       41
<PAGE>

nor shall the   Commitment of any Lender be increased or decreased as a result of
the default by any other Lender in that other Lender's obligation to make a Loan
requested   hereunder,   and each   Lender   shall be   obligated   to make the   Loans
required   to be made by it by the   terms   of this   Agreement   regardless   of the
failure by any other Lender.

      (ii) Notwithstanding any other provision of this Agreement, and in order to
reduce   the   number of fund   transfers   among the   Borrower,   the Agents and the
Lenders, the Borrower,   the Agents and the Lenders agree that the Administrative
Agent may (but shall not be   obligated   to),   and the   Borrower   and the Lenders
hereby irrevocably authorize the Administrative Agent to, fund, on behalf of the
Lenders with a Revolving Credit Commitment,   Revolving Loans pursuant to Section
2.01,   subject to the procedures   for   settlement set forth in Section   2.02(d);
provided,   however, that (a) the Administrative Agent shall in no event fund any
such Revolving   Loans if the   Administrative   Agent shall have received   written
notice from the   Collateral   Agent or the Required   Lenders prior to the time of
the   proposed   Revolving   Loan   that   one or   more of the   conditions   precedent
contained   in Section   5.02 will not be   satisfied   at the time of the   proposed
Revolving Loan, and (b) the Administrative Agent shall not otherwise be required
to determine that, or take notice whether,   the conditions   precedent in Section
5.02 have been satisfied. If the Borrower gives a Notice of Borrowing requesting
a Revolving Loan and the Administrative   Agent elects not to fund such Revolving
Loan on behalf of the Revolving Loan Lenders, then promptly after receipt of the
Notice of Borrowing   requesting   such Revolving Loan, the   Administrative   Agent
shall   notify each   Revolving   Loan   Lender of the   specifics   of the   requested
Revolving Loan and that it will not fund the requested   Revolving Loan on behalf
of   the   Revolving   Loan   Lenders.   If the   Administrative   Agent   notifies   the
Revolving   Loan   Lenders   that it will not fund a   requested   Revolving   Loan on
behalf of such Revolving Loan Lenders, each Revolving Loan Lender shall make its
Pro Rata Share of the Revolving Loan available to the   Administrative   Agent, in
immediately   available funds, at the Payment Office no later than 3:00 p.m. (New
York City time) (provided that the   Administrative   Agent requests   payment from
such Revolving Loan Lender not later than 1:00 p.m. (New York City time)) on the
date of the proposed   Revolving   Loan.   The   Administrative   Agent will make the
proceeds of such   Revolving   Loans   available   to the Borrower on the day of the
proposed   Revolving Loan by causing an amount,   in immediately   available funds,
equal to the proceeds of all such Revolving Loans received by the Administrative
Agent at the Payment Office or the amount funded by the Administrative   Agent on
behalf of the Revolving Loan Lenders to be deposited in an account designated by
the Borrower.

     (iii) If the   Administrative   Agent has notified the Revolving Loan Lenders
that the   Administrative   Agent, on behalf of such Revolving Loan Lenders,   will
fund   a   particular   Revolving   Loan   pursuant   to   Section    2.02(c)(ii),    the
Administrative   Agent may assume that each such   Revolving   Loan Lender has made
such   amount   available   to   the   Administrative   Agent   on   such   day   and   the
Administrative   Agent, in its sole   discretion,   may, but shall not be obligated
to, cause a   corresponding   amount to be made   available to the Borrower on such
day. If the Administrative   Agent makes such   corresponding   amount available to
the Borrower and such corresponding   amount is not in fact made available to the
Administrative Agent by any such Revolving Loan Lender, the Administrative Agent
shall be   entitled   to recover   such   corresponding   amount on demand   from such
Revolving Loan Lender together with interest thereon, for each day from the date
such   payment was due until the date such   amount is paid to the   Administrative
Agent,   at the   Federal   Funds Rate for 3 Business   Days and   thereafter   at the


                                        42
<PAGE>

Reference   Rate.   During the period in which such   Revolving Loan Lender has not
paid such   corresponding   amount to the   Administrative   Agent,   notwithstanding
anything to the contrary contained in this Agreement or any other Loan Document,
the amount so advanced by the   Administrative   Agent to the Borrower shall,   for
all purposes hereof,   be a Revolving Loan made by the   Administrative   Agent for
its own   account.   Upon any such   failure by a Revolving   Loan Lender to pay the
Administrative   Agent, the Administrative Agent shall promptly thereafter notify
the   Borrower   of such   failure   and the   Borrower   shall   immediately   pay such
corresponding amount to the Administrative Agent for its own account.

     (iv)   Nothing   in this   Section   2.02(c)   shall be   deemed to   relieve   any
Revolving   Loan Lender from its   obligations   to fulfill   its   Revolving   Credit
Commitment hereunder or to prejudice any rights that the Administrative Agent or
the   Borrower   may have   against   any   Revolving   Loan Lender as a result of any
default by such Revolving Loan Lender hereunder.

     (d) (i) With respect to all periods for which the Administrative   Agent has
funded Revolving Loans pursuant to Section   2.02(c),   on Wednesday of each week,
or if the   applicable   Wednesday is not a Business   Day,   then on the   following
Business Day, or such shorter period as the   Administrative   Agent may from time
to   time   select   (any   such   week or   shorter   period   being   herein   called   a
"Settlement Period"),   the Administrative Agent shall notify each Revolving Loan
Lender of the unpaid principal   amount of the Revolving Loans   outstanding as of
the last day of each such   Settlement   Period.   In the event that such amount is
greater than the unpaid principal   amount of the Revolving Loans   outstanding on
the last day of the Settlement   Period   immediately   preceding   such   Settlement
Period (or, if there has been no preceding   Settlement Period, the amount of the
Revolving   Loans   made on the   date   of such   Revolving   Loan   Lender's   initial
funding),   each Revolving Loan Lender shall promptly (and in any event not later
than 2:00 p.m. (New York City time) if the Administrative Agent requests payment
from such   Lender   not later   than   12:00 noon (New York City time) on such day)
make available to the Administrative   Agent its Pro Rata Share of the difference
in immediately   available funds. In the event that such amount is less than such
unpaid principal   amount,   the   Administrative   Agent shall promptly pay over to
each   Revolving   Loan Lender its Pro Rata Share of the difference in immediately
available funds. In addition,   if the   Administrative   Agent shall so request at
any time   when a Default   or an Event of   Default   shall   have   occurred   and be
continuing,   or any other   event   shall have   occurred   as a result of which the
Administrative   Agent shall   determine   that it is desirable   to present   claims
against the Borrower for   repayment,   each   Revolving Loan Lender shall promptly
remit to the   Administrative   Agent or, as the case may be,   the   Administrative
Agent shall promptly remit to each   Revolving Loan Lender,   sufficient   funds to
adjust the   interests   of the   Revolving   Loan   Lenders in the then   outstanding
Revolving Loans to such an extent that,   after giving effect to such adjustment,
each such Revolving   Loan Lender's   interest in the then   outstanding   Revolving
Loans   will be equal to its Pro   Rata   Share   thereof.   The   obligations   of the
Administrative   Agent and each Revolving Loan Lender under this Section   2.02(d)
shall be absolute and   unconditional.   Each   Revolving Loan Lender shall only be
entitled to receive   interest on its Pro Rata Share of the Revolving Loans which
have been funded by such Revolving Loan Lender.

     (ii) In the event that any Revolving   Loan Lender fails to make any payment
required   to be made by it pursuant to Section   2.02(d)(i),   the   Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Revolving Loan Lender together with interest thereon, for each day from the date
such   payment was due until the date such   amount is paid to the   Administrative


                                       43
<PAGE>

Agent,   at the   Federal   Funds Rate for 3 Business   Days and   thereafter   at the
Reference   Rate.   During the period in which such   Revolving Loan Lender has not
paid such   corresponding   amount to the   Administrative   Agent,   notwithstanding
anything to the contrary contained in this Agreement or any other Loan Document,
the amount so advanced by the   Administrative   Agent to the Borrower shall,   for
all purposes hereof,   be a Revolving Loan made by the   Administrative   Agent for
its own   account.   Upon any such   failure by a Revolving   Loan Lender to pay the
Administrative   Agent, the Administrative Agent shall promptly thereafter notify
the   Borrower   of such   failure   and the   Borrower   shall   immediately   pay such
corresponding amount to the Administrative Agent for its own account. Nothing in
this Section   2.02(d)(ii)   shall be deemed to relieve any Revolving   Loan Lender
from its obligation to fulfill its Revolving Credit   Commitment   hereunder or to
prejudice   any rights that the   Administrative   Agent or the   Borrower   may have
against any Revolving   Loan Lender as a result of any default by such   Revolving
Loan Lender hereunder.

     Section 2.03 Repayment of Loans; Evidence of Debt.

     (a) The   outstanding   principal   of all   Revolving   Loans   shall be due and
payable on the Final Maturity Date.

     (b) The   outstanding   principal   of the Term   Loan   shall be   repayable   in
consecutive   quarterly   installments,   on the first day of each January,   April,
July,   and October   commencing on April 1, 2007 and ending on the Final Maturity
Date, as follows:

        PAYMENT DATE                   AMOUNT
  ---------------------------- ----------------------
        April 1, 2007                  $250,000
  ---------------------------- ----------------------
        July 1, 2007                   $250,000
  ---------------------------- ----------------------
        October 1, 2007                $250,000
  ---------------------------- ----------------------
        January 1, 2008                $250,000
  ---------------------------- ----------------------
         April 1, 2008                  $500,000
  ---------------------------- ----------------------
        July 1, 2008                   $500,000
  ---------------------------- ----------------------
        October 1, 2008                $500,000
  ---------------------------- ----------------------
        January 1, 2009                $500,000
  ---------------------------- ----------------------
        April 1, 2009                  $500,000
  ---------------------------- ----------------------
        July 1, 2009                   $500,000
  ---------------------------- ----------------------
        October 1, 2009                $500,000
  ---------------------------- ----------------------
        January 1, 2010                $500,000
  ---------------------------- ----------------------

                                       44
<PAGE>

;   provided,   however,   that the last such   installment   shall be in the   amount
necessary   to repay in full the unpaid   principal   amount of the Term Loan.   The
outstanding principal of the Term Loan shall be repaid in full on the earlier of
(i) the termination of the Total Revolving Credit   Commitment and (ii) the Final
Maturity Date.

     (c) Each Lender shall   maintain in   accordance   with its usual   practice an
account or accounts   evidencing the   Indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

     (d) The   Administrative   Agent   shall   maintain   accounts in which it shall
record   (i) the   amount   of each   Loan made   hereunder,   (ii) the   amount of any
principal   or interest   due and   payable or to become due and   payable   from the
Borrower to each Lender   hereunder   and (iii) the amount of any sum   received by
the   Administrative   Agent   hereunder   for the   account of the   Lenders and each
Lender's share thereof.

     (e) The entries made in the accounts   maintained pursuant to paragraphs (c)
or (d) of this Section 2.03 shall be prima facie   evidence of the   existence and
amounts of the obligations   recorded   therein;   provided that the failure of any
Lender   or the   Administrative   Agent to   maintain   such   accounts   or any error
therein shall not in any manner   affect the   obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.

     (f)   Any   Lender   may   request   that   Loans   made by it be   evidenced   by a
promissory   note. In such event,   the Borrower shall execute and deliver to such
Lender a   promissory   note   payable to such   Lender (or,   if   requested   by such
Lender,   to such Lender and its   registered   assigns) in a form furnished by the
Collateral Agent and reasonably   satisfactory to the Borrower.   Thereafter,   the
Loans evidenced by such promissory note and interest   thereon shall at all times
(including after assignment   pursuant to Section 12.07) be represented by one or
more   promissory   notes in such form payable to the payee named   therein (or, if
such   promissory   note is a registered   note,   to such payee and its   registered
assigns).

     Section 2.04 Interest.

     (a)   Revolving   Loans.   Each   Revolving   Loan   shall bear   interest   on the
principal   amount thereof from time to time   outstanding,   from the date of such
Loan until such principal is repaid, as follows:   (i) if the relevant   Revolving
Loan is a LIBOR Rate Loan, at a rate per annum equal to the LIBOR Rate plus 3.75
percentage   points,   and   (ii)   otherwise,   at a rate   per   annum   equal   to the
Reference Rate plus 1.0 percentage point.

     (b) Term Loan.   The Term Loan shall bear interest on the   principal   amount
thereof from time to time   outstanding,   from the date of the making of the Term
Loan until such   principal   amount is repaid,   as follows:   (i) if the   relevant
portion of the Term Loan is a LIBOR Rate Loan,   at a rate per annum equal to the
LIBOR Rate plus 8.50 percentage points, and (ii) otherwise,   at a rate per annum
equal to the Reference Rate plus 5.50 percentage points.

     (c) Default   Interest and Fees.   To the extent   permitted by law,   upon the
occurrence   and   during   the   continuance   of an   Event of   Default,   (i) at the
election of the Required   Revolving Lenders (and written notice of such election
shall be given by such   Lenders to each   Agent),   the   principal   of, and unpaid
interest on, all Revolving   Loans shall bear interest,   from the date such Event
of Default   occurred   until the date such Event of Default is cured or waived in


                                       45
<PAGE>

writing in   accordance   herewith,   at all times during such period at a rate per
annum equal to the Post-Default   Rate with respect to the Revolving Loans,   (ii)
at the   election of the Required   Term Loan Lenders (and written   notice of such
election   shall be given by such Lenders to each Agent),   the   principal of, and
unpaid interest on, the Term Loan shall bear interest,   from the date such Event
of Default   occurred   until the date such Event of Default is cured or waived in
writing in   accordance   herewith,   at all times during such period at a rate per
annum equal to the Post-Default Rate with respect to the Term Loan, and (iii) at
the election of the   Required   Revolving   Lenders   (and   written   notice of such
election   shall be given by such   Lenders to each   Agent),   the Letter of Credit
Fees   shall be   increased   by 2.0   percentage   points   above the per annum   rate
otherwise applicable hereunder.

     (d) Interest   Payment Dates.   Interest on each Reference Rate Loan shall be
payable monthly, in arrears,   on the first day of each month,   commencing on the
first day of the   month   following   the month in which   such Loan is made and at
maturity (whether upon demand, by acceleration or otherwise).   Interest on LIBOR
Rate Loans shall be payable on the   earliest of (i) the last day of the Interest
Period   applicable   thereto,   (ii) the   occurrence   of an Event   of   Default   in
consequence of which the Required   Lenders or Collateral Agent on behalf thereof
elect to accelerate   the maturity of all or any portion of the   Obligations,   or
(iii)   termination of this Agreement   pursuant to the terms hereof.   Interest at
the Post-Default Rate shall be payable on demand. The Borrower hereby authorizes
the   Administrative   Agent to, and the   Administrative   Agent may,   from time to
time,   charge the Loan   Account   pursuant to Section 4.02 with the amount of any
interest payment due hereunder.

     (e) General.   All interest   shall be computed on the basis of a year of 360
days for the actual   number of days,   including   the first day but excluding the
last day, elapsed.

     (f) LIBOR Option.

     (i) LIBOR Election.   In lieu of having   interest   charged at the rate based
upon the Reference Rate, the Borrower shall have the option (the "LIBOR Option")
to have   interest   on all or a   portion   of the   Loans be   charged   at a rate of
interest based upon the LIBOR Rate. On the last day of each applicable   Interest
Period, unless the Borrower properly has exercised the LIBOR Option with respect
thereto,   the interest   rate   applicable   to such LIBOR Rate Loan   automatically
shall convert to the rate of interest then applicable to Reference Rate Loans of
the same type   hereunder.   At any time that an Event of Default has occurred and
is   continuing,   the   Borrower no longer   shall have the option to request   that
Loans bear   interest at the LIBOR Rate and   Administrative   Agent shall have the
right to convert the interest   rate on all   outstanding   LIBOR Rate Loans to the
rate then applicable to Reference Rate Loans hereunder.

     (A) The   Borrower   may,   at any time and from   time to time,   so long as no
Event of Default has   occurred   and is   continuing,   elect to exercise the LIBOR
Option by notifying   Administrative Agent prior to 12:00 noon (New York time) at
least 3 Business Days prior to the commencement of the proposed   Interest Period
(the "LIBOR   Deadline").   Notice of the Borrower's   election of the LIBOR Option
for a   permitted   portion of the Loans and an Interest   Period   pursuant to this


                                        46
<PAGE>

Section   shall be made by delivery   to   Administrative   Agent of a LIBOR   Notice
received by   Administrative   Agent before the LIBOR Deadline.   Promptly upon its
receipt of each such LIBOR   Notice,   Administrative   Agent shall   provide a copy
thereof to each of the   Lenders   having a   Commitment   of the type to which such
LIBOR Notice relates.

     (B) Each LIBOR Notice shall be irrevocable and binding on the Borrower.   In
connection with each LIBOR Rate Loan, the Borrower shall indemnify,   defend, and
hold   Administrative   Agent and the Lenders   harmless against any loss, cost, or
expense   incurred by   Administrative   Agent or any Lender as a result of (1) the
payment of any principal of any LIBOR Rate Loan other than on the last day of an
Interest   Period   applicable   thereto   (including   as a   result   of an   Event of
Default),   (2) the   conversion of any LIBOR Rate Loan other than on the last day
of the   Interest   Period   applicable   thereto,   or (3) the   failure   to   borrow,
convert,   continue   or prepay any LIBOR Rate Loan on the date   specified   in any
LIBOR Notice   delivered   pursuant   hereto (such   losses,   costs,   and   expenses,
collectively,    "Funding   Losses").    Funding   Losses   shall,   with   respect   to
Administrative   Agent or any Lender, be deemed to equal the amount determined by
Administrative   Agent or such Lender to be the excess, if any, of (x) the amount
of interest that would have accrued on the   principal   amount of such LIBOR Rate
Loan had such   event not   occurred,   at the   LIBOR   Rate   that   would   have been
applicable   thereto,   for the period from the date of such event to the last day
of the then current   Interest   Period   therefor (or, in the case of a failure to
borrow,   convert or   continue,   for the period that would have been the Interest
Period   therefor),   minus (y) the amount of interest   that would   accrue on such
principal amount for such period at the interest rate which Administrative Agent
or such Lender would be offered were it to be offered,   at the   commencement   of
such period,   Dollar   deposits of a   comparable   amount and period in the London
interbank market. A certificate of Administrative Agent or a Lender delivered to
the Borrower   setting forth any amount or amounts that   Administrative   Agent or
such Lender is entitled to receive   pursuant to this Section shall be conclusive
absent manifest error.

     (C) The   Borrower   shall have not more than 5 LIBOR Rate Loans in effect at
any given time.   The Borrower   only may exercise the LIBOR Option for LIBOR Rate
Loans of at least $500,000 and integral multiples of $100,000 in excess thereof.

     (ii)   Prepayments.   The   Borrower   may prepay LIBOR Rate Loans at any time;
provided,   however,   that in the event that LIBOR Rate Loans are   prepaid on any
date   that   is not the   last   day of the   Interest   Period   applicable   thereto,
including   as   a   result   of   any   automatic   prepayment   through   the   required
application   by   Administrative   Agent of proceeds of   Collections in accordance
with Section 4.04 or for any other reason,   including   early   termination of the
term of this Agreement or   acceleration of all or any portion of the Obligations
pursuant to the terms hereof,   the Borrower shall   indemnify,   defend,   and hold
Administrative Agent and the Lenders and their participants harmless against any
and all Funding Losses in accordance with subsection (ii) above.



                                       47
<PAGE>

     (iii) Special Provisions Applicable to LIBOR Rate.

     (A) The LIBOR Rate may be adjusted by Administrative   Agent with respect to
any   Lender   on a   prospective   basis to take into   account   any   additional   or
increased   costs to such   Lender of   maintaining   or   obtaining   any   eurodollar
deposits   or   increased   costs   due   to   changes   in   applicable   law   occurring
subsequent to the commencement of the then applicable Interest Period, including
changes in tax laws (except changes of general applicability in corporate income
tax   laws) and   changes   in the   reserve   requirements   imposed   by the Board of
Governors   of the   Federal   Reserve   System (or any   successor),   excluding   the
Reserve Percentage,   which additional or increased costs would increase the cost
of funding   loans   bearing   interest at the LIBOR Rate.   In any such event,   the
affected Lender shall give the Borrower and Administrative   Agent notice of such
a determination and adjustment and Administrative   Agent promptly shall transmit
the notice to each other   Lender   and,   upon its   receipt of the notice from the
affected Lender, the Borrower may, by notice to such affected Lender (1) require
such Lender to furnish to the Borrower a statement   setting   forth the basis for
adjusting   such LIBOR Rate and the   method   for   determining   the amount of such
adjustment,   or (2)   repay the LIBOR   Rate   Loans   with   respect   to which   such
adjustment   is made   (together   with any   amounts due under   subsection   (ii)(B)
above).

     (B) In   the   event   that   any   change   in   market   conditions   or any   law,
regulation, treaty, or directive, or any change therein or in the interpretation
of   application   thereof,   shall   at any time   after   the   date   hereof,   in the
reasonable   opinion of any   Lender,   make it unlawful   or   impractical   for such
Lender to fund or   maintain   LIBOR Rate   Loans or to   continue   such   funding or
maintaining,   or to determine or charge   interest rates at the LIBOR Rate,   such
Lender shall give notice of such changed   circumstances to Administrative   Agent
and the Borrower and Administrative   Agent promptly shall transmit the notice to
each other   Lender   and (1) in the case of any LIBOR   Rate Loans of such   Lender
that are outstanding, the date specified in such Lender's notice shall be deemed
to be the last day of the Interest Period of such LIBOR Rate Loans, and interest
upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the
rate then applicable to Reference Rate Loans,   and (2) the Borrower shall not be
entitled to elect the LIBOR Option until such Lender determines that it would no
longer be unlawful or impractical to do so.

     (iv) No Requirement of Matched Funding.   Anything to the contrary contained
herein notwithstanding, neither Administrative Agent, nor any Lender, nor any of
their participants,   is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate.   The   provisions   of this   Section   shall   apply as if each   Lender or its
participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring   eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.

     Section 2.05 Reduction of Commitment; Prepayment of Loans.

     (a) Reduction of Commitments.

     (i) Revolving Credit   Commitments.   The Total Revolving   Credit   Commitment
shall terminate on the Final Maturity Date. On or after the first anniversary of
the Effective   Date, the Borrower may,   without   premium or penalty,   reduce the
Total Revolving Credit Commitment to an amount (which may be zero) not less than
the sum of (A) the aggregate unpaid principal amount of all Revolving Loans then
outstanding,   (B) the aggregate   principal amount of all Revolving Loans not yet
made as to which a Notice of   Borrowing   has been   given by the   Borrower   under
Section   2.02,   (C) the   Letter of Credit   Obligations   at such time and (D) the
stated   amount of all Letters of Credit not yet issued as to which a request has
been made and not withdrawn.   Each such reduction shall be in an amount which is
an integral multiple of $1,000,000 (unless the Total Revolving Credit Commitment
in effect immediately prior to such reduction is less than $1,000,000), shall be
made by   providing   not less than 3 Business   Days prior   written   notice to the
Administrative   Agent   and   shall be   irrevocable;   provided   that,   a notice of
termination   of the   Commitments   delivered   by the Borrower may state that such
notice is conditioned upon the consummation of financing that will refinance the
Indebtedness   under this Agreement,   in which case such notice may be revoked by
the Borrower if such condition is not satisfied (by notice to the Administrative
Agent   on or prior to the   specified   effective   date),   and if such   notice   is
revoked then,   anything to the contrary   contained herein   notwithstanding,   the
failure to terminate the   Commitments on the date specified in such notice shall
not constitute an Event of Default.   Once reduced,   the Total   Revolving   Credit
Commitment   may not be   increased.   Each such   reduction of the Total   Revolving
Credit   Commitment shall reduce the Revolving   Credit   Commitment of each Lender
proportionately in accordance with its Pro Rata Share thereof.

     (ii) Term Loan.   The Total Term Loan   Commitment   shall   terminate upon the
making of the Term Loan on the Effective Date.

     (b) Optional Prepayment.

     (i) Revolving Loans. The Borrower may prepay without penalty or premium the
principal of any Revolving Loan, in whole or in part.

     (ii) Term Loan. On or after the first anniversary of the Effective Date, so
long   as (A)   no   Default   or   Event   of   Default   shall   have   occurred   and be
continuing,   and (B) Availability is greater than or equal to $10,000,000   after
giving effect to such   payment,   the Borrower may, upon at least 3 Business Days
prior written notice to the   Administrative   Agent,   prepay the principal of the
Term Loan, in whole or in part.   Each   prepayment   made pursuant to this Section
2.05(b)(ii)   shall be accompanied by (A) the payment of accrued   interest to the
date of such payment on the amount   prepaid,   and (B) the prepayment   premium as
set forth in the Fee Letter.   Each such prepayment   shall be applied against the
remaining installments of principal due on the Term Loan in the inverse order of
maturity.

     (c) Mandatory Prepayment.

     (i) The   Borrower   will   immediately   prepay the   Revolving   Loans within 1
Business Day at any time that the   aggregate   principal   amount of all Revolving
Loans plus the outstanding   amount of all Letter of Credit   Obligations   exceeds
the lesser of (A) the Total Revolving Credit   Commitment,   and (B) the Borrowing
Base,   to the full   extent of any such   excess.   On each day that any   Revolving


                                       48
<PAGE>

Loans or Letter of Credit Obligations are outstanding, the Borrower shall hereby
be deemed to   represent   and   warrant   to the Agents   and the   Lenders   that the
Borrowing   Base   calculated   as of such day   equals   or   exceeds   the   aggregate
principal   amount   of all   Revolving   Loans and   Letter   of   Credit   Obligations
outstanding on such day. If at any time after the Borrower has complied with the
first   sentence   of this   Section   2.05(c)(i),   the   aggregate   Letter of Credit
Obligations   is   greater   than the   lesser   of (x) the   Total   Revolving   Credit
Commitment,   and (y) the then current Borrowing Base, the Borrower shall provide
cash collateral to the   Administrative   Agent in an amount equal to 105% of such
excess,   which   cash   collateral   shall be   deposited   in the   Letter   of Credit
Collateral   Account and,   provided   that no Event of Default shall have occurred
and be   continuing,   returned   to the   Borrower,   at such time as the   aggregate
Letter   of   Credit   Obligations   plus   the   aggregate   principal   amount   of all
outstanding Revolving Loans no longer exceeds the then current Borrowing Base.

     (ii) The Borrower will immediately prepay the outstanding   principal amount
of the Term Loan in the event   that the Total   Revolving   Credit   Commitment   is
terminated for any reason.

     (iii) The   Administrative   Agent shall on each Business Day apply all funds
transferred   to or   deposited   in the   Administrative   Agent's   Account,   to the
payment,   in   whole or in