10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________

FORM 10-K

________________________________________

(Mark One)

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-28000

PRGX Global, Inc.

(Exact name of registrant as specified in its charter)

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

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, No Par Value	The NASDAQ Stock Market LLC (The Nasdaq Global Select Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act.   Yes  ¨    No  ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes  ¨    No  ý

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

¨  Large accelerated filer	ý	Accelerated filer	¨	Non-accelerated filer	ý	Smaller reporting company
					¨	Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

The aggregate market value, as of June 30, 2018, of common shares of the registrant held by non-affiliates of the registrant was approximately $200.7 million, based upon the last sales price reported that date on The Nasdaq Global Select Market of $9.70 per share. (Aggregate market value is estimated solely for the purposes of this report and shall not be construed as an admission for the purposes of determining affiliate status.)

Common shares of the registrant outstanding at March 11, 2019 were 23,080,564.

Documents Incorporated by Reference

Part III: Portions of Registrant’s Proxy Statement relating to the Company’s 2019 Annual Meeting of Shareholders.

PRGX GLOBAL, INC.

FORM 10-K

December 31, 2018

INDEX

	Page No.
Part I
Item 1. Business	1
Item 1A. Risk Factors	8
Item 1B. Unresolved Staff Comments	16
Item 2. Properties	16
Item 3. Legal Proceedings	16
Item 4. Mine Safety Disclosures	16
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6. Selected Financial Data	19
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	36
Item 8. Financial Statements and Supplementary Data	37
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	77
Item 9A. Controls and Procedures	77
Item 9B. Other Information	80
Part III
Item 10. Directors, Executive Officers and Corporate Governance	81
Item 11. Executive Compensation	81
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stock Matters	81
Item 13. Certain Relationships and Related Transactions, and Director Independence	82
Item 14. Principal Accountant Fees and Services	82
Part IV
Item 15. Financial Statement Schedules, Exhibits	83
Item 16. Form 10-K Summary	89
Signatures	90

Cautionary Statement Regarding Forward-Looking Statements

The following discussion includes “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are at times identified by words such as “plans,” “intends,” “expects,” or “anticipates” and words of similar effect and include statements regarding the Company’s financial and operating plans and goals. These forward-looking statements include any statements that cannot be assessed until the occurrence of a future event or events. Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries.

These forward-looking statements are subject to risks, uncertainties and other factors, including but not limited to those discussed herein and below under Item 1A “Risk Factors.” Many of these risks are outside of our control and could cause actual results to differ materially from the results discussed in the forward-looking statements. Factors that could lead to material changes in our performance may include, but are not limited to:

• our ability to successfully execute our recovery audit growth strategy;

• our continued dependence on our largest clients for significant revenue;

• the use of internal recovery audit groups by our clients, reducing the amount of recoveries available to us;

• commoditization of our services and the effects of rate reductions;

• the significant control that our clients have over assertion or acceptance of recovery audit claims against their suppliers and the corresponding impact on our revenue;

• revenue that does not meet expectations or justify costs incurred;

• our ability to develop material sources of new revenue in addition to revenue from our core accounts payable recovery audit services;

• changes in the market for our services;

• client and vendor bankruptcies and financial difficulties;

• our ability to retain and attract qualified personnel and effectively manage our global workforce;

• our ability to protect and maintain the competitive advantage of our proprietary technology and intellectual property rights;

• our reliance on operations outside the U.S. for a significant portion of our revenue;

• our ability to effectively manage foreign currency fluctuations;

• the highly competitive environments in which our recovery audit services and Adjacent Services businesses operate and the resulting pricing pressure on those businesses;

• our ability to integrate recent and future acquisitions;

• our ability to realize operational cost savings and the transformation severance and related expenses we may incur to generate these savings;

• uncertainty in the global credit markets;

• our ability to maintain compliance with the financial and non-financial covenants in our financing arrangements;

• changes to Medicare and Medicaid recovery audit contractor (“RAC”) programs administered by the Centers for Medicare and Medicaid Services (“CMS”) and other government agencies, and our role in the national Medicare RAC program, the results of operations of which are reported in our discontinued operations;

• our tax positions and other factors, including the enactment of the Tax Cuts and Jobs Act in December 2017, that could affect our effective income tax rate or our ability to use our existing deferred tax assets;

• our ability to operate in compliance with changing data privacy requirements;

• our ability to comply with a variety of foreign laws and regulations, such as those relating to data protection and employment, as well as U.S. laws affecting operations outside of the United States;

• a cyber-security incident involving the misappropriation, loss or unauthorized disclosure or use of client data or other confidential information of our clients;

• effects of changes in accounting policies, standards, guidelines or principles;

• terrorist acts, acts of war and other factors over which we have little or no control;

• our ability to effectively develop, maintain, operate and improve our proprietary technology platforms and applications; or

i

• uncertainties and effects of the implementation of the United Kingdom's referendum to withdraw membership from the European Union (referred to as "Brexit"), including financial, legal, trade and tax implications.

i

Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all such factors.

ii

PART I

ITEM 1. Business

PRGX Global, Inc., together with its subsidiaries, is a global leader in recovery audit and spend analytics services, providing a suite of services targeted at our clients' Source-to-Pay ("S2P") business processes. Our services include recovery audit, spend analytics and supplier information management ("SIM") services. We are based in the United States of America (“U.S.”) and serve clients in more than 30 countries. PRGX Global, Inc. was incorporated in the State of Georgia in 1996. At the heart of our client services portfolio is the core capability of mining client data to deliver “actionable insights.” Actionable insights allow our clients to improve their financial performance by reducing costs, improving business processes and managing risks.

The vast majority of our revenue comes from recovery audit, a business service based on the mining of a tremendous amount of our clients’ purchasing-related data, looking for overpayments made to their third-party suppliers. PRGX is one of the world's leading providers of accounts payable recovery audit services principally to large businesses and government agencies with high volumes of transactions and complex pricing arrangements with vendors. We provide services to 80% of the top 15 global retailers and over 25% of the top 50 companies in the Fortune 500. We earn the largest portion of our revenue from our retail clients. Recovery audit in the retail industry is a mature service offering and we have been serving a number of our clients for decades. Pricing of merchandise for resale in the retail industry is extremely complex due to the high volume of promotions, allowances and rebates provided by suppliers. The second largest portion of our business is referred to within the recovery audit business as “commercial.” Commercial recovery auditing is the delivery of recovery audit services to industries other than retail, such as telecommunications, automotive and industrial manufacturing, resources, financial services, and transportation. Recovery audit in the industries represented within commercial is typically less complex in terms of vendor pricing structure, scope of purchase transactions made available for audit and depth of audit programs within individual companies. Another type of recovery audit is called “contract compliance” auditing, a specific type of recovery auditing that is more heavily utilized by commercial clients and continues to be a growing part of our business. This service offering focuses on auditing complex supplier billings against large services, construction and licensing contracts, and is relevant to a large portion of our client base. We continue to innovate through technological advances, including new recovery audit claim types, accelerating the audit process by moving closer to the original transaction, enhancements to our proprietary technology audit tools and expanded service offerings, including spend visibility, analytics and SIM services. These services target client functional and process areas where we have established expertise, enabling us to provide services to finance, merchandising and procurement executives to improve working capital, optimize purchasing leverage in vendor pricing negotiations, improve insight into product margin and cost of goods for resale, identify and manage risks associated with vendor compliance, improve quality of vendor master data and improve visibility and diagnostics of direct and indirect spend. These service offerings are increasingly important to our business and are applicable to clients in both retail and commercial industries.

PRGX is unique in that we are a global recovery audit services provider, serving clients in over 30 countries across a multitude of industries. We conduct our operations through three reportable segments: Recovery Audit Services - Americas, Recovery Audit Services - Europe/Asia-Pacific and Adjacent Services. The Recovery Audit Services - Americas segment represents recovery audit services we provide in the U.S., Canada and Latin America and is our largest segment in terms of clients served and revenue generated. The Recovery Audit Services - Europe/Asia-Pacific segment represents recovery audit services we provide in Europe, Asia and the Pacific region and is responsible for a significant portion of our revenue. The Adjacent Services segment includes advisory, analytics and SIM services, as well as our PRGX OPTIX^® suite of analytics tools, provided to our clients in any country. We report the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three reportable segments in Corporate Support. For additional financial information relating to our reporting segments, see Note 2 - Operating Segments and Related Information of our Consolidated Financial Statements included in Item 8 of this Form 10-K.

In October 2016, we announced that we had entered into agreements to acquire Cost & Compliance Associates, LLC and Cost & Cost Compliance Associates Limited (together, “C&CA"), a commercial recovery audit and contract compliance firm with operations in the U.S. and the UK and Lavante, Inc. (“Lavante”), a Software-as-a-Service ("SaaS")-based SIM and recovery audit services firm based in San Jose, California. The Lavante acquisition closed in October 2016 and the C&CA acquisition closed in February 2017.

As of December 31, 2015, the Company discontinued its Healthcare Claims Recovery Audit ("HCRA") business. In connection with the discontinuation of that business, the Company entered into agreements with third parties to fulfill its Medicare recovery audit contractor ("RAC") program subcontract obligations to audit Medicare payments and provide support for claims appeals, and assigned its remaining Medicaid contract to another party. One of the third-party Medicare RAC-related contracts has been settled and the results are reflected in these financial statements. The Company will continue to incur certain expenses until the remaining Medicare RAC contracts are concluded.

1

The Recovery Audit Industry and PRGX

Many businesses and government agencies generate substantial volumes of payment transactions involving multiple vendors, numerous discounts and allowances, fluctuating prices and complex pricing arrangements or rate structures. Although these entities correctly process the vast majority of payment transactions, errors occur in a small percentage of transactions. These errors include, but are not limited to, missed or inaccurate discounts, allowances and rebates, vendor pricing errors, erroneous coding and duplicate payments. Many factors contribute to the errors, including communication failures between the purchasing and accounts payable departments, complex pricing arrangements or rate structures, personnel turnover and changes in information and accounting systems. Recovery auditing is a business service focused on finding overpayments created by these errors. These audits are either accounts payable audits or contract compliance audits and entail comprehensive and customized data acquisition from the client, frequently including purchasing, receiving, point-of-sale, pricing and deal documentation, emails, and payment data.

PRGX, like most companies in the recovery audit services industry, generates the majority of its revenue through contingent fee arrangements, sharing a pre-determined percentage of successful claims or “recoveries” generated from an audit. There are certain recovery audit services or types of audits that are billed as a fixed fee or on a time and materials basis, but the vast majority of our revenue is generated through contingent fee contracts.

Recovery audit clients generally recover claims by either (a) taking credits against outstanding payables or future purchases from the involved vendors or service providers, or (b) receiving refund checks directly from those vendors or service providers. Industry practice generally dictates the manner in which a client receives the benefit for a recovery audit claim. In many cases, we must satisfy client-specific procedural guidelines before we can submit recovery audit claims for client approval.

Contracts with recovery audit clients generally vary in length from one year to three years, with some being evergreen. Most of our recovery audit contracts provide that the client may terminate the contract without cause prior to the completion of the term of the agreement by providing relatively short prior written notice of termination.

As businesses have evolved, PRGX and the recovery audit industry have evolved with them, innovating processes, error identification tools, and claim types to maximize recoveries. The following are a number of factors impacting recovery auditing:

•Supply Chain System Proliferation & Data Complexity. Businesses increasingly are using many different forms of proprietary and third-party technology to manage complex procurement and accounts payable systems in an effort to realize greater operating efficiencies. Many businesses worldwide communicate with vendors electronically, including the use of email, Electronic Data Interchange (“EDI”) and the Internet or third-party platforms to exchange inventory and sales data, transmit purchase orders, submit invoices, forward shipping and receiving information and remit payments. Though the complexity of capturing the data has increased significantly, these systems capture more detailed data, which should further inform transactional reviews by recovery auditors.

•Globalization & Global Supply Chain Complexity. As the operations of business enterprises become increasingly multi-national, they often seek service providers with a global reach. Sophistication in systems and processes varies markedly across the global network of suppliers which further drives the need for our services. Companies are sourcing from all parts of the world, at times with minimal understanding of the associated risks. Companies have created vast networks of potential transaction partners that will continue to create complexity and risk throughout the supply chain. PRGX serves clients in more than 30 countries and we believe we are the recovery audit service provider best suited to deliver multi-national audits.

•Increased Role of Email Documentation in Client Transaction Data. Clients and vendors increasingly document transaction terms in email correspondence that is not integrated into their financial or merchant deal systems, which increases opportunities for errors. To efficiently identify these errors, recovery audit firms must use sophisticated technology-based tools that are able to ingest and search through massive volumes of emails to identify potential errors that then are investigated by the auditors. A comprehensive recovery audit requires the effective use of technology-based email search tools and techniques.

•Increasing Claim Categories and Accelerating Audits. Traditionally, the focus of a recovery audit was on a simple, or “disbursement,” claim type, such as the duplicate payment of invoices. Enhancements to accounts payable software, particularly large enterprise software solutions used by many large companies, have reduced the extent to which companies make simple disbursement errors. However, the introduction of creative vendor discount programs, complex pricing arrangements and activity-based incentives has led to an increase in auditable transactions and potential sources of error. These transactions are complicated to audit, as the underlying transaction data is difficult to access and recognizing mistakes can be complex. Recovery audit firms such as PRGX with significant industry-specific expertise and sophisticated technology are best equipped to audit these complicated claim categories. Historically these claims were audited months and in some cases years after the original transaction. PRGX is working to bring the timing of auditing closer to the original transaction. Audit acceleration has multiple benefits, including reduced vendor abrasion for clients, and greater accuracy of claims.

2

•Significant Promotional Activity. Trade promotion spending is substantial within the retail trade and significant sums are being spent in categories with numerous transactions and a high potential for errors, such as scan downs, or discounts at the point of sale. Because of the high volume of trade promotion within retail, there are significant opportunities for mistakes and, therefore, auditable claims.

•Technology Platform. The ability to efficiently and cost effectively ingest large volumes of structured and unstructured data is critical to providing best in class recovery audit services. We believe we have developed the most sophisticated and highest performing large data processing infrastructure system in our industry. This system allows us to effectively process and manage our clients’ data in large scale volumes and at superior speeds. We continue to accelerate our data processing speeds for both structured and unstructured data sets, which supports our efforts to accelerate audit results and transform our core audit processes.

We expect the evolution of the recovery audit industry to continue. In particular, we expect that the industry will continue to move towards the electronic capture and presentation of data, more automated, centralized processing and auditing closer to the time of the payment transaction.

Adjacent Services

Our Adjacent Services business, targets client functional and process areas where we have established expertise, enabling us to provide advisory and SaaS solution services to our clients' finance, merchandising and procurement functions to improve working capital, reduce supplier discrepancies, optimize purchasing leverage in vendor pricing negotiations, improve insight into product margin and cost of goods for resale. We also help clients identify and manage risks associated with vendor compliance, improve quality of clients' vendor master data and improve visibility and diagnostics of clients' direct and indirect spend. Our Adjacent Services include our global PRGX OPTIXanalytics suite and our SIM and deduction management solutions. As our clients’ supplier base, data volumes and complexity levels continue to grow, we are using our deep data management experience to develop new actionable insight solutions, compliance-related tools, analytics solutions and data transformation services. Taken together, our deep understanding of our clients’ S2P data and our Adjacent Services solutions provide multiple routes to help our clients achieve greater profitability.

Clients

PRGX provides its services principally to large businesses and government agencies having a tremendous volume of payment transactions and complex procurement environments. Retailers continue to constitute the largest part of our client and revenue base. Our five largest clients contributed to our revenue from continuing operations by approximately 35.4% in 2018, 36.6% in 2017 and 37.3% in 2016. We have one client, The Kroger Co., that accounted for approximately 12% of our revenue from continuing operations in 2018 and 2017, and 11% of our revenue from continuing operations in 2016.

Some organizations (primarily large retailers) maintain internal recovery audit departments to recover certain types of payment errors and identify opportunities to reduce costs. Despite having such internal resources, many companies also retain independent recovery audit firms, such as PRGX, due to their specialized knowledge, capabilities and focused technologies. In the U.S., Canada, the United Kingdom, France, Mexico, Brazil, and Australia, large retailers routinely engage independent recovery audit firms as a standard business practice. It is typical in the retail industry for large firms to engage a primary audit firm at one contingency fee rate and a secondary firm to audit behind the primary at a higher rate. Our commercial recovery audit clients are typically Fortune 1000 companies in industries other than retail and with multi-billion dollars of purchase transactions to be audited. These clients range from large multi-national manufacturing and resource companies, to large regional or national telecommunications and financial services institutions to global high-tech software organizations. The audit specialty practice of contract compliance is a specific type of recovery auditing which is more heavily utilized by commercial clients and is expected to be a growing part of our business. This service offering focuses on auditing complex supplier billings against large services, construction and licensing contracts, and is relevant to a large portion of our client base.

3

The PRGX Strategy

PRGX is a global leader in recovery audit and spend analytics services. We provide recovery audit and other S2P services, including, spend analytics and SIM services. We principally offer these services to large businesses and government agencies having a tremendous volume of payment transactions and complex procurement environments. We plan to achieve revenue growth and higher profitability through the following strategy:

1.Grow and improve our core recovery audit business;

2.Differentiate our service offerings and capabilities;

3.Create adjacent service offerings, including SaaS solutions; and

4.Expand into new high potential industries and geographies.

Grow and improve our core recovery audit business

We continue to be the industry leader by introducing innovative concepts and audit processes. In addition, we are deploying global best practices and rolling out world class enhancements to our proprietary technology audit tools to drive deeper recoveries and enable next generation audit concepts. We expect to achieve our objectives through process redesign coupled with investing in our technology infrastructure and aggressively rolling out new technologies across our global audits.

Differentiate our service offerings and capabilities

We plan to differentiate our service offerings and capabilities through enhancing our current services and implementing innovations such as:

• Audit acceleration. Our clients are constantly seeking to accelerate the audit process to deliver audit results closer to the time of the transaction to increase recovery yields, provide a greater opportunity to address process errors, and reduce supplier abrasion. We believe that our deep and broad business process experience across thousands of audits, together with our enhanced and new technology initiatives will put us in a unique position to achieve superior results for our clients.

• Global audit best practice programs. Our global programs take advantage of our operations that span over 30 countries to provide true global audit capabilities to multi-national companies. We believe this unique perspective gives our clients visibility to their business practice variations around the world and creates value for our clients by allowing them to see their data in new ways.

Create adjacent and high value service offerings

We will continue to focus on new service offerings that complement our existing services and provide increased value to our customers.

Our Adjacent Services offerings, including PRGX OPTIX and SIM services, target client functional and process areas where we have established expertise, enabling us to provide services to support our clients' finance, merchandising and procurement functions. These services can be project-based (advisory services), which are typically billed on a rates and hours basis, or subscription-based (typically SaaS offerings), which are billed on a monthly basis. The Adjacent Services offerings assist our clients in improving many aspects of their businesses, including working capital, optimization of purchasing leverage in vendor pricing negotiations, improved insight into product margin and cost of goods for resale, identification and management of risks associated with vendor compliance, improved quality of vendor master data and improved visibility and diagnostics of direct and indirect spend.

Expand into new high potential industries and geographies

Our plans include continuing to build our commercial recovery audit practice, which serves industries outside of retail in order to reduce our industry concentration. We have organized the commercial recovery audit practice into industry verticals such as resources, telecommunications, financial services and manufacturing, and are building focused practice areas with targeted service offerings for each industry.

4

Technology

The PRGX software platform focuses on three core areas - audit, supplier collaboration and S2P analytics. This platform includes advanced and proprietary solutions, systems and processes. The platform incorporates a large-scale technology infrastructure to support our broad range of audit and advisory services and our client facing SaaS-based solutions.

Foundational to this platform is our ability to efficiently and cost effectively ingest, prepare, and transform large volumes of structured and unstructured data. We believe we have developed the most sophisticated and highest performing large data processing infrastructure system in the recovery audit industry. This system is critical to providing best-in-class recovery audit and S2P analytics services. This system utilizes queue-driven data pipelines and in-memory processing to manage our clients' data in large scale volumes at superior speeds. We are continuing to accelerate data processing speeds for both structured and unstructured data sets. This allows us to support our efforts to accelerate audit results, deliver pre-event and pre-payment audit capabilities, and transform our core audit processes.

We believe that our proprietary technology and processes serve as important competitive advantages over both our principal competitors and our clients’ internal recovery audit functions. To sustain these competitive advantages, we continually invest in technology initiatives to deliver innovative solutions that improve both the effectiveness and efficiency of our services.

We design our data acquisition, data processing and data management solutions to maximize efficiencies and productivity - all while maintaining the highest standards of transaction auditing and spend analytics accuracy. Further, we uphold highly reliable security standards utilizing the most sophisticated and effective tools to protect all data under our control. At the beginning of a typical recovery audit or spend analytics engagement, we use a dedicated staff of data acquisition specialists and proprietary tools to acquire a wide array of transaction data from the client for the time period under review. We typically receive this data by secured electronic transmissions, digital media or paper documents. For paper documents, we use a robust imaging technology to scan the paper into electronic format. Upon receipt of the data we secure, catalog, back-up and convert it into standard readable formats using third-party and proprietary audit technology.

Our technology professionals clean and map massive volumes of structured and unstructured client data into standardized layouts and formats, and generate statistical reports to verify the completeness and accuracy of the data. We utilize high performance database and storage technologies to maintain the data at one of our secure data processing facilities.

We then process the data using proprietary algorithms (business rules) leveraging our experience to help uncover patterns or potential issues in our clients’ various transactional streams. We deliver this processed data to our auditors who, using our proprietary audit software, sort, filter and search the data to validate and identify actual transaction errors. We maintain a secure database of audit information with the ability to query on multiple variables, including claim categories, industry codes, vendors and audit years. This allows us to identify additional recovery opportunities and provide recommendations for process improvements to our clients.

Once we identify and validate transaction errors, we present the information to our clients for approval and submission to vendors as “claims.” We offer a proprietary web-based claim presentation and collaboration solution to help our clients view, approve, and submit claims to vendors.

As part of our Adjacent Services, we offer both the PRGX OPTIX suite of analytics tools and our SIM and deduction management solutions. The PRGX OPTIX suite facilitates S2P business decisions through actionable, data-enabled insights that are delivered through three primary modules - Product, Payment, and Spend Analytics.  Each of these modules is powered by the core PRGX OPTIX platform that provides the ability to process and visualize S2P data delivered via a SaaS solution. In providing our analytics services, we use proprietary algorithms and technologies to clean and classify a client’s vendor spend data down to the line item level. We then present this information to the client as a multi-dimensional data cube over a web-based interface. We believe these proprietary algorithms and technologies provide us with a competitive advantage over many of our competitors.

The PRGX deduction management solution is a powerful SaaS solution providing transaction data visibility, buyer/supplier communication and collaboration, and transaction issue remediation. SIM is designed to enable supplier master data harmonization, on-boarding, compliance with regulatory and client specified standards and requirements, as well as an enterprise level view of supplier performance.

5

Competition

Accounts Payable Recovery Audit Services

We believe that the principal providers of domestic and international accounts payable recovery audit services in major markets worldwide consist of PRGX, two substantial competitors, and numerous other smaller competitors. The smaller recovery audit firms generally do not possess multi-country service capabilities and advanced technology infrastructure necessary to support our clients' large and complex purchasing and accounts payable operations. In addition, many of these firms have limited resources and may lack the experience and knowledge of national promotions, seasonal allowances and current recovery audit practices. As a result, we believe that compared to most other firms providing accounts payable recovery audit services, PRGX has competitive advantages based on its domestic and international presence, well-trained and experienced professionals, and advanced technology.

While we believe that PRGX has the greatest depth and breadth of audit expertise, data and technology capabilities, scale and global presence in the industry, we face competition from the following:

Client Internal Recovery Audit Departments. A number of large retailers (particularly those in the discount, grocery and drug store sectors) have developed an internal recovery audit process to review transactions prior to turning them over to external recovery audit firms. The scale and scope of these client internal organizations varies by client based on their level of in-house expertise and investment in required tools and technologies. Regardless of the level of recoveries made by internal recovery audit departments, virtually all large retail clients retain at least one (primary), and frequently two (primary and secondary), external recovery audit firms to capture errors not identified by their internal recovery audit departments.

Other Accounts Payable Recovery Audit Firms. The competitive landscape in the recovery audit industry is comprised of:

• Full-service accounts payable recovery audit firms. We believe that only two companies other than PRGX offer a full suite of U.S. and international recovery audit services;

• A large number of smaller accounts payable recovery audit firms which have a limited client base and which use less sophisticated tools to mine disbursement claim categories at low contingency rates. These firms are most common in the U.S. and UK markets. Competition in most international markets, if any, typically comes from small niche providers;

• Firms, including one of our two substantial competitors, that offer a hybrid of audit software tools and training for use by internal audit departments, or general accounts payable process improvement enablers; and

• Firms with specialized skills focused on recovery audit services for discrete sectors such as sales and use tax, telecom, freight or real estate.

Other Providers of Recovery Audit Services. The major international accounting firms provide recovery audit services; however, we believe their practices tend to be primarily focused on tax-related services.

Adjacent Services

Our Adjacent Services business faces competition from global and regional consulting firms; well-known ERP software vendors; procurement-specific software and SaaS providers and smaller, very specialized analytics providers. These competitors generally compete on the basis of the breadth of services, market reputations and integration with other services. We believe that we differentiate ourselves from our competitors through our in-depth knowledge of our clients’ data, systems, and purchasing processes, along with advanced and specialized technology tools.

Hiring, Training and Compensation of Personnel

Many of our auditors and other professionals formerly held finance-related management positions in the industries we serve. Training primarily is provided in the field by our experienced professionals enabling newly hired personnel to develop and refine their skills and improve productivity. We also use various other training materials such as process manuals and documented policies and procedures to supplement the field training provided by our experienced professionals. We periodically upgrade our training programs based on feedback from auditors and changing industry protocols. Many of our professionals participate in one of our incentive compensation plans that link their compensation to the financial performance of their service offering(s).

6

Proprietary Rights

From time to time, we develop new software and methodologies that replace or enhance existing proprietary software and methodologies. We rely primarily on trade secret and copyright protection for our proprietary software and other proprietary information. We capitalize the costs incurred for the development of computer software that will be sold, leased, or otherwise marketed or that will be used in our operations beginning when technological feasibility has been established. We consider the costs associated with developing or replacing methodologies to be development costs.

We own or have rights to various trademarks, trade names and copyrights, including U.S. and foreign registered trademarks and trade names and U.S. registered copyrights, that are valuable assets and important to our business. We monitor the status of our copyright and trademark registrations to maintain them in force and renew them as appropriate. The duration of our active trademark registrations varies based upon the relevant statutes in the applicable jurisdiction, but generally endure for as long as they are used. The duration of our active copyright registrations similarly varies based on the relevant statutes in the applicable jurisdiction, but generally endure for the full statutory period. Our trademarks and trade names are of significant importance and include, but are not limited to, the following: PRGX®, Thrive in the Data™, Discover Your Hidden Profits^®, Profit Discovery™,  Lavante^®, Lavante SIM™,  PRGX OPTIX^®, PRGX MailTrax™, PRGX APTrax™, PRGX AuditTrax™, PRGX ClaimTrax™,  PRGX SpendTrax™, GET™, and imDex™.

Regulation

Various aspects of our business, including, without limitation, our data flows and our data acquisition, processing and reporting protocols, are subject to extensive and frequently changing governmental regulation in the U.S. and the numerous other countries around the world where we operate. These regulations include extensive data protection and privacy requirements. In the U.S., we are subject to the provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) with respect to information regarding our employees, as well as our discontinued HCRA business. Internationally, we must comply with the European data protection requirements including the General Data Protection Regulation ("GDPR"), which went into effect in May 2018, as well as with data protection laws that exist in many of the other countries where we serve clients. Failure to comply with such regulations may, depending on the nature of the noncompliance, result in the termination or loss of contracts, the imposition of contractual damages, civil sanctions, and damage to our reputation or in certain circumstances, criminal penalties.

Employees

As of December 31, 2018, PRGX had approximately 1,600 employees, of whom approximately 600 were in the U.S. The majority of our employees are involved in our recovery audit business.

Website

PRGX makes available free of charge on its website, www.prgx.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports. PRGX makes all filings with the Securities and Exchange Commission ("SEC") available on its website no later than the close of business on the date the filing was made. In addition, investors can access our filings with the Securities and Exchange Commission at www.sec.gov.

We also post certain corporate governance materials, including our Board of Directors committee charters and our Code of Conduct and Code of Ethics For Senior Financial Officers, on our website under the heading “Corporate Governance” on the “Investors” page. From time to time, we may update the corporate governance materials on our website as necessary to comply with rules issued by the SEC or NASDAQ, or as desirable to further the continued effective and efficient governance of our Company.

7

ITEM 1A. Risk Factors

We must successfully execute our growth strategy in order to increase our revenue, and must control our costs in order to maintain profitability.

Over time, our clients tend to resolve recurring transaction processing deficiencies. In addition, many of our clients have an internal staff that audits the transactions before we do. As the skills, experience and resources of our clients' internal recovery audit staffs improve, they will identify many overpayments themselves and reduce some of our audit recovery opportunities. In addition, our revenues are potentially impacted by competitive rate pressures, our dependency on clients to approve our claims on a timely basis, changes in audit scope by our clients and occasional loss of clients or movement from primary to secondary position. We must continually innovate new audit concepts, improve audit execution, develop new clients and successfully execute our own growth strategy in order to increase our revenue and avoid losses in our business.

We depend on our largest clients for significant revenue, so losing a major client could adversely affect our revenue and liquidity.

We generate a significant portion of our revenue from our largest clients. Our five largest clients collectively accounted for 35.4% of our revenue from continuing operations in 2018, 36.6% of our revenue from continuing operations in 2017 and 37.3% of our revenue from continuing operations in 2016. We have one client, The Kroger Co., that accounted for approximately 12% of our revenue from continuing operations in 2018 and 2017, and 11% of our revenue from continuing operations in 2016. If we lose any of our major clients, our results of operations and liquidity could be materially and adversely affected.

Although we continually seek to diversify our client base, we may be unable to offset the effects of an adverse change in one of our key client relationships. For example, if our existing clients elect not to renew their contracts with us at the expiration of the current terms of those contracts, or reduce the services they purchase thereunder, our recurring revenue base will be reduced, which could have a material adverse effect on our business, financial position, results of operations, and cash flows. In addition, we could lose clients if: (i) they cancel their agreements with us; (ii) we fail to win a competitive bid at the time of contract renewal; (iii) the financial condition of any of our clients deteriorates; or (iv) our clients are acquired by, or acquire, companies with which we do not have contracts. Any of these could materially and adversely affect our business, financial position, results of operations, and cash flows.

Our strategy may not be successful.

As discussed in Item 1 “The PRGX Strategy,” our objectives are to achieve revenue growth and higher profitability by growing and improving our core recovery audit business, differentiating our service offerings and capabilities, creating adjacent service offerings (including SaaS solutions) and expanding into new high potential industries and geographies. These efforts are ongoing, and the results of our efforts will not be known until sometime in the future. Successful execution of our strategy requires sustained management focus, innovation, organization and coordination over time, as well as success in building relationships with third parties. If we are unable to execute our strategy successfully, our business, financial position, results of operations and cash flows could be adversely affected. In addition, execution of our strategy will require material investments and additional costs that may not yield incremental revenue and improved financial performance as planned.

Our acquisitions, investments, partnerships and strategic alliances may require significant resources and/or result in significant unanticipated losses, costs or liabilities.

Acquisitions have contributed and are expected to continue to contribute to our revenue. Although we cannot predict our rate of growth as the result of acquisitions with complete accuracy, we believe that additional acquisitions, investments and strategic alliances will be important to our growth strategy.

We may finance future acquisitions by issuing additional equity and/or debt. The issuance of additional equity in connection with any such transaction could be substantially dilutive to existing shareholders. The issuance of additional debt could increase our leverage substantially. In addition, announcement or implementation of future transactions by us or others could have a material effect on the price of our common stock. We could face financial risks associated with incurring significant debt. Additional debt may reduce our liquidity, curtail our access to financing markets, impact our standing with credit agencies and increase the cash flow required for debt service. Any incremental debt incurred to finance an acquisition could also place significant constraints on the operation of our business.

Furthermore, any future acquisitions of businesses or facilities could entail a number of additional risks, including:

•problems with effective integration of acquired operations;

•the inability to maintain key pre-acquisition business relationships;

•increased operating costs;

•the diversion of our management team from our other operations;

8

•problems with regulatory agencies;

•exposure to unanticipated liabilities;

•difficulties in realizing projected efficiencies, synergies and cost savings; and

•changes in our credit rating and financing costs.

The terms of our credit facility place restrictions on us, which create risks of default and reduce our flexibility.

Our current credit facility contains a number of affirmative, negative, and financial covenants that may limit our ability to take certain actions and require us to comply with specified financial ratios and other performance covenants. No assurance can be provided that we will not violate the covenants of our secured credit facility in the future. If we are unable to comply with our financial covenants in the future, our lenders could pursue their contractual remedies under the credit facility, including requiring the immediate repayment in full of all amounts outstanding, if any. Additionally, we cannot be certain that, if the lenders demanded immediate repayment of any amounts outstanding, we would be able to secure adequate or timely replacement financing on acceptable terms or at all.

Our ability to make payments due on debt we may have outstanding will depend upon our future operating performance, which is subject to general economic and competitive conditions and to financial, business and other factors, many of which we cannot control. If the cash flow from our operating activities is insufficient to make these payments, we may take actions such as delaying or reducing capital expenditures, attempting to restructure or refinance our debt, selling assets or operations or seeking additional equity capital. Some or all of these actions may not be sufficient to allow us to service our debt obligations and we could be required to file for bankruptcy. Further, we may be unable to take any of these actions on satisfactory terms, in a timely manner or at all. In addition, our credit agreements may limit our ability to take several of these actions. Our failure to generate sufficient funds to pay our debts or to undertake any of these actions successfully could materially and adversely affect our business, financial position, results of operations and cash flows.

Uncertainty about the future of the London Interbank Offer Rate (LIBOR) may adversely affect our business and financial results.

LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures may cause LIBOR to disappear entirely or to perform differently than in the past. The consequences of these developments cannot be predicted, but could adversely affect the cost of our variable rate indebtedness.

We have incurred and will continue to incur significant costs in connection with our discontinued HCRA services business.

As of December 31, 2015, the Company discontinued its Healthcare Claims Recovery Audit ("HCRA") business. In connection with the discontinuation of that business, the Company entered into agreements with third parties to fulfill its Medicare recovery audit contractor ("RAC") program subcontract obligations to audit Medicare payments and provide support for claims appeals, and assigned its remaining Medicaid contract to another party. One of the third-party Medicare RAC-related contracts has been settled and the results are reflected in these financial statements. The Company will continue to incur certain expenses until the remaining Medicare RAC contracts are concluded.

We may be unable to protect and maintain the competitive advantage of our proprietary technology and intellectual property rights.

Our operations could be materially and adversely affected if we are not able to protect our proprietary software, audit techniques and methodologies, and other proprietary intellectual property rights. We generally rely on a combination of trade secret and copyright laws, nondisclosure and other contractual arrangements and technical measures to protect our proprietary rights. Although we presently hold U.S. registered copyrights on certain of our proprietary technology and certain U.S. and foreign registered trademarks, we may be unable to obtain similar protection on our other intellectual property. In addition, our foreign registered trademarks may not receive the same enforcement protection as our U.S. registered trademarks.

Additionally, to protect our confidential and trade secret information, we generally enter into nondisclosure agreements with our employees, consultants, clients and potential clients. We also limit access to, and distribution of, our proprietary information. Nevertheless, we may be unable to deter misappropriation or unauthorized dissemination of our proprietary information, detect unauthorized use and take appropriate steps to enforce our intellectual property rights. In spite of the level of care taken to protect our intellectual property, there is no guarantee that our sensitive proprietary information will not be improperly accessed or that our competitors will not independently develop technologies that are substantially equivalent or superior to our technology.

We could be subjected to claims of intellectual property infringement.

Although we are not aware of any infringement of our services and products on the intellectual property rights of others, the potential for intellectual property infringement claims continually increases as the universe of intellectual property continues to rapidly expand, and we are subject to the risk that someone else will assert a claim against us for violating their

9

intellectual property rights. Any claim for intellectual property infringement, even if not meritorious, could be expensive to defend. If we were held liable for infringing third-party intellectual property rights, we could incur substantial damage awards, and potentially be required to cease using the technology, produce non-infringing technology or obtain a license to use such technology. Such potential liabilities or increased costs could be material to us.

Cyber-security incidents, including data security breaches or computer viruses, could harm our business by disrupting our delivery of services, damaging our reputation or exposing us to liability.

We receive, process, store and transmit, often electronically, the confidential data of our clients and others. Unauthorized access to our computer systems or stored data could result in the theft or improper disclosure of confidential information, the deletion or modification of records or could cause interruptions in our operations. These cyber-security risks increase when we transmit information from one location to another, including transmissions over the Internet or other electronic networks. Despite implemented security measures, our facilities, systems and procedures, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, software viruses, misplaced or lost data, programming and/or human errors or other similar events which may disrupt our delivery of services or expose the confidential information of our clients and others. Any security breach involving the misappropriation, loss or other unauthorized disclosure or use of confidential information of our clients or others, whether by us or a third-party, could (i) subject us to civil and criminal penalties, (ii) have a negative impact on our reputation, (iii) expose us to liability to our clients, third parties or government authorities, (iv) cause our present and potential clients to choose another service provider, and (v) cause us to incur significant remediation costs. Any of these developments could have a material adverse effect on our business, results of operations, financial position, and cash flows.

Our ability to deliver our SaaS solutions is dependent on the development and maintenance of the infrastructure of the Internet by third parties.

The infrastructure of the Internet consists of multiple fragmented networks. Multiple third-party organizations run this infrastructure together under the governance of the Internet Corporation for Assigned Numbers and Names (ICANN) and the Internet Assigned Numbers Authority under the stewardship of ICANN. The Internet has experienced outages and other delays resulting from damage to portions of infrastructure, denial-of-service attacks or related cyber incidents, and the Internet could face outages and delays in the future. These outages and delays could reduce the level of Internet usage or result in fragmentation of the Internet, resulting in multiple separate networks lacking interconnection. These scenarios are outside of our control and could impair the delivery of our SaaS solutions to our clients. Resulting interruptions in our SaaS solutions or the ability of our clients to access our SaaS solutions could result in a loss of potential or existing clients and harm our business.

Our software and SaaS solutions may not be error-free and could result in claims of breach of contract and liabilities.

Our software and SaaS solutions are very complex and may not be error-free, especially when first released. Although we perform extensive testing, the failure of any solution to operate in accordance with its specifications, documentation or applicable license agreement could require us to correct the deficiency. If such deficiency cannot be corrected in accordance with the relevant contract for services, the deficiency could constitute a material breach of the contract allowing for the contract’s termination and possibly subjecting us to liability. Also, we sometimes indemnify our clients against third-party infringement claims and certain other losses. If such claims for indemnification are made, even if they are without merit, they could be expensive to resolve. A significant judgment against us could have a material adverse impact on us.

Operational failures in our data processing facilities could harm our business and reputation.

An interruption of our SaaS hosting facilities or other data processing services, including an interruption caused by damage or destruction of communication lines or physical facilities or a failure of data processing equipment, could result in a loss of clients, difficulties in obtaining new clients and a reduction in revenue. In addition, we also may be liable to third parties or our clients because of such interruption. These risks would increase with longer service interruptions. Despite any disaster recovery and business continuity plans and precautions we have implemented (including insurance) to protect against the effects of service delivery interruptions, such interruptions could result in a material adverse effect on our business, results of operations, financial position, and cash flows.

Our investment of substantial capital in information technology systems, and a failure to successfully implement such systems could adversely affect our business.

We have invested and continue to invest substantial amounts in the development and implementation of information technology systems. Although investments are carefully planned, there can be no assurance that such systems will justify the related investments. If we fail to realize the benefits expected from our information technology system investments, or if we fail to do so within the envisioned time frame, it could have an adverse effect on our results of operations, financial position, and cash flows.

10

Client and vendor bankruptcies and financial difficulties could reduce our earnings.

Our clients generally operate in intensely competitive environments and, accordingly, bankruptcy filings by our clients are not uncommon. Bankruptcy filings by our large clients or the significant vendors who supply them or unexpectedly large vendor claim chargebacks lodged against one or more of our larger clients could have a materially adverse effect on our financial condition, results of operations, and cash flows. Similarly, our inability to collect our accounts receivable due to other financial difficulties of one or more of our large clients could adversely affect our financial position, results of operations, and cash flows.

Economic conditions which adversely impact our clients and their vendors in the retail industry in the United Kingdom and Europe may continue to have a negative impact on our revenue. Specifically, client liquidity and the liquidity of client vendors can have a significant impact on claim production, the claim approval process, and the ability of clients to offset or otherwise make recoveries from their vendors.

If a client files for bankruptcy, we could be subject to an action to recover certain payments received in the 90 days prior to the bankruptcy filing known as “preference payments.” If we are unsuccessful in defending against such claims, we would be required to make unbudgeted cash payments which could strain our financial liquidity, and our earnings would be reduced.

Our failure to retain the services of key members of our management team and highly skilled personnel could adversely impact our operations and financial performance.

Our future success depends largely on the efforts and skills of our management team, including our executive officers and other key employees. As such, we have entered into employment agreements with key members of our management team. While these employment agreements include limits on the ability of key employees to directly compete with us in the future, nothing prevents them from leaving our Company. We also do not maintain “key person” life insurance policies on any of our executive officers or other key employees. Thus, we may have to incur costs to replace such employees if we were to lose their services, and our ability to execute our business strategy could be impaired if we are unable to replace such employees in a timely manner.

In addition, it is especially challenging to attract and retain highly qualified skilled auditors and other professionals in an industry where competition for skilled personnel is intense. Accordingly, our future performance also depends, in part, on the ability of our management team to work together effectively, manage our workforce, and retain highly qualified personnel.

We rely on operations outside the U.S. for a significant portion of our revenue and are increasingly dependent on operations outside the U.S. for supporting our operations globally.

Operations outside the U.S. generated 41.5% of our annual revenue from continuing operations in 2018, 42.2% in 2017 and 42.6% in 2016. These international operations are subject to numerous risks, including:

• greater exposure to the possibility of economic instability, the disruption of operations from labor and political disturbances, expropriation or war in the international markets we serve;

• difficulties in staffing and managing foreign operations and in collecting accounts receivable;

• fluctuations in currency exchange rates, particularly weaknesses in the British pound, the euro, the Canadian dollar, the Mexican peso, the Brazilian real, the Australian dollar, the Indian rupee and other currencies of countries in which we transact business, which could result in currency translations that materially reduce our revenue and earnings;

• costs associated with adapting our services to our foreign clients’ needs;

• unexpected changes in regulatory requirements and laws;

• expenses and legal restrictions associated with transferring earnings from our foreign subsidiaries to us;

• difficulties in complying with a variety of foreign laws and regulations, such as those relating to data protection and employment, as well as U.S. laws affecting operations outside of the United States;

• business interruptions due to widespread disease, actual or potential terrorist activities, or other catastrophes;

• reduced or limited protection of our intellectual property rights;

• longer accounts receivable cycles; and

• competition with large or state-owned enterprises or regulations that effectively limit our operations and favor local competitors.

Because we expect a significant portion of our revenue to continue to come from operations outside the U.S., and expect to continue transitioning certain of our operations to locations outside the U.S., the occurrence of any of these events could materially and adversely affect our business, financial position, results of operations, and cash flows.

11

In 2018, our European operations accounted for 22.2% of our consolidated revenue from continuing operations. There have been continuing concerns and uncertainties regarding the stability of certain European economies. A continued decline in the economic conditions in Europe may materially and adversely affect our operations both in Europe and on a consolidated basis.

Furthermore, certain of our core data processing and other functions are located outside the U.S., including India, where approximately 20% of our employees were located on December 31, 2018. While our operations in India have been key to serving clients more efficiently and cost-effectively under our improved service delivery model, India has from time to time experienced instances of civil unrest and hostilities with neighboring countries. Geopolitical conflicts, military activity, terrorist attacks, or other political uncertainties in the future could adversely affect the Indian economy by disrupting communications and making business operations and travel more difficult, which may have a material adverse effect on our ability to deliver services from India. Disruption of our Indian operations could materially and adversely affect our profitability and our ability to execute our growth strategy.

The uncertainty surrounding the implementation and effect of the UK exiting the European Union, and related negative developments in the European Union could adversely affect our business, results of operations or financial condition.

The results of a June 2016 referendum vote in the UK were in favor of the UK exiting the European Union (commonly referred to as “Brexit”). On March 29, 2017, the UK notified the European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty. As a result of this notification, a complex and uncertain process of negotiation is now taking place to determine the future terms of the UK’s relationship with the European Union, with the UK currently due to exit the European Union on March 29, 2019. The uncertainty leading up to and following the Brexit referendum has had, and the implementation of Brexit may continue to have, a negative impact on our business and demand for our products in Europe, and particularly in the UK. The long-term nature of the UK’s relationship with the European Union is unclear and there is considerable uncertainty when, or if, any withdrawal agreement or long-term relationship strategy, including trade deals, will be agreed to and implemented by the UK and the European Union. Brexit could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in political institutions and regulatory agencies. Brexit could also have the effect of disrupting the free movement of goods, services, and people between the UK, the European Union and elsewhere. In addition, Brexit has had a detrimental effect, and could have further detrimental effects, on the value of either or both of the euro and the British pound sterling, which could negatively impact our business (principally from the translation of sales and earnings in those foreign currencies into our reporting currency).

Our business operates in highly competitive environments and is subject to pricing pressure.

The environments in which our business operates are highly competitive, with numerous other recovery audit firms and other service providers. In addition, many of our recovery audit clients have developed their own internal recovery audit capabilities. As a result of competition among the providers of these services and the availability of certain recovery audit services from clients’ internal audit departments, our business is subject to intense rate pressure. Our Adjacent Services business also has numerous competitors varying in size, market strength and specialization, many of whom have established and well-known franchises and brands. Intense price competition faced by all of our service lines could negatively impact our profit margins and have a potential adverse effect on our business, financial position, results of operations, and cash flows.

Our client contracts generally contain provisions under which the client may terminate our services prior to the completion of the agreement.

Many of our client contracts provide that the client may terminate the contract without cause prior to the end of the term of the agreement by providing us with relatively short prior written notice of the termination. As a result, the existence of contractual relationships with our clients is not an assurance that we will continue to provide services for our clients through the entire term of their respective agreements. If clients representing a significant portion of our revenue terminated their agreements unexpectedly, we may not, in the short-term, be able to replace the revenue and income from such contracts and this would have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, client contract terminations also could harm our reputation within the industry which could negatively impact our ability to obtain new clients.

Our charges to earnings resulting from acquisition, restructuring and integration costs may materially adversely affect the market value of our common stock.

We account for the completion of our acquisitions using the purchase method of accounting. We allocate the total estimated purchase prices to net tangible assets, amortizable intangible assets and indefinite-lived intangible assets, and based on their fair values as of the date of completion of the acquisitions, record the excess of the purchase price over those fair values as goodwill. Our financial results, including earnings per share, could be adversely affected by a number of financial adjustments required in purchase accounting including the following:

12

• we will incur additional amortization expense over the estimated useful lives of certain of the intangible assets acquired in connection with acquisitions during such estimated useful lives;

• we will incur additional depreciation expense as a result of recording purchased tangible assets; and

• to the extent the value of goodwill or intangible assets becomes impaired, we may be required to incur material charges relating to the impairment of those assets.

Our failure to comply with applicable governmental privacy laws and regulations in the U.S. and internationally could substantially impact our business, operations, financial position, and cash flows. Additionally, compliance with the laws and regulations relating to the handing of personal data may impede our ability to provide services in certain jurisdictions and may result in increased costs.

We are subject to extensive and evolving federal, state and foreign privacy laws and regulations. Changes in privacy laws or regulations or new interpretations of existing laws or regulations could have a substantial effect on our business, financial condition and results of operations. Failure to comply with such regulations could result in the termination or loss of contracts, the imposition of contractual damages, civil sanctions, damage to the Company’s reputation, or in certain circumstances, criminal penalties, any of which could have a material adverse effect on our results of operations, financial position, cash flows, business and prospects. Determining compliance with such regulations is complicated by the fact that the interpretations of these laws and regulations by governing regulatory authorities and the courts evolve over time, and many of the provisions of such laws and regulations are open to a wide range of interpretations. There can be no assurance that we are or have been in compliance with all applicable existing laws and regulations or that we will be able to comply with new laws or regulations.

With respect to trans-border data flows from the European Economic Area, or EEA, we are certified under the U.S.-European Union Privacy Shield Framework, as agreed to by the U.S. Department of Commerce and the European Union (“EU”), as a means to legally transfer European personal information from Europe to the United States; however, it is possible that the U.S.-European Union Privacy Shield Framework may be challenged in EU courts and there is some uncertainty regarding its future validity and our ability to rely on it for EU to U.S. data transfers. In addition, despite our Privacy Shield certification and extensive efforts to maintain the privacy, integrity and controlled use of confidential information, including personally identifiable information, through a combination of hardware, software, and physical security, coupled with strong internal data security processes, procedures and controls that we believe meet or exceed relevant laws, regulations and industry best practices, we may experience hesitancy, reluctance, or refusal by European or multi-national clients to use our services due to the potential risk exposure they may face as a result of their data being transferred outside of the European Union.

Further, in 2016, the EU adopted a new law governing data protection practices and privacy called the General Data Protection Regulation (“GDPR”), which became effective in May 2018. GDPR is a redesign of the European Data Protection Directive 95/46/EC and is intended to boost the online and offline privacy rights of individuals. GDPR places more stringent operational requirements on processors and controllers of personal data, including, for example, expanded disclosures about how personal information is to be used, limitations on retention of information, increased requirements to correct or erase an individual’s information upon request, mandatory data breach notification requirements and higher standards for data controllers to demonstrate that they have obtained valid consent for certain data processing activities. The GDPR also significantly increases penalties for non-compliance.

Laws are also increasingly aimed at the use of personal information for marketing purposes, such as the EU’s e-Privacy Directive, and the country-specific regulations that implement that directive. Such laws and regulations are also subject to new and differing interpretations and may be inconsistent among jurisdictions.

The EU’s e-Privacy Directive, the EU-U.S. Privacy Shield Framework, the GDPR and other regulations could reduce demand for our services or restrict our ability to store and process data or, in some cases, impact our ability to offer our services in certain locations or our customers' ability to deploy our solutions globally. Failure to provide adequate privacy protections and maintain compliance with the new data privacy laws, including the EU-U.S. Privacy Shield framework and the GDPR, could have a material adverse effect on our financial condition and results of operations.

Federal tax reform in the United States could adversely affect our business and financial condition.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted in the United States. The Tax Act includes a number of provisions, including the lowering of the U.S. corporate tax rate from 35% to 21%, the elimination of U.S. tax on foreign earnings (subject to certain exceptions), one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, limitation of the tax deduction for interest expense, immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits. Given our U.S. valuation allowance, the Act does not materially impact our income tax provision or balance sheet, however further tax changes or reform could materially adversely impact our business, financial condition and results of operations.

13

Certain ownership changes may limit our ability to use our net operating losses.

We have substantial tax loss and credit carry-forwards for U.S. federal income tax purposes. On December 30, 2016, the Company experienced an ownership change as defined under Section 382 of the Internal Revenue Code (“IRC”). This ownership change resulted in an annual IRC Section 382 limitation that limits the use of certain tax attribute carry-forwards and also resulted in the write-off of certain deferred tax assets and the related valuation allowances that the Company recorded in 2017. The Company performed an assessment and determined that $87.3 million of the gross federal net operating losses and $62.9 million of gross state net operating losses outstanding as of December 30, 2016 were available for use going forward. The Company utilized $6.4 million of these federal losses on the 2017 U.S. federal tax return and the remaining $80.9 million remain available for use. Of the $62.9 million of gross state net operating losses as of December 30, 2016, $61.8 million are still available as of the filings of the 2017 state tax returns. If a future ownership change occurs and limits our ability to use our historical net operating loss carryforwards, it could have a material adverse impact on our business, financial position and results of operations by increasing our future tax obligations.

Certain of our tax positions may be subject to challenge by the Internal Revenue Service and other tax authorities, and if successful, these challenges could increase our future tax liabilities and expense.

For U.S. federal income tax purposes, as well as local country tax purposes in the jurisdictions where we operate, from time to time we take positions under provisions of applicable tax law that are subject to varying interpretations. Certain of our tax positions may be subject to challenge by the applicable taxing authorities, including, in the U.S., the Internal Revenue Service. If our tax positions are successfully challenged, our future tax liabilities and expense could significantly increase.

While we believe that our tax positions are proper based on applicable law and we believe that it is more likely than not that we would prevail with respect to challenges to these positions, we can make no assurances that we would prevail if our positions are challenged or that business economics would justify the mounting of a legal defense against such challenges. If our tax positions are successfully challenged by the U.S. or non-U.S. taxing authorities, it could increase our future tax liabilities and expense and have a material adverse impact on our financial position, results of operations and cash flows.

We may have exposure to additional income tax liabilities or additional costs if the U.S. government changes certain U.S. tax rules or other tax laws applicable to U.S. corporations doing business in foreign jurisdictions.

We are a U.S. corporation that conducts business both in the U.S. and in foreign jurisdictions. From time to time, proposals for changes to tax and other laws are made that may negatively impact U.S. corporations doing business in foreign jurisdictions, including proposals for tax reform. While the scope of future changes remains unclear, proposed changes might include limiting the ability of U.S. corporations to deduct certain expenses attributable to offshore earnings, modifying the foreign tax credit rules and taxing currently certain transfers of intangible assets offshore or imposing other economic disincentives to doing business outside of the U.S. The enactment of some or all of these proposals could increase the Company’s effective tax rate or otherwise adversely affect our profitability.

Future impairment of goodwill, other intangible assets and long-lived assets would reduce our future earnings.

As of December 31, 2018, the Company’s goodwill and other intangible assets totaled $32.5 million. We must perform periodic assessments to determine whether some portion, or all, of our goodwill, intangible assets and other long-lived assets are impaired. Our most recent assessment showed no impairment to our goodwill, intangible assets and other long-lived assets, but future impairment testing could result in a determination that our goodwill, other intangible assets or our other long-lived assets have been impaired. Future adverse changes in the business environment or in our ability to perform audits successfully and compete effectively in our markets or the discontinuation of our use of certain of our intangible or other long-lived assets could result in impairment which could materially adversely impact future earnings.

Our articles of incorporation, bylaws and Georgia law may inhibit a change of control that shareholders may favor.

Our articles of incorporation, bylaws and Georgia law contain provisions that may delay, deter or inhibit a future acquisition of PRGX that is not approved by our Board of Directors. This could occur even if our shareholders receive attractive offers for their shares or if a substantial number, or even a majority, of our shareholders believe the takeover is in their best interest. These provisions are intended to encourage any person interested in acquiring us to negotiate with and obtain the approval of our Board of Directors in connection with the transaction. Provisions that could delay, deter or inhibit a future acquisition include the following:

• a classified Board of Directors;

• the requirement that our shareholders may only remove directors for cause;

• specified requirements for calling special meetings of shareholders;

• the ability of the Board of Directors to consider the interests of various constituencies, including our employees, clients and creditors and the local community, in making decisions; and

14

• the ability of the Board of Directors to issue shares of preferred stock with such designations, powers, preferences and rights as it determines, without any further vote or action by our shareholders.

15

Our stock price has been and may continue to be volatile.

Our common stock is currently traded on The Nasdaq Global Select Market. The trading price of our common stock has been and may continue to be subject to large fluctuations. For example, for the year ended December 31, 2018, our stock traded as high as $10.30 per share and as low as $6.95 per share. Our stock price may increase or decrease in response to a number of events and factors, including:

•future announcements concerning us, key clients or competitors;

•variations in operating results and liquidity;

•changes in financial estimates and recommendations by securities analysts;

•developments with respect to technology or litigation;

•changes in applicable laws and regulations;

•the operating and stock price performance of other companies that investors may deem comparable to our

Company;

•acquisitions and financings; and

•sales and purchases of our stock by insiders.

Fluctuations in the stock market, generally, also impact the volatility of our stock price. Finally, general economic conditions and stock market movements may adversely affect the price of our common stock, regardless of our operating performance.

ITEM 1B. Unresolved Staff Comments

None.

ITEM 2. Properties

Our principal executive offices are located in Atlanta, Georgia and occupy approximately 58,000 square feet of office space. The term of our lease expires December 31, 2021. This space is used by our Recovery Audit Services - Americas and Adjacent Services segments and is the primary location of our Corporate Support personnel. Our various operating units lease numerous other parcels of operating space elsewhere in the U.S. and in the various other countries in which we currently conduct our business.

The majority of our real property leases are individually less than five years in duration. See Contractual Obligations and Other Commitments in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of this Form 10-K and Note 6 of “Notes to Consolidated Financial Statements” included in Part II, Item 8 of this Form 10-K for a discussion of costs we may incur in the future to the extent we (i) reduce our office space capacity or (ii) commit to, or occupy, new properties in the locations in which we operate.

ITEM 3. Legal Proceedings

We are party to a variety of legal proceedings arising in the normal course of business. While the results of these proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

ITEM 4. Mine Safety Disclosures

Not applicable.

16

PART II

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded under the symbol “PRGX” on The Nasdaq Global Select Market (Nasdaq). The Company has not paid cash dividends on its common stock since it became a public company in 1996 and does not intend to pay cash dividends in the foreseeable future. Moreover, restrictive covenants included in our secured credit facility specifically prohibit payment of cash dividends. As of February 28, 2019, there were 101 holders of record of our common stock and management believes there are approximately 2,429 beneficial holders of our common stock.

Issuer Purchases of Equity Securities

The following table sets forth information regarding the purchases of the Company’s equity securities made by or on behalf of the Company or any affiliated purchaser (as defined in Exchange Act Rule 10b-18) during the three months ended December 31, 2018.

2018	Total Number of Shares Purchased (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
					(millions of dollars)
October 1 - October 31	693	$	8.66	—	$	—
November 1 - November 30	236,314	$	9.20	236,314	$	—
December 1 - December 31	203,972	$	9.24	203,972	$	—
	440,979	$	9.22	440,286	$	26.4

(a) Shares purchased during the quarter include shares surrendered by employees to satisfy tax withholding obligations upon vesting of restricted stock and shares from the Company's stock repurchase program.

(b) On February 21, 2014, our Board of Directors authorized a stock repurchase program under which we could repurchase up to $10.0 million of our common stock from time to time through March 31, 2015. Since 2014, the original authorization of the stock repurchase program, the Board of Directors has modified the program from time to time to increase the repurchase limit to $75 million and extend the expiration date to December 31, 2019. The timing and amount of repurchases, if any, will depend upon the Company's stock price, economic and market conditions, regulatory requirements, and other corporate considerations. The Company may initiate, suspend or discontinue purchases under the stock repurchase program at any time.

17

Performance Graph

Set forth below is a line graph presentation comparing the cumulative shareholder return on our common stock, on an indexed basis, against cumulative total returns of The Nasdaq Composite Index and the RDG Technology Composite Index. The graph assumes that the value of the investment in the common stock in each index was $100 on December 31, 2013 and shows total return on investment for the period beginning December 31, 2013 through December 31, 2018, assuming reinvestment of any dividends. Notwithstanding anything to the contrary set forth in any of the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate future filings, including this Annual Report on Form 10-K, in whole or in part, the Performance Graph presented below shall not be incorporated by reference into any such filings.

Cumulative Total Return
	12/13	12/14	12/15	12/16	12/17	12/18
PRGX Global, Inc.	100.00	85.12	55.36	87.80	105.65	140.92
NASDAQ Composite	100.00	114.62	122.81	133.19	172.11	165.84
RDG Technology Composite	100.00	117.81	122.23	138.28	189.14	190.13

18

ITEM 6. Selected Financial Data

The following table sets forth selected financial data from continuing operations for the Company as of and for each of the five years in the period ended December 31, 2018. The following data reflects the business acquisitions that we have completed through December 31, 2018. We have included the results of operations for these acquired businesses in our results of operations since the date of their acquisitions. We have derived this historical consolidated financial data from our Consolidated Financial Statements and Notes thereto, which have been audited by our Independent Registered Public Accounting Firm. The Consolidated Balance Sheets as of December 31, 2018 and 2017, and the related Consolidated Statements of Operations, Comprehensive Income, Shareholders’ Equity and Cash Flows for each of the years in the three-year period ended December 31, 2018 and the report of the Independent Registered Public Accounting Firm thereon are included in Item 8 of this Form 10-K.

The data presented below should be read in conjunction with the Consolidated Financial Statements and Notes thereto included elsewhere in this Form 10-K and other financial information appearing elsewhere in this Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Certain reclassifications have been made to the prior periods to conform to the current period presentation.

	Years Ended December 31, (1)
	2018			2017			2016			2015			2014
	(In thousands, except per share data)
Revenue, net of refund liabilities	$	171,776		$	161,620		$	140,844		$	138,302		$	161,552
Operating expenses:
Cost of revenue	104,825			102,052			91,299			93,169			110,890
Selling, general and administrative expenses	50,456			46,941			39,399			32,284			38,581
Depreciation of property, equipment and software assets	7,370			4,569			5,033			5,317			6,025
Amortization of intangible assets	3,395			3,634			1,832			2,458			3,531
Acquisition-related adjustments (income) loss	(1,628		)	(2,283		)	—			—			—
Total operating expenses	164,418			154,913			137,563			133,228			159,027
Operating income from continuing operations	7,358			6,707			3,281			5,074			2,525
Foreign currency transaction (gains) losses on short-term intercompany balances	1,002			(2,190		)	84			2,165			2,003
Interest expense (income), net	1,663			1,539			(153		)	(190		)	(77		)
Other (income) loss	21			(160		)	(121		)	1,191			57
Net income from continuing operations before income tax	4,672			7,518			3,471			1,908			542
Income tax expense (2)	1,321			2,962			1,242			369			3,241
Net income (loss) from continuing operations	$	3,351		$	4,556		$	2,229		$	1,539		$	(2,699	)
Basic earnings (loss) per common share	$	0.14		$	0.21		$	0.10		$	0.06		$	(0.09	)
Diluted earnings (loss) per common share	$	0.14		$	0.21		$	0.10		$	0.06		$	(0.09	)

19

	December 31,
	2018		2017		2016		2015		2014
Balance Sheet Data (consolidated): (3)	(In thousands)
Cash and cash equivalents	$	13,973	$	18,823	$	15,723	$	15,122	$	25,735
Working capital	28,872		24,070		16,706		21,641		36,006
Total assets	124,829		120,218		93,474		80,391		102,782
Long-term debt, excluding current installments	21,553		13,526		—		—		—
Total shareholders' equity	$	66,329	$	60,314	$	52,390	$	52,415	$	70,986

(1) Data for 2014 has been restated in order to reflect only continuing operations.

(2) The taxes recorded for 2014 were primarily related to the recording of a valuation allowance on the future use of net losses in our UK operations. See Note 1 (i) and Note 7 of “Notes to Consolidated Financial Statements” included in Item 8 of this Form 10-K.

(3) Data in this table reflects the balance sheet amounts for both continuing and discontinued operations.

20

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

PRGX Global, Inc. is a global leader in recovery audit and spend analytics, providing a suite of services targeted at our clients' Source-to-Pay ("S2P") business processes. At the heart of our services suite is the core capability of mining client data to deliver "actionable insights." Actionable insights allow our clients to improve their cash flow and profitability by reducing costs, improving business processes and managing risks.

In addition to recovery audit and spend analytics, we offer advisory and supplier information management ("SIM") services. We deliver services to hundreds of clients and serve clients in more than 30 countries. We conduct our operations through three reportable segments: Recovery Audit Services - Americas, Recovery Audit Services - Europe/Asia-Pacific and Adjacent Services. The Recovery Audit Services - Americas segment represents recovery audit services we provide in the U.S., Canada and Latin America. The Recovery Audit Services - Europe/Asia-Pacific segment represents recovery audit services we provide in Europe, Asia and the Pacific region. The Adjacent Services segment includes advisory, analytics and SIM services, as well as our PRGX OPTIX suite of analytics tools. We include the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three reportable segments in Corporate Support.

Recovery auditing is a business service focused on finding overpayments created by errors in payment transactions, such as missed or inaccurate discounts, allowances and rebates, vendor pricing errors, erroneous coding and duplicate payments. Recovery audit services are part of the broader S2P services market space, focused on the payment side of the S2P market.

Generally, we earn our recovery audit revenue on a contingent fee basis by identifying overpayments made by our clients, assisting our clients in recovering the overpayments from their vendors, and collecting a specified percentage of the recoveries from our clients as our fee. The fee percentage we earn is based on specific contracts with our clients that generally also specify: (a) time periods covered by the audit; (b) the nature and extent of services we are to provide; and (c) the client’s responsibilities to assist and cooperate with us. Clients generally recover claims by either taking credits against outstanding payables or future purchases from the relevant vendors, or receiving refund checks directly from those vendors. The manner in which a claim is recovered by a client is often dictated by industry practice. In addition, many clients establish client-specific procedural guidelines that we must satisfy prior to submitting claims for client approval. Our recovery audit business also includes contract compliance services which focus on auditing complex supplier billings against large services, construction and licensing contracts, and is relevant to a large portion of our client base. Such services include verification of the accuracy of third-party reporting, appropriateness of allocations and other charges in cost or revenue sharing types of arrangements, adherence to contract covenants and other risk mitigation requirements and numerous other reviews and procedures to assist our clients with proper monitoring and enforcement of the obligations of their contractors. Services in our Adjacent Services segment can be project-based (advisory services), which are typically billed on a rates and hours basis, or subscription-based (typically SaaS offerings), which are billed on a monthly basis.

We earn the vast majority of our recovery audit revenue from clients in the retail industry due to many factors, including the high volume of transactions and the complicated pricing and allowance programs typical in this industry. Changes in consumer spending associated with economic fluctuations generally impact our recovery audit revenue to a lesser degree than they affect individual retailers due to several factors, including:

• Diverse client base - our clients include a diverse mix of discounters, grocery, pharmacy, department and other stores that tend to be impacted to varying degrees by general economic fluctuations, and even in opposite directions from each other depending on their position in the market and their market segment;

• Motivation - when our clients experience a downturn, they frequently are more motivated to use our services to recover prior overpayments to make up for relatively weaker financial performance in their own business operations;

• Nature of claims - the relationship between the dollar amount of recovery audit claims identified and client purchases is non-linear. Claim volumes are generally impacted by purchase volumes, but a number of other factors may have an even more significant impact on claim volumes, including new items being purchased, changes in discount, rebate, marketing allowance and similar programs offered by vendors and changes in a client’s or a vendor’s information processing systems; and

• Timing - the client purchase data on which we perform our recovery audit services is historical data that typically reflects transactions between our clients and their vendors that took place 3 to 15 months prior to the data being provided to us for audit. As a result, we generally experience a delayed impact from economic changes that varies by client and the impact may be positive or negative depending on the individual clients’ circumstances.

21

We have processes in place to mitigate the financial impact arising from fluctuations in our businesses. These processes include reviewing and monitoring financial and operational results through our internal reporting, devoting substantial efforts to develop an improved service delivery model to enable us to more cost effectively serve our clients, and maintaining the flexibility to control the compensation-related portions of our cost structure.

While the net impact of the economic environment on our recovery audit revenue is difficult to determine or predict, we believe that for the foreseeable future, our revenue will remain at a level that will allow us to continue investing in our growth strategy. Included in our growth strategy are our investments in developing and enhancing our technology platforms and improved operational processes within our recovery audit business. In addition, we continue to pursue the expansion of our business beyond retail recovery audit services by growing the portion of our business that provides recovery audit services to enterprises other than retailers; growing our contract compliance service offerings; expanding into new industry verticals, such as telecommunications, manufacturing and resources; and growing our Adjacent Services which includes our global PRGX OPTIXanalytics solutions and our SIM services offering. We believe that our recovery audit business uniquely positions us to create value for clients and gives us a competitive advantage over other players in the broader S2P market for four fundamental reasons:

• We already have the clients' spend data - we serve a large and impressive list of very large, multinational companies in our core recovery audit business, which requires access to and processing of these clients' detailed S2P data on a daily, weekly or at least periodic basis;

• We know the clients' spend data and underlying processes - the work we do in recovery audit requires that we fully understand our clients’ systems, buying practices, receiving and payment procedures, as well as their suppliers’ contracting, performance and billing practices;

• We take a different perspective in analyzing the clients' spend data - we look horizontally across our clients' processes and organizational structures versus vertically, which is how most companies are organized and enterprise resource planning systems are designed; and

• Our contingent fee recovery audit value proposition minimizes our clients' cost of entry and truly aligns us with our clients.

As our clients’ data volumes and complexity levels continue to grow, we are using our deep data management experience to develop new actionable insight solutions, as well as to develop custom analytics and data transformation services. Taken together, our deep understanding of our clients’ S2P data and our technology-based solutions provide multiple routes to help our clients achieve greater profitability. Our Adjacent Services business targets client functional and process areas where we have established expertise, enabling us to provide services to finance, merchandising and procurement executives to improve working capital, reduce supplier discrepancies, optimize purchasing leverage in vendor pricing negotiations, improve insight into product margin and true cost of goods for resale, identify and manage risks associated with vendor compliance, improve quality of vendor master data and improve visibility and diagnostics of direct and indirect spend.

Looking ahead, we expect to continue the evolution of our business from its historical auditor-led recovery audit operation, to today’s data-driven, technology-led recovery audit, SIM and analytics solutions, to tomorrow’s next generation payment assurance solutions, which will provide access to software and enable services closer in time to or contemporaneous with the transaction. We believe this evolution will allow us to provide incremental value to our clients and ultimately transform our business from one primarily focused on post-transaction analysis, error identification and recovery, to one with its major emphasis on error prevention and S2P process efficiency.

We believe that for the foreseeable future, our revenue will remain at a level that will allow us to continue investing in our growth strategy, including developing and enhancing our technology platforms and improved operational processes within our recovery audit business. We have processes in place to mitigate the financial impact arising from fluctuations in our businesses. These processes include reviewing and monitoring financial and operational results through our internal reporting, devoting substantial efforts to develop an improved service delivery model to enable us to more cost effectively serve our clients, and maintaining the flexibility to control the compensation-related portions of our cost structure.

We expect to continue our information technology and product development efforts to improve our services and solutions. In 2018, we increased our sales force to accelerate our acquisition of new clients and the cross-sale of solutions within our existing client base. We expect to continue investing in sales and marketing and will continue to assess the success and effectiveness of our sales and marketing efforts and the optimal level of sales and marketing investment for future periods. We also expect to add headcount in product development, data services, advisory services and recovery audit to support new services and client contracts. We believe that our investments in next generation recovery audit technology will further increase the operating leverage in our recovery audit platform in future years.

22

Business Acquisitions

In the first quarter of 2017, we completed the acquisition of substantially all of the assets of Cost & Compliance Associates, LLC and Cost & Compliance Associates Limited (collectively, "C&CA"), a commercial recovery audit and contract compliance firm with operations in the U.S. and the UK. We have included the results of C&CA from the date of acquisition through December 31, 2018 in our Condensed Consolidated Statement of Operations and in the Results of Operations from Continuing Operations discussion.

Discontinued Operations

As of December 31, 2015, the Company discontinued its HCRA business. In connection with the discontinuation of that business, the Company entered into agreements with third parties to fulfill its Medicare RAC program subcontract obligations to audit Medicare payments and provide support for claims appeals and assigned its remaining Medicaid contract to another party. One of the third-party Medicare RAC-related contracts has been settled and the results are reflected in these financial statements. The Company will continue to incur certain expenses until the remaining Medicare RAC contracts and relationships are concluded.

Results from Continuing Operations

The discussions and financial results in this Item 7 reflect our continuing operations.

The following table sets forth the percentage of revenue represented by certain items in our Consolidated Statements of Operations for the periods indicated:

	Years Ended December 31,
	2018		2017		2016
Revenue, net of refund liabilities	100.0	%	100.0	%	100.0	%
Operating expenses:
Cost of revenue	61.0		63.1		64.8
Selling, general and administrative expenses	29.4		29.0		28.0
Depreciation of property, equipment and software assets	4.3		2.8		3.6
Amortization of intangible assets	2.0		2.3		1.3
Acquisition-related adjustments (income) loss	(0.9	)	(1.4	)	—
Total operating expenses	95.8		95.8		97.7
Operating income from continuing operations	4.2		4.2		2.3
Foreign currency transaction losses (gains) on short-term intercompany balances	0.6		(1.3	)	0.1
Interest expense (income), net	1.0		1.0		(0.1	)
Other (income) loss	—		(0.1	)	(0.1	)
Net income from continuing operations before income tax	2.6		4.6		2.4
Income tax expense	0.8		1.8		0.9
Net income from continuing operations	1.8	%	2.8	%	1.5	%

Year Ended December 31, 2018 Compared to Prior Years from Continuing Operations

Revenue, net of refund liabilities. Revenue, net of refund liabilities was as follows (in thousands):

23

	Years Ended December 31,
	2018		2017		2016
Recovery Audit Services – Americas	$	115,920	$	113,122	$	99,861
Recovery Audit Services – Europe/Asia-Pacific	49,526		44,372		37,335
Adjacent Services	6,330		4,126		3,648
Total	$	171,776	$	161,620	$	140,844

Consolidated revenue from continuing operations increased by $10.2 million, or 6.3%, in 2018 compared to 2017, and increased by $20.8 million, or 14.8%, in 2017 compared to 2016. On an organic basis (excluding C&CA and, for the first three quarters of 2017, Lavante), our revenue increased 6.0% in 2017 compared to 2016. Our 2018 consolidated year-over-year growth was led by our global retail and commercial recovery audit operations. We experienced some changes in our reported revenue based on the strength of the U.S. dollar relative to foreign currencies. On a constant dollar basis, adjusted for changes in foreign exchange ("FX") rates, consolidated revenue increased 6.5% in 2018 compared to 2017 and increased 14.1% in 2017 compared to 2016. On a constant dollar basis, we organically grew our revenue 5.5% in 2017 compared to 2016. Below is a discussion of our revenue for our three reportable segments.

Recovery Audit Services - Americas revenue increased $2.8 million, or 2.5%, in 2018 compared to 2017 and increased$13.3 million, or 13.3%, in 2017 compared to 2016. On an organic basis, our revenue increased by 4.6% in 2017 compared to 2016. The 2018 year-over-year growth was led by our retail recovery audit business. Changes in the value of the U.S. dollar relative to currencies in Canada and Latin America negatively impacted reported revenue in 2018 and positively impacted reported revenue in 2017. On a constant dollar basis, adjusted for changes in FX rates, 2018 revenue increased 2.8% compared to 2017 and increased 12.9% compared to 2016. On a constant dollar basis, we organically grew our revenue by 4.3% in 2017 compared to 2016. The growth in our Recovery Audit Services - Americas revenue in 2018 and 2017 was due to a number of factors including stronger claims conversion, the implementation of acceleration and maturity model programs, increased staffing at certain audits, and enhancements to our proprietary audit technologies. This growth was partially offset by continued rate pressures.

Recovery Audit Services - Europe/Asia-Pacific revenue increased $5.2 million, or 11.6%, in 2018 compared to 2017 and increased $7.0 million, or 18.8%, in 2017 compared to 2016. On an organic basis, revenue in this segment increased by 10.4% in 2017 compared to 2016. The year-over-year revenue growth in 2018 and 2017 was led by our business in Europe. Changes in the value of the U.S. dollar relative to currencies in Europe, Asia, and the Pacific negatively impacted reported revenue in 2018 and positively impacted reported revenue in 2017. On a constant dollar basis, adjusted for changes in FX rates, 2018 revenue increased by 11.7% compared to 2017 and 2017 revenue increased by 17.5% compared to 2016. On a constant dollar basis, Recovery Audit Services - Europe/Asia-Pacific organic revenue increased 9.2% in 2017 compared to 2016.

Adjacent Services revenue increased by $2.2 million, or 53.4%, in 2018 compared to 2017 and increased $0.5 million, or 13.1%, in 2017 compared to 2016. The 2018 year-over-year growth in revenue was both in advisory services and SaaS subscriptions. The increase in revenue in 2017 compared to 2016 was due to new advisory work and the launch of the Lavante SIM-based Deduction Management contract announced in the fourth quarter of 2017.

Cost of Revenue (“COR”). COR consists principally of commissions and other forms of variable compensation we pay to our auditors based primarily on the level of overpayment recoveries and/or profit margins derived therefrom, fixed auditor salaries, compensation paid to various types of hourly support staff and salaries for operational and client service managers for our recovery audit services and our Adjacent Services businesses. COR also includes other direct and indirect costs incurred by these personnel, including office rent, travel and entertainment, telephone, utilities, maintenance and supplies and clerical assistance. A significant number of the components comprising COR are variable and will increase or decrease with increases or decreases in revenue.

COR was as follows (in thousands):

	Years Ended December 31,
	2018		2017		2016
Recovery Audit Services – Americas	$	69,897	$	68,963	$	60,706
Recovery Audit Services – Europe/Asia-Pacific	27,767		26,930		24,802
Adjacent Services	7,161		6,159		5,791
Total	$	104,825	$	102,052	$	91,299

24

COR as a percentage of revenue for Recovery Audit Services - Americas was 60.3% in 2018, 61.0% in 2017 and 60.8% in 2016. We continue to invest in our various growth and other strategic initiatives, and include portions of these costs in Recovery Audit Services - Americas COR. COR for Recovery Audit Services - Americas increased by 1.4% in 2018 compared to 2017 and increased 13.6% in 2017 compared to 2016. In 2017, Recovery Audit Services - Americas COR included Lavante and C&CA business expenses and certain transformation charges which were not included in 2016. The improvement in COR as a percentage of revenue in 2017 compared to 2016 was primarily due to the increase in revenues and the positive financial impact of operational process improvements.

COR as a percentage of revenue for Recovery Audit Services - Europe/Asia-Pacific was 56.1% in 2018, 60.7% in 2017 and 66.4% in 2016. In 2017, Recovery Audit Services - Europe/Asia-Pacific COR included C&CA business expenses and certain transformation charges which were not included in 2016.  COR as a percentage of revenue improved 4.6% in 2018 compared to 2017 and 5.7% in 2017 compared to 2016. Improvements primarily related to the increase in revenue and retrained cost growth. The improvement in COR as a percentage of revenue for 2017 compared to 2016 was primarily due to the increase in revenues and the impact of transforming our operational processes.

Adjacent Services COR is primarily related to our continued investments in personnel whom we are hiring to either sell or assist with service delivery. COR as a percentage of revenue decreased to 113.1% in 2018 from 149.3% in 2017, which was a decrease from 158.7% in 2016. The reduction in Adjacent Services COR as a percentage of revenue in 2018 and 2017 is primarily due to our increase in revenue and lower service delivery costs.

Selling, General and Administrative Expenses (“SG&A”). SG&A expenses for all segments other than Corporate Support include the expenses of sales and marketing activities, information technology services and allocated corporate data center costs, human resources, legal, accounting, administration, foreign currency transaction gains and losses other than those relating to short-term intercompany balances and gains and losses on asset disposals. Corporate Support SG&A represents the unallocated portion of SG&A expenses which are not specifically attributable to our segment activities and include the expenses of information technology services, the corporate data center, human resources, legal, accounting, treasury, administration and stock-based compensation charges.

SG&A expenses were as follows (in thousands):

	Years Ended December 31,
	2018		2017		2016
Recovery Audit Services – Americas	$	11,849	$	9,410	$	8,421
Recovery Audit Services – Europe/Asia-Pacific	7,439		6,586		5,442
Adjacent Services	1,685		3,735		1,469
Subtotal for reportable segments	20,973		19,731		15,332
Corporate Support	29,483		27,210		24,067
Total	$	50,456	$	46,941	$	39,399

Recovery Audit Services - Americas SG&A expenses increased25.9% in 2018 compared to 2017 and increased11.7% in 2017 compared to 2016. The 2018 increase resulted primarily from our investment in sales and marketing. The increase in 2017 was primarily due to expenses associated with the Lavante and C&CA acquisitions that were not included in the prior year amounts.

Recovery Audit Services - Europe/Asia-Pacific SG&A expenses increased13.0% in 2018 compared to 2017 after increasing 21.0% in 2017 compared to 2016. The 2018 increase resulted primarily from an increase of equity-based compensation costs. The increase in 2017 was primarily associated with expenses related to the C&CA acquisition which were not included in the prior year amounts.

Adjacent Services SG&A expenses decreased$2.1 million in 2018 compared to 2017 as a result of the integration of information technology resources into Corporate. Adjacent Services SG&A expenses increased $2.3 million in 2017 compared to 2016 due mainly to three quarters of expenses related to the Lavante acquisition which were not included in the prior year amounts.

Corporate Support SG&A expenses include stock-based compensation charges of $5.1 million in 2018, $7.1 million in 2017 and $5.1 million in 2016. Excluding stock-based compensation charges, Corporate Support SG&A expenses increased21.2% in 2018 compared to 2017 and increased6.4% in 2017 compared to 2016. The increase in 2018 compared to 2017 was

25

due primarily to increased sales and marketing personnel. The increase in 2017 compared to 2016 was due mainly to increases in the business acquisition activity, increased personnel and incentive-based compensation expenses.

Acquisition-Related Adjustments included adjustments to earnout consideration of acquired businesses in 2018 and 2017 for $1.6 million and $2.3 million, respectively. 

Depreciation of Property, Equipment and Software Assets. Depreciation of property, equipment and software assets was as follows (in thousands):

	Years Ended December 31,
	2018		2017		2016
Recovery Audit Services – Americas	$	5,545	$	3,165	$	3,750
Recovery Audit Services – Europe/Asia-Pacific	683		599		529
Adjacent Services	1,142		805		755
Total	$	7,370	$	4,569	$	5,034

Depreciation expense increased in 2018 compared to 2017 primarily as a result of the increased level of capital purchases and assets placed into service in 2018 compared to the prior year. Depreciation expense decreased in 2017 compared to 2016 primarily as a result of the reduced level of capital purchases and assets placed into service in 2017 compared to the prior year.

Amortization of Intangible Assets. Amortization of intangible assets was as follows (in thousands):

	Years Ended December 31,
	2018		2017		2016
Recovery Audit Services – Americas	$	1,664	$	1,919	$	1,477
Recovery Audit Services – Europe/Asia-Pacific	172		142		—
Adjacent Services	1,559		1,573		355
Total	$	3,395	$	3,634	$	1,832

Generally, we amortize the customer relationship and trademark intangible assets we record in connection with an acquisition on an accelerated basis over six years or longer, and we amortize non-compete agreements and trade names on a straight-line basis over five years or less. This methodology results in higher amortization immediately following an acquisition, and declining expense in subsequent periods. Our most recent acquisitions prior to December 31, 2018 include C&CA in February 2017 (Recovery Audit Services - Americas and Recovery Audit Services Europe, Asia Pacific) and Lavante in October 2016 (Adjacent Services). Amortization expense decreased $0.2 million in 2018 compared to 2017. Amortization expense increased in our recovery audit segments in 2017 compared to 2016 as a result of the amortization charges associated with the C&CA acquisition. Similarly, Adjacent Services amortization expense increased in 2017 compared to 2016 due to the amortization of certain assets acquired in the acquisition of Lavante.

Foreign Currency Transaction (Gains) Losses on Short-Term Intercompany Balances. Foreign currency transaction gains and losses on short-term intercompany balances result from fluctuations in the exchange rates between foreign currencies and the U.S. dollar and the impact of these fluctuations, primarily on balances payable by our foreign subsidiaries to their U.S. parent. Substantial changes from period to period in foreign currency exchange rates may significantly impact the amount of such gains and losses. The strengthening of the U.S. dollar relative to other currencies results in recorded losses on short-term intercompany balances receivable from our foreign subsidiaries while the relative weakening of the U.S. dollar results in recorded gains.

The U.S. dollar generally strengthened relative to the local currencies of certain of our foreign subsidiaries in 2018 and weakened relative to the local currencies of certain of our foreign subsidiaries in 2017, and strengthened in 2016, resulting in our recording on short-term intercompany balances net foreign currency losses in 2018 of $1.0 million, net foreign currency gains in 2017 of $2.2 million and net foreign currency losses in 2016 of less than $0.1 million.

Net Interest Expense (Income). Net interest expense was $1.7 million in 2018 and $1.5 million in 2017 as a result of increased borrowings associated with our acquisitions and the accretion of contingent payments associated with our acquisitions. Net interest income was $0.2 million in 2016 due to reductions in interest accruals on uncertain tax positions.

26

Income Tax Expense. Our reported effective tax rates on earnings approximated 28.3% in 2018, 39.4% in 2017, and 35.8% in 2016. Reported income tax expense in each year primarily results from taxes on the income of foreign subsidiaries. We have recorded a deferred tax asset valuation allowance that effectively eliminates income tax expense or benefit relating to our U.S. operations. The tax rate for 2018 reflects the impact of the release of the valuation allowance offsetting certain deferred tax assets in France and the UK. The tax rate for 2017 reflects the impact of the release of the valuation allowance for various jurisdictions, the impact of which was not material to the financials. The tax rate for 2016 reflects the impact of the release of the valuation allowance offsetting certain deferred tax assets in New Zealand and Singapore.

Together with the reversal of interest expense accruals, the total net reduction to our reserves for uncertain tax positions based on changes in accruals was nominal in 2018, $0.5 million in 2017, and $0.1 million in 2016.

As of the end of each of the past three years, management determined that based on all available evidence, deferred tax asset valuation allowances of $31.6 million in 2018, $34.8 million in 2017, and $50.1 million in 2016 were appropriate.

As of December 31, 2018, we had approximately $81.5 million of U.S. federal loss carry-forwards available to reduce future U.S. federal taxable income. Approximately $80.9 million of the U.S. federal loss carry-forwards expire between 2026 and 2035. The remaining $0.6 million of U.S. federal loss carry-forwards do not expire due to the Tax Act. As of December 31, 2018, we had approximately $70.9 million of state loss carry-forwards available to reduce future state taxable income. The state loss carry-forwards expire between 2022 and 2037 and are subject to certain limitations.  The U.S. federal and state loss carry-forwards at December 31, 2018, reflect adjustments for prior period write-downs associated with ownership changes.

On December 30, 2016, the Company experienced an ownership change as defined under Section 382 of the Internal Revenue Code (“IRC”). This ownership change resulted in an annual IRC Section 382 limitation that limits the use of certain tax attribute carry-forwards and also resulted in the write-off of certain deferred tax assets and the related valuation allowances that the Company recorded in 2017. The loss carry-forwards outstanding as of December 30, 2016 are subject to an annual base usage limitation of $2.7 million. The Company performed its assessment and determined that $87.3 million of the gross federal net operating losses outstanding as of December 30, 2016 would be available for use going-forward. The Company utilized $6.4 million of these losses on the 2017 U.S. federal tax return and the remaining $80.9 million remains available.

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act"), was signed into law making significant changes to the Internal Revenue Code. The new legislation contains several key provisions that affect us including, but not limited to, the lowering of the U.S. corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings. As a result of the Tax Act, we recorded a one-time adjustment for the re-measurement of deferred tax assets and liabilities during 2017. Given our U.S. valuation allowance, the Tax Act does not materially impact our income tax provision or balance sheet. Additionally, in December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation were expected during the 2018 calendar year, we considered the accounting of the transition tax, deferred tax re-measurements, and other items to be incomplete as of December 31, 2017, though we recorded provisional amounts in the consolidated financial statements. As of December 22, 2018, we have completed our analysis related to the Tax Act in accordance with SAB 118 and there was no additional adjustment required.

Non-GAAP Financial Measures

We evaluate the performance of our operating segments based upon revenue and measures of profit or loss we refer to as EBITDA and Adjusted EBITDA. We define Adjusted EBITDA as earnings from continuing operations before interest and taxes (“EBIT”), adjusted for depreciation and amortization (“EBITDA”), and then adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period. Such adjustments include restructuring charges, stock-based compensation, bargain purchase gains, acquisition-related charges and benefits (acquisition transaction costs, acquisition obligations classified as compensation, and fair value adjustments to acquisition-related contingent consideration), tangible and intangible asset impairment charges, certain litigation costs and litigation settlements, severance charges and foreign currency transaction gains and losses on short-term intercompany balances viewed by management as individually or collectively significant.

27

EBIT, EBITDA and Adjusted EBITDA are all “non-GAAP financial measures” presented as supplemental measures of the Company’s performance. They are not presented in accordance with accounting principles generally accepted in the United States ("GAAP"). We believe these measures provide additional meaningful information in evaluating its performance over time, and that the rating agencies and a number of lenders use EBITDA and similar measures for similar purposes. In addition, a measure similar to Adjusted EBITDA is used in the restrictive covenants contained in our secured credit facility. However, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as substitutes for analysis of our results as reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, the adjustments may vary from period to period and in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items.

A reconciliation of consolidated net income to each of EBIT, EBITDA and Adjusted EBITDA for the periods presented in this report are as follows (in thousands):

EBIT, EBITDA, and Adjusted EBITDA

	Years Ended December 31,
	2018			2017			2016
Net income	$	4,593		$	3,184		$	905
Income tax expense	1,321			2,962			1,242
Interest expense (income), net	1,663			1,539			(153		)
EBIT	7,577			7,685			1,994
Depreciation of property, equipment and software assets	7,371			4,577			5,047
Amortization of intangible assets	3,395			3,634			1,832
EBITDA	18,343			15,896			8,873
Foreign currency transaction losses (gains) on short-term intercompany balances	1,002			(2,190		)	84
Acquisition-related adjustments (income) loss	(1,628		)	(2,283		)	—
Transformation and severance expenses	3,122			1,666			1,383
Other loss (income)	21			(160		)	(121		)
Stock-based compensation	5,056			7,052			5,123
Adjusted EBITDA	$	25,916		$	19,981		$	15,342
Adjusted EBITDA from continuing operations	$	24,673		$	21,345		$	16,598
Adjusted EBITDA from discontinued operations	$	1,243		$	(1,364	)	$	(1,256	)

Acquisition-related adjustments decreased by $0.7 million in 2018 compared to 2017. The adjustments in 2018 and 2017 were to adjust the earnout consideration associated with business acquisitions.

Transformation and severance expenses increased $1.5 million in 2018 compared to 2017 and increased $0.3 million in 2017 compared to 2016. The increases in 2018 and 2017 were primarily the result of certain positions in the Company that were permanently eliminated.

Stock-based compensation decreased $2.0 million, or 28.3%, in 2018 compared to 2017 primarily due to lower compensation expense associated with our performance-based restricted stock units than in the prior year. Stock-based compensation increased $1.9 million, or 37.7%, in 2017 compared to 2016 due to the issuance in 2017 of performance-based equity grants whose value fluctuates with our stock price, and the appreciation of our stock price during the year.

28

Adjusted EBITDA by Segment

We include a detailed calculation of Adjusted EBITDA by segment in Note 2 of “Notes to Consolidated Financial Statements” in Item 8 of this Form 10-K. A summary of Adjusted EBITDA by segment for the years ended December 31, 2018, 2017, and 2016 is as follows (in thousands):

	Years Ended December 31,
	2018			2017			2016
Recovery Audit Services – Americas	$	35,118		$	35,062		$	31,251
Recovery Audit Services – Europe/Asia-Pacific	15,514			11,511			7,403
Adjacent Services	(2,450		)	(5,448		)	(3,354		)
Subtotal for reportable segments	48,182			41,125			35,300
Corporate Support	(23,509		)	(19,780		)	(18,702		)
Total for continuing operations	$	24,673		$	21,345		$	16,598

Adjusted EBITDA in 2018 was $24.7 million, an increase of $3.3 million, or 15.6%, compared to 2017 Adjusted EBITDA of $21.3 million. Adjusted EBITDA in 2017increased by $4.7 million, or 28.6%, compared to $16.6 million in 2016.

Recovery Audit Services - Americas Adjusted EBITDA was relatively unchanged in 2018 compared to 2017 and increased12.2% in 2017 compared to 2016. The 2017 increase resulted primarily from increased revenue, including revenue from the C&CA acquired business, and other operational improvements implemented during the year. On an organic basis, 2017 Adjusted EBITDA in this segment increased by 8.2% compared to 2016.

Recovery Audit Services - Europe/Asia-Pacific Adjusted EBITDA increased34.8% in 2018 compared to 2017. Adjusted EBITDA in this segment increased primarily as a result of increased revenue together with continued operational improvements. The 2017 increase resulted primarily from increased revenue, including revenue from the C&CA acquired business, and other operational improvements implemented during the year. On an organic basis, 2017 Adjusted EBITDA in this segment increased by 43.5% compared to 2016.

Adjacent Services Adjusted EBITDA increased 55% in 2018 compared to 2017 and declined62.4% in 2017 compared to 2016. In 2018 the increase primarily resulted from increased revenue and operational improvements in the segment. The 2017 results are primarily related to Lavante operating costs that were included for the first three quarters in 2017, but not included in the first three quarters of 2016.  On an organic basis, 2017 Adjusted EBITDA in this segment increased by 22.3% compared to 2016.

Corporate Support Adjusted EBITDA declined by $3.7 million, or 18.9%, in 2018 compared to 2017 due mainly to investments in software and technology and the addition of sales and marketing personnel. Corporate Support Adjusted EBITDA declined by $1.1 million, or 5.8%, in 2017 compared to 2016 due mainly to the addition of sales personnel, increases in incentive compensation expenses and increased costs associated with business acquisition activities. On an organic basis, Adjusted EBITDA in this segment declined by 6.2% in 2017 compared to 2016.

Liquidity and Capital Resources

Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less from the date of purchase. We place our temporary cash investments with high credit quality financial institutions. At times, certain investments may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit or otherwise may not be covered by FDIC insurance. Some of our cash and cash equivalents are held at banks in jurisdictions outside the U.S. that have restrictions on transferring such assets outside of these countries on a temporary or permanent basis. Such restricted net assets are not material to our consolidated net assets.

As of December 31, 2018, we had $14.0 million in cash and cash equivalents and $21.6 million of borrowings under our revolving credit facility with SunTrust Bank ("SunTrust"). As of December 31, 2018, the limit on our revolving credit facility was $35.0 million and we had $13.4 million of availability for borrowings. As of December 31, 2018, the Company was in compliance with the covenants in its SunTrust credit facility. We amended the SunTrust credit facility in January 2014, December 2014, December 2016, May 2017, March 2018, September 2018 and November 2018 as further described in Secured Credit Facility below.

29

The $14.0 million in cash and cash equivalents includes $5.7 million held at banks in the U.S. and the remainder held at banks in other jurisdictions, primarily in the United Kingdom, Canada, India, and Australia. Certain foreign jurisdictions restrict the amount of cash that can be transferred to the U.S. or impose taxes and penalties on such transfers of cash. To the extent we have excess cash in foreign locations that could be used in, or is needed by, our operations in the U.S., we may incur significant penalties and/or taxes to repatriate these funds. Generally, we have not provided for deferred taxes on the undistributed earnings of international subsidiaries as we consider these earnings to be permanently reinvested. However, we do not consider the earnings of our Canadian subsidiary to be permanently invested, and have provided deferred taxes relating to the potential repatriation of the funds held in Canada.

Our cash and cash equivalents as of December 31, 2018 included short-term investments of approximately $1.4 million, the majority of which was held at banks outside of the United States, primarily in Brazil and Canada.

Operating Activities. Net cash provided by operating activities was $2.4 million in 2018, $13.5 million in 2017 and $10.1 million in 2016. These amounts consist of two components, specifically, net income adjusted for certain non-cash items (such as depreciation, amortization, stock-based compensation expense, impairment charges, and deferred income taxes) and changes in assets and liabilities, primarily working capital, as follows (in thousands):

	Years Ended December 31,
	2018			2017			2016
Net income	$	4,593		$	3,184		$	905
Adjustments for certain non-cash items	14,889			12,813			11,307
	19,482			15,997			12,212
Changes in operating assets and liabilities	(17,051		)	(2,537		)	(2,094		)
Net cash provided by operating activities	$	2,431		$	13,460		$	10,118

Long term incentive payments of $6.4 million were made in 2018. On June 30, 2018, Stock Appreciation Rights (SARs) covering 200,000 shares of the Company's common stock vested and became payable to the Company’s Chief Executive Officer in cash in a lump sum equal to $1.0 million (less applicable tax withholding), which was paid in July 2018.

We have one client, The Kroger Co., that accounted for approximately 12% of our revenue in both 2018 and 2017 and approximately 11% of our revenue in 2016. The loss of any one of our major clients would negatively impact our operating cash flows and would potentially have a material adverse impact on our liquidity.

Investing Activities. Net cash used for capital expenditures was $10.4 million in 2018, $9.4 million in 2017 and $5.9 million in 2016. These capital expenditures primarily related to acquisitions and investments we made to upgrade our information technology infrastructure, develop our proprietary audit technologies, and develop our SaaS solutions.

Capital expenditures are discretionary and we currently expect to continue to make capital expenditures to develop our proprietary audit technologies, our SaaS solutions, and enhance our information technology infrastructure. Should we experience changes in our operating results, we may alter our capital expenditure plans.

Business Acquisitions and Divestitures

We made several business acquisitions over the past few years, each of which is discussed more fully in Note 12 - Business Acquisitions and Divestitures in “Notes to Consolidated Financial Statements” in Part II, Item 8 of this Form 10-K. Following is a summary of recent business acquisition and divestiture activities impacting our liquidity and capital resources in the past three years.

In February 2017, we completed the acquisition of C&CA, a commercial recovery audit and contract compliance business with operations in the U.S. and the UK for a net purchase price of $15.9 million. C&CA assets consist primarily of customer contracts.

In October 2016, we completed the acquisition of Lavante, a SaaS-based supplier of SIM and recovery audit services, for a net purchase price of $3.7 million. Lavante’s assets consist primarily of its proprietary software applications and customer contracts.

Financing Activities. Net cash provided by financing activities was $3.0 million in 2018, primarily due to proceeds from our credit facility (net of repayments) of $8.0 million, and $4.4 million of proceeds from option exercises, partially offset by $4.1 million of payments for repurchases of common stock under our stock repurchase program, $4.0 million of payments for an acquisition earnout liability and $1.3 million of payments for stock repurchased from employees for withholding taxes

30

associated with the vesting of equity awards. Net cash provided by financing activities was $11.0 million in 2017 and net cash used by financing activities was less than $0.1 million in 2016.

Secured Credit Facility

On January 19, 2010, we entered into a four-year revolving credit and term loan agreement with SunTrust Bank (“SunTrust”). The SunTrust credit facility initially consisted of a $15.0 million committed revolving credit facility and a $15.0 million term loan. The SunTrust credit facility was guaranteed by the Company and its material domestic subsidiaries and was secured by substantially all of our assets. The SunTrust term loan required quarterly principal payments of $0.8 million from March 2010 through December 2013, and a final principal payment of $3.0 million in January 2014 that we paid in December 2013.

On January 17, 2014, we entered into an amendment of the SunTrust credit facility that increased the committed credit facility from $15.0 million to $25.0 million, lowered the applicable margin to a fixed rate of 1.75%, eliminated the provision limiting availability under the credit facility based on eligible accounts receivable, increased our stock repurchase program limit, and extended the scheduled maturity of the credit facility to January 16, 2015 (subject to earlier termination as provided therein). We were required pay a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the $25.0 million credit facility.

On December 23, 2014, we entered into an amendment of the SunTrust credit facility that reduced the committed revolving credit facility from $25.0 million to $20.0 million. Pursuant to the December 2014 amendment, the credit facility would bear interest at a rate per annum comprised of a specified index rate based on one-month LIBOR, plus an applicable margin (1.75% per annum). The index rate was determined as of the first business day of each calendar month. The credit facility included two financial covenants (a maximum leverage ratio and a minimum fixed charge coverage ratio) that would apply only if we had borrowings under the credit facility that arose or remained outstanding during the final 30 calendar days of any fiscal quarter. These financial covenants were also tested, on a modified pro forma basis, in connection with each new borrowing under the credit facility. This amendment also extended the scheduled maturity of the revolving credit facility to December 23, 2017 and lowered the commitment fee to 0.25% per annum, payable quarterly, on the unused portion of the revolving credit facility.

On December 21, 2016, we entered into an amendment of the SunTrust credit facility in order to clarify certain definitions and other terms of the facility.

On May 4, 2017, we entered into an amendment of the SunTrust credit facility, that, among other things, (i) increased the aggregate principal amount of the committed revolving credit facility from $20.0 million to $35.0 million through December 31, 2018, which amount was reduced to $30.0 million thereafter, (ii) extended the maturity date of the credit facility to December 31, 2019, (iii) added customary provisions to reflect European Union “bail-in” directive compliance language, and (iv) modified the financial covenants applicable to the Company during the remaining term of the credit facility by (A) revising the maximum leverage ratio and minimum fixed charge coverage ratio and (B) adding an additional financial covenant requiring the Company to maintain a minimum amount of consolidated adjusted EBITDA. In addition, the applicable margin used to determine the interest rate per annum on outstanding borrowings under the credit facility, and the ongoing commitment fee payable on the unused portion of the revolving credit facility commitment, both of which previously had been fixed percentages per annum, were amended and to both vary based upon our quarterly leverage ratio calculation under the SunTrust credit facility.

On March 21, 2018, the SunTrust credit facility was amended with respect to the calculation of consolidated adjusted EBITDA for financial covenant compliance. The debt covenant calculation was modified to include the cash component of stock-based compensation for 2017.

On September 28, 2018, the SunTrust credit facility was amended in order to expand the types of stock the Company could purchase as well as adjust the fixed coverage charge ratio. Under the amended terms, the Company could make restricted payments to purchase capital stock (other than disqualified stock). The fixed charge coverage ratio was reduced from 1.25 to 1.00 for the quarter ended September 30, 2018.

On November 5, 2018, the SunTrust credit facility was amended to add, as an additional financial condition to the Company's ability to make certain restricted payments, a requirement that the Company have an aggregate "minimum liquidity" of $5.0 million immediately prior to and immediately after giving effect to any restricted payment, with "minimum liquidity" being defined as 100% of all unrestricted domestic cash holdings, 70% of unrestricted foreign cash holdings, and the unused availability under the SunTrust credit facility. In addition, the calculation of the fixed charge coverage ratio was revised to exclude the following fixed charges: (i) the $4.0 million earnout payment made in the second quarter of 2018 in connection with a prior acquisition by the Company and (ii) up to $5.0 million (in the aggregate) of restricted payments consisting of redemption, purchases or repurchases of capital stock in the fourth quarter of 2018 and the first quarter of 2019.

31

The SunTrust credit facility included customary affirmative, negative, and financial covenants binding on the Company, including delivery of financial statements and other reports, conduct of business, and transactions with affiliates. The negative covenants limited our ability, among other things, to incur debt, incur liens, make investments, sell assets or declare or pay dividends on our capital stock. The financial covenants included in the credit facility set forth maximum leverage and minimum fixed charge coverage ratios and require maintenance of a minimum amount of consolidated adjusted earnings before interest, taxes, depreciation and amortization. In addition, the credit facility included customary events of default. Borrowing availability under the SunTrust credit facility at December 31, 2018 was $13.4 million. As of December 31, 2018, we had $21.6 million in outstanding borrowings under the SunTrust credit facility. The Company was in compliance with the covenants in its SunTrust credit facility as of December 31, 2018. The interest rate at December 31, 2018 was approximately 4.60% and the ongoing commitment fee was 0.25%.

On March 14, 2019, we entered into a credit agreement with Bank of America, N.A. to refinance our borrowing facility with SunTrust. Refer to Note 14 - Subsequent Events of the notes to the consolidated financial statements for a description of the credit agreement with Bank of America, N.A.

We believe that we will have sufficient borrowing capacity and cash generated from operations to fund our capital and operational needs for at least the next twelve months.

Stock Repurchase Program

On February 21, 2014, our Board of Directors authorized a stock repurchase program under which we could repurchase up to $10.0 million of our common stock from time to time through March 31, 2015. Since 2014, the original authorization of the stock repurchase program, the Board of Directors has modified the program from time to time to increase the repurchase limit to $75 million and extend the expiration date to December 31, 2019. From the February 2014 announcement of the Company’s current stock repurchase program through December 31, 2018, the Company has repurchased 9.1 million shares of its common stock for an aggregate cost of $48.6 million. These shares were retired and accounted for as a reduction to Shareholders' equity in the Consolidated Balance Sheet. Direct costs incurred to acquire the shares are included in the total cost of the shares.

The timing and amount of future repurchases, if any, will depend upon the Company’s stock price, the amount of the Company’s available cash, regulatory requirements, and other corporate considerations. The Company may initiate, suspend or discontinue purchases under the stock repurchase program at any time.

Contractual Obligations and Other Commitments

As discussed in “Notes to Consolidated Financial Statements” included in Item 8 of this Form 10-K, the Company has certain contractual obligations and other commitments. A summary of those commitments as of December 31, 2018 is as follows:

	Payments Due by Period (in thousands)
Contractual obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Long-term debt obligations	$	21,600	$	—	$	21,600	$	—	$	—
Interest and commitment fee on Secured Credit Facility (1)	1,015		1,015		—		—		—
Operating lease obligations	14,320		4,975		7,130		1,653		562
Payments to Messrs. Cook and Toma (2)	326		66		141		84		35
Acquisition costs for earnout provision (3)	4,162		4,162		—		—		—
Severance	657		657		—		—		—
Total	$	42,080	$	10,875	$	28,871	$	1,737	$	597

(1) Represents the estimated commitment fee and interest due on the Secured Credit Facility using an interest rate as of December 31, 2018 and assuming borrowing under the SunTrust credit facility of $21.6 million. See Note 5 of the "Notes to Consolidated Financial Statements" for additional information regarding the Secured Credit Facility. On March 14, 2019, we entered into a credit agreement with Bank of America, N.A. to refinance our borrowing facility with SunTrust. See Note 14 for a description of the credit agreement with Bank of America, N.A.

(2) Represents estimated reimbursements payable for healthcare costs incurred by these former executives.

32

(3) This earnout provision is calculated using the present value of the expected (probability-weighted) payments based on the likelihood of achieving each of the financial performance targets. The remaining cash payments will total $8.5 million assuming that the full earnout amount is achieved (see Note 12 of the "Notes to the Consolidated Financial Statements" for additional information).

Off-Balance Sheet Arrangements

As of December 31, 2018, the Company did not have any material off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of the SEC’s Regulation S-K.

Critical Accounting Policies

We describe our significant accounting policies in Note 1 of “Notes to Consolidated Financial Statements” included in Item 8 of this Form 10-K. Certain of our accounting policies are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by management. As a result, they are subject to an inherent degree of uncertainty. We consider accounting policies that involve the use of estimates that meet both of the following criteria to be “critical” accounting policies. First, the accounting estimate requires us to make assumptions about matters that are highly uncertain at the time that the accounting estimate is made. Second, alternative estimates in the current period, or

changes in the estimate that are reasonably likely in future periods, would have a material impact on the presentation of our financial condition, changes in financial condition or results of operations.

In addition to estimates that meet the “critical” estimate criteria, we also make many other accounting estimates in preparing our consolidated financial statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenue and expenses, as well as disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition, refund liabilities, accounts receivable allowance for doubtful accounts, goodwill and other intangible assets and income taxes. We base our estimates and judgments on historical experience, information available prior to the issuance of the consolidated financial statements and on various other factors that we believe to be reasonable under the circumstances. This information forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Materially different results can occur as circumstances change and additional information becomes known, including changes in those estimates not deemed “critical”.

We believe the following critical accounting policies, among others, involve our more significant estimates and judgments we used in the preparation of our consolidated financial statements. We have discussed the development and selection of accounting estimates, including those deemed “critical,” and the associated disclosures in this Form 10-K with the audit committee of the Board of Directors.

• Revenue Recognition. The Company's policy is to recognize revenue in a way that depicts the transfer of promised goods or services to customers in a manner and amount that reflects the consideration to which the Company expects to be entitled in exchange for the transfer of goods or services promised to customers. To adhere to this core principle, the Company applies the following five steps: (a) identify contract(s) with a customer; (b) identify the performance obligations in a contract; (c) determine the transaction price; (d) allocate the transaction price to the performance obligations in a contract; and (e) recognize revenue when (or as) performance obligations are satisfied. The Company determines that the performance obligations have been satisfied when its customers obtain control of the goods or services as evidenced by the customer’s ability to direct the use, or the ability to receive substantially all of the remaining economic benefit, of the contract assets. Additionally, for purposes of determining the appropriate timing of recognition, revenue will be recognized over time or at a point in time based on an evaluation of the specific criteria that is to be achieved to meet the performance obligations of each contract.

The determination that the core principle for revenue recognition has been met, and the five steps have been applied appropriately, requires significant judgment. Management considers the application of this judgment to be critical in determining the appropriate amount of revenue to be recognized. The most critical judgments are required in the determination of the transaction price, the identification of the performance obligations within a contract, and the determination as to whether or not and to what extent such performance obligations have been satisfied. A misapplication of this judgment could result in inappropriate recognition of revenue.

• Unbilled Receivables. Unbilled receivables relate to claims for which the Company's customers have received economic value and for which they acknowledge that the unbilled receivable has been earned but has not yet been billed. The Company typically invoices the customer in the subsequent month.

• Refund liabilities. Refund liabilities result from reductions in the economic value previously received by our clients with respect to vendor claims identified by us and for which we previously have recognized revenue. We compute the estimate of our refund liabilities at any given time based on actual historical refund data. We record periodic changes in refund liabilities as adjustments to revenue. We satisfy such refund liabilities either by offsets to amounts otherwise due from clients or by cash refunds to clients.

• Goodwill, Other Intangible Assets, Long-lived Assets, and Impairment Charges. Goodwill represents the excess of the purchase price over the estimated fair market value of net identifiable assets of acquired businesses. Intangible assets are assets that lack physical substance. We evaluate the recoverability of goodwill and other intangible assets in accordance with ASC 350, Intangibles-Goodwill and Other, in the fourth quarter of each year or sooner if events or changes in circumstances indicate that the carrying amount may exceed its fair value. This evaluation includes a preliminary assessment of qualitative factors to determine if it is necessary to perform a two-step impairment testing process. The first step identifies potential impairments by comparing the fair value of the reporting unit with its carrying value, including goodwill. If the calculated fair value of a reporting unit exceeds the carrying value, goodwill is not impaired, and the second step is not necessary. If the carrying value of a reporting unit exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying value. If the fair value is less than the carrying value, we would record an impairment charge.

33

We are not required to calculate the fair value of our reporting units that hold goodwill unless we determine that it is more likely than not that the fair value of these reporting units is less than their carrying values. In this analysis, we consider a number of factors, including changes in our legal, business and regulatory climates, changes in competition or key personnel, macroeconomic factors impacting our Company or our clients, our recent financial performance and expectations of future performance and other pertinent factors. Based on these analyses, we determined that it was not necessary for us to perform the two-step process. We last used independent business valuation professionals to estimate fair value in the fourth quarter of 2010 and determined that fair value exceeded carrying value for all relevant reporting units. No impairment charges were necessary based on our internal calculations in the three years ended December 31, 2018.

We review the carrying value of long-lived assets such as property and equipment for impairment when events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, we will recognize an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset. No impairment charges were necessary in the three years ended December 31, 2018.

• Income Taxes. Our effective tax rate is based on historical and anticipated future taxable income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. Significant judgment is required in determining the effective tax rate and in evaluating our tax positions. Tax regulations require items to be included in the tax returns at different times than the items are reflected in the financial statements. As a result, our effective tax rate reflected in our Consolidated Financial Statements included in Item 8 of this Form 10-K is different than that reported in our tax returns. Some of these differences are permanent, such as expenses that are not deductible on our tax returns, and some are temporary differences, such as depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in our tax returns in future years for which we have already recorded the tax benefit in our Consolidated Statements of Operations. We establish valuation allowances to reduce net deferred tax assets to the amounts that we believe are more likely than not to be realized. We adjust these valuation allowances in light of changing facts and circumstances. Deferred tax liabilities generally represent tax expense recognized in our consolidated financial statements for which payment has been deferred, or expense for which a deduction has already been taken on our tax returns but has not yet been recognized as an expense in our consolidated financial statements.

We reduce our deferred tax assets by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. In determining the amount of valuation allowance to record, we consider all available positive and negative evidence affecting specific deferred tax assets, including our past and anticipated future performance, the reversal of deferred tax liabilities, the length of carry-back and carry-forward periods, and the implementation of tax planning strategies. Objective positive evidence is necessary to support a conclusion that a valuation allowance is not needed for all or a portion of deferred tax assets when significant negative evidence exists. Cumulative tax losses in recent years are the most compelling form of negative evidence we considered in this determination.

We apply a “more-likely-than-not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We refer to U.S. generally accepted accounting principles (“GAAP”) for guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Our policy for recording interest and penalties associated with tax positions is to record such items as a component of income before income taxes. A number of years may elapse before a particular tax position is audited and finally resolved or before a tax assessment is raised. The number of years subject to tax assessments varies by tax jurisdictions.

• Stock-Based Compensation. We account for awards of equity instruments issued to employees and directors under the fair value method of accounting and recognize such amounts in our Consolidated Statements of Operations. We measure compensation cost for all stock-based awards at fair value on the date of grant and recognize compensation expense using the straight-line method over the service period over which we expect the awards to vest. We recognize compensation costs for awards with performance conditions based on the probable outcome of the performance conditions. We accrue compensation cost if we believe it is probable that the performance condition(s) will be achieved and do not accrue compensation cost if we believe it is not probable that the performance condition(s) will be achieved. In the event that it becomes probable that performance condition(s) will no longer be achieved, we reverse all of the previously recognized compensation expense in the period such a determination is made.

34

We estimate the fair value of all time-vested options as of the date of grant using the Black-Scholes option valuation model, which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation models require the input of highly subjective assumptions, including the expected stock price volatility, which we calculate based on the historical volatility of our common stock. We use a risk-free interest rate, based on the U.S. Treasury instruments in effect at the time of the grant, for the period comparable to the expected term of the option. We use the “simplified” method in estimating the expected term of options as we have concluded that our historical share option exercise experience is a less than reasonable basis upon which to estimate the expected term for our grants. We account for forfeitures as they occur rather than estimating expected forfeitures.

We estimate the fair value of awards of restricted shares and nonvested shares as being equal to the market value of the common stock on the date of the award. We classify our share-based payments as either liability-classified awards or as equity-classified awards. We remeasure liability-classified awards to fair value at each balance sheet date until the award is settled. We measure equity-classified awards at their grant date fair value and do not subsequently remeasure them. We have classified our share-based payments which are settled in our common stock as equity-classified awards and our share-based payments that are settled in cash as liability-classified awards. Compensation costs related to equity-classified awards generally are equal to the grant-date fair value of the award amortized over the vesting period of the award. The liability for liability-classified awards generally is equal to the fair value of the award as of the balance sheet date multiplied by the percentage vested at the time. We charge (or credit) the change in the liability amount from one balance sheet date to another to compensation expense.

New Accounting Standards

For information related to new and recently adopted accounting standards, see Note 1 – Summary of Significant Accounting Policies and Basis of Presentation, in “Notes to Consolidated Financial Statements” in Item 8 of this Form 10-K.

35

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Market Risk. Our reporting currency is the U.S. dollar, although we transact business in various foreign locations and currencies. As a result, our financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we provide our services. Our operating results are exposed to changes in exchange rates between the U.S. dollar and the currencies of the other countries in which we operate. When the U.S. dollar strengthens against other currencies, the value of foreign functional currency revenue decreases. When the U.S. dollar weakens, the value of the foreign functional currency revenue increases. Overall, we are a net receiver of currencies other than the U.S. dollar and, as such, benefit from a weaker dollar. We therefore are adversely affected by a stronger dollar relative to major currencies worldwide. In 2018, we recognized $18.8 million of operating income from operations located outside the U.S., virtually all of which was originally accounted for in currencies other than the U.S. dollar. Upon translation into U.S. dollars, such operating income would increase or decrease, assuming a hypothetical 10% change in weighted-average foreign currency exchange rates against the U.S. dollar, by approximately $1.9 million. We currently do not have any arrangements in place to hedge our foreign currency risk.

Interest Rate Risk. Our interest income and expense are sensitive to changes in the general level of U.S. interest rates. In this regard, changes in U.S. interest rates affect the interest earned on our cash equivalents as well as interest paid on amounts outstanding under our revolving credit facility, if any. We had $13.4 million of borrowing availability under our revolving credit facility as of December 31, 2018, and had $21.6 million borrowed under the facility as of that date. Interest on the amended credit facility is payable monthly and accrues at an index rate using the one-month LIBOR rate plus an applicable margin of 2.25%. Assuming full utilization of the credit facility, a hypothetical 100 basis point change in interest rates would result in an approximate $0.4 million change in annual pre-tax income.

36

ITEM 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page No.
Report of Independent Registered Public Accounting Firm	38
Consolidated Statements of Operations for the Years Ended December 31, 2018, 2017 and 2016	39
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 2017 and 2016	40
Consolidated Balance Sheets as of December 31, 2018 and 2017	41
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2018, 2017 and 2016	42
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016	43
Notes to Consolidated Financial Statements	44

37

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

PRGX Global, Inc. and Subsidiaries

Atlanta, Georgia

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of PRGX Global, Inc. and Subsidiaries (the “Company”) as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 18, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company's auditor since 2006.

/s/ BDO USA, LLP

Atlanta, Georgia

March 18, 2019

38

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Years Ended December 31,
	2018			2017			2016
Revenue, net of refund liabilities	$	171,776		$	161,620		$	140,844
Operating expenses:
Cost of revenue	104,825			102,052			91,299
Selling, general and administrative expenses	50,456			46,941			39,399
Depreciation of property, equipment and software assets	7,370			4,569			5,033
Amortization of intangible assets	3,395			3,634			1,832
Acquisition-related adjustments (income) loss	(1,628		)	(2,283		)	—
Total operating expenses	164,418			154,913			137,563
Operating income from continuing operations	7,358			6,707			3,281
Foreign currency transaction losses (gains) on short-term intercompany balances	1,002			(2,190		)	84
Interest expense	(1,824		)	(1,785		)	(107		)
Interest income	161			246			260
Other loss (income)	21			(160		)	(121		)
Net income from continuing operations before income tax	4,672			7,518			3,471
Income tax expense	1,321			2,962			1,242
Net income from continuing operations	$	3,351		$	4,556		$	2,229
Discontinued operations:
Income (loss) from discontinued operations	1,242			(1,372		)	(1,324		)
Income tax expense (benefit)	—			—			—
Net income (loss) from discontinued operations	1,242			(1,372		)	(1,324		)
Net income	$	4,593		$	3,184		$	905
Basic earnings (loss) per common share (Note 3):
Basic earnings from continuing operations	$	0.14		$	0.21		$	0.10
Basic earnings (loss) from discontinued operations	0.06			(0.06		)	(0.06		)
Total basic earnings per common share	$	0.20		$	0.15		$	0.04
Diluted earnings (loss) per common share (Note 3):
Diluted earnings from continuing operations	$	0.14		$	0.21		$	0.10
Diluted earnings (loss) from discontinued operations	0.06			(0.06		)	(0.06		)
Total diluted earnings per common share	$	0.20		$	0.15		$	0.04
Weighted-average common shares outstanding (Note 3):
Basic	22,811			21,937			21,969
Diluted	23,434			22,111			22,016

See accompanying Notes to Consolidated Financial Statements.

39

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Years Ended December 31,
	2018		2017			2016
Net income	$	4,593	$	3,184		$	905
Foreign currency translation adjustments	1,128		(180		)	(507		)
Comprehensive income	$	5,721	$	3,004		$	398

See accompanying Notes to Consolidated Financial Statements.

40

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	December 31,
	2018			2017
ASSETS
Current assets:
Cash and cash equivalents	$	13,973		$	18,823
Restricted cash	46			51
Receivables:
Contract receivables, less allowances of $1,024 in 2018 and $1,499 in 2017
Billed	43,878			36,058
Unbilled	2,987			2,709
	46,865			38,767
Employee advances and miscellaneous receivables, less allowances of $176 in 2018 and $292 in 2017	567			1,665
Total receivables	47,432			40,432
Prepaid expenses and other current assets	3,144			4,608
Total current assets	64,595			63,914
Property, equipment and software:
Computer and other equipment	20,517			32,655
Furniture and fixtures	1,694			2,761
Leasehold improvements	3,463			3,916
Software	39,578			34,234
	65,252			73,566
Less accumulated depreciation and amortization	(43,224		)	(56,088		)
Property and equipment, net	22,028			17,478
Goodwill (Note 4)	17,531			17,648
Intangible assets, less accumulated amortization of $43,370 in 2018 and $40,461 in 2017	14,945			18,478
Unbilled receivables	1,608			894
Deferred income taxes (Note 7)	3,561			1,538
Other assets	561			268
Total assets	$	124,829		$	120,218
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	7,515		$	8,548
Accrued payroll and related expenses	15,073			13,078
Refund liabilities	6,497			7,864
Deferred revenue	2,428			1,431
Current portion of debt (Note 5)	48			48
Current portion of long-term incentive compensation liability	—			5,116
Business acquisition obligations (Notes 1 and 12)	4,162			3,759
Total current liabilities	35,723			39,844
Long-term debt (Note 5)	21,553			13,526
Noncurrent business acquisition obligations (Notes 1 and 12)	—			5,135
Refund liabilities	100			957
Deferred income taxes (Note 7)	666			—
Other long-term liabilities	458			442
Total liabilities	58,500			59,904
Commitments and contingencies (Notes 2, 5, 6, 9 and 10)
Shareholders’ equity (Notes 9 and 11):
Common stock, no par value; $.01 stated value per share. Authorized 50,000,000 shares; 23,186,258 shares issued and outstanding at December 31, 2018 and 22,419,417 shares issued and outstanding at December 31, 2017	232			224
Additional paid-in capital	582,574			580,032
Accumulated deficit	(515,456		)	(520,049		)
Accumulated other comprehensive income	(1,021		)	107
Total shareholders’ equity	66,329			60,314
Total liabilities and shareholders’ equity	$	124,829		$	120,218

See accompanying Notes to Consolidated Financial Statements.

41

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Years Ended December 31, 2018, 2017 and 2016

(In thousands, except share data)

	Common Stock					Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			Total Shareholders' Equity
	Shares		Amount
Balance at December 31, 2015	22,681,656		$	227		$	575,532		$	(524,138	)	$	794		$	52,415
Net income	—		—			—			905			—			905
Foreign currency translation adjustments	—		—			—			—			(507		)	(507		)
Issuances of common stock:
Restricted shares remitted by employees for taxes	(20,829	)	—			(217		)	—			—			(217		)
Stock option exercises	90,496		—			320			—			—			320
Repurchases of common stock	(905,403	)	(9		)	(3,763		)	—			—			(3,772		)
Stock-based compensation expense	—		—			3,246									3,246
Balance at December 31, 2016	21,845,920		218			575,118			(523,233		)	287			52,390
Net income	—		—			—			3,184			—			3,184
Foreign currency translation adjustments	—		—			—			—			(180		)	(180		)
Issuances of common stock:
Restricted share awards	381,059		4			(4		)							—
Restricted shares remitted by employees for taxes	(15,006	)	—			(100		)	—			—			(100		)
Stock option exercises	225,043		2			1,170			—			—			1,172
Forfeited restricted share awards	(27,599	)							—			—			—
Stock-based compensation expense	—		—			3,848			—			—			3,848
Balance at December 31, 2017	22,419,417		224			580,032			(520,049		)	107			60,314
Net income	—		—			—			4,593			—			4,593
Foreign currency translation adjustments	—		—			—			—			(1,128		)	(1,128		)
Issuances of common stock:
Restricted share awards	331,333		3			(3		)	—			—			—
Restricted shares remitted by employees for taxes	(155,329	)	(2		)	(1,279		)	—			—			(1,281		)
Stock option exercises	676,649		7			4,415			—			—			4,422
Performance-based restricted stock unit settlement	483,623		5			(5		)							—
Restricted stock unit settlement	18,934								—			—			—
Forfeited restricted share awards	(148,083	)	(1		)	1			—			—			—
Repurchase of common stock	(440,286	)	(4		)	(4,065		)							(4,069		)
Stock-based compensation expense	—		—			3,592			—			—			3,592
Other activities						(114		)							(114		)
Balance at December 31, 2018	23,186,258		$	232		$	582,574		$	(515,456	)	$	(1,021	)	$	66,329

See accompanying Notes to Consolidated Financial Statements.

42

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years Ended December 31,
	2018			2017			2016
Cash flows from operating activities:
Net income	$	4,593		$	3,184		$	905
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	10,766			8,203			6,879
Amortization of deferred loan costs	53			85			60
Noncash interest expense	961			1,215			—
Stock-based compensation expense	5,056			7,052			5,123
Other loss from sale of assets	—			—			22
Foreign currency transaction losses (gains) on short-term intercompany balances	1,002			(2,190		)	84
Income taxes	(1,321		)	731			(861		)
Changes in fair value of contingent consideration	(1,628		)	(2,283		)	—
Changes in operating assets and liabilities, net of business acquisitions:
Restricted cash	5			(4		)	1
Billed receivables	(8,639		)	(3,949		)	(3,339		)
Unbilled receivables	(992		)	(469		)	(509		)
Prepaid expenses and other current assets	2,404			(417		)	(1,506		)
Other assets	(229		)	(57		)	(65		)
Accounts payable and accrued expenses	(3,275		)	815			1,218
Accrued payroll and related expenses	778			975			2,606
Refund liabilities	(2,112		)	115			67
Deferred revenue	1,036			101			(5		)
Long-term incentive compensation payout	(6,378		)	—			—
Other long-term liabilities	351			353			(562		)
Net cash provided by operating activities	2,431			13,460			10,118
Cash flows from investing activities:
Business acquisition, net of cash acquired	19			(10,128		)	(3,669		)
Capital expenditures for property, equipment and software, net of disposal proceeds	(10,398		)	(9,355		)	(5,887		)
Net cash used in investing activities	(10,379		)	(19,483		)	(9,556		)
Cash flows from financing activities:
Repayments of long-term debt	(13,500		)	66			—
Payment of deferred loan costs	(38		)	(155		)	—
Proceeds from credit facility	21,500			10,000			3,600
Payment of earnout liability related to business acquisitions	(4,000		)	—			—
Repurchases of common stock	(4,069		)	—			(3,772		)
Restricted stock repurchased from employees for withholding taxes	(1,281		)	(100		)	(218		)
Proceeds from option exercises	4,422			1,172			326
Net cash provided by (used in) financing activities	3,034			10,983			(64		)
Effect of exchange rates on cash and cash equivalents	64			(1,860		)	103
Net (decrease) increase in cash and cash equivalents	(4,850		)	3,100			601
Cash and cash equivalents at beginning of period	18,823			15,723			15,122
Cash and cash equivalents at end of period	$	13,973		$	18,823		$	15,723
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	681		$	434		$	60
Cash paid during the period for income taxes, net of refunds received	$	3,255		$	2,929		$	1,407
Noncash investing activities:
Fair value of contingent consideration liabilities at the date of acquisition	$	—		$	5,954		$	3,834
Capital expenditures for property, equipment, and software not paid by year-end	$	1,954		$	365		$	203

See accompanying Notes to Consolidated Financial Statements.

43

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

(a) Description of Business and Basis of Presentation

Description of Business

The principal business of PRGX Global, Inc. and subsidiaries is providing recovery audit services to large businesses and government agencies having numerous payment transactions. PRGX also provides services adjacent to recovery audit services, including supplier information management ("SIM"), data transformation, spend analytics and associated advisory services, to a similar client base. These businesses include, but are not limited to:

• retailers such as discount, department, specialty, grocery and drug stores, and wholesalers who sell to these retailers;

• business enterprises other than retailers such as manufacturers, financial services firms, pharmaceutical companies, and resource companies such as oil and gas companies; and

• federal and state government agencies.

Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries. PRGX currently provides services to clients in over 30 countries across a multitude of industries.

Basis of Presentation

During the fourth quarter of 2015 we discontinued the Healthcare Claims Recovery Audit ("HCRA") business. The results of our continuing and discontinued operations for the years ended December 31, 2018, 2017 and 2016 are presented in accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations.

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Subsequent events have been considered, and the appropriate changes have been made to our financial statements as of December 31, 2018 as required under U.S. generally accepted accounting principles (“GAAP”), through the date of filing this Annual Report on Form 10-K. Refer to Note 14 - Subsequent Event for a description of the credit agreement we entered into with Bank of America, N.A. on March 14, 2019.

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. GAAP. Actual results could differ from those estimates.

(b) Revenue Recognition, Billed and Unbilled Receivables, and Refund Liabilities

Revenue Recognition, Billed and Unbilled Receivables

The Company has revised its accounting policy as it relates to the Financial Accounting Standards Board (“FASB”) issuedAccounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and the subsequent amendments and modifications thereto. The revised policy requires the Company to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To adhere to this core principle, the Company applies the following five steps: (a) identify contract(s) with a customer; (b) identify the performance obligations in a contract; (c) determine the transaction price; (d) allocate the transaction price to the performance obligations in a contract; and (e) recognize revenue when (or as) performance obligations are satisfied. The Company determines that the performance obligations have been satisfied when its customers obtain control of the goods or services as evidenced by the customer’s ability to direct the use, or the ability to receive substantially all of the remaining economic benefit, of the contract assets. Additionally, for purposes of determining the appropriate timing of recognition, revenue will be recognized over time or at a point in time based on an evaluation of the specific criteria that is to be achieved to meet the performance obligations of each contract.

The determination that the core principle for revenue recognition has been met, and the five steps have been applied appropriately, requires significant judgment. Management considers the application of this judgment to be critical in determining the appropriate amount of revenue to be recognized. The most critical judgments are required in the determination of the transaction price, the identification of the performance obligations within a contract, and the determination as to whether or not and to what

44

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

extent such performance obligations have been satisfied. A misapplication of this judgment could result in inappropriate recognition of revenue.

Revenue is recognized over time, on an invoice basis for the Company's recovery audit contracts, which is approximately 96% of consolidated revenue for the year ended December 31, 2018. The Company has adopted the Invoicing Expedient as provided for in FASB Accounting Standards Codification ("ASC") Topic 606, which allows for the recognition of revenue for an amount that an entity has a right to invoice its customer. It is management’s conclusion that the Company's right to consideration from its customers corresponds directly to the value provided to customers from its performance to-date, as represented by billable recoveries. A recovery is billable when it is determined that the customer has received the economic benefit from the service (generally through credits taken against existing accounts payable due to, or refund checks received from, the customer’s vendors). The manner in which a claim is recovered by a client often is dictated by industry practice. Many clients establish specific procedural guidelines that must be satisfied prior to submitting claims for client approval, and these guidelines are unique to each client.

On occasion, it is possible that a transaction has met the core principle for revenue recognition, but the Company does not recognize revenue until the customary business practices and processes specific to that client have been completed. Historically, there has been a certain amount of recovery audit revenue with respect to which, even though the Company has met the requirements of its revenue recognition policy, its clients’ vendors ultimately have rejected the claims underlying the revenue. In that case, the Company's clients may request a refund or offset of such amount even though the fees may have been previously collected. These refunds are accounted for as a variable consideration. The Company provides refund liabilities for these reductions in the economic value previously received by its clients with respect to vendor claims that have been identified and for which revenue has been previously recognized. The Company computes an estimate of its refund liabilities at any given time based on actual historical refund data.

Revenue is recognized over time for the Company's subscription services. Typically, implementation services, hosting services, unspecified upgrades, technical and support services, service level guarantees and subscription rights under contracts for subscription services are delivered concurrently and are therefore considered a single performance obligation. Generally, revenue will be recognized ratably over the subscription term as this represents the timing of when those services are transferred to the customer. The subscription term commences when the customer both has access to the software application and can benefit from its use.

Revenue is recognized at a point in time for certain services provided on a fixed fee basis and over time for certain services performed on a fee per unit of time-basis or other unit of performance. The revenue recognition method is determined based on the specific criteria that is to be achieved to meet the performance obligations of each transaction within a contract.

When a contract includes an option to acquire future goods or services that constitutes a material right to the customer, and those goods or services are similar to the original goods and services provided for in the contract, the Company has adopted the Practical Alternative as prescribed in ASC Topic 606 to estimate the standalone selling price of that option.

Billed receivables are stated at the amount expected to be collected and do not bear interest. The Company makes ongoing estimates relating to the collectability of billed receivables and maintains a reserve for estimated losses resulting from the inability of its clients to meet its financial obligations to the Company. This reserve is primarily based on the level of past-due accounts based on the contractual terms of the receivables; the Company's history of write-offs; and its relationships with, and the economic status of, its clients.

Unbilled receivables relate to claims for which the Company's customers have received economic value and for which they acknowledge that the unbilled receivable has been earned but has not yet been billed. The Company typically invoices the customer in the subsequent month.

The Company includes unbilled receivables and refund liabilities in determining revenue.

Contract assets will be recorded if a performance obligation is satisfied (and revenue recognized), but the Company is not entitled to payment until other conditions as specified in the contract are met.

Contract liabilities are recognized when consideration is received and the Company has not yet transferred the goods or services to the customer. The Company refers to this as deferred revenue.

The Company derives a relatively small portion of revenue on a fee-for-service basis whereby billing is based upon a fixed fee, a fee per unit of time, or a fee per other unit of service. The Company recognizes revenue for these types of services when the core principles for revenue recognition have been met.

Contract Balances

45

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of December 31, 2018 and December 31, 2017, we had the following balances (in thousands) included in our Consolidated Balance Sheets that relate to contracts with our clients.

	12/31/2018			12/31/2017			Change
Contract receivables from billed revenue	$	43,878		$	36,058		$	7,820
Contract receivables from unbilled revenue	2,987			2,709			278
Deferred revenue	(2,428		)	(1,431		)	(997		)
Refund liabilities	6,497			7,864			(1,367		)

The increase in our contract receivables balance from billed revenues at December 31, 2018 compared to December 31, 2017 is mainly due to higher revenue generated in the fourth quarter of fiscal year 2018 compared with the revenue generated in the fourth quarter of fiscal year 2017. This year-over-year increase in fourth quarter revenue is primarily due to higher revenue generated from our UK retail recovery audit business, as well as additional revenue contributed from businesses acquired in fiscal years 2016 and 2017. We recognized revenue, net of refund liabilities of $171.8 million in fiscal year 2018 and $161.6 million in fiscal year 2017, an increase of $10.2 million, which included additional revenue of $2.9 million from our C&CA business acquired in fiscal year 2017 and $0.3 million from our Lavante business acquired in fiscal year 2016.

The increase in our contract receivables balance from unbilled revenues at December 31, 2018 compared to December 31, 2017, is mainly due to the timing of revenue earned that was not yet billable to our clients that have scheduled billing arrangements as part of our contractual terms.

The increase in our deferred revenue balance at December 31, 2018 compared to December 31, 2017 is mainly due to an increase in revenue generated in fiscal year 2018 from our subscription services offerings for our SIM and PRGX OPTIX^® solutions as a result of increased market acceptance of those product offerings in fiscal year 2018. We recognized $1.2 million in fiscal year 2018 that was included in deferred revenue as of December 31, 2017.

The decrease in our refund liabilities balance at December 31, 2018 compared to December 31, 2017 is mainly due to the change in methodology used to determine refund liabilities as of December 31, 2018 as described in the section entitled Refund Liabilities below.

Disaggregation of Revenue

We depict revenue earned by country and by reporting segment in our Operating Segments and Related Information disclosure. Refer to Note 2 of the Notes to our Consolidated Financial Statements for further information pertaining to our disaggregation of revenue.

Refund Liabilities

Refund liabilities result from reductions in the economic value previously received by our clients with respect to vendor claims identified by us and for which we previously have recognized revenue. We compute the estimate of our refund liabilities at any given time based on actual historical refund data. We record periodic changes in refund liabilities as adjustments to revenue. We satisfy such refund liabilities either by offsets to amounts otherwise due from clients or by cash refunds to clients.

On an on-going basis, we evaluate our estimates and judgments, including those related to refund liabilities. We base our estimates and judgments on historical experience, information available prior to the issuance of the consolidated financial statements and on various other factors that we believe to be reasonable under the circumstances. This information forms the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Materially different results can occur as circumstances change and additional information becomes known, including changes in those estimates not deemed “critical."

An integral component of the methodology used to determine the refund liability includes applying a trendline to historical payback data extracted from our claims-tracking systems. As part of our on-going review of this process, we determined that a better correlation exists between the extracted data points and this trendline when the line takes the form of a cubic polynomial rather than our historical approach of a natural logarithm. As a result, effective in the interim period ended

46

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

June 30, 2018, the Company refined its methodology to incorporate this new trendline for the estimation of refunds expected to occur in future periods.

(c) Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less from date of purchase. We place our temporary cash investments with high credit quality financial institutions. At times, certain investments may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit or otherwise may not be covered by FDIC insurance. Some of our cash and cash equivalents are held at banks in jurisdictions outside the U.S. that have restrictions on transferring such assets outside of these countries on a temporary or permanent basis. Such restricted net assets are not significant in comparison to our consolidated net assets.

The $14.0 million in cash and cash equivalents as of December 31, 2018 includes $5.7 million held in the U.S., $1.2 million held in Canada, and $7.1 million held in other foreign jurisdictions, primarily in the United Kingdom, India, and Australia. Our cash and cash equivalents included short-term investments of approximately $1.4 million as of December 31, 2018 and $1.9 million as of December 31, 2017, all of which were held at banks outside of the United States, primarily in Brazil and Canada.

(d) Fair Value of Financial Instruments

We state cash equivalents at cost, which approximates fair market value. The carrying values for receivables from clients, unbilled receivables, accounts payable, deferred revenue and other accrued liabilities reasonably approximate fair market value due to the nature of the financial instrument and the short-term maturity of these items.

We record bank debt, if any, as of the period end date based on the effective borrowing rate and repayment terms when originated. As of December 31, 2018, we had $21.6 million in bank debt outstanding. As of December 31, 2017, we had $13.6 million in bank debt outstanding. We believe the carrying value of the bank debt approximates its fair value. We considered the factors used in determining the fair value of this debt to be Level 3 inputs (significant unobservable inputs).

We had $4.2 million of business acquisition obligations as of December 31, 2018, and $8.9 million as of December 31, 2017. Our business acquisition obligations represent the fair value of deferred consideration and earnout payments estimated to be due as of the date for which we recorded these amounts. We determine the preliminary estimated fair values based on our projections of future revenue and profits or other factors used in the calculation of the ultimate payment to be made. The discount rate that we use to value the liability is based on specific business risk, cost of capital, and other factors. We consider these factors to be Level 3 inputs (significant unobservable inputs).

We state certain assets at fair value on a nonrecurring basis as required by accounting principles generally accepted in the United States of America. Generally, these assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.

(e) Property and Equipment

We report property and equipment at cost or estimated fair value at acquisition date and depreciate them over their estimated useful lives using the straight-line method. Our useful lives for fixed assets are three years for computer laptops, four years for desktops, five years for IT server, storage and network equipment, five years for furniture and fixtures and three years for purchased software. We amortize leasehold improvements using the straight-line method over the shorter of the lease term or ten years. Depreciation expense from continuing operations was $7.4 million in 2018, $4.6 million in 2017 and $5.0 million in 2016.

We review the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, we will recognize an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset. No impairment charges were necessary in the three years ended December 31, 2018.

(f) Software Development Costs

We capitalize a portion of the costs we incur related to our internal development of software that we use in our operations and amortize these costs using the straight-line method over the expected useful lives of three to seven years.

We also capitalize a portion of the costs we incur related to our internal development of software that we intend to market to others. We amortize these costs over the products’ estimated economic lives, which typically are three years, beginning when the underlying products are available for general release to clients. We review the carrying value of capitalized software development costs for impairment whenever events and circumstances indicate that the carrying value of the asset may not be

47

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, we will recognize an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset.

We consider software development activities to be research and development costs and expense them as incurred. However, we capitalize the costs incurred for the development of computer software that will be sold, leased, or otherwise marketed or that will be used in our operations beginning when technological feasibility has been established. We consider the costs associated with developing or replacing methodologies to be development costs. Development costs were approximately $8.3 million in 2018, $1.2 million in 2017 and $1.6 million in 2016.

(g) Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair market value of net identifiable assets of acquired businesses. We evaluate the recoverability of goodwill and other intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other, in the fourth quarter of each year or sooner if events or changes in circumstances indicate that the carrying amount may exceed its fair value. This evaluation includes a preliminary assessment of qualitative factors to determine if it is necessary to perform a two-step impairment testing process. The first step identifies potential impairments by comparing the fair value of the reporting unit with its carrying value, including goodwill. If the calculated fair value of a reporting unit exceeds the carrying value, goodwill is not impaired, and the second step is not necessary. If the carrying value of a reporting unit exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying value. If the fair value is less than the carrying value, we would record an impairment charge.

We are not required to calculate the fair value of our reporting units that hold goodwill unless we determine that it is more likely than not that the fair value of these reporting units is less than their carrying values. In this analysis, we consider a number of factors, including changes in our legal, business and regulatory climates, changes in competition or key personnel, macroeconomic factors impacting our company or our clients, our recent financial performance and expectations of future performance and other pertinent factors. Based on these analyses, we determined that it was not necessary for us to perform the two-step process. No impairment charges were necessary based on our internal assessments in the three years ended December 31, 2018.

(h) Direct Expenses and Deferred Costs

We typically expense direct expenses that we incur during the course of recovery audit and delivery of Adjacent Services offerings as incurred. For certain implementation and set-up costs associated with our “fee for service” revenue that we earn over an extended period of time, we defer the related direct and incremental costs and recognize them as expenses over the life of the underlying contract.

(i) Income Taxes

We account for income taxes under the asset and liability method. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. We measure deferred tax assets and liabilities using enacted tax rates we expect to apply to taxable income in the years in which we expect to recover or settle those temporary differences. We recognize the effect on the deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date.

We reduce our deferred tax assets by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. In determining the amount of valuation allowance to record, we consider all available positive and negative evidence affecting specific deferred tax assets, including our past and anticipated future performance, the reversal of deferred tax liabilities, the length of carry-back and carry-forward periods and the implementation of tax planning strategies. Objective positive evidence is necessary to support a conclusion that a valuation allowance is not needed for all or a portion of deferred tax assets when significant negative evidence exists. Cumulative losses in recent years are the most compelling form of negative evidence we considered in this determination.

We apply a “more-likely-than-not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We refer to GAAP for guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. In accordance with FASB ASC 740, our policy for recording interest and penalties associated with tax positions is to record such items as a component of income before income taxes. A number of years may elapse before a particular tax position is audited and finally resolved or when a tax assessment is raised. The number of years subject to tax assessments also varies by tax jurisdictions.

48

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(j) Foreign Currency

We use the local currency as the functional currency in the majority of the countries in which we conduct business outside of the United States. We translate the assets and liabilities denominated in foreign currencies into U.S. dollars at the current rates of exchange at the balance sheet date. We include the translation gains and losses as a separate component of shareholders’ equity and in the determination of comprehensive income (loss). We translate revenue and expenses in foreign currencies at the weighted average exchange rates for the period. We separately state the foreign currency transaction gains and losses on short-term intercompany balances in the Consolidated Statements of Operations. We include all other realized and unrealized foreign currency transaction gains (losses) in “Selling, general and administrative expenses.”

(k) Earnings (Loss) Per Common Share

We compute basic earnings (loss) per common share by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. We compute diluted earnings (loss) per common share by dividing net income (loss) available to common shareholders by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of stock options using the treasury stock method, and (3) the dilutive effect of other potentially dilutive securities. We exclude the potential dilutive effect of stock options and convertible instruments from the determination of diluted earnings (loss) per common share if the effect of including them would be antidilutive.

(l) Stock-Based Compensation

We account for awards of equity instruments issued to employees and directors under the fair value method of accounting and recognize such amounts in our Consolidated Statements of Operations. We measure compensation expense for time-based all stock-based awards at fair value on the date of grant and recognize compensation expense, less actual forfeitures, in our Consolidated Statements of Operations using the straight-line method over the service period over which we expect the awards to vest. We recognize compensation expense for awards with performance conditions based on the probable outcome of the performance conditions. We accrue compensation expense if we believe it is probable that the performance condition(s) will be achieved and do not accrue compensation expense if we believe it is not probable that the performance condition(s) will be achieved. In the event that it becomes probable that performance condition(s) will no longer be achieved, we reverse all of the previously recognized compensation expense in the period such a determination is made.

We estimate the fair value of all time-vested options as of the date of grant using the Black-Scholes option valuation model, which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation models require the input of highly subjective assumptions, including the expected stock price volatility, which we calculate based on the historical volatility of our common stock. We use a risk-free interest rate, based on the U.S. Treasury instruments in effect at the time of the grant, for the period comparable to the expected term of the option. We use the “simplified” method in estimating the expected term of options as we have concluded that our historical share option exercise experience is a less than reasonable basis upon which to estimate the expected term for our grants.

We estimate the fair value of nonvested stock awards (restricted stock and restricted stock units) as being equal to the market value of the common stock on the date of the award. We classify our share-based payments as either liability-classified awards or as equity-classified awards. We remeasure liability-classified awards to fair value at each balance sheet date until the award is settled. We measure equity-classified awards at their grant date fair value and do not subsequently remeasure them. We have classified our share-based payments which are settled in our common stock as equity-classified awards and our share-based payments that are settled in cash as liability-classified awards. Compensation expense related to equity-classified awards generally are equal to the fair value of the award at grant-date amortized over the vesting period of the award. The liability for liability-classified awards generally is equal to the fair value of the award as of the balance sheet date multiplied by the percentage vested at the time. We record the change in the liability amount from one balance sheet date to another to compensation expense.

(m) Comprehensive Income (Loss) and Accumulated Other Comprehensive Income

Consolidated comprehensive income (loss) consists of consolidated net income (loss) and foreign currency translation adjustments. We present the calculation of consolidated comprehensive income (loss) in the accompanying Consolidated Statements of Comprehensive Income (Loss). No amounts have been reclassified out of Accumulated Other Comprehensive Income during the periods presented in our consolidated financial statements.

(n) Segment Reporting

We report our operating segment information in three segments: Recovery Audit Services – Americas; Recovery Audit Services – Europe/Asia-Pacific and Adjacent Services. We include the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to our three operating segments in Corporate Support. Our business

49

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

segments reflect the internal reporting that our Chief Executive Officer, who is our chief operating decision maker, uses for the purpose of making decisions about allocating resources and assessing performance. Our management, including our Chief Executive Officer, uses what we internally refer to as “Adjusted EBITDA” as the primary measure of profit or loss for purposes of assessing the operating performance of all operating segments. We define Adjusted EBITDA as earnings from continuing operations before interest, taxes, depreciation and amortization (“EBITDA”) as adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period.

EBITDA and Adjusted EBITDA are not financial measures determined in accordance with GAAP. Such non-GAAP financial measures do not measure the profit or loss of the reportable segments in accordance with GAAP. Given that we use Adjusted EBITDA as our primary measure of segment performance, GAAP rules on segment reporting require that we include this non-GAAP measure in our discussion of our operating segments. We also must reconcile Adjusted EBITDA to our operating results presented on a GAAP basis. We provide this reconciliation in Note 2 to these consolidated financial statements along with other information about our reportable segments. We do not intend the reconciling items to be, nor should they be, interpreted as non-recurring or extraordinary, or in any manner be deemed as adjustments made in accordance with GAAP. Because Adjusted EBITDA is not a financial measure determined in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies.

(o) Loss Contingencies

Certain conditions may exist as of the date the financial statements are issued that may result in a loss to the Company, but which will only be determined and resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss is likely to occur and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not accrued or disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. Legal costs relating to loss contingencies are expensed as incurred.

(p) Reclassification of Prior Year Balance Sheet

Certain reclassifications have been made in the prior year in order to conform to the current year presentation.

(q) Impact of Recently Issued Accounting Standards

A summary of the recently issued accounting standards issued by the Financial Accounting Standards Board (“FASB”) and included in the Accounting Standards Codification (“ASC”) that apply to us is set forth below.

Adopted by the Company in Fiscal Year 2018

FASB ASC Update No. 2014-09 - In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), as later amended, which resulted in a new accounting standard Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The new revenue recognition standard requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 has replaced most existing revenue recognition guidance within GAAP. The new standard became effective for the Company on January 1, 2018 and was adopted by the Company on that date. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements utilizing the modified retrospective approach.

FASB ASU No. 2018-07 - In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718)-Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The Company has elected early adoption of this standard, which is permitted, and adopted this standard on September 30, 2018. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

50

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

FASB ASU No. 2018-03 - In February 2018, the FASB issued ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10), which clarified certain aspects of the previously issued ASU 2016-01 issued in January 2016. This standard updates ASU guidance on the classification and measurement of financial instruments, including significant revisions in accounting related to the classification and measurement of investments in equity securities and presentation of certain fair value changes for financial liabilities when the fair value option is elected. This ASU requires equity securities to be measured at fair value with changes in fair value recognized through net earnings and amends certain disclosure requirements associated with the fair value of financial instruments. In the period of adoption, the Company is required to reclassify the unrealized gains/losses on equity securities within accumulated other comprehensive income (loss) to retained earnings. This standard became effective for the Company on September 30, 2018 and was adopted by the Company on that date. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Accounting Standards Not Yet Adopted

FASB ASU 2018-13 - In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. The new guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Upon the effective date, certain provisions are to be applied prospectively, while others are to be applied retrospectively to all periods presented. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until their effective date. We are currently evaluating the effect of this standard on our consolidated financial statement disclosures. Since this standard affects disclosure requirements only, it is not expected to have an impact on the Company's consolidated financial statements.

FASB ASU No. 2016-02 - In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The standard is effective for the first interim period within annual periods beginning after December 15, 2018, which will be January 1, 2019, for the Company. The standard is required to be adopted using a modified retrospective approach. The Company has applied the provisions of the new leasing standard at the effective date (January 1, 2019) rather than at the beginning of the earliest period presented under the transition method provided, and will recognize a cumulative-effect adjustment to the opening balance sheet on that date. The Company has made a policy decision to include all payments as lease payments for each category of listed assets with the exception of computer equipment. Computer equipment will be bifurcated between the lease payment and the contracted maintenance payment. This standard will become effective in the first quarter of 2019.

The Company has implemented a third-party supported software solution to manage and account for leases under the new standard. The Company has also established a new lease accounting process and has designed new internal controls for that process. The Company plans on electing the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company does not plan to elect the practical expedient to use hindsight in determining the lease term and in assessing impairment of right-of-use assets. The Company expects the adoption of this standard to increase lease assets and lease liabilities by approximately $13 million. The adoption of this standard is not expected to have a material impact on the Company's net income or its cash flow.

(2) OPERATING SEGMENTS AND RELATED INFORMATION

We conduct our operations through three reportable segments:

Recovery Audit Services – Americas represents recovery audit services (other than HCRA services) provided in the United States of America (“U.S.”), Canada and Latin America.

Recovery Audit Services – Europe/Asia-Pacific represents recovery audit services provided in Europe, Asia and the Pacific region.

Adjacent Services represents data transformation, spend analytics, PRGX OPTIX and SIM services, and associated advisory services.

We include the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three reportable segments in Corporate Support.

Discontinued Operations - In the fourth quarter of 2015, PRGX entered into agreements with third parties to fulfill its Medicare recovery audit contractor ("RAC") program subcontract obligations to audit Medicare payments and provide support for claims appeals and assigned its remaining Medicaid contract to another party. One of the third-party Medicare RAC-related contracts has been settled and the results are reflected in these financial statements. The Company will continue to incur certain

51

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

expenses until the remaining Medicare RAC contracts are concluded. As part of discontinuing the HCRA business, the Company has an accrual for outstanding Medicare RAC appeals of approximately $2.0 million and a receivable of approximately $1.7 million for unpaid claims as of December 31, 2018. The HCRA services business has been reported as Discontinued Operations in accordance with US GAAP. One of the third-party contracts have been settled and the results are reflected in these financial statements.

Discontinued operations information for the years ended December 31, 2018, 2017 and 2016 (in thousands) is as follows: 

Results of Discontinued Operations (in thousands)	Years Ended December 31,
	2018			2017			2016
Revenue, net of refund liability	$	959		$	—		$	(14	)
Cost of sales (adjustments)	(300		)	1,350			1,112
Selling, general and administrative expense	16			14			184
Depreciation of property, equipment and software assets	1			8			14
Pretax income (loss) from discontinued operations before income taxes	1,242			(1,372		)	(1,324		)
Income tax expense	—			—			—
Net income (loss) from discontinued operations	$	1,242		$	(1,372	)	$	(1,324	)

The following table presents the discontinued operations of the HCRA services business in the Consolidated Statements of Cash Flows, for the years ended December 31, 2018, 2017 and 2016 (in thousands):

	Years Ended December 31,
	2018			2017			2016
Net cash used in operating activities	$	(1,484	)	$	(1,364	)	$	(1,309	)
Net cash used in investing activities	—			—			—
Net cash provided by financing activities	—			—			—
Increase (decrease) in cash and cash equivalents	$	(1,484	)	$	(1,364	)	$	(1,309	)

We evaluate the performance of our reportable segments based upon revenue and measures of profit or loss we refer to as EBITDA and Adjusted EBITDA. We define Adjusted EBITDA as earnings before interest and taxes (“EBIT”), adjusted for depreciation and amortization (“EBITDA”), and then further adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period. Such adjustments include restructuring charges, stock-based compensation, bargain purchase gains, acquisition-related charges and benefits (acquisition transaction costs, acquisition obligations classified as compensation, and fair value adjustments to acquisition-related contingent consideration), tangible and intangible asset impairment charges, certain litigation costs and litigation settlements, certain severance charges and foreign currency transaction gains and losses on short-term intercompany balances viewed by management as individually or collectively significant. We do not have any inter-segment revenue.

52

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Segment information for the years ended December 31, 2018, 2017 and 2016 (in thousands) is as follows:

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific		Adjacent Services			Corporate Support			Total
2018
Revenue, net of refund liabilities	$	115,920		$	49,526	$	6,330		$	—		$	171,776
Net income from continuing operations												$	3,351
Income tax expense												1,321
Interest expense, net												1,663
EBIT	$	26,602		$	12,413	$	(5,231	)	$	(27,449	)	6,335
Depreciation of property, equipment and software assets	5,545			683		1,142			—			7,370
Amortization of intangible assets	1,664			172		1,559			—			3,395
EBITDA	33,811			13,268		(2,530		)	(27,449		)	17,100
Foreign currency transaction losses (gains) on short-term intercompany balances	367			1,044		14			(423		)	1,002
Acquisition-related adjustments (income) loss	—			—		—			(1,628		)	(1,628		)
Transformation and severance expenses	944			1,194		66			918			3,122
Other (income) loss	(4		)	8		—			17			21
Stock-based compensation	—			—		—			5,056			5,056
Adjusted EBITDA	$	35,118		$	15,514	$	(2,450	)	$	(23,509	)	$	24,673
Capital expenditures	$	2,050		$	1,200	$	257		$	6,891		$	10,398
Allocated assets	$	71,211		$	26,147	$	7,294		$	—		$	104,652
Unallocated assets:
Cash and cash equivalents	—			—		—			13,973			13,973
Restricted cash	—			—		—			46			46
Deferred income taxes	—			—		—			3,561			3,561
Prepaid expenses and other assets	—			—		—			910			910
Discontinued operations	—			—		—			1,687			1,687
Total assets	$	71,211		$	26,147	$	7,294		$	20,177		$	124,829

53

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Corporate Support			Total
2017
Revenue, net of refund liabilities	$	113,122		$	44,372		$	4,126		$	—		$	161,620
Net income from continuing operations													$	4,556
Income tax expense													2,962
Interest expense, net													1,539
EBIT	$	29,163		$	11,700		$	(7,942	)	$	(23,864	)	9,057
Depreciation of property, equipment and software assets	3,165			599			805			—			4,569
Amortization of intangible assets	1,919			142			1,573			—			3,634
EBITDA	34,247			12,441			(5,564		)	(23,864		)	17,260
Foreign currency transaction (gains) losses on short-term intercompany balances	(249		)	(1,769		)	(9		)	(163		)	(2,190		)
Acquisition-related adjustments (income) loss	—			—			—			(2,283		)	(2,283		)
Transformation and severance expenses	313			655			320			378			1,666
Other (income) loss	751			184			(195		)	(900		)	(160		)
Stock-based compensation	—			—			—			7,052			7,052
Adjusted EBITDA	$	35,062		$	11,511		$	(5,448	)	$	(19,780	)	$	21,345
Capital expenditures	$	2,389		$	2,383		$	1,335		$	3,248		$	9,355
Allocated assets	$	65,397		$	22,474		$	9,486		$	—		$	97,357
Unallocated assets:
Cash and cash equivalents	—			—			—			18,823			18,823
Restricted cash	—			—			—			51			51
Deferred loan costs	—			—			—			—			—
Deferred income taxes	—			—			—			1,538			1,538
Prepaid expenses and other assets	$	—		$	—		$	—		910			910
Discontinued operations	$	—		$	—		$	—		$	1,539		$	1,539
Total assets	$	65,397		$	22,474		$	9,486		$	22,861		$	120,218

54

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		Adjacent Services			Corporate Support			Total
2016
Revenue, net of refund liabilities	$	99,861	$	37,335	$	3,648		$	—		$	140,844
Net income from continuing operations											$	2,229
Income tax expense											1,242
Interest income, net											(153		)
EBIT	$	25,476	$	6,455	$	(4,617	)	$	(23,996	)	3,318
Depreciation of property, equipment and software assets	3,750		529		754			—			5,033
Amortization of intangible assets	1,477		—		355			—			1,832
EBITDA	30,703		6,984		(3,508		)	(23,996		)	10,183
Foreign currency transaction losses (gains) on short-term intercompany balances	31		107		17			(71		)	84
Transformation and severance expenses	517		312		258			242			1,329
Other income	—		—		(121		)	—			(121		)
Stock-based compensation	—		—		—			5,123			5,123
Adjusted EBITDA	$	31,251	$	7,403	$	(3,354	)	$	(18,702	)	$	16,598
Capital expenditures	$	4,393	$	600	$	894		$	—		$	5,887
Allocated assets	$	47,690	$	14,813	$	10,532		$	—		$	73,035
Unallocated assets:
Cash and cash equivalents	—		—		—			15,723			15,723
Restricted cash	—		—		—			47			47
Deferred income taxes	—		—		—			2,269			2,269
Prepaid expenses and other assets	—		—		—			800			800
Discontinued operations								1,600			1,600
Total assets	$	47,690	$	14,813	$	10,532		$	20,439		$	93,474

55

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents revenue by country based on the location of clients served (in thousands):

	Years Ended December 31,
	2018		2017		2016
United States	$	100,458	$	93,447	$	80,857
United Kingdom	27,774		23,408		17,501
Canada	14,700		14,375		14,531
Australia	8,397		8,732		7,354
France	6,721		5,987		6,934
Mexico	3,793		5,385		4,900
Brazil	1,799		2,053		1,169
Spain	1,443		1,127		964
Hong Kong	1,219		889		824
Thailand	1,094		699		654
Ireland	741		929		337
Colombia	465		709		583
New Zealand	338		899		979
Other	2,834		2,981		3,257
	$	171,776	$	161,620	$	140,844

The following table presents long-lived assets by country based on the location of the asset (in thousands):

	December 31,
	2018		2017
United States	$	34,236	$	47,371
UK	2,909		5,510
All Other	395		1,125
	$	37,540	$	54,006

One client, The Kroger Co., accounted for approximately 12% of revenue from continuing operations in 2018 and 2017, and approximately 11% of revenue from continuing operations in 2016.

(3) EARNINGS (LOSS) PER COMMON SHARE

The following tables set forth the computations of basic and diluted earnings (loss) per common share (in thousands, except per share data):

	Years Ended December 31,
Basic earnings (loss) per common share:	2018		2017			2016
Numerator:
Net income from continuing operations	$	3,351	$	4,556		$	2,229
Net income (loss) from discontinued operations	$	1,242	$	(1,372	)	$	(1,324	)
Denominator:
Weighted-average common shares outstanding	22,811		21,937			21,969
Basic earnings per common share from continuing operations	$	0.14	$	0.21		$	0.10
Basic earnings (loss) per common share from discontinued operations	$	0.06	$	(0.06	)	$	(0.06	)

56

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Years Ended December 31,
Diluted earnings (loss) per common share:	2018		2017			2016
Numerator:
Net income from continuing operations	$	3,351	$	4,556		$	2,229
Net income (loss) from discontinued operations	$	1,242	$	(1,372	)	$	(1,324	)
Denominator:
Weighted-average common shares outstanding	22,811		21,937			21,969
Effect of dilutive securities from stock-based compensation plans	623		174			47
Denominator for diluted earnings per common share	23,434		22,111			22,016
Diluted earnings per common share from continuing operations	$	0.14	$	0.21		$	0.10
Diluted earnings (loss) per common share from discontinued operations	$	0.06	$	(0.06	)	$	(0.06	)

Weighted-average shares outstanding excludes antidilutive shares underlying options that totaled 0.9 million, 2.3 million, and 2.9 million shares, respectively, from the computation of diluted earnings per common share for the years ended December 31, 2018, 2017, and 2016.

57

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(4) GOODWILL AND INTANGIBLE ASSETS

(a) Goodwill

We evaluate the recoverability of goodwill in the fourth quarter of each year or sooner if events or changes in circumstances indicate that the carrying amount may exceed its fair value. These analyses did not result in an impairment charge during the periods presented.

Goodwill by reportable segments during 2018 and 2017 was as follows (in thousands):

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services		Total
Balance, January 1, 2017	$	10,755		$	680		$	2,388	$	13,823
Goodwill recorded in connection with business combinations	2,685			869			140		3,694
Foreign currency translation	—			131			—		131
Balance, December 31, 2017	13,440			1,680			2,528		17,648
Goodwill recorded in connection with business combinations	(20		)	—			—		(20		)
Foreign currency translation	—			(97		)	—		(97		)
Balance, December 31, 2018	$	13,420		$	1,583		$	2,528	$	17,531

During 2017, we recorded goodwill of $3.6 million in our Recovery Audit Services - Americas and Recovery Audit Services - Europe/Asia-Pacific segments in conjunction with the acquisition of Cost & Compliance Associates, LLC and Cost & Compliance Associates Limited respectively, (collectively "C&CA") on February 23, 2017. C&CA is a commercial recovery audit and contract compliance firm with operations in the U.S. and the UK (refer to Note 12 below).

(b) Intangible Assets

Intangible assets consist principally of amounts we have assigned to customer relationships, trademarks, non-compete agreements and trade names in conjunction with business acquisitions. Certain of our intangible assets associated with acquisitions of assets or businesses by our foreign subsidiaries are denominated in the local currency of such subsidiary and therefore are subject to foreign currency ("FX") adjustments. We present the amounts for these transactions in United States dollars utilizing foreign currency exchange rates as of the respective balance sheet dates.

Amortization expense relating to intangible assets was $3.4 million in 2018, $3.6 million in 2017 and $1.8 million in 2016. As of December 31, 2018 and based on our current amortization methods and current levels of intangible assets, we project amortization expense relating to intangible assets for the next five years will be $3.5 million in 2019, $3.1 million in 2020, $1.7 million in 2021, $0.7 million in 2022 and $0.7 million in 2023. We use accelerated amortization methods for customer relationships and trade names, and straight-line amortization for non-compete agreements and trademarks.

58

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Changes in noncurrent intangible assets during 2018 and 2017 were as follows (in thousands):

	Customer Relationships			Trademarks			Non- compete Agreements			Software			Trade Names			Total
Gross carrying amount:
Balance, January 1, 2017	$	36,573		$	853		$	1,322		$	6,178		$	2,200		$	47,126
Acquisition of C&CA Assets	9,556			135			1,232			—			—			10,923
FX adjustments and other	777			38			75			—			—			890
Balance, December 31, 2017	46,906			1,026			2,629			6,178			2,200			58,939
FX adjustments and other	(547		)	138			(51		)	(164		)	—			(624		)
Balance, December 31, 2018	$	46,359		$	1,164		$	2,578		$	6,014		$	2,200		$	58,315
Accumulated amortization:
Balance, January 1, 2017	$	(31,481	)	$	(853	)	$	(1,322	)	$	(272	)	$	(2,200	)	$	(36,128	)
Amortization expense	(1,796		)	(22		)	(204		)	(1,612		)	—			(3,634		)
FX adjustments and other	(585		)	(38		)	(76		)	—			—			(699		)
Balance, December 31, 2017	(33,862		)	(913		)	(1,602		)	(1,884		)	(2,200		)	(40,461		)
Amortization expense	(1,607		)	(67		)	(246		)	(1,475		)	—			(3,395		)
FX adjustments and other	409			(22		)	51			48			—			486
Balance, December 31, 2018	$	(35,060	)	$	(1,002	)	$	(1,797	)	$	(3,311	)	$	(2,200	)	$	(43,370	)
Net carrying amount:
Balance, December 31, 2017	$	13,044		$	113		$	1,027		$	4,294		$	—		$	18,478
Balance, December 31, 2018	$	11,299		$	162		$	781		$	2,703		$	—		$	14,945
Estimated useful life (years)	10-15 years			4-5 years			5 years			4 years			4-5 years

(5) DEBT

Debt issuance costs on the balance sheet are presented as a direct deduction from the related debt liability, rather than represented as a separate asset. Long-term debt as of December 31, 2018 and 2017 consists of the following (in thousands):

	As of December 31
	2018							2017
	Gross		DFC (1)			Net		Gross		DFC			Net
Revolving Facility	$	21,600	$	(65	)	$	21,535	$	13,600	$	(131	)	$	13,469
Capital lease obligations	66		—			66		105		—			105
Total long term debt	21,666		(65		)	21,601		13,705		(131		)	13,574
Less: Current portion of long-term debt	48		—			48		48		—			48
Long-term debt, excluding current portion	$	21,618	$	(65	)	$	21,553	$	13,657	$	(131	)	$	13,526

(1) DFC refers to deferred financing costs related to the Company's long-term debt.

On January 19, 2010, we entered into a four-year revolving credit and term loan agreement with SunTrust Bank (“SunTrust”). The SunTrust credit facility initially consisted of a $15.0 million committed revolving credit facility and a $15.0 million term loan. The SunTrust credit facility was guaranteed by the Company and its domestic subsidiaries and was secured by substantially all of our assets.

The SunTrust credit facility has been modified from time to time through various amendments since January 2010. Included in these amendments was the refinancing of the committed credit facility in 2014, and clarification of certain

59

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

definitions and other terms of the facility in 2016. The refinancing resulted in an extended maturity date of December 23, 2017, as well as a lower interest rate. Pursuant to the December 2014 amendment, the credit facility would bear interest at a rate per annum comprised of a specified index rate based on one-month LIBOR, plus an applicable margin (1.75% per annum). The index rate was determined as of the first business day of each calendar month. PRGX was required to pay a commitment fee, payable quarterly, on the unused portion of the credit facility.

On May 4, 2017, we entered into an amendment of the SunTrust credit facility, that, among other things, (i) increased the aggregate principal amount of the committed revolving credit facility from $20.0 million to $35.0 million through December 31, 2018, which was reduced to $30.0 million thereafter, (ii) extended the maturity date of the credit facility to December 31, 2019, (iii) added customary provisions to reflect European Union “bail-in” directive compliance language, and (iv) modified the financial covenants applicable to the Company during the remaining term of the credit facility by (A) revising the maximum leverage ratio and minimum fixed charge coverage ratio and (B) adding an additional financial covenant requiring the Company to maintain a minimum amount of consolidated adjusted EBITDA. In addition, the applicable margin used to determine the interest rate per annum on outstanding borrowings under the credit facility, and the ongoing commitment fee payable on the unused portion of the revolving credit facility commitment, both of which previously had been fixed percentages per annum, were amended and to both vary based upon our quarterly leverage ratio calculation under the SunTrust credit facility. The applicable margin per annum on interest accruing on all borrowings under the credit facility outstanding on or after May 4, 2017, and the applicable percentage per annum commitment fee accruing on and after that date, respectively were determined as follows:

Pricing Level	Leverage Ratio	Applicable Margin for LIBOR Index Rate Loans	Applicable Margin for Base Rate Loans	Applicable Percentage for Commitment Fee
I	Less than 1.25:1.00	2.25% per annum	1.25% per annum	0.250% per annum
II	Greater than or equal to 1.25:1.00 but less than 1.75:1.00	2.50% per annum	1.50% per annum	0.375% per annum
III	Greater than or equal to 1.75:1.00	2.75% per annum	1.75% per annum	0.375% per annum

On March 21, 2018, the SunTrust credit facility was amended with respect to the calculation of consolidated adjusted EBITDA for financial covenant compliance. The debt covenant calculation was modified to include the cash component of stock-based compensation for 2017.

On September 28, 2018, the SunTrust credit facility was amended in order to expand the types of stock the Company could purchase as well as adjust the fixed coverage charge ratio. Under the amended terms, the Company could make restricted payments to purchase capital stock (other than disqualified stock). The fixed charge coverage ratio was reduced from 1.25 to 1.00 for the quarter ending September 30, 2018.

On November 5, 2018, the SunTrust credit facility was amended to add, as an additional financial condition to the Company's ability to make certain restricted payments, a requirement that the Company have an aggregate "minimum liquidity" of $5.0 million immediately prior to and immediately after giving effect to any restricted payment, with "minimum liquidity" being defined as 100% of all unrestricted domestic cash holdings, 70% of unrestricted foreign cash holdings, and the unused availability under the SunTrust credit facility. In addition, the calculation of the fixed charge coverage ratio was revised to exclude the following fixed charges: (i) the $4.0 million earnout payment made in the second quarter of 2018 in connection with a prior acquisition by the Company and (ii) up to $5.0 million (in the aggregate) of restricted payments consisting of redemption, purchases or repurchases of capital stock in the fourth quarter of 2018 and the first quarter of 2019.

As of December 31, 2018 there was $21.6 million in debt outstanding under the SunTrust credit facility that would be due December 31, 2019. The amount available for additional borrowing under the SunTrust credit facility was $13.4 million as of December 31, 2018. Based on the terms of the credit facility, as amended, the applicable interest rate at December 31, 2018 was approximately 4.60%. As of December 31, 2018, the Company was required to pay a commitment fee of 0.25% per annum, payable quarterly, on the unused portion of the revolving SunTrust credit facility.

The SunTrust credit facility included customary affirmative, negative, and financial covenants binding on the Company, including delivery of financial statements and other reports, conduct of business, and transactions with affiliates. The negative covenants limited the ability of the Company, among other things, to incur debt, incur liens, make investments, sell assets or declare or pay dividends on its capital stock. The financial covenants included in the credit facility set forth maximum leverage and minimum fixed charge coverage ratios and require maintenance of a minimum amount of consolidated adjusted earnings before interest, taxes, depreciation and amortization. In addition, the credit facility included customary events of default. The Company was in compliance with the covenants in the SunTrust credit facility as of December 31, 2018.

60

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On March 14, 2019, we entered into a credit agreement with Bank of America, N.A. Refer to Note 14 - Subsequent Event of the notes to the Company's consolidated financial statements for a description of the credit agreement with Bank of America, N.A.

Future Commitments

The following is a summary of the combined principal maturities of all long-term debt and principal payments to be made under the Company’s capital lease agreements for each of the fiscal years presented in the table below (in thousands):

Year Ended December 31
2019	$	21,661
2020	5
Total	$	21,666

(6) LEASE COMMITMENTS

PRGX is committed under noncancelable lease arrangements for facilities and equipment. Rent expense, excluding costs associated with the termination of noncancelable lease arrangements, was $4.9 million in 2018, $5.1 million in 2017 and $3.9 million in 2016.

In January 2014, we amended the lease for our principal executive offices to extend the term through December 31, 2021, reduce the lease payment for 2014, and reduce the space under lease from approximately 132,000 square feet to approximately 58,000 square feet effective January 1, 2015. Starting in February 2016 we subleased approximately 3,000 square feet.

We have entered into several operating lease agreements that contain provisions for future rent increases, free rent periods or periods in which rent payments are reduced (abated). We charge the total amount of rental payments due over the lease term to rent expense on the straight-line, undiscounted method over the lease terms.

Future minimum lease payments under noncancelable operating leases including the amended lease for our principal executive offices, are as follows (in thousands):

Year Ending December 31,	Gross		Sublease Income			Amount
2019	$	4,974	$	(72	)	$	4,902
2020	3,882		(74		)	3,808
2021	3,248		(77		)	3,171
2022	1,168		—			1,168
2023	488		—			488
Total payments	$	13,760	$	(223	)	$	13,537

(7) INCOME TAXES

Income (loss) before income taxes from continuing operations relate to the following jurisdictions (in thousands):

	Years Ended December 31,
	2018			2017			2016
United States	$	(4,673	)	$	(6,502	)	$	(5,306	)
Foreign	9,345			14,020			8,777
	$	4,672		$	7,518		$	3,471

61

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The provision for income taxes for continuing operations consists of the following (in thousands):

	Years Ended December 31,
	2018			2017			2016
Current:
Federal	$	—		$	—		$	—
State	70			1			—
Foreign	2,920			2,230			2,103
	2,990			2,231			2,103
Deferred:
Federal	(145		)	(155		)	—
State	—			—			—
Foreign	(1,524		)	886			(861		)
	(1,669		)	731			(861		)
Total	$	1,321		$	2,962		$	1,242

62

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The significant differences between the U.S. federal statutory tax rate and the Company’s effective income tax expense for earnings (in thousands) are as follows:

	Years Ended December 31,
	2018			2017			2016
Statutory federal income tax rate	$	981		$	2,631		$	1,180
State income taxes, net of federal effect	(285		)	(62		)	(173		)
Net operating loss limitation	—			2,975			—
Adjustment to deferred taxes	939			301			(4,103		)
Change in deferred tax asset valuation allowance	(2,867		)	(15,338		)	4,877
Change in tax law	(992		)	13,850			—
Foreign tax rate differential	1,306			(899		)	(1,153		)
Compensation and equity adjustments	1,474			—			113
Acquisition earnout adjustment	(320		)	87			60
Other permanent differences	183			(682		)	—
Withholding taxes	591			342			441
Changes in uncertain tax positions	19			(429		)	—
Return to provision adjustments	257			155			—
Other, net	35			31			—
Total	$	1,321		$	2,962		$	1,242

The tax effects of temporary differences and carry-forwards that give rise to deferred tax assets and liabilities consist of the following (in thousands):

	Years Ended December 31,
	2018		2017
Deferred income tax assets:
Accounts payable and accrued expenses	$	714	$	1,215
Accrued payroll and related expenses	2,315		1,691
Stock-based compensation expense	2,336		3,508
Depreciation of property and equipment	853		1,711
Capitalized software	119		—
Unbilled receivables and refund liabilities	97		1,811
Operating loss carry-forwards of foreign subsidiary	9,484		11,000
Federal operating loss carry-forwards	17,109		17,161
State operating loss carry-forwards	4,537		3,591
Other	1,624		376
Gross deferred tax assets	39,188		42,064
Less valuation allowance	31,597		34,776
Gross deferred tax assets net of valuation allowance	7,591		7,288
Deferred income tax liabilities:
Intangible assets	1,269		1,987
Capitalized software	—		29
Other	3,427		3,734
Gross deferred tax liabilities	4,696		5,750
Net deferred tax assets	$	2,895	$	1,538

63

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Our reported effective tax rates on income approximated 28.3% in 2018, 39.4% in 2017, and 35.8% in 2016. Reported income tax expense in each year primarily results from taxes on the income of foreign subsidiaries. The effective tax rates generally differ from the expected tax rate primarily due to the Company’s deferred tax asset valuation allowance on the domestic earnings and taxes on income of foreign subsidiaries.

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law making significant changes to the Internal Revenue Code.  The new legislation contains several key provisions that impact the consolidated financial statements for the year ended December 31, 2017. Additionally, in December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation was expected during the 2018 calendar year, we considered the accounting of the transition tax, deferred tax re-measurements, and other items to be incomplete as of December 31, 2017, though we recorded provisional amounts in the consolidated financial statements. As of December 31, 2018, we have completed our analysis related to the Tax Act in accordance with SAB 118 and there was no additional adjustment required.

The new legislation contains several key provisions that affect us. The lowering of the corporate tax rate from 35% to 21% resulted in our deferred tax balances and related valuation allowances being re-measured to reflect the future tax benefit at the new enacted rate.  During 2017, the U.S. deferred tax assets were reduced by $13.9 million and the valuation allowance was also reduced by $13.9 million, resulting in no net impact to the effective tax rate for the year ended December 31, 2017.  During 2018, the Company finalized the accounting for this item resulting in a $0.6 million increase to both the U.S. deferred tax assets and the valuation allowance, with no impacts to tax expense or the effective tax rate. In addition, the Alternative Minimum Tax (“AMT”) was repealed for tax years beginning after December 31, 2017 and the AMT credit will be refundable in future years.  As 50% of this credit will be refundable along with the 2018 tax return, that portion was reclassified to a current asset on the balance sheet. The Tax Act requires the payment of a transition tax on the mandatory deemed repatriation of cumulative unremitted foreign earnings, the larger amount measured on November 2, 2017 and December 31, 2017. Based upon all available evidence and the Company’s analysis, there was no transition tax liability due to a net earnings and profits deficit in our controlled foreign corporations and no impact to the effective tax rate for the year ended December 31, 2017. No amounts were recorded during 2018, and the accounting for this item is considered complete. The Global Intangible Low Tax Income Tax (“GILTI”) is a U.S. minimum tax on the foreign earnings on intangible assets.  The Company has elected to account for the impact of the minimum tax in the period realized.  GILTI results in no impact to the effective tax rate for the year ended December 31, 2018.

We undertook a detailed review of our deferred taxes and it was determined with the exception of the deferred tax assets associated with the AMT credit described above, a valuation allowance was required for all other U.S. deferred tax assets. We released the valuation allowance on our UK deferred tax assets during the year ended December 31, 2018. We reduce our deferred tax assets by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. In making this determination, we consider all available positive and negative evidence affecting specific deferred tax assets, including our past and anticipated future performance, the reversal of deferred tax liabilities, the length of carryback and carryforward periods and the implementation of tax planning strategies. Since this evaluation requires consideration of future events, significant judgment is required in making the evaluation, and our conclusion could be materially different should certain of our expectations not be met. The balance of our valuation allowance was $31.6 million as of December 31, 2018, representing a change of $3.2 million from the valuation allowance of $34.8 million recorded as of December 31, 2017. The primary driver of the valuation allowance movement was determined by the release of the valuation allowances against the deferred tax assets in France and the UK.

In 2016, management determined that a valuation allowance was no longer required against the deferred tax assets of its U.S. branches in New Zealand and Singapore. As of December 31, 2016, we had gross deferred tax assets of $8.4 million relating to those foreign subsidiaries. The benefit of these deferred tax assets is reflected as a credit of $1.7 million to tax expense during the year ended December 31, 2016.

In 2017, management determined that a valuation allowance was no longer required against the deferred tax assets of certain of its U.S. branches in Spain, Taiwan, Thailand and Mexico. As of December 31, 2017, we had gross deferred tax assets of $0.9 million relating to those foreign subsidiaries. The benefit of these deferred tax assets is reflected as a credit of $0.2 million to tax expense during the year ended December 31, 2017.

In 2018, management determined that a valuation allowance was no longer required against the deferred tax assets of the UK subsidiary and U.S. branch in France. As of December 31, 2018, we had gross deferred tax assets of $6.6 million relating to

64

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

those foreign subsidiaries. The benefit of these deferred tax assets is reflected as a credit of $1.2 million to tax expense during the year ended December 31, 2018.

As of December 31, 2018, we had approximately $81.5 million of U.S. federal loss carry-forwards available to reduce future U.S. federal taxable income. Approximately $80.9 million of the U.S. federal loss carry-forwards expire between 2026 and 2035. The remaining $0.6 million of U.S. federal loss carry-forwards do not expire. As of December 31, 2018, we had approximately $70.9 million of state loss carry-forwards available to reduce future state taxable income. The state loss carry-forwards expire between 2022 and 2037 and are subject to certain limitations. The U.S. federal and state loss carry-forwards at December 31, 2018, reflect adjustments for prior period write-downs associated with ownership changes.

Generally, we have not provided deferred taxes on the undistributed earnings of international subsidiaries as we consider these earnings to be permanently reinvested. As it relates to the earnings of our Brazilian subsidiary, we assert that we are not permanently reinvested. We did not provide additional incremental tax expense on these amounts as our Brazilian subsidiary did not have undistributed earnings during the year.

On December 30, 2016, the Company experienced an ownership change as defined under Section 382 of the Internal Revenue Code (“IRC”). This ownership change resulted in an annual IRC Section 382 limitation that limits the use of certain tax attribute carry-forwards and also resulted in the write-off of certain deferred tax assets and the related valuation allowances that the Company recorded in 2017. The Company has performed its assessment and has determined that $87.3 million of the gross federal net operating losses outstanding as of December 30, 2016 will be available for use going-forward. The Company utilized $6.4 million of these losses on the 2017 U.S. federal tax return and the remaining $80.9 million remains available.

A reconciliation of our beginning and ending amount of unrecognized tax benefits and related accrued interest thereon is as follows:

	Unrecognized Tax Benefits			Accrued Interest and Penalties
Balance at January 1, 2016	$	535		$	202
Additions based on tax positions related to the current year	—			—
Additions based on tax positions related to the prior years	—			11
Decrease based on payments made during the year	—			—
Decreases based on tax positions related to the prior years	$	(38	)	$	(59	)
Balance at December 31, 2016	$	497		$	154
Additions based on tax positions related to the current year	—			—
Additions based on tax positions related to the prior years	116			19
Decreases based on payments made during the year	—			—
Decreases based on tax positions related to the prior years	(420		)	(145		)
Balance at December 31, 2017	$	193		$	28
Additions based on tax positions related to the current year	4			—
Additions based on tax positions related to the prior years	10			6
Decreases based on payments made during the year	—			—
Decreases based on tax positions related to the prior years	—			—
Balance at December 31, 2018	$	207		$	34

Due to the complexity of the tax rules underlying these unrecognized tax benefits, and the unclear timing of tax audits, tax agency determinations, and other events, we cannot establish reasonably reliable estimates for the periods in which the cash settlement of these liabilities will occur.

We file U.S. federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitations. As of December 31, 2018, the 2015 through 2017 tax years generally remain subject to examination by federal and most state and foreign tax authorities. The use of net operating losses generated in tax years prior to 2015 may also subject returns for those years to examination.

65

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(8) EMPLOYEE BENEFIT PLANS

We maintain a defined contribution retirement plan (the "Plan") in accordance with Section 401(k) of the Internal Revenue Code, which allows eligible participating employees to defer a portion of their annual compensation and contribute such amount to one or more investment funds. The Plan provides for a discretionary matching contribution by the Company as determined by management and approved by the Board of Directors each plan year. The Company's current practice is to match 50% of the annual employee's contribution, up to but not exceeding the lesser of 6% of the employee’s annual compensation or $3,000. Discretionary matching contributions made by the Company to a participant's account are vested once a participant has attained three or more years of service. The Company contributed to the Plan approximately $0.9 million in 2018, $0.8 million in 2017, and $0.8 million in 2016.

(9) CAPITAL STRUCTURE

On February 21, 2014, our Board of Directors authorized a stock repurchase program under which we could repurchase up to $10.0 million of our common stock from time to time through March 31, 2015. On March 25, 2014, our Board of Directors authorized a $10.0 million increase to the stock repurchase program, bringing the total amount of its common stock that the Company could repurchase under the program to $20.0 million. On October 24, 2014, our Board of Directors authorized a $20.0 million increase to the stock repurchase program, increasing the total share repurchase program to $40.0 million, and extended the duration of the program to December 31, 2015. In October 2015, our Board of Directors authorized an additional $10.0 million increase to the stock repurchase program, increasing the total share repurchase program to $50.0 million, and extended the duration of the program to December 31, 2016. In December 2016, our Board of Directors authorized an additional $10.0 million increase to the stock repurchase program, increasing the total share repurchase program to $60.0 million, and extended the duration of the program to December 31, 2017. In December 2017, our Board of Directors extended the duration of the program to December 31, 2018. In November 2018, our Board of Directors authorized a $15.0 million increase to the stock repurchase program, increasing the total share repurchase program to $75.0 million, and extended the duration of the program to December 31, 2019.

During the year ended December 31, 2018, we repurchased 0.4 million shares of our common stock for $4.1 million. No shares were repurchased under the share repurchase program in the year ended December 31, 2017.

66

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(10) COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are party to a variety of legal proceedings arising in the normal course of business. While the results of these proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

(11) STOCK-BASED COMPENSATION

Plan Summary

During 2018, the Company had two shareholder-approved stock-based compensation plans under which outstanding equity awards have been granted: (1) the 2008 Equity Incentive Plan (“2008 EIP”); and (2) the 2017 Equity Incentive Compensation Plan (“2017 EICP”) (collectively, the “Plans”).

2008 EIP Awards

During the first quarter of 2008, the Board of Directors of the Company adopted the 2008 EIP, which was approved by the shareholders at the annual meeting of the shareholders on May 29, 2008. The 2008 EIP authorized the grant of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other incentive awards. Pursuant to amendments to the 2008 EIP that were approved by the Board of Directors and the Company's shareholders, 10,600,000 shares were reserved for issuance under the 2008 EIP to award grants to key employees, directors and service providers. The options granted pursuant to the 2008 EIP generally had seven year terms and vested in equal annual increments over the vesting period, which typically was three years for employees and one year for directors. No further awards can be granted from the 2008 EIP following the approval of the 2017 EICP by shareholders on June 27, 2017.

2017 EICP Awards

In April 2017, the Board of Directors adopted the 2017 EICP, which was approved by the shareholders at the annual meeting of the shareholders on June 27, 2017. The 2017 EICP applies to awards granted on or after June 27, 2017. Under the 2017 EICP, the Company may grant incentive and non-qualified stock options, stock appreciation rights, restricted stock, deferred stock, restricted stock units, performance units, performance shares, dividend equivalents, bonus shares, and other stock-based or cash-based awards. The maximum number of shares of common stock that may be issued pursuant to the awards under the 2017 EICP is 3.4 million shares plus that number of shares of common stock subject to awards granted under the 2008 EIP that were outstanding when the 2017 EICP became effective and that subsequently terminate without deleting of the shares, whether by lapse, forfeiture, cancellation, or otherwise. The options granted to date pursuant to the 2017 EICP have a term of seven years. As of December 31, 2018 there were approximately 2.9 million shares available for future grants under the 2017 EICP.

67

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Grants

Option Awards

The following table summarizes stock option awards granted during the years ended December 31, 2018, 2017, and 2016:

Grantee Type	Number of Options Granted	Vesting Period	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
2018
Employee inducement (1)	535,000	3 years	$	8.91	$	2.89
2017
Director group	90,566	1 year or less	$	6.34	$	3.49
Director group(2)	35,000	3 years	$	6.25	$	3.50
CEO grant	500,000	4 years	$	7.35	$	2.36
Employee group	30,000	3 years	$	7.25	$	3.99
Employee inducement (3)	335,000	3 years	$	6.19	$	3.41
2016
Director group (4)	195,417	1 year or less	$	5.01	$	2.71
Director group (2)	35,000	3 years	$	4.80	$	2.66
Employee inducement (5)(6)	232,500	3 years	$	4.61	$	2.60

(1) The Company granted non-qualified stock options outside its existing stock-based compensation plan in 2018 to nine employees in connection with the employees joining the Company.

(2) The Company granted non-qualified stock options to one director in connection with the director joining the Company's board of directors.

(3) The Company granted non-qualified stock options outside its existing stock-based compensation plans to certain employees in connection with the employees joining the Company.

(4) Includes 20,417 non-qualified stock options granted to one director in connection with the director joining the Company's board of directors.

(5) The Company granted non-qualified stock options outside its existing stock-based compensation plans in 2016 in connection with an employee joining the Company.

(6) The Company granted non-qualified stock options outside its existing stock-based compensation plans in connection with the closing of the Lavante acquisition.

68

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Nonvested Stock Awards

The following table summarizes nonvested stock awards granted during the years ended December 31, 2018, 2017 and 2016:

Grantee Type	Number of Stock Awards Granted	Vesting Period	Weighted Average Grant Date Fair Value
2018
Director group	64,545	1 year or less	$	9.45
Employee group (1)	488,685	3 years or less	$	9.56
Employee inducement (2)	160,516	3 years or less	$	8.95
2017
Director group	51,179	1 year or less	$	6.35
Employee group (3)	641,751	3 years or less	$	6.31
Employee inducement (4)	100,000	3 years or less	$	6.33
2016
Employee group (5)	1,250,750	2 years	$	4.88
Employee inducement (6)	100,000	3 years	$	4.94

(1) The Company granted nonvested performance-based stock awards (restricted stock units), restricted stock awards, and restricted stock units in 2018 to certain key employees.

(2) The Company granted nonvested performance-based stock awards (restricted stock units) and restricted stock awards in 2018 to six employees in connection with the employees joining the Company.

(3) The Company granted nonvested performance-based stock awards (restricted stock units), restricted stock units and restricted stock awards in the first quarter of 2017 to twelve executive officers totaling 458,000 units. During the second quarter of 2017, the Company issued 183,751 restricted stock awards and restricted stock units to key employees.

(4) The Company granted nonvested performance-based stock awards (restricted stock units) and restricted stock awards in 2017 to two executive officers in connection with the employees joining the Company.

(5) The Company granted nonvested performance-based stock awards (restricted stock units) in 2016 to five executive officers and certain other key employees.

(6) The Company granted nonvested performance-based stock awards (restricted stock units) outside its existing stock-based compensation plans in 2016 to three employees in connection with the employees joining the Company.

Nonvested stock awards, including both restricted stock and restricted stock units, generally are nontransferable until vesting and the holders are entitled to receive dividends with respect to the nonvested shares, provided the shares ultimately vest. Prior to vesting, the grantees of restricted stock are entitled to vote the shares, but the grantees of restricted stock units are not entitled to vote the shares. Generally, nonvested stock awards, excluding those whose vesting is performance-based, vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. Performance-based stock awards vest based on the achievement of certain performance objectives.

Performance-Based Restricted Stock Units

During 2018, one executive officer and two senior leaders were granted 40,750 performance-based restricted stock units ("PBUs") outside of the existing stock-based compensation plan as an inducement for employment and one senior leader was granted 12,000 PBUs under the 2017 EICP. If vested, 100% of the vested PBUs will be paid in whole shares of common stock. 65% of the PBUs vest and become payable based on the cumulative revenue from continuing operations and 35% of the PBUs vest and become payable on the cumulative adjusted EBITDA from continuing operations that the Company achieves, in each case, for the two-year performance period ending December 31, 2018. At the threshold performance level, 35% of the PBUs will become vested and payable and at the target performance level, 100% of the PBUs will become vested and payable. If performance falls between the stated performance levels the percentage of PBUs that shall become vested and payable will be based on a straight-line interpolation between such stated performance levels (although the PBUs may not become vested and payable for more than 100% of the PBUs and no PBUs shall become vested and payable if performance does not equal or exceed the applicable threshold performance level).

69

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

During 2018, five executive officers and nine other senior leaders were granted 192,098 PBUs under the 2017 EICP and 54,180 PBUs outside of the existing stock-based compensation plan as an inducement for employment. If vested, 100% of the vested Units will be paid in whole shares of common stock. 50% of the PBUs vest and become payable based on the cumulative revenue from continuing operations,35% of the PBUs vest and become payable based on the cumulative adjusted EBITDA from continuing operations and 15% of the PBUs vest and become payable based on the cumulative adjacent services revenue that the Company achieves, in each case, for the two-year performance period ending December 31, 2019. At the threshold performance level, 35% of the PBUs will become vested and payable; at the target performance level, 100% of the PBUs will become vested and payable; and at the maximum performance level, 150% of the PBUs will become vested and payable. If performance falls between the stated performance levels the percentage of PBUs that shall become vested and payable will be based on a straight-line interpolation between such stated performance levels (although the PBUs may not become vested and payable for more than 150% of the PBUs and no PBUs shall become vested and payable if performance does not equal or exceed the applicable threshold performance level).

During 2017, certain employees of the company were granted 333,800 PBUs. If vested, 100% of the vested PBUs will be paid in whole shares of common stock. 65% of the PBUs vest and become payable based on the cumulative revenue from continuing operations and 35% of the PBUs vest and become payable on the cumulative adjusted EBITDA from continuing operations that the Company achieves, in each case, for the two-year performance period ending December 31, 2018. At the threshold performance level, 35% of the PBUs will become vested and payable and at the target performance level, 100% of the PBUs will become vested and payable. If performance falls between the stated performance levels the percentage of PBUs that shall become vested and payable will be based on a straight-line interpolation between such stated performance levels (although the PBUs may not become vested and payable for more than 100% of the PBUs and no PBUs shall become vested and payable if performance does not equal or exceed the applicable threshold performance level).

During 2016, certain employees of the Company were granted 1,350,750 PBUs. During the first quarter of 2018, the Company issued 483,623 shares of common stock and paid $5.4 million in cash as long-term incentive compensation related to the vesting of these awards.

The following table summarizes the PBUs granted during the years ended December 31, 2018, 2017 and 2016:

	Total PBUs Granted	PBUs to be Settled in Common Stock (1)	PBUs to be Settled in Cash (2)
2018	299,028	299,028	—
2017	333,800	333,800	—
2016	1,350,750	560,670	790,080

(1) Represents the number of PBUs to be settled in common stock at the target performance level.

(2) Represents the number of PBUs to be settled in cash at the target performance level.

In the fourth quarter of 2018, management determined that 80% of the PBUs with a two-year performance period ending December 31, 2018 would likely vest based on expected financial performance compared to the target financial objectives. As a result, the associated expense was adjusted down to reflect the new estimate. During 2017 and 2016, the PBUs that were granted in 2017 and 2016 were expensed at the target performance level based on management's estimates.

Stock Appreciation Rights

During 2018, certain employees were granted stock appreciation rights ("SARs") covering 350,000 shares of the Company's common stock under the 2017 EICP. The SARs will vest on March 1, 2020. Upon vesting, 25% of the SARs may be exercised on the last day of each of the first, second and third calendar quarters in 2020. Within 30 days after the SARs are exercised, the Company must settle the exercised SARs in a cash payment equal to the excess of (i) the lesser of the fair market value, as of the date on which the SARs are exercised, or $18 per share, over (ii) $9.15 per share, less any applicable tax withholding. Vested SARs not exercised during any previous quarter will remain outstanding and be automatically exercised as of December 31, 2020.

On April 27, 2016, the Company's Chief Executive Officer was granted SARs covering 200,000 shares of the Company’s common stock under the 2008 EIP. The SARs were issued with an initial value per share equal to $4.71. On June 30, 2018, the SARs vested and became payable in cash in a lump sum equal to $1.0 million (less applicable tax withholding), which

70

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

represents the excess of the fair market value, as of June 30, 2018, of the shares of the Company's common stock over $4.71, the fair market value (closing price) of the Company's common stock on the date of grant, April 27, 2016.

Summary of Activity

A summary of option activity as of December 31, 2018, and changes during the year then ended is presented below:

Options	Shares		Weighted- Average Exercise Price (Per Share)		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value ($ 000’s)
Outstanding at January 1, 2018	3,399,293		$	6.54	4.05 years	$	2,367
Granted	535,000		8.91
Exercised	(676,649	)	6.54			$	1,585
Forfeited	(280,556	)	7.61
Expired	(126,271	)	6.53
Outstanding at December 31, 2018	2,850,817		$	6.84	3.74 years	$	7,384
Exercisable at December 31, 2018	1,735,149		$	6.40	2.73 years	$	5,225

The weighted-average grant date fair value of options granted was $2.89 per share in 2018, $2.91 per share in 2017 and $2.66 per share in 2016. The total intrinsic value of options exercised was $1.6 million in 2018, $0.3 million in 2017 and $0.1 million in 2016.

For time-vested option grants that resulted in compensation expense recognition, we used the following assumptions in our Black-Scholes valuation models:

	Years Ended December 31,
	2018	2017	2016
Risk-free interest rates (1)	2.3% - 2.99%	1.38% - 1.96%	0.58% - 1.20%
Dividend yields (2)	—%	—%	—%
Volatility factor of expected market price (3)	.362 - .371	.540 - .749	.391 - .779
Weighted-average expected term of options (4)	4 years	2.2 - 4 years	1.3 - 4.5 years
Forfeiture rate (5)	—%	—%	—%

(1) The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for periods corresponding to the expected term of the options.

(2) The Company has not historically declared dividends.

(3) The expected volatility is based on the historical volatility of the Company's stock.

(4) The expected term represents the weighted average period of time that the stock options are expected to be outstanding, giving consideration to the vesting schedules.

(5) The Company accounts for forfeitures as they occur rather than estimating expected forfeitures.

71

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

A summary of nonvested stock awards (including restricted stock, restricted stock units and performance-based restricted stock units) activity as of December 31, 2018 and changes during the year then ended is presented below:

Nonvested Stock	Shares		Weighted Average Grant Date Fair Value (Per Share)
Nonvested at January 1, 2018	2,116,696		$	5.36
Granted	713,746		9.42
Vested	(1,523,696	)	5.02
Forfeited	(340,796	)	7.51
Nonvested at December 31, 2018	965,950		$	8.18

The weighted-average grant date fair value of nonvested stock awards (restricted stock and restricted stock units) granted was $9.42 per share in 2018, $6.32 per share in 2017 and $4.86 per share in 2016. The total vest date fair value of stock awards vested during the year was $12.7 million in 2018, $0.3 million in 2017 and $0.7 million in 2016.

Stock-based compensation expense was $5.1 million in 2018, $7.1 million in 2017, and $5.1 million in 2016. We include these charges in Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. The total income tax benefit recognized in our Consolidated Statements of Operations was $1.3 million, $2.7 million and $1.9 million in 2018, 2017 and 2016, respectively.

Total unrecognized compensation expense related to nonvested stock-based compensation as of December 31, 2018 is as follows (dollars in thousands):

	Stock				Restricted		Restricted
	Options		SARs		Stock Awards		Stock Units		Total
Unrecognized compensation expense	$	2,145	$	313	$	2,614	$	2,125	$	7,197
Weighted-average remaining recognition period (in years)	2.5		1.2		2.1		1.2		1.9

(12) BUSINESS ACQUISITIONS

We completed several acquisitions in recent years that we describe below. Generally, we acquire businesses that we believe will provide a strategic fit for our existing operations, cost savings and revenue synergies, or enable us to expand our capabilities.

Cost & Compliance Associates Acquisition

In February 2017, we completed the acquisition of Cost & Compliance Associates, LLC and Cost & Compliance Associates Limited (collectively "C&CA"). C&CA is a commercial recovery audit and contract compliance firm with operations in the U.S. and the UK. We acquired substantially all of the assets of C&CA for approximately $10.0 million in cash plus potential earnout consideration of up to $8.0 million.

72

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The actual payment of the earnout consideration is based on achieving certain financial targets over a two year period that commenced on March 1, 2017 and will conclude on February 28, 2019. Management estimated that the fair value of the earnout consideration was approximately $5.9 million at the date of acquisition. During each of 2018 and 2017, the Company recognized accretion of $0.9 million on the fair value of the earnout amount which was included in Interest expense in the Consolidated Statements of Operations, and increased the related contingent consideration liability. The remaining potential earnout payment is $4.0 million. As of December 31, 2018, the contingent consideration liability related to the C&CA acquisition was $3.7 million, which is included in current Business acquisition obligations in our Consolidated Balance Sheet. We funded the purchase price and acquisition costs from borrowings under our credit facility, further described in Note 5.

Purchase Price Allocation

We allocated the aggregate purchase price for C&CA to the net tangible and intangible assets acquired based on their fair values as of February 23, 2017. We based the allocation of the purchase price on a valuation for intangible assets and the carrying value for the remaining assets and liabilities, as the carrying value approximates their fair value. The fair value of C&CA's identifiable intangible assets were measured using the income approach which includes a projection of estimated future discounted cash flows using a discount rate that is specific to the business risk, cost of capital and other factors. We recorded the excess of the purchase price over the net tangible and intangible assets as goodwill, which has been allocated and recognized as goodwill within our Recovery Audit Services-Americas and Recovery Audit Services-Europe/Asia-Pacific business segments. Factors that contributed to the recognition of goodwill included expected synergies and the trained workforce.

Our purchase price allocation was as follows (in thousands):

Accounts receivable	$	1,621
Commissions receivable	48
Prepaid expenses	109
Other current assets, net	6
Intangible assets	10,923
Goodwill	3,554
Fixed assets	323
Accounts payable	(125		)
Accrued commissions	(537		)
Total consideration paid	$	15,922
Contingent consideration (1)	(5,954		)
Total cash paid	$	9,968

⁽¹⁾ In the second quarter of 2018 we made an earnout payment of $4.0 million. As of December 31, 2018, the contingent consideration liability balance was $3.7 million.

The intangible assets acquired were as follows (in thousands):

	Fair Value		Remaining useful life
Customer relationships	$	9,556	14 years
Non-compete	1,232		4 years
Trademarks	135		4 years
	$	10,923

We have included the results of C&CA from the date of acquisition through December 31, 2018 in our Consolidated Statement of Operations. In fiscal year 2017, we included revenue of $7.8 million and income before income tax of $0.8 million in our Recovery Audit Services - Americas business segment, and revenue of $3.3 million and income before income tax of $1.0 million in our Recovery Audit Services - Europe/Asia-Pacific business segment. In fiscal year 2018, we included revenue of $9.6 million and loss before income tax of less than $0.6 million in our Recovery Audit Services - Americas business segment, and revenue of $4.4 million and income before income tax of $1.5 million in our Recovery Audit Services - Europe/Asia-Pacific business segment.

73

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Unaudited Supplemental Financial Information

Our unaudited pro forma results presented below, including C&CA, for the years ended December 31, 2017 and 2016 are presented as if the acquisition had been completed on January 1, 2016. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the C&CA acquisition been completed on January 1, 2016. In addition, the unaudited pro forma information does not purport to project future operating results.

	Year Ended December 31,
(in thousands)	2017	2016
Unaudited pro forma revenue	162,459	155,626
Unaudited pro forma net income from continuing operations	3,886	5,365

Lavante Acquisition

In October 2016, we completed the acquisition of Lavante, Inc. ("Lavante"). Lavante is a SaaS-based procure-to-pay supplier information management (SIM) and recovery audit services firm, based in San Jose, California. We acquired substantially all of the assets of Lavante, which primarily consisted of its proprietary software applications, for $3.8 million in cash, plus potential earnout consideration of up to $4.5 million.

The actual payment of the earnout consideration is based on achieving certain financial targets over a two year period that commenced on October 31, 2016 and concluded on December 31, 2018. Management estimated that the fair value of the earnout consideration was approximately $3.8 million at the date of acquisition, of which $2.0 million was included in Other current liabilities and $1.8 million was included in Other long-term liabilities in our Consolidated Balance Sheet as of December 31, 2016. During 2018 and 2017, the Company recognized accretion of $0.1 million and $0.3 million, respectively, on the fair value of the earnout amount which was included in Interest expense in the Consolidated Statements of Operations, and increased the related contingent consideration liability. In the fourth quarter of 2017, we reduced the earnout liability by $2.1 million and in the third quarter of 2018, we further reduced the earnout liability by $1.6 million, after it was determined that a portion of the earnout consideration would not be achieved. These adjustments were included in Acquisition-related adjustments in the Consolidated Statements of Operations for the years ended December 31, 2018 and 2017. As of December 31, 2018, the contingent consideration liability related to the Lavante acquisition was $0.5 million, which was included in current Business acquisition obligations in our Consolidated Balance Sheet. We funded the purchase price and acquisition costs from borrowings on our credit facility, further described in Note 5.

Purchase Price Allocation

We allocated the aggregate purchase price for Lavante to the net tangible and intangible assets acquired based on their fair values as of October 31, 2016. We based the allocation of the purchase price on a valuation of intangible assets, and the carrying value for the remaining assets and liabilities as the carrying value approximated their fair value. The fair value of Lavante's identifiable intangible assets were measured using a form of the income approach, and a cost approach. The income approach includes a projection of estimated future discounted cash flows using a discount rate that is specific to the business risk, cost of capital and other factors. We recorded the excess of the purchase price over the net tangible and intangible assets as goodwill within our Adjacent Services business segment. Factors that contributed to the recognition of goodwill included expected synergies and the trained workforce.

Our purchase price allocation was as follows (in thousands):

74

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Cash and cash equivalents	$	28
Accounts receivable, net	207
Other current assets	92
Intangible assets	6,178
Goodwill	2,286
Fixed assets, net	98
Accounts payable	(121		)
Deferred revenue	(370		)
Other current liabilities	(757		)
Total consideration paid	$	7,641
Contingent consideration(1)	(3,832		)
Total cash paid	$	3,809

⁽¹⁾ In the third quarter of 2018, we reduced the earnout liability by $1.6 million and in the fourth quarter of 2017, we reduced the earnout liability by $2.1 million. At December 31, 2018, the contingent consideration liability balance was $0.5 million.

The intangible assets acquired were as follows (in thousands):

	Fair Value		Remaining useful life
Trademarks	$	163	4 years
Patents	114		1 year
Software	5,901		4 years
Total intangible assets	$	6,178

We have included the results of Lavante from its date of acquisition through December 31, 2018 in our Consolidated Statement of Operations, which consisted of revenue of $0.4 million and a loss before income tax of $0.9 million in the year ended December 31, 2016, revenue of $1.9 million and a loss before income tax of $4.8 million in the year ended December 31, 2017, and revenue of $2.2 million and a loss before income tax of $2.3 million in the year ended December 31, 2018. The results from Lavante are included in our Adjacent Services business segment.

Unaudited Supplemental Financial Information

Our unaudited pro forma results presented below, including Lavante, for the years ended December 31, 2016 and 2015 are presented as if the acquisition had been completed on January 1, 2015. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the Lavante acquisition been completed on January 1, 2015. In addition, the unaudited pro forma information does not purport to project future operating results.

	Year Ended December 31,
(in thousands)	2016		2015
Unaudited pro forma revenue	143,198		140,994
Unaudited pro forma net (loss) income from continuing operations	(3,418	)	(5,516	)

75

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(13) QUARTERLY RESULTS (UNAUDITED)

The following tables set forth certain unaudited condensed consolidated quarterly financial data for each of the last eight quarters during our fiscal years ended December 31, 2018 and 2017. We have derived the information from unaudited Condensed Consolidated Financial Statements that, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of such quarterly information. The operating results for any quarter are not necessarily indicative of the results to be expected for any future period. The quarterly results are updated for continuing operations.

	2018 Quarter Ended												2017 Quarter Ended
	Mar. 31			June 30			Sept. 30			Dec. 31			Mar. 31			June 30			Sept. 30			Dec. 31
	(In thousands, except per share data)
Revenue, net of refund liabilities	$	36,721		$	42,102		$	43,320		$	49,633		$	33,569		$	38,510		$	42,467		$	47,074
Operating expenses:
Cost of revenue	24,797			27,389			26,146			26,493			23,026			25,605			26,675			26,746
Selling, general and administrative expenses	11,264			12,809			12,521			13,862			10,536			11,424			12,189			12,792
Depreciation of property, equipment and software assets	1,223			2,360			1,713			2,074			1,220			1,109			1,133			1,107
Amortization of intangible assets	788			864			872			871			722			722			722			1,468
Acquisition-related adjustments (income) loss	—			—			(1,640		)	12			—			—			—			(2,283		)
Total operating expenses	38,072			43,422			39,612			43,312			35,504			38,860			40,719			39,830
Operating (loss) income from continuing operations	(1,351		)	(1,320		)	3,708			6,321			(1,935		)	(350		)	1,748			7,244
Foreign currency transaction (gains) losses on short-term intercompany balances	(220		)	880			70			272			(552		)	(957		)	(418		)	(263		)
Interest expense, net	398			486			416			363			37			48			142			1,312
Other loss (income)	12			5			(1		)	5			(199		)	5			17			17
(Loss) income from continuing operations before income taxes	(1,541		)	(2,691		)	3,223			5,681			(1,221		)	554			2,007			6,178
Income tax expense (benefit)	787			189			597			(252		)	627			879			930			526
Net (loss) income from continuing operations	(2,328		)	(2,880		)	2,626			5,933			(1,848		)	(325		)	1,077			5,652
Basic (loss) earnings per common share from continuing operations (1)	$	(0.10	)	$	(0.13	)	$	0.11		$	0.26		$	(0.08	)	$	(0.01	)	$	0.05		$	0.26
Diluted (loss) earnings per common share from continuing operations (1)	$	(0.10	)	$	(0.13	)	$	0.11		$	0.26		$	(0.08	)	$	(0.01	)	$	0.05		$	0.26

(1) We calculate each quarter as a discrete period; the sum of the four quarters may not equal the calculated full-year amount.

76

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(14) SUBSEQUENT EVENT

On March 14, 2019, the Company, as co-borrower with PRGX USA, Inc. (“PRGX-USA”), a wholly owned subsidiary that is the Company’s principal domestic operating subsidiary, entered into a five-year Credit Agreement (the “BOA Credit Facility”) with Bank of America, N.A. (“BOA”), and Synovus Bank as the initial lenders thereunder, and with BOA as the letter-of-credit issuer thereunder, as the swingline lender thereunder, and as the administrative agent (the “Administrative Agent”) for the lenders from time to time party thereto. The BOA Credit Facility consists of a $60.0 million senior revolving credit facility (the “Revolver”), with a $5.0 million subfacility for the issuance of letters of credit, and a $5.0 million swingline loan subfacility (the “Swingline Loan”). The BOA Credit Facility is guaranteed by each of PRGX’s direct and indirect domestic wholly owned subsidiaries (other than PRGX-USA), except for certain immaterial domestic subsidiaries. None of PRGX’s direct or indirect foreign subsidiaries has guaranteed the BOA Credit Facility. The BOA Credit Facility is secured by substantially all of the assets of PRGX, PRGX-USA and each guarantor (including the equity interests in substantially all of the Company’s domestic subsidiaries and up to sixty-five percent (65%) of the equity interests of certain of the Company’s first-tier material foreign subsidiaries).

PRGX has borrowed $30.0 million under the Revolver, which was substantially used to prepay in full the approximately $29.0 million in outstanding indebtedness owed to the lenders under PRGX’s pre-existing Amended & Restated Revolving Credit Agreement, dated December 23, 2014, as amended from time to time, by and among PRGX, PRGX-USA, the several banks and other financial institutions and lenders from time to time party thereto and SunTrust Bank, in its capacity as administrative agent for the lenders, and to terminate that prior credit facility in its entirety. There were no early termination penalties associated with the termination of the pre-existing credit facility with SunTrust Bank.

The BOA Credit Facility will mature on March 14, 2024. Interest is payable quarterly in arrears. There are no prepayment penalties in the event the Company elects to prepay and terminate the BOA Credit Facility prior to its scheduled maturity date, subject to breakage and redeployment costs in certain limited circumstances.

The Revolver bears interest under the BOA Credit Facility at a rate per annum comprised of a specified index rate based on LIBOR plus an applicable interest rate margin determined under the BOA Credit Facility. For U.S. Dollar denominated loans under the Revolver, at the option of the Borrowers, such loans shall bear interest under the BOA Credit Facility at a rate per annum equal to (x) the LIBOR daily floating rate plus an applicable interest rate margin determined under the BOA Credit Facility or (y) the base rate plus the applicable interest rate margin, each as determined under the BOA Credit Facility. Although the Company does not anticipate the need for Swingline Loans, were any Swingline Loans to be made they would bear interest at the base rate plus the applicable interest rate margin for base rate loans, each as determined under the BOA Credit Facility. The applicable interest rate margin varies from 1.50% per annum to 2.25% per annum, for LIBOR daily floating rate loans, and from 0.50% per annum to 1.25% per annum, for loans based on the base rate, and in either case depending on the Company’s consolidated leverage ratio, and is determined in accordance with a pricing grid under the BOA Credit Facility. On March 14, 2019, the closing date under the BOA Credit Facility, the applicable interest rate (inclusive of the applicable interest rate margin) for LIBOR daily floating rate loans (the only type outstanding on the closing date) was 3.89% per annum.

The BOA Credit Facility includes customary affirmative, negative, and financial covenants binding on the Company, including delivery of financial statements and other reports and maintenance of existence. The negative covenants limit the ability of the Company, among other things, to incur debt, incur liens, make investments and sell assets, but does provide for certain permitted repurchases of shares of its capital stock and the declaration and payment of certain dividends on its capital stock. The financial covenants included in the BOA Credit Facility set forth a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio for the Company, each which will be tested on a quarterly basis; and with the Company having the ability to increase the maximum leverage ratio for a limited time when needed in connection with permitted acquisitions. In addition, the BOA Credit Facility includes customary events of default.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9A. Controls and Procedures

77

Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of December 31, 2018.

Changes in internal controls over financial reporting

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as defined in the Exchange Act Rule 13a-15(f). Our internal control system is designed to provide reasonable assurance regarding the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance that the objectives of the internal control system are met. Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, the Company conducted an assessment of the effectiveness of internal control over financial reporting based on the framework (2013 Framework) in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, management concluded that, as of December 31, 2018, the Company’s internal control over financial reporting is effective. The Company’s internal control over financial reporting as of December 31, 2018 has been audited by BDO USA, LLP, an independent registered public accounting firm, as stated in their report which is included herein, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018.

Management’s report shall not be deemed filed for purposes of Section 18 of the Exchange Act.

78

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

PRGX Global, Inc. and subsidiaries

Atlanta, Georgia

Opinion on Internal Control over Financial Reporting

We have audited PRGX Global, Inc. and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the accompanying index and our report dated March 18, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Annual Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ BDO USA, LLP

Atlanta, Georgia

March 18, 2019

79

ITEM 9B. Other Information

On March 14, 2019, the Company, as co-borrower with PRGX USA, Inc. (“PRGX-USA”), a wholly owned subsidiary that is the Company’s principal domestic operating subsidiary, entered into a five-year Credit Agreement (the “BOA Credit Facility”) with Bank of America, N.A. (“BOA”), and Synovus Bank as the initial lenders thereunder, and with BOA as the letter-of-credit issuer thereunder, as the swingline lender thereunder, and as the administrative agent (the “Administrative Agent”) for the lenders from time to time party thereto. The BOA Credit Facility consists of a $60.0 million senior revolving credit facility (the “Revolver”), with a $5.0 million subfacility for the issuance of letters of credit, and a $5.0 million swingline loan subfacility (the “Swingline Loan”). The BOA Credit Facility is guaranteed by each of PRGX’s direct and indirect domestic wholly owned subsidiaries (other than PRGX-USA), except for certain immaterial domestic subsidiaries. None of PRGX’s direct or indirect foreign subsidiaries has guaranteed the BOA Credit Facility. The BOA Credit Facility is secured by substantially all of the assets of PRGX, PRGX-USA and each guarantor (including the equity interests in substantially all of the Company’s domestic subsidiaries and up to sixty-five percent (65%) of the equity interests of certain of the Company’s first-tier material foreign subsidiaries).

PRGX has borrowed $30.0 million under the Revolver, which was substantially used to prepay in full the approximately $29.0 million in outstanding indebtedness owed to the lenders under PRGX’s pre-existing Amended & Restated Revolving Credit Agreement, dated December 23, 2014, as amended from time to time, by and among PRGX, PRGX-USA, the several banks and other financial institutions and lenders from time to time party thereto and SunTrust Bank, in its capacity as administrative agent for the lenders, and to terminate that prior credit facility in its entirety. There were no early termination penalties associated with the termination of the pre-existing credit facility with SunTrust Bank.

The BOA Credit Facility will mature on March 14, 2024. Interest is payable quarterly in arrears. There are no prepayment penalties in the event the Company elects to prepay and terminate the BOA Credit Facility prior to its scheduled maturity date, subject to breakage and redeployment costs in certain limited circumstances.

The Revolver bears interest under the BOA Credit Facility at a rate per annum comprised of a specified index rate based on LIBOR plus an applicable interest rate margin determined under the BOA Credit Facility. For U.S. Dollar denominated loans under the Revolver, at the option of the Borrowers, such loans shall bear interest under the BOA Credit Facility at a rate per annum equal to (x) the LIBOR daily floating rate plus an applicable interest rate margin determined under the BOA Credit Facility or (y) the base rate plus the applicable interest rate margin, each as determined under the BOA Credit Facility. Although the Company does not anticipate the need for Swingline Loans, were any Swingline Loans to be made they would bear interest at the base rate plus the applicable interest rate margin for base rate loans, each as determined under the BOA Credit Facility. The applicable interest rate margin varies from 1.50% per annum to 2.25% per annum, for LIBOR daily floating rate loans, and from 0.50% per annum to 1.25% per annum, for loans based on the base rate, and in either case depending on the Company’s consolidated leverage ratio, and is determined in accordance with a pricing grid under the BOA Credit Facility. On March 14, 2019, the closing date under the BOA Credit Facility, the applicable interest rate (inclusive of the applicable interest rate margin) for LIBOR daily floating rate loans (the only type outstanding on the closing date) was 3.89% per annum.

The BOA Credit Facility includes customary affirmative, negative, and financial covenants binding on the Company, including delivery of financial statements and other reports and maintenance of existence. The negative covenants limit the ability of the Company, among other things, to incur debt, incur liens, make investments and sell assets, but does provide for certain permitted repurchases of shares of its capital stock and the declaration and payment of certain dividends on its capital stock. The financial covenants included in the BOA Credit Facility set forth a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio for the Company, each which will be tested on a quarterly basis; and with the Company having the ability to increase the maximum leverage ratio for a limited time when needed in connection with permitted acquisitions. In addition, the BOA Credit Facility includes customary events of default.

The foregoing description is qualified in its entirety by reference to the BOA Credit Facility, a copy of which is filed herewith as Exhibit 10.52; and by reference to the Security and Pledge Agreement dated as of March 14, 2019 among the Company, PRGX-USA, and the Company’s subsidiaries that are guarantors under the BOA Credit Facility, as grantors, in favor of BOA, as administrative agent, a copy of which is filed herewith as Exhibit 10.53.

80

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

Except as set forth below, the information required by Item 10 of this Form 10-K is incorporated herein by reference to the information contained in the sections captioned “Proposal I: Election of Directors”, “Information about the Board of Directors and Committees of the Board of Directors”, “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance” of our definitive proxy statement (the “Proxy Statement”) for the 2019 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).

We have undertaken to provide to any person without charge, upon request, a copy of our code of ethics applicable to our chief executive officer and senior financial officers. You may obtain a copy of this code of ethics free of charge from our website, www.prgx.com.

ITEM 11. Executive Compensation

The information required by Item 11 of this Form 10-K is incorporated by reference to the information contained in the sections captioned “Executive Compensation”, “Information about the Board of Directors and Committees of the Board of Directors”, and “Report of the Compensation Committee” of the Proxy Statement.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Except as set forth below, the information required by Item 12 of this Form 10-K is incorporated by reference to the information contained in the section captioned “Ownership of Directors, Principal Shareholders and Certain Executive Officers” of the Proxy Statement.

Securities Authorized for Issuance Under Equity Compensation Plans

During 2018, the Company had two shareholder approved stock-based compensation plans under which equity awards have been granted: (1) the 2008 Equity Incentive Plan (“2008 EIP”) and (2) the 2017 Equity Incentive Compensation Plan ("2017 EICP").

Under the 2008 EIP, previously approved by our Board of Directors, we reserved shares of common stock for issuance in the form of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other incentive awards. Pursuant to amendments to the 2008 EIP that were approved by the Board of Directors and the Company's shareholders, 10,600,000 shares were reserved for issuance under the 2008 EIP.

On June 27, 2017, the shareholders approved the 2017 EICP which applies to awards granted on or after June 27, 2017. Under the 2017 EICP, the Company may grant incentive and non-qualified stock options, stock appreciation rights, restricted stock, deferred stock, restricted stock units, performance units, performance shares, dividend equivalents, bonus shares, and other stock-based or cash-based awards. The maximum number of shares of common stock that may be issued under the 2017 EICP is 3,400,000 shares plus that number of shares of common stock subject to awards granted under the 2008 EIP that were outstanding when the 2017 EICP became effective.

81

The following table presents certain information with respect to compensation plans under which equity securities of the registrant were authorized for issuance as of December 31, 2018:

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)		(c)
Equity compensation plans approved by security holders:
2008 EIP (1), (2)	1,924,957	$	6.37	—
2017 EICP (2), (3)	744,347	7.35		2,897,664
Equity compensation plans not approved by security holders (2), (4)	699,107	7.75		—
Total (2)	3,368,411	$	6.54	2,897,664

(1) This amount includes 1,738,039 stock options and 186,918 performance-based restricted stock units (“PBUs”) and restricted stock units ("RSUs") that, if and when vested, will be settled in shares of PRGX common stock. For PBUs for which the performance period has ended as of December 31 2018, the amounts reported in the table reflect the expected number of PBUs to be earned based on actual performance measured at the end of the performance period.

(2) Weighted-average exercise price of outstanding options only.

(3) This amount includes 500,000 stock options and 244,347 PBUs and RSUs that, if and when vested, will be settled in shares of PRGX common stock.

(4) This amount includes 612,778 options and 86,329 PBUs that represent inducement grants, which were made outside of the existing stock-based compensation plans.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 of this Form 10-K is incorporated by reference to the information contained in the sections captioned “Information about the Board of Directors and Committees of the Board of Directors”, “Executive Compensation – Employment Agreements” and “Certain Transactions” of the Proxy Statement.

ITEM 14. Principal Accountant Fees and Services

The information required by Item 14 of this Form 10-K is incorporated by reference to the information contained in the sections captioned “Principal Accountant Fees and Services” of the Proxy Statement.

82

PART IV

ITEM 15. Exhibits, Financial Statement Schedules

(a) Documents filed as part of the report

(1) Consolidated Financial Statements:

For the following consolidated financial information included herein, see Index on Page 37.

	Page No.
Report of Independent Registered Public Accounting Firm	38
Consolidated Statements of Operations for the Years Ended December 31, 2018, 2017 and 2016	39
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 2017 and 2016	40
Consolidated Balance Sheets as of December 31, 2018 and 2017	41
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2018, 2017 and 2016	42
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016	43
Notes to Consolidated Financial Statements	44

(2) Financial Statement Schedule:

Schedule II - Valuation and Qualifying Accounts 83

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016

(In thousands)

			Additions		Deductions
Description	Balance at Beginning of Year		Charge (Credit) to Costs and Expenses		Credit to the respective receivable (1)		Balance at End of Year
2018
Allowance for doubtful accounts receivable	$	1,499	(346	)	(129	)	$	1,024
Allowance for doubtful employee advances and miscellaneous receivables	$	292	(48	)	(68	)	$	176
Deferred tax valuation allowance	$	34,776	(3,179	)	—		$	31,597
2017
Allowance for doubtful accounts receivable	$	799	724		(24	)	$	1,499
Allowance for doubtful employee advances and miscellaneous receivables	$	500	1,665		(1,873	)	$	292
Deferred tax valuation allowance	$	50,114	(15,338	)	—		$	34,776
2016
Allowance for doubtful accounts receivable	$	930	(129	)	(2	)	$	799
Allowance for doubtful employee advances and miscellaneous receivables	$	681	2,184		(2,365	)	$	500
Deferred tax valuation allowance	$	45,565	4,549		—		$	50,114

-----------------------------

(1) Write-offs net of recoveries.

83

(3) Exhibits

Exhibit Number	Description
2.1	Asset Purchase Agreement dated October 6, 2016, by and among PRGX USA, INC., PRGX UK LTD., Cost & Compliance Associates, LLC, Cost & Compliance Associates Limited and Robert F. Donohue (incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K filed on October 6, 2016).
2.2	Agreement and Plan of Merger dated October 25, 2016, by and among PRGX USA, Inc., Braveheart Merger Co., Lavante, Inc., PointGuard Ventures I, L.P. and Krish Panu (incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K filed on October 25, 2016).
2.3	First Amendment to Asset Purchase Agreement, dated February 23, 2017, by and among PRGX USA, INC., PRGX UK LTD., Cost & Compliance Associates, LLC, Cost & Compliance Associates Limited and Robert F. Donohue (incorporated by reference to Exhibit 2.2 to the Registrant’s Form 8-K filed on February 27, 2017).
3.1	Restated Articles of Incorporation of the Registrant, as amended and corrected through August 11, 2006 (restated solely for the purpose of filing with the Commission) (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on August 17, 2006).
3.1.1	Articles of Amendment of the Registrant effective January 20, 2010 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on January 25, 2010).
3.2	Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on December 11, 2007).
4.1	Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-K for the year ended December 31, 2001).
4.2	See Restated Articles of Incorporation and Bylaws of the Registrant, filed as Exhibits 3.1 and 3.2, respectively.
+10.1	Form of Indemnification Agreement between the Registrant and Directors and certain officers, including named executive officers, of the Registrant (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 10-K for the year ended December 31, 2003).
10.2	Noncompetition, Nonsolicitation and Confidentiality Agreement among The Profit Recovery Group International, Inc., Howard Schultz & Associates International, Inc., Howard Schultz, Andrew Schultz and certain trusts, dated January 24, 2002 (incorporated by reference to Exhibit 10.34 to the Registrant’s Form 10-K for the year ended December 31, 2001).
10.3	Office Lease Agreement between Galleria 600, LLC and PRG-Schultz International, Inc. (incorporated by reference to Exhibit 10.43 to the Registrant’s Form 10-K for the year ended December 31, 2001).
10.4	First Amendment to Office Lease Agreement between Galleria 600, LLC and PRG-Schultz International, Inc. (incorporated by reference to Exhibit 10.65 to the Registrant’s Form 10-K for the year ended December 31, 2002).
10.5	Third Amendment of Lease, entered into as of January 8, 2014, by and between Galleria 600, LLC and the Registrant (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on January 14, 2014).
+10.6	PRGX Global, Inc. 2008 Equity Incentive Plan, as Amended and Restated effective April 25, 2014 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on June 30, 2014).
+10.7	Form of Restricted Stock Agreement for Non-Employee Directors under the PRGX Global, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on June 4, 2008).
+10.8	Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the PRGX Global, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed on June 4, 2008).

84

+10.9	Form of Nonqualified Stock Option Agreement under the PRGX Global, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on January 14, 2009).
+10.10	Form of Restricted Stock Agreement under the PRGX Global, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed on January 14, 2009).
+10.11	Form of Performance-Based Restricted Stock Unit Agreement for Employees under the PRGX Global, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on April 1, 2015).
+10.12	Form of PRGX Global, Inc. Restricted Stock Unit Agreement for Non-Employee Directors under the PRGX Global, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed on June 30, 2014).
+10.13	Form of PRGX Global, Inc. Stock Appreciation Rights Agreement under the PRGX Global, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K filed on April 29, 2016).
+10.14	PRGX Global, Inc. 2017 Equity Incentive Compensation Plan effective as of April 25, 2017 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on June 30, 2017).
+10.15	PRGX Global, Inc. Deferred Compensation Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on June 30, 2014).
10.16	Amended & Restated Revolving Credit Agreement dated as of December 23, 2014, among PRGX Global, Inc. and PRGX USA, Inc., as borrowers (the "Borrowers"), the lenders from time to time party thereto (the "Lender") and SunTrust Bank, as administrative agent and issuing bank (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on December 30, 2014).
10.17	Subsidiary Guaranty Agreement dated as of January 19, 2010 by and among PRGX Global, Inc. (formerly PRG-Schultz International, Inc), and PRGX USA, Inc. (formerly PRG-Schultz USA, Inc.), as borrowers, each of the subsidiaries of PRGX Global, Inc. listed on Schedule I thereto, as guarantors (the "Guarantors"), and SunTrust Bank, as administrative agent (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on January 25, 2010).
10.18	Security Agreement dated January 19, 2010 among PRGX Global, Inc. (formerly PRG-Schultz International, Inc), PRGX USA, Inc. (formerly PRG-Schultz USA, Inc.), and the other direct and indirect subsidiaries of PRGX Global, Inc. signatory thereto, as grantors, in favor of SunTrust Bank, as administrative agent (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed on January 25, 2010).
10.19	Equity Pledge Agreement dated as of January 19, 2010, made by PRGX Global, Inc. (formerly PRG-Schultz International, Inc), PRGX USA, Inc. (formerly PRG-Schultz USA, Inc.), and the other direct and indirect subsidiaries of PRGX Global, Inc. signatory thereto, as grantors, in favor of SunTrust Bank, as administrative agent (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 8-K filed on January 25, 2010).
10.20	Loan Documents Modification Agreement dated June 21, 2010, by and among the Borrowers, the Guarantors and the Lender (incorporated by reference to Exhibit 10.29.4 to the Registrant’s Form 10-K filed on March 15, 2012).
10.21	Second Loan Documents Modification Agreement dated September 30, 2010, by and among the Borrowers and the Lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on October 1, 2010).
10.22	Third Loan Documents Modification Agreement dated October 17, 2011, by and among the Borrowers and the Lender (incorporated by reference to Exhibit 10.29.6 to the Registrant’s Form 10-K filed on March 15, 2012)
10.23	Fourth Loan Documents Modification Agreement, entered into as of January 17, 2014, by and among the Borrowers, the Guarantors and the Lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on January 24, 2014).
10.24	Fifth Loan Documents Modification Agreement and Waiver, entered into as of May 8, 2014, by and among the Borrowers, the Guarantors and the Lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed on May 12, 2014).

85

10.25	Sixth Loan Documents Modification Agreement and Waiver, entered into as of August 7, 2014, by and among the Borrowers, the Guarantors and the Lender (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 10-Q filed on August 7, 2014).
10.26	Seventh Loan Documents Modification Agreement, entered into as of October 23, 2014, by and among the Borrowers, the Guarantors and the Lender (incorporated by reference to Exhibit 10.29 to the Registrant's Form 10-K filed on March 13, 2015).
10.27	Eighth Loan Documents Modification Agreement, entered into as of December 23, 2014, by and among the Borrowers, the Guarantors and the Lender (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on December 30, 2014).
10.28	Ninth Loan Documents Modification Agreement, entered into as of December 21, 2016, by and among the Borrowers, the Guarantors and the Lender (incorporated by reference to Exhibit 10.26 to the Registrant’s Form 10-K filed on March 16, 2017).
10.29	Tenth Loan Documents Modification Agreement, entered into as of May 4, 2017, by and among the Borrowers, the Guarantors and the Lender (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-Q filed on May 9, 2017).
10.30	Eleventh Loan Documents Modification Agreement, entered into as of March 21, 2018 by and among the Borrowers, the Guarantors, and the Lender (incorporated by reference to Exhibit 10.1 to the Registrant's Form 10-Q filed on May 9, 2018).
10.31	Twelfth Loan Documents Modification Agreement dated September 28, 2018, by and among the Borrowers, the Guarantors, and the Lender (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on October 2, 2018).
10.32	Thirteenth Loan Documents Modification Agreement dated November 5, 2018, by and among the Borrowers, the Guarantors and the Lender (incorporated by reference to Exhibit 10.4 to the Registrant's Form 10-Q filed on November 8, 2018).
+10.33	Employment Agreement between the Registrant and Victor A. Allums dated November 28, 2008 (incorporated by reference to Exhibit 10.31 to the Registrant’s Form 10-K filed on March 29, 2010).
+10.34	Employment Agreement between the Registrant and Ronald E. Stewart dated December 13, 2013 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on December 19, 2013).
+10.35	Amendment of Employment Agreement dated April 27, 2016, by and between Ronald E. Stewart and the Registrant (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on April 29, 2016).
+10.36	Second Amendment of Employment Agreement dated October 25, 2017, by and between Ronald E. Stewart and the Registrant (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on October 26, 2017).
+10.37	PRGX Non-Qualified Stock Option Agreement dated October 25, 2017, by and between Ronald E. Stewart and the Registrant (incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K filed on October 26, 2017).
+10.38	Employment Agreement between the Registrant and Michael Cochrane dated April 24, 2014 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on April 29, 2014).
+10.39	Separation Agreement dated May 16, 2018, by and between Peter Limeri and the Company (incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K filed on May 18, 2018).
+10.40	Employment Agreement dated August 30, 2018, by and between Peter Limeri and the Company (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on August 30, 2018).
+10.41	Separation Agreement dated September 27, 2018, by and between Deborah M. Schleicher and the Company (incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K filed on October 2, 2018).
+10.42	Employment Agreement dated January 3, 2019, by and between Kurt J. Abkemeier and the Company (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on January 7, 2019).

86

10.43	Agreement dated as of November 10, 2016 by and among PRGX Global, Inc. and Matthew A. Drapkin, Northern Right Capital Management, L.P., Northern Right Capital (QP), L.P., and BC Advisors, LLC (incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K filed on November 10, 2016).
+10.44	Form of Restricted Stock Agreement for Employees under the PRGX Global, Inc. 2017 Equity Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on June 4, 2018).
+10.45	Form of Performance-Based Restricted Stock Unit Agreement for Employees under the PRGX Global, Inc. 2017 Equity Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on June 4, 2018).
+10.46	Form of Restricted Stock Unit Agreement for Employees under the PRGX Global, Inc. 2017 Equity Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed on June 4, 2018).
+10.47	Form of Non-Qualified Stock Option Agreement for Employees under the PRGX Global, Inc. 2017 Equity Incentive Compensation Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 8-K filed on June 4, 2018).
+10.48	Form of Stock Appreciation Rights Agreement for Employees under the PRGX Global, Inc. 2017 Equity Incentive Compensation Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Form 8-K filed on June 4, 2018).
+10.49	Form of Restricted Stock Agreement for Non-Employee Directors under the PRGX Global, Inc. 2017 Equity Incentive Compensation Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Form 8-K filed on June 4, 2018).
+10.50	Form of Restricted Stock Unit Agreement for Non-Employee Directors under the PRGX Global, Inc. 2017 Equity Incentive Compensation Plan (incorporated by reference to Exhibit 10.7 to the Registrant’s Form 8-K filed on June 4, 2018).
+10.51	Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the PRGX Global, Inc. 2017 Equity Incentive Compensation Plan (incorporated by reference to Exhibit 10.8 to the Registrant’s Form 8-K filed on June 4, 2018).
10.52	Credit Agreement dated as of March 14, 2019 among PRGX Global, Inc. and PRGX USA, Inc., as borrowers, Bank of America, N.A. and Synovus Bank, as lenders, and Bank of America, N.A., as administrative agent, letter-of-credit issuer, and swingline lender.
10.53	Security and Pledge Agreement dated as of March 14, 2019 among PRGX Global, Inc., PRGX USA, Inc., and the other direct and indirect subsidiaries of PRGX Global, Inc. signatory thereto, as grantors, in favor of Bank of America, N.A., as administrative agent.
14.1	Code of Ethics for Senior Financial Officers (incorporated by reference to Exhibit 14.1 to the Registrant’s Form 10-K for the year ended December 31, 2003).
21.1	Subsidiaries of the Registrant.
23.1	Consent of BDO USA, LLP.
31.1	Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the year ended December 31, 2018.
31.2	Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the year ended December 31, 2018.
32.1	Certification of the Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for the year ended December 31, 2018.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase

87

101.PRE	XBRL Taxonomy Extension Presentation Linkbase
+	Designates management contract or compensatory plan or arrangement.

88

ITEM 16. Form 10-K Summary

None.

89

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PRGX GLOBAL, INC.
	By:	/s/ RONALD E. STEWART
		Ronald E. Stewart
		President, Chief Executive Officer, Director (Principal Executive Officer)
Date:		March 18, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ RONALD E. STEWART	President, Chief Executive Officer and Director	March 18, 2019
Ronald E. Stewart	(Principal Executive Officer)
/s/ KURT J. ABKEMEIER	Chief Financial Officer, Treasurer and Controller	March 18, 2019
Kurt J. Abkemeier	(Principal Financial and Accounting Officer)
/s/ MATTHEW A. DRAPKIN	Director	March 18, 2019
Matthew A. Drapkin
/s/ WILLIAM F. KIMBLE	Director	March 18, 2019
William F. Kimble
/s/ MYLLE H. MANGUM	Director	March 18, 2019
Mylle H. Mangum
/s/ GREGORY J. OWENS	Executive Chairman of the Board	March 18, 2019
Gregory J. Owens
/s/ KEVIN S. COSTELLO	Director	March 18, 2019
Kevin S. Costello
/s/ JOSEPH E. WHITTERS	Lead Director	March 18, 2019
Joseph E. Whitters

90

EX-10.52

EXECUTION VERSION

CREDIT AGREEMENT

Dated as of March 14, 2019

among

PRGX GLOBAL, INC.

and

PRGX USA, INC.,
as the Borrowers,

THE SUBSIDIARIES OF THE BORROWERS IDENTIFIED HEREIN,
as the Guarantors,

BANK OF AMERICA, N.A.,
as Administrative Agent, Swingline Lender and L/C Issuer,

and

THE OTHER LENDERS PARTY HERETO

Arranged By:

MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED,
as Sole Lead Arranger and Sole Bookrunner

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS1

1.01Defined Terms.    1

1.02Other Interpretive Provisions.    32

1.03Accounting Terms.    33

1.04Rounding.    34

1.05Exchange Rates; Currency Equivalents.    34

1.06Change of Currency.    34

1.07Times of Day.    35

1.08Letter of Credit Amounts.    35

ARTICLE II THE REVOLVING COMMITMENTS AND CREDIT EXTENSIONS35

2.01Revolving Loans.    35

2.02Borrowings, Conversions and Continuations of Loans.    37

2.03Letters of Credit.    39

2.04Swingline Loans.    48

2.05Prepayments.    51

2.06Termination or Reduction of Aggregate Revolving Commitments.    52

2.07Repayment of Loans.    53

2.08Interest.    53

2.09Fees.    53

2.10Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate.    54

2.11Evidence of Debt.    55

2.12Payments Generally; Administrative Agent’s Clawback.    55

2.13Sharing of Payments by Lenders.    57

2.14Cash Collateral.    58

2.15Defaulting Lenders.    59

ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY61

3.01Taxes.    61

3.02Illegality.    66

3.03Inability to Determine Rates.    67

3.04Increased Costs; Reserves on Eurocurrency Rate Loans.    68

3.05Compensation for Losses.    69

3.06Mitigation Obligations; Replacement of Lenders.    70

3.07Successor LIBOR.    70

3.08Survival.    71

ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS72

4.01Conditions of Initial Credit Extension.    72

4.02Conditions to all Credit Extensions.    75

ARTICLE V REPRESENTATIONS AND WARRANTIES75

5.01Existence, Qualification and Power.    75

5.02Authorization; No Contravention.    76

5.03Governmental Authorization; Other Consents.    76

5.04Binding Effect.    76

5.05Financial Statements; No Material Adverse Effect.    76

5.06Litigation.    77

5.07No Default.    77

5.08Ownership of Property.    77

5.09Environmental Compliance.    77

5.10Insurance.    78

5.11Taxes.    78

5.12ERISA Compliance.    78

5.13Subsidiaries.    79

5.14Margin Regulations; Investment Company Act.    79

5.15Disclosure.    80

5.16Compliance with Laws.    80

5.17Intellectual Property; Licenses, Etc.    80

5.18Solvency.    80

5.19Perfection of Security Interests in the Collateral.    81

5.20Business Locations; Taxpayer Identification Number.    81

5.21OFAC.    81

5.22Anti-Corruption Laws.    81

5.23No EEA Financial Institution.    81

5.24No Casualty.    81

5.25Designation as Senior Indebtedness.    81

ARTICLE VI AFFIRMATIVE COVENANTS82

6.01Financial Statements.    82

6.02Certificates; Other Information.    82

6.03Notices.    84

6.04Payment of Taxes.    84

6.05Preservation of Existence, Etc.    85

6.06Maintenance of Properties.    85

6.07Maintenance of Insurance.    85

6.08Compliance with Laws.    86

6.09Books and Records.    86

6.10Inspection Rights.    86

6.11Use of Proceeds.    86

6.12ERISA Compliance.    87

6.13Additional Guarantors.    87

6.14Pledged Assets.    87

6.15Material Contracts.    89

6.16Depository and Treasury Management Relationship.    89

6.17Anti-Corruption Laws.    89

6.18Merchant Services Settlement Account Standing Transfer Order.    89

6.19Post-Closing Covenants.    89

ARTICLE VII NEGATIVE COVENANTS90

7.01Liens.    90

7.02Investments.    91

7.03Indebtedness.    92

7.04Fundamental Changes.    94

7.05Dispositions.    94

7.06Restricted Payments.    94

7.07Change in Nature of Business.    95

7.08Transactions with Affiliates.    95

7.09Burdensome Agreements.    95

7.10Use of Proceeds.    96

7.11Financial Covenants.    96

7.12Prepayment and Amendment of Other Indebtedness, Etc.    97

7.13Organization Documents; Fiscal Year; Legal Name, State of Formation; Form of Entity and Accounting Changes.    97

7.14Ownership of Subsidiaries.    97

7.15Sale Leasebacks.    98

7.16Sanctions.    98

7.17Anti-Corruption Laws.    98

7.18Designation of Subsidiaries as Immaterial Subsidiaries.    98

ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES98

8.01Events of Default.    98

8.02Remedies Upon Event of Default.    101

8.03Application of Funds.    101

ARTICLE IX ADMINISTRATIVE AGENT102

9.01Appointment and Authority.    102

9.02Rights as a Lender.    103

9.03Exculpatory Provisions.    103

9.04Reliance by Administrative Agent.    104

9.05Delegation of Duties.    104

9.06Resignation of Administrative Agent.    105

9.07Non-Reliance on Administrative Agent and Other Lenders.    106

9.08No Other Duties; Etc.    106

9.09Administrative Agent May File Proofs of Claim; Credit Bidding.    107

9.10Collateral and Guaranty Matters.    108

9.11Secured Cash Management Agreements.    108

9.12ERISA Matters.    109

ARTICLE X GUARANTY111

10.01The Guaranty.    111

10.02Obligations Unconditional.    111

10.03Reinstatement.    112

10.04Certain Additional Waivers.    112

10.05Remedies.    112

10.06Rights of Contribution.    113

10.07Guarantee of Payment; Continuing Guarantee.    113

ARTICLE XI MISCELLANEOUS114

11.01Amendments, Etc.    114

11.02Notices; Effectiveness; Electronic Communications.    116

11.03No Waiver; Cumulative Remedies; Enforcement.    118

11.04Expenses; Indemnity; Damage Waiver.    118

11.05Payments Set Aside.    120

11.06Successors and Assigns.    121

11.07Treatment of Certain Information; Confidentiality.    125

11.08Rights of Setoff.    126

11.09Interest Rate Limitation.    127

11.10Counterparts; Integration; Effectiveness.    127

11.11Survival of Representations and Warranties.    127

11.12Severability.    128

11.13Replacement of Lenders.    128

11.14Governing Law; Jurisdiction; Etc.    129

11.15Waiver of Jury Trial.    130

11.16No Advisory or Fiduciary Responsibility.    130

11.17Electronic Execution of Assignments and Certain Other Documents.    131

11.18USA PATRIOT Act Notice.    131

11.19Judgment Currency.    131

11.20Acknowledgement and Consent to Bail-In of EEA Financial Institutions.    132

11.21Subordination of Intercompany Indebtedness.    132

11.22Concerning Joint and Several Liability.    132

11.23Borrower Agent.    134

SCHEDULES

2.01    Revolving Commitments and Applicable Percentages

5.10    Insurance

5.13    Subsidiaries

5.17    IP Rights

5.20(a)    Locations of Real Property

5.20(b)    Location of Chief Executive Office, Taxpayer Identification Number, Etc.

5.20(c)    Changes in Legal Name, State of Formation and Structure

5.20(d)    Deposit and Investment Accounts

7.01    Liens Existing on the Closing Date

7.02    Investments Existing on the Closing Date

7.03    Indebtedness Existing on the Closing Date

11.02    Certain Addresses for Notices

EXHIBITS

1.01    Form of Secured Party Designation Notice

2.02    Form of Loan Notice

2.04    Form of Swingline Loan Notice

2.05    Form of Notice of Loan Prepayment

2.11(a)    Form of Note

3.01    Forms of U.S. Tax Compliance Certificates

6.02    Form of Compliance Certificate

6.13    Form of Joinder Agreement

11.06(b)    Form of Assignment and Assumption

11.06(b)(iv)     Form of Administrative Questionnaire

CREDIT AGREEMENT

This CREDIT AGREEMENT is entered into as of March 14, 2019 among PRGX Global, Inc., a Georgia corporation (“PRGX”), and PRGX USA, Inc., a Georgia corporation (“PUSA”, and together with PRGX, the “Borrowers” and each, a “Borrower”), the Guarantors (defined herein), the Lenders (defined herein) and BANK OF AMERICA, N.A., as Administrative Agent, Swingline Lender and L/C Issuer.

The Borrowers have requested that the Lenders provide credit facilities for the purposes set forth herein, and the Lenders are willing to do so on the terms and conditions set forth herein.

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

Article IDEFINITIONS AND ACCOUNTING TERMS

1.01Defined Terms.

As used in this Agreement, the following terms shall have the meanings set forth below:

“2017 Audited Financial Statements” means the audited consolidated balance sheet of PRGX and its Subsidiaries for the fiscal year ended December 31, 2017, and the related consolidated statements of income or operations, shareholders’ equity and cash flows of PRGX and its Subsidiaries for such fiscal year, including the notes thereto.

“Accounts” shall mean “accounts” as such term is defined in the Uniform Commercial Code, and, in any event, includes, without limitation, (a) all accounts receivable, and all other rights to payment for property sold, leased, licensed, assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit card or charge card, or for services rendered or to be rendered or in connection with any other transaction (whether or not yet earned by performance), (b) all rights in, to, and under all purchase orders or receipts for goods or services, (c) all rights to any goods represented by any of the foregoing, including, without limitation, all rights of rescission, replevin, reclamation, and stoppage in transit and rights to returned, reclaimed, or repossessed goods, (d) all reserves and credit balances held by each Borrower with respect to any such accounts receivable or account debtors, (e) all books, records, computer tapes, programs and ledger books arising therefrom or relating thereto, and (f) all guarantees and collateral security of any kind, given by any account debtor or any other Person with respect to any of the foregoing, all whether now owned or existing or hereafter acquired or arising, by or in favor of, either Borrower.

“Acquisition”, by any Person, means the acquisition by such Person, in a single transaction or in a series of related transactions, of either (a) all or any substantial portion of the property of, or a line of business, division of or other business unit of, another Person or (b) at least a majority of the Voting Stock of, or other controlling ownership interest in, another Person, in each case whether or not involving a merger or consolidation with such other Person.

“Acquisition Notice” has the meaning specified in the definition of “Permitted Acquisition”.

“Act” has the meaning specified in Section 11.18.

“Administrative Agent” means Bank of America (or any of its designated branch offices or affiliates) in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

“Administrative Agent’s Office” means, with respect to any currency, the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 11.02 with respect to such currency, or such other address or account with respect to such currency as the Administrative Agent may from time to time notify PRGX and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit 11.06(b)(iv) or any other form approved by the Administrative Agent.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Agent Parties” has the meaning specified in Section 11.02(c).

“Aggregate Revolving Commitments” means the Revolving Commitments of all the Lenders. The initial amount of the Aggregate Revolving Commitments in effect on the Closing Date is $60,000,000.

“Agreement” means this Credit Agreement.

“Agreement Currency” has the meaning specified in Section 11.19.

“Alternative Currency” means the Euro and the Sterling; provided that for each Alternative Currency, such requested currency is an Eligible Currency.

“Alternative Currency Equivalent” means, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Alternative Currency with Dollars.

“Applicable Percentage” means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Revolving Commitments represented by such Lender’s Revolving Commitment at such time; provided that if the commitment of each Lender to make Revolving Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Revolving Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption or other documentation pursuant to which such Lender becomes a party hereto, as applicable. The Applicable Percentages shall be subject to adjustment as provided in Section 2.15.

“Applicable Rate” means the following percentages per annum, based upon the Consolidated Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(b):

Pricing Tier	Consolidated Leverage Ratio	Commitment Fee	Eurocurrency Rate Loans, LIBOR Daily Floating Rate Loans and Letter of Credit Fees	Base Rate Loans
1	< 1.25 to 1.0	0.15%	1.50%	0.50%
2	> 1.25 to 1.0 but < 1.75 to 1.0	0.25%	1.75%	0.75%
3	> 1.75 to 1.0 but < 2.25 to 1.0	0.25%	2.00%	1.00%
4	> 2.25 to 1.0	0.25%	2.25%	1.25%

Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b); provided, however, that if a Compliance Certificate is not delivered when due in accordance with such Section, then, upon the request of the Required Lenders, Pricing Tier 4 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the first Business Day immediately following the date on which such Compliance Certificate is delivered in accordance with Section 6.02(b), whereupon the Applicable Rate shall be adjusted based upon the calculation of the Consolidated Leverage Ratio contained in such Compliance Certificate. The Applicable Rate in effect from the Closing Date through the first Business Day immediately following the date a Compliance Certificate is required to be delivered pursuant to Section 6.02(b) for the fiscal quarter ending June 30, 2019 shall be determined based upon Pricing Tier 1.

“Applicable Time” means, with respect to any borrowings and payments in any Alternative Currency, the local time in the place of settlement for such Alternative Currency as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Arranger” means Merrill Lynch, Pierce, Fenner & Smith, Incorporated (or any other registered broker-dealer wholly-owned by Bank of America Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’ investment banking, commercial lending services or related businesses may be transferred following the date of this Agreement), in its capacity as sole lead arranger and sole bookrunner.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section11.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit 11.06(b) or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.

“Attributable Indebtedness” means, with respect to any Person on any date, (a) in respect of any capital lease, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease, (c) in respect of any Securitization Transaction, the outstanding principal amount of such financing, after taking into account reserve accounts and making appropriate adjustments, determined by the Administrative Agent in its reasonable judgment and (d) in respect of any Sale and Leaseback Transaction, the present value (discounted in accordance with GAAP at the debt rate implied in the applicable lease) of the obligations of the lessee for rental payments during the term of such lease.

“Auto-Extension Letter of Credit” has the meaning specified in Section 2.03(b)(iii).

“Auto-Reinstatement Letter of Credit” has the meaning specified in Section 2.03(b)(iv).

“Availability Period” means, with respect to the Revolving Commitments, the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Revolving Commitments pursuant to Section 2.06, and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“Bank of America” means Bank of America, N.A. and its successors.

“Base Rate” means for any day a fluctuating rate of interest per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate” and (c) the LIBOR Daily Floating Rate plus 1.0%; provided that if the Base Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such “prime rate” announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“Base Rate Loan” means a Loan that bears interest based on the Base Rate. All Base Rate Loans shall be denominated in Dollars.

“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Internal Revenue Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Internal Revenue Code) the assets of any such “employee benefit plan” or “plan”.

“Borrower” or “Borrowers” have the meanings specified in the introductory paragraph hereto.

“Borrower Materials” has the meaning specified in Section 6.02.

“Borrowing” means a borrowing consisting of simultaneous Loans of the same Type, in the same currency and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and: (a) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Dollars or a LIBOR Daily Floating Rate Loan, any fundings, disbursements, settlements and payments in Dollars in respect of any such Eurocurrency Rate Loan or any such LIBOR Daily Floating Rate Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan or LIBOR Daily Floating Rate Loan, means any such day that is also a day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market; (b) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Euro, any fundings, disbursements, settlements and payments in Euro in respect of any such Eurocurrency Rate Loan, or any other dealings in Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, means a TARGET Day; (c) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in a currency other than Dollars or Euro, means any such day on which dealings in deposits in the relevant currency are conducted by and between banks in the London or other applicable offshore interbank market for such currency; and (d) if such day relates to any fundings, disbursements, settlements and payments in a currency other than Dollars or Euro in respect of a Eurocurrency Rate Loan denominated in a currency other than Dollars or Euro, or any other dealings in any currency other than Dollars or Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan (other than any interest rate settings), means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such currency.

“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the L/C Issuer or the Lenders, as collateral for L/C Obligations or obligations of the Lenders to fund participations in respect of L/C Obligations, (a) cash or deposit account balances, (b) backstop letters of credit entered into on terms, from issuers and in amounts satisfactory to the Administrative Agent and the L/C Issuer and/or (c) if the Administrative Agent and the L/C Issuer shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“Cash Equivalents” means, as at any date, (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition, (b) Dollar denominated time deposits and certificates of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (iii) any bank whose short term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof (any such bank being an “Approved Bank”), in each case with maturities of not more than two hundred and seventy (270) days from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody’s and maturing within six months of the date of acquisition, (d) repurchase agreements entered into by any Person with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least one hundred percent (100%) of the amount of the repurchase obligations, (e) investments, classified in accordance with GAAP as current assets, in money market investment programs registered under the Investment Company Act of 1940 which are administered by reputable financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing subdivisions (a) through (d), and (f) comparable (as reasonably determined by PRGX) foreign investments to the Cash Equivalents described in clauses (a) through (e) above.

“Cash Management Agreement” means any agreement that is not prohibited by the terms hereof to provide treasury or cash management services, including any one or more of the following: deposit accounts, overnight draft, credit cards, debit cards, p-cards (including purchasing cards and commercial cards), funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.

“Cash Management Bank” means any Person that (a) at the time it enters into a Cash Management Agreement, is a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent, (b) in the case of any Cash Management Agreement in effect on or prior to the Closing Date, is, as of the Closing Date or within thirty (30) days thereafter, a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent and a party to a Cash Management Agreement or (c) within thirty (30) days after the time it enters into the applicable Cash Management Agreement, becomes a Lender, the Administrative Agent or an Affiliate of a Lender or the Administrative Agent, in each case, in its capacity as a party to such Cash Management Agreement.

“Change in Law” means the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any Law, (b) any change in any Law or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Change of Control” means an event or series of events by which:

(a)any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all Equity Interests that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of thirty-five percent (35%) or more of the Voting Stock of, or other controlling ownership interest in, PRGX representing thirty-five percent (35%) or more of the combined voting power of all Voting Stock of, or other controlling ownership interest in, PRGXon a fully diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right);

(b)during any period of twenty-four (24) consecutive months, a majority of the members of the board of directors or other equivalent governing body of PRGX cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; or

(c)PUSA shall cease to be a wholly owned Subsidiary of PRGX.

“Clean-up Fiscal Quarter” has the meaning specified in Section 7.11(a).

“Closing Date” means March 14, 2019.

“Collateral” means a collective reference to all property with respect to which Liens in favor of the Administrative Agent, for the benefit of itself and the other holders of the Obligations, are purported to be granted pursuant to and in accordance with the terms of the Collateral Documents.

“Collateral Documents” means a collective reference to this Agreement (insofar as containing any security interest grant), the Security Agreement and other security documents as may be executed and delivered by any Loan Party pursuant to the terms of Section 6.14 or any of the other Loan Documents.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

“Compliance Certificate” means a certificate substantially in the form of Exhibit 6.02.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“Consolidated Capital Expenditures” means, for any period, for PRGX and its Subsidiaries on a consolidated basis, all capital expenditures.

“Consolidated Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of (a) the sum of (i) Consolidated Net Adjusted EBITDA for the most recently completed four fiscal quarters minus (ii) Consolidated Capital Expenditures for the most recently completed four fiscal quarters to (b) Consolidated Fixed Charges for the most recently completed four fiscal quarters.

“Consolidated Fixed Charges” means, for any period, for PRGX and its Subsidiaries on a consolidated basis, without duplication, an amount equal to the sum of: (a) the cash portion of Consolidated Interest Charges for such period (net of cash interest income actually received for such period); plus (b) federal, state, local and foreign income taxes paid in such period net of any refunds with respect to federal, state, local and foreign income taxes (whether paid in the same period or a prior period) received during such period; plus (c) the current portion of long-term Indebtedness (other than Indebtedness under the Aggregate Revolving Commitments) as of the last day of such period as set forth in the applicable financial statements for such period (excluding, for the avoidance of doubt, any Earn-Out Payments or Deferred Payments); plus (d) Restricted Payments made pursuant to Section 7.06(a) (other than those Restricted Payments made to Loan Parties or wholly-owned Subsidiaries) and Section 7.06(d) during such period. Notwithstanding the foregoing, and for the avoidance of doubt, Restricted Payments made pursuant to Section 7.06(c) and the netting of shares (for cashless exercises of stock options and tax withholding payments) shall not be included pursuant to clause (d) immediately above in any calculation of Consolidated Fixed Charges (it being acknowledged and agreed that any tax withholding payments in connection with a cashless exercise of stock options that are included as a positive adjustment to Consolidated Gross Adjusted EBITDA (as a result of clause (e) of the definition thereof) are intended to be included as a negative adjustment to Consolidated Net Adjusted EBITDA (pursuant to clause (b) of the definition thereof)).

“Consolidated Funded Indebtedness” means, as of any date of determination, for PRGX and its Subsidiaries on a consolidated basis, without duplication, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all purchase money indebtedness; (c) the maximum amount available to be drawn under issued and outstanding letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments; (d) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business), including earnout obligations; (e) all Attributable Indebtedness; (f) all obligations to purchase, redeem, retire, defease or otherwise make any payment prior to the Maturity Date in respect of any Equity Interests or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (g) all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (f) above of another Person; and (h) all Indebtedness of the types referred to in clauses (a) through (g) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which either Borrower or a Subsidiary thereof is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Borrowers or such Subsidiary.

“Consolidated Gross Adjusted EBITDA” means, for any period, the following (determined on a consolidated basis and without duplication) for PRGX and its Subsidiaries: their Consolidated Net Income for such period, adjusted (up or down, as applicable, and in accordance with GAAP (if and to the extent applicable)) by the following (to the extent included in calculating such Consolidated Net Income):

(a)net interest income/expense,

(b)federal, state, local and foreign income tax expense,

(c)depreciation and amortization expense,

(d)restructuring/transformation expenses (which, for the avoidance of doubt, includes dark lease obligations and excludes severance obligations),

(e)expenses in connection with stock-based compensation,

(f)acquisition transaction costs,

(g)acquisition earn-out obligation expenses,

(h)fair value adjustments to acquisition-related contingent consideration,

(i)tangible and intangible asset impairment charges other than write-downs or write-offs of inventory and accounts receivable,

(j)litigation costs and litigation settlements,

(k)severance expenses, and

(l)net foreign currency transaction gains or losses on short-term intercompany balances.

“Consolidated Interest Charges” means, for any period, for PRGX and its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, plus (b) the portion of rent expense with respect to such period under capital leases that is treated as interest in accordance with GAAP plus (c) the implied interest component of Synthetic Lease Obligations with respect to such period.

“Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated Net Adjusted EBITDA for the most recently completed four fiscal quarters.

“Consolidated Net Adjusted EBITDA” means, for any period, the following determined on a consolidated basis, without duplication, for PRGX and its Subsidiaries: (a) Consolidated Gross Adjusted EBITDA for such period; as (b) adjusted to reverse the cash portion of stock-based compensation (to the extent included in calculating such Consolidated Gross Adjusted EBITDA); and as (c) adjusted to reverse the net aggregate amount (if any) included in determining Consolidated Gross Adjusted EBITDA under clauses (g) (acquisition earn-out obligation expenses) and (k) (severance expenses) of the definition thereof; provided that the reversal (whether positive or negative) under clause (c) shall be limited to the amount (if any) by which the absolute value of such reversal with respect to clauses (g) and (k) of Consolidated Gross Adjusted EBITDA, taken together, (determined prior to giving effect to this proviso) exceeds fifteen percent (15%) of Consolidated Gross Adjusted EBITDA (clause (a) above).

“Consolidated Net Income” means, at any date of determination, the net income (or loss) of PRGX and its Subsidiaries on a consolidated basis in accordance with GAAP for the most recently completed period of four fiscal quarters; provided that Consolidated Net Income shall exclude (to the extent otherwise included): (a) any extraordinary gains or losses; (b) any gains attributable to write-ups of assets; (c) any Equity Interest of PRGX and its Subsidiaries in the unremitted earnings of any Person that is not a Subsidiary; (d) any income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with PRGX or a Subsidiary or the date that such Person’s assets are acquired by PRGX or such Subsidiary; and (e) any gains or losses from discontinued operations.

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Contribution Share” has the meaning specified in Section 10.06(c).

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote ten percent (10%) or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.

“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“Default Rate” means (a) with respect to any Obligation for which a rate is specified, a rate per annum equal to two percent (2%) in excess of the rate otherwise applicable thereto and (b) with respect to any Obligation for which a rate is not specified or available, a rate per annum equal to the Base Rate plus the Applicable Rate for Revolving Loans that are Base Rate Loans plus two percent (2%), in each case, to the fullest extent permitted by applicable Law.

“Defaulting Lender” means, subject to Section 2.15(d), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrowers in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the L/C Issuer, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two (2) Business Days of the date when due, (b) has notified the Borrowers, the Administrative Agent, the L/C Issuer or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrowers, to confirm in writing to the Administrative Agent and the Borrowers that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrowers), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.15(d)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrowers, the L/C Issuer, the Swingline Lender and each other Lender promptly following such determination.

“Deferred Payments” shall mean (a) deferred cash payments (whether or not conditional) paid or payable in connection with a Permitted Acquisition (or, to the extent paid or payable in connection with an Acquisition that occurred prior to the date hereof, an Acquisition that met the requirements of a “Permitted Acquisition” under the Existing Credit Agreement), whether or not evidenced by a promissory note and whether or not such payment obligations would be reflected as a liability on the consolidated balance sheet of PRGX and its Subsidiaries and (b) cash payments in respect of Indebtedness of any acquired business assumed by PRGX or any of its Subsidiaries in conjunction with a Permitted Acquisition (or, to the extent paid or payable in connection with an Acquisition that occurred prior to the date hereof, an Acquisition that met the requirements of a “Permitted Acquisition” under the Existing Credit Agreement), but in either case excluding Earn-Out Payments and reasonable and customary consulting fees.

“Designated Jurisdiction” means any country or territory to the extent that such country or territory is the subject of any Sanction.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition of any property by any Loan Party or any Subsidiary, including any Sale and Leaseback Transaction, any transfer of assets by way of a division, and any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, but excluding any Recovery Event.

“Dollar” and “$” mean lawful money of the United States.

“Dollar Equivalent” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.

“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of any state of the United States or the District of Columbia. The status of a Subsidiary as a Domestic Subsidiary is unaffected by the fact that the Equity Interests in such Subsidiary may be owned by an entity that itself is a Foreign Subsidiary.

“Earn-Out Payments” shall mean contingent future payments, based on performance, paid or payable in connection with a Permitted Acquisition (or, to the extent paid or payable in connection with an Acquisition that occurred prior to the date hereof, an Acquisition that met the requirements of a “Permitted Acquisition” under the Existing Credit Agreement), whether or not evidenced by a promissory note and whether or not such payment obligations would be reflected as a liability on the consolidated balance sheet of PRGX and its Subsidiaries.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Sections 11.06(b) (subject to such consents, if any, as may be required under Section 11.06(b)(iii)).

“Eligible Currency” means any lawful currency other than Dollars that is readily available, freely transferable and convertible into Dollars in the international interbank market available to the Lenders in such market and as to which a Dollar Equivalent may be readily calculated. If, after the designation by the Lenders of any currency as an Alternative Currency, any change in currency controls or exchange regulations or any change in the national or international financial, political or economic conditions are imposed in the country in which such currency is issued, result in, in the reasonable opinion of the Administrative Agent (in the case of any Loans to be denominated in an Alternative Currency) or the L/C Issuer (in the case of any Letter of Credit to be denominated in an Alternative Currency), (a) such currency no longer being readily available, freely transferable and convertible into Dollars, (b) a Dollar Equivalent is no longer readily calculable with respect to such currency, (c) providing such currency is impracticable for the Lenders or (d) no longer a currency in which the Required Lenders are willing to make such Credit Extensions (each of (a), (b), (c), and (d) a “Disqualifying Event”), then the Administrative Agent shall promptly notify the Lenders and PRGX, and such country’s currency shall no longer be an Alternative Currency until such time as the Disqualifying Event(s) no longer exist. Within, five (5) Business Days after receipt of such notice from the Administrative Agent, the Borrowers shall repay all Loans in such currency to which the Disqualifying Event applies or convert such Loans into the Dollar Equivalent of Loans in Dollars, subject to the other terms contained herein.

“Environmental Laws” means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any Hazardous Materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any Loan Party or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with either Borrower within the meaning of Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal Revenue Code for purposes of provisions relating to Section 412 of the Internal Revenue Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of either Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by either Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Internal Revenue Code or Sections 303, 304 and 305 of ERISA, (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon either Borrower or any ERISA Affiliate or (i) a failure by either Borrower or any ERISA Affiliate to meet all applicable requirements under the Pension Funding Rules in respect of a Pension Plan, whether or not waived, or the failure by either Borrower or any ERISA Affiliate to make any required contribution to a Multiemployer Plan.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

“Euro” and “€” mean the single currency of the Participating Member States.

“Eurocurrency Rate” means, for any Interest Period with respect to a Eurocurrency Rate Loan, the rate per annum equal to the London Interbank Offered Rate (“LIBOR”) or a comparable or successor rate, which rate is approved by the Administrative Agent, as published by Bloomberg (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at or about 11:00 a.m., London time on the Rate Determination Date, for deposits in the relevant currency with a term equivalent to such Interest Period; provided that (a) to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent and (b) if the Eurocurrency Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.

“Eurocurrency Rate Loan” means a Loan that bears interest at a rate based on the definition of “Eurocurrency Rate.” Eurocurrency Rate Loans may be denominated in Dollars or in an Alternative Currency. All Loans denominated in an Alternative Currencymust be Eurocurrency Rate Loans.

“Event of Default” has the meaning specified in Section 8.01.

“Excess Payment” has the meaning specified in Section 10.06(a).

“Excluded Accounts” means (a) escrow accounts, (b) trust accounts, and (c) accounts functioning solely as payroll and/or payroll tax disbursement accounts.

“Excluded Merchant Services Assets” means any one or more of the following, in each case if (and to the extent) arising under a merchant services arrangement with SunTrust Bank or its Affiliates in effect as of the Closing Date whereby SunTrust Bank or such Affiliate prohibits further encumbrances thereon: (a) reserve accounts and reserves, whether constituting deposit accounts or otherwise, established and maintained solely in connection with such arrangement; (b) one or more settlement accounts, whether constituting deposit accounts or otherwise, established and maintained solely in connection with such arrangement; (c) certain Accounts processed by such processor in connection with such arrangement; (d) proceeds of the foregoing; and (e) books and records relating to the foregoing. For the avoidance of doubt, “Excluded Merchant Services Assets” shall not include the amounts transferred from settlement accounts subject to standing transfer orders pursuant to Section 6.18.

“Excluded Property” means, with respect to any Loan Party, (a) any owned or leased real property, including fixtures to the extent the attachment or perfection of a Lien thereon cannot be effected by a filing with a jurisdiction’s central filing office pursuant to the Uniform Commercial Code, (b) any IP Rights for which a perfected Lien thereon is not effected either by filing of a Uniform Commercial Code financing statement or by appropriate evidence of such Lien being filed in either the United States Copyright Office or the United States Patent and Trademark Office, (c) any personal property (other than personal property described in clause (b) above) for which the attachment or perfection of a Lien thereon is not governed by the Uniform Commercial Code, (d) the Equity Interests of any direct Subsidiary of any Loan Party to the extent not required to be pledged to secure the Obligations pursuant to Section 6.14(a), (e) any property which, subject to the terms of Section 7.09, is subject to a Lien of the type described in Section 7.01(i) pursuant to documents which prohibit such Loan Party from granting any other Liens in such property, (f) any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable Law, (g) Excluded Accounts, (h) Excluded Merchant Services Assets and (i) any rights or interest in any contract, lease, permit, license, charter or license agreement covering real or personal property of the applicable grantor, as such, or any governmental approvals, if, to the extent and so long as under the terms of such contract, lease, permit, license, charter or license agreement, or such governmental approvals, or applicable Law with respect thereto, the valid grant of a security interest or lien therein to the Administrative Agent is prohibited and such prohibition has not been or is not waived or the consent of the other party to such contract, lease, permit, license, charter or license agreement, or governmental approval, has not been or is not otherwise obtained; provided that the foregoing exclusion shall in no way be construed (i) to apply if any such prohibition is unenforceable under Sections 9-401, 9-406(d), 9-407, 9-408 or 9-409 of the Uniform Commercial Code of any applicable state or other applicable Law or (ii) so as to limit, impair or otherwise affect the Administrative Agent’s unconditional continuing security interests in and liens upon any rights or interests of the applicable grantor in or to monies due or to become due under any such contract, lease, permit, license, charter or license agreement (including any accounts).

“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the Laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Revolving Commitment pursuant to a Law in effect on the date on which (i) such Lender acquires such interest in the Loan or Revolving Commitment (other than pursuant to an assignment request by either Borrower under Section 11.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii), 3.01(a)(iii) or 3.01(c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

“Existing Credit Agreement” means that certain Amended & Restated Revolving Credit Agreement, dated as of December 23, 2014, by and among PRGX, PUSA, the several banks and other financial institutions and lenders from time to time party thereto and SunTrust Bank, in its capacity as administrative agent for the lenders, as amended and in effect immediately prior to the Closing Date.

“Facility Office” means, with respect to any Lender, the office through which such Lender will perform its obligations under this Agreement.

“Facility Termination Date” means the date as of which all of the following shall have occurred: (a) all Revolving Commitments have terminated, (b) all Obligations arising under the Loan Documents have been paid in full (other than (i) contingent indemnification and contingent expense reimbursement obligations for which no claim has been made and (ii) Letters of Credit that have been Cash Collateralized or as to which other arrangements satisfactory to the Administrative Agent and the L/C Issuer have been made), and (c) all Letters of Credit have terminated, surrendered without draw, or expired (other than Letters of Credit that have been Cash Collateralized or as to which other arrangements satisfactory to the Administrative Agent and the L/C Issuer have been made).

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code and any fiscal or regulatory legislation, rule or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Internal Revenue Code.

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent and (c) if the Federal Funds Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.

“Fee Letter” means the letter agreement, dated January 18, 2019 among the Borrowers, the Administrative Agent and the Arranger.

“Foreign Lender” means a Lender that is not a U.S. Person. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the Outstanding Amount of all outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swingline Lender, such Defaulting Lender’s Applicable Percentage of Swingline Loans other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof.

“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“GAAP” means generally accepted accounting principles in the United States set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession) including, without limitation, the FASB Accounting Standards Codification, that are applicable to the circumstances as of the date of determination, consistently applied and subject to Section 1.03.

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

“Guarantors” means, collectively, (a) each Domestic Subsidiary of PRGX (other than PUSA) identified as a “Guarantor” on the signature pages hereto, (b) each Person that joins as a Guarantor pursuant to Section 6.13 or otherwise, (c) with respect to Obligations under any Secured Cash Management Agreement under the Guaranty, eachBorrower, and (d) the successors and permitted assigns of the foregoing.

“Guaranty” means the Guaranty made by the Guarantors in favor of the Administrative Agent and the other holders of the Obligations pursuant to Article X.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, natural gas, natural gas liquids, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, toxic mold, infectious or medical wastes and all other substances, wastes, chemicals, pollutants, contaminants or compounds of any nature in any form regulated pursuant to any Environmental Law.

“Honor Date” has the meaning set forth in Section 2.03(c).

“IFRS” means international accounting standards within the meaning of IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements delivered under or referred to herein.

“Immaterial Subsidiary” means any Subsidiary (other than a Loan Party) designated in writing by PRGX as an “Immaterial Subsidiary” for purposes of the Loan Documents. As of the Closing Date, PRGX designates the following Subsidiaries as Immaterial Subsidiaries: (a) PRG USA, Inc., PRGX Puerto Rico, Inc., PRGX Costa Rica, Inc., PRGX Chile, Inc., PRGX Holdings, Inc., PRGX Acquisition Corp., and PRGX Italy, Inc., each a Georgia corporation; (b) PRG-Schultz Venezuela, S.R.L., a Venezuela corporation; and (c) each Subsidiary (if any) omitted from Schedule 5.13 as of the Closing Date.

“Impacted Loans” has the meaning specified in Section 3.03(a).

“Incremental Facility Amendment” has the meaning specified in Section 2.01(b).

“Incremental Request” has the meaning specified in Section 2.01(b).

“Incremental Revolving Commitments” has the meaning specified in Section 2.01(b).

“Incremental Revolving Loans” has the meaning specified in Section 2.01(b).

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a)all obligations for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b)the maximum amount of all direct or contingent obligations arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(c)the Swap Termination Value of any Swap Contract;

(d)all obligations to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business);

(e)indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(f)all Attributable Indebtedness;

(g)all obligations to purchase, redeem, retire, defease or otherwise make any payment prior to the Maturity Date in respect of any Equity Interests or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends;

(h)all Guarantees of such Person in respect of any of the foregoing; and

(i)all Indebtedness of the types referred to in clauses (a) through (h) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

“Indemnitee” has the meaning specified in Section 11.04(b).

“Information” has the meaning specified in Section 11.07.

“Interest Payment Date” means (a) as to any Eurocurrency Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurocurrency Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swingline Loan) or any LIBOR Daily Floating Rate Loan, the first Business Day of each January, April, July and October and the Maturity Date.

“Interest Period” means, as to each Eurocurrency Rate Loan, the period commencing on the date such Eurocurrency Rate Loan is disbursed or converted to or continued as a Eurocurrency Rate Loan and ending on the date one, two, three or six months thereafter (in each case, subject to availability), as selected by the Borrowers in their Loan Notice; provided that:

(a)any Interest Period that would otherwise 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;

(b)any 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) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(c)no Interest Period shall extend beyond the Maturity Date.

“Internal Revenue Code” means the Internal Revenue Code of 1986.

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) an Acquisition. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“IP Rights” means trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights.

“IRS” means the United States Internal Revenue Service.

“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

“Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrowers (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.

“Joinder Agreement” means a joinder agreement substantially in the form of Exhibit 6.13 executed and delivered by a Domestic Subsidiary in accordance with the provisions of Section 6.13 or any other documents as the Administrative Agent shall deem appropriate for such purpose.

“Judgment Currency” has the meaning specified in Section 11.19.

“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of Law.

“L/C Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage. All L/C Advances shall be denominated in Dollars.

“L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing of Revolving Loans. All L/C Borrowings shall be denominated in Dollars.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

“L/C Issuer” means Bank of America, through itself or through one of its designated Affiliates or branch offices, in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

“L/C Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.08. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“Lenders” means each of the Persons identified as a “Lender” on the signature pages hereto, each other Person that becomes a “Lender” in accordance with this Agreement and their successors and assigns and, unless the context requires otherwise, includes the Swingline Lender.

“Lending Office” means, as to the Administrative Agent, the L/C Issuer or any Lender, the office or offices of such Person described as such in such Person’s Administrative Questionnaire, or such other office or offices as such Person may from time to time notify PRGX and the Administrative Agent, which office may include any Affiliate of such Person or any domestic or foreign branch of such Person or such affiliate.

“Letter of Credit” means any standby letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation thereunder. Letters of Credit may be issued in Dollars or in an Alternative Currency.

“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

“Letter of Credit Expiration Date” means the day that is seven (7) days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

“Letter of Credit Fee” has the meaning specified in Section 2.03(h).

“Letter of Credit Sublimit” means an amount equal to the lesser of (a) $5,000,000 and (b) the Aggregate Revolving Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Revolving Commitments. As of the Closing Date, the Letter of Credit Sublimit is set forth on Schedule 2.01.

“Leverage Increase Period” has the meaning specified in Section 7.11(a).

“LIBOR” has the meaning specified in the definition of Eurocurrency Rate.

“LIBOR Daily Floating Rate” means the fluctuating rate of interest, which can change on each business day, equal to the LIBOR, or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at or about 11:00 a.m., London time, two (2) Business Days prior to the date in question, for Dollar deposits with a term equivalent to a one (1) month term beginning on that date; provided that: (a) to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent and (b) if the LIBOR Daily Floating Rate shall be less than zero, such rate shall be deemed zero for purposes of the Loan Documents.

“LIBOR Daily Floating Rate Loan” means a Loan that bears interest at a rate based on the definition of “LIBOR Daily Floating Rate.” All LIBOR Daily Floating Rate Loans shall be denominated in Dollars.

“LIBOR Screen Rate” means the LIBOR quote on the applicable screen page the Administrative Agent designates to determine LIBOR (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time).

“LIBOR Successor Rate Conforming Changes” means, with respect to any proposed LIBOR Successor Rate, any conforming changes to the definition of Base Rate, Interest Period, timing and frequency of determining rates and making payments of interest and other administrative matters as may be appropriate, in the discretion of the Administrative Agent, to reflect the adoption of such LIBOR Successor Rate and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as the Administrative Agent determines in consultation with PRGX).

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

“Loan” means an extension of credit by a Lender to the Borrowers under Article II in the form of a Revolving Loan or a Swingline Loan.

“Loan Documents” means this Agreement, each Note, each Issuer Document, each Joinder Agreement, the Collateral Documentsand the Fee Letter (but specifically excluding any and all Cash Management Agreements and Secured Cash Management Agreements).

“Loan Notice” means a notice of (a) a Borrowing of Revolving Loans, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurocurrency Rate Loans, in each case pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit 2.02 or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent) appropriately completed and signed by a Responsible Officer of the Borrowers.

“Loan Parties” means, collectively, each Borrower and each Guarantor.

“Mandatory Cost” means any amount incurred periodically by any Lender during the term of this Agreement which constitutes fees, costs or charges imposed on lenders generally in the jurisdiction in which such Lender is domiciled, subject to regulation or has its Facility Office by any Governmental Authority.

“Master Agreement” has the meaning specified in the definition of “Swap Contract.”

“Material Acquisition” means any Permitted Acquisition (or series of related or unrelated Permitted Acquisitions occurring within a six (6) month period) for which the total purchase consideration (including any assumed Indebtedness of the target of such Permitted Acquisition) equals or exceeds $10,000,000. The calculation of such total purchase consideration shall be made by PRGX on a reasonable basis, and may take into account (among other things) any non-cash component of such purchase consideration and the reasonably estimated amount of any Deferred Payments and any Earn-Out Payments.

“Material Adverse Effect” means any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singularly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences whether or not related, resulting in a material adverse change in, or a material adverse effect on, (a) the business, results of operations, financial condition, assets or liabilities of PRGX and its Subsidiaries taken as a whole, (b) the ability of either Borrower (or of the Loan Parties, taken as a whole) to perform any of its or their respective obligations under the Loan Documents, (c) the rights and remedies of the Administrative Agent, the L/C Issuer and the Lenders under any of the Loan Documents or (d) the legality, validity or enforceability of any of the Loan Documents.

“Material Contract” means, with respect to any Person, each contract or agreement (a) material to the business, condition (financial or otherwise), operations, performance, properties or prospects of such Person or (b) any other contract, agreement, permit or license, written or oral, of either Borrower and its Subsidiaries as to which the breach, nonperformance, cancellation or failure to renew by any party thereto, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

“Maturity Date” means March 14, 2024; provided, however, that if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

“Maximum Rate” has the meaning specified in Section 11.09.

“Minimum Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during any period when a Lender constitutes a Defaulting Lender, an amount equal to one hundred five percent (105%) of the Fronting Exposure of the L/C Issuer with respect to Letters of Credit issued and outstanding at such time and (b) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.14(a)(i), (a)(ii) or (a)(iii), an amount equal to one hundred five percent (105%) of the Outstanding Amount of all L/C Obligations.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“Multiple Employer Plan” means a Pension Plan which has two or more contributing sponsors (including either Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 11.01 and (b) has been approved by the Required Lenders.

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.

“Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).

“Non-Reinstatement Deadline” has the meaning specified in Section 2.03(b)(iv).

“Note” has the meaning specified in Section 2.11(a).

“Notice of Loan Prepayment” means a notice of prepayment with respect to a Loan, which shall be substantially in the form of Exhibit 2.05 or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrowers.

“Obligations” means with respect to each Loan Party: (a) all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit; and (b) all obligations of any Loan Party owing to a Cash Management Bank in respect of Secured Cash Management Agreements; in each case identified in clauses (a) and (b) whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement or limited liability company agreement (or equivalent or comparable documents with respect to any non-U.S. jurisdiction); (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction) and (d) with respect to all entities, any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction).

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06).

“Outstanding Amount” means (a) with respect to any Loans on any date, the Dollar Equivalent amount of the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of any Loans occurring on such date; and (b) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of the aggregate outstanding amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Borrowers of Unreimbursed Amounts.

“Overnight Rate” means, for any day, (a) with respect to any amount denominated in Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight rate determined by the Administrative Agent, the L/C Issuer, or the Swingline Lender, as the case may be, in accordance with banking industry rules on interbank compensation, and (b) with respect to any amount denominated in an Alternative Currency, the rate of interest per annum at which overnight deposits in the applicable Alternative Currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by a branch or Affiliate of Bank of America in the applicable offshore interbank market for such currency to major banks in such interbank market.

“Participant” has the meaning specified in Section 11.06(d).

“Participant Register” has the meaning specified in Section 11.06(d).

“Participating Member State” means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Act” means the Pension Protection Act of 2006.

“Pension Funding Rules” means the rules of the Internal Revenue Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Internal Revenue Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Internal Revenue Code and Sections 302, 303, 304 and 305 of ERISA.

“Pension Plan” means any employee pension benefit plan within the meaning of Section 3(2) of ERISA (including a Multiple Employer Plan but excluding a Multiemployer Plan) that is maintained or contributed to by either Borrower or any ERISA Affiliate and that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code.

“Permitted Acquisition” means an Investment consisting of an Acquisition by PRGX or any Subsidiary, providedthat: (a) the Required Lenders consent thereto; or (b) the following conditions shall be satisfied in respect of such Acquisition: (i) no Default or Event of Default shall have occurred and be continuing or would result from such Acquisition, (ii) the property acquired (or the property of the Person acquired) in such Acquisition is used or useful in the same or a similar line of business as PRGX and its Subsidiaries were engaged in on the Closing Date (or any reasonable extensions or expansions thereof), (iii) in the case of an Acquisition of the Equity Interests of another Person, the board of directors (or other comparable governing body) or equityholders of such other Person shall have duly approved such Acquisition, (iv) PRGX shall have delivered to the Administrative Agent a Pro Forma Compliance Certificate demonstrating that the Loan Parties would be in compliance with the financial covenants set forth in Section 7.11 recomputed as of the end of the period of the four fiscal quarters most recently ended for which PRGX has delivered financial statements pursuant to Section 6.01(a) or (b) after giving effect to such Acquisition on a Pro Forma Basis, (v) the representations and warranties made by the Loan Parties in each Loan Document shall be true and correct in all material respects at and as if made as of the date of such Acquisition (after giving effect thereto) and (vi) at least ten (10) Business Days (or such shorter period as the Administrative Agent may agree in its sole discretion) prior to the closing of such Acquisition, PRGX shall give written notice of such transaction to the Administrative Agent (which shall promptly deliver a copy to the Lenders) (the “Acquisition Notice”), which Acquisition Notice shall include either (A) the final acquisition agreement or the then current draft of the acquisition agreement or (B) a reasonably detailed description of the material terms of such Acquisition (including, without limitation, the purchase price and method and structure of payment), and shall be accompanied by such additional documentation regarding the Acquisition as the Administrative Agent shall reasonably require (including, without limitation, financial statements or a financial review of such target, as applicable, for its two (2) most recent fiscal years in form and substance reasonably acceptable to the Administrative Agent and unaudited fiscal year-to-date statements for the two (2) most recent interim periods, provided,that if such financial statements, financial reviews or unaudited fiscal year-to-date statements (as the case may be) are not available for the target’s most recent two (2) fiscal years, then the Administrative Agent, in its sole discretion, may permit and accept the delivery of such financial statements, financial reviews or unaudited fiscal year-to-date statements (as the case may be) comprised of a shorter time-frame).

“Permitted Liens” means, at any time, Liens in respect of property of any Loan Party or any Subsidiary permitted to exist at such time pursuant to the terms of Section 7.01.

“Permitted Transfers” means (a) Dispositions of inventory in the ordinary course of business; (b) Dispositions of property to PRGX or any Subsidiary; provided, that if the transferor of such property is a Loan Party then the transferee thereof must be a Loan Party; (c) Dispositions of accounts receivable in connection with the collection or compromise thereof; (d) Dispositions of machinery and equipment no longer used or useful in the conduct of business of the Loan Parties and their Subsidiaries that are Disposed of in the ordinary course of business; (e) licenses, sublicenses, leases or subleases granted to others not interfering in any material respect with the business of PRGX and its Subsidiaries; and (f) the sale or disposition of Cash Equivalents for fair market value.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Platform” has the meaning specified in Section 6.02.

“PRGX” has the meaning specified in the introductory paragraph hereto.

“Pro Forma Basis” means, with respect to any transaction, that for purposes of calculating the financial covenants set forth in Section 7.11, such transaction (including the incurrence of any Indebtedness therewith) shall be deemed to have occurred as of the first day of the most recent four fiscal quarter period preceding the date of such transaction for which financial statements were required to be delivered pursuant to Section 6.01(a) or 6.01(b). In connection with the foregoing, (a) with respect to any Disposition or Recovery Event, (i) income statement and cash flow statement items (whether positive or negative) attributable to the property disposed of shall be excluded to the extent relating to any period occurring prior to the date of such transaction and (ii) Indebtedness which is retired shall be excluded and deemed to have been retired as of the first day of the applicable period and (b) with respect to any Acquisition, (i) income statement and cash flow statement items attributable to the Person or property acquired shall be included to the extent relating to any period applicable in such calculations to the extent (A) such items are not otherwise included in such income statement and cash flow statement items for PRGX and its Subsidiaries in accordance with GAAP or in accordance with any defined terms set forth in Section 1.01 and (B) such items are supported by financial statements or other information reasonably satisfactory to the Administrative Agent and (ii) any Indebtedness incurred or assumed by any Loan Party or any Subsidiary (including the Person or property acquired) in connection with such transaction and any Indebtedness of the Person or property acquired which is not retired in connection with such transaction (A) shall be deemed to have been incurred as of the first day of the applicable period and (B) if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination.

“Pro Forma Compliance Certificate” means a certificate of a Responsible Officer of PRGX containing reasonably detailed calculations of the financial covenants set forth in Section 7.11 recomputed as of the end of the period of the four fiscal quarters most recently ended for which PRGX has delivered financial statements pursuant to Section 6.01(a) or (b) after giving effect to the applicable transaction on a Pro Forma Basis.

“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

“Public Lender” has the meaning specified in Section 6.02.

“PUSA” has the meaning specified in the introductory paragraph hereto.

“Qualified ECP Guarantor” means, at any time, each Loan Party with total assets exceeding $10,000,000 or that qualifies at such time as an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” at such time under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“Ratable Share” has the meaning specified in Section 10.06(b).

“Rate Determination Date” means two (2) Business Days prior to the commencement of such Interest Period (or such other day as is generally treated as the rate fixing day by market practice in such interbank market, as determined by the Administrative Agent; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, then “Rate Determination Date” means such other day as otherwise reasonably determined by the Administrative Agent).

“Recipient” means the Administrative Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.

“Recovery Event” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of any Loan Party or any Subsidiary.

“Register” has the meaning specified in Section 11.06(c).

“Registered IP Rights” has the meaning specified in Section 5.17.

“Related Indemnified Party” means (a) any controlling Person or controlled Affiliate of such Indemnitee, (b) the respective directors, officers or employees of such Indemnitee or any of its controlling Persons or controlled Affiliates and (c) the respective agents of such Indemnitee or any of its controlling Persons or controlled Affiliates, in the case of this clause (c), acting on behalf of, or at the express instructions of, such Indemnitee, controlling Person or such controlled Affiliate; provided, that each reference to a controlling Person, controlled Affiliate, director, officer or employee in this sentence pertains to a controlling Person, controlled Affiliate, director, officer or employee involved in the negotiation, syndication, administration or enforcement of the Loan Documents.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“Removal Effective Date” has the meaning specified in Section 9.06.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived.

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Loans, a Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swingline Loan, a Swingline Loan Notice.

“Required Lenders” means, at any time, at least two (2) Lenders having Total Credit Exposures representing more than fifty percent (50%) of the Total Credit Exposures of all Lenders (unless there is only one (1) Lender, in which case such Lender shall constitute Required Lenders). The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided that the amount of any participation in any Swingline Loan and Unreimbursed Amounts that such Defaulting Lender has failed to fund that have not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swingline Lender or L/C Issuer, as the case may be, in making such determination.

“Resignation Effective Date” has the meaning specified in Section 9.06.

“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party, and, solely for purposes of the delivery of incumbency certificates, the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. To the extent requested by the Administrative Agent, each Responsible Officer will provide an incumbency certificate and appropriate authorization documentation, in form and substance reasonably satisfactory to the Administrative Agent.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests of any Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Equity Interests or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent Person thereof), or any option, warrant or other right to acquire any such dividend or other distribution or payment. For the avoidance of doubt, payments as consideration for the purchase price in connection with a Permitted Acquisition, including Earn-Out Payments and Deferred Payments with respect thereto, do not constitute “Restricted Payments.”

“Revaluation Date” means (a) with respect to any Loan, each of the following: (i) each date of a Borrowing of a Eurocurrency Rate Loan denominated in an Alternative Currency, (ii) each date of a continuation of a Eurocurrency Rate Loan denominated in an Alternative Currency pursuant to Section 2.02, and (iii) such additional dates as the Administrative Agent shall determine or the Required Lenders shall require; and (b) with respect to any Letter of Credit, each of the following: (i) each date of issuance, amendment and/or extension of a Letter of Credit denominated in an Alternative Currency, (ii) each date of any payment by the L/C Issuer under any Letter of Credit denominated in an Alternative Currency, and (iii) such additional dates as the Administrative Agent or the L/C Issuer shall determine or the Required Lenders shall require.

“Revolving Commitment” means, as to each Lender, its obligation to (a) make Revolving Loans to the Borrowers pursuant to Section 2.01, (b) purchase participations in L/C Obligations, and (c) purchase participations in Swingline Loans, in an aggregate principal amount at any one time outstanding not to exceed the Dollar amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto or in any documentation executed by such Lender pursuant to Section 2.01(b), as applicable as such amount may be adjusted from time to time in accordance with this Agreement.

“Revolving Credit Exposure” means, as to any Lender at any time, the aggregate Outstanding Amount at such time of its Revolving Loans and its participation in L/C Obligations and Swingline Loans at such time.

“Revolving Loan” has the meaning specified in Section 2.01(a).

“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw Hill Companies, Inc. and any successor thereto.

“Sale and Leaseback Transaction” means, with respect to any Person, any arrangement, directly or indirectly, whereby such Person shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred.

“Same Day Funds” means (a) with respect to disbursements and payments in Dollars, immediately available funds, and (b) with respect to disbursements and payments in an Alternative Currency, same day or other funds as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency.

“Sanction(s)” means any sanction administered or enforced by the United States Government (including without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury (“HMT”) or other relevant sanctions authority.

“Scheduled Unavailability Date” has the meaning specified in Section 3.07(b).

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“Secured Cash Management Agreement” means any Cash Management Agreement that is entered into by and between any Loan Party and any Cash Management Bank with respect to such Cash Management Agreement. For the avoidance of doubt, a holder of Obligations in respect of Secured Cash Management Agreements shall be subject to the last paragraph of Section 8.03 and Section 9.11.

“Secured Party Designation Notice” means a notice from any Lender or an Affiliate of a Lender substantially in the form of Exhibit 1.01.

“Securitization Transaction” means, with respect to any Person, any financing transaction or series of financing transactions (including factoring arrangements) pursuant to which such Person or any Subsidiary of such Person may sell, convey or otherwise transfer, or grant a security interest in, accounts, payments, receivables, rights to future lease payments or residuals or similar rights to payment to a special purpose subsidiary or affiliate of such Person.

“Security Agreement” means the security and pledge agreement, dated as of the Closing Date, executed in favor of the Administrative Agent for the benefit of the holders of the Obligations by each of the Loan Parties.

“Solvent” or “Solvency” means, with respect to any Person as of a particular date, that on such date (a) such Person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the ordinary 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 such debts and liabilities as they mature in the ordinary course of business, (c) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s property would constitute unreasonably small capital, (d) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person and (e) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Spot Rate” for a currency means the rate determined by the Administrative Agent or the L/C Issuer, as applicable, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two (2) Business Days prior to the date as of which the foreign exchange computation is made; providedthat the Administrative Agent or the L/C Issuer may obtain such spot rate from another financial institution designated by the Administrative Agent or the L/C Issuer if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; and providedfurther that the L/C Issuer may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in an Alternative Currency.

“Sterling” and “£” mean the lawful currency of the United Kingdom.

“Subordinated Debt” means: (a) the intercompany Indebtedness subordinated pursuant to Section 11.21; (b) any Indebtedness subordinated pursuant to Article X; and (c) any other Indebtedness (other than Deferred Payments and Earn-Out Payments) incurred by any Loan Party which by its terms (i) is subordinated in right of payment to the prior payment of the Obligations and (ii) contains other terms, including without limitation, standstill, interest rate, maturity and amortization, and insolvency-related provisions, in all respects acceptable to the Administrative Agent in its sole discretion. For the avoidance of doubt, to the extent the Loan Parties in their sole discretion determine to cause any Indebtedness consisting of Deferred Payments and/or Earn-Out Payments to be subordinated in right of payment to the prior payment of the Obligations (or of any other obligations of the Loan Parties), such Indebtedness shall not thereby constitute “Subordinated Debt” for purposes of the Loan Documents; and the Loan Parties in their sole discretion thereafter from time to time may waive or amend such subordination provisions (including to eliminate the same in whole or in part).

“Subordinated Debt Documents” means all agreements (including without limitation intercreditor agreements, instruments and other documents) pursuant to which Subordinated Debt has been or will be issued or otherwise setting forth the terms of any Subordinated Debt. For the avoidance of doubt, this Agreement shall not constitute a “Subordinated Debt Document” notwithstanding the provisions contained herein providing for the subordination of certain Indebtedness and other obligations.

“Subordinating Loan Party” has the meaning specified in Section 11.21.

“Subordinating Provisions” has the meaning specified in Section 8.01(l).

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of Voting Stock or other controlling ownership interest is at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of PRGX.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

“SWIFT” has the meaning specified in Section 2.03(f).

“Swingline Lender” means Bank of America in its capacity as provider of Swingline Loans, or any successor Swingline lender hereunder.

“Swingline Loan” has the meaning specified in Section 2.04(a).

“Swingline Loan Notice” means a notice of a Borrowing of Swingline Loans pursuant to Section 2.04(b), which shall be substantially in the form of Exhibit 2.04 or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrowers.

“Swingline Sublimit” means an amount equal to the lesser of (a) $5,000,000 and (b) the Aggregate Revolving Commitments. The Swingline Sublimit is part of, and not in addition to, the Aggregate Revolving Commitments. As of the Closing Date, the Swingline Sublimit is set forth on Schedule 2.01.

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilizes a single shared platform and which was launched on November 19, 2007.

“TARGET Day” means any day on which TARGET2 (or, if such payment system ceases to be operative, such other payment system, if any, determined by the Administrative Agent to be a suitable replacement) is open for the settlement of payments in Euro.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Threshold Amount” means $2,000,000.

“Total Credit Exposure” means, as to any Lender at any time, and without duplication, the unused Revolving Commitments of such Lender at such time, the outstanding Loans of such Lender at such time and such Lender’s participation in L/C Obligations and Swingline Loans at such time.

“Total Revolving Outstandings” means the aggregate Outstanding Amount of all Revolving Loans, all Swingline Loans and all L/C Obligations.

“Type” means, with respect to any Loan, its character as a Base Rate Loan, LIBOR Daily Floating Rate Loan or a Eurocurrency Rate Loan.

“UCP” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ICC”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).

“United States” and “U.S.” mean the United States of America.

“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.

“U.S. Tax Compliance Certificate” has the meaning specified in Section 3.01(e)(ii)(B)(3).

“Voting Stock” means, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

1.02Other Interpretive Provisions.

With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a)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 expressly so stated), unless the context requires otherwise. The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Loan Document or Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, amended and restated, modified, extended, restated, replaced or supplemented from time to time (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, Preliminary Statements of and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any Law shall include all statutory and regulatory rules, regulations, orders and provisions consolidating, amending, replacing or interpreting such Law and any reference to any Law or regulation shall, unless otherwise specified, refer to such Law or regulation as amended, modified, extended, restated, replaced or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all assets and properties, tangible and intangible, real and personal, including cash, securities, accounts and contract rights.

(b)In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

(c)Any reference herein to a merger, transfer, consolidation, amalgamation, assignment, sale or disposition, or similar term, shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation, assignment, sale or disposition, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).

(d)Section, subsection and other headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

1.03Accounting Terms.

(a)Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the 2017 Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, (i) Indebtedness of the Loan Parties and their Subsidiaries shall be deemed to be carried at one hundred percent (100%) of the outstanding principal amount thereof, and the effects of FASB ASC 825 on financial liabilities shall be disregarded and (ii) no effect shall be given to any change in accounting for leases pursuant to GAAP resulting from the implementation of FASB ASU No. 2016-02, Leases (Topic 842) (as the same may be amended from time to time) or any changes in GAAP arising therefrom or similar changes, to the extent such adoption would require recognition of a lease liability where such lease (or similar arrangement) would not have required a lease liability under GAAP as in effect on December 31, 2017.

(b)Changes in GAAP. If at any time any change in GAAP (including the adoption of IFRS) would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrowers or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); providedthat, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrowers shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

(c)Calculations. Notwithstanding the above, the parties hereto acknowledge and agree that all calculations of the financial covenants in Section 7.11 (including for purposes of determining the Applicable Rate) shall be made on a Pro Forma Basis with respect to (i) any Disposition of all of the Equity Interests of, or all or substantially all of the assets of, a Subsidiary, (ii) any Disposition of a line of business or division of any Loan Party or Subsidiary, (iii) any Acquisition, in each case, occurring during the applicable period or (iv) with respect to calculations of financial covenants for purposes of Section 2.01(b) only, repayment of indebtedness (other than revolving indebtedness for which no permanent reduction in commitments has been made).

1.04Rounding.

Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.05Exchange Rates; Currency Equivalents.

(a)The Administrative Agent or the L/C Issuer, as applicable, shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of Credit Extensions and Outstanding Amounts denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by Loan Parties hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent or the L/C Issuer, as applicable.

(b)Wherever in this Agreement in connection with a Borrowing, conversion, continuation or prepayment of a Eurocurrency Rate Loan or the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Borrowing, Eurocurrency Rate Loan or Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent or the L/C Issuer, as the case may be.

(c)The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Eurocurrency Rate” or “LIBOR Daily Floating Rate” or with respect to any comparable or successor rate thereto.

1.06Change of Currency.Each obligation of the Borrowers to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the Closing Date shall be redenominated into Euro at the time of such adoption. If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; provided that if any Borrowing in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Borrowing, at the end of the then current Interest Period.

(a)Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro.

(b)Each provision of this Agreement also shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect a change in currency of any other country and any relevant market conventions or practices relating to the change in currency.

1.07Times of Day.

Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

1.08Letter of Credit Amounts.

Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent of the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the Dollar Equivalent of the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

ARTICLE IITHE REVOLVING COMMITMENTS AND CREDIT EXTENSIONS

2.01Revolving Loans.

(a)Revolving Loans. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “Revolving Loan”) to the Borrowers, on a joint and several basis and as co-borrowers, in Dollars or in one or more Alternative Currencies from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Revolving Commitment; provided, however, that after giving effect to any Borrowing of Revolving Loans, (i) the Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments, and (ii) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Revolving Commitment. Within the limits of each Lender’s Revolving Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01. Revolving Loans may be Base Rate Loans, LIBOR Daily Floating Rate Loans or Eurocurrency Rate Loans, or a combination thereof, as further provided herein, provided, however, all Borrowings made on the Closing Date shall be made as Base Rate Loans or LIBOR Daily Floating Rate Loans.

(b)Increases of the Aggregate Revolving Commitments. Subject to the terms and conditions set forth herein, the Borrowers shall have the right, from time to time and upon at least ten (10) Business Days’ prior written notice to the Administrative Agent (an “Incremental Request”), to request to increase the Aggregate Revolving Commitments (the “Incremental Revolving Commitments”; and revolving loans made thereunder the “Incremental Revolving Loans”) subject, however, in any such case, to satisfaction of the following conditions precedent:

(i)the aggregate amount of all Incremental Revolving Commitments effected pursuant to this Section 2.01(b) shall not exceed $25,000,000;

(ii)on the date on which any Incremental Facility Amendment is to become effective, both immediately prior to and immediately after giving effect to the incurrence of any Revolving Loans outstanding on such date (including any Incremental Revolving Loans to be made on such date) and any related transactions, no Default or Event of Default shall have occurred and be continuing;

(iii)on the date on which any Incremental Facility Amendment is to become effective, both immediately prior to and immediately after giving effect to the incurrence of any Revolving Loans outstanding on such date (including any Incremental Revolving Loans to be made on such date) and any related transactions, on a Pro Forma Basis, the Loan Parties shall be in compliance with the financial covenants set forth in Section 7.11;

(iv)the representations and warranties set forth in Article V shall be true and correct in all material respects (or if such representation and warranty is qualified by materiality or Material Adverse Effect, it shall be true and correct) on and as of the date on which such Incremental Facility Amendment is to become effective, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (or if such representation and warranty is qualified by materiality or Material Adverse Effect, it shall be true and correct) as of such earlier date;

(v)such Incremental Revolving Commitments shall be in a minimum amount of $10,000,000 and in integral multiples of $5,000,000 in excess thereof (or such lesser amounts as agreed by the Administrative Agent);

(vi)any Incremental Revolving Commitments shall be made on the same terms and provisions (other than upfront fees) as apply to the existing Revolving Commitments, including with respect to maturity date, interest rate and prepayment provisions, and shall not constitute a credit facility separate and apart from the existing revolving credit facility described in Section 2.01(a);

(vii)the Administrative Agent shall have received (A) a certificate of a Responsible Officer of PRGX certifying satisfaction of the conditions to such Incremental Revolving Commitments set forth in Section 2.01(b)(ii), (iii) and (iv), and, with respect to Section 2.01(b)(iii), demonstrating compliance with the financial covenants on a Pro Forma Basis as required thereunder and (B) additional commitments in a corresponding amount of such requested Incremental Revolving Commitments from either existing Lenders and/or one or more other institutions that qualify as Eligible Assignees and which are reasonably acceptable to the Administrative Agent, the Swingline Lender, the L/C Issuer and PRGX (it being understood and agreed that each existing Lender shall have the right, but not the obligation, to provide an additional commitment in accordance with its ratable share of the existing Aggregate Revolving Commitments);

(viii)the Administrative Agent shall have received customary closing certificates and legal opinions and all other documents (including resolutions of the board of directors of the Loan Parties) it may reasonably request relating to the corporate or other necessary authority for such Incremental Revolving Commitments and the validity of such Incremental Revolving Commitments, and any other matters relevant thereto, all in form and substance reasonably satisfactory to the Administrative Agent; and

(ix)the Administrative Agent shall have received such amendments to the Collateral Documents as the Administrative Agent reasonably requests to cause the Collateral Documents to secure the Obligations (in a manner consistent with the terms of the Loan Documents) after giving effect to such Incremental Revolving Commitments.

Any Incremental Revolving Commitments shall be evidenced by an amendment (an “Incremental Facility Amendment”) to this Agreement, giving effect to the modifications permitted by this Section 2.01(b) (and subject to the limitations set forth in the immediately preceding paragraph), executed by the Loan Parties, the Administrative Agent and each Lender providing a portion of the Incremental Revolving Commitment; which such amendment, when so executed, shall amend this Agreement as provided therein. Each Incremental Facility Amendment shall also require such amendments to the other Loan Documents, and such other new Loan Documents, as the Administrative Agent reasonably deems necessary or appropriate to effect the modifications and credit extensions permitted by this Section 2.01(b). Neither any Incremental Facility Amendment, nor any such amendments to the other Loan Documents or such other new Loan Documents, shall be required to be executed or approved by any Lender, other than the Lenders providing such Incremental Revolving Commitments and the Administrative Agent, in order to be effective. The effectiveness of any Incremental Facility Amendment shall be subject to the satisfaction on the date thereof of each of the conditions set forth above and as such other conditions as requested by the Lenders under the Incremental Revolving Loans established in connection therewith.

2.02Borrowings, Conversions and Continuations of Loans.

(a)Each Borrowing, each conversion of Loans from one Type to another Type, and each continuation of Eurocurrency Rate Loans shall be made upon the Borrowers’ irrevocable notice to the Administrative Agent, which may be given by (A) telephone, or (B) a Loan Notice; providedthat any telephonic notice must be confirmed promptly by delivery to the Administrative Agent of a Loan Notice. Each such Loan Notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three (3) Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurocurrency Rate Loans denominated in Dollars or of any conversion of Eurocurrency Rate Loans denominated in Dollars to LIBOR Daily Floating Rate Loans or Base Rate Loans, (ii) four (4) Business Days prior to the requested date of any Borrowing or continuation of Eurocurrency Rate Loans denominated in Alternative Currencies, and (iii) on the requested date of any Borrowing of LIBOR Daily Floating Rate Loans or Base Rate Loans, or conversion of LIBOR Daily Floating Rate Loans to Base Rate Loans or Base Rate Loans to LIBOR Daily Floating Rate Loans. Each Borrowing of, conversion to or continuation of Eurocurrency Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of$1,000,000 in excess thereof. Except as provided in Sections 2.03(c) and 2.04(c), each Borrowing of or conversion to Base Rate Loans or LIBOR Daily Floating Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $500,000 in excess thereof. Each Loan Notice shall specify (i) whether the Borrowers are requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Eurocurrency Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, (v) if applicable, the duration of the Interest Period with respect thereto, and (v) if applicable, the currency of the Loans to be borrowed. If the Borrowers fail to specify a currency in a Loan Notice requesting a Borrowing, then the Loans so requested shall be made in Dollars. If the Borrowers fail to specify a Type of Loan in a Loan Notice or if the Borrowers fail to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, LIBOR Daily Floating Rate Loans; provided, however, that in the case of a failure to timely request a continuation of Loans denominated in an Alternative Currency, such Loans shall be continued as Eurocurrency Rate Loans in their original currency with an Interest Period of one month. Any such automatic conversion to LIBOR Daily Floating Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurocurrency Rate Loans. If the Borrowers request a Borrowing of, conversion to, or continuation of Eurocurrency Rate Loans in any Loan Notice, but fail to specify an Interest Period, they will be deemed to have specified an Interest Period of one month. No Loan may be converted into or continued as a Loan denominated in a different currency, but instead must be repaid in the original currency of such Loan and reborrowed in the other currency.

(b)Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount (and currency) of its Applicable Percentage of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrowers, the Administrative Agent shall notify each Lender of the details of any automatic conversion to LIBOR Daily Floating Rate Loans or continuation of Loans denominated in a currency other than Dollars, in each case as described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in Same Day Funds at the Administrative Agent’s Office for the applicable currency not later than 1:00 p.m., in the case of any Loan denominated in Dollars, and not later than the Applicable Time specified by the Administrative Agent in the case of any Loan denominated in an Alternative Currency, in each case on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Borrowers in like funds as received by the Administrative Agent either by (i) crediting an account of the Borrowers on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrowers (or, to the extent no such instructions have been provided to, with receipt acknowledged by, the Administrative Agent, such funds shall be credited to the account referred to in clause (b)(i) above); provided, however, that if, on the date the Loan Notice with respect to a Borrowing of Revolving Loans denominated in Dollars is given by the Borrowers, there are L/C Borrowings outstanding, then the proceeds of such Borrowing, first, shall be applied to the payment in full of any such L/C Borrowings and second, shall be made available to the Borrowers as provided above.

(c)Except as otherwise provided herein, a Eurocurrency Rate Loan may be continued or converted only on the last day of the Interest Period for such Eurocurrency Rate Loan. During the existence of a Default (or Event of Default, in the case of LIBOR Daily Floating Rate Loans): (i) no Loans may be requested as, converted to or continued as Eurocurrency Rate Loans or LIBOR Daily Floating Rate Loans (as applicable) without the consent of the Required Lenders; and (ii) the Required Lenders may demand that (A) any or all of the outstanding Eurocurrency Rate Loans denominated in Dollars or LIBOR Daily Floating Rate Loans (as applicable) be converted immediately to Base Rate Loans and (B) any or all of the outstanding Eurocurrency Rate Loans denominated in an Alternative Currency be prepaid, or redenominated into Dollars in the amount of the Dollar Equivalent thereof, on the last day of the then current Interest Period with respect thereto.

(d)Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrowers and the Lenders in the absence of manifest error.

(e)After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, as to Eurocurrency Rate Loans there shall not be more than ten Interest Periods in effect.

(f)Notwithstanding anything to the contrary in this Agreement, any Lender may exchange, continue or rollover all or a portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by PRGX, the Administrative Agent and such Lender.

(g)This Section 2.02 shall not apply to Swingline Loans.

2.03Letters of Credit.

(a)The Letter of Credit Commitment.

(i)Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars or in one or more Alternative Currencies for the account of the Borrowers or any of their Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrowers or their Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments, (y) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Revolving Commitment and (z) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by the Borrowers for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrowers that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrowers may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.

(ii)The L/C Issuer shall not issue any Letter of Credit if:

(A)subject to Section 2.03(b)(iii), the expiry date of the requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Lenders (other than Defaulting Lenders) holding a majority of the Revolving Credit Exposure have approved such expiry date; or

(B)the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders that have Revolving Commitments have approved such expiry date.

(iii)The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

(A)any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of Law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

(B)the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally;

(C)except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of Credit is in an initial stated amount less than $100,000 (or such lesser amount as the L/C Issuer may agree in its sole discretion);

(D)except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of Credit is to be denominated in a currency other than Dollars or an Alternative Currency;

(E)the L/C Issuer does not as of the issuance date of the requested Letter of Credit issue Letters of Credit in the requested currency;

(F)any Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the Borrowers or such Defaulting Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.15(b)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion; or

(G)such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.

(iv)The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.

(v)The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.

(vi)The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.

(b)Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.

(i)Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrowers delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrowers. Such Letter of Credit Application may be sent by fax transmission, by United States mail, by overnight courier, by electronic transmission using the system provided by the L/C Issuer, by personal delivery or by any other means acceptable to the L/C Issuer. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least three (3) Business Days (or such earlier or later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount and currency thereof (and in the absence of specification of currency, shall be deemed a request for a Letter of Credit denominated in Dollars); (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, the Borrowers shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may require.

(ii)Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrowers and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrowers or the applicable Subsidiary or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter of Credit.

(iii)If the Borrowers so request in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrowers shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven (7) Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the Borrowers that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each case directing the L/C Issuer not to permit such extension.

(iv)If the Borrowers so request in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that permits the automatic reinstatement of all or a portion of the stated amount thereof after any drawing thereunder (each, an “Auto-Reinstatement Letter of Credit”). Unless otherwise directed by the L/C Issuer, the Borrowers shall not be required to make a specific request to the L/C Issuer to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except as provided in the following sentence, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to reinstate all or a portion of the stated amount thereof in accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit permits the L/C Issuer to decline to reinstate all or any portion of the stated amount thereof after a drawing thereunder by giving notice of such non-reinstatement within a specified number of days after such drawing (the “Non-Reinstatement Deadline”), the L/C Issuer shall not permit such reinstatement if it has received a notice (which may be by telephone or in writing) on or before the day that is seven (7) Business Days before the Non-Reinstatement Deadline (A) from the Administrative Agent that the Required Lenders have elected not to permit such reinstatement or (B) from the Administrative Agent, any Lender or the Borrowers that one or more of the applicable conditions specified in Section 4.02 is not then satisfied (treating such reinstatement as an L/C Credit Extension for purposes of this clause) and, in each case, directing the L/C Issuer not to permit such reinstatement.

(v)Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrowers and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

(c)Drawings and Reimbursements; Funding of Participations.

(i)Upon receipt from the beneficiary of any Letter of Credit of any notice of drawing under such Letter of Credit, the L/C Issuer shall notify the Borrowers and the Administrative Agent thereof. In the case of a Letter of Credit denominated in an Alternative Currency, the Borrowers shall reimburse the L/C Issuer in such Alternative Currency, unless (A) the L/C Issuer (at its option) shall have specified in such notice that it will require reimbursement in Dollars, or (B) in the absence of any such requirement for reimbursement in Dollars, the Borrowers shall have notified the L/C Issuer promptly following receipt of the notice of drawing that the Borrowers will reimburse the L/C Issuer in Dollars. In the case of any such reimbursement in Dollars of a drawing under a Letter of Credit denominated in an Alternative Currency, the L/C Issuer shall notify the Borrowers of the Dollar Equivalent of the amount of the drawing promptly following the determination thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in Dollars, or the Applicable Time on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in an Alternative Currency (each such date, an “Honor Date”), or if the Borrowers receive notice of such drawing after 11:00 a.m. or the Applicable Time on the Honor Date, not later than 10:00 a.m. on the first Business Day following the Honor Date, the Borrower shall reimburse the  L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing and in the applicable currency. In the event that (A) a drawing denominated in an Alternative Currency is to be reimbursed in Dollars pursuant to the second sentence in this Section 2.03(c)(i) and (B) the Dollar amount paid by the Borrowers, whether on or after the Honor Date, shall not be adequate on the date of that payment to purchase in accordance with normal banking procedures a sum denominated in the Alternative Currency equal to the drawing, the Borrowers agree, as a separate and independent obligation, to indemnify the L/C Issuer for the loss resulting from its inability on that date to purchase the Alternative Currency in the full amount of the drawing. If the Borrowers fail to timely reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (expressed in Dollars in the amount of the Dollar Equivalent thereof in the case of a Letter of Credit denominated in an Alternative Currency) (the “Unreimbursed Amount”), and the amount of such Lender’s Applicable Percentage thereof. In such event, the Borrowers shall be deemed to have requested a Borrowing of Revolving Loans that are LIBOR Daily Floating Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of LIBOR Daily Floating Rate Loans, but subject to the unutilized portion of the Aggregate Revolving Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii)Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the L/C Issuer, in Dollars, at the Administrative Agent’s Office for Dollar-denominated payments in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Revolving Loan that is a LIBOR Daily Floating Rate Loan to the Borrowers in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer in Dollars.

(iii)With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing of Revolving Loans that are LIBOR Daily Floating Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Borrowers shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03.

(iv)Until each Lender funds its Revolving Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.

(v)Each Lender’s obligation to make Revolving Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, either Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Revolving Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Borrowers of a Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrowers to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

(vi)If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any reasonable administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Loan included in the relevant Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

(d)Repayment of Participations.

(i)At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrowers or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Applicable Percentage thereof in Dollars and in the same funds as those received by the Administrative Agent.

(ii)If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 11.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the applicable Overnight Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e)Obligations Absolute. The obligation of the Borrowers to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i)any lack of validity or enforceability of such Letter of Credit, this Agreement or any other Loan Document;

(ii)the existence of any claim, counterclaim, setoff, defense or other right that any Loan Party or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii)any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv)waiver by the L/C Issuer of any requirement that exists for the L/C Issuer’s protection and not the protection of the Borrowers or any waiver by the L/C Issuer which does not in fact materially prejudice the Borrowers;

(v)honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;

(vi)any payment made by the L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP, as applicable;

(vii)any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;

(viii)any adverse change in the relevant exchange rates or in the availability of the relevant Alternative Currency to the Borrowers or any Subsidiary or in the relevant currency markets generally; or

(ix)any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any Subsidiary.

The Borrowers shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrowers’ instructions or other irregularity, the Borrowers will immediately notify the L/C Issuer. The Borrowers shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

(f)Role of L/C Issuer. Each Lender and each Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight or time draft, certificates and documents expressly required by such Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrowers hereby assume all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrowers from pursuing such rights and remedies as they may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in Section 2.03(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrowers may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrowers, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrowers which the Borrowers prove, as determined by a final nonappealable judgment of a court of competent jurisdiction, were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight or time draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring, endorsing or assigning or purporting to transfer, endorse or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The L/C Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.

(g)Applicability of ISP; Limitation of Liability. Unless otherwise expressly agreed by the L/C Issuer and the Borrowers when a Letter of Credit is issued, the rules of the ISP shall apply to each Letter of Credit. Notwithstanding the foregoing, the L/C Issuer shall not be responsible to the Borrowers for, and the L/C Issuer’s rights and remedies against the Borrowers shall not be impaired by, any action or inaction of the L/C Issuer required or permitted under any Law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where the L/C Issuer or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such Law or practice.

(h)Letter of Credit Fees. The Borrowers shall pay to the Administrative Agent for the account of each Lender in accordance, subject to Section 2.15, with its Applicable Percentage, in Dollars, a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Rate times the Dollar Equivalent of thedaily amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.08. Letter of Credit Fees shall be (i) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate.

(i)Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Borrowers shall pay directly to the L/C Issuer for its own account, in Dollars, a fronting fee with respect to each Letter of Credit, at the rate per annum specified in the Fee Letter, computed on the Dollar Equivalent of thedaily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.08. In addition, the Borrowers shall pay directly to the L/C Issuer for its own account, in Dollars, the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

(j)Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

(k)Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrowers shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Borrowers hereby acknowledge that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of each Borrower, and that the Borrowers’ business derives substantial benefits from the businesses of such Subsidiaries.

2.04Swingline Loans.

(a)Swingline Facility. Subject to the terms and conditions set forth herein, the Swingline Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.04, may in its sole discretion make loans (each such loan, a “Swingline Loan”) to the Borrowers, on a joint and several basis and as co-borrowers, in Dollars from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swingline Sublimit, notwithstanding the fact that such Swingline Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Revolving Loans and L/C Obligations of the Lender acting as Swingline Lender, may exceed the amount of such Lender’s Revolving Commitment; provided, however, that (i) after giving effect to any Swingline Loan, (A) the Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments and (B) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Revolving Commitment, (ii) the Borrowers shall not use the proceeds of any Swingline Loan to refinance any outstanding Swingline Loan and (iii) the Swingline Lender shall not be under any obligation to make any Swingline Loan if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by such Credit Extension may have, Fronting Exposure. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.04, prepay under Section 2.05, and reborrow under this Section 2.04. Each Swingline Loan shall be a Base Rate Loan. Immediately upon the making of a Swingline Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swingline Lender a risk participation in such Swingline Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Swingline Loan.

(b)Borrowing Procedures. Each Borrowing of Swingline Loans shall be made upon the Borrowers’ irrevocable notice to the Swingline Lender and the Administrative Agent, which may be given by (A) telephone or (B) by a Swingline Loan Notice; providedthat any telephonic notice must be confirmed promptly by delivery to the Swingline Lender and the Administrative Agent of a Swingline Loan Notice. Each such Swingline Loan Notice must be received by the Swingline Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum principal amount of $100,000, and (ii) the requested borrowing date, which shall be a Business Day. Promptly after receipt by the Swingline Lender of any Swingline Loan Notice, the Swingline Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swingline Loan Notice and, if not, the Swingline Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swingline Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Borrowing of Swingline Loans (A) directing the Swingline Lender not to make such Swingline Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swingline Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swingline Loan Notice, make the amount of its Swingline Loan available to the Borrowers.

(c)Refinancing of Swingline Loans.

(i)The Swingline Lender at any time in its sole discretion may request, on behalf of the Borrowers (which hereby irrevocably authorize the Swingline Lender to so request on their behalf), that each Lender make a Revolving Loan that is a Base Rate Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swingline Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Aggregate Revolving Commitments and the conditions set forth in Section 4.02. The Swingline Lender shall furnish PRGX with a copy of the applicable Loan Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Loan Notice available to the Administrative Agent in Same Day Funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swingline Loan) for the account of the Swingline Lender at the Administrative Agent’s Office for Dollar-denominated payments not later than 1:00 p.m. on the day specified in such Loan Notice, whereupon, subject to Section 2.04(c)(ii), each Lender that so makes funds available shall be deemed to have made a Revolving Loan that is a Base Rate Loan to the Borrowers in such amount. The Administrative Agent shall remit the funds so received to the Swingline Lender.

(ii)If for any reason any Swingline Loan cannot be refinanced by such a Borrowing of Revolving Loans in accordance with Section 2.04(c)(i), the request for Revolving Loans that are Base Rate Loans submitted by the Swingline Lender as set forth herein shall be deemed to be a request by the Swingline Lender that each of the Lenders fund its risk participation in the relevant Swingline Loan and each Lender’s payment to the Administrative Agent for the account of the Swingline Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.

(iii)If any Lender fails to make available to the Administrative Agent for the account of the Swingline Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swingline Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swingline Lender at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any reasonable administrative, processing or similar fees customarily charged by the Swingline Lender in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Loan included in the relevant Borrowing or funded participation in the relevant Swingline Loan, as the case may be. A certificate of the Swingline Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

(iv)Each Lender’s obligation to make Revolving Loans or to purchase and fund risk participations in Swingline Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right that such Lender may have against the Swingline Lender, either Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Revolving Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Borrowers of a Loan Notice). No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrowers to repay Swingline Loans, together with interest as provided herein.

(d)Repayment of Participations.

(i)At any time after any Lender has purchased and funded a risk participation in a Swingline Loan, if the Swingline Lender receives any payment on account of such Swingline Loan, the Swingline Lender will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Swingline Lender.

(ii)If any payment received by the Swingline Lender in respect of principal or interest on any Swingline Loan is required to be returned by the Swingline Lender under any of the circumstances described in Section 11.05 (including pursuant to any settlement entered into by the Swingline Lender in its discretion), each Lender shall pay to the Swingline Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the applicable Overnight Rate. The Administrative Agent will make such demand upon the request of the Swingline Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e)Interest for Account of Swingline Lender. The Swingline Lender shall be responsible for invoicing the Borrowers for interest on the Swingline Loans. Until each Lender funds its Revolving Loans that are Base Rate Loans or risk participation pursuant to this Section 2.04 to refinance such Lender’s Applicable Percentage of any Swingline Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swingline Lender.

(f)Payments Directly to Swingline Lender. The Borrowers shall make all payments of principal and interest in respect of the Swingline Loans directly to the Swingline Lender.

2.05Prepayments.

(a)Voluntary Prepayments.

(i)Revolving Loans. The Borrowers may, upon delivery of a Notice of Loan Prepayment to the Administrative Agent, at any time or from time to time voluntarily prepay Revolving Loans in whole or in part without premium or penalty; provided that, unless otherwise agreed by the Administrative Agent, (A) such notice must be received by the Administrative Agent not later than 11:00 a.m. (1) three (3) Business Days prior to any date of prepayment of Eurocurrency Rate Loans denominated in Dollars, (2) four (4) Business Days prior to any date of prepayment of Eurocurrency Rate Loans denominated in Alternative Currencies, and (3) on the date of prepayment of Base Rate Loans or LIBOR Daily Floating Rate Loans; (B) any such prepayment of Eurocurrency Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if less, the entire principal amount thereof then outstanding); and (C) any prepayment of Base Rate Loans or LIBOR Daily Floating Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $500,000 in excess thereof (or, if less, the entire principal amount thereof then outstanding). Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if Eurocurrency Rate Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Borrowers, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurocurrency Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05. Subject to Section 2.15, each such prepayment shall be applied to the Loans of the applicable Lenders in accordance with their respective Applicable Percentages.

(ii)Swingline Loans. The Borrowers may, upon notice to the Swingline Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swingline Loans in whole or in part without premium or penalty; provided that, unless otherwise agreed by the Swingline Lender, (i) such notice must be received by the Swingline Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000 or a whole multiple of $100,000 in excess thereof (or, if less, the entire principal thereof then outstanding). Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrowers, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

(b)Mandatory Prepayments.

(i)    Revolving Commitments. If for any reason the Total Revolving Outstandings at any time exceed the Aggregate Revolving Commitments then in effect, the Borrowers shall immediately prepay Revolving Loans and/or Swingline Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided, however, that the Borrowers shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(b)(i) unless after the prepayment in full of the Revolving Loans and Swingline Loans the Total Revolving Outstandings exceed the Aggregate Revolving Commitments then in effect.

(ii)    Application of Mandatory Prepayments. All amounts required to be paid pursuant to this Section 2.05(b) shall be applied as follows: first, ratably to the L/C Borrowings and the Swingline Loans, second, to the outstanding Revolving Loans, and, third, to Cash Collateralize the remaining L/C Obligations.

Within the parameters of the applications set forth above, prepayments shall be applied first to Base Rate Loans, then to LIBOR Daily Floating Rate Loans and then to Eurocurrency Rate Loans in direct order of Interest Period maturities. All prepayments under this Section 2.05(b) shall be subject to Section 3.05, but otherwise without premium or penalty, and shall be accompanied by interest on the principal amount prepaid through the date of prepayment.

2.06Termination or Reduction of Aggregate Revolving Commitments.

The Borrowers may, upon notice to the Administrative Agent, terminate the Aggregate Revolving Commitments, the Letter of Credit Sublimit or the Swingline Sublimit, or from time to time permanently reduce the Aggregate Revolving Commitments, the Letter of Credit Sublimit or the Swingline Sublimit; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five (5) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Borrowers shall not terminate or reduce the Aggregate Revolving Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Revolving Outstandings would exceed the Aggregate Revolving Commitments, (iv) the Borrowers shall not terminate or reduce the Letter of Credit Sublimit if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit, (v) the Borrowers shall not terminate or reduce the Swingline Sublimit if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount of Swingline Loans would exceed the Swingline Sublimit and (vi) if, after giving effect to any reduction of the Aggregate Revolving Commitments, the Letter of Credit Sublimitor the Swingline Sublimit exceeds the amount of the Aggregate Revolving Commitments, such sublimit shall be automatically reduced by the amount of such excess. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction. Any reduction of the Aggregate Revolving Commitments shall be applied to the Revolving Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Revolving Commitments shall be paid on the effective date of such termination.

2.07Repayment of Loans.

(a)Revolving Loans. The Borrowers shall repay to the Lenders on the Maturity Date the aggregate principal amount of all Revolving Loans outstanding on such date.

(b)Swingline Loans. The Borrowers shall repay each Swingline Loan on the earlier to occur of (i) the date ten (10) Business Days after such Swingline Loan is made and (ii) the Maturity Date.

2.08Interest.

(a)Subject to the provisions of subsection (b) below, (i) each Eurocurrency Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the sum of the Eurocurrency Rate for such Interest Period plus the Applicable Rate applicable to such Loan; (ii) each LIBOR Daily Floating Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the sum of the LIBOR Daily Floating Rate plus the Applicable Rate applicable to such Loan; (iii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the sum of the Base Rate plus the Applicable Rate applicable to such Loan; and (iv) each Swingline Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the sum of the Base Rate plus the Applicable Rate applicable to such Loan. To the extent that any calculation of interest or any fee required to be paid under this Agreement shall be based on (or result in) a calculation that is less than zero, such calculation shall be deemed zero for purposes of this Agreement.

(b)(i)    Upon the occurrence of an Event of Default under Section 8.01(f) or (g)(without regard to any applicable grace periods), outstanding Obligations (including Letter of Credit Fees) shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(i)Upon the request of the Required Lenders, while any Event of Default exists (other than as set forth in clause (b)(i) above), the Borrowers shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(ii)Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(c)Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

2.09Fees.

In addition to certain fees described in subsections (h) and (i) of Section 2.03:

(a)Commitment Fee. The Borrowers shall pay to the Administrative Agent, for the account of each Lender in accordance with its Applicable Percentage, a commitment fee in Dollars equal to the product of (i) the Applicable Rate times (ii) the actual daily amount by which the Aggregate Revolving Commitments exceed the sum of (y) the Outstanding Amount of Revolving Loans and (z) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 2.15. For the avoidance of doubt, the Outstanding Amount of Swingline Loans shall not be counted towards or considered usage of the Aggregate Revolving Commitments for purposes of determining the commitment fee. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the first Business Day of each January, April, July and October, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

(b)Other Fees.

(i)The Borrowers shall pay to the Arranger and the Administrative Agent for their own respective accounts, in Dollars, fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

(ii)The Borrowers shall pay to the Lenders, in Dollars, such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

2.10Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate.

(a)All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the LIBOR Daily Floating Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year), or, in the case of interest in respect of Loans denominated in Alternative Currencies as to which market practice differs from the foregoing, in accordance with such market practice. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

(b)If, as a result of any restatement of or other adjustment to the financial statements of PRGX or for any other reason, PRGX or the Lenders determine that (i) the Consolidated Leverage Ratio as calculated by the Borrowers as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in higher pricing for such period, the Borrowers shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders or the L/C Issuer, as the case may be, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to either Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent, any Lender or the L/C Issuer), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent, any Lender or the L/C Issuer, as the case may be, under this Agreement to the payment of any Obligations hereunder at the Default Rate or under Article VIII. The Borrowers’ obligations under this paragraph shall survive the termination of the Aggregate Revolving Commitments and the repayment of all other Obligations hereunder.

2.11Evidence of Debt.

(a)The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrowers shall execute and deliver to such Lender (through the Administrative Agent) a promissory note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each such promissory note shall be in the form of Exhibit 2.11(a) (a “Note”). Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount, currency and maturity of its Loans and payments with respect thereto.

(b)In addition to the accounts and records referred to in subsection (a) above, each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swingline Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

2.12Payments Generally; Administrative Agent’s Clawback.

(a)General. All payments to be made by the Borrowers shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein and except with respect to principal of and interest on Loans denominated in an Alternative Currency, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date specified herein. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder with respect to principal and interest on Loans denominated in an Alternative Currency shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in such Alternative Currency and in Same Day Funds not later than the Applicable Time specified by the Administrative Agent on the dates specified herein. Without limiting the generality of the foregoing, the Administrative Agent may require that any payments due under this Agreement be made in the United States. If, for any reason, the Borrowers are prohibited by any Law from making any required payment hereunder in an Alternative Currency, the Borrowers shall make such payment in Dollars in the Dollar Equivalent of the Alternative Currency payment amount. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent (i) after 2:00 p.m., in the case of payments in Dollars, or (ii) after the Applicable Time specified by the Administrative Agent in the case of payments in an Alternative Currency, shall in each case be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. Except as otherwise specifically provided for in this Agreement, if any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(b)(i)Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurocurrency Rate Loans (or, in the case of any Borrowing of LIBOR Daily Floating Rate Loans or Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the Borrowers a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrowers severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in Same Day Funds with interest thereon, for each day from and including the date such amount is made available to the Borrowers to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the Overnight Rate, plus any reasonable administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrowers, the interest rate applicable to Base Rate Loans. If the Borrowers and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrowers the amount of such interest paid by the Borrowers for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(i)Payments by Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from PRGX prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuer hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if the Borrowers have not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in Same Day Funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Overnight Rate.

A notice of the Administrative Agent to any Lender or either Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

(c)Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrowers by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d)Obligations of Lenders Several. The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and Swingline Loans and to make payments pursuant to Section 11.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 11.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 11.04(c).

(e)Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

2.13Sharing of Payments by Lenders.

If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it, or the participations in L/C Obligations or in Swingline Loans held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and subparticipations in L/C Obligations and Swingline Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:

(i)if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii)the provisions of this Section shall not be construed to apply to (A) any payment made by or on behalf of the Borrowers pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (B) the application of Cash Collateral provided for in Section 2.14, or (C) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in L/C Obligations or Swingline Loans to any assignee or participant, other than an assignment to any Loan Party or any Subsidiary (as to which the provisions of this Section shall apply).

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

2.14Cash Collateral.

(a)Certain Credit Support Events. If (i) the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, (ii) as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, (iii) the Borrowers shall be required to provide Cash Collateral pursuant to Section 2.05 or 8.02(c) or (iv) there shall exist a Defaulting Lender, the Borrowers shall immediately (in the case of clause (iii) above) or within one Business Day (in all other cases) following any request by the Administrative Agent or the L/C Issuer provide Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (iv) above, after giving effect to Section 2.15(b) and any Cash Collateral provided by the Defaulting Lender). Additionally, if the Administrative Agent notifies PRGX at any time that the Outstanding Amount of all L/C Obligations at such time exceeds one hundred five percent (105%) of the Letter of Credit Sublimit then in effect, then, within two (2) Business Days after receipt of such notice, the Borrowers shall provide Cash Collateral for the Outstanding Amount of the L/C Obligations in an amount not less than the amount by which the Outstanding Amount of all L/C Obligations exceeds the Letter of Credit Sublimit.

(b)Grant of Security Interest.

(i)Each Borrower hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and agrees to maintain, a first priority security interest in all Cash Collateral delivered by such Borrower under Section 2.14(a), and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.14(c). If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent or the L/C Issuer as herein provided (other than Liens permitted under Section 7.01(m)), or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrowers will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. Each Borrower shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.

(ii)To the extent provided by any Defaulting Lender, such Defaulting Lender hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto delivered by such Defaulting Lender under Section 2.15, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.14(c). All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. Each Defaulting Lender shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.

(c)Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.14 or Sections 2.03, 2.05, 2.15 or 8.02 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

(d)Release. Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 11.06(b)(vi))) or (ii) the determination by the Administrative Agent and the L/C Issuer that there exists excess Cash Collateral; provided, however, (x) any such release shall be without prejudice to, and any disbursement or other transfer of Cash Collateral shall be and remain subject to, any other Lien conferred under the Loan Documents and the other applicable provisions of the Loan Documents, and (y) the Person providing Cash Collateral and the L/C Issuer may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

2.15Defaulting Lenders.

(a)Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

(i)Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 11.01.

(ii)Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 11.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the L/C Issuer or Swingline Lender hereunder; third, to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.14; fourth, as PRGX may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and PRGX, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.14; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or the Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of a court of competent jurisdiction obtained by the Borrowers against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise as may be required under the Loan Documents in connection with any Lien conferred thereunder or directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Borrowings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Obligations owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations and Swingline Loans are held by the Lenders pro rata in accordance with the Revolving Commitments hereunder without giving effect to Section 2.15(b). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.15(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii)Certain Fees.

(A)No Defaulting Lender shall be entitled to receive any fee payable under Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Borrowers shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(B)Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.14.

(C)With respect to any fee payable under any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrowers shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations that has been reallocated to such Non-Defaulting Lender pursuant to clause (b) below, (y) pay to the L/C Issuer the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(b)Reallocation of Applicable Percentages to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in L/C Obligations and Swingline Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Revolving Commitment) but only to the extent that such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Revolving Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(c)Cash Collateral, Repayment of Swingline Loans. If the reallocation described in clause (b) above cannot, or can only partially, be effected, the Borrowers shall, without prejudice to any right or remedy available to them hereunder or under applicable Law, (x) first, prepay Swingline Loans in an amount equal to the Swingline Lenders’ Fronting Exposure and (y) second, Cash Collateralize the L/C Issuer’s Fronting Exposure in accordance with the procedures set forth in Section 2.14.

(d)Defaulting Lender Cure. If PRGX, the Administrative Agent, the Swingline Lender and the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.15(b)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

ARTICLE IIITAXES, YIELD PROTECTION AND ILLEGALITY

3.01Taxes.

(a)Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.

(i)Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws. If any applicable Laws (as determined in the good faith discretion of the Administrative Agent) require the deduction or withholding of any Tax from any such payment by the Administrative Agent or a Loan Party, then the Administrative Agent or such Loan Party shall be entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

(ii)If any Loan Party or the Administrative Agent shall be required by the Internal Revenue Code to withhold or deduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment, then (A) the Administrative Agent shall withhold or make such deductions as are determined by the Administrative Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Administrative Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Internal Revenue Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(iii)If any Loan Party or the Administrative Agent shall be required by any applicable Laws other than the Internal Revenue Code to withhold or deduct any Taxes from any payment, then (A) such Loan Party or the Administrative Agent, as required by such Laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) such Loan Party or the Administrative Agent, to the extent required by such Laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(b)Payment of Other Taxes by the Loan Parties. Without limiting the provisions of subsection (a) above, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Laws, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(c)Tax Indemnifications. (i) Each of the Loan Parties shall, and does hereby, jointly and severally indemnify each Recipient, and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrowers by a Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error. Each of the Loan Parties shall, and does hereby, jointly and severally indemnify the Administrative Agent, and shall make payment in respect thereof within ten (10) days after demand therefor, for any amount which a Lender or the L/C Issuer for any reason fails to pay indefeasibly to the Administrative Agent as required pursuant to Section 3.01(c)(ii) below.

(i)Each Lender and the L/C Issuer shall, and does hereby, severally indemnify, and shall make payment in respect thereof within ten (10) days after demand therefor, (x) the Administrative Agent against any Indemnified Taxes attributable to such Lender or the L/C Issuer (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (y) the Administrative Agent and the Loan Parties, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.06(d) relating to the maintenance of a Participant Register and (z) the Administrative Agent and the Loan Parties, as applicable, against any Excluded Taxes attributable to such Lender or the L/C Issuer, in each case, that are payable or paid by the Administrative Agent or a Loan Party in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender and the L/C Issuer hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or the L/C Issuer, as the case may be, under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii).

(d)Evidence of Payments. As soon as practicable, after any payment of Taxes by any Loan Party to a Governmental Authority as provided in this Section 3.01, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)Status of Lenders; Tax Documentation.

(i)Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrowers and the Administrative Agent, at the time or times reasonably requested by the Borrowers or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrowers or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrowers or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrowers or the Administrative Agent as will enable the Borrowers or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(e)(ii)(A), 3.01(e)(ii)(B) and 3.01(e)(ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii)Without limiting the generality of the foregoing,

(A)any Lender that is a U.S. Person shall deliver to the Borrowers and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowers or the Administrative Agent), executed copies of IRS Form W-9 (or successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowers or the Administrative Agent), whichever of the following is applicable:

(1)in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E (or W-8BEN, as applicable) (or successor form) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E (or W-8BEN, as applicable) (or successor form) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(2)executed copies of IRS Form W-8ECI (or successor form);

(3)in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate substantially in the form of Exhibit 3.01-A to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of either Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN-E (or W-8BEN, as applicable) (or successor form); or

(4)to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E (or W-8BEN, as applicable) (or successor form), a U.S. Tax Compliance Certificate substantially in the form of Exhibit 3.01-B or Exhibit 3.01-C, IRS Form W-9 (or successor form), and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit 3.01-D on behalf of each such direct and indirect partner;

(C)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowers or the Administrative Agent), executed copies (or originals, as required) of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrowers or the Administrative Agent to determine the withholding or deduction required to be made; and

(D)if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrowers and the Administrative Agent at the time or times prescribed by Law and at such time or times reasonably requested by the Borrowers or the Administrative Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrowers or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the Closing Date.

(iii)Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrowers and the Administrative Agent in writing of its legal inability to do so.

(f)Treatment of Certain Refunds. Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay to any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from funds paid for the account of such Lender or the L/C Issuer, as the case may be. If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section 3.01, it shall pay to the Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by a Loan Party under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Loan Party, upon the request of the Recipient, agrees to repay the amount paid over to the Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the applicable Recipient be required to pay any amount to the Loan Party pursuant to this subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any Recipient to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Loan Party or any other Person.

(g)Survival. Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the termination of the Aggregate Revolving Commitments and the repayment, satisfaction or discharge of all other Obligations.

3.02Illegality.

If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its Lending Office to perform any of its obligations hereunder or to make, maintain or fund or charge interest with respect to any Credit Extension or to determine or charge interest rates based upon the Eurocurrency Rate or the LIBOR Daily Floating Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars or any Alternative Currency in the applicable interbank market, then, on notice thereof by such Lender to the Borrowers through the Administrative Agent, (i) any obligation of such Lender to issue, make, maintain, fund or charge interest with respect to any such Credit Extension or continue Eurocurrency Rate Loans in the affected currency or currencies or, in the case of Eurocurrency Rate Loans in Dollars or LIBOR Daily Floating Rate Loans, to convert Base Rate Loans to Eurocurrency Rate Loans or LIBOR Daily Floating Rate Loans, shall be suspended and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the LIBOR Daily Floating Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender, shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the LIBOR Daily Floating Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrowers that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable and such Loans are denominated in Dollars, convert all Eurocurrency Rate Loans or LIBOR Daily Floating Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the LIBOR Daily Floating Rate component of the Base Rate), immediately with respect to such LIBOR Daily Floating Rate Loan and either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurocurrency Rate Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurocurrency Rate or the LIBOR Daily Floating Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the LIBOR Daily Floating Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurocurrency Rate or the LIBOR Daily Floating Rate. Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.

3.03Inability to Determine Rates.

(a)If in connection with any request for a Eurocurrency Rate Loan or a conversion to or continuation thereof, (i) the Administrative Agent determines that (A) deposits (whether in Dollars or an Alternative Currency) are not being offered to banks in the applicable offshore interbank market for such currency for the applicable amount and Interest Period of such Eurocurrency Rate Loan, (B) adequate and reasonable means do not exist for determining the Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate Loan (whether denominated in Dollars or an Alternative Currency) or in connection with an existing or proposed LIBOR Daily Floating Rate Loan or Base Rate Loan or (C) a fundamental change has occurred in the foreign exchange or interbank markets with respect to such Alternative Currency (including, without limitation, changes in national or international financial, political or economic conditions or currency exchange rates or exchange controls) (in each case with respect to clause (i), “Impacted Loans”), or (ii) the Administrative Agent or the Required Lenders determine that for any reason the Eurocurrency Rate for any requested Interest Period or LIBOR Daily Floating Rate with respect to a proposed Eurocurrency Rate Loan or LIBOR Daily Floating Rate does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrowers and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurocurrency Rate Loans in the affected currency or currencies or LIBOR Daily Floating Rate shall be suspended (to the extent of the affected LIBOR Daily Floating Rate Loans, Eurocurrency Rate Loans or Interest Periods) and (y) in the event of a determination described in the preceding sentence with respect to the LIBOR Daily Floating Rate component of the Base Rate, the utilization of the LIBOR Daily Floating Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrowers may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Daily Floating Rate Loans and Eurocurrency Rate Loans in the affected currency or currencies (to the extent of the affected LIBOR Daily Floating Rate Loans, Eurocurrency Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

(b)Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (a)(i) of this Section, the Administrative Agent in consultation with the Borrowers and the Required Lenders, may establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (1) the Administrative Agent revokes the notice delivered with respect to the Impacted Loans under clause (a)(i) of this Section, (2) the Administrative Agent or the Required Lenders notify the Administrative Agent and the Borrowers that such alternative interest rate does not adequately and fairly reflect the cost to the Lenders of funding the Impacted Loans, or (3) any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Administrative Agent and the Borrowers written notice thereof.

3.04Increased Costs; Reserves on Eurocurrency Rate Loans.

(a)Increased Costs Generally. If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e)) or the L/C Issuer;

(ii)subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d)of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii)impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement, LIBOR Daily Floating Rate Loans or Eurocurrency Rate Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, the Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.

(b)Capital Requirements. If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Revolving Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.

(c)Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrowers shall be conclusive absent manifest error. The Borrowers shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

(d)Mandatory Costs. If any Lender or the L/C Issuer incurs any Mandatory Costs attributable to the Obligations, then from time to time the Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such Mandatory Costs; provided, that, a Lender or the L/C Issuer shall not be entitled to any compensation pursuant to this Section 3.04(d) to the extent such Lender or the L/C Issuer is not generally imposing such charges or requesting such compensation from other similarly situated borrowers under similar circumstances. Such amount shall be expressed as a percentage rate per annum and shall be payable on the full amount of the applicable Obligations.

(e)Additional Reserve Requirements. The Borrowers shall pay to each Lender, (i) as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each LIBOR Daily Floating Rate Loan or Eurocurrency Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), and (ii)as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any central banking or financial regulatory authority imposed in respect of the maintenance of the Revolving Commitments or the funding of the Eurocurrency Rate Loans or LIBOR Daily Floating Rate Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Revolving Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrowers shall have received at least ten (10) days’ prior notice (with a copy to the Administrative Agent) of such additional interest or costs from such Lender. If a Lender fails to give notice ten (10) days prior to the relevant Interest Payment Date, such additional interest shall be due and payable ten (10) days from receipt of such notice.

(f)Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that the Borrowers shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than six (6) months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

3.05Compensation for Losses.

Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a)any continuation, conversion, payment or prepayment of any Eurocurrency Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b)any failure by the Borrowers (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Eurocurrency Rate Loan on the date or in the amount notified by the Borrowers;

(c)any failure by the Borrowers to make payment of any Loan or drawing under any Letter of Credit (or interest due thereon) denominated in an Alternative Currency on its scheduled due date or any payment thereof in a different currency; or

(d)any assignment of a Eurocurrency Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrowers pursuant to Section 11.13;

including any loss of anticipated profits, any foreign exchange losses and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract. The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurocurrency Rate Loan made by it at the Eurocurrency Rate used in determining the Eurocurrency Rate for such Loan by a matching deposit or other borrowing in the offshore interbank market for such currency for a comparable amount and for a comparable period, whether or not such Eurocurrency Rate Loan was in fact so funded.

3.06Mitigation Obligations; Replacement of Lenders.

(a)Designation of a Different Lending Office. If any Lender requests compensation under Section 3.04, or requires the Borrowers to pay any Indemnified Taxes or additional amounts to any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then at the request of the Borrowers such Lender or the L/C Issuer, as applicable, shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or the L/C Issuer, as applicable, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case may be. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with any such designation or assignment.

(b)Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if the Borrowers are required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.06(a), the Borrowers may replace such Lender in accordance with Section 11.13.

3.07Successor LIBOR.

Notwithstanding anything to the contrary in this Agreement or any other Loan Documents (including Section 11.01 hereof), if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Borrowers or Required Lenders notify the Administrative Agent (with, in the case of the Required Lenders, a copy to the Borrowers) that the Borrowers or Required Lenders (as applicable) have determined, that:

(a)adequate and reasonable means do not exist for ascertaining LIBOR for any requested Interest Period because the LIBOR Screen Rate is not available or published on a current basis and such circumstances are unlikely to be temporary; or

(b)the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which LIBOR or the LIBOR Screen Rate shall no longer be made available, or used for determining the interest rate of loans (such specific date, the “Scheduled Unavailability Date”), or

(c)syndicated loans currently being executed, or that include language similar to that contained in this Section, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR,

then, reasonably promptly after such determination by the Administrative Agent or receipt by the Administrative Agent of such notice, as applicable, the Administrative Agent and the Borrowers may amend this Agreement to replace LIBOR with an alternate benchmark rate (including any mathematical or other adjustments to the benchmark (if any) incorporated therein), giving due consideration to any evolving or then existing convention for similar Dollar denominated syndicated credit facilities for such alternative benchmarks (any such proposed rate, a “LIBOR Successor Rate”), together with any proposed LIBOR Successor Rate Conforming Changes and any such amendment shall become effective at 5:00 p.m. on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Borrowers unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders do not accept such amendment.

If no LIBOR Successor Rate has been determined and the circumstances under clause (a) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Borrowers and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain LIBOR Daily Floating Rate Loans or Eurocurrency Rate Loans shall be suspended, (to the extent of the affected LIBOR Daily Floating Rate Loans, Eurocurrency Rate Loans or Interest Periods), and (y) the LIBOR Daily Floating Rate component shall no longer be utilized in determining the Base Rate. Upon receipt of such notice, the Borrowers may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Daily Floating Rate Loans or Eurocurrency Rate Loans (to the extent of the affected LIBOR Daily Floating Rate Loans, Eurocurrency Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans (subject to the foregoing clause (y)) in the amount specified therein.

Notwithstanding anything else herein, any definition of LIBOR Successor Rate shall provide that in no event shall such LIBOR Successor Rate be less than zero for purposes of this Agreement.

3.08Survival.

All of the Loan Parties’ obligations under this Article III shall survive termination of the Aggregate Revolving Commitments, repayment of all other Obligations hereunder, resignation of the Administrative Agent and the Facility Termination Date.

ARTICLE IVCONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01Conditions of Initial Credit Extension.

This Agreement shall become effective upon, and the obligation of the L/C Issuer and each Lender to make its initial Credit Extension hereunder is subject to, the satisfaction of the following conditions precedent:

(a)Receipt by the Administrative Agent of the following, each in form and substance reasonably satisfactory to the Administrative Agent and each Lender:

(i)Loan Documents. Executed counterparts of this Agreement and the other Loan Documents, each properly executed by a Responsible Officer of the signing Loan Party and, in the case of this Agreement, by each Lender.

(ii)Opinions of Counsel. Favorable opinions of legal counsel to the Loan Parties (including appropriate local counsel), addressed to the Administrative Agent and each Lender, dated as of the Closing Date.

(iii)Organization Documents, Resolutions, Etc.

(A)copies of the Organization Documents of each Loan Party certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and certified by a secretary or assistant secretary of such Loan Party to be true and correct as of the Closing Date;

(B)such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party; and

(C)such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and is validly existing, in good standing and qualified to engage in business in its state of organization or formation.

(iv)Personal Property Collateral.

(A)searches of Uniform Commercial Code filings in the jurisdiction of incorporation or formation, as applicable, of each Loan Party, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens and (B) tax lien and judgment searches;

(B)searches of ownership of intellectual property in the records of the appropriate federal Governmental Authorities, and such patent/trademark/copyright filings as requested by the Administrative Agent in order to perfect the Administrative Agent’s security interest in the intellectual property;

(C)Uniform Commercial Code financing statements for each appropriate jurisdiction as is necessary, in the Administrative Agent’s discretion, to perfect the Administrative Agent’s security interest in the Collateral;

(D)(1) all certificates evidencing any certificated Equity Interests pledged to the Administrative Agent pursuant to the Security Agreement, together with duly executed in blank, undated stock powers attached thereto (unless, with respect to the pledged Equity Interests of any Foreign Subsidiary, such stock powers are deemed unnecessary by the Administrative Agent in its reasonable discretion under the Law of the jurisdiction of organization of such Person) and (2) all other possessory Collateral (together with allonges or assignments, as applicable) required to be delivered to the Administrative Agent as of the Closing Date;

(E)duly executed notices of grant of security interest in the form required by the Security Agreement as are necessary, in the Administrative Agent’s sole discretion, to perfect the Administrative Agent’s security interest in the United States registered intellectual property of the Loan Parties; and

(F)in the case of any personal property Collateral located at a headquarters location leased by each of the Borrowers, such estoppel letters, consents and waivers from the landlords on such real property as may be reasonably required by the Administrative Agent;

(v)Evidence of Insurance. Copies of insurance policy declaration pages or certificates of insurance of the Loan Parties evidencing liability and casualty insurance meeting the requirements set forth in the Loan Documents, including naming the Administrative Agent and its successors and assigns as additional insured (in the case of liability insurance) or lender’s loss payee (in the case of property insurance) on behalf of the Lenders.

(vi)Closing Certificate. A certificate signed by a Responsible Officer of each Borrower certifying that the conditions specified in Sections 4.01(c), 4.01(d), 4.01(f), 4.02(a) and 4.02(b) have been satisfied.

(vii)Solvency Certificate. A certificate signed by a Responsible Officer of each Borrower confirming that (i) each Borrower and (ii) the Loan Parties on a consolidated basis, are, in each case, Solvent before and after giving effect to the consummation of the transactions contemplated herein to occur on the Closing Date.

(viii)Financial Statements and Projections. Copies of interim financial statements of PRGX and its Subsidiaries for the fiscal quarter ended September 30, 2018 and annual projections for PRGX and Subsidiaries for the fiscal years 2019 through 2023 (on a quarterly basis for 2019 and on an annual basis for each fiscal year thereafter), each in form and substance reasonably satisfactory to the Administrative Agent.

(b)KYC Information.

(i)(i) Upon the reasonable request of any Lender made at least ten (10) days prior to the Closing Date, each Borrower shall have provided to such Lender the documentation and other information so requested in connection with applicable environmental regulations, U.S. Department of Treasury Office of Foreign Assets Control, Foreign Corrupt Practices Act, “know your customer” and anti-money-laundering rules and regulations, including the PATRIOT Act, in each case at least five (5) days prior to the Closing Date.

(ii)At least five (5) days prior to the Closing Date, if either Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, it shall deliver a Beneficial Ownership Certification in relation to such Borrower.

(c)Material Adverse Effect. There shall not have occurred since December 31, 2017 any event or condition that has had or could be reasonably expected, either individually or in the aggregate, to have a Material Adverse Effect.

(d)No Litigation. The absence of any action, suit, investigation or proceeding pending or, to the knowledge of the Loan Parties, threatened in any court or before any arbitrator or governmental authority that could reasonably be expected to have a Material Adverse Effect.

(e)Existing Indebtedness. All of the existing Indebtedness for borrowed money of the Loan Parties and their Subsidiaries (other than Indebtedness permitted to exist pursuant to Section 7.03) shall be repaid in full and all security interests related thereto shall be terminated on or prior to the Closing Date.

(f)Consents. The Lenders shall have received evidence that all members, boards of directors, governmental, shareholder and material third party consents and approvals necessary in connection with the entering into of this Agreement have been obtained.

(g)Taxes and Recording Fees. Receipt by the Administrative Agent of such evidence as the Administrative Agent may reasonably request in order to establish that all applicable documentary taxes and recording fees have been paid or are being paid simultaneously herewith.

(h)Fees. Receipt by the Administrative Agent, the Arranger and the Lenders of any fees required to be paid on or before the Closing Date.

(i)Attorney Costs. The Borrowers shall have paid all reasonable fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such reasonable fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrowers and the Administrative Agent).

Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

4.02Conditions to all Credit Extensions.

The obligation of each Lender and the L/C Issuer to honor any Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurocurrency Rate Loans) is subject to the following conditions precedent:

(a)The representations and warranties of each Loan Party contained in this Agreement or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (or if such representation and warranty is qualified by materiality or Material Adverse Effect, it shall be true and correct) on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (or if such representation and warranty is qualified by materiality or Material Adverse Effect, it shall be true and correct) as of such earlier date.

(b)No Default or Event of Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

(c)The Administrative Agent and, if applicable, the L/C Issuer or the Swingline Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.

(d)In the case of a Credit Extension to be denominated in an Alternative Currency, such currency remains an Eligible Currency.

Each Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans from one Type to another Type, or a continuation of Eurocurrency Rate Loans) submitted by either Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE VREPRESENTATIONS AND WARRANTIES

The Loan Parties represent and warrant to the Administrative Agent and the Lenders that:

5.01Existence, Qualification and Power.

Each Loan Party and each Subsidiary (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except (x) in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect and (y) in the case of clause (a), with respect to any Subsidiary that is not a Loan Party, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

5.02Authorization; No Contravention.

The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party have been duly authorized by all necessary corporate or other organizational action, and do not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any material Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any material Law.

5.03Governmental Authorization; Other Consents.

No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by any Loan Party of this Agreement or any other Loan Document other than (a) those that have already been obtained and are in full force and effect, (b) filings to perfect the Liens created by the Collateral Documents and (c) required filings under the Securities Exchange Act of 1934.

5.04Binding Effect.

Each Loan Document has been duly executed and delivered by each Loan Party that is party thereto. Each Loan Document constitutes a legal, valid and binding obligation of each Loan Party that is party thereto, enforceable against each such Loan Party in accordance with its terms.

5.05Financial Statements; No Material Adverse Effect.

(a)The financial statements delivered pursuant to Sections 6.01(a) and 6.01(b) (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of PRGX and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein (subject, in the case of unaudited financial statements, to the absence of footnotes and to normal year-end audit adjustments); and (iii) to the extent required under GAAP to be reflected therein, show all material indebtedness and other liabilities, direct or contingent, of PRGX and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

(b)The 2017 Audited Financial Statements and the unaudited consolidated financial statements of PRGX and its Subsidiaries for the fiscal quarter ending September 30, 2018 (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of PRGX and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby (subject, in the case of unaudited financial statements, to the absence of footnotes and to normal year-end audit adjustments); and (iii) to the extent required under GAAP to be reflected therein, show all material indebtedness and other liabilities, direct or contingent, of PRGX and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

(c)From the date of the 2017 Audited Financial Statements to and including the Closing Date, there has been no Disposition, or Recovery Event, of any material part of the business or property of the Loan Parties and their Subsidiaries, taken as a whole, and no purchase or other acquisition by any of them of any business or property (including any Equity Interests of any other Person) material in relation to the consolidated financial condition of the Loan Parties and their Subsidiaries, taken as a whole, in each case, which is not reflected in the foregoing financial statements or in the notes thereto and has not otherwise been disclosed in writing to the Lenders on or prior to the Closing Date.

(d)Since the date of the 2017 Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

5.06Litigation.

There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Loan Parties after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any Subsidiary or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document or any of the transactions contemplated hereby or (b) either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

5.07No Default.

(a)No Loan Party nor any Subsidiary is in default under or with respect to any Contractual Obligation that individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

(b)No Default or Event of Default has occurred and is continuing.

5.08Ownership of Property.

Each Loan Party and each of its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, in each case except to the extent the same could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.09Environmental Compliance.

(a)The Loan Parties and their Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof the Loan Parties have reasonably concluded that such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b)None of the properties currently owned or operated by any Loan Party or any Subsidiary is listed or proposed for listing on the National Priorities List under CERCLA or on the CERCLIS or any analogous foreign, state or local list. To the knowledge of the Loan Parties, none of the properties formerly owned or operated by any Loan Party or any Subsidiary is listed or proposed for listing on the National Priorities List under CERCLA or on the CERCLIS or any analogous foreign, state or local list. To the knowledge of the Loan Parties, there are no and never have been any underground or above-ground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently or formerly owned or operated by any Loan Party or any Subsidiary. To the knowledge of the Loan Parties, there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or any Subsidiary, except where the presence of such asbestos or asbestos-containing material could not reasonably be expected to result in any material liability to any Loan Party. Neither the Loan Parties nor, to the knowledge of the Loan Parties, any other Person, has released, discharged or disposed of any Hazardous Materials on any property currently owned or operated by any Loan Party or any Subsidiary.

(c)No Loan Party nor any Subsidiary is undertaking as of the Closing Date, and has not completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated, handled or stored by any Loan Party or any Subsidiary and, to the knowledge of the Loan Parties, any other Person at, or transported by any Loan Party or any Subsidiary and, to the knowledge of the Loan Parties, any other Person to or from, any property currently owned or operated by any Loan Party or any Subsidiary have been disposed of in a manner not reasonably expected to result in material liability to any Loan Party or any Subsidiary.

5.10Insurance.

The properties of the Loan Parties and their Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of either Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the applicable Loan Party or the applicable Subsidiary operates. The property and general liability insurance coverage of the Loan Parties as in effect on the Closing Date is outlined as to carrier, policy number, expiration date, type, amount and deductibles on Schedule 5.10.

5.11Taxes.

Each Loan Party and its Subsidiaries have filed all federal income and other material Tax returns and reports required to be filed, and have paid all federal income and other material Taxes that were due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against any Loan Party or any Subsidiary that would, if made, have a Material Adverse Effect. No Loan Party nor any Subsidiary is party to any tax sharing agreement with a Person not a Loan Party or Subsidiary.

5.12ERISA Compliance.

(a)Each Pension Plan has been administered in compliance in all material respects with the applicable provisions of ERISA, the Internal Revenue Code and other federal or state Laws. Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Internal Revenue Code has received a favorable determination letter or is subject to a favorable opinion letter from the IRS to the effect that the form of such Pension Plan is qualified under Section 401(a) of the Internal Revenue Code and the trust related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Internal Revenue Code. To the best knowledge of the Loan Parties, nothing has occurred that would reasonably be expected to cause the loss of such Pension Plan’s tax-qualified status.

(b)There are no pending or, to the best knowledge of the Loan Parties, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Pension Plan that could reasonably be expected to have a Material Adverse Effect. Neither Borrower nor, to the best knowledge of the Loan Parties, any other person engaged in a prohibited transaction with respect to any Pension Plan or violated any of the fiduciary responsibility rules with respect to any Pension Plan, which in either event could reasonably be expected to result in a Material Adverse Effect.

(c)(i) No ERISA Event has occurred or, to the best knowledge of the Loan Parties, is expected to occur; (ii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Internal Revenue Code) is sixty percent (60%) or higher; (iii) no Loan Party nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (iv) no Loan Party nor any ERISA Affiliate has engaged in a transaction that could reasonably be expected to be subject to Section 4069 or Section 4212(c) of ERISA; and (v) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

5.13Subsidiaries.

Set forth on Schedule 5.13 is a complete and accurate list as of the Closing Date of each Loan Party and each Subsidiary that is not an Immaterial Subsidiary and, to the knowledge of the Loan Parties, each Immaterial Subsidiary, together with (i) jurisdiction of organization, (ii) number of shares of each class of Equity Interests outstanding, and (iii) number and percentage of outstanding shares of each class owned (directly or indirectly) by any Loan Party or any Subsidiary. The outstanding Equity Interests of each Loan Party and each Domestic Subsidiary that is not an Immaterial Subsidiary (and, to the extent applicable under applicable foreign Law, each Foreign Subsidiary that is not an Immaterial Subsidiary) are validly issued, fully paid and nonassessable, and, to the knowledge of the Loan Parties, the outstanding Equity Interests of each Immaterial Subsidiary that is a Domestic Subsidiary (and, to the extent applicable under applicable foreign Law, each Immaterial Subsidiary that is a Foreign Subsidiary) are validly issued, fully paid and nonassessable.

5.14Margin Regulations; Investment Company Act.

(a)Neither Borrower is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than twenty-five percent (25%) of the value of the assets (either of a Borrower only or of a Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section 7.01 or Section 7.05 or subject to any restriction contained in any agreement or instrument between either Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 8.01(e) will be margin stock.

(b)Neither Borrower, nor any Person Controlling either of the Borrowers, nor any Subsidiary, is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

5.15Disclosure.

Each Loan Party has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, taken as a whole, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. As of the Closing Date, the information included in the Beneficial Ownership Certification is true and correct in all respects.

5.16Compliance with Laws.

Each Loan Party and Subsidiary is in compliance with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

5.17Intellectual Property; Licenses, Etc.

Each Loan Party and each Subsidiary owns, or possesses the right to use, all of the IP Rights that are reasonably necessary for the operation of their respective businesses (collectively, the “Material IP Rights”). Set forth on Schedule 5.17 is a list, as of the Closing Date, of: (i) all IP Rights registered or pending registration with the United States Copyright Office or the United States Patent and Trademark Office that a Loan Party owns; and (ii) all licenses (excluding, in the case of licensed software, any shrink wrap, click through, browse wrap or commercial off-the-shelf software that has not been modified or customized by a third party for the Loan Parties and that has been licensed in the ordinary course of business to the Loan Parties) of Material IP Rights that are owned by third parties. Except for such claims and infringements that could not reasonably be expected to have a Material Adverse Effect: (x) no claim has been asserted and is pending by any Person challenging or questioning the use of any Material IP Rights or the validity or effectiveness of any Material IP Rights, nor does any Loan Party know of any such claim; and (y) to the knowledge of the Responsible Officers of the Loan Parties, the use of any Material IP Rights by any Loan Party or any Subsidiary or the granting of a right or a license in respect of any Material IP Rights from any Loan Party or any Subsidiary or the operation of the business of any Loan Party or any Subsidiary does not infringe in any material respect on the rights of any other Person. As of the Closing Date, none of the Material IP Rights owned by any Loan Party is subject to any exclusive licensing agreement or similar arrangement in favor of a third party licensee (other than in the ordinary course of business) except as set forth on Schedule 5.17.

5.18Solvency.

Each of the Borrowers is Solvent, and the Loan Parties on a consolidated basis are Solvent.

5.19Perfection of Security Interests in the Collateral.

The Collateral Documents create valid security interests in, and Liens on, the Collateral purported to be covered thereby, which security interests and Liens are currently perfected security interests and Liens (to the extent contemplated by the Loan Documents), prior to all other Liens other than Permitted Liens.

5.20Business Locations; Taxpayer Identification Number.

Set forth on Schedule 5.20(a) is a list of all real property located in the United States that is owned or leased by any Loan Party as of the Closing Date. Set forth on Schedule 5.20(b) is the jurisdiction of organization, chief executive office, exact legal name, U.S. taxpayer identification number and organizational identification number of each Loan Party as of the Closing Date. Except as set forth on Schedule 5.20(c), no Loan Party has during the five years preceding the Closing Date (i) changed its legal name, (ii) changed its state of formation or (iii) been party to a merger, consolidation or other change in structure. Set forth on Schedule 5.20(d) is a list of each domestic deposit and investment account of each Loan Party as of the Closing Date.

5.21OFAC.

None of the Loan Parties, nor any of their Subsidiaries, nor, to the knowledge of the Loan Parties and their Subsidiaries, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity that is (or is owned or controlled by any individual or entity that is) (i) currently the subject or target of any Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (iii) located, organized or resident in a Designated Jurisdiction.

5.22Anti-Corruption Laws.

The Loan Parties and their Subsidiaries have conducted their businesses in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other jurisdictions and have instituted and maintained policies and procedures designed to promote and achieve compliance with such Laws.

5.23No EEA Financial Institution.

No Loan Party is an EEA Financial Institution.

5.24No Casualty.

Neither the businesses nor the properties of any Loan Party or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate (and after taking into account proceeds, and reasonably anticipated proceeds, of insurance), could reasonably be expected to have a Material Adverse Effect.

5.25Designation as Senior Indebtedness.

The Obligations constitute “Designated Senior Indebtedness” or any similar designation (with respect to indebtedness having the maximum rights as “senior debt”) under and as defined in any agreement governing any Subordinated Debt and the subordination provisions set forth in each such agreement are legally valid and enforceable against the parties thereto.

ARTICLE VIAFFIRMATIVE COVENANTS

Until the Facility Termination Date, each Loan Party shall and shall cause each Subsidiary to:

6.01Financial Statements.

Deliver to the Administrative Agent and each Lender:

(a)as soon as available, but in any event within ninety (90) days after the end of each fiscal year of PRGX, commencing with the fiscal year ending December 31, 2018, a consolidated balance sheet of PRGX and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Administrative Agent (it being understood and agreed that the Borrowers’ auditors as of the Closing Date are deemed reasonably acceptable), which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; and

(b)as soon as available, but in any event within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of PRGX, commencing with the fiscal quarter ending March 31, 2019, a consolidated balance sheet of PRGX and its Subsidiaries as at the end of such fiscal quarter (and showing in comparative form their financial condition as of the preceding fiscal year end), the related consolidated statements of operations for such fiscal quarter and for the portion of PRGX’s fiscal year then ended (and showing in comparative form the figures for the corresponding periods in the previous fiscal year), and the related consolidated statements of cash flows for the portion of PRGX’s fiscal year then ended (and showing in comparative form the figures for the corresponding period in the previous fiscal year), all in reasonable detail and certified by the chief executive officer, chief financial officer, treasurer or controller of PRGX as fairly presenting the consolidated financial condition, results of operations, and cash flows of PRGX and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.

As to any information contained in materials furnished pursuant to Section 6.02(d), PRGX shall not be separately required to furnish such information under Section 6.01(a) or 6.01(b), but the foregoing shall not be in derogation of the obligation of PRGX to furnish the information and materials described in Section 6.01(a) or 6.01(b) at the times specified therein.

6.02Certificates; Other Information.

Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

(a)concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of its independent certified public accountants who certified such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default under the financial covenants set forth herein or, if any such Default shall exist, stating the nature and status of such event; and such certificate may be limited to the extent required by accounting rules or guidelines;

(b)concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and 6.01(b), a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of PRGX which shall include such supplements to Schedules 5.13, 5.17, 5.20(a), 5.20(b), 5.20(c) and 5.20(d), as are necessary such that, as supplemented, such Schedules would be accurate and complete as of the date of such Compliance Certificate; provided, that, supplements to Schedule 5.17 shall only be required upon the reasonable request of the Administrative Agent (which delivery may, unless the Administrative Agent, or a Lender requests executed originals, be by electronic communication including fax or e-mail and shall be deemed to be an original authentic counterpart thereof for all purposes);

(c)not later than March 31 of each fiscal year of PRGX, commencing with the fiscal year beginning January 1, 2019, an annual business plan and budget of PRGX and its Subsidiaries containing, among other things, a pro forma balance sheet and statement of cash flows for such fiscal year and a pro forma profits and losses statement by service line for each quarter of such fiscal year;

(d)promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the equityholders of PRGX, and copies of all annual, regular, periodic and special reports and registration statements which a Loan Party or any Subsidiary may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;

(e)promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of PRGX by independent accountants in connection with the accounts or books of PRGX or any Subsidiary, or any audit of any of them;

(f)promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Subsidiary pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;

(g)promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or any Subsidiary, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary;

(h)promptly following any request therefor, information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” requirements under the PATRIOT Act, the Beneficial Ownership Regulation or other applicable anti-money laundering Laws; and

(i)promptly, such additional information regarding the business, financial or corporate affairs of any Loan Party or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a) or 6.01(b) or Section 6.02(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which PRGX posts such documents, or provides a link thereto on PRGX’s website on the Internet at the website address listed on Schedule 11.02; or (ii) on which such documents are posted on PRGX’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third party website or whether sponsored by the Administrative Agent).

PRGX hereby acknowledges that (a) the Administrative Agent and/or an Affiliate thereof may, but shall not be obligated to, make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of PRGX hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks, Syndtrak, ClearPar or a substantially similar electronic transmission system (the “Platform”) and (b) certain of the Lenders (each a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to PRGX or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities.

6.03Notices.

Promptly notify the Administrative Agent and each Lender of:

(a)the occurrence of any Default or Event of Default;

(b)any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect;

(c)the occurrence of any ERISA Event; or

(d)any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary, including any determination by the Borrowers referred to in Section 2.10(b).

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of the Borrowers setting forth details of the occurrence referred to therein and stating what action the Borrowers have taken and propose to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that are the subject of such Default or other referenced event.

6.04Payment of Taxes.

Pay and discharge, as the same shall become due and payable, all its federal income and other material tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by such Loan Party or such Subsidiary.

6.05Preservation of Existence, Etc.

(a)Preserve, renew and maintain in full force and effect its legal existence under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05 except, in the case of any Subsidiary of PRGX that is not a Loan Party, to the extent the failure to do so would not reasonably be expected to result in a Material Adverse Effect.

(b)(i) With respect to the Borrowers, preserve, renew and maintain in full force and effect its good standing (to the extent that such concept exists in such jurisdiction) under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05 and (ii) with respect to each Loan Party and each Subsidiary (other than either Borrower), preserve, renew and maintain in full force and effect its good standing (to the extent that such concept exists in such jurisdiction) under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05 and except, with respect to this clause (b)(ii), to the extent the failure to do so would not reasonably be expected to result in a Material Adverse Effect, and, with respect to any Guarantor that is not in good standing (to the extent that such concept exists in such jurisdiction) under the Laws of the jurisdiction of its organization, upon becoming aware of such Guarantor no longer being in good standing, the Loan Parties shall promptly undertake commercially reasonable efforts to restore such Guarantor to good standing.

(c)Take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.

(d)Preserve or renew all of its IP Rights, the non-preservation or non-renewal of which could reasonably be expected to have a Material Adverse Effect.

6.06Maintenance of Properties.

(a)Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted.

(b)Make all necessary repairs thereto and renewals and replacements thereof, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

(c)Use the standard of care typical in the industry in the operation and maintenance of its facilities.

6.07Maintenance of Insurance.

(a)Maintain in full force and effect insurance (including worker’s compensation insurance, liability insurance, casualty insurance and business interruption insurance) with financially sound and reputable insurance companies not Affiliates of either Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where such Loan Party or such Subsidiary operates.

(b)In the case of any Loan Party, cause the Administrative Agent and its successors and assigns to be named as lender’s loss payee or mortgagee, as its interest may appear, and/or additional insured with respect to any such insurance providing liability coverage or coverage in respect of any Collateral, and cause each provider of any such insurance to agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the Administrative Agent, that it will give the Administrative Agent thirty (30) days (or such lesser amount as the Administrative Agent may agree) prior written notice before any such policy or policies shall be altered or canceled.

6.08Compliance with Laws.

Comply with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

6.09Books and Records.

(a)Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of such Loan Party or such Subsidiary, as the case may be.

(b)Maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over such Loan Party or such Subsidiary, as the case may be.

6.10Inspection Rights.

Permit representatives and independent contractors of the Administrative Agent (which may include representatives of one or more Lenders) to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants (with the Borrowers being given a reasonable opportunity to be present in any discussion with such accountants), all at the expense of the Borrowers and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrowers; provided, however, that (i) unless an Event of Default exists, such visits and inspections shall only be conducted up to two (2) times per calendar year and (ii) when an Event of Default exists the Administrative Agent (or any of the Administrative Agent’s representatives or independent contractors (which may include representatives of one or more Lenders)) may do any of the foregoing at the expense of the Borrowers at any time during normal business hours and without advance notice. In no event shall the Borrowers be obligated to pay the expense associated with such visits and inspections of any Lender (other than, for purposes of clarity, the reasonable expenses of the Administrative Agent).

6.11Use of Proceeds.

Use the proceeds of the Credit Extensions (a) to finance working capital, capital expenditures, share repurchases, Permitted Acquisitions and other lawful corporate purposes, and (b) to refinance certain existing Indebtedness, provided that in no event shall the proceeds of the Credit Extensions be used in contravention of any Law or of any Loan Document.

6.12ERISA Compliance.

Do, and cause each of its ERISA Affiliates to do, each of the following: (a) maintain each Pension Plan in compliance in all material respects with the applicable provisions of ERISA, the Internal Revenue Code and other federal or state Law; (b) cause each Pension Plan that is qualified under Section 401(a) of the Internal Revenue Code to maintain such qualification; and (c) make all required contributions to any Pension Plan subject to Section 412, Section 430 or Section 431 of the Internal Revenue Code.

6.13Additional Guarantors.

Each Domestic Subsidiary (other than PUSA, which shall be a “Guarantor” only to the extent that such Borrower is a “Guarantor” as provided under clause (c) of the definition of “Guarantor”) existing on the Closing Date, unless an Immaterial Subsidiary, shall become a Guarantor as of the Closing Date. Each Domestic Subsidiary formed or acquired after the Closing Date, unless an Immaterial Subsidiary, shall become a Guarantor within thirty (30) days (or such later date as the Administrative Agent may agree in its sole discretion) after such Person becomes a Domestic Subsidiary (including by way of division). Each Domestic Subsidiary that is not a Loan Party because it is an Immaterial Subsidiary shall become a Guarantor within thirty (30) days (or such later date as the Administrative Agent may agree in its sole discretion) after such Person ceases to be an Immaterial Subsidiary. In the case of any Domestic Subsidiary that becomes a Guarantor after the Closing Date, such Person shall (i) become a Guarantor by executing and delivering to the Administrative Agent a Joinder Agreement or such other documents as the Administrative Agent shall deem appropriate for such purpose, and (ii) upon the request of the Administrative Agent in its sole discretion, deliver to the Administrative Agent such Organization Documents, resolutions and favorable opinions of counsel, all in form, content and scope reasonably satisfactory to the Administrative Agent. It is understood and agreed that, to the extent that, as of the date of the most recent financial statements required to be delivered pursuant to Section 6.01(a) or Section 6.01(b), PRGX and its Subsidiaries would not be in compliance with Section 7.18, PRGX shall within thirty (30) days (or such longer period of time as is agreed to by the Administrative Agent in its sole discretion) cause Domestic Subsidiaries that would otherwise be classified as Immaterial Subsidiaries to become Guarantors in accordance with the foregoing provisions of this Section 6.13 to the extent necessary to achieve compliance with Section 7.18.

6.14Pledged Assets.

(a)Equity Interests. Cause each Loan Party to cause (i) one hundred percent (100%) of the issued and outstanding Equity Interests in each Domestic Subsidiary (unless an Immaterial Subsidiary) directly owned by such Loan Party and (ii) sixty-five percent (65%) of the issued and outstanding Equity Interests in each first-tier Foreign Subsidiary (unless an Immaterial Subsidiary) directly owned by such Loan Party to be subject at all times to a first priority, perfected Lien in favor of the Administrative Agent pursuant to the terms and conditions of the Collateral Documents (subject to Permitted Liens), and, in connection with the foregoing, deliver to the Administrative Agent such other documentation as the Administrative Agent may reasonably may request, including any filings and deliveries, necessary to perfect such Liens and favorable opinions of counsel all in form and substance reasonably satisfactory to the Administrative Agent.  For purposes of the foregoing, it is understood and agreed that: (w) in the event that the Administrative Agent shall reasonably determine that the cost of obtaining such a Lien on the Equity Interests in any Subsidiary in which a Loan Party owns five percent (5%) or less is excessive in relation to the benefit to the Administrative Agent and the other holders of the Obligations of the security to be afforded thereby, the Administrative Agent may, without any further consent of the Lenders, waive the requirement that the Equity Interests in such Subsidiary held by such Loan Party be subject to a Lien in favor of the Administrative Agent (in which case, such Equity Interests in such Subsidiary shall not be, and shall not be required to become, subject to a Lien in favor of the Administrative Agent); (x) to the extent that a first priority, perfected Lien in favor of the Administrative Agent in the Equity Interests in any first-tier Foreign Subsidiary cannot be obtained pursuant to a pledge agreement or similar agreement under the laws of the State of New York, the Loan Parties shall (A) cause such Equity Interests to become subject to a Lien in favor of the Administrative Agent pursuant to the laws of the jurisdiction in which such Foreign Subsidiary is organized or formed and (B) deliver to the Administrative Agent such documentation as the Administrative Agent may reasonably request in connection therewith, including any filings and deliveries necessary to perfect such Lien, together with favorable opinions of counsel, in each case in form and substance reasonably satisfactory to the Administrative Agent; provided, however, that in the event that the Administrative Agent shall reasonably determine that the cost of obtaining such a Lien under this clause (x) on the Equity Interests in any such Foreign Subsidiary under the laws of the jurisdiction in which such Foreign Subsidiary is organized or formed is excessive in relation to the benefit to the Administrative Agent and the other holders of the Obligations of the security to be afforded thereby, the Administrative Agent may, without any further consent of the Lenders, waive the requirement that the Equity Interests in such Foreign Subsidiary be subject to a Lien in favor of the Administrative Agent pursuant to the laws of the jurisdiction in which such Foreign Subsidiary is organized or formed (in which case, such Equity Interests in such Foreign Subsidiary shall not be, and shall not be required to become, subject to a Lien in favor of the Administrative Agent); (y) in the event that the Administrative Agent shall reasonably determine that the cost of obtaining such a Lien on the Equity Interests in PRGX India Private Limited, an Indian corporation, is excessive in relation to the benefit to the Administrative Agent and the other holders of the Obligations of the security to be afforded thereby, the Administrative Agent may, without any further consent of the Lenders, waive the requirement that the Equity Interests in PRGX India Private Limited, an Indian corporation, be subject to a Lien in favor of the Administrative Agent (in which case, such Equity Interests in PRGX India Private Limited, an Indian corporation, shall not be, and shall not be required to become, subject to a Lien in favor of the Administrative Agent); and (z) to the extent that, as of the date of the most recent financial statements required to be delivered pursuant to Section 6.01(a) or Section 6.01(b), PRGX and its Subsidiaries would not be in compliance with Section 7.18, PRGX shall within thirty (30) days (or such longer period of time as is agreed to by the Administrative Agent in its sole discretion) cause (A) one hundred percent (100%) of the issued and outstanding Equity Interests in each Domestic Subsidiary directly owned by such Loan Party and (B) sixty-five percent (65%) of the issued and outstanding Equity Interests in each first-tier Foreign Subsidiary directly owned by such Loan Party to be subject at all times to a first priority, perfected Lien in favor of the Administrative Agent pursuant to the terms and conditions of the Collateral Documents (subject to Permitted Liens) in accordance with the foregoing provisions of this Section 6.14(a) to the extent necessary to achieve compliance with Section 7.18.

(b)Other Property. Cause each Loan Party to cause all property (other than Equity Interests in any Subsidiary, and all Excluded Property) of such Loan Party to be subject at all times to first priority, perfected Liens in favor of the Administrative Agent to secure the Obligations pursuant to the Collateral Documents (subject to Permitted Liens) and, in connection with the foregoing, deliver to the Administrative Agent such other documentation as the Administrative Agent may reasonably request, including filings and deliveries necessary to perfect such Liens, Organization Documents, resolutions and favorable opinions of counsel to such Person, all in form, content and scope reasonably satisfactory to the Administrative Agent; provided, however, notwithstanding anything to the contrary in this Agreement or any other Loan Document, none of the Loan Parties shall be required to enter into any deposit or securities account control agreements; provided, further, that, the Loan Parties shall only be required, using commercially reasonable efforts, to assign rights to the payment of Accounts pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. §3727 et. seq.) to the extent Accounts owed by federal Governmental Authorities comprise more than twenty percent (20%) of all Accounts of the Borrowers and the other Loan Parties, in the aggregate.

6.15Material Contracts.

Perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by the Administrative Agent and, upon the reasonable request of the Administrative Agent, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

6.16Depository and Treasury Management Relationship.

Except as may be agreed otherwise in writing by the Administrative Agent in its sole discretion, maintain their principal depository bank and treasury management relationships with Bank of America (subject to a transitional period of six (6) months (or such longer period as may be reasonably required, so long as the Loan Parties are acting in good faith and with reasonable diligence to transition such accounts) with respect to domestic accounts and of twelve (12) months (or such longer period as may be reasonably required, so long as the Loan Parties are acting in good faith and with reasonable diligence to transition such accounts) with respect to foreign accounts). In the case of domestic relationships, compliance with this section shall be assessed (i) against each Borrower separately and (ii) against the Loan Parties taken as a whole. In the case of foreign relationships, compliance with this section shall be assessed against all Foreign Subsidiaries (including for this purpose any foreign relationships of any Loan Party) taken as a whole.

6.17Anti-Corruption Laws.

Conduct its businesses in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 and other similar anti-corruption legislation in other jurisdictions and maintain policies and procedures designed to promote and achieve compliance with such Laws.

6.18Merchant Services Settlement Account Standing Transfer Order.

Establish as promptly as possible and maintain thereafter a standing transfer order for each deposit account of such Borrower or Loan Party used as a settlement account in connection with a merchant services arrangement, whereby the available balance of such accounts in excess of $100,000 in the aggregate is transferred each Business Day into one or more accounts of the Loan Parties constituting Collateral.

6.19Post-Closing Covenants.

(a)Within thirty (30) days following the Closing Date (or such later date as the Administrative Agent shall agree in its sole discretion), the Loan Parties shall deliver such stock certificates, stock powers and certificates of resolutions or other action of PRGX Canada Corp., a Canadian corporation, as the Administrative Agent may require.

(b)Within thirty (30) days following the Closing Date (or such later date as the Administrative Agent shall agree in its sole discretion), the Loan Parties shall deliver such stock certificates, stock powers and certificates of resolutions or other action of Meridian Corporation Limited, a Jersey corporation, as the Administrative Agent may require.

(c)As promptly as possible using commercially reasonable effort, the Loan Parties shall deliver such stock certificates, stock powers and certificates of resolutions or other action of PRGX India Private Limited, an Indian corporation, as the Administrative Agent may require.

ARTICLE VIINEGATIVE COVENANTS

Until the Facility Termination Date, no Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly:

7.01Liens.

Create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, other than the following:

(a)Liens pursuant to any Loan Document;

(b)Liens existing on the Closing Date and listed on Schedule 7.01 and any renewals, replacements or extensions thereof, provided that the property covered thereby is not increased;

(c)Liens (other than Liens imposed under ERISA) for taxes, assessments or governmental charges or levies not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

(d)Liens of landlords, carriers, warehousemen, mechanics, materialmen and repairmen or other like Liens (i) arising in the ordinary course of business for amounts which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person and (ii) which do not secure borrowed money;

(e)pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

(f)deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(g)easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

(h)Liens securing judgments and attachments for the payment of money (or appeal or other surety bonds relating to such judgments) not constituting an Event of Default under Section 8.01(h) or existing from any litigation or legal proceeding that are currently being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP;

(i)Liens securing Indebtedness permitted under Section 7.03(e); provided that such Liens do not at any time encumber any property other than the property financed by such Indebtedness;

(j)leases or subleases, and licenses or sublicenses, granted to others not interfering in any material respect with the business of any Loan Party or any Subsidiary;

(k)any interest of title of a lessor under, and Liens arising from Uniform Commercial Code financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, leases permitted by this Agreement;

(l)Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 7.02(a);

(m)normal and customary rights of setoff, revocation, refund or chargeback upon deposits (or permitted investments) of cash in favor of banks or other financial institutions;

(n)Liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection;

(o)Liens securing Indebtedness to the extent permitted under Section 7.03(m) (i) existing on any asset of any Person at the time such Person becomes a Subsidiary of a Borrower, (ii) existing on any asset of any Person at the time such Person is merged with or into any Borrower or any Subsidiary of a Borrower or (iii) existing on any asset prior to the Acquisition thereof by any Borrower or any Subsidiary of a Borrower; provided, that any such Lien was not created in the contemplation of any of the foregoing and any such Lien secures only those obligations which it secures on the date that such Person becomes a Subsidiary or the date of such Acquisition; provided, further, that such Lien may secure any replacements, renewals and extensions of any such Indebtedness to the extent permitted under Section 7.03(m) and provided that the property covered thereby is not increased;

(p)Liens securing the obligations of a Borrower or Subsidiary of a Borrower arising under any merchant services arrangement permitted by the Loan Documents, to the extent such Lien encumbers only Excluded Property; and

(q)other Liens securing Indebtedness or other obligations in an aggregate amount not to exceed $1,000,000.

7.02Investments.

Make any Investments, except:

(a)Investments held in the form of cash (including demand deposit accounts) or Cash Equivalents;

(b)Investments existing as of the Closing Date and set forth on Schedule 7.02;

(c)Investments made after the Closing Date by PRGX in or to any Subsidiary and by any Subsidiary to PRGX or in or to another Subsidiary; provided, that the aggregate amount of Investments made after the Closing Date by Loan Parties in or to (including Guarantees by Loan Parties of Indebtedness of) any Subsidiary that is not a Loan Party (excluding all such Investments and Guarantees listed on Schedule 7.02), shall not exceed $5,000,000 in the aggregate at any time outstanding (with such $5,000,000 being measured as (A) the outflow of cash from the Loan Parties to other Subsidiaries that are not Loan Parties, excluding cash arm’s-length payments for services rendered by such other Subsidiaries that are not Loan Parties to the Loan Parties, net of (B) the inflow of cash, including via transfer pricing, from the other Subsidiaries that are not Loan Parties to the Loan Parties);

(d)Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

(e)Guarantees permitted by Section 7.03;

(f)Permitted Acquisitions;

(g)loans or advances to employees, officers or directors of either Borrower or any Subsidiary in the ordinary course of business for travel, relocation and related expenses, and for advances; provided, however, that the aggregate amount of all such loans and advances does not exceed $500,000 at any time outstanding;

(h)commission advances made in the ordinary course of business and consistent with practices during the previous two (2) fiscal years ending prior to the Closing Date;

(i)to the extent permitted by Section 7.06, PRGX’s redemption, purchase or repurchase of its Equity Interests (other than disqualified stock) pursuant to open-market purchases, privately negotiated transactions or otherwise;

(j)Guarantees of real estate and personalty leases of Subsidiaries in the ordinary course of business;

(k)to the extent constituting Investments, transactions permitted under Section 7.04;

(l)to the extent constituting Investments, transactions permitted under Section 7.05;

(m)subject to compliance with Section 6.13, the formation of Subsidiaries, provided, however, that after the Closing Date, no Foreign Subsidiary may form a Domestic Subsidiary; and

(n)Investments of a nature not contemplated in the foregoing clauses in an amount not to exceed $1,000,000 in the aggregate at any time outstanding.

7.03Indebtedness.

Create, incur, assume or suffer to exist any Indebtedness, except:

(a)Indebtedness under the Loan Documents;

(b)Indebtedness outstanding on the Closing Date set forth on Schedule 7.03 (and renewals, refinancings and extensions thereof); provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, renewal or extension are no less favorable in any material respect to the Loan Parties and their Subsidiaries or the Lenders than the terms of the Indebtedness being refinanced, renewed or extended;

(c)intercompany Indebtedness to the extent permitted under Section 7.02; provided that in the case of Indebtedness owing by a Loan Party to a Foreign Subsidiary such Indebtedness shall not be paid or prepaid unless no Event of Default exists immediately prior to or after giving effect to such prepayment;

(d)obligations (contingent or otherwise) existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with fluctuations in interest rates or foreign exchange rates, and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

(e)purchase money Indebtedness (including (i) obligations in respect of capital leases and Synthetic Lease Obligations and (ii) purchase money Indebtedness, obligations in respect of capital leases and Synthetic Lease Obligations assumed in connection with any Permitted Acquisition or the acquisition of assets secured by a Lien on any such assets prior to the acquisition thereof; provided, that such Indebtedness is incurred prior to, contemporaneously with or within ninety (90) days after such acquisition or the completion of such construction or improvements) heretofore or hereafter incurred to finance the purchase of fixed assets, and renewals, refinancings and extensions thereof, provided that (i) the aggregate outstanding principal amount of all such Indebtedness shall not exceed $2,000,000 at any one time outstanding; and (ii) such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed;

(f)unsecured Indebtedness consisting solely of Earn-Out Payments in respect of Permitted Acquisitions;

(g)unsecured Indebtedness consisting solely of Deferred Payments in respect of Permitted Acquisitions;

(h)unsecured Indebtedness consisting of deferred or incentive compensation payment obligations of PRGX or any of its Subsidiaries that mandatorily must be, or optionally may be, settled in cash;

(i)other unsecured Indebtedness in an aggregate principal amount not to exceed $5,000,000 at any one time outstanding;

(j)unsecured Subordinated Debt in an aggregate principal amount (exclusive of Indebtedness subordinated pursuant to Article X or Section 11.21) not to exceed $5,000,000 at any time outstanding;

(k)obligations of a Borrower or Subsidiary of a Borrower incurred in connection with a merchant services arrangement permitted by the Loan Documents;

(l)to the extent constituting Indebtedness, obligations of PRGX or any of its Subsidiaries in respect of any overdraft and related liabilities arising from treasury, depository, credit card, purchasing card and cash management services or any automated clearing house transfers of funds and other obligations in respect of netting services, overdraft protections, cash pooling, employee credit cards and similar arrangements, in each case, in connection with deposit accounts in the ordinary course of business;

(m)Indebtedness of any Subsidiary, or in respect of assets, in each case, acquired after the Closing Date in a Permitted Acquisition to the extent existing at the time of such Permitted Acquisition; provided, that (i) such Indebtedness shall not have been incurred in contemplation of such Permitted Acquisition, (ii) the aggregate principal amount of such Indebtedness shall not exceed $2,000,000 at any one time outstanding and (iii) such Indebtedness arises in connection with the financing of specific assets; and

(n)Guarantees with respect to Indebtedness permitted under this Section 7.03.

7.04Fundamental Changes.

Merge, dissolve, liquidate or consolidate with or into another Person or consummate any division, except that so long as no Event of Default exists or would result therefrom, (a) a Borrower may merge or consolidate with any of its Subsidiaries provided that such Borrower is the continuing or surviving Person, (b) any Subsidiary may merge or consolidate with any other Subsidiary provided that if a Loan Party is a party to such transaction, the continuing or surviving Person is a Loan Party or shall become a Loan Party substantially simultaneously with such transaction, (c) either Borrower or any Subsidiary may merge or consolidate with any other Person in connection with a Permitted Acquisition provided that (i) if such Borrower is a party to such transaction, such Borrower is the continuing or surviving Person and (ii) if any other Loan Party is a party to such transaction, the continuing or surviving Person is a Loan Party or shall become a Loan Party substantially simultaneously with such transaction and (d) any Subsidiary may dissolve, liquidate or wind up its affairs at any time provided that such dissolution, liquidation or winding up, as applicable, could not have a Material Adverse Effect.

7.05Dispositions.

Make any Disposition except:

(a)Permitted Transfers;

(b)to the extent constituting Dispositions, Dispositions to the extent permitted under Section 7.02, Section 7.04 or Section 7.06; and

(c)other Dispositions so long as the aggregate net book value of all of the assets sold or otherwise disposed of by the Loan Parties and their Subsidiaries in all such transactions occurring after the Closing Date shall not exceed $2,000,000.

7.06Restricted Payments.

Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:

(a)each Subsidiary may make Restricted Payments to Persons that own Equity Interests in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;

(b)each Loan Party and each Subsidiary may declare and make dividend payments or other distributions payable solely in common Equity Interests of such Person;

(c)so long as no Event of Default then exists or would arise therefrom and the Loan Parties would be in compliance with the financial covenants set forth in Section 7.11 recomputed as of the end of the period of the four fiscal quarters most recently ended for which PRGX has delivered financial statements pursuant to Section 6.01(a) or Section 6.01(b) after giving effect to such Restricted Payment on a Pro Forma Basis, PRGX shall be permitted to make share repurchases of up to $10,000,000 in the aggregate during any fiscal year of PRGX (including, for purposes of fiscal year 2019, any such share repurchases occurring since January 1, 2019 and prior to the Closing Date); and

(d)PRGX may declare and make other Restricted Payments so long as no Event of Default then exists or would arise therefrom and the Loan Parties would be in compliance with the financial covenants set forth in Section 7.11 recomputed as of the end of the period of the four fiscal quarters most recently ended for which PRGX has delivered financial statements pursuant to Section 6.01(a) or Section 6.01(b) after giving effect to such Restricted Payment on a Pro Forma Basis.

7.07Change in Nature of Business.

Engage in any material line of business substantially different from those lines of business conducted by the Loan Parties and their Subsidiaries on the Closing Date or any business substantially related or incidental thereto and reasonable expansions thereof.

7.08Transactions with Affiliates.

Sell, lease or otherwise transfer any property to, or purchase, lease or otherwise acquire any property from, or otherwise engage in any other transactions with, any of its Affiliates, except for: (a) transactions in the ordinary course of business at prices and on terms and conditions not less favorable to such Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties; (b) transactions between or among a Borrower and/or any other Loan Parties not involving any other Affiliates; (c) to the extent not specifically prohibited elsewhere in this Agreement, transactions between or among Loan Parties and Subsidiaries that are not Loan Parties, at prices and on terms and conditions, taken as a whole, not less favorable to such Loan Parties than could be obtained on an arm’s-length basis from unrelated third parties; (d) transactions between or among Subsidiaries that are not Loan Parties; and (e) any Restricted Payment permitted by Section 7.06.

7.09Burdensome Agreements.

Enter into, or permit to exist, any Contractual Obligation (except for the Loan Documents) that:

(a)encumbers or restricts the ability of any such Person to (i) make Restricted Payments to any Loan Party, (ii) pay any Indebtedness or other obligation owed to any Loan Party, (iii) make loans or advances to any Loan Party, (iv) transfer any of its property to any Loan Party, (v) pledge its property pursuant to the Loan Documents or (vi) act as a Loan Party pursuant to the Loan Documents; or

(b)requires the grant of any security for any obligation if such property is given as security for the Obligations;

(c)the foregoing clauses (a) and (b) shall not apply to (i) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary (or assets thereof) that is sold and such sale is permitted hereunder, (ii) restrictions or conditions imposed under Subordinated Debt permitted hereunder and (iii) restrictions contained in the Organization Documents of any non-wholly owned Subsidiary or joint venture formed or acquired after the Closing Date to the extent that such restrictions existed at the time of acquisition thereof and were not incorporated into such Organization Documents in anticipation of such acquisition; and

(d)the foregoing clause (a) shall not apply to (i) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement (including obligations of a Borrower or Subsidiary of a Borrower incurred in connection with a merchant services arrangement permitted by the Loan Documents) so long as such restrictions and conditions apply only to the property securing such Indebtedness, (ii) customary provisions in leases and other contracts incurred in the ordinary course of business restricting the assignment thereof, (iii) customary provisions restricting assignments, subletting or other transfers or payments contained in leases, licenses, and similar agreements, (iv) customary restrictions and conditions contained in any agreement relating to any disposition of assets not prohibited hereunder pending consummation of such sale so long as such restrictions and conditions apply only to the property to be sold, (v) customary restrictions in agreements governing cash collateral or deposits so long as such restrictions apply only to such cash collateral or deposits, (vi) customary provisions restricting assignment of any agreement with customers of, or vendors to, either Borrower or any of their respective Subsidiaries in the ordinary course of business and (vii) the terms and conditions of any merchant services arrangement entered into by a Borrower or a Subsidiary of a Borrower permitted by the Loan Documents.

7.10Use of Proceeds.

Engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.  Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than twenty-five percent (25%) of the value of the assets (either of either Borrower only or of PRGX and its Subsidiaries on a consolidated basis) subject to the provisions of Section 7.01 or Section 7.05 or subject to any restriction contained in any agreement or instrument between either Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 8.01(e) will be margin stock.

7.11Financial Covenants.

(a)Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as of the end of any fiscal quarter of PRGX to be greater than 3.00 to 1.0; provided that upon the occurrence of a Material Acquisition, for the four (4) fiscal quarter period commencing with the fiscal quarter during which such Material Acquisition closes (such period of increase, the “Leverage Increase Period”), the ratio set forth above shall, at the election of PRGX, be increased to 3.25 to 1.0. Upon the expiration of such Leverage Increase Period, a subsequent Leverage Increase Period cannot commence unless there has been at least one fiscal quarter (a “Clean-up Fiscal Quarter”) where the permitted Consolidated Leverage Ratio is 3.00 to 1.0. Notwithstanding the foregoing, if PRGX delivers a Compliance Certificate for a completed fiscal quarter included in a Leverage Increase Period and such Compliance Certificate evidences that the actual Consolidated Leverage Ratio for such completed fiscal quarter was not greater than 3.00 to 1.0, then PRGX, at its option, also may include in such Compliance Certificate its election to regard that completed fiscal quarter as the requisite Clean-up Fiscal Quarter; and, in that event: (x) PRGX may commence a new Leverage Increase Period (in connection with a new Material Acquisition, as per the proviso above) in any fiscal quarter following that Clean-up Fiscal Quarter; and (y) until such time (if ever) as a new Leverage Increase Period has been duly commenced, the maximum permitted Consolidated Leverage Ratio shall be 3.00 to 1.0. Subject to the above, there shall be no limit on the number of Leverage Increase Periods.

(b)Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter of PRGX to be less than 1.25 to 1.0.

7.12Prepayment and Amendment of Other Indebtedness, Etc.

(a)Prepay, redeem, purchase, defease or otherwise satisfy or obligate itself to do so prior to the scheduled maturity thereof in any manner (including by the exercise of any right of setoff), or make any payment in violation of any subordination, standstill or collateral sharing terms of or governing any Subordinated Debt, in each case if and to the extent the same would violate any of the subordinating provisions under the applicable subordination agreement.

(b)Amend, modify or change in any manner any term or condition of any Subordinated Debt Document or give any consent, waiver or approval thereunder; provided that the Subordinated Debt Documents may be amended or modified to extend the amortization or maturity of the indebtedness evidenced thereby, reduce the interest rate thereon, or otherwise amend or modify the terms thereof so long as the terms of any such amendment or modification are no more restrictive on the Loan Parties than the terms of such documents as in effect before giving effect to such amendment or modification.

(c)Take any other action in connection with any Subordinated Debt Document that would materially impair the value of the interest or rights of any Loan Party thereunder or that would materially impair the rights or interests of the Administrative Agent or any Lender.

7.13Organization Documents; Fiscal Year; Legal Name, State of Formation; Form of Entity and Accounting Changes.

(a)Amend, modify or change its Organization Documents in a manner materially adverse to the Lenders.

(b)Change its fiscal year (except to change the fiscal year of a Subsidiary to conform to the fiscal year of PRGX).

(c)Without providing ten (10) days prior written notice to the Administrative Agent (or such lesser period as the Administrative Agent may agree), change its name, state of formation or form of organization.

(d)Make any significant change in accounting treatment or reporting practices, except as required by GAAP.

7.14Ownership of Subsidiaries.

Notwithstanding any other provisions of this Agreement to the contrary, (a) permit any Person (other than one or more of the Borrowers and their wholly-owned Subsidiaries) to own any Equity Interests of any Subsidiary except to qualify directors where required by applicable Law or to satisfy other requirements of applicable Law with respect to the ownership of Equity Interests of Foreign Subsidiaries, or (b) permit any Subsidiary to issue or have outstanding any shares of preferred Equity Interests.

7.15Sale Leasebacks.

Enter into any Sale and Leaseback Transaction.

7.16Sanctions.

Directly or indirectly, use any Credit Extension or the proceeds of any Credit Extension, or lend, contribute or otherwise make available such Credit Extension or the proceeds of any Credit Extension to any Person, to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as Lender, Arranger, Administrative Agent, L/C Issuer, Swingline Lender, or otherwise) of Sanctions.

7.17Anti-Corruption Laws.

Directly or indirectly use any Credit Extension or the proceeds of any Credit Extension for any purpose which would breach the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 or other similar anti-corruption legislation in other jurisdictions.

7.18Designation of Subsidiaries as Immaterial Subsidiaries.

PRGX shall not be permitted to designate a Subsidiary as an “Immaterial Subsidiary” (or, if such designation has already occurred, to continue designating a Subsidiary as an “Immaterial Subsidiary”) unless, as of the date of the most recent financial statements required to be delivered pursuant to Section 6.01(a) or Section 6.01(b) (or, if prior to the first such delivery thereunder, then as of the date of the most recent financial statements required to be delivered pursuant to the Existing Credit Agreement), not more than one percent (1%) of the consolidated total assets of PRGX and its consolidated Subsidiaries, and not more than one percent (1%) of the consolidated total revenues of PRGX and its consolidated Subsidiaries, are attributable to all then-designated Immaterial Subsidiaries. In determining consolidated assets and consolidated revenues, intercompany accounts eliminated in consolidation shall be disregarded. If a Subsidiary itself has one or more Subsidiaries, then none of them may be designated as an Immaterial Subsidiary unless all of them are.

ARTICLE VIIIEVENTS OF DEFAULT AND REMEDIES

8.01Events of Default.

Any of the following shall constitute an Event of Default:

(a)Non-Payment. Any Loan Party fails to pay (i) when and as required to be paid herein, and in the currency required hereunder, any amount of principal of any Loan or any L/C Obligation or deposit any funds as Cash Collateral in respect of L/C Obligations, or (ii) within three (3) Business Days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) within five (5) Business Days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

(b)Specific Covenants. Any Loan Party fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03(a), 6.05(a), 6.10 or 6.11 or Article VII; or

(c)Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days after the earlier of (i) any Responsible Officer of either Borrower becomes aware of such failure, or (ii) notice thereof shall have been given to PRGX by the Administrative Agent or any Lender; or

(d)Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made (other than a representation or warranty that is expressly qualified by a Material Adverse Effect or materiality, in which case such representation or warranty shall prove to be incorrect in all respects); or

(e)Cross-Default. (i) Any Loan Party or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which any Loan Party or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which any Loan Party or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan Party or such Subsidiary as a result thereof is greater than the Threshold Amount; subject, however, in the case of both clause (i) and (ii) above, to any applicable grace period or cure period, as well as any applicable requirement for notice of default, under the definitive documentation for such Indebtedness; or

(f)Insolvency Proceedings, Etc. Any Loan Party or any Subsidiary (other than any Immaterial Subsidiary) institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or

(g)Inability to Pay Debts; Attachment. (i) Any Loan Party or any Subsidiary (other than any Immaterial Subsidiary) becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within thirty (30) days after its issue or levy; or

(h)Judgments. There is entered against any Loan Party or any Subsidiary (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer has been notified of the claim and does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of thirty (30) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i)ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) either Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

(j)Invalidity of Loan Documents. Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect or ceases to give the Administrative Agent any material part of the Liens purported to be created thereby; or any Loan Party contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

(k)Change of Control. There occurs any Change of Control; or

(l)Subordination. In the case of any Subordinated Debt having an aggregate principal amount of more than the Threshold Amount: (i) any of the subordination, standstill, payover and insolvency related provisions of any of the Subordinated Debt Documents in respect of such Subordinated Debt (the “Subordination Provisions”) shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of the applicable Subordinated Debt; or (ii) either Borrower or any other Loan Party shall, directly or indirectly, disavow or contest in any manner (A) the effectiveness, validity or enforceability of any of the Subordination Provisions, (B) that the Subordination Provisions exist for the benefit of the Administrative Agent and the holders of the Obligations or (C) that all payments of principal of or premium and interest on the applicable Subordinated Debt, or realized from the liquidation of any property of any Loan Party, shall be subject to any of the Subordination Provisions.

8.02Remedies Upon Event of Default.

If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

(a)declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

(b)declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;

(c)require that the Borrowers Cash Collateralize the L/C Obligations (in an amount equal to the Minimum Collateral Amount with respect thereto); and

(d)exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available to it, the Lenders and the L/C Issuer under the Loan Documents or applicable Law or at equity;

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrowers under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrowers to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

8.03Application of Funds.

After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.14 and 2.15, be applied by the Administrative Agent in the following order:

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans and L/C Borrowings, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them;

Fourth, to (a) payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, (b) payment of Obligations then owing under any Secured Cash Management Agreements and (c) Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit, ratably among the Lenders, the L/C Issuer and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth payable to them; and

Last, the balance, if any and provided the Facility Termination Date has occurred, to the Borrowers or as otherwise required by Law.

Subject to Sections 2.03(c) and 2.14, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fourth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above; and, if no such Obligations remain (other than contingent indemnification and contingent expense reimbursement obligations for which no claim has been made), such remaining amount shall be released to the Loan Parties.

Notwithstanding the foregoing, Obligations arising under Secured Cash Management Agreements shall be excluded from the application described above if the Administrative Agent has not received a Secured Party Designation Notice, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank (unless such Cash Management Bank is the Administrative Agent or an Affiliate thereof). Each Cash Management Bank not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article IX for itself and its Affiliates as if a “Lender” party hereto.

ARTICLE IXADMINISTRATIVE AGENT

9.01Appointment and Authority.

Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Except as provided in the final paragraph of this Section 9.01, the provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and no Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (in its capacities as a Lender, Swingline Lender (if applicable) and potential Cash Management Banks) and the L/C Issuer hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and the L/C Issuer for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article IX and Article XI (including Section 11.04(c), as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.

The Loan Parties shall be third party beneficiaries of the following aspects of this Article IX: (i) Section 9.06; (ii) Section 9.10, as it pertains to the authority of the Administrative Agent to make releases or enter into subordination terms as provided therein; and (iii) Section 9.11, as it pertains to any Cash Management Bank not having any right to notice of any action or the right to consent to, direct or object to any action under any of the Loan Documents.

9.02Rights as a Lender.

The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Loan Party or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders or to provide notice to or consent of the Lenders with respect thereto.

9.03Exculpatory Provisions.

The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent and its Related Parties:

(a)shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b)shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

(c)shall not, except as expressly set forth herein and in the other Loan Documents, have any duty or responsibility to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

Neither the Administrative Agent nor any of its Related Parties shall be liable for any action taken or not taken by the Administrative Agent under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby or thereby (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrowers, a Lender or the L/C Issuer.

Neither the Administrative Agent nor any of its Related Parties have any duty or obligation to any Lender or participant or any other Person to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any Collateral or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

9.04Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall be fully protected in relying and shall not incur any liability for relying upon, any notice, request, certificate, communication, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall be fully protected in relying and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance, extension, renewal or increase of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Loan Parties), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

9.05Delegation of Duties.

The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub agents appointed by the Administrative Agent. The Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub agent and to the Related Parties of the Administrative Agent and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

9.06Resignation of Administrative Agent.

(a)The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuer and the Borrowers. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the written consent of the Borrowers (not to be unreasonably withheld) so long as no Event of Default has occurred and is continuing, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting the qualifications set forth above, provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b)If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable Law, by notice in writing to the Borrowers and such Person remove such Person as Administrative Agent and, in consultation with the Borrowers, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c)With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (i) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.01(g) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 11.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them (i) while the retiring or removed Administrative Agent was acting as Administrative Agent and (ii) after such resignation or removal for as long as any of them continues to act in any capacity hereunder or under the other Loan Documents, including (A) acting as collateral agent or otherwise holding any collateral security on behalf of any of the Lenders and (B) in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent.

(d)Any resignation by or removal of Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swingline Lender. If Bank of America resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto, including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c). If Bank of America resigns as Swingline Lender, it shall retain all the rights of the Swingline Lender provided for hereunder with respect to Swingline Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swingline Loans pursuant to Section 2.04(c). Upon the appointment by the Borrowers of a successor L/C Issuer or Swingline Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swingline Lender, as applicable, (ii) the retiring L/C Issuer and Swingline Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents and (iii) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

9.07Non-Reliance on Administrative Agent and Other Lenders.

Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

9.08No Other Duties; Etc.

Anything herein to the contrary notwithstanding, none of the bookrunners, arrangers, syndication agents, documentation agents or co-agents shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.

9.09Administrative Agent May File Proofs of Claim; Credit Bidding.

In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrowers) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Sections 2.03(h), 2.03(i), 2.09 and 11.04) allowed in such judicial proceeding; and

(b)to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 11.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer in any such proceeding.

The holders of the Obligations hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Obligations (including accepting some or all of the Collateral in satisfaction of some or all of the Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code of the United States, including under Sections 363, 1123 or 1129 of the Bankruptcy Code of the United States, or any similar Laws in any other jurisdictions to which a Loan Party is subject, (b) at any other sale or foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable Law. In connection with any such credit bid and purchase, the Obligations owed to the holders thereof shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that would vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) in the asset or assets so purchased (or in the Equity Interests or debt instruments of the acquisition vehicle or vehicles that are used to consummate such purchase). In connection with any such bid (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles to make a bid, (ii) to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or Equity Interests thereof shall be governed, directly or indirectly, by the vote of the Required Lenders, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in clauses (a)(i) through (a)(vi) of Section 11.01), and (ii) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of debt credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Lenders pro rata and the Equity Interests and/or debt instruments issued by any acquisition vehicle on account of the Obligations that had been assigned to the acquisition vehicle shall automatically be cancelled, without the need for any Lender or any acquisition vehicle to take any further action.

9.10Collateral and Guaranty Matters.

Without limiting the provisions of Section 9.09, each of the Lenders (including in its capacity as a potential Cash Management Bank) and the L/C Issuer irrevocably authorize the Administrative Agent, at its option and in its discretion,

(a)to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon the Facility Termination Date, (ii) that is sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted hereunder or under any other Loan Document or any Recovery Event, (iii) whenever such release otherwise is required under this Agreement or any other Loan Document or (iv) as approved in accordance with Section 11.01;

(b)to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(i); and

(c)to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents.

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty, pursuant to this Section 9.10.

The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

9.11Secured Cash Management Agreements.

Except as otherwise expressly set forth herein, no Cash Management Bank that obtains the benefit of Section 8.03, the Guaranty or any Collateral by virtue of the provisions hereof or any Collateral Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) (or to notice of or to consent to any amendment, waiver or modification of the provisions hereof or of the Guaranty or any Collateral Document) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Cash Management Agreements except to the extent expressly provided herein and unless the Administrative Agent has received a Secured Party Designation Notice of such Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank. The Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Cash Management Agreements in the case of the Facility Termination Date.

9.12ERISA Matters.

(a)Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of either Borrower or any other Loan Party, that at least one of the following is and will be true:

(i)such Lender is not using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Revolving Commitments,

(ii)the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments and this Agreement,

(iii)(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Revolving Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments and this Agreement, or

(iv)such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b)In addition, unless subclause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has not provided another representation, warranty and covenant as provided in subclause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of either Borrower or any other Loan Party, that:

(i)none of the Administrative Agent, the Arranger or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto),

(ii)the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments and this Agreement is independent (within the meaning of 29 CFR § 2510.3-21) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or other person that holds, or has under management or control, total assets of at least $50 million, in each case as described in 29 CFR § 2510.3-21(c)(1)(i)(A)-(E),

(iii)the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments and this Agreement is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies (including in respect of the Obligations),

(iv)the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments and this Agreement is a fiduciary under ERISA or the Internal Revenue Code, or both, with respect to the Loans, the Letters of Credit, the Revolving Commitments and this Agreement and is responsible for exercising independent judgment in evaluating the transactions hereunder, and

(v)no fee or other compensation is being paid directly to the Administrative Agent, the Arranger or any their respective Affiliates for investment advice (as opposed to other services) in connection with the Loans, the Letters of Credit, the Revolving Commitments or this Agreement.

(c)The Administrative Agent and the Arranger hereby inform the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Revolving Commitments and this Agreement, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Revolving Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Revolving Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

ARTICLE XGUARANTY

10.01The Guaranty.

Each of the Guarantors hereby jointly and severally guarantees to each Lender, the L/C Issuer and each other holder of Obligations as hereinafter provided, as primary obligor and not as surety, the prompt payment of the Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) strictly in accordance with the terms thereof. The Guarantors hereby further agree that if any of the Obligations are not paid in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise), the Guarantors will, jointly and severally, promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) in accordance with the terms of such extension or renewal.

Notwithstanding any provision to the contrary contained herein or in any other of the Loan Documents or the other documents relating to the Obligations, the obligations of each Guarantor under this Agreement and the other Loan Documents shall not exceed an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under applicable Debtor Relief Laws.

10.02Obligations Unconditional.

The obligations of the Guarantors under Section 10.01 are joint and several, absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Loan Documents or other documents relating to the Obligations, or any substitution, release, impairment or exchange of any other guarantee of or security for any of the Obligations, and, to the fullest extent permitted by applicable Law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense (other than defense of payment in full) of a surety or guarantor, it being the intent of this Section 10.02 that the obligations of the Guarantors hereunder shall be absolute and unconditional under any and all circumstances. Each Guarantor agrees that such Guarantor shall have no right of subrogation, indemnity, reimbursement or contribution against either Borrower or any other Loan Party for amounts paid under this Article X until such time as the Obligations have been paid in full and the Revolving Commitments have expired or terminated. Without limiting the generality of the foregoing, it is agreed that, to the fullest extent permitted by Law, the occurrence of any one or more of the following shall not alter or impair the liability of any Guarantor hereunder, which shall remain absolute and unconditional as described above:

(a)at any time or from time to time, without notice to any Guarantor, the time for any performance of or compliance with any of the Obligations shall be extended, or such performance or compliance shall be waived;

(b)any of the acts mentioned in any of the provisions of any of the Loan Documents or other documents relating to the Obligations shall be done or omitted;

(c)the maturity of any of the Obligations shall be accelerated, or any of the Obligations shall be modified, supplemented or amended in any respect, or any right under any of the Loan Documents or other documents relating to the Obligations shall be waived or any other guarantee of any of the Obligations or any security therefor shall be released, impaired or exchanged in whole or in part or otherwise dealt with;

(d)any Lien granted to, or in favor of, the Administrative Agent or any other holder of the Obligations as security for any of the Obligations shall fail to attach or be perfected; or

(e)any of the Obligations shall be determined to be void or voidable (including for the benefit of any creditor of any Guarantor) or shall be subordinated to the claims of any Person (including any creditor of any Guarantor).

With respect to its obligations hereunder, each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Administrative Agent or any other holder of the Obligations exhaust any right, power or remedy or proceed against any Person under any of the Loan Documents or any other document relating to the Obligations, or against any other Person under any other guarantee of, or security for, any of the Obligations.

For the avoidance of doubt, the waivers by each Loan Party under this Article X apply for purposes of the enforceability of the guarantee or/and suretyship obligations of such Loan Party under this Article X only.

10.03Reinstatement.

The obligations of each Guarantor under this Article X shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Obligations is rescinded or must be otherwise restored by any holder of any of the Obligations, whether as a result of any Debtor Relief Law or otherwise, and each Guarantor agrees that it will indemnify the Administrative Agent and each other holder of the Obligations on demand for all reasonable costs and expenses (including the reasonable fees, charges and disbursements of counsel) incurred by the Administrative Agent or such holder of the Obligations in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any Debtor Relief Law.

10.04Certain Additional Waivers.

Each Guarantor agrees that such Guarantor shall have no right of recourse to security for the Obligations, except through the exercise of rights of subrogation pursuant to Section 10.02 and through the exercise of rights of contribution pursuant to Section 10.06.

10.05Remedies.

The Guarantors agree that, to the fullest extent permitted by Law, as between the Guarantors, on the one hand, and the Administrative Agent and the other holders of the Obligations, on the other hand, the Obligations may be declared to be forthwith due and payable as specified in Section 8.02 (and shall be deemed to have become automatically due and payable in the circumstances specified in Section 8.02) for purposes of Section 10.01 notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing the Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or the Obligations being deemed to have become automatically due and payable), the Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Guarantors for purposes of Section 10.01. The Guarantors acknowledge and agree that their obligations hereunder are secured in accordance with the terms of the Collateral Documents and that the holders of the Obligations may exercise their remedies thereunder in accordance with the terms thereof.

10.06Rights of Contribution.

The Guarantors hereby agree as among themselves that, if any Guarantor shall make an Excess Payment (as defined below), such Guarantor shall have a right of contribution from each other Guarantor in an amount equal to such other Guarantor’s Contribution Share (as defined below) of such Excess Payment. The payment obligations of any Guarantor under this Section 10.06 shall be subordinate and subject in right of payment to the Obligations until such time as the Obligations have been paid-in-full and the Revolving Commitments have terminated, and none of the Guarantors shall exercise any right or remedy under this Section 10.06 against any other Guarantor until such Obligations have been paid-in-full and the Revolving Commitments have terminated. For purposes of this Section 10.06, (a) “Excess Payment” shall mean the amount paid by any Guarantor in excess of its Ratable Share of any Obligations; (b) “Ratable Share” shall mean, for any Guarantor in respect of any payment of Obligations, the ratio (expressed as a percentage) as of the date of such payment of Obligations of (i) the amount by which the aggregate present fair salable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Guarantor (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder) to (ii) the amount by which the aggregate present fair salable value of all assets and other properties of all of the Loan Parties exceeds the amount of all of the debts and liabilities (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Loan Parties hereunder) of the Loan Parties; provided, however, that, for purposes of calculating the Ratable Shares of the Guarantors in respect of any payment of Obligations, any Guarantor that became a Guarantor subsequent to the date of any such payment shall be deemed to have been a Guarantor on the date of such payment and the financial information for such Guarantor as of the date such Guarantor became a Guarantor shall be utilized for such Guarantor in connection with such payment; and (c) “Contribution Share” shall mean, for any Guarantor in respect of any Excess Payment made by any other Guarantor, the ratio (expressed as a percentage) as of the date of such Excess Payment of (i) the amount by which the aggregate present fair salable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Guarantor (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder) to (ii) the amount by which the aggregate present fair salable value of all assets and other properties of the Loan Parties other than the maker of such Excess Payment exceeds the amount of all of the debts and liabilities (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Loan Parties) of the Loan Parties other than the maker of such Excess Payment; provided, however, that, for purposes of calculating the Contribution Shares of the Guarantors in respect of any Excess Payment, any Guarantor that became a Guarantor subsequent to the date of any such Excess Payment shall be deemed to have been a Guarantor on the date of such Excess Payment and the financial information for such Guarantor as of the date such Guarantor became a Guarantor shall be utilized for such Guarantor in connection with such Excess Payment. This Section 10.06 shall not be deemed to affect any right of subrogation, indemnity, reimbursement or contribution that any Guarantor may have under Law against either Borrower in respect of any payment of Obligations.

10.07Guarantee of Payment; Continuing Guarantee.

The guarantee in this Article X is a guaranty of payment and not of collection, is a continuing guarantee, and shall apply to the Obligations whenever arising.

ARTICLE XIMISCELLANEOUS

11.01Amendments, Etc.

No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party or any other Person therefrom, shall be effective unless in writing signed by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and the Borrowers or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that

(a)no such amendment, waiver or consent shall:

(i)extend or increase the Revolving Commitment of any Lender (or reinstate any Revolving Commitment terminated pursuant to Section 8.02) without the written consent of such Lender (it being understood and agreed that a waiver of any condition precedent set forth in Section 4.02 or of any Default or a mandatory reduction in Revolving Commitments is not considered an extension or increase in Revolving Commitments of any Lender);

(ii)postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them) or any scheduled reduction of the Revolving Commitments hereunder or under any other Loan Document without the written consent of each Lender entitled to receive such payment or whose Revolving Commitments are to be reduced;

(iii)reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (i) of the final proviso of this first sentence of this Section 11.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender entitled to receive such amount; provided, however, that (A) only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrowers to pay interest or Letter of Credit Fees at the Default Rate and (B) an amendment, waiver or consent to any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder shall not be deemed to be a reduction of the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or any fees or other amounts payable hereunder or under any other Loan Document;

(iv)change Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly and adversely affected thereby;

(v)change any provision of this Section 11.01(a) or the definition of “Required Lenders” without the written consent of each Lender directly and adversely affected thereby;

(vi)except (A) in connection with a Disposition to the extent permitted under Section 7.05, (B) upon the occurrence of the Facility Termination Date or (C) to the extent such release is permitted pursuant to Section 9.10 (in which case such release may be made by the Administrative Agent acting alone), release all or substantially all of the Collateral without the written consent of each Lender whose Obligations are secured by such Collateral;

(vii)release either Borrower without the consent of each Lender, or, except in connection with a transaction permitted under Section 7.04 or Section 7.05, all or substantially all of the value of the Guaranty without the written consent of each Lender whose Obligations are guarantied thereby, except to the extent such release is permitted pursuant to Section 9.10 (in which case such release may be made by the Administrative Agent acting alone);

(viii)amend the definition of “Alternative Currency” without the written consent of each Lender and L/C Issuer obligated to make Credit Extensions in Alternative Currencies; or

(b)unless also signed by the L/C Issuer, no amendment, waiver or consent shall affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it;

(c)unless also signed by the Swingline Lender, no amendment, waiver or consent shall affect the rights or duties of the Swingline Lender under this Agreement; and

(d)unless also signed by the Administrative Agent, no amendment, waiver or consent shall affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document;

provided, further, that notwithstanding anything to the contrary herein, (i) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto, (ii) only the consent of the Borrowers and the Lenders and L/C Issuer that have agreed to issue such Credit Extensions in the applicable Alternative Currency shall be necessary to amend the definition of “Eurocurrency Rate” to provide for the addition of a replacement interest rate with respect to such Alternative Currency, (iii) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code of the United States supersedes the unanimous consent provisions set forth herein, (iv) the Required Lenders shall determine whether or not to allow a Loan Party to use cash collateral in the context of a bankruptcy or insolvency proceeding and such determination shall be binding on all of the Lenders, (v) the Administrative Agent and the Borrowers may make amendments contemplated by Section 3.07 and (vi) each Incremental Facility Amendment shall be effective if signed only by the Administrative Agent, the Borrowers and the Lenders providing the applicable Incremental Revolving Commitments.

No Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Revolving Commitment of such Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects such Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.

Notwithstanding anything to the contrary herein, this Agreement may be amended and restated without the consent of any Lender (but with the consent of the Borrowers and the Administrative Agent) if, upon giving effect to such amendment and restatement, such Lender shall no longer be a party to this Agreement (as so amended and restated), the Revolving Commitments of such Lender shall have terminated, such Lender shall have no other commitment or other obligation hereunder and shall have been paid in full all principal, interest and other amounts owing to it or accrued for its account under this Agreement.

Notwithstanding any provision herein to the contrary the Administrative Agent and the Borrowers may amend, modify or supplement this Agreement or any other Loan Document to cure or correct administrative errors or omissions, any ambiguity, omission, defect or inconsistency or to effect administrative changes or to extend an existing Lien over additional property, and such amendment shall become effective without any further consent of any other party to such Loan Document so long as (i) such amendment, modification or supplement does not adversely affect the rights of any Lender or other holder of Obligations in any material respect and (ii) the Lenders shall have received at least five (5) Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five (5) Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment.

11.02Notices; Effectiveness; Electronic Communications.

(a)Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or e-mail as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i)if to any Loan Party, the Administrative Agent, the L/C Issuer or the Swingline Lender, to the address, facsimile number, e-mail address or telephone number specified for such Person on Schedule 11.02; and

(ii)if to any other Lender, to the address, facsimile number, e-mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrowers).

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

(b)Electronic Communications. Notices and other communications to the Administrative Agent, the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e mail, FpML messaging, and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent, the Swingline Lender, the L/C Issuer or PRGX may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent and the Borrowers otherwise agree in writing, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement) and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, e-mail or other communication is not sent during the normal business hours of the recipient, such notice, e-mail or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(c)The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to either Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials or notices through the Platform, any other electronic platform or electronic messaging service, or through the Internet.

(d)Change of Address, Etc. Each of the Borrowers, the Administrative Agent, the L/C Issuer and the Swingline Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the Borrowers, the Administrative Agent, the L/C Issuer and the Swingline Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and e-mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to either Borrower or its securities for purposes of United States Federal or state securities Laws.

(e)Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic or electronic notices, Loan Notices, Letter of Credit Applications and Swingline Loan Notices) purportedly given by or on behalf of any Loan Party even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Loan Parties shall indemnify the Administrative Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of a Loan Party. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

11.03No Waiver; Cumulative Remedies; Enforcement.

No failure by any Lender, the L/C Issuer or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Loan Document (including the imposition of the Default Rate) preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuer; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) the L/C Issuer or the Swingline Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swingline Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 11.08 (subject to the terms of Section 2.13), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.13, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

11.04Expenses; Indemnity; Damage Waiver.

(a)Costs and Expenses. The Loan Parties shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent) in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, any Lender or the L/C Issuer (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the L/C Issuer), and shall pay all reasonable fees and time charges for attorneys who may be employees of the Administrative Agent, any Lender or the L/C Issuer, in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b)Indemnification by the Loan Parties. The Loan Parties shall indemnify the Administrative Agent (and any sub-agent thereof), the Arranger, each Lender, the Swingline Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related reasonable expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all reasonable fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any Person (including any Loan Party) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.01), (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by a Loan Party or any of its Subsidiaries, or any Environmental Liability related in any way to a Loan Party or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity and holding harmless obligations shall not, as to any Indemnitee or Related Indemnified Party, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or Related Indemnified Party or (y) result from a claim brought by any Loan Party against an Indemnitee or Related Indemnified Party for breach in bad faith of such Indemnitee’s or Related Indemnified Party’s obligations hereunder or under any other Loan Document, if such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. Without limiting the provisions of Section 3.01(c), this Section 11.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

(c)Reimbursement by Lenders. To the extent that the Loan Parties for any reason fail to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by them to the Administrative Agent (or any sub-agent thereof), the L/C Issuer, the Swingline Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Issuer, the Swingline Lender or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Credit Exposures of all Lenders at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lenders’ Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided, further that, the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the L/C Issuer or the Swingline Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the L/C Issuer or the Swingline Lender in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).

(d)Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, no Loan Party shall assert, and each Loan Party hereby waives, and acknowledges that no other Person shall have, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. Absent the gross negligence or willful misconduct of an Indemnitee or any Related Indemnified Party in the transmission or other distribution of information or other materials to an unintended recipient, no Indemnitee shall be liable for any damages arising from the use by any such unintended recipient of any information or other materials distributed to such unintended recipient by such Indemnitee or such Related Indemnified Party through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

(e)Payments. All amounts due under this Section shall be payable not later than ten (10) Business Days after demand therefor.

(f)Survival. The agreements in this Section and the indemnity provisions of Section 11.02(e) shall survive the resignation of the Administrative Agent, the L/C Issuer and the Swingline Lender, the replacement of any Lender, the termination of the Revolving Commitments and the repayment, satisfaction or discharge of all the other Obligations.

11.05Payments Set Aside.

To the extent that any payment by or on behalf of any Loan Party is made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect, in the applicable currency of such recovery or payment. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

11.06Successors and Assigns.

(a)Successors and Assigns Generally. The provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby, except that the Borrowers may not assign or otherwise transfer any of their respective rights or obligations hereunder or thereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Revolving Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swingline Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i)Minimum Amounts.

(A)in the case of an assignment of the entire remaining amount of the assigning Lender’s Revolving Commitment and the related Loans at the time owing to it or contemporaneous assignments to related Approved Funds (determined after giving effect to such assignment) that equal at least the amount specified in subsection (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B)in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Revolving Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Revolving Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $10,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, PRGX otherwise consents (each such consent not to be unreasonably withheld or delayed).

(ii)Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s Loans and Revolving Commitments, and rights and obligations with respect thereto, assigned, except that this clause (ii) shall not (A) apply to the Swingline Lender’s rights and obligations in respect of Swingline Loans or (B) prohibit any Lender from assigning all or a portion of its rights and obligations in respect of its Revolving Commitment (and the related Revolving Loans thereunder) on a non-pro rata basis;

(iii)Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A)the consent of PRGX (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that PRGX shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;

(B)the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Revolving Commitment if such assignment is to a Person that is not a Lender with a Revolving Commitment in respect of the applicable facility subject to such assignment, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

(C)the consent of the L/C Issuer and the Swingline Lender shall be required for any assignment in respect of Revolving Loans and Revolving Commitments.

(iv)Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent for its own account an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v)No Assignment to Certain Persons. No such assignment shall be made to (A) the Borrowers or any of the Borrowers’ respective Subsidiaries or other Affiliates, (B) any Defaulting Lender or any of its Subsidiaries or any Person which is owned and controlled by the same parent as the parent of the Defaulting Lender, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person).

(vi)Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrowers and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the L/C Issuer or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swingline Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05 and 11.04 with respect to facts and circumstances occurring prior to the effective date of such assignment); provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, the Borrowers (at their expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c)Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrowers (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Revolving Commitments of, and principal amounts (and stated interest) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrowers, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers and any Lender at any reasonable time and from time to time upon reasonable prior notice.

(d)Participations. Any Lender may at any time, without the consent of, or notice to, either Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person), a Defaulting Lender or either Borrower or any of the Borrowers’ respective Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Revolving Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swingline Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 11.04(c) without regard to the existence of any participation.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in Section 11.01(a) that affects such Participant. Each Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section (it being understood that the documentation required under Section 3.01(e) shall be delivered to the Lender who sells the participation) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 3.06 and 11.13 as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04, with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at either Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrowers to effectuate the provisions of Section 3.06 with respect to any Participant. To the extent permitted by Law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e)Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(f)Resignation as L/C Issuer or Swingline Lender after Assignment. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Revolving Commitment and Revolving Loans pursuant to subsection (b) above, Bank of America may, (i) upon thirty (30) days’ notice to the Borrowers and the Lenders, resign as L/C Issuer and/or (ii) upon thirty (30) days’ notice to the Borrowers, resign as Swingline Lender. In the event of any such resignation as L/C Issuer or Swingline Lender, the Borrowers shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swingline Lender hereunder; provided, however, that no failure by the Borrowers to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swingline Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)). If Bank of America resigns as Swingline Lender, it shall retain all the rights of the Swingline Lender provided for hereunder with respect to Swingline Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swingline Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer and/or Swingline Lender, (1) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swingline Lender, as the case may be, and (2) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession (or, in the alternative, if the successor L/C Issuer is reasonably acceptable to the retiring L/C Issuer, such letters of credit may be issued to backstop any Letters of Credit then outstanding in amounts and with terms reasonably acceptable to the retiring L/C Issuer) or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

11.07Treatment of Certain Information; Confidentiality.

Each of the Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates, its auditors and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to each Borrower and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating any Loan Party or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of the Borrowers or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrowers. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Agents and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Revolving Commitments.

For purposes of this Section, “Information” means all information received from a Loan Party or any Subsidiary relating to the Loan Parties or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by such Loan Party or any Subsidiary. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning a Loan Party or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

The Loan Parties and their Affiliates agree that they will not in the future issue any press releases or other public disclosure with respect to this Agreement using the name of the Administrative Agent or any Lender or their respective Affiliates or referring to this Agreement or any of the Loan Documents without the prior written consent of the Administrative Agent, unless (and only to the extent that) the Loan Parties or such Affiliate is required to do so under Law and then, in any event the Loan Parties or such Affiliate will consult with such Person before issuing such press release or other public disclosure; provided, that filings required to be made with the SEC may be made without prior consultation.

The Loan Parties consent to the publication by the Administrative Agent or any Lender of customary advertising material relating to the transactions contemplated hereby using the name, logo or trademark of the Loan Parties.

11.08Rights of Setoff.

If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency), but, in any event, excluding Excluded Accounts, at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of any Loan Party against any and all of the obligations of such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer or their respective Affiliates, irrespective of whether or not such Lender, the L/C Issuer or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of such Loan Party may be contingent or unmatured or are owed to a branch or office or Affiliate of such Lender or the L/C Issuer different from the branch or office or Affiliate holding such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.15 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Borrowers and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

11.09Interest Rate Limitation.

Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

11.10Counterparts; Integration; Effectiveness.

This Agreement and each of the other Loan Documents may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements entered into after the Closing with respect to fees payable to the Administrative Agent or the L/C Issuer constitute the entire contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement or any other Loan Document, or any certificate delivered thereunder, by fax transmission or e-mail transmission (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement or such other Loan Document or certificate. Without limiting the foregoing, to the extent a manually executed counterpart is not specifically required to be delivered under the terms of any Loan Document, upon the request of any party, such fax transmission or e-mail transmission shall be promptly followed by such manually executed counterpart.

11.11Survival of Representations and Warranties.

All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

11.12Severability.

If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 11.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, the L/C Issuer or the Swingline Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.

11.13Replacement of Lenders.

If the Borrowers are entitled to replace a Lender pursuant to the provisions of Section 3.06, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.06), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.01 and 3.04) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

(a)the Borrowers shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 11.06(b);

(b)such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);

(c)in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;

(d)such assignment does not conflict with applicable Laws; and

(e)in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

11.14Governing Law; Jurisdiction; Etc.

(a)GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b)SUBMISSION TO JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, THE L/C ISSUER, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c)WAIVER OF VENUE. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d)SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

11.15Waiver of Jury Trial.

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

11.16No Advisory or Fiduciary Responsibility.

In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each of the Loan Parties acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Arranger, and the Lenders are arm’s-length commercial transactions between the Loan Parties and their Affiliates, on the one hand, and the Administrative Agent, the Arranger, and the Lenders, on the other hand, (B) each of the Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each of the Loan Parties is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, the Arranger and the Lenders each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Loan Parties or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, the Arranger, nor any Lender has any obligation to the Loan Parties or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Arranger, the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Loan Parties and their respective Affiliates, and neither the Administrative Agent, the Arranger, nor any Lender has any obligation to disclose any of such interests to the Loan Parties and their respective Affiliates. To the fullest extent permitted by Law, each of the Loan Parties hereby waives and releases any claims that it may have against the Administrative Agent, the Arrangeror any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

11.17Electronic Execution of Assignments and Certain Other Documents.

The words “execute,” “execution,” “signed,” “signature,” and words of like import in any Loan Document or any other document executed in connection herewith and the transactions contemplated hereby shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state Laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it; providedfurther without limiting the foregoing, upon the request of the Administrative Agent, any electronic signature shall be promptly followed by such manually executed counterpart.

11.18USA PATRIOT Act Notice.

Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Loan Parties in accordance with the Act. The Loan Parties shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

11.19Judgment Currency.

If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of each Loan Party in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from any Loan Party in the Agreement Currency, the Loan Parties agree, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to the Loan Parties (or to any other Person who may be entitled thereto under applicable Law).

11.20Acknowledgement and Consent to Bail-In of EEA Financial Institutions.

Solely to the extent any Lender or L/C Issuer that is an EEA Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender or L/C Issuer that is an EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a)the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender or L/C Issuer that is an EEA Financial Institution; and

(b)the effects of any Bail-In Action on any such liability, including, if applicable:

(i)a reduction in full or in part or cancellation of any such liability;

(ii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii)the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

11.21Subordination of Intercompany Indebtedness.

Each Loan Party (a “Subordinating Loan Party”) agrees that the payment of all obligations and indebtedness, whether principal, interest, fees and other amounts and whether now owing or hereafter arising, owing to such Subordinating Loan Party by any other Loan Party is expressly subordinated to the payment in full in cash of the Obligations. If the Administrative Agent so requests while any Event of Default has occurred and is continuing, any such obligation or indebtedness shall be enforced and performance received by the Subordinating Loan Party as trustee for the holders of the Obligations and the proceeds thereof shall be paid over to the holders of the Obligations on account of the Obligations, but without reducing or affecting in any manner the liability of the Subordinating Loan Party under this Agreement or any other Loan Document. Without limitation of the foregoing, unless the Loan Parties have received the foregoing request from the Administrative Agent while an Event of Default has occurred and is continuing, the Loan Parties may make and receive payments with respect to any such obligations and indebtedness, provided, that in the event that any Loan Party receives any payment of any such obligations and indebtedness at a time when such payment is prohibited by this Section, such payment shall be held by such Loan Party, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to the Administrative Agent. For purposes of compliance with Section 5.25, the parties hereto acknowledge and agree that obligations under the Loan Documents constitute “Designated Senior Indebtedness.”

11.22Concerning Joint and Several Liability.

(a)Each of the Borrowers is accepting joint and several liability hereunder in consideration of the financial accommodations provided by the Lenders under this Agreement, for the mutual benefit, directly and indirectly, of each of the Borrowers, and in consideration of the undertakings of each of the Borrowers to accept joint and several liability for the obligations of each of them.

(b)Each of the Borrowers jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrower with respect to the payment and performance of all of the Obligations (including, without limitation, the obligations of the other Borrower to a Cash Management Bank in respect of Secured Cash Management Agreements) of the other Borrower, it being the intention of the parties hereto that all the Obligations of either Borrower shall be the joint and several obligations of each of the Borrowers without preferences or distinction between them.

(c)If and to the extent that a Borrower shall fail to make any payment with respect to any of the Obligations of the other Borrower as and when due or to perform any of such Obligations in accordance with the terms thereof, then in each such event, the other Borrower will make such payment with respect to, or perform, such Obligation.

(d)The obligations of each Borrower under the provisions of this Section 11.22 constitute the absolute and unconditional, full recourse obligations of such Borrower, enforceable against it to the full extent of its property, irrespective of the validity, regularity or enforceability of this Agreement or any other circumstances whatsoever.

(e)Except as otherwise expressly provided herein, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of occurrence of any Default or Event of Default (except to the extent notice is expressly required to be given pursuant to the terms of this Agreement), or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by the Administrative Agent or the Lenders under or in respect of any of the Obligations hereunder, any requirement of diligence and, generally, all demands, notices and other formalities of every kind in connection with this Agreement. Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations hereunder, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by the Lenders at any time or times in respect of any default by either Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement and/or the other Loan Documents, any and all other indulgences whatsoever by the Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of such Obligations or the addition, substitution or release, in whole or in part, of either Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or any failure to act on the part of the Administrative Agent, the Lenders or any other holder of the Obligations, including any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable Laws or regulations thereunder which might, but for the provisions of this Section 11.22, afford grounds for terminating, discharging or relieving such Borrower, in whole or in part, from any of its obligations under this Section 11.22, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the obligations of such Borrower under this Section 11.22 shall not be discharged except by performance and then only to the extent of such performance. The obligations of each Borrower under this Section 11.22 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any reconstruction or similar proceeding with respect to either Borrower, the Lenders or any other holder of the Obligations. The joint and several liability of the Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of either Borrower, the Administrative Agent, any Lender or any other holder of the Obligations.

(f)The provisions of this Section 11.22 are made for the benefit of the Administrative Agent, the Lenders, the other holders of the Obligations and their respective successors and assigns, and may be enforced by the Administrative Agent from time to time against any of the Borrowers as often as occasion therefore may arise and without requirement on the part of the Administrative Agent, any Lender or any other holder of the Obligations first to marshal any of its claims or to exercise any of its rights against the other Borrower or to exhaust any remedies available to it against the other Borrower or to resort to any other source or means of obtaining payment of any of the Obligations or to elect any other remedy. The provisions of this Section 11.22 shall remain in effect until the Facility Termination Date. If at any time, any payment, or any part thereof, made in respect of any of the Obligations of either Borrower, is rescinded or must otherwise be restored or returned by the Lenders upon the insolvency, bankruptcy or reorganization of any of the Borrowers, or otherwise, the provisions of this Section 11.22 will forthwith be reinstated and in effect as though such payment had not been made.

(g)Notwithstanding any provision to the contrary contained herein or in any other of the Loan Documents or any Cash Management Agreements, the obligations of each Borrower hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code of the United States or any comparable provisions of any applicable Debtor Relief Law.

(h)For the avoidance of doubt, the waivers by each Borrower under this Section 11.22 apply for purposes of the enforceability of the suretyship obligations of each Borrower under this Section 11.22 only.

11.23Borrower Agent.

Each of the Loan Parties hereby appoints PRGX to act as its agent for all purposes of this Agreement, the other Loan Documents and all other documents and electronic platforms entered into in connection herewith and agrees that (a) PRGX may execute such documents and provide such authorizations on behalf of such Loan Parties as PRGX deems appropriate in its sole discretion and each Loan Party shall be obligated by all of the terms of any such document and/or authorization executed on its behalf, (b) any notice or communication delivered by the Administrative Agent, L/C Issuer or a Lender to PRGX shall be deemed delivered to each Loan Party and (c) the Administrative Agent, L/C Issuer or the Lenders may accept, and be permitted to rely on, any document, authorization, instrument or agreement executed by PRGX on behalf of each of the Loan Parties. For the avoidance of doubt, each Borrower hereby appoints PRGX, and PRGX shall act under this Agreement and the other Loan Documents, as, the agent, attorney-in-fact and legal representative of all Borrowers for all purposes, including requesting loans and receiving account statements and other notices and communications to Borrowers (or any of them) from the Administrative Agent on behalf of the Lenders. The Borrowers acknowledge and agree that all the Obligations are jointly and severally owing by the Borrowers. The Administrative Agent may rely, and shall be fully protected in relying, on any Loan Notice, disbursement instruction, report, information or any other notice or communication made or given by PRGX, whether in its own name or on behalf of on behalf of one or more Borrowers, and the Administrative Agent shall not have any obligation to make any inquiry or request any confirmation from or on behalf of any other Borrower as to the binding effect on it of any such request, instruction, report, information, other notice or communication, nor shall the joint and several character of the Borrowers’ obligations hereunder be affected, provided, that the provisions of this Section 11.23 shall not be construed so as to preclude any Borrower from taking actions permitted to be taken by a “Borrower” hereunder.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

BORROWER:	PRGX GLOBAL, INC., a Georgia corporation By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
	PRGX USA, INC., a Georgia corporation By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
GUARANTORS:	LAVANTE, INC., a Delaware corporation By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
	PRGDS, LLC, a Georgia limited liability company By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
	PRGFS, INC., a Delaware corporation By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
	PRG INTERNATIONAL, INC., a Georgia corporation By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
	PRGTS, LLC, a Georgia limited liability company By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
	PRGX ASIA, INC., a Georgia corporation By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
	PRGX AUSTRALIA, INC., a Georgia corporation By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
	PRGX BELGIUM, INC., a Georgia corporation By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
	PRGX BRASIL, LLC, a Georgia limited liability company By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer
	PRGX CANADA, LLC, a Georgia limited liability company By: /s/ Kurt J. Abkemeier Name: Kurt J. Abkemeier Title: Chief Financial Officer

PRGX COMMERCIAL LLC,

a Georgia limited liability company

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX EUROPE, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX FRANCE, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX GERMANY, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX MEXICO, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX NETHERLANDS, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX NEW ZEALAND, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX PORTUGAL, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX SCANDINAVIA, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX SPAIN, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX SWITZERLAND, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier

Name: Kurt J. Abkemeier

Title: Chief Financial Officer

PRGX TEXAS, INC.,

a Texas corporation

By: /s/ Ronald E. Stewart

Name: Ronald E. Stewart

Title: President

ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A., as Administrative Agent By: /s/ Anthony W. Kell Name: Andrew W. Kell Title: Vice President

LENDERS: BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swingline Lender By: /s/ Ryan Maples Name: Ryan Maples Title: Sr. Vice President

SYNOVUS BANK,

as a Lender

By: /s/ Matthew McKee

Name: Matthew McKee

Title: Relationship Manager

SCHEDULE 5.10

per auto for hired or non-owned

$1,000

Deductible / Retention

Property

GL

$10,000

Federal Ins Co.

Federal Ins. Co.

Chubb National

Ins. Co.

$1,000

Auto

Work Comp

Umbrella

Foreign

Package Policy

3/27/2018 -

3/27/2019

Policy

Effective

Date

Policy #

Insurer

Limits

3584-60-57 ATL

3/27/2018 -

3/27/2019

Great Northern Ins.

Co.

3/27/2018 -

3/27/2019

3/27/2018 -

3/27/2019

7171-79-92

7353-30-91

$10,000 unless otherwise specified

24 Hr Waiting Period

$25,000 per premises - Earthquake except CA & WA

$50,000 per premises/per occurrence - Earthquake Sprinkler Leakage

$50,000 per occurrence (48 hr waiting period - Flood (all locations unless

otherwise specified)

$100,000 per occurrence (48 hr waiting period) - Flood (Santa Clara, CA)

$500,000 per occurrence (72 hr waiting period) - Flood (Sacramento, CA)

5% per premises/per occurrence ($25,000 min) - Wind/Hail

3527-11-34

Great Northern Ins.

Co.

$10,000

$50,000

$25,000

3/27/2018 -

3/27/2019

7989-45-32

$1,000

$1,000

SCHEDULE 5.13

Entity	Jurisdiction of Organization	Number of Shares Outstanding	Owner	Number of Shares Owned	% of Outstanding Shares Owned
PRGX Global, Inc.	Georgia, USA	--	--	--	--
PRGX USA, Inc.	Georgia, USA	5,740,000 Common	PRGX Global, Inc.	5,740,000 Common	100%
PRGDS, LLC	Georgia, USA	n/a	PRG International, Inc. or PRGX Global, Inc.	n/a	100%
PRGFS, Inc.	Delaware, USA	1,000 Common	PRG International, Inc.	1,000 Common	100%
PRG International, Inc.	Georgia, USA	100 Common	PRGX Global, Inc.	100 Common	100%
PRG USA, Inc.	Georgia, USA	--	PRGX Global, Inc.	--	100%
PRGTS, LLC	Georgia, USA	n/a	PRGX USA, Inc.	n/a	100%
PRGX Asia, Inc.	Georgia, USA	500 Common	PRGX Global, Inc.	500 Common	100%
PRGX Acquisition Corp.	Georgia, USA	--	PRGX Global, Inc.	--	100%
PRGX Australia, Inc.	Georgia, USA	1,100 Common	PRGX Global, Inc.	1,100 Common	100%
PRGX Belgium, Inc.	Georgia, USA	100 Common	PRGX Global, Inc.	100 Common	100%
PRGX Brasil, LLC	Georgia, USA	n/a	PRGX Canada Corp.	n/a	100%
PRGX Canada, LLC	Georgia, USA	n/a	PRGX Global, Inc.	n/a	100%
PRGX Chile, Inc.	Georgia, USA	--	PRGX Global, Inc.	--	100%
PRGX Costa Rica, Inc.	Georgia, USA	--	PRGX Global, Inc.	--	100%
PRGX Europe, Inc.	Georgia, USA	100 Common	PRGX Global, Inc.	100 Common	100%
PRGX France, Inc.	Georgia, USA	500 Common	PRGX Global, Inc.	500 Common	100%
PRGX Germany, Inc.	Georgia, USA	100 Common	PRGX Global, Inc.	100 Common	100%
PRGX Holdings, Inc.	Georgia, USA	--	PRGX Global, Inc.	--	100%
PRGX Italy, Inc.	Georgia, USA	--	PRGX Global, Inc.	--	100%
PRGX Mexico, Inc.	Georgia, USA	--	PRGX Canada Corp.	--	100%
PRGX Netherlands, Inc.	Georgia, USA	100 Common	PRGX Global, Inc.	100 Common	100%
PRGX New Zealand, Inc.	Georgia, USA	100 Common	PRGX Global, Inc.	100 Common	100%
PRGX Puerto Rico, Inc.	Georgia, USA	--	PRGX Global, Inc.	--	100%
PRGX Portugal, Inc.	Georgia, USA	100 Common	PRGX Global, Inc.	100 Common	100%
PRGX Scandinavia, Inc.	Georgia, USA	100 Common	PRGX Global, Inc.	100 Common	100%
PRGX Spain, Inc.	Georgia, USA	100 Common	PRGX Global, Inc.	100 Common	100%
PRGX Switzerland, Inc.	Georgia, USA	100 Common	PRGX Global, Inc.	100 Common	100%
PRGX Texas, Inc.	Texas, USA	1,500 Common	PRGX Global, Inc.	1,500 Common	100%
PRGX Commercial LLC	Georgia, USA	n/a	PRGX USA, Inc.	n/a	100%
Lavante, Inc.	Delaware, USA	100 Common	PRGX USA, Inc.	100 Common	100%
PRGX Argentina S.A.	Argentina	12,000 cuotas	PRGX Global, Inc.	11,880 cuotas	95%
			PRGX USA, Inc.	120 cuotas	5%
PRGX Brasil Ltda.	Brazil	4950 quotos	PRGX Brasil, LLC	4,949 quotos	≥ 99%
			PRGX USA, Inc.	1 quotos	≤ 1%
PRGX Canada Corp.	Canada	1,525,217 Nonvoting Common 897,101 Voting Common	PRGX Canada, LLC	1,525,217 Nonvoting Common 897,101 Voting Common	100% Nonvoting Common 100% Voting Common
PRG-Schultz Suzhou' Co Ltd.	China	--	PRGX International PTE Limited	--	100%
PRGX Shanghai Company Limited	China	--	PRG-Schultz Suzhou' Co Ltd.	--	100%
PRGX Colombia Ltda	Colombia	8,303,325 cuotas	PRGX Global, Inc.	8,283,900 cuotas	99%
			PRGX USA, Inc.	19,425 cuotas	1%
PRGX CR s.r.o.	Czech Republic	200,000	PRGX Global, Inc.	200,000	100%
Etesius Limited	United Kingdom	--	PRGX UK Ltd	--	100%
PRGX Deutschland GmbH	Germany	50,000	PRGX Germany, Inc.	50,000	100%
PRGX India Private Limited	India	118,167	PRGX Asia, Inc.	118,166	≥ 99.99%
			PRGX USA, Inc.	1	≤ 1%
PRGX Servicios Mexico, S. de R.L. de C.V.	Mexico		PRGX Holdings Mexico S. de R.L. de C.V.		≥ 99%
			PRGX Mexico, Inc.		≤ 1%
PRGX de Mexico, S. de R.L. de C.V.	Mexico		PRGX Holdings Mexico S. de R.L. de C.V.		≥ 99%
			PRGX Mexico, Inc.		≤ 1%
PRGX Holdings Mexico, S. de R.L. de C.V.	Mexico	3,000	PRGX Mexico, Inc.	3,000	100%
Meridian Corporation Limited	Isle of Jersey	11,927,177	PRGX Texas, Inc.	7,028,524	59%
			PRGX Global, Inc.	4,898,653	41%
PRGX Nederland BV	Netherlands	90,000	PRGX Netherlands, Inc.	90,000	100%
PRGX Polska sp. z o.o.	Poland	7,160	PRGX Global, Inc.	7,160	100%
PRGX International PTE Limited	Singapore	75,000	PRGX Asia, Inc.	75,000	100%
PRGX Svenska AB	Sweden	700,000	PRGX Global, Inc.	700,000	100%
PRGX UK Holdings Ltd	United Kingdom	--	Meridian Corporation Limited	--	100%
PRGX UK Ltd	United Kingdom	--	PRGX UK Holdings Ltd	--	100%
PRG-Schultz Venezuela S.R.L.	Venezuela	200 cuotas	PRGX Global, Inc.	199 cuotas	99.5%
			PRGX USA, Inc.	1 cuota	0.5%

SCHEDULE 5.17

(i.)

	TRADEMARK
OWNER	TITLE	Reg. No.	Reg. Date
PRGTS, LLC	PRGX®	3894937	12/21/2010
PRGTS, LLC	PRGX® (Design)	3980876	6/21/2011
PRGTS, LLC	Thrive in the Data®	5152239	2/28/2017
Lavante, Inc.	Lavante®	3747459	2/9/2010
PRGTS, LLC	PRGX OPTIX®	5439396	4/3/2018
	COPYRIGHT
OWNER	TITLE	Reg. No.	Reg. Date
PRGX Global, Inc.	AuditPro	TXu000715889	11/30/1995
PRGTS, LLC	SUREF!NE(ver.3.1.1)	TXu001065632	4/3/2003
	PATENT
OWNER	TITLE	Patent No.	Issue Date
Lavante, Inc.	LINE ITEM MANAGEMENT SYSTEM METHOD AND APPARATUS	10115152	10/30/2018
Lavante, Inc.	OCR ENABLED MANAGEMENT OF ACCOUNTS PAYABLE AND/OR ACCOUNTS RECEIVABLE AUDITING DATA	8996416	3/31/2015
Lavante, Inc.	METHOD AND SYSTEM OF MANAGING ACCOUNTS PAYABLE AUDITING DATA	7908188	3/15/2011
PRGTS, LLC	SYSTEMS AND METHODS FOR RECOVERY AUDIT SCOPE DETERMINATION	7120649	10/10/2006
	PATENT APPLICATION
OWNER	TITLE	Application No.	Filing Date
Lavante, Inc.	OCR ENABLED MANAGEMENT OF ACCOUNTS PAYABLE AND/OR ACCOUNTS RECEIVABLE AUDITING DATA	14/634431	2/27/2015

[Intentionally omitted]

The disclosure in this schedule may be overinclusive.  Accordingly, the listing of any particular IP Right on this schedule does not necessarily constitute the acknowledgment or agreement of the Loan Parties that such item in fact satisfies the criteria to constitute a Material IP Right.

SCHEDULE 5.20(a)

Lessee	Leased Real Property Address	Landlord Name and Address
PRGX USA, Inc.	211 SE 34th Street Suite 27 Bentonville, AR 72712	RCCP Investments, L.L.C. PO BOX 9505 Fayetteville, AR 72703
Lavante, Inc.	5225 Hellyer Oaks Blvd Suite 200 San Jose, CA 95138	Hellyer Oaks Owner LLC 980 Fifth Avenue San Rafael, CA 94901
PRGX Global, Inc.	600 Galleria Parkway Suite 100 Atlanta, GA 30339	Childress Klein Properties 300 Galleria Pkwy, Suite 200 Atlanta, GA 30339
PRGX USA, Inc.	1033 Jefferson St NW Atlanta, GA 30318	Quality Technology Services (QTS) 12851 Foster Street, Suite 205 Overland Park, KS 66213
PRGX USA, Inc.	1901 E. Vorhees Danville, IL 60834	Genpact LLC 9 Sylvan Way, Suite 165 Parsippany, NJ 07054
PRGX USA, Inc.	2610 Horizon Drive SE Suite 200 Grand Rapids, MI 49546	2600 Horizon, L.L.C. 750 Trade Centre Way, Suite 100 Portage, MI 49002
PRGX USA, Inc.	6900 Wedgewood Road Maple Grove, MN 55311	WCC Partners, LP 2970 Peachtree Road NW, Suite 805 Atlanta, GA 30305
PRGX USA, Inc.	4504 Darrow Road Stow, OH 44224	Stow Professional Center, LLC 8750 River Styx Road Wadsworth, OH 44281
PRGX USA, Inc.	2555 Kingston Road Suite 260 York, PA 17402	KM Executive Center, L.P. 6259 Reynolds Mill Road Seven Valleys, PA 17360
PRGX USA, Inc.	1 Bridgestone Park Nashville, TN 37214	YMC Oldsmar Investments, LLC dba YMC Bridgestone Investments, LLC 3611 Motor Avenue, Suite 100 Los Angeles, CA 90034
PRGX USA, Inc.	4849 Greenville Ave Ste 1200 Dallas, TX 75206	US Energy Square, LLC 4925 Greenville Avenue, Suite 105 Dallas, TX 75206
PRGX USA, Inc.	6431 Longhorn Dr. Irving, TX 75063	Quality Technology Services (QTS) 12851 Foster Street, Suite 205 Overland Park, KS 66213

SCHEDULE 5.20(b)

Loan Party	Jurisdiction of Organization	Address/Principal place of Business	Federal TIN	Organization (SOS Control) No.
PRGX Global, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2213805	K602561
PRGX USA, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-1917267	K021332
PRGDS, LLC	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	43-2093272	600266
PRGFS, Inc.	Delaware, USA	801 West Street, 2nd Floor, Wilmington, DE 19801	51-0386672	2986065
PRG International, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2341353	K732287
PRGTS, LLC	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	43-2093270	600268
PRGX Asia, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2074456	K323809
PRGX Australia, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2248063	K614253
PRGX Belgium, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2226408	K609517
PRGX Brasil, LLC	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	90-0350839	8020709
PRGX Canada, LLC	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	90-0350839	7101248
PRGX Europe, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	20-3365295	542674
PRGX France, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2074681	K323981
PRGX Germany, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2248439	K619962
PRGX Mexico, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-1932732	K103713
PRGX Netherlands, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2247655	K616811
PRGX New Zealand, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2248046	K614252
PRGX Portugal, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2561834	29010
PRGX Scandinavia, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2561588	29009
PRGX Spain, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2461695	K917375
PRGX Switzerland, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	58-2406318	K828388
PRGX Texas, Inc.	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	75-2965383	800028200
PRGX Commercial LLC	Georgia, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	45-3817455	11085107
Lavante, Inc.	Delaware, USA	600 Galleria Parkway, Suite 100 Atlanta, GA 30339	02-0814255	14008908

SCHEDULE 5.20(c)

Lavante, Inc. merged with Braveheart Merger Co. on October 31, 2016, with Lavante, Inc. as the surviving entity.

SCHEDULE 5.20(d)

Company	Account	Bank
PRGX USA, Inc.		Wells Fargo Brokerage Services
PRGFS, Inc.		PNC Bank
PRGX Global, Inc.		SunTrust Bank
PRGX USA, Inc.		SunTrust Bank
PRGX USA, Inc.		SunTrust Bank
PRGX USA, Inc.		SunTrust Bank
PRGX USA, Inc.		SunTrust Bank
PRGX USA, Inc.		SunTrust Bank
PRGTS, LLC		SunTrust Bank
PRGX Commercial LLC		SunTrust Bank
PRGX USA, Inc.		SunTrust Bank
Lavante, Inc.		SunTrust Bank
Lavante, Inc.		SunTrust Bank
PRGX Global, Inc.		Fidelity Investments
PRGX Global, Inc.		Fidelity Investments

SCHEDULE 7.01

None.

SCHEDULE 7.02

Intercompany Indebtedness and investments, in each case as existing as of the Closing Date.

Shares of Delta stock held in Fidelity Investment accounts listed in Schedule 5.20(d).

SCHEDULE 7.03

PRGX has severance obligations of $167,869.69 to former employees.

PRGX has obligations under severance agreements, as amended, between PRGX and each of PRGX's former Chairman, President and CEO, John M. Cook, and former Vice Chairman, John M. Toma, in respect of obligations to pay annual reimbursements, that began on or about February 1, 2007, to Mr. Cook and Mr. Toma for the cost of health insurance for themselves and their respective spouses (not to exceed $25,000 and $20,000, respectively, subject to adjustment based on changes in the Consumer Price Index), continuing until each reaches the age of 80.

Exhibit 1.01

FORM OF SECURED PARTY DESIGNATION NOTICE

TO:        Bank of America, N.A., as Administrative Agent

RE: Credit Agreement, dated as of March 14, 2019 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement;” the terms defined therein being used herein as therein defined), among PRGX Global, Inc., a Georgia corporation (“PRGX”), PRGX USA, Inc., a Georgia corporation (“PUSA” and together with PRGX, each, a “Borrower” and collectively, the “Borrowers”), the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent

DATE:        [Date]

[Name of Cash Management Bank] (the “Secured Party”) hereby notifies you, pursuant to the terms of the Credit Agreement, that the Secured Party meets the requirements of a Cash Management Bank under the terms of the Credit Agreement and is a Cash Management Bank under the Credit Agreement and the other Loan Documents. The Secured Party hereby designates the Cash Management Agreement described on Schedule 1 hereto as a Secured Cash Management Agreement.

Delivery of an executed counterpart of a signature page of this notice by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this notice.

A duly authorized officer of the undersigned has executed this notice as of the day and year set forth above.

,

as a Cash Management Bank

By:

Name:

Title:

Schedule 1

To Secured Party Designation Notice

Exhibit 2.02

FORM OF LOAN NOTICE

Date: ___________, _____

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of March 14, 2019 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement;” the terms defined therein being used herein as therein defined), among PRGX Global, Inc., a Georgia corporation (“PRGX”), PRGX USA, Inc., a Georgia corporation (“PUSA” and together with PRGX, each, a “Borrower” and collectively, the “Borrowers”), the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned hereby requests (select one):

A Borrowing of Revolving Loans

A conversion or continuation of Revolving Loans

1.    On (a Business Day).

2.    In the amount of in the following currency: _________.

3.    Comprised of .        [Type of Loan requested]

4.    For Eurocurrency Rate Loans: with an Interest Period of ___ months.

[With respect to such Borrowing, the undersigned Borrower hereby represents and warrants that (i) such request complies with the requirements of Section 2.01 of the Credit Agreement and (ii) each of the conditions set forth in Section 4.02 of the Credit Agreement have been satisfied on and as of the date of such Borrowing.]

[signature page follows]

[PRGX GLOBAL, INC.,

a Georgia corporation

By:

Name:

Title: ]

[PRGX USA, INC.,

a Georgia corporation

By:

Name:

Title: ]

Exhibit 2.04

FORM OF SWINGLINE LOAN NOTICE

Date: __________, 20__

To:    Bank of America, N.A., as Swingline Lender

Cc:    Bank of America, N.A., as Administrative Agent

Re: Credit Agreement, dated as of March 14, 2019 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”), among PRGX Global, Inc., a Georgia corporation (“PRGX”), PRGX USA, Inc., a Georgia corporation (“PUSA” and together with PRGX, each, a “Borrower” and collectively, the “Borrowers”), the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent. Capitalized terms used but not otherwise defined herein have the meanings provided in the Credit Agreement.

Ladies and Gentlemen:

The undersigned hereby requests a Swingline Loan:

1.    On __________, 20__ (a Business Day).

2.    In the amount of $__________.

With respect to such Borrowing of Swingline Loans, the undersigned Borrower hereby represents and warrants that (i) such request complies with the requirements of the first proviso to the first sentence of Section 2.04(a) of the Credit Agreement and (ii) each of the conditions set forth in Section 4.02 of the Credit Agreement have been satisfied on and as of the date of such Borrowing of Swingline Loans.

[signature page follows]

[PRGX GLOBAL, INC.,

a Georgia corporation

By:

Name:

Title: ]

[PRGX USA, INC.,

a Georgia corporation

By:

Name:

Title: ]

Exhibit 2.05

FORM OF NOTICE OF LOAN PREPAYMENT

TO:        Bank of America, N.A., as [Administrative Agent][Swingline Lender]

RE: Credit Agreement, dated as of March 14, 2019 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”), among PRGX Global, Inc., a Georgia corporation (“PRGX”), PRGX USA, Inc., a Georgia corporation (“PUSA” and together with PRGX, each, a “Borrower” and collectively, the “Borrowers”), the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent. Capitalized terms used but not otherwise defined herein have the meanings provided in the Credit Agreement.

DATE:        [Date]

The undersigned Borrower hereby notifies the Administrative Agent that on _____________ pursuant to the terms of Section 2.05 of the Credit Agreement, the undersigned Borrower intends to prepay/repay the following Loans as more specifically set forth below:

Optional prepayment of Revolving Loans in the following amount(s):

Eurocurrency Rate Loans: [$]

Applicable Interest Period:

[In the following Alternative Currency:             ]

Base Rate Loans: $

LIBOR Daily Floating Rate Loans: $

Optional prepayment of Swingline Loans in the following amount:

$

Delivery of an executed counterpart of a signature page of this notice by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this notice.

[signature page follows]

[PRGX GLOBAL, INC.,

a Georgia corporation

By:

Name:

Title: ]

[PRGX USA, INC.,

a Georgia corporation

By:

Name:

Title: ]

Exhibit 2.11(a)

FORM OF NOTE

____________, 20__

FOR VALUE RECEIVED, each of the undersigned (each, a “Borrower” and collectively, the “Borrowers”), hereby promises to pay to _____________________ or registered assigns (the “Lender”), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the Lender to the Borrowers under that certain Credit Agreement, dated as of March 14, 2019 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement;” the terms defined therein being used herein as therein defined), among the Borrowers, the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent.

Each Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. Except as otherwise provided in Section 2.04(f) of the Credit Agreement with respect to Swingline Loans, all payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in the applicable currency and in Same Day Funds at the applicable Administrative Agent’s Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement.

This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

Each Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

[signature page follows]

PRGX GLOBAL, INC.,

a Georgia corporation

By:

Name:    

Title:

PRGX USA, INC.,

a Georgia corporation

By:

Name:

Title:

Exhibit 3.01-A

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement dated as of March 14, 2019 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PRGX Global, Inc., a Georgia corporation (“PRGX”), PRGX USA, Inc., a Georgia corporation (“PUSA” and together with PRGX, each, a “Borrower” and collectively, the “Borrowers”), the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent.

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent shareholder of the Borrowers within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (iv) it is not a controlled foreign corporation related to the Borrowers as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished the Administrative Agent and the Borrowers with a certificate of its non-U.S. Person status on IRS Form W-8BEN (or W-8BEN-E, as applicable). By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowers and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrowers and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

By:

Name:

Title:

Date:, 20___

Exhibit 3.01-B

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement dated as of March 14, 2019 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PRGX Global, Inc., a Georgia corporation (“PRGX”), PRGX USA, Inc., a Georgia corporation (“PUSA” and together with PRGX, each, a “Borrower” and collectively, the “Borrowers”), the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent.

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent shareholder of the Borrowers within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code, and (iv) it is not a controlled foreign corporation related to the Borrowers as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN (or W-8BEN-E, as applicable). By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]

By:

Name:

Title:

Date:, 20___

Exhibit 3.01-C

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement dated as of March 14, 2019 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PRGX Global, Inc., a Georgia corporation (“PRGX”), PRGX USA, Inc., a Georgia corporation (“PUSA” and together with PRGX, each, a “Borrower” and collectively, the “Borrowers”), the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent.

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect to such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrowers within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrowers as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN (or W-8BEN-E, as applicable) or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN (or W-8BEN-E, as applicable) from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]

By:

Name:

Title:

Date:, 20___

Exhibit 3.01-D

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement dated as of March 14, 2019 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PRGX Global, Inc., a Georgia corporation (“PRGX”), PRGX USA, Inc., a Georgia corporation (“PUSA” and together with PRGX, each, a “Borrower” and collectively, the “Borrowers”), the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent.

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrowers within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrowers as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished the Administrative Agent and the Borrowers with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN (or W-8BEN-E, as applicable) or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN (or W-8BEN-E, as applicable) from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowers and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrowers and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

By:

Name:

Title:

Date:, 20___

Exhibit 6.02

FORM OF COMPLIANCE CERTIFICATE

Check for distribution to public and private side Lenders

For the fiscal [quarter][year] ended _________________, 20___.

I, ______________________, [Title] of PRGX Global, Inc. (the “Company”) hereby certify that, to the best of my knowledge and belief, with respect to that certain Credit Agreement dated as of March 14, 2019 (as amended, modified, restated or supplemented from time to time, the “Credit Agreement”; all of the defined terms in the Credit Agreement are incorporated herein by reference) among the Company, PRGX USA, Inc., the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent:

[Use following paragraph (a) for fiscal year-end financial statements]

(a)    The Company has delivered the year-end audited financial statements required by Section 6.01(a) of the Credit Agreement for the fiscal year of the Company ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.

[Use following paragraph (a) for fiscal quarter-end financial statements]

(a)    The Company has delivered the unaudited financial statements required by Section 6.01(b) of the Credit Agreement for the fiscal quarter of the Company ended as of the above date. Such consolidatedfinancial statements fairly present the financial condition, results of operations and cash flows of the Company and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

(b)    Since ___________ (the date of the last similar certification, or, if none, the Closing Date) no Default or Event of Default has occurred under the Credit Agreement;

(c)    (select one):

    Attached hereto are such supplements to Schedules 5.13 (Subsidiaries), 5.20(a) (Locations of Real Property), 5.20(b) (Location of Chief Executive Office, Taxpayer Identification Number, Etc.), 5.20(c) (Changes in Legal Name, State of Formation and Structure) and 5.20(d) (Deposit and Investment Accounts) of the Credit Agreement, such that, as supplemented, such Schedules are accurate and complete as of the date hereof; and, if a supplement had been requested by the Administrative Agent under Section 6.02(b) of the Credit Agreement, Schedule 5.17 (IP Rights) of the Credit Agreement such that, as supplemented, such Schedule is accurate and complete as of the date hereof.

No such supplements are required at this time.

Delivered herewith are detailed calculations demonstrating compliance by the Loan Parties with the financial covenants contained in Section 7.11 of the Credit Agreement as of the end of the fiscal period referred to above.

[signature page follows]

This ______ day of ___________, 20__.

PRGX GLOBAL, INC.                        PRGX GLOBAL, INC.,

a Georgia corporation

By:

Name:

Title:

Attachment to Compliance Certificate

Computation of Financial Covenants

Exhibit 6.13

FORM OF JOINDER AGREEMENT

THIS JOINDER AGREEMENT (the “Joinder Agreement”), dated as of _____________, 20__, is by and between _____________________, a ___________________ (the “New Subsidiary”), and BANK OF AMERICA, N.A., in its capacity as Administrative Agent under that certain Credit Agreement (as it may be amended, modified, restated or supplemented from time to time, the “Credit Agreement”), dated as of March 14, 2019, by and among PRGX Global, Inc., a Georgia corporation (“PRGX”), PRGX USA, Inc., a Georgia corporation (“PUSA” and together with PRGX, each, a “Borrower” and collectively, the “Borrowers”), the Guarantors party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent. All of the defined terms in the Credit Agreement are incorporated herein by reference.

The Loan Parties are required by Section 6.13 of the Credit Agreement to cause the New Subsidiary to become a “Guarantor”.

Accordingly, the New Subsidiary hereby agrees as follows with the Administrative Agent, for the benefit of the Lenders:

1.    The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Joinder Agreement, the New Subsidiary will be deemed to be a party to the Credit Agreement and a “Guarantor” for all purposes of the Credit Agreement, and shall have all of the obligations of a Guarantor thereunder as if it had executed the Credit Agreement. The New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions applicable to the Guarantors contained in the Credit Agreement. Without limiting the generality of the foregoing terms of this paragraph 1, the New Subsidiary hereby jointly and severally together with the other Guarantors, guarantees to each Lender and the Administrative Agent, as provided in Article X of the Credit Agreement, the prompt payment of the Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, a mandatory cash collateralization or otherwise) strictly in accordance with the terms thereof.

2.    The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Joinder Agreement, the New Subsidiary will be deemed to be a party to the Security Agreement, and shall have all the obligations of an “Obligor” (as such term is defined in the Security Agreement) thereunder as if it had executed the Security Agreement. The New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Security Agreement. Without limiting generality of the foregoing terms of this paragraph 2, the New Subsidiary hereby grants to the Administrative Agent, for the benefit of the holders of the Secured Obligations (as such term is defined in Section 1 of the Security Agreement), a continuing security interest in, and a right of set off against any and all right, title and interest of the New Subsidiary in and to the Collateral (as such term is defined in Section 2 of the Security Agreement) of the New Subsidiary. The New Subsidiary hereby represents and warrants to the Administrative Agent, for the benefit of the holders of the Secured Obligations (as such term is defined in Section 1 of the Security Agreement), that:

(i)    The New Subsidiary’s chief executive office, tax payer identification number, organization identification number, and chief place of business are (and for the prior four months have been) located at the locations set forth on Schedule 1 attached hereto and the New Subsidiary keeps its books and records at such locations.

(ii)    The location of all owned and leased real property of the New Subsidiary is as shown on Schedule 2 attached hereto.

(iii)    The New Subsidiary’s legal name and jurisdiction of organization is as shown in this Joinder Agreement and the New Subsidiary has not in the past four months changed its name, been party to a merger, consolidation or other change in structure or used any tradename except as set forth in Schedule 3 attached hereto.

(iv)    The patents, copyrights, and trademarks listed on Schedule 4 attached hereto constitute all of the registrations and applications for the patents, copyrights and trademarks owned by the New Subsidiary.

(v)    The deposit accounts and investment accounts listed on Schedule 5 attached hereto constitute all of the deposit accounts and investment accounts owned by the New Subsidiary.

(vi)    Schedule 6 attached hereto sets forth a complete and accurate list of (i) any Pledged Equity owned by the New Subsidiary that is required to be pledged and delivered to the Administrative Agent pursuant to the Security Agreement and (ii) any Instruments, Documents and Tangible Chattel Paper constituting Collateral owned by the New Subsidiary that are required to be pledged and delivered to the Administrative Agent pursuant to Section 4(a)(i) of the Security Agreement.

3.    The address of the New Subsidiary for purposes of all notices and other communications is ____________________, ____________________________, Attention of ______________ (Facsimile No. ____________).

4.    The New Subsidiary hereby waives acceptance by the Administrative Agent and the Lenders of the guaranty by the New Subsidiary under Article X of the Credit Agreement upon the execution of this Joinder Agreement by the New Subsidiary.

5.    This Joinder Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute one contract.

6.    This Joinder Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York.

[signature page follows]

IN WITNESS WHEREOF, the New Subsidiary has caused this Joinder Agreement to be duly executed by its authorized officers, and the Administrative Agent, for the benefit of the Lenders, has caused the same to be accepted by its authorized officer, as of the day and year first above written.

[NEW SUBSIDIARY]

By:

Name:                    

Title:                    

Acknowledged and accepted:        

BANK OF AMERICA, N.A.,

as Administrative Agent

By:

Name:                    

Title:                    

Schedule 1

TO FORM OF JOINDER AGREEMENT

[Chief Executive Office, Tax Identification Number, Organization Identification Number

and Chief Place of Business of New Subsidiary]

Schedule 2

TO FORM OF JOINDER AGREEMENT

[Owned and Leased Real Property]

Schedule 3

TO FORM OF JOINDER AGREEMENT

[Tradenames]

Schedule 4

TO FORM OF JOINDER AGREEMENT

[Patents, Copyrights, and Trademarks]

Schedule 5

TO FORM OF JOINDER AGREEMENT

[Deposit and Investment Accounts]

Exhibit 11.06(b)

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto in the amount[s] and equal to the percentage interest[s] identified below of all the outstanding rights and obligations under the respective facilities identified below (including, without limitation, Letters of Credit, Guarantees and Swingline Loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.    Assignor:        ______________________________

[Assignor [is][is not] a Defaulting Lender.]

2. Assignee:        ______________________________

[and is an Affiliate/Approved Fund of [identify Lender]]

3. Borrowers:    PRGX Global, Inc., a Georgia corporation, and PRGX USA, Inc., a Georgia corporation

4. Administrative Agent:    Bank of America, N.A., as the administrative agent under the Credit Agreement

5. Credit Agreement:    Credit Agreement dated as of March 14, 2019 among the Borrowers, the Guarantors party thereto, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent

6. Assigned Interest:    

Aggregate Amount of Commitment/Loans for all Lenders*	Amount of Commitment/Loans Assigned*	Percentage Assigned of Commitment/Loans
$	$	%
$	$	%
$	$	%

[7.    Trade Date:        ______________]

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

[signature page follows]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:______________________________

Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:______________________________

Title:

[Consented to and] Accepted:

BANK OF AMERICA, N.A. as

Administrative Agent

By_________________________________

Title:

[Consented to:]

[BANK OF AMERICA, N.A., as L/C Issuer][and Swingline Lender]

By________________________________

Title:]

[PRGX GLOBAL, INC.

a Georgia corporation

By________________________________

Title:]

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrowers, any of their Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by either Borrower, any of their Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets the requirements to be an assignee under Section 11.06(b)(iii) and (v) of the Credit Agreement (subject to such consents, if any, as may be required under Section 11.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender. The Assignee represents and warrants as of the Effective Date that it is not (A) an employee benefit plan subject to Title I of ERISA, (B) a plan or account subject to Section 4975 of the Internal Revenue Code, (C) an entity deemed to hold “plan assets” of any such plans or accounts for purposes of ERISA or the Internal Revenue Code, or (D) a “governmental plan” within the meaning of ERISA.

2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to the Assignee.

3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

Exhibit 11.06(b)(iv)

FORM OF ADMINISTRATIVE QUESTIONNAIRE

(See attached.)

EX-10.53

SECURITY AND PLEDGE AGREEMENT

THIS SECURITY AND PLEDGE AGREEMENT (this “Agreement”) is entered into as of March 14, 2019 among PRGX Global, Inc., a Georgia corporation (“PRGX”), PRGX USA, Inc., a Georgia corporation (“PUSA”, and together with PRGX, individually, a “Borrower” and, collectively, the “Borrowers”), the other parties identified as “Obligors” on the signature pages hereto and such other parties that may become Obligors hereunder after the date hereof (together with the Borrowers, individually, an “Obligor”, and, collectively, the “Obligors”) and Bank of America, N.A., in its capacity as administrative agent (in such capacity, the “Administrative Agent”) for the holders of the Secured Obligations (defined below).

RECITALS

WHEREAS, pursuant to that certain Credit Agreement, dated as of the date hereof (as amended, modified, supplemented, increased, extended, restated, renewed, refinanced or replaced from time to time, the “Credit Agreement”) among the Borrowers, the Guarantors identified therein, the Lenders identified therein and the Administrative Agent, the Lenders have agreed to make Loans and issue Letters of Credit upon the terms and subject to the conditions set forth therein; and

WHEREAS, this Agreement is required by the terms of the Credit Agreement.

NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.Definitions.

(a)Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement, and the following terms shall have the meanings set forth in Article 9 (or, if not defined therein, then Article 8 or, if not defined therein, then Section 1-201) of the UCC (defined below): Accession, Adverse Claim, As-Extracted Collateral, Chattel Paper, Commercial Tort Claim, Consumer Goods, Deposit Account, Document, Electronic Chattel Paper, Equipment, Farm Products, Financial Asset, Fixtures, General Intangible, Goods, Instrument, Inventory, Investment Company Security, Investment Property, Letter-of-Credit Right, Manufactured Home, Money, Proceeds, Securities Account, Security Entitlement, Security, Software, Supporting Obligation and Tangible Chattel Paper.

(b)In addition, the following terms shall have the meanings set forth below:

“Collateral” has the meaning provided in Section 2 hereof.

“Copyright License” means any written agreement, naming any Obligor as licensor, granting any right under any Copyright.

“Copyrights” means (a) all registered United States copyrights in all Works, now existing or hereafter created or acquired, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, registrations, recordings and applications in the United States Copyright Office, and (b) all renewals thereof.

“Patent License” means any agreement, whether written or oral, providing for the grant by or to an Obligor of any right to manufacture, use or sell any invention covered by a Patent.

“Patents” means (a) all letters patent of the United States or any other country and all reissues and extensions thereof, and (b) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof.

“Pledged Equity” means, with respect to each applicable Obligor, (i) 100% of the issued and outstanding Equity Interests in each Domestic Subsidiary (unless an Immaterial Subsidiary) of PRGX that is directly owned by such Obligor and (ii) 65% of the issued and outstanding Equity Interests in each first tier Foreign Subsidiary (unless an Immaterial Subsidiary) of PRGX that is directly owned by such Obligor, including the Equity Interests of the Subsidiaries owned by such Obligor and reflected as pledged by such Obligor as set forth on Schedule 1(b) hereto, in each case together with the certificates (or other agreements or instruments), if any, representing such shares, and all options and other rights, contractual or otherwise, with respect thereto, including, but not limited to, the following:

(1)all Equity Interests representing a dividend thereon, or representing a distribution or return of capital upon or in respect thereof, or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to the holder thereof, or otherwise in respect thereof; and

(2)in the event of any consolidation or merger involving the issuer thereof and in which such issuer is not the surviving Person, all shares of each class of the Equity Interests of the successor Person formed by or resulting from such consolidation or merger, to the extent that such successor Person is a direct Subsidiary of an Obligor; provided, however, for purposes of clarity, the extent of the Equity Interests of the successor Person that constitutes “Pledged Equity” shall be subject to the limitations set forth in clauses (i) and (ii) of this definition.

For the avoidance of doubt, “Pledged Equity” shall not include any Excluded Property.

“Secured Obligations” means, without duplication, (a) all Obligations and (b) all costs and expenses incurred in connection with enforcement and collection of the Obligations, including the reasonable fees, charges and disbursements of counsel to the extent reimbursable by the Borrowers in accordance with the Credit Agreement.

“Trademark License” means any agreement, written or oral, providing for the grant by or to an Obligor of any right to use any Trademark.

“Trademarks” means (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise and (b) all renewals thereof.

“UCC” means the Uniform Commercial Code as in effect from time to time in the state of New York except as such term may be used in connection with the perfection of the Collateral and then the applicable jurisdiction with respect to such affected Collateral shall apply.

“Work” means any work that is subject to copyright protection pursuant to Title 17 of the United States Code.

2.Grant of Security Interest in the Collateral. To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Secured Obligations, each Obligor hereby grants to the Administrative Agent, for the benefit of the holders of the Secured Obligations, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to all of the following, whether now owned or existing or owned, acquired, or arising hereafter (collectively, the “Collateral”): (a) all Accounts; (b) all Chattel Paper; (c) those certain Commercial Tort Claims set forth on Schedule 2(c) hereto; (d) all Copyrights; (e) all Copyright Licenses; (f) all Deposit Accounts; (g) all Documents; (h) all Equipment; (i) all Fixtures; (j) all General Intangibles (excluding Equity Interests in any Subsidiary except insofar as such Equity Interests constitute Pledged Equity); (k) all Instruments; (l) all Inventory; (m) all Investment Property (excluding Equity Interests in any Subsidiary except insofar as such Equity Interests constitute Pledged Equity); (n) all Letter-of-Credit Rights; (o) all Money; (p) all Patents; (q) all Patent Licenses; (r) all Pledged Equity; (s) all Software; (t) all Supporting Obligations; (u) all Trademarks; (v) all Trademark Licenses; and (w) all Accessions and all Proceeds of any and all of the foregoing.

Notwithstanding anything to the contrary contained herein, (x) the security interests granted under this Agreement shall not extend to any Excluded Property, (y) the term “Collateral” shall not include any such Excluded Property and (z) the foregoing right of set off is subject to the provisions of Section 11.08 of the Credit Agreement.

The Obligors and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest created hereby in the Collateral (i) constitutes continuing collateral security for all of the Secured Obligations, whether now existing or hereafter arising and (ii) is not to be construed as an assignment of any Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks or Trademark Licenses.

3.Representations and Warranties. Each Obligor hereby represents and warrants to the Administrative Agent, for the benefit of the holders of the Secured Obligations, that:

(a)Ownership. Each Obligor is the legal and beneficial owner of the Collateral in which it is granting a security interest hereunder, and has the right to grant such security interest therein. There exists no Adverse Claim with respect to the Pledged Equity pledged by such Obligor.

(b)Security Interest/Priority. This Agreement creates a valid security interest in favor of the Administrative Agent, for the benefit of the holders of the Secured Obligations, in the Collateral pledged by such Obligor, and, when properly perfected by filing, shall constitute a valid and perfected, first priority security interest in such Collateral (including all uncertificated Pledged Equity consisting of partnership or limited liability company interests that do not constitute Securities), to the extent such security interest can be perfected by filing under the UCC, free and clear of all Liens except for Permitted Liens. The taking possession by the Administrative Agent of the certificated Securities (if any) evidencing the Pledged Equity pledged by such Obligor and all other Instruments constituting Collateral will perfect and establish the first priority of the Administrative Agent’s security interest in all such Pledged Equity evidenced by such certificated Securities and such Instruments.

(c)Types of Collateral. None of the Collateral consists of, or is the Proceeds of, and the Administrative Agent is not being granted a security interest in, As-Extracted Collateral, Consumer Goods, Farm Products, Manufactured Homes or standing timber.

(d)Equipment and Inventory. With respect to any Equipment and/or Inventory of an Obligor included as Collateral, each such Obligor has exclusive possession and control of such Equipment and Inventory of such Obligor except for (i) Equipment leased by such Obligor as a lessee or (ii) Equipment or Inventory in transit with common carriers. No Inventory of an Obligor is held by a Person other than an Obligor pursuant to consignment, sale or return, sale on approval or similar arrangement.

(e)Authorization of Pledged Equity. All Pledged Equity is duly authorized and validly issued, is fully paid and, to the extent applicable, nonassessable and is not subject to the preemptive rights of any Person.

(f)No Other Equity Interests, Instruments, Etc. As of the Closing Date, (i) no Obligor owns any certificated Equity Interests in any Subsidiary that constitute Securities and are required to be pledged and delivered to the Administrative Agent hereunder except as set forth on Schedule 1(b) hereto, and (ii) no Obligor holds any Instruments, Documents or Tangible Chattel Paper required to be pledged and delivered to the Administrative Agent pursuant to Section 4(a)(i) of this Agreement other than as set forth on Schedule 3(f) hereto. All such certificated Securities, Instruments, Documents and Tangible Chattel Paper have been delivered to the Administrative Agent.

(g)Partnership and Limited Liability Company Interests. Except as previously disclosed to the Administrative Agent, none of the Collateral consisting of an interest in a partnership or a limited liability company (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is a Security governed by Article 8 of the UCC, (iii) is an Investment Company Security, (iv) is held in a Securities Account or (v) constitutes a Security.

(h)[Reserved].

(i)Consents; Etc. There are no restrictions in any Organization Document governing any Pledged Equity or any other document related thereto which would limit or restrict (i) the grant of a Lien pursuant to this Agreement on such Pledged Equity, (ii) the perfection of such Lien or (iii) the exercise of remedies in respect of such perfected Lien in such Pledged Equity as contemplated by this Agreement. Except for (i) the filing or recording of UCC financing statements, (ii) the filing of appropriate notices with the United States Patent and Trademark Office and the United States Copyright Office, (iii) obtaining control to perfect the Liens created by this Agreement (to the extent required under Section 4(a) hereof), (iv) such actions as may be required by Laws affecting the offering and sale of securities, (v) such actions as may be required by applicable foreign Laws affecting the pledge of the Pledged Equity of Foreign Subsidiaries and (vi) consents, authorizations, filings or other actions which have been obtained or made, no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority and no consent of any other Person (including, without limitation, any stockholder, member or creditor of such Obligor), is required for (A) the grant by such Obligor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by such Obligor, (B) the perfection of such security interest (to the extent such security interest can be perfected by filing under the UCC), the granting of control (to the extent required under Section 4(a) hereof) or by filing an appropriate notice with the United States Patent and Trademark Office or the United States Copyright Office) or (C) subject to compliance with applicable foreclosure Laws, the exercise by the Administrative Agent or, subject to Section 21, the Required Lenders of the rights and remedies provided for in this Agreement.

(j)Commercial Tort Claims. As of the Closing Date, no Obligor has any Commercial Tort Claims seeking damages in excess of $50,000 other than as set forth on Schedule 2(c) hereto.

(k)Copyrights, Patents and Trademarks.

(i)To the best of each Obligor’s knowledge, each material U.S. Copyright, each U.S. Patent and each U.S. Trademark of such Obligor is valid, subsisting, unexpired, enforceable and has not been abandoned.

(ii)To the best of each Obligor’s knowledge, no holding, decision or judgment has been rendered by any Governmental Authority that would limit, cancel or question the validity of any Copyright, Patent or Trademark referenced in clause (i) of any Obligor.

(iii)No action or proceeding is pending seeking to limit, cancel or question the validity of any Copyright, Patent or Trademark referenced in clause (i) of any Obligor, or that, if adversely determined, could reasonably be expected to have a material adverse effect on the value of any Copyright, Patent or Trademark referenced in clause (i) of any Obligor.

(iv)All applications pertaining to the Copyrights, Patents and Trademarks referenced in clause (i) of each Obligor have been duly and properly filed, and all registrations or letters pertaining to such Copyrights, Patents and Trademarks have been duly and properly filed and issued.

(v)No Obligor has made any assignment or agreement in conflict with the security interest in the Copyrights, Patents or Trademarks of any Obligor hereunder.

4.Covenants. Each Obligor covenants that until the Facility Termination Date has occurred, such Obligor shall:

(a)Instruments/Chattel Paper/Pledged Equity/Control.

(i)If any amount in excess of $50,000 payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Tangible Chattel Paper, or if any property constituting Collateral with a fair market value (as reasonably determined by the Borrowers) in excess of $50,000 shall be stored or shipped subject to a Document, ensure that such Instrument, Tangible Chattel Paper or Document is either in the possession of such Obligor at all times or, if requested by the Administrative Agent to perfect its security interest in such Collateral, is delivered to the Administrative Agent duly endorsed in a manner satisfactory to the Administrative Agent. Such Obligor shall ensure that any Collateral consisting of Tangible Chattel Paper relating to an amount payable in excess of $50,000 is marked with a legend acceptable to the Administrative Agent indicating the Administrative Agent’s security interest in such Tangible Chattel Paper.

(ii)In accordance with the provisions of Section 6.14(a) of the Credit Agreement, deliver to the Administrative Agent promptly upon the receipt thereof by or on behalf of an Obligor, all Securities certificates and instruments constituting Pledged Equity. Prior to delivery to the Administrative Agent, all such certificates constituting Pledged Equity shall be held in trust by such Obligor for the benefit of the Administrative Agent pursuant hereto. All such certificates representing Pledged Equity shall be delivered in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, substantially in the form provided in Exhibit 4(a)(ii) hereto or such other form as is reasonably acceptable to the Administrative Agent.

(iii)Execute and deliver all agreements, assignments, instruments or other documents as reasonably requested by the Administrative Agent for the purpose of obtaining and maintaining control with respect to any Collateral consisting of (i) Investment Property (excluding Equity Interests in any Subsidiary except insofar as such Equity Interests constitute Pledged Equity), (ii) Letter-of-Credit Rights and (iii) Electronic Chattel Paper.

(b)Filing of Financing Statements, Notices, etc. Except as otherwise provided in this Agreement and the other Loan Documents, each Obligor shall execute and deliver to the Administrative Agent such agreements, assignments or instruments (including affidavits, notices, reaffirmations and amendments and restatements of existing documents, as the Administrative Agent may reasonably request) and do all such other things as the Administrative Agent may reasonably deem necessary or appropriate: (i) to assure to the Administrative Agent its security interests hereunder, including (A) such instruments as the Administrative Agent may from time to time reasonably request in order to perfect and maintain the security interests granted hereunder in accordance with the UCC, (B) with regard to U.S. registrations and applications for Copyrights, a Notice of Grant of Security Interest in Copyrights in the form of Exhibit 4(b)(iii), (C) with regard to U.S. registrations and applications for Patents, a Notice of Grant of Security Interest in Patents for filing with the United States Patent and Trademark Office in the form of Exhibit 4(b)(i) hereto and (D) with regard to U.S. registrations and applications for Trademarks, a Notice of Grant of Security Interest in Trademarks for filing with the United States Patent and Trademark Office in the form of Exhibit 4(b)(ii) hereto; (ii) to consummate the transactions contemplated hereby; and (iii) to otherwise protect and assure the Administrative Agent of its rights and interests hereunder. Furthermore, each Obligor also hereby irrevocably makes, constitutes and appoints the Administrative Agent, its nominee or any sub agents appointed by the Administrative Agent, as such Obligor’s attorney in fact with full power and for the limited purpose to sign in the name of such Obligor any financing statements, or amendments and supplements to financing statements, renewal financing statements, notices or any similar documents which in the Administrative Agent’s reasonable discretion would be necessary or appropriate in order to perfect and maintain perfection of the security interests granted hereunder, such power, being coupled with an interest, being and remaining irrevocable until the Facility Termination Date has occurred.

(c)Collateral Held by Warehouseman, Bailee, etc. If any Collateral is at any time in the possession or control of a warehouseman, bailee or any agent or processor of such Obligor and the Administrative Agent so requests (i) notify such Person in writing of the Administrative Agent’s security interest therein, (ii) instruct such Person to hold all such Collateral for the Administrative Agent’s account and subject to the Administrative Agent’s instructions and (iii) use commercially reasonable efforts to obtain a written acknowledgment from such Person that it is holding such Collateral for the benefit of the Administrative Agent.

(d)Commercial Tort Claims. (i) Promptly forward to the Administrative Agent an updated Schedule 2(c) listing any and all Commercial Tort Claims by or in favor of such Obligor seeking damages in excess of $50,000and (ii) execute and deliver such statements, documents and notices and do and cause to be done all such things as may be required by the Administrative Agent, or required by Law to create, preserve, perfect and maintain the Administrative Agent’s security interest in any Commercial Tort Claims initiated by or in favor of any Obligor.

(e)Books and Records. To the extent applicable, mark its books and records to reflect the security interest granted pursuant to this Agreement.

(f)Nature of Collateral. At all times maintain the Collateral with a fair market value (as reasonably determined by the Borrowers) in excess of $250,000 as personal property and not affix any of such Collateral to any real property in a manner which would change its nature from personal property to real property or a Fixture to real property, unless the Administrative Agent shall have a perfected Lien on such Fixture or real property.

(g)Issuance or Acquisition of Equity Interests in Partnerships or Limited Liability Companies. Not without executing and delivering, or causing to be executed and delivered, to the Administrative Agent such agreements, documents and instruments as the Administrative Agent may reasonably require, issue or acquire any Pledged Equity consisting of an interest in a partnership or a limited liability company that (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is a Security governed by Article 8 of the UCC, (iii) is an investment company security, (iv) is held in a Securities Account or (v) constitutes a Security.

(h)Intellectual Property.

(i)Not do any act or omit to do any act whereby any material U.S. Copyright may become invalidated and (A) not do any act, or omit to do any act, whereby any material U.S. Copyright may become injected into the public domain; (B) use its commercially reasonable effort to endeavor to notify the Administrative Agent promptly if it knows that any material U.S. Copyright becomes injected into the public domain or of any materially adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any court or tribunal in the United States) regarding an Obligor’s ownership of any such Copyright or its validity; (C) take all necessary steps as it shall deem reasonably appropriate under the circumstances, to maintain and pursue each application (and to obtain the relevant registration) of each material U.S. Copyright owned by an Obligor and to maintain each registration of each material U.S. Copyright owned by an Obligor including, without limitation, filing of applications for renewal where necessary; and (D) use its commercially reasonable efforts to endeavor to promptly notify the Administrative Agent of any material infringement of any material U.S. Copyright of an Obligor of which it becomes aware and take such actions as it shall reasonably deem appropriate under the circumstances to protect such Copyright, including, where appropriate, the bringing of suit for infringement, seeking injunctive relief and seeking to recover any and all damages for such infringement.

(ii)Not make any assignment or agreement in conflict with the security interest in the U.S. Copyrights of each Obligor hereunder (except as permitted by the Credit Agreement or this Agreement).

(iii)(A) Continue to use each material U.S. Trademark on each and every trademark class of goods applicable to its current line as reflected in its current catalogs, brochures and price lists in order to maintain such Trademark in full force free from any claim of abandonment for non-use, (B) employ such Trademark with the appropriate notice of registration, if applicable, (C) not adopt or use any mark that is confusingly similar or a colorable imitation of such Trademark unless the Administrative Agent, for the ratable benefit of the holders of the Secured Obligations, shall obtain a perfected security interest in such mark pursuant to this Agreement, and (D) not (and not permit any licensee or sublicensee thereof to) do any act or omit to do any act whereby any such Trademark may become invalidated.

(iv)Not do any act, or omit to do any act, whereby any material U.S. Patent may become abandoned or dedicated.

(v)Notify the Administrative Agent promptly if it knows that any application or registration relating to any material U.S. Patent or material U.S. Trademark may become abandoned or dedicated, or of any materially adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or any court or tribunal in any country) regarding such Obligor’s ownership of any such Patent or Trademark or its right to register the same or to keep and maintain the same.

(vi)Take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of each material U.S. Patent and material U.S. Trademark, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability.

(vii)Promptly notify the Administrative Agent after it learns that any material U.S. Patent or material U.S. Trademark included in the Collateral is infringed, misappropriated or diluted by a third party in such manner as to materially prejudice the rights of PRGX and its Subsidiaries in and to such Patent or Trademark; and promptly sue for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for such infringement, misappropriation or dilution, or to take such other actions (if any) as it shall reasonably deem appropriate under the circumstances to protect such Patent or Trademark.

(viii)Not make any assignment or agreement in conflict with the security interest in the U.S. Patents or U.S. Trademarks of each Obligor hereunder (except as permitted by the Credit Agreement).

Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, the Obligors may, in their reasonable business judgment, fail to maintain, pursue, preserve, prosecute, utilize or protect any Copyright, Patent or Trademark which is not material to their businesses, and to the extent that any covenant or other provision contained in this Agreement or any other Loan Document is contrary thereto or would be breached by the occurrence of any of the above, such contrary provision shall not apply.

5.Authorization to File Financing Statements. Each Obligor hereby authorizes the Administrative Agent to prepare and file such financing statements (including continuation statements) or amendments thereof or supplements thereto or other instruments as the Administrative Agent may from time to time deem necessary or appropriate in order to perfect and maintain the security interests granted hereunder in accordance with the UCC (including authorization to describe the Collateral as “all personal property”, “all assets” or words of similar meaning).

6.Advances. On failure of any Obligor to perform any of the covenants and agreements contained herein or in any other Loan Document, the Administrative Agent may, at its sole option and in its sole discretion, perform the same and in so doing may expend such sums as the Administrative Agent may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any insurance premiums, the payment of any taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures which the Administrative Agent may make for the protection of the security hereof or which may be compelled to make by operation of Law. All such sums and amounts so expended shall be repayable by the Obligors on a joint and several basis promptly upon timely notice thereof and demand therefor, shall constitute additional Secured Obligations and shall bear interest from the date said amounts are expended at the Default Rate. No such performance of any covenant or agreement by the Administrative Agent on behalf of any Obligor, and no such advance or expenditure therefor, shall relieve the Obligors of any Default or Event of Default. The Administrative Agent may make any payment hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by an Obligor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.

7.Remedies.

(a)General Remedies. Upon the occurrence of an Event of Default and during continuation thereof, the Administrative Agent shall have, in addition to the rights and remedies provided herein, in the Loan Documents, in any other documents relating to the Secured Obligations, or by Law (including, but not limited to, levy of attachment, garnishment and the rights and remedies set forth in the UCC of the jurisdiction applicable to the affected Collateral), the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the rights and remedies are asserted and regardless of whether the UCC applies to the affected Collateral), and further, the Administrative Agent may, with or without judicial process or the aid and assistance of others, (i) enter onto any premises on which any of the Collateral may be located and, without resistance or interference by the Obligors, take possession of the Collateral (subject to the rights of landlords under applicable Laws, lease agreements and landlord consents), (ii) dispose of any Collateral on any such premises (subject to the rights of landlords under applicable Laws, lease agreements and landlord consents), (iii) require the Obligors to assemble and make available to the Administrative Agent at the expense of the Obligors any Collateral at any place and time designated by the Administrative Agent which is reasonably convenient to both parties, (iv) remove any Collateral from any such premises for the purpose of effecting sale or other disposition thereof, and/or (v) without demand and without advertisement, notice, hearing or process of law, all of which each of the Obligors hereby waives to the fullest extent permitted by Law, at any place and time or times, sell and deliver any or all Collateral held by or for it at public or private sale (which in the case of a private sale of Pledged Equity, shall be to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such securities for their own account, for investment and not with a view to the distribution or resale thereof), at any exchange or broker’s board or elsewhere, by one or more contracts, in one or more parcels, for Money, upon credit or otherwise, at such prices and upon such terms as the Administrative Agent deems advisable, in its sole discretion (subject to any and all mandatory legal requirements). Each Obligor acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale shall be deemed to have been made in a commercially reasonable manner and, in the case of a sale of Pledged Equity, that the Administrative Agent shall have no obligation to delay sale of any such securities for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act of 1933. Neither the Administrative Agent’s compliance with applicable Law nor its disclaimer of warranties relating to the Collateral shall be considered to adversely affect the commercial reasonableness of any sale. To the extent the rights of notice cannot be legally waived hereunder, each Obligor agrees that any requirement of reasonable notice shall be met if such notice, specifying the place of any public sale or the time after which any private sale is to be made, is personally served on or mailed, postage prepaid, to PRGX in accordance with the notice provisions of Section 11.02 of the Credit Agreement at least ten (10) days before the time of sale or other event giving rise to the requirement of such notice. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Obligor further acknowledges and agrees that any offer to sell any Pledged Equity which has been (i) publicly advertised on a bona fide basis in a newspaper or other publication of general circulation in the financial community of New York, New York (to the extent that such offer may be advertised without prior registration under the Securities Act of 1933), or (ii) made privately in the manner described above shall be deemed to involve a “public sale” under the UCC, notwithstanding that such sale may not constitute a “public offering” under the Securities Act of 1933, and the Administrative Agent may, in such event, bid for the purchase of such securities. The Administrative Agent shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. To the extent permitted by applicable Law, any holder of Secured Obligations may be a purchaser at any such sale. To the extent permitted by applicable Law, each of the Obligors hereby waives all of its rights of redemption with respect to any such sale. Subject to the provisions of applicable Law, the Administrative Agent may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, to the extent permitted by Law, be made at the time and place to which the sale was postponed, or the Administrative Agent may further postpone such sale by announcement made at such time and place.

(b)Remedies relating to Accounts. During the continuation of an Event of Default, whether or not the Administrative Agent has exercised any or all of its rights and remedies hereunder, (i) each Obligor will promptly upon request of the Administrative Agent instruct all account debtors to remit all payments in respect of Accounts to a mailing location selected by the Administrative Agent and (ii) the Administrative Agent shall have the right to enforce any Obligor’s rights against its customers and account debtors, and the Administrative Agent or its designee may notify any Obligor’s customers and account debtors that the Accounts of such Obligor have been assigned to the Administrative Agent or of the Administrative Agent’s security interest therein, and may (either in its own name or in the name of an Obligor or both) demand, collect (including without limitation by way of a lockbox arrangement), receive, take receipt for, sell, sue for, compound, settle, compromise and give acquittance for any and all amounts due or to become due on any Account, and, in the Administrative Agent’s discretion, file any claim or take any other action or proceeding to protect and realize upon the security interest of the holders of the Secured Obligations in the Accounts. Each Obligor acknowledges and agrees that the Proceeds of its Accounts remitted to or on behalf of the Administrative Agent in accordance with the provisions hereof shall be solely for the Administrative Agent’s own convenience. Neither the Administrative Agent nor the holders of the Secured Obligations shall have any liability or responsibility to any Obligor for acceptance of a check, draft or other order for payment of money bearing the legend “payment in full” or words of similar import or any other restrictive legend or endorsement or be responsible for determining the correctness of any remittance. Furthermore, during the continuation of an Event of Default, (i) the Administrative Agent shall have the right, but not the obligation, to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable, and the Obligors shall furnish all such assistance and information as the Administrative Agent may require in connection with such test verifications, (ii) upon the Administrative Agent’s request and at the expense of the Obligors, the Obligors shall cause independent public accountants or others satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts and (iii) the Administrative Agent in its own name or in the name of others may communicate with account debtors on the Accounts to verify with them to the Administrative Agent’s satisfaction the existence, amount and terms of any Accounts.

(c)Deposit Accounts. Upon the occurrence of an Event of Default and during continuation thereof, the Administrative Agent may prevent withdrawals or other dispositions of funds in Deposit Accounts maintained with the Administrative Agent.        

(d)Access. In addition to the rights and remedies hereunder (and subject to the rights of landlords under applicable Laws, lease agreements and landlord consents), upon the occurrence of an Event of Default and during the continuance thereof, the Administrative Agent shall have the right to enter and remain upon the various premises of the Obligors without cost or charge to the Administrative Agent, and use the same, together with materials, supplies, books and records of the Obligors for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise. In addition, the Administrative Agent may remove Collateral, or any part thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral.

(e)Nonexclusive Nature of Remedies. Failure by the Administrative Agent or the holders of the Secured Obligations to exercise any right, remedy or option under this Agreement, any other Loan Document, any other document relating to the Secured Obligations, or as provided by Law, or any delay by the Administrative Agent or the holders of the Secured Obligations in exercising the same, shall not operate as a waiver of any such right, remedy or option. No waiver hereunder shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of the Administrative Agent or the holders of the Secured Obligations shall only be granted as provided herein. To the extent permitted by Law, neither the Administrative Agent, the holders of the Secured Obligations, nor any party acting as attorney for the Administrative Agent or the holders of the Secured Obligations, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder. The rights and remedies of the Administrative Agent and the holders of the Secured Obligations under this Agreement shall be cumulative and not exclusive of any other right or remedy which the Administrative Agent or the holders of the Secured Obligations may have.

(f)Retention of Collateral. In addition to the rights and remedies hereunder, the Administrative Agent may, in compliance with Sections 9-620 and 9-621 of the UCC or otherwise complying with the requirements of applicable Law of the relevant jurisdiction, accept or retain the Collateral in satisfaction of the Secured Obligations. Unless and until the Administrative Agent shall have provided such notices, however, the Administrative Agent shall not be deemed to have retained any Collateral in satisfaction of any Secured Obligations for any reason.

(g)Deficiency. In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Administrative Agent or the holders of the Secured Obligations are legally entitled, the Obligors shall be jointly and severally liable for the deficiency, together with interest thereon at the Default Rate, together with the reasonable costs of collection and the fees, charges and disbursements of counsel. Any surplus remaining after the full payment and satisfaction of the Secured Obligations shall be returned to the Obligors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto.

8.Rights of the Administrative Agent.

(a)Power of Attorney. In addition to other powers of attorney contained herein, each Obligor hereby designates and appoints the Administrative Agent, on behalf of the holders of the Secured Obligations, and each of its designees or agents, as attorney-in-fact of such Obligor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuance of an Event of Default:

(i)to demand, collect, settle, compromise, adjust, give discharges and releases, all as the Administrative Agent may reasonably determine;

(ii)to commence and prosecute any actions at any court for the purposes of collecting any Collateral and enforcing any other right in respect thereof;

(iii)to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release as the Administrative Agent may deem reasonably appropriate;

(iv)to receive, open and dispose of mail addressed to an Obligor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to the Collateral of such Obligor on behalf of and in the name of such Obligor, or securing, or relating to such Collateral;

(v)to sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any Collateral or the goods or services which have given rise thereto, as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes;

(vi)to adjust and settle claims under any insurance policy relating thereto;

(vii)to execute and deliver all assignments, conveyances, statements, financing statements, renewal financing statements, security agreements, affidavits, notices and other agreements, instruments and documents that the Administrative Agent may determine reasonably necessary in order to perfect and maintain the security interests and liens granted in this Agreement and in order to fully consummate all of the transactions contemplated therein;

(viii)to institute any foreclosure proceedings that the Administrative Agent may deem appropriate;

(ix)to sign and endorse any drafts, assignments, proxies, stock powers, verifications, notices and other documents relating to the Collateral;

(x)to exchange any of the Pledged Equity or other property upon any merger, consolidation, reorganization, recapitalization or other readjustment of the issuer thereof and, in connection therewith, deposit any of the Pledged Equity with any committee, depository, transfer agent, registrar or other designated agency upon such terms as the Administrative Agent may reasonably deem appropriate;

(xi)to vote for a shareholder resolution, or to sign an instrument in writing, sanctioning the transfer of any or all of the Pledged Equity into the name of the Administrative Agent or one or more of the holders of the Secured Obligations or into the name of any transferee to whom the Pledged Equity or any part thereof may be sold pursuant to Section 7 hereof;

(xii)to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral;

(xiii)to direct any parties liable for any payment in connection with any of the Collateral to make payment of any and all monies due and to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct;

(xiv)to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of or arising out of any Collateral; and

(xv)to do and perform all such other acts and things as the Administrative Agent may reasonably deem to be necessary, proper or convenient in connection with the Collateral.

This power of attorney is a power coupled with an interest and shall be irrevocable until such time as the Secured Obligations arising under the Loan Documents have been paid in full and the Commitments have expired or been terminated. The Administrative Agent shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Administrative Agent in this Agreement, and shall not be liable for any failure to do so or any delay in doing so. The Administrative Agent shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willful misconduct. This power of attorney is conferred on the Administrative Agent solely to protect, preserve and realize upon its security interest in the Collateral.

(b)Assignment by the Administrative Agent. The Administrative Agent may from time to time assign the Secured Obligations to a successor Administrative Agent appointed in accordance with the Credit Agreement, and such successor shall be entitled to all of the rights and remedies of the Administrative Agent under this Agreement in relation thereto.

(c)The Administrative Agent’s Duty of Care. Other than the exercise of reasonable care to assure the safe custody of the Collateral while being held by the Administrative Agent hereunder, the Administrative Agent shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that the Obligors shall be responsible for preservation of all rights in the Collateral, and the Administrative Agent shall be relieved of all responsibility for the Collateral upon surrendering it or tendering the surrender of it to the Obligors. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that the Administrative Agent shall not have responsibility for taking any necessary steps to preserve rights against any parties with respect to any of the Collateral. In the event of a public or private sale of Collateral pursuant to Section 7 hereof, the Administrative Agent shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Administrative Agent has or is deemed to have knowledge of such matters, or (ii) taking any steps to clean, repair or otherwise prepare the Collateral for sale.

(d)Liability with Respect to Accounts. Anything herein to the contrary notwithstanding, each of the Obligors shall remain liable under each of the Accounts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account. Neither the Administrative Agent nor any holder of Secured Obligations shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Administrative Agent or any holder of Secured Obligations of any payment relating to such Account pursuant hereto, except arising out of their gross negligence or willful misconduct, in each case as determined by a court of competent jurisdiction by final and nonappealable judgment, nor shall the Administrative Agent or any holder of Secured Obligations be obligated in any manner to perform any of the obligations of an Obligor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

(e)Voting and Payment Rights in Respect of the Pledged Equity.

(i)Except to the extent clause (ii) then applies, each Obligor may (A) exercise any and all voting and other consensual rights pertaining to the Pledged Equity of such Obligor or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement and (B) receive and retain any and all dividends (other than stock dividends and other dividends constituting Collateral which are addressed hereinabove), principal or interest paid in respect of the Pledged Equity to the extent they are allowed under the Credit Agreement; and

(ii)If an Event of Default has occurred and is continuing, the Administrative Agent shall be entitled to give the Obligors notice of the Administrative Agent’s exercise of its rights under this clause (ii) and, upon delivery of such notice and thereafter so long as such Event of Default is continuing, (A) all rights of an Obligor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to clause (i)(A) above shall cease and all such rights shall thereupon become vested in the Administrative Agent which shall then have the sole right to exercise such voting and other consensual rights, (B) all rights of an Obligor to receive the dividends, principal and interest payments which it would otherwise be authorized to receive and retain pursuant to clause (i)(B) above shall cease and all such rights shall thereupon be vested in the Administrative Agent which shall then have the sole right to receive and hold as Collateral such dividends, principal and interest payments, and (C) all dividends, principal and interest payments which are received by an Obligor contrary to the provisions of clause (ii)(B) above shall be received in trust for the benefit of the Administrative Agent, shall be segregated from other property or funds of such Obligor, and shall be forthwith paid over to the Administrative Agent as Collateral in the exact form received, to be held by the Administrative Agent as Collateral and as further collateral security for the Secured Obligations.

(f)Releases of Collateral. (i) If (A) any Collateral shall be sold, transferred or otherwise disposed of by any Obligor or (B) an Obligor ceases to be a subsidiary of any Loan Party, in each case in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the request and sole expense of such Obligor, shall promptly execute and deliver to such Obligor all releases and other documents, and take such other action, reasonably necessary for the release of the Liens created hereby or by any other Collateral Document on such Collateral. (ii) The Administrative Agent may release any of the Pledged Equity from this Agreement or may substitute any of the Pledged Equity for other Pledged Equity without altering, varying or diminishing in any way the force, effect, lien, pledge or security interest of this Agreement as to any Pledged Equity not expressly released or substituted, and this Agreement shall continue as a first priority lien on all Pledged Equity not expressly released or substituted. (iii) If the Facility Termination Date has occurred, then the Administrative Agent, at the request and sole expense of the Obligors, shall promptly execute and deliver to the Obligors all releases and other documents, and take such other action, reasonably necessary for the release of the Liens created hereby or by any other Collateral Document on the Collateral.

9.Application of Proceeds. Upon the acceleration of the Obligations pursuant to Section 8.02 of the Credit Agreement, any payments in respect of the Secured Obligations and any proceeds of the Collateral, when received by the Administrative Agent or any holder of the Secured Obligations in Money, will be applied in reduction of the Secured Obligations in the order set forth in Section 8.03 of the Credit Agreement.

10.Continuing Agreement.

(a)This Agreement shall remain in full force and effect until the Facility Termination Date has occurred, at which time this Agreement and the liens and security interest of the Administrative Agent hereunder shall be automatically terminated and the Administrative Agent shall, upon the request and at the expense of the Obligors, forthwith release all of its liens and security interests hereunder and shall execute and deliver all UCC termination statements and/or other documents reasonably requested by the Obligors evidencing such termination.

(b)This Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any holder of the Secured Obligations as a preference, fraudulent conveyance or otherwise under any Debtor Relief Law, all as though such payment had not been made; provided that in the event payment of all or any part of the Secured Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including without limitation any reasonable legal fees and disbursements) incurred by the Administrative Agent or any holder of the Secured Obligations in defending and enforcing such reinstatement shall be deemed to be included as a part of the Secured Obligations.

11.Amendments; Waivers; Modifications, etc. This Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated except as set forth in Section 11.01 of the Credit Agreement; provided that any update or revision to Schedule 2(c) hereof delivered by any Obligor shall not constitute an amendment for purposes of this Section 11 or Section 11.01 of the Credit Agreement.

12.Successors in Interest. This Agreement shall be binding upon each Obligor, its successors and assigns and shall inure, together with the rights and remedies of the Administrative Agent and the holders of the Secured Obligations hereunder, to the benefit of the Administrative Agent and the holders of the Secured Obligations and their successors and permitted assigns.

13.Notices. All notices required or permitted to be given under this Agreement shall be in conformance with Section 11.02 of the Credit Agreement.

14.Counterparts. This Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Delivery of executed counterparts of this Agreement by facsimile or other electronic means shall be effective as an original.

15.Headings. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

16.Governing Law; Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL. The terms of Sections 11.14 and 11.15of the Credit Agreement with respect to governing law, submission to jurisdiction, venue and waiver of jury trial are incorporated herein by reference, mutatis mutandis, and the parties hereto agree to such terms.

17.Severability. If any provision of this Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions.

18.Entirety. This Agreement, the other Loan Documents and the other documents relating to the Secured Obligations represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, and any contemporaneous oral agreements and understandings, if any, including any commitment letters or correspondence relating to the Loan Documents, any other documents relating to the Secured Obligations, or the transactions contemplated herein and therein.

19.Other Security. To the extent that any of the Secured Obligations are now or hereafter secured by property other than the Collateral (including, without limitation, real property and securities owned by an Obligor), or by a guarantee, endorsement or property of any other Person, then the Administrative Agent shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence and during the continuance of any Event of Default, and the Administrative Agent shall have the right, in its sole discretion, to determine which rights, security, liens, security interests or remedies the Administrative Agent shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or the Secured Obligations or any of the rights of the Administrative Agent or the holders of the Secured Obligations under this Agreement, under any other of the Loan Documents or under any other document relating to the Secured Obligations.

20.Joinder. At any time after the date of this Agreement, one or more additional Persons may become party hereto by executing and delivering to the Administrative Agent a Joinder Agreement. Immediately upon such execution and delivery of such Joinder Agreement (and without any further action), each such additional Person will become a party to this Agreement as an “Obligor” and have all of the rights and obligations of an Obligor hereunder and this Agreement and the schedules hereto shall be deemed amended by such Joinder Agreement.

21.Rights of Required Lenders. All rights of the Administrative Agent hereunder, if not exercised by the Administrative Agent, may be exercised by the Required Lenders, and if, at any time there shall not be an Administrative Agent, all rights of the Administrative Agent hereunder shall be exercised by the Required Lenders.

22.Certain Consents Respecting Pledged Equity. Each Obligor in its capacity (if any) as the pledgor of any Pledged Equity, and also in its capacity (if any) as the issuer of Pledged Equity pledged hereunder by one or more other Obligors, hereby acknowledges, consents and agrees to the grant of the security interests in such Pledged Equity by such pledging Obligor(s) pursuant to this Agreement, together with all rights accompanying such security interest as provided by this Agreement and applicable law (and, including, in the case of the pledge of Equity Interests in a partnership or limited liability company, the right of the assignee of such pledged Equity Interests to be admitted as a partner or member thereof), notwithstanding any anti-assignment provisions or other contrary provisions in any operating agreement, limited partnership agreement or similar organizational or governance documents of such issuer.

[remainder of page intentionally left blank]

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

OBLIGORS:            PRGX GLOBAL, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX USA, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

LAVANTE, INC.,

a Delaware corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGDS, LLC,

a Georgia limited liability company

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGFS, INC.,

a Delaware corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRG INTERNATIONAL, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGTS, LLC,

a Georgia limited liability company

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX ASIA, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX AUSTRALIA, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX BELGIUM, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX BRASIL, LLC,

a Georgia limited liability company

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX CANADA, LLC,

a Georgia limited liability company

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX COMMERCIAL LLC,

a Georgia limited liability company

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX EUROPE, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX FRANCE, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX GERMANY, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX MEXICO, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX NETHERLANDS, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX NEW ZEALAND, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX PORTUGAL, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX SCANDINAVIA, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX SPAIN, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX SWITZERLAND, INC.,

a Georgia corporation

By: /s/ Kurt J. Abkemeier    

Name:    Kurt J. Abkemeier

Title:    Chief Financial Officer

PRGX TEXAS, INC.,

a Texas corporation

By: /s/ Ronald E. Stewart    

Name: Ronald E. Stewart

Title: President

Accepted and agreed to as of the date first above written.

BANK OF AMERICA, N.A., as Administrative Agent

By: /s/ Anthony W. Kell    

Name: Anthony W. Kell

Title: Vice President

SCHEDULE 1(b)PLEDGED EQUITY

OBLIGOR: PRGX Global, Inc.
Name of Subsidiary	Certificate Number	Shares Evidenced by Certificate	Percentage of Outstanding Shares Evidenced by Certificate	Shares Pledged	Percentage of Outstanding Shares Pledged
PRGX USA, Inc.	B43	5,740,000	100%	5,740,000	100%
PRG International, Inc.	3	100	100%	100	100%
PRGX Asia, Inc.	13	500	100%	500	100%
PRGX Australia, Inc.	6	1,100	100%	1,100	100%
PRGX Belgium, Inc.	3	100	100%	100	100%
PRGX Canada, LLC	Uncertificated	n/a	n/a	Entire Interest	100%
PRGX Europe, Inc.	3	100	100%	100	100%
PRGX France, Inc.	14	500	100%	500	100%
PRGX Germany, Inc.	3	100	100%	100	100%
PRGX Netherlands, Inc.	3	100	100%	100	100%
PRGX New Zealand, Inc.	3	100	100%	100	100%
PRGX Portugal, Inc.	3	100	100%	100	100%
PRGX Scandinavia, Inc.	3	100	100%	100	100%
PRGX Spain, Inc.	4	100	100%	100	100%
PRGX Switzerland, Inc.	3	100	100%	100	100%
PRGX Texas, Inc.	7	1,500	100%	1,500	100%
Meridian Corporation Limited	112	4,898,653	41%	3,184,124	26.7%
PRGDS, LLC	Uncertificated	n/a	n/a	Entire Interest	100%
OBLIGOR: PRGX Asia, Inc.
Name of Subsidiary	Certificate Number	Shares Evidenced by Certificate	Percentage of Outstanding Shares Evidenced by Certificate	Shares Pledged	Percentage of Outstanding Shares Pledged
PRGX India Private Limited	TBD	TBD	TBD	TBD	TBD
OBLIGOR: PRGX Texas, Inc.
Name of Subsidiary	Certificate Number	Shares Evidenced by Certificate	Percentage of Outstanding Shares Evidenced by Certificate	Shares Pledged	Percentage of Outstanding Shares Pledged
Meridian Corporation Limited	114	7,028,524	59%	4,568,540	38.3%
OBLIGOR: PRG International, Inc.
Name of Subsidiary	Certificate Number	Shares Evidenced by Certificate	Percentage of Outstanding Shares Evidenced by Certificate	Shares Pledged	Percentage of Outstanding Shares Pledged
PRGFS, Inc.	3	1,000	100%	1,000	100%
PRGDS, LLC	Uncertificated	n/a	n/a	Entire Interest	100%
OBLIGOR: PRGX USA, Inc.
Name of Subsidiary	Certificate Number	Shares Evidenced by Certificate	Percentage of Outstanding Shares Evidenced by Certificate	Shares Pledged	Percentage of Outstanding Shares Pledged
PRGTS, LLC	Uncertificated	n/a	n/a	Entire Interest	100%
PRGX Commercial LLC	Uncertificated	n/a	n/a	Entire Interest	100%
Lavante, Inc.	C-71	100	100%	100	100%
OBLIGOR: PRGX Canada, LLC
Name of Subsidiary	Certificate Number	Shares Evidenced by Certificate	Percentage of Outstanding Shares Evidenced by Certificate	Shares Pledged	Percentage of Outstanding Shares Pledged
PRGX Canada Corp.	NV1  NV2  CV3  CV4	906,120 Nonvoting Common 619,097 Nonvoting Common 592,086 Voting Common 305,015 Voting Common	59.4% Nonvoting Common 40.6% Nonvoting Common 66% Voting Common 34% Voting Common	906,120 Nonvoting Common 85,271 Nonvoting Common 583,103 Voting Common 0 Voting Common	59.4% Nonvoting Common 5.6% Nonvoting Common 65% Voting Common 0% Voting Common

SCHEDULE 2(c)

COMMERCIAL TORT CLAIMS

None.

SCHEDULE 3(f)

INSTRUMENTS; DOCUMENTS; TANGIBLE CHATTEL PAPER

None.

EXHIBIT 4(a)(ii)

IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to ______________________ the following Equity Interests of _____________________, a ____________ corporation:

No. of SharesCertificate No.

and irrevocably appoints __________________________________ its agent and attorney-in-fact to transfer all or any part of such Equity Interests and to take all necessary and appropriate action to effect any such transfer. The agent and attorney-in-fact may substitute and appoint one or more persons to act for him.

By:

Name:

Title:

EXHIBIT  4(b)(i)

NOTICEOFGRANT OF SECURITY INTERESTINPATENTS

United States Patent and Trademark Office

Ladies and Gentlemen:

Please be advised that pursuant to the Security and Pledge Agreement dated as of March 14, 2019 (as the same may be amended, modified, extended or restated from time to time, the “Agreement”) by and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Bank of America, N.A., as administrative agent (the “Administrative Agent”) for the holders of the Secured Obligations referenced therein, the undersigned Obligor has granted a continuing security interest in and a right to set off against the patents and patent applications shown below to the Administrative Agent for the ratable benefit of the holders of the Secured Obligations:

PATENTS
Patent No.	Description of Patent Item	Date of Patent
	See Schedule 1 attached hereto
PATENT APPLICATIONS
Patent Applications No.	Description ofPatent Applied for	Date ofPatent Applications
	See Schedule 1 attached hereto

The undersigned Obligor and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest in the foregoing patents and patent applications (i) may only be terminated in accordance with the terms of the Agreement and (ii) is not to be construed as an assignment of any patent or patent application.

Very truly yours,

__________________________________

[Obligor]

By:

Name:

Title:

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

By:

Name:

Title:

EXHIBIT  4(b)(ii)

NOTICEOFGRANT OF SECURITY INTERESTINTRADEMARKS

United States Patent and Trademark Office

Ladies and Gentlemen:

Please be advised that pursuant to the Security and Pledge Agreement dated as of March 14, 2019 (as the same may be amended, modified, extended or restated from time to time, the “Agreement”) by and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Bank of America, N.A., as Administrative Agent (the “Administrative Agent”) for the holders of the Secured Obligations referenced therein, the undersigned Obligor has granted a continuing security interest in and a right to set off against the trademarks and trademark applications shown below to the Administrative Agent for the ratable benefit of the holders of the Secured Obligations:

TRADEMARKS
Trademark No.	Description of Trademark Item	Date of Trademark
	See Schedule 1 attached hereto
TRADEMARK APPLICATIONS
Trademark Applications No.	Description ofTrademark Applied for	Date ofTrademark Applications
	See Schedule 1 attached hereto

The undersigned Obligor and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest in the foregoing trademarks and trademark applications (i) may only be terminated in accordance with the terms of the Agreement and (ii) is not to be construed as an assignment of any trademark or trademark application.

Very truly yours,

__________________________________

[Obligor]

By:

Name:

Title:

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

By:

Name:

Title:

EXHIBIT  4(b)(iii)

NOTICEOFGRANT OF SECURITY INTERESTINCOPYRIGHTS

United States Copyright Office

Ladies and Gentlemen:

Please be advised that pursuant to the Security and Pledge Agreement dated as of March 14, 2019 (as the same may be amended, modified, extended or restated from time to time, the “Agreement”) by and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Bank of America, N.A., as administrative agent (the “Administrative Agent”) for the holders of the Secured Obligations referenced therein, the undersigned Obligor has granted a continuing security interest in and a right to set off against the copyrights and copyright applications shown below to the Administrative Agent for the ratable benefit of the holders of the Secured Obligations:

COPYRIGHTS
Copyright No.	Description of Copyright Item	Date of Copyright
	See Schedule 1 attached hereto
COPYRIGHT APPLICATIONS
Copyright Applications No.	Description ofCopyright Applied for	Date ofCopyright Applications
	See Schedule 1 attached hereto

The undersigned Obligor and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest in the foregoing copyrights and copyright applications (i) may only be terminated in accordance with the terms of the Agreement and (ii) is not to be construed as an assignment of any copyright or copyright application.

Very truly yours,

__________________________________

[Obligor]

By:

Name:

Title:

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

By:

Name:

Title:

1

EX-21.1

EXHIBIT 21.1

PRGX GLOBAL, INC.

SUBSIDIARIES

As of December 31, 2018

Company	Jurisdiction of Organization
PRGX USA, Inc.	Georgia
PRGX Asia, Inc.	Georgia
PRGX Australia, Inc.	Georgia
PRGX Belgium, Inc.	Georgia
PRGX Canada, LLC	Georgia
PRGX Commercial LLC	Georgia
PRGX Costa Rica, Inc.	Georgia
PRGX New Zealand, Inc.	Georgia
PRGX Netherlands, Inc.	Georgia
PRGX Mexico, Inc.	Georgia
PRGX France, Inc.	Georgia
PRGX Germany, Inc.	Georgia
PRGX Acquisition Corp.	Georgia
PRGX Switzerland, Inc.	Georgia
PRGX Italy, Inc.	Georgia
PRGX Spain, Inc.	Georgia
PRGX Portugal, Inc.	Georgia
PRG International, Inc.	Georgia
PRG USA, Inc.	Georgia
PRGX Scandinavia, Inc.	Georgia
PRGX Holdings, Inc.	Georgia
PRGX Puerto Rico, Inc.	Georgia
PRGX Chile, Inc.	Georgia
PRGX Europe, Inc.	Georgia
PRGX Brasil, LLC	Georgia
PRGX India Private Limited	India
PRGX Holdings Mexico, S de RL de CV	Mexico
PRGX Servicios Mexico S de RL de CV	Mexico
PRGX de Mexico S de RL de CV	Mexico
PRGX Argentina S.A.	Argentina
PRGX Brasil Ltda.	Brazil
PRGX International PTE Limited	Singapore
PRG-Schultz Suzhou' Co Ltd.	China
PRGX Shanghai Company Limited	China
PRGX CR s.r.o.	Czech Republic
PRGFS, Inc.	Delaware
PRGX Texas, Inc.	Texas
Meridian Corporation Limited	Jersey (Channel Islands)
PRGX UK Holdings Ltd	United Kingdom
PRGX UK Ltd	United Kingdom
Etesius Limited	United Kingdom
PRGX Canada Corp.	Canada
PRGX Deutschland GmbH	Germany
PRGX Nederland B.V.	Netherlands
PRGX Colombia Ltda.	Colombia
PRGX Svenska AB	Sweden
PRG-Schultz Venezuela S. R. L.	Venezuela
PRGX Polska Sp. z o.o.	Poland
PRGDS, LLC	Georgia
PRGTS, LLC	Georgia
Lavante, Inc	Delaware

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

PRGX Global, Inc.

Atlanta, Georgia

We hereby consent to the incorporation by reference in the Registration Statements on Form S­3 (File No. 333-134698, No. 333-171986, No. 333-185027 and No. 333-208075) and Form S-8 (File No. 333-153837, 333-170809, No. 333-189010, No. 333-204489 and No. 333-222110) of PRGX Global, Inc. and subsidiaries of our reports dated March 13, 2018, relating to the consolidated financial statements and financial statement schedule, and the effectiveness of PRGX Global, Inc. and subsidiaries’ internal control over financial reporting, which appear in this Form 10-K.

/s/ BDO USA, LLP

Atlanta, Georgia

March 18, 2019

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Ronald E. Stewart, certify that:

1. I have reviewed this Form 10-K of PRGX Global, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 18, 2019	By:	/s/ Ronald E. Stewart
		Ronald E. Stewart
		President, Chief Executive Officer, Director (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Kurt J. Abkemeier, certify that:

1. I have reviewed this Form 10-K of PRGX Global, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 18, 2019	By:	/s/ Kurt J. Abkemeier
		Kurt J. Abkemeier
		Chief Financial Officer, Treasurer and Controller (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of PRGX Global, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald E. Stewart, President and Chief Executive Officer of the Company and I, Kurt J. Abkemeier, Chief Financial Officer, Treasurer and Controller, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of the undersigned’s knowledge: (1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 18, 2019	By:	/s/ Ronald E. Stewart
		Ronald E. Stewart
		President, Chief Executive Officer, Director (Principal Executive Officer)
March 18, 2019	By:	/s/ Kurt J. Abkemeier
		Kurt J. Abkemeier
		Chief Financial Officer, Treasurer and Controller (Principal Financial Officer)

XML

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Mar. 11, 2019	Jun. 30, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	PRGX GLOBAL, INC.
Entity Central Index Key	0001007330
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 200.7
Entity Common Stock, Shares Outstanding		23,080,564
Entity Shell Company	false
Entity Small Business	true
Entity Emerging Growth Company	false

XML

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Statement [Abstract]
Revenue, net of refund liabilities	$ 171,776	$ 161,620	$ 140,844
Operating expenses:
Cost of revenue	104,825	102,052	91,299
Selling, general and administrative expenses	50,456	46,941	39,399
Depreciation of property, equipment and software assets	7,370	4,569	5,033
Amortization of intangible assets	3,395	3,634	1,832
Acquisition-related adjustments (income) loss	(1,628)	(2,283)	0
Total operating expenses	164,418	154,913	137,563
Operating income from continuing operations	7,358	6,707	3,281
Foreign currency transaction losses (gains) on short-term intercompany balances	1,002	(2,190)	84
Interest expense	(1,824)	(1,785)	(107)
Interest income	161	246	260
Other loss (income)	21	(160)	(121)
Net income from continuing operations before income tax	4,672	7,518	3,471
Income tax expense	1,321	2,962	1,242
Net income from continuing operations	3,351	4,556	2,229
Discontinued operations:
Income (loss) from discontinued operations	1,242	(1,372)	(1,324)
Income tax expense (benefit)	0	0	0
Net income (loss) from discontinued operations	1,242	(1,372)	(1,324)
Net income from continuing operations	$ 4,593	$ 3,184	$ 905
Basic earnings (loss) per common share (Note 3):
Basic earnings from continuing operations (in USD per share)	$ 0.14	$ 0.21	$ 0.10
Basic earnings from discontinued operations (in USD per share)	0.06	(0.06)	(0.06)
Total basic earnings (loss) per common share (in USD per share)	0.20	0.15	0.04
Diluted earnings (loss) per common share (Note 3):
Diluted earnings from continuing operations (in USD per share)	0.14	0.21	0.10
Diluted earnings from discontinued operations (in USD per share)	0.06	(0.06)	(0.06)
Total diluted earnings (loss) per common share (in USD per share)	$ 0.20	$ 0.15	$ 0.04
Weighted-average common shares outstanding (Note 3):
Basic (shares)	22,811	21,937	21,969
Diluted (shares)	23,434	22,111	22,016

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 4,593	$ 3,184	$ 905
Foreign currency translation adjustments	1,128	(180)	(507)
Comprehensive income	$ 5,721	$ 3,004	$ 398

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 13,973	$ 18,823
Restricted cash	46	51
Contract receivables, less allowances of $1,024 in 2018 and $1,499 in 2017
Billed	43,878	36,058
Unbilled	2,987	2,709
Contract receivables, net	46,865	38,767
Employee advances and miscellaneous receivables, less allowances of $176 in 2018 and $292 in 2017	567	1,665
Total receivables	47,432	40,432
Prepaid expenses and other current assets	3,144	4,608
Total current assets	64,595	63,914
Property, equipment and software:
Computer and other equipment	20,517	32,655
Furniture and fixtures	1,694	2,761
Leasehold improvements	3,463	3,916
Software	39,578	34,234
Property and equipment, gross	65,252	73,566
Less accumulated depreciation and amortization	(43,224)	(56,088)
Property and equipment, net	22,028	17,478
Goodwill (Note 4)	17,531	17,648
Intangible assets, less accumulated amortization of $43,370 in 2018 and $40,461 in 2017	14,945	18,478
Unbilled receivables	1,608	894
Deferred income taxes (Note 7)	3,561	1,538
Other assets	561	268
Total assets	124,829	120,218
Current liabilities:
Accounts payable and accrued expenses	7,515	8,548
Accrued payroll and related expenses	15,073	13,078
Refund liabilities	6,497	7,864
Deferred revenue	2,428	1,431
Current portion of debt (Note 5)	48	48
Compensation Liability, Long-term Incentive, Current	0	5,116
Business acquisition obligations (Notes 1 and 12)	4,162	3,759
Total current liabilities	35,723	39,844
Long-term debt (Note 5)	21,553	13,526
Noncurrent business acquisition obligations (Notes 1 and 12)	0	5,135
Refund liabilities	100	957
Deferred income taxes (Note 7)	666	0
Other long-term liabilities	458	442
Total liabilities	58,500	59,904
Commitments and contingencies (Notes 2, 5, 6, 9 and 10)
Shareholders’ equity (Notes 9 and 11):
Common stock, no par value; $.01 stated value per share. Authorized 50,000,000 shares; 23,186,258 shares issued and outstanding at December 31, 2018 and 22,419,417 shares issued and outstanding at December 31, 2017	232	224
Additional paid-in capital	582,574	580,032
Accumulated deficit	(515,456)	(520,049)
Accumulated other comprehensive income	(1,021)	107
Total shareholders’ equity	66,329	60,314
Total liabilities and shareholders’ equity	$ 124,829	$ 120,218

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Allowances for contract receivables	$ 1,024	$ 1,499
Allowances for employee advances and miscellaneous receivables	176	292
Accumulated amortization on intangible assets	$ 43,370	$ 40,461
Common stock, par value (usd per share)	$ 0	$ 0
Common stock, stated value per share (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (shares)	50,000,000	50,000,000
Common stock, shares issued (shares)	23,186,258	22,419,417
Common stock, shares outstanding (shares)	23,186,258	22,419,417

XML

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income
Beginning balance (shares) at Dec. 31, 2015		22,681,656
Beginning balance at Dec. 31, 2015	$ 52,415	$ 227	$ 575,532	$ (524,138)	$ 794
Increase (Decrease) in Stockholders' Equity
Net (loss) income	905			905
Foreign currency translation adjustments	507				507
Issuances of common stock:
Restricted shares remitted by employees for taxes (shares)		(20,829)
Restricted shares remitted by employees for taxes	(217)		(217)
Stock option exercises (shares)		90,496
Stock option exercises	320		320
Repurchase of common stock (shares)		(905,403)
Repurchases of common stock	(3,772)	$ (9)	(3,763)
Stock-based compensation expense	3,246		3,246
Ending balance (shares) at Dec. 31, 2016		21,845,920
Ending balance at Dec. 31, 2016	52,390	$ 218	575,118	(523,233)	287
Increase (Decrease) in Stockholders' Equity
Net (loss) income	3,184			3,184
Foreign currency translation adjustments	180				180
Issuances of common stock:
Restricted share awards (shares)		381,059
Restricted share awards		$ 4	(4)
Restricted shares remitted by employees for taxes (shares)		(15,006)
Restricted shares remitted by employees for taxes	(100)		(100)
Stock option exercises (shares)		225,043
Stock option exercises	1,172	$ 2	1,170
Repurchase of common stock (shares)		(27,599)
Repurchases of common stock	0
Stock-based compensation expense	$ 3,848		3,848
Ending balance (shares) at Dec. 31, 2017	22,419,417	22,419,417
Ending balance at Dec. 31, 2017	$ 60,314	$ 224	580,032	(520,049)	107
Increase (Decrease) in Stockholders' Equity
Net (loss) income	4,593			4,593
Foreign currency translation adjustments	(1,128)				1,128
Issuances of common stock:
Restricted share awards (shares)		331,333
Restricted share awards	0	$ 3	(3)
Restricted shares remitted by employees for taxes (shares)		(155,329)
Restricted shares remitted by employees for taxes	$ (1,281)	$ (2)	(1,279)
Stock option exercises (shares)	676,649	676,649
Stock option exercises	$ 4,422	$ 7	4,415
Performance-based restricted stock, shares issued net of shares for tax withholdings	483,623
Performance-based Restricted Stock, Amount Issued Net Of Shares For Tax Withholdings		$ 5	(5)
Restricted stock unit settlement (shares)		18,934
Restricted stock unit settlement	$ 0
Forfeited restricted share awards (shares)		(148,083)
Forfeited restricted share awards	0	$ (1)	1
Repurchase of common stock (shares)		(440,286)
Repurchases of common stock	(4,069)	$ (4)	(4,065)
Stock-based compensation expense	3,592		3,592
Stockholder's equity, other activities, amount	$ (114)		(114)
Ending balance (shares) at Dec. 31, 2018	23,186,258	23,186,258
Ending balance at Dec. 31, 2018	$ 66,329	$ 232	$ 582,574	$ (515,456)	$ (1,021)

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities:
Net income	$ 4,593	$ 3,184	$ 905
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	10,766	8,203	6,879
Amortization of deferred loan costs	53	85	60
Noncash interest expense	961	1,215	0
Stock-based compensation expense	5,056	7,052	5,123
Other loss from sale of assets	0	0	22
Foreign currency transaction losses (gains) on short-term intercompany balances	1,002	(2,190)	84
Income taxes	(1,321)	731	(861)
Changes in fair value of contingent consideration	(1,628)	(2,283)	0
Changes in operating assets and liabilities, net of business acquisitions:
Restricted cash	5	(4)	1
Billed receivables	(8,639)	(3,949)	(3,339)
Unbilled receivables	(992)	(469)	(509)
Prepaid expenses and other current assets	2,404	(417)	(1,506)
Other assets	(229)	(57)	(65)
Accounts payable and accrued expenses	(3,275)	815	1,218
Accrued payroll and related expenses	778	975	2,606
Refund liabilities	(2,112)	115	67
Deferred revenue	1,036	101	(5)
Compensation, Long-term Incentive, Payout	(6,378)	0	0
Other long-term liabilities	351	353	(562)
Net cash provided by operating activities	2,431	13,460	10,118
Cash flows from investing activities:
Business acquisition, net of cash acquired	19	(10,128)	(3,669)
Capital expenditures for property, equipment and software, net of disposal proceeds	(10,398)	(9,355)	(5,887)
Net cash used in investing activities	(10,379)	(19,483)	(9,556)
Cash flows from financing activities:
Repayments of long-term debt	(13,500)	66	0
Payment of deferred loan costs	(38)	(155)	0
Proceeds from credit facility	21,500	10,000	3,600
Business acquisitions, payment of earnout liability	(4,000)	0	0
Repurchases of common stock	(4,069)	0	(3,772)
Restricted stock repurchased from employees for withholding taxes	(1,281)	(100)	(218)
Proceeds from option exercises	4,422	1,172	326
Net cash provided by (used in) financing activities	3,034	10,983	(64)
Effect of exchange rates on cash and cash equivalents	64	(1,860)	103
Net (decrease) increase in cash and cash equivalents	(4,850)	3,100	601
Cash and cash equivalents at beginning of period	18,823	15,723	15,122
Cash and cash equivalents at end of period	13,973	18,823	15,723
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	681	434	60
Cash paid during the period for income taxes, net of refunds received	3,255	2,929	1,407
Noncash investing activities:
Fair value of contingent consideration liabilities at the date of acquisition	0	5,954	3,834
Capital expenditures incurred but not yet paid	$ 1,954	$ 365	$ 203

XML

Summary of Significant Accounting Policies and Basis of Presentation

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Basis of Presentation

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

(a) Description of Business and Basis of Presentation

Description of Business

The principal business of PRGX Global, Inc. and subsidiaries is providing recovery audit services to large businesses and government agencies having numerous payment transactions. PRGX also provides services adjacent to recovery audit services, including supplier information management ("SIM"), data transformation, spend analytics and associated advisory services, to a similar client base. These businesses include, but are not limited to:

• retailers such as discount, department, specialty, grocery and drug stores, and wholesalers who sell to these retailers;

• business enterprises other than retailers such as manufacturers, financial services firms, pharmaceutical companies, and resource companies such as oil and gas companies; and

• federal and state government agencies.

Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries. PRGX currently provides services to clients in over 30 countries across a multitude of industries.

Basis of Presentation

During the fourth quarter of 2015 we discontinued the Healthcare Claims Recovery Audit ("HCRA") business. The results of our continuing and discontinued operations for the years ended December 31, 2018, 2017 and 2016 are presented in accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations.

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Subsequent events have been considered, and the appropriate changes have been made to our financial statements as of December 31, 2018 as required under U.S. generally accepted accounting principles (“GAAP”), through the date of filing this Annual Report on Form 10-K. Refer to Note 14 - Subsequent Event for a description of the credit agreement we entered into with Bank of America, N.A. on March 14, 2019.

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. GAAP. Actual results could differ from those estimates.

(b) Revenue Recognition, Billed and Unbilled Receivables, and Refund Liabilities

Revenue Recognition, Billed and Unbilled Receivables

The Company has revised its accounting policy as it relates to the Financial Accounting Standards Board (“FASB”) issuedAccounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and the subsequent amendments and modifications thereto. The revised policy requires the Company to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To adhere to this core principle, the Company applies the following five steps: (a) identify contract(s) with a customer; (b) identify the performance obligations in a contract; (c) determine the transaction price; (d) allocate the transaction price to the performance obligations in a contract; and (e) recognize revenue when (or as) performance obligations are satisfied. The Company determines that the performance obligations have been satisfied when its customers obtain control of the goods or services as evidenced by the customer’s ability to direct the use, or the ability to receive substantially all of the remaining economic benefit, of the contract assets. Additionally, for purposes of determining the appropriate timing of recognition, revenue will be recognized over time or at a point in time based on an evaluation of the specific criteria that is to be achieved to meet the performance obligations of each contract.

The determination that the core principle for revenue recognition has been met, and the five steps have been applied appropriately, requires significant judgment. Management considers the application of this judgment to be critical in determining the appropriate amount of revenue to be recognized. The most critical judgments are required in the determination of the transaction price, the identification of the performance obligations within a contract, and the determination as to whether or not and to what extent such performance obligations have been satisfied. A misapplication of this judgment could result in inappropriate recognition of revenue.

Revenue is recognized over time, on an invoice basis for the Company's recovery audit contracts, which is approximately 96% of consolidated revenue for the year ended December 31, 2018. The Company has adopted the Invoicing Expedient as provided for in FASB Accounting Standards Codification ("ASC") Topic 606, which allows for the recognition of revenue for an amount that an entity has a right to invoice its customer. It is management’s conclusion that the Company's right to consideration from its customers corresponds directly to the value provided to customers from its performance to-date, as represented by billable recoveries. A recovery is billable when it is determined that the customer has received the economic benefit from the service (generally through credits taken against existing accounts payable due to, or refund checks received from, the customer’s vendors). The manner in which a claim is recovered by a client often is dictated by industry practice. Many clients establish specific procedural guidelines that must be satisfied prior to submitting claims for client approval, and these guidelines are unique to each client.

On occasion, it is possible that a transaction has met the core principle for revenue recognition, but the Company does not recognize revenue until the customary business practices and processes specific to that client have been completed. Historically, there has been a certain amount of recovery audit revenue with respect to which, even though the Company has met the requirements of its revenue recognition policy, its clients’ vendors ultimately have rejected the claims underlying the revenue. In that case, the Company's clients may request a refund or offset of such amount even though the fees may have been previously collected. These refunds are accounted for as a variable consideration. The Company provides refund liabilities for these reductions in the economic value previously received by its clients with respect to vendor claims that have been identified and for which revenue has been previously recognized. The Company computes an estimate of its refund liabilities at any given time based on actual historical refund data.

Revenue is recognized over time for the Company's subscription services. Typically, implementation services, hosting services, unspecified upgrades, technical and support services, service level guarantees and subscription rights under contracts for subscription services are delivered concurrently and are therefore considered a single performance obligation. Generally, revenue will be recognized ratably over the subscription term as this represents the timing of when those services are transferred to the customer. The subscription term commences when the customer both has access to the software application and can benefit from its use.

Revenue is recognized at a point in time for certain services provided on a fixed fee basis and over time for certain services performed on a fee per unit of time-basis or other unit of performance. The revenue recognition method is determined based on the specific criteria that is to be achieved to meet the performance obligations of each transaction within a contract.

When a contract includes an option to acquire future goods or services that constitutes a material right to the customer, and those goods or services are similar to the original goods and services provided for in the contract, the Company has adopted the Practical Alternative as prescribed in ASC Topic 606 to estimate the standalone selling price of that option.

Billed receivables are stated at the amount expected to be collected and do not bear interest. The Company makes ongoing estimates relating to the collectability of billed receivables and maintains a reserve for estimated losses resulting from the inability of its clients to meet its financial obligations to the Company. This reserve is primarily based on the level of past-due accounts based on the contractual terms of the receivables; the Company's history of write-offs; and its relationships with, and the economic status of, its clients.

Unbilled receivables relate to claims for which the Company's customers have received economic value and for which they acknowledge that the unbilled receivable has been earned but has not yet been billed. The Company typically invoices the customer in the subsequent month.

The Company includes unbilled receivables and refund liabilities in determining revenue.

Contract assets will be recorded if a performance obligation is satisfied (and revenue recognized), but the Company is not entitled to payment until other conditions as specified in the contract are met.

Contract liabilities are recognized when consideration is received and the Company has not yet transferred the goods or services to the customer. The Company refers to this as deferred revenue.

The Company derives a relatively small portion of revenue on a fee-for-service basis whereby billing is based upon a fixed fee, a fee per unit of time, or a fee per other unit of service. The Company recognizes revenue for these types of services when the core principles for revenue recognition have been met.

Contract Balances

As of December 31, 2018 and December 31, 2017, we had the following balances (in thousands) included in our Consolidated Balance Sheets that relate to contracts with our clients.

	12/31/2018			12/31/2017			Change
Contract receivables from billed revenue	$	43,878		$	36,058		$	7,820
Contract receivables from unbilled revenue	2,987			2,709			278
Deferred revenue	(2,428		)	(1,431		)	(997		)
Refund liabilities	6,497			7,864			(1,367		)

The increase in our contract receivables balance from billed revenues at December 31, 2018 compared to December 31, 2017 is mainly due to higher revenue generated in the fourth quarter of fiscal year 2018 compared with the revenue generated in the fourth quarter of fiscal year 2017. This year-over-year increase in fourth quarter revenue is primarily due to higher revenue generated from our UK retail recovery audit business, as well as additional revenue contributed from businesses acquired in fiscal years 2016 and 2017. We recognized revenue, net of refund liabilities of $171.8 million in fiscal year 2018 and $161.6 million in fiscal year 2017, an increase of $10.2 million, which included additional revenue of $2.9 million from our C&CA business acquired in fiscal year 2017 and $0.3 million from our Lavante business acquired in fiscal year 2016.

The increase in our contract receivables balance from unbilled revenues at December 31, 2018 compared to December 31, 2017, is mainly due to the timing of revenue earned that was not yet billable to our clients that have scheduled billing arrangements as part of our contractual terms.

The increase in our deferred revenue balance at December 31, 2018 compared to December 31, 2017 is mainly due to an increase in revenue generated in fiscal year 2018 from our subscription services offerings for our SIM and PRGX OPTIX^® solutions as a result of increased market acceptance of those product offerings in fiscal year 2018. We recognized $1.2 million in fiscal year 2018 that was included in deferred revenue as of December 31, 2017.

The decrease in our refund liabilities balance at December 31, 2018 compared to December 31, 2017 is mainly due to the change in methodology used to determine refund liabilities as of December 31, 2018 as described in the section entitled Refund Liabilities below.

Disaggregation of Revenue

We depict revenue earned by country and by reporting segment in our Operating Segments and Related Information disclosure. Refer to Note 2 of the Notes to our Consolidated Financial Statements for further information pertaining to our disaggregation of revenue.

Refund Liabilities

Refund liabilities result from reductions in the economic value previously received by our clients with respect to vendor claims identified by us and for which we previously have recognized revenue. We compute the estimate of our refund liabilities at any given time based on actual historical refund data. We record periodic changes in refund liabilities as adjustments to revenue. We satisfy such refund liabilities either by offsets to amounts otherwise due from clients or by cash refunds to clients.

On an on-going basis, we evaluate our estimates and judgments, including those related to refund liabilities. We base our estimates and judgments on historical experience, information available prior to the issuance of the consolidated financial statements and on various other factors that we believe to be reasonable under the circumstances. This information forms the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Materially different results can occur as circumstances change and additional information becomes known, including changes in those estimates not deemed “critical."

An integral component of the methodology used to determine the refund liability includes applying a trendline to historical payback data extracted from our claims-tracking systems. As part of our on-going review of this process, we determined that a better correlation exists between the extracted data points and this trendline when the line takes the form of a cubic polynomial rather than our historical approach of a natural logarithm. As a result, effective in the interim period ended June 30, 2018, the Company refined its methodology to incorporate this new trendline for the estimation of refunds expected to occur in future periods.

(c) Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less from date of purchase. We place our temporary cash investments with high credit quality financial institutions. At times, certain investments may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit or otherwise may not be covered by FDIC insurance. Some of our cash and cash equivalents are held at banks in jurisdictions outside the U.S. that have restrictions on transferring such assets outside of these countries on a temporary or permanent basis. Such restricted net assets are not significant in comparison to our consolidated net assets.

The $14.0 million in cash and cash equivalents as of December 31, 2018 includes $5.7 million held in the U.S., $1.2 million held in Canada, and $7.1 million held in other foreign jurisdictions, primarily in the United Kingdom, India, and Australia. Our cash and cash equivalents included short-term investments of approximately $1.4 million as of December 31, 2018 and $1.9 million as of December 31, 2017, all of which were held at banks outside of the United States, primarily in Brazil and Canada.

(d) Fair Value of Financial Instruments

We state cash equivalents at cost, which approximates fair market value. The carrying values for receivables from clients, unbilled receivables, accounts payable, deferred revenue and other accrued liabilities reasonably approximate fair market value due to the nature of the financial instrument and the short-term maturity of these items.

We record bank debt, if any, as of the period end date based on the effective borrowing rate and repayment terms when originated. As of December 31, 2018, we had $21.6 million in bank debt outstanding. As of December 31, 2017, we had $13.6 million in bank debt outstanding. We believe the carrying value of the bank debt approximates its fair value. We considered the factors used in determining the fair value of this debt to be Level 3 inputs (significant unobservable inputs).

We had $4.2 million of business acquisition obligations as of December 31, 2018, and $8.9 million as of December 31, 2017. Our business acquisition obligations represent the fair value of deferred consideration and earnout payments estimated to be due as of the date for which we recorded these amounts. We determine the preliminary estimated fair values based on our projections of future revenue and profits or other factors used in the calculation of the ultimate payment to be made. The discount rate that we use to value the liability is based on specific business risk, cost of capital, and other factors. We consider these factors to be Level 3 inputs (significant unobservable inputs).

We state certain assets at fair value on a nonrecurring basis as required by accounting principles generally accepted in the United States of America. Generally, these assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.

(e) Property and Equipment

We report property and equipment at cost or estimated fair value at acquisition date and depreciate them over their estimated useful lives using the straight-line method. Our useful lives for fixed assets are three years for computer laptops, four years for desktops, five years for IT server, storage and network equipment, five years for furniture and fixtures and three years for purchased software. We amortize leasehold improvements using the straight-line method over the shorter of the lease term or ten years. Depreciation expense from continuing operations was $7.4 million in 2018, $4.6 million in 2017 and $5.0 million in 2016.

We review the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, we will recognize an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset. No impairment charges were necessary in the three years ended December 31, 2018.

(f) Software Development Costs

We capitalize a portion of the costs we incur related to our internal development of software that we use in our operations and amortize these costs using the straight-line method over the expected useful lives of three to seven years.

We also capitalize a portion of the costs we incur related to our internal development of software that we intend to market to others. We amortize these costs over the products’ estimated economic lives, which typically are three years, beginning when the underlying products are available for general release to clients. We review the carrying value of capitalized software development costs for impairment whenever events and circumstances indicate that the carrying value of the asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, we will recognize an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset.

We consider software development activities to be research and development costs and expense them as incurred. However, we capitalize the costs incurred for the development of computer software that will be sold, leased, or otherwise marketed or that will be used in our operations beginning when technological feasibility has been established. We consider the costs associated with developing or replacing methodologies to be development costs. Development costs were approximately $8.3 million in 2018, $1.2 million in 2017 and $1.6 million in 2016.

(g) Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair market value of net identifiable assets of acquired businesses. We evaluate the recoverability of goodwill and other intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other, in the fourth quarter of each year or sooner if events or changes in circumstances indicate that the carrying amount may exceed its fair value. This evaluation includes a preliminary assessment of qualitative factors to determine if it is necessary to perform a two-step impairment testing process. The first step identifies potential impairments by comparing the fair value of the reporting unit with its carrying value, including goodwill. If the calculated fair value of a reporting unit exceeds the carrying value, goodwill is not impaired, and the second step is not necessary. If the carrying value of a reporting unit exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying value. If the fair value is less than the carrying value, we would record an impairment charge.

We are not required to calculate the fair value of our reporting units that hold goodwill unless we determine that it is more likely than not that the fair value of these reporting units is less than their carrying values. In this analysis, we consider a number of factors, including changes in our legal, business and regulatory climates, changes in competition or key personnel, macroeconomic factors impacting our company or our clients, our recent financial performance and expectations of future performance and other pertinent factors. Based on these analyses, we determined that it was not necessary for us to perform the two-step process. No impairment charges were necessary based on our internal assessments in the three years ended December 31, 2018.

(h) Direct Expenses and Deferred Costs

We typically expense direct expenses that we incur during the course of recovery audit and delivery of Adjacent Services offerings as incurred. For certain implementation and set-up costs associated with our “fee for service” revenue that we earn over an extended period of time, we defer the related direct and incremental costs and recognize them as expenses over the life of the underlying contract.

(i) Income Taxes

We account for income taxes under the asset and liability method. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. We measure deferred tax assets and liabilities using enacted tax rates we expect to apply to taxable income in the years in which we expect to recover or settle those temporary differences. We recognize the effect on the deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date.

We reduce our deferred tax assets by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. In determining the amount of valuation allowance to record, we consider all available positive and negative evidence affecting specific deferred tax assets, including our past and anticipated future performance, the reversal of deferred tax liabilities, the length of carry-back and carry-forward periods and the implementation of tax planning strategies. Objective positive evidence is necessary to support a conclusion that a valuation allowance is not needed for all or a portion of deferred tax assets when significant negative evidence exists. Cumulative losses in recent years are the most compelling form of negative evidence we considered in this determination.

We apply a “more-likely-than-not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We refer to GAAP for guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. In accordance with FASB ASC 740, our policy for recording interest and penalties associated with tax positions is to record such items as a component of income before income taxes. A number of years may elapse before a particular tax position is audited and finally resolved or when a tax assessment is raised. The number of years subject to tax assessments also varies by tax jurisdictions.

(j) Foreign Currency

We use the local currency as the functional currency in the majority of the countries in which we conduct business outside of the United States. We translate the assets and liabilities denominated in foreign currencies into U.S. dollars at the current rates of exchange at the balance sheet date. We include the translation gains and losses as a separate component of shareholders’ equity and in the determination of comprehensive income (loss). We translate revenue and expenses in foreign currencies at the weighted average exchange rates for the period. We separately state the foreign currency transaction gains and losses on short-term intercompany balances in the Consolidated Statements of Operations. We include all other realized and unrealized foreign currency transaction gains (losses) in “Selling, general and administrative expenses.”

(k) Earnings (Loss) Per Common Share

We compute basic earnings (loss) per common share by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. We compute diluted earnings (loss) per common share by dividing net income (loss) available to common shareholders by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of stock options using the treasury stock method, and (3) the dilutive effect of other potentially dilutive securities. We exclude the potential dilutive effect of stock options and convertible instruments from the determination of diluted earnings (loss) per common share if the effect of including them would be antidilutive.

(l) Stock-Based Compensation

We account for awards of equity instruments issued to employees and directors under the fair value method of accounting and recognize such amounts in our Consolidated Statements of Operations. We measure compensation expense for time-based all stock-based awards at fair value on the date of grant and recognize compensation expense, less actual forfeitures, in our Consolidated Statements of Operations using the straight-line method over the service period over which we expect the awards to vest. We recognize compensation expense for awards with performance conditions based on the probable outcome of the performance conditions. We accrue compensation expense if we believe it is probable that the performance condition(s) will be achieved and do not accrue compensation expense if we believe it is not probable that the performance condition(s) will be achieved. In the event that it becomes probable that performance condition(s) will no longer be achieved, we reverse all of the previously recognized compensation expense in the period such a determination is made.

We estimate the fair value of all time-vested options as of the date of grant using the Black-Scholes option valuation model, which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation models require the input of highly subjective assumptions, including the expected stock price volatility, which we calculate based on the historical volatility of our common stock. We use a risk-free interest rate, based on the U.S. Treasury instruments in effect at the time of the grant, for the period comparable to the expected term of the option. We use the “simplified” method in estimating the expected term of options as we have concluded that our historical share option exercise experience is a less than reasonable basis upon which to estimate the expected term for our grants.

We estimate the fair value of nonvested stock awards (restricted stock and restricted stock units) as being equal to the market value of the common stock on the date of the award. We classify our share-based payments as either liability-classified awards or as equity-classified awards. We remeasure liability-classified awards to fair value at each balance sheet date until the award is settled. We measure equity-classified awards at their grant date fair value and do not subsequently remeasure them. We have classified our share-based payments which are settled in our common stock as equity-classified awards and our share-based payments that are settled in cash as liability-classified awards. Compensation expense related to equity-classified awards generally are equal to the fair value of the award at grant-date amortized over the vesting period of the award. The liability for liability-classified awards generally is equal to the fair value of the award as of the balance sheet date multiplied by the percentage vested at the time. We record the change in the liability amount from one balance sheet date to another to compensation expense.

(m) Comprehensive Income (Loss) and Accumulated Other Comprehensive Income

Consolidated comprehensive income (loss) consists of consolidated net income (loss) and foreign currency translation adjustments. We present the calculation of consolidated comprehensive income (loss) in the accompanying Consolidated Statements of Comprehensive Income (Loss). No amounts have been reclassified out of Accumulated Other Comprehensive Income during the periods presented in our consolidated financial statements.

(n) Segment Reporting

We report our operating segment information in three segments: Recovery Audit Services – Americas; Recovery Audit Services – Europe/Asia-Pacific and Adjacent Services. We include the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to our three operating segments in Corporate Support. Our business segments reflect the internal reporting that our Chief Executive Officer, who is our chief operating decision maker, uses for the purpose of making decisions about allocating resources and assessing performance. Our management, including our Chief Executive Officer, uses what we internally refer to as “Adjusted EBITDA” as the primary measure of profit or loss for purposes of assessing the operating performance of all operating segments. We define Adjusted EBITDA as earnings from continuing operations before interest, taxes, depreciation and amortization (“EBITDA”) as adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period.

EBITDA and Adjusted EBITDA are not financial measures determined in accordance with GAAP. Such non-GAAP financial measures do not measure the profit or loss of the reportable segments in accordance with GAAP. Given that we use Adjusted EBITDA as our primary measure of segment performance, GAAP rules on segment reporting require that we include this non-GAAP measure in our discussion of our operating segments. We also must reconcile Adjusted EBITDA to our operating results presented on a GAAP basis. We provide this reconciliation in Note 2 to these consolidated financial statements along with other information about our reportable segments. We do not intend the reconciling items to be, nor should they be, interpreted as non-recurring or extraordinary, or in any manner be deemed as adjustments made in accordance with GAAP. Because Adjusted EBITDA is not a financial measure determined in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies.

(o) Loss Contingencies

Certain conditions may exist as of the date the financial statements are issued that may result in a loss to the Company, but which will only be determined and resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss is likely to occur and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not accrued or disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. Legal costs relating to loss contingencies are expensed as incurred.

(p) Reclassification of Prior Year Balance Sheet

Certain reclassifications have been made in the prior year in order to conform to the current year presentation.

(q) Impact of Recently Issued Accounting Standards

A summary of the recently issued accounting standards issued by the Financial Accounting Standards Board (“FASB”) and included in the Accounting Standards Codification (“ASC”) that apply to us is set forth below.

Adopted by the Company in Fiscal Year 2018

FASB ASC Update No. 2014-09 - In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), as later amended, which resulted in a new accounting standard Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The new revenue recognition standard requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 has replaced most existing revenue recognition guidance within GAAP. The new standard became effective for the Company on January 1, 2018 and was adopted by the Company on that date. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements utilizing the modified retrospective approach.

FASB ASU No. 2018-07 - In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718)-Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The Company has elected early adoption of this standard, which is permitted, and adopted this standard on September 30, 2018. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

FASB ASU No. 2018-03 - In February 2018, the FASB issued ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10), which clarified certain aspects of the previously issued ASU 2016-01 issued in January 2016. This standard updates ASU guidance on the classification and measurement of financial instruments, including significant revisions in accounting related to the classification and measurement of investments in equity securities and presentation of certain fair value changes for financial liabilities when the fair value option is elected. This ASU requires equity securities to be measured at fair value with changes in fair value recognized through net earnings and amends certain disclosure requirements associated with the fair value of financial instruments. In the period of adoption, the Company is required to reclassify the unrealized gains/losses on equity securities within accumulated other comprehensive income (loss) to retained earnings. This standard became effective for the Company on September 30, 2018 and was adopted by the Company on that date. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Accounting Standards Not Yet Adopted

FASB ASU 2018-13 - In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. The new guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Upon the effective date, certain provisions are to be applied prospectively, while others are to be applied retrospectively to all periods presented. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until their effective date. We are currently evaluating the effect of this standard on our consolidated financial statement disclosures. Since this standard affects disclosure requirements only, it is not expected to have an impact on the Company's consolidated financial statements.

FASB ASU No. 2016-02 - In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The standard is effective for the first interim period within annual periods beginning after December 15, 2018, which will be January 1, 2019, for the Company. The standard is required to be adopted using a modified retrospective approach. The Company has applied the provisions of the new leasing standard at the effective date (January 1, 2019) rather than at the beginning of the earliest period presented under the transition method provided, and will recognize a cumulative-effect adjustment to the opening balance sheet on that date. The Company has made a policy decision to include all payments as lease payments for each category of listed assets with the exception of computer equipment. Computer equipment will be bifurcated between the lease payment and the contracted maintenance payment. This standard will become effective in the first quarter of 2019.

The Company has implemented a third-party supported software solution to manage and account for leases under the new standard. The Company has also established a new lease accounting process and has designed new internal controls for that process. The Company plans on electing the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company does not plan to elect the practical expedient to use hindsight in determining the lease term and in assessing impairment of right-of-use assets. The Company expects the adoption of this standard to increase lease assets and lease liabilities by approximately $13 million. The adoption of this standard is not expected to have a material impact on the Company's net income or its cash flow.

XML

Operating Segments and Related Information

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Operating Segments and Related Information

OPERATING SEGMENTS AND RELATED INFORMATION

We conduct our operations through three reportable segments:

Recovery Audit Services – Americas represents recovery audit services (other than HCRA services) provided in the United States of America (“U.S.”), Canada and Latin America.

Recovery Audit Services – Europe/Asia-Pacific represents recovery audit services provided in Europe, Asia and the Pacific region.

Adjacent Services represents data transformation, spend analytics, PRGX OPTIX and SIM services, and associated advisory services.

We include the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three reportable segments in Corporate Support.

Discontinued Operations - In the fourth quarter of 2015, PRGX entered into agreements with third parties to fulfill its Medicare recovery audit contractor ("RAC") program subcontract obligations to audit Medicare payments and provide support for claims appeals and assigned its remaining Medicaid contract to another party. One of the third-party Medicare RAC-related contracts has been settled and the results are reflected in these financial statements. The Company will continue to incur certain expenses until the remaining Medicare RAC contracts are concluded. As part of discontinuing the HCRA business, the Company has an accrual for outstanding Medicare RAC appeals of approximately $2.0 million and a receivable of approximately $1.7 million for unpaid claims as of December 31, 2018. The HCRA services business has been reported as Discontinued Operations in accordance with US GAAP. One of the third-party contracts have been settled and the results are reflected in these financial statements.

Discontinued operations information for the years ended December 31, 2018, 2017 and 2016 (in thousands) is as follows: 

Results of Discontinued Operations (in thousands)	Years Ended December 31,
	2018			2017			2016
Revenue, net of refund liability	$	959		$	—		$	(14	)
Cost of sales (adjustments)	(300		)	1,350			1,112
Selling, general and administrative expense	16			14			184
Depreciation of property, equipment and software assets	1			8			14
Pretax income (loss) from discontinued operations before income taxes	1,242			(1,372		)	(1,324		)
Income tax expense	—			—			—
Net income (loss) from discontinued operations	$	1,242		$	(1,372	)	$	(1,324	)

The following table presents the discontinued operations of the HCRA services business in the Consolidated Statements of Cash Flows, for the years ended December 31, 2018, 2017 and 2016 (in thousands):

	Years Ended December 31,
	2018			2017			2016
Net cash used in operating activities	$	(1,484	)	$	(1,364	)	$	(1,309	)
Net cash used in investing activities	—			—			—
Net cash provided by financing activities	—			—			—
Increase (decrease) in cash and cash equivalents	$	(1,484	)	$	(1,364	)	$	(1,309	)

We evaluate the performance of our reportable segments based upon revenue and measures of profit or loss we refer to as EBITDA and Adjusted EBITDA. We define Adjusted EBITDA as earnings before interest and taxes (“EBIT”), adjusted for depreciation and amortization (“EBITDA”), and then further adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period. Such adjustments include restructuring charges, stock-based compensation, bargain purchase gains, acquisition-related charges and benefits (acquisition transaction costs, acquisition obligations classified as compensation, and fair value adjustments to acquisition-related contingent consideration), tangible and intangible asset impairment charges, certain litigation costs and litigation settlements, certain severance charges and foreign currency transaction gains and losses on short-term intercompany balances viewed by management as individually or collectively significant. We do not have any inter-segment revenue.

Segment information for the years ended December 31, 2018, 2017 and 2016 (in thousands) is as follows:

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific		Adjacent Services			Corporate Support			Total
2018
Revenue, net of refund liabilities	$	115,920		$	49,526	$	6,330		$	—		$	171,776
Net income from continuing operations												$	3,351
Income tax expense												1,321
Interest expense, net												1,663
EBIT	$	26,602		$	12,413	$	(5,231	)	$	(27,449	)	6,335
Depreciation of property, equipment and software assets	5,545			683		1,142			—			7,370
Amortization of intangible assets	1,664			172		1,559			—			3,395
EBITDA	33,811			13,268		(2,530		)	(27,449		)	17,100
Foreign currency transaction losses (gains) on short-term intercompany balances	367			1,044		14			(423		)	1,002
Acquisition-related adjustments (income) loss	—			—		—			(1,628		)	(1,628		)
Transformation and severance expenses	944			1,194		66			918			3,122
Other (income) loss	(4		)	8		—			17			21
Stock-based compensation	—			—		—			5,056			5,056
Adjusted EBITDA	$	35,118		$	15,514	$	(2,450	)	$	(23,509	)	$	24,673
Capital expenditures	$	2,050		$	1,200	$	257		$	6,891		$	10,398
Allocated assets	$	71,211		$	26,147	$	7,294		$	—		$	104,652
Unallocated assets:
Cash and cash equivalents	—			—		—			13,973			13,973
Restricted cash	—			—		—			46			46
Deferred income taxes	—			—		—			3,561			3,561
Prepaid expenses and other assets	—			—		—			910			910
Discontinued operations	—			—		—			1,687			1,687
Total assets	$	71,211		$	26,147	$	7,294		$	20,177		$	124,829

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Corporate Support			Total
2017
Revenue, net of refund liabilities	$	113,122		$	44,372		$	4,126		$	—		$	161,620
Net income from continuing operations													$	4,556
Income tax expense													2,962
Interest expense, net													1,539
EBIT	$	29,163		$	11,700		$	(7,942	)	$	(23,864	)	9,057
Depreciation of property, equipment and software assets	3,165			599			805			—			4,569
Amortization of intangible assets	1,919			142			1,573			—			3,634
EBITDA	34,247			12,441			(5,564		)	(23,864		)	17,260
Foreign currency transaction (gains) losses on short-term intercompany balances	(249		)	(1,769		)	(9		)	(163		)	(2,190		)
Acquisition-related adjustments (income) loss	—			—			—			(2,283		)	(2,283		)
Transformation and severance expenses	313			655			320			378			1,666
Other (income) loss	751			184			(195		)	(900		)	(160		)
Stock-based compensation	—			—			—			7,052			7,052
Adjusted EBITDA	$	35,062		$	11,511		$	(5,448	)	$	(19,780	)	$	21,345
Capital expenditures	$	2,389		$	2,383		$	1,335		$	3,248		$	9,355
Allocated assets	$	65,397		$	22,474		$	9,486		$	—		$	97,357
Unallocated assets:
Cash and cash equivalents	—			—			—			18,823			18,823
Restricted cash	—			—			—			51			51
Deferred loan costs	—			—			—			—			—
Deferred income taxes	—			—			—			1,538			1,538
Prepaid expenses and other assets	$	—		$	—		$	—		910			910
Discontinued operations	$	—		$	—		$	—		$	1,539		$	1,539
Total assets	$	65,397		$	22,474		$	9,486		$	22,861		$	120,218

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		Adjacent Services			Corporate Support			Total
2016
Revenue, net of refund liabilities	$	99,861	$	37,335	$	3,648		$	—		$	140,844
Net income from continuing operations											$	2,229
Income tax expense											1,242
Interest income, net											(153		)
EBIT	$	25,476	$	6,455	$	(4,617	)	$	(23,996	)	3,318
Depreciation of property, equipment and software assets	3,750		529		754			—			5,033
Amortization of intangible assets	1,477		—		355			—			1,832
EBITDA	30,703		6,984		(3,508		)	(23,996		)	10,183
Foreign currency transaction losses (gains) on short-term intercompany balances	31		107		17			(71		)	84
Transformation and severance expenses	517		312		258			242			1,329
Other income	—		—		(121		)	—			(121		)
Stock-based compensation	—		—		—			5,123			5,123
Adjusted EBITDA	$	31,251	$	7,403	$	(3,354	)	$	(18,702	)	$	16,598
Capital expenditures	$	4,393	$	600	$	894		$	—		$	5,887
Allocated assets	$	47,690	$	14,813	$	10,532		$	—		$	73,035
Unallocated assets:
Cash and cash equivalents	—		—		—			15,723			15,723
Restricted cash	—		—		—			47			47
Deferred income taxes	—		—		—			2,269			2,269
Prepaid expenses and other assets	—		—		—			800			800
Discontinued operations								1,600			1,600
Total assets	$	47,690	$	14,813	$	10,532		$	20,439		$	93,474

The following table presents revenue by country based on the location of clients served (in thousands):

	Years Ended December 31,
	2018		2017		2016
United States	$	100,458	$	93,447	$	80,857
United Kingdom	27,774		23,408		17,501
Canada	14,700		14,375		14,531
Australia	8,397		8,732		7,354
France	6,721		5,987		6,934
Mexico	3,793		5,385		4,900
Brazil	1,799		2,053		1,169
Spain	1,443		1,127		964
Hong Kong	1,219		889		824
Thailand	1,094		699		654
Ireland	741		929		337
Colombia	465		709		583
New Zealand	338		899		979
Other	2,834		2,981		3,257
	$	171,776	$	161,620	$	140,844

The following table presents long-lived assets by country based on the location of the asset (in thousands):

	December 31,
	2018		2017
United States	$	34,236	$	47,371
UK	2,909		5,510
All Other	395		1,125
	$	37,540	$	54,006

One client, The Kroger Co., accounted for approximately 12% of revenue from continuing operations in 2018 and 2017, and approximately 11% of revenue from continuing operations in 2016.

XML

Earnings (Loss) Per Common Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Earnings (Loss) Per Common Share

EARNINGS (LOSS) PER COMMON SHARE

The following tables set forth the computations of basic and diluted earnings (loss) per common share (in thousands, except per share data):

	Years Ended December 31,
Basic earnings (loss) per common share:	2018		2017			2016
Numerator:
Net income from continuing operations	$	3,351	$	4,556		$	2,229
Net income (loss) from discontinued operations	$	1,242	$	(1,372	)	$	(1,324	)
Denominator:
Weighted-average common shares outstanding	22,811		21,937			21,969
Basic earnings per common share from continuing operations	$	0.14	$	0.21		$	0.10
Basic earnings (loss) per common share from discontinued operations	$	0.06	$	(0.06	)	$	(0.06	)

	Years Ended December 31,
Diluted earnings (loss) per common share:	2018		2017			2016
Numerator:
Net income from continuing operations	$	3,351	$	4,556		$	2,229
Net income (loss) from discontinued operations	$	1,242	$	(1,372	)	$	(1,324	)
Denominator:
Weighted-average common shares outstanding	22,811		21,937			21,969
Effect of dilutive securities from stock-based compensation plans	623		174			47
Denominator for diluted earnings per common share	23,434		22,111			22,016
Diluted earnings per common share from continuing operations	$	0.14	$	0.21		$	0.10
Diluted earnings (loss) per common share from discontinued operations	$	0.06	$	(0.06	)	$	(0.06	)

Weighted-average shares outstanding excludes antidilutive shares underlying options that totaled 0.9 million, 2.3 million, and 2.9 million shares, respectively, from the computation of diluted earnings per common share for the years ended December 31, 2018, 2017, and 2016.

XML

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

GOODWILL AND INTANGIBLE ASSETS

(a) Goodwill

We evaluate the recoverability of goodwill in the fourth quarter of each year or sooner if events or changes in circumstances indicate that the carrying amount may exceed its fair value. These analyses did not result in an impairment charge during the periods presented.

Goodwill by reportable segments during 2018 and 2017 was as follows (in thousands):

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services		Total
Balance, January 1, 2017	$	10,755		$	680		$	2,388	$	13,823
Goodwill recorded in connection with business combinations	2,685			869			140		3,694
Foreign currency translation	—			131			—		131
Balance, December 31, 2017	13,440			1,680			2,528		17,648
Goodwill recorded in connection with business combinations	(20		)	—			—		(20		)
Foreign currency translation	—			(97		)	—		(97		)
Balance, December 31, 2018	$	13,420		$	1,583		$	2,528	$	17,531

During 2017, we recorded goodwill of $3.6 million in our Recovery Audit Services - Americas and Recovery Audit Services - Europe/Asia-Pacific segments in conjunction with the acquisition of Cost & Compliance Associates, LLC and Cost & Compliance Associates Limited respectively, (collectively "C&CA") on February 23, 2017. C&CA is a commercial recovery audit and contract compliance firm with operations in the U.S. and the UK (refer to Note 12 below).

(b) Intangible Assets

Intangible assets consist principally of amounts we have assigned to customer relationships, trademarks, non-compete agreements and trade names in conjunction with business acquisitions. Certain of our intangible assets associated with acquisitions of assets or businesses by our foreign subsidiaries are denominated in the local currency of such subsidiary and therefore are subject to foreign currency ("FX") adjustments. We present the amounts for these transactions in United States dollars utilizing foreign currency exchange rates as of the respective balance sheet dates.

Amortization expense relating to intangible assets was $3.4 million in 2018, $3.6 million in 2017 and $1.8 million in 2016. As of December 31, 2018 and based on our current amortization methods and current levels of intangible assets, we project amortization expense relating to intangible assets for the next five years will be $3.5 million in 2019, $3.1 million in 2020, $1.7 million in 2021, $0.7 million in 2022 and $0.7 million in 2023. We use accelerated amortization methods for customer relationships and trade names, and straight-line amortization for non-compete agreements and trademarks.

Changes in noncurrent intangible assets during 2018 and 2017 were as follows (in thousands):

	Customer Relationships			Trademarks			Non- compete Agreements			Software			Trade Names			Total
Gross carrying amount:
Balance, January 1, 2017	$	36,573		$	853		$	1,322		$	6,178		$	2,200		$	47,126
Acquisition of C&CA Assets	9,556			135			1,232			—			—			10,923
FX adjustments and other	777			38			75			—			—			890
Balance, December 31, 2017	46,906			1,026			2,629			6,178			2,200			58,939
FX adjustments and other	(547		)	138			(51		)	(164		)	—			(624		)
Balance, December 31, 2018	$	46,359		$	1,164		$	2,578		$	6,014		$	2,200		$	58,315
Accumulated amortization:
Balance, January 1, 2017	$	(31,481	)	$	(853	)	$	(1,322	)	$	(272	)	$	(2,200	)	$	(36,128	)
Amortization expense	(1,796		)	(22		)	(204		)	(1,612		)	—			(3,634		)
FX adjustments and other	(585		)	(38		)	(76		)	—			—			(699		)
Balance, December 31, 2017	(33,862		)	(913		)	(1,602		)	(1,884		)	(2,200		)	(40,461		)
Amortization expense	(1,607		)	(67		)	(246		)	(1,475		)	—			(3,395		)
FX adjustments and other	409			(22		)	51			48			—			486
Balance, December 31, 2018	$	(35,060	)	$	(1,002	)	$	(1,797	)	$	(3,311	)	$	(2,200	)	$	(43,370	)
Net carrying amount:
Balance, December 31, 2017	$	13,044		$	113		$	1,027		$	4,294		$	—		$	18,478
Balance, December 31, 2018	$	11,299		$	162		$	781		$	2,703		$	—		$	14,945
Estimated useful life (years)	10-15 years			4-5 years			5 years			4 years			4-5 years

XML

Debt

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Debt

DEBT

Debt issuance costs on the balance sheet are presented as a direct deduction from the related debt liability, rather than represented as a separate asset. Long-term debt as of December 31, 2018 and 2017 consists of the following (in thousands):

	As of December 31
	2018							2017
	Gross		DFC (1)			Net		Gross		DFC			Net
Revolving Facility	$	21,600	$	(65	)	$	21,535	$	13,600	$	(131	)	$	13,469
Capital lease obligations	66		—			66		105		—			105
Total long term debt	21,666		(65		)	21,601		13,705		(131		)	13,574
Less: Current portion of long-term debt	48		—			48		48		—			48
Long-term debt, excluding current portion	$	21,618	$	(65	)	$	21,553	$	13,657	$	(131	)	$	13,526

(1) DFC refers to deferred financing costs related to the Company's long-term debt.

On January 19, 2010, we entered into a four-year revolving credit and term loan agreement with SunTrust Bank (“SunTrust”). The SunTrust credit facility initially consisted of a $15.0 million committed revolving credit facility and a $15.0 million term loan. The SunTrust credit facility was guaranteed by the Company and its domestic subsidiaries and was secured by substantially all of our assets.

The SunTrust credit facility has been modified from time to time through various amendments since January 2010. Included in these amendments was the refinancing of the committed credit facility in 2014, and clarification of certain definitions and other terms of the facility in 2016. The refinancing resulted in an extended maturity date of December 23, 2017, as well as a lower interest rate. Pursuant to the December 2014 amendment, the credit facility would bear interest at a rate per annum comprised of a specified index rate based on one-month LIBOR, plus an applicable margin (1.75% per annum). The index rate was determined as of the first business day of each calendar month. PRGX was required to pay a commitment fee, payable quarterly, on the unused portion of the credit facility.

On May 4, 2017, we entered into an amendment of the SunTrust credit facility, that, among other things, (i) increased the aggregate principal amount of the committed revolving credit facility from $20.0 million to $35.0 million through December 31, 2018, which was reduced to $30.0 million thereafter, (ii) extended the maturity date of the credit facility to December 31, 2019, (iii) added customary provisions to reflect European Union “bail-in” directive compliance language, and (iv) modified the financial covenants applicable to the Company during the remaining term of the credit facility by (A) revising the maximum leverage ratio and minimum fixed charge coverage ratio and (B) adding an additional financial covenant requiring the Company to maintain a minimum amount of consolidated adjusted EBITDA. In addition, the applicable margin used to determine the interest rate per annum on outstanding borrowings under the credit facility, and the ongoing commitment fee payable on the unused portion of the revolving credit facility commitment, both of which previously had been fixed percentages per annum, were amended and to both vary based upon our quarterly leverage ratio calculation under the SunTrust credit facility. The applicable margin per annum on interest accruing on all borrowings under the credit facility outstanding on or after May 4, 2017, and the applicable percentage per annum commitment fee accruing on and after that date, respectively were determined as follows:

Pricing Level	Leverage Ratio	Applicable Margin for LIBOR Index Rate Loans	Applicable Margin for Base Rate Loans	Applicable Percentage for Commitment Fee
I	Less than 1.25:1.00	2.25% per annum	1.25% per annum	0.250% per annum
II	Greater than or equal to 1.25:1.00 but less than 1.75:1.00	2.50% per annum	1.50% per annum	0.375% per annum
III	Greater than or equal to 1.75:1.00	2.75% per annum	1.75% per annum	0.375% per annum

On March 21, 2018, the SunTrust credit facility was amended with respect to the calculation of consolidated adjusted EBITDA for financial covenant compliance. The debt covenant calculation was modified to include the cash component of stock-based compensation for 2017.

On September 28, 2018, the SunTrust credit facility was amended in order to expand the types of stock the Company could purchase as well as adjust the fixed coverage charge ratio. Under the amended terms, the Company could make restricted payments to purchase capital stock (other than disqualified stock). The fixed charge coverage ratio was reduced from 1.25 to 1.00 for the quarter ending September 30, 2018.

On November 5, 2018, the SunTrust credit facility was amended to add, as an additional financial condition to the Company's ability to make certain restricted payments, a requirement that the Company have an aggregate "minimum liquidity" of $5.0 million immediately prior to and immediately after giving effect to any restricted payment, with "minimum liquidity" being defined as 100% of all unrestricted domestic cash holdings, 70% of unrestricted foreign cash holdings, and the unused availability under the SunTrust credit facility. In addition, the calculation of the fixed charge coverage ratio was revised to exclude the following fixed charges: (i) the $4.0 million earnout payment made in the second quarter of 2018 in connection with a prior acquisition by the Company and (ii) up to $5.0 million (in the aggregate) of restricted payments consisting of redemption, purchases or repurchases of capital stock in the fourth quarter of 2018 and the first quarter of 2019.

As of December 31, 2018 there was $21.6 million in debt outstanding under the SunTrust credit facility that would be due December 31, 2019. The amount available for additional borrowing under the SunTrust credit facility was $13.4 million as of December 31, 2018. Based on the terms of the credit facility, as amended, the applicable interest rate at December 31, 2018 was approximately 4.60%. As of December 31, 2018, the Company was required to pay a commitment fee of 0.25% per annum, payable quarterly, on the unused portion of the revolving SunTrust credit facility.

The SunTrust credit facility included customary affirmative, negative, and financial covenants binding on the Company, including delivery of financial statements and other reports, conduct of business, and transactions with affiliates. The negative covenants limited the ability of the Company, among other things, to incur debt, incur liens, make investments, sell assets or declare or pay dividends on its capital stock. The financial covenants included in the credit facility set forth maximum leverage and minimum fixed charge coverage ratios and require maintenance of a minimum amount of consolidated adjusted earnings before interest, taxes, depreciation and amortization. In addition, the credit facility included customary events of default. The Company was in compliance with the covenants in the SunTrust credit facility as of December 31, 2018.

On March 14, 2019, we entered into a credit agreement with Bank of America, N.A. Refer to Note 14 - Subsequent Event of the notes to the Company's consolidated financial statements for a description of the credit agreement with Bank of America, N.A.

Future Commitments

The following is a summary of the combined principal maturities of all long-term debt and principal payments to be made under the Company’s capital lease agreements for each of the fiscal years presented in the table below (in thousands):

Year Ended December 31
2019	$	21,661
2020	5
Total	$	21,666

XML

Lease Commitments

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Lease Commitments

LEASE COMMITMENTS

PRGX is committed under noncancelable lease arrangements for facilities and equipment. Rent expense, excluding costs associated with the termination of noncancelable lease arrangements, was $4.9 million in 2018, $5.1 million in 2017 and $3.9 million in 2016.

In January 2014, we amended the lease for our principal executive offices to extend the term through December 31, 2021, reduce the lease payment for 2014, and reduce the space under lease from approximately 132,000 square feet to approximately 58,000 square feet effective January 1, 2015. Starting in February 2016 we subleased approximately 3,000 square feet.

We have entered into several operating lease agreements that contain provisions for future rent increases, free rent periods or periods in which rent payments are reduced (abated). We charge the total amount of rental payments due over the lease term to rent expense on the straight-line, undiscounted method over the lease terms.

Future minimum lease payments under noncancelable operating leases including the amended lease for our principal executive offices, are as follows (in thousands):

Year Ending December 31,	Gross		Sublease Income			Amount
2019	$	4,974	$	(72	)	$	4,902
2020	3,882		(74		)	3,808
2021	3,248		(77		)	3,171
2022	1,168		—			1,168
2023	488		—			488
Total payments	$	13,760	$	(223	)	$	13,537

XML

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income (loss) before income taxes from continuing operations relate to the following jurisdictions (in thousands):

	Years Ended December 31,
	2018			2017			2016
United States	$	(4,673	)	$	(6,502	)	$	(5,306	)
Foreign	9,345			14,020			8,777
	$	4,672		$	7,518		$	3,471

The provision for income taxes for continuing operations consists of the following (in thousands):

	Years Ended December 31,
	2018			2017			2016
Current:
Federal	$	—		$	—		$	—
State	70			1			—
Foreign	2,920			2,230			2,103
	2,990			2,231			2,103
Deferred:
Federal	(145		)	(155		)	—
State	—			—			—
Foreign	(1,524		)	886			(861		)
	(1,669		)	731			(861		)
Total	$	1,321		$	2,962		$	1,242

The significant differences between the U.S. federal statutory tax rate and the Company’s effective income tax expense for earnings (in thousands) are as follows:

	Years Ended December 31,
	2018			2017			2016
Statutory federal income tax rate	$	981		$	2,631		$	1,180
State income taxes, net of federal effect	(285		)	(62		)	(173		)
Net operating loss limitation	—			2,975			—
Adjustment to deferred taxes	939			301			(4,103		)
Change in deferred tax asset valuation allowance	(2,867		)	(15,338		)	4,877
Change in tax law	(992		)	13,850			—
Foreign tax rate differential	1,306			(899		)	(1,153		)
Compensation and equity adjustments	1,474			—			113
Acquisition earnout adjustment	(320		)	87			60
Other permanent differences	183			(682		)	—
Withholding taxes	591			342			441
Changes in uncertain tax positions	19			(429		)	—
Return to provision adjustments	257			155			—
Other, net	35			31			—
Total	$	1,321		$	2,962		$	1,242

The tax effects of temporary differences and carry-forwards that give rise to deferred tax assets and liabilities consist of the following (in thousands):

	Years Ended December 31,
	2018		2017
Deferred income tax assets:
Accounts payable and accrued expenses	$	714	$	1,215
Accrued payroll and related expenses	2,315		1,691
Stock-based compensation expense	2,336		3,508
Depreciation of property and equipment	853		1,711
Capitalized software	119		—
Unbilled receivables and refund liabilities	97		1,811
Operating loss carry-forwards of foreign subsidiary	9,484		11,000
Federal operating loss carry-forwards	17,109		17,161
State operating loss carry-forwards	4,537		3,591
Other	1,624		376
Gross deferred tax assets	39,188		42,064
Less valuation allowance	31,597		34,776
Gross deferred tax assets net of valuation allowance	7,591		7,288
Deferred income tax liabilities:
Intangible assets	1,269		1,987
Capitalized software	—		29
Other	3,427		3,734
Gross deferred tax liabilities	4,696		5,750
Net deferred tax assets	$	2,895	$	1,538

Our reported effective tax rates on income approximated 28.3% in 2018, 39.4% in 2017, and 35.8% in 2016. Reported income tax expense in each year primarily results from taxes on the income of foreign subsidiaries. The effective tax rates generally differ from the expected tax rate primarily due to the Company’s deferred tax asset valuation allowance on the domestic earnings and taxes on income of foreign subsidiaries.

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law making significant changes to the Internal Revenue Code.  The new legislation contains several key provisions that impact the consolidated financial statements for the year ended December 31, 2017. Additionally, in December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation was expected during the 2018 calendar year, we considered the accounting of the transition tax, deferred tax re-measurements, and other items to be incomplete as of December 31, 2017, though we recorded provisional amounts in the consolidated financial statements. As of December 31, 2018, we have completed our analysis related to the Tax Act in accordance with SAB 118 and there was no additional adjustment required.

The new legislation contains several key provisions that affect us. The lowering of the corporate tax rate from 35% to 21% resulted in our deferred tax balances and related valuation allowances being re-measured to reflect the future tax benefit at the new enacted rate.  During 2017, the U.S. deferred tax assets were reduced by $13.9 million and the valuation allowance was also reduced by $13.9 million, resulting in no net impact to the effective tax rate for the year ended December 31, 2017.  During 2018, the Company finalized the accounting for this item resulting in a $0.6 million increase to both the U.S. deferred tax assets and the valuation allowance, with no impacts to tax expense or the effective tax rate. In addition, the Alternative Minimum Tax (“AMT”) was repealed for tax years beginning after December 31, 2017 and the AMT credit will be refundable in future years.  As 50% of this credit will be refundable along with the 2018 tax return, that portion was reclassified to a current asset on the balance sheet. The Tax Act requires the payment of a transition tax on the mandatory deemed repatriation of cumulative unremitted foreign earnings, the larger amount measured on November 2, 2017 and December 31, 2017. Based upon all available evidence and the Company’s analysis, there was no transition tax liability due to a net earnings and profits deficit in our controlled foreign corporations and no impact to the effective tax rate for the year ended December 31, 2017. No amounts were recorded during 2018, and the accounting for this item is considered complete. The Global Intangible Low Tax Income Tax (“GILTI”) is a U.S. minimum tax on the foreign earnings on intangible assets.  The Company has elected to account for the impact of the minimum tax in the period realized.  GILTI results in no impact to the effective tax rate for the year ended December 31, 2018.

We undertook a detailed review of our deferred taxes and it was determined with the exception of the deferred tax assets associated with the AMT credit described above, a valuation allowance was required for all other U.S. deferred tax assets. We released the valuation allowance on our UK deferred tax assets during the year ended December 31, 2018. We reduce our deferred tax assets by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. In making this determination, we consider all available positive and negative evidence affecting specific deferred tax assets, including our past and anticipated future performance, the reversal of deferred tax liabilities, the length of carryback and carryforward periods and the implementation of tax planning strategies. Since this evaluation requires consideration of future events, significant judgment is required in making the evaluation, and our conclusion could be materially different should certain of our expectations not be met. The balance of our valuation allowance was $31.6 million as of December 31, 2018, representing a change of $3.2 million from the valuation allowance of $34.8 million recorded as of December 31, 2017. The primary driver of the valuation allowance movement was determined by the release of the valuation allowances against the deferred tax assets in France and the UK.

In 2016, management determined that a valuation allowance was no longer required against the deferred tax assets of its U.S. branches in New Zealand and Singapore. As of December 31, 2016, we had gross deferred tax assets of $8.4 million relating to those foreign subsidiaries. The benefit of these deferred tax assets is reflected as a credit of $1.7 million to tax expense during the year ended December 31, 2016.

In 2017, management determined that a valuation allowance was no longer required against the deferred tax assets of certain of its U.S. branches in Spain, Taiwan, Thailand and Mexico. As of December 31, 2017, we had gross deferred tax assets of $0.9 million relating to those foreign subsidiaries. The benefit of these deferred tax assets is reflected as a credit of $0.2 million to tax expense during the year ended December 31, 2017.

In 2018, management determined that a valuation allowance was no longer required against the deferred tax assets of the UK subsidiary and U.S. branch in France. As of December 31, 2018, we had gross deferred tax assets of $6.6 million relating to those foreign subsidiaries. The benefit of these deferred tax assets is reflected as a credit of $1.2 million to tax expense during the year ended December 31, 2018.

As of December 31, 2018, we had approximately $81.5 million of U.S. federal loss carry-forwards available to reduce future U.S. federal taxable income. Approximately $80.9 million of the U.S. federal loss carry-forwards expire between 2026 and 2035. The remaining $0.6 million of U.S. federal loss carry-forwards do not expire. As of December 31, 2018, we had approximately $70.9 million of state loss carry-forwards available to reduce future state taxable income. The state loss carry-forwards expire between 2022 and 2037 and are subject to certain limitations. The U.S. federal and state loss carry-forwards at December 31, 2018, reflect adjustments for prior period write-downs associated with ownership changes.

Generally, we have not provided deferred taxes on the undistributed earnings of international subsidiaries as we consider these earnings to be permanently reinvested. As it relates to the earnings of our Brazilian subsidiary, we assert that we are not permanently reinvested. We did not provide additional incremental tax expense on these amounts as our Brazilian subsidiary did not have undistributed earnings during the year.

On December 30, 2016, the Company experienced an ownership change as defined under Section 382 of the Internal Revenue Code (“IRC”). This ownership change resulted in an annual IRC Section 382 limitation that limits the use of certain tax attribute carry-forwards and also resulted in the write-off of certain deferred tax assets and the related valuation allowances that the Company recorded in 2017. The Company has performed its assessment and has determined that $87.3 million of the gross federal net operating losses outstanding as of December 30, 2016 will be available for use going-forward. The Company utilized $6.4 million of these losses on the 2017 U.S. federal tax return and the remaining $80.9 million remains available.

A reconciliation of our beginning and ending amount of unrecognized tax benefits and related accrued interest thereon is as follows:

	Unrecognized Tax Benefits			Accrued Interest and Penalties
Balance at January 1, 2016	$	535		$	202
Additions based on tax positions related to the current year	—			—
Additions based on tax positions related to the prior years	—			11
Decrease based on payments made during the year	—			—
Decreases based on tax positions related to the prior years	$	(38	)	$	(59	)
Balance at December 31, 2016	$	497		$	154
Additions based on tax positions related to the current year	—			—
Additions based on tax positions related to the prior years	116			19
Decreases based on payments made during the year	—			—
Decreases based on tax positions related to the prior years	(420		)	(145		)
Balance at December 31, 2017	$	193		$	28
Additions based on tax positions related to the current year	4			—
Additions based on tax positions related to the prior years	10			6
Decreases based on payments made during the year	—			—
Decreases based on tax positions related to the prior years	—			—
Balance at December 31, 2018	$	207		$	34

Due to the complexity of the tax rules underlying these unrecognized tax benefits, and the unclear timing of tax audits, tax agency determinations, and other events, we cannot establish reasonably reliable estimates for the periods in which the cash settlement of these liabilities will occur.

We file U.S. federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitations. As of December 31, 2018, the 2015 through 2017 tax years generally remain subject to examination by federal and most state and foreign tax authorities. The use of net operating losses generated in tax years prior to 2015 may also subject returns for those years to examination.

XML

Employee Benefit Plans

12 Months Ended

Dec. 31, 2018

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

We maintain a defined contribution retirement plan (the "Plan") in accordance with Section 401(k) of the Internal Revenue Code, which allows eligible participating employees to defer a portion of their annual compensation and contribute such amount to one or more investment funds. The Plan provides for a discretionary matching contribution by the Company as determined by management and approved by the Board of Directors each plan year. The Company's current practice is to match 50% of the annual employee's contribution, up to but not exceeding the lesser of 6% of the employee’s annual compensation or $3,000. Discretionary matching contributions made by the Company to a participant's account are vested once a participant has attained three or more years of service. The Company contributed to the Plan approximately $0.9 million in 2018, $0.8 million in 2017, and $0.8 million in 2016.

XML

Capital Structure

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

CAPITAL STRUCTURE

CAPITAL STRUCTURE

On February 21, 2014, our Board of Directors authorized a stock repurchase program under which we could repurchase up to $10.0 million of our common stock from time to time through March 31, 2015. On March 25, 2014, our Board of Directors authorized a $10.0 million increase to the stock repurchase program, bringing the total amount of its common stock that the Company could repurchase under the program to $20.0 million. On October 24, 2014, our Board of Directors authorized a $20.0 million increase to the stock repurchase program, increasing the total share repurchase program to $40.0 million, and extended the duration of the program to December 31, 2015. In October 2015, our Board of Directors authorized an additional $10.0 million increase to the stock repurchase program, increasing the total share repurchase program to $50.0 million, and extended the duration of the program to December 31, 2016. In December 2016, our Board of Directors authorized an additional $10.0 million increase to the stock repurchase program, increasing the total share repurchase program to $60.0 million, and extended the duration of the program to December 31, 2017. In December 2017, our Board of Directors extended the duration of the program to December 31, 2018. In November 2018, our Board of Directors authorized a $15.0 million increase to the stock repurchase program, increasing the total share repurchase program to $75.0 million, and extended the duration of the program to December 31, 2019.

During the year ended December 31, 2018, we repurchased 0.4 million shares of our common stock for $4.1 million. No shares were repurchased under the share repurchase program in the year ended December 31, 2017.

XML

Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are party to a variety of legal proceedings arising in the normal course of business. While the results of these proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

XML

Stock-Based Compensation

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

Plan Summary

During 2018, the Company had two shareholder-approved stock-based compensation plans under which outstanding equity awards have been granted: (1) the 2008 Equity Incentive Plan (“2008 EIP”); and (2) the 2017 Equity Incentive Compensation Plan (“2017 EICP”) (collectively, the “Plans”).

2008 EIP Awards

During the first quarter of 2008, the Board of Directors of the Company adopted the 2008 EIP, which was approved by the shareholders at the annual meeting of the shareholders on May 29, 2008. The 2008 EIP authorized the grant of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other incentive awards. Pursuant to amendments to the 2008 EIP that were approved by the Board of Directors and the Company's shareholders, 10,600,000 shares were reserved for issuance under the 2008 EIP to award grants to key employees, directors and service providers. The options granted pursuant to the 2008 EIP generally had seven year terms and vested in equal annual increments over the vesting period, which typically was three years for employees and one year for directors. No further awards can be granted from the 2008 EIP following the approval of the 2017 EICP by shareholders on June 27, 2017.

2017 EICP Awards

In April 2017, the Board of Directors adopted the 2017 EICP, which was approved by the shareholders at the annual meeting of the shareholders on June 27, 2017. The 2017 EICP applies to awards granted on or after June 27, 2017. Under the 2017 EICP, the Company may grant incentive and non-qualified stock options, stock appreciation rights, restricted stock, deferred stock, restricted stock units, performance units, performance shares, dividend equivalents, bonus shares, and other stock-based or cash-based awards. The maximum number of shares of common stock that may be issued pursuant to the awards under the 2017 EICP is 3.4 million shares plus that number of shares of common stock subject to awards granted under the 2008 EIP that were outstanding when the 2017 EICP became effective and that subsequently terminate without deleting of the shares, whether by lapse, forfeiture, cancellation, or otherwise. The options granted to date pursuant to the 2017 EICP have a term of seven years. As of December 31, 2018 there were approximately 2.9 million shares available for future grants under the 2017 EICP.

Grants

Option Awards

The following table summarizes stock option awards granted during the years ended December 31, 2018, 2017, and 2016:

Grantee Type	Number of Options Granted	Vesting Period	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
2018
Employee inducement (1)	535,000	3 years	$	8.91	$	2.89
2017
Director group	90,566	1 year or less	$	6.34	$	3.49
Director group(2)	35,000	3 years	$	6.25	$	3.50
CEO grant	500,000	4 years	$	7.35	$	2.36
Employee group	30,000	3 years	$	7.25	$	3.99
Employee inducement (3)	335,000	3 years	$	6.19	$	3.41
2016
Director group (4)	195,417	1 year or less	$	5.01	$	2.71
Director group (2)	35,000	3 years	$	4.80	$	2.66
Employee inducement (5)(6)	232,500	3 years	$	4.61	$	2.60

(1) The Company granted non-qualified stock options outside its existing stock-based compensation plan in 2018 to nine employees in connection with the employees joining the Company.

(2) The Company granted non-qualified stock options to one director in connection with the director joining the Company's board of directors.

(3) The Company granted non-qualified stock options outside its existing stock-based compensation plans to certain employees in connection with the employees joining the Company.

(4) Includes 20,417 non-qualified stock options granted to one director in connection with the director joining the Company's board of directors.

(5) The Company granted non-qualified stock options outside its existing stock-based compensation plans in 2016 in connection with an employee joining the Company.

(6) The Company granted non-qualified stock options outside its existing stock-based compensation plans in connection with the closing of the Lavante acquisition.

Nonvested Stock Awards

The following table summarizes nonvested stock awards granted during the years ended December 31, 2018, 2017 and 2016:

Grantee Type	Number of Stock Awards Granted	Vesting Period	Weighted Average Grant Date Fair Value
2018
Director group	64,545	1 year or less	$	9.45
Employee group (1)	488,685	3 years or less	$	9.56
Employee inducement (2)	160,516	3 years or less	$	8.95
2017
Director group	51,179	1 year or less	$	6.35
Employee group (3)	641,751	3 years or less	$	6.31
Employee inducement (4)	100,000	3 years or less	$	6.33
2016
Employee group (5)	1,250,750	2 years	$	4.88
Employee inducement (6)	100,000	3 years	$	4.94

(1) The Company granted nonvested performance-based stock awards (restricted stock units), restricted stock awards, and restricted stock units in 2018 to certain key employees.

(2) The Company granted nonvested performance-based stock awards (restricted stock units) and restricted stock awards in 2018 to six employees in connection with the employees joining the Company.

(3) The Company granted nonvested performance-based stock awards (restricted stock units), restricted stock units and restricted stock awards in the first quarter of 2017 to twelve executive officers totaling 458,000 units. During the second quarter of 2017, the Company issued 183,751 restricted stock awards and restricted stock units to key employees.

(4) The Company granted nonvested performance-based stock awards (restricted stock units) and restricted stock awards in 2017 to two executive officers in connection with the employees joining the Company.

(5) The Company granted nonvested performance-based stock awards (restricted stock units) in 2016 to five executive officers and certain other key employees.

(6) The Company granted nonvested performance-based stock awards (restricted stock units) outside its existing stock-based compensation plans in 2016 to three employees in connection with the employees joining the Company.

Nonvested stock awards, including both restricted stock and restricted stock units, generally are nontransferable until vesting and the holders are entitled to receive dividends with respect to the nonvested shares, provided the shares ultimately vest. Prior to vesting, the grantees of restricted stock are entitled to vote the shares, but the grantees of restricted stock units are not entitled to vote the shares. Generally, nonvested stock awards, excluding those whose vesting is performance-based, vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. Performance-based stock awards vest based on the achievement of certain performance objectives.

Performance-Based Restricted Stock Units

During 2018, one executive officer and two senior leaders were granted 40,750 performance-based restricted stock units ("PBUs") outside of the existing stock-based compensation plan as an inducement for employment and one senior leader was granted 12,000 PBUs under the 2017 EICP. If vested, 100% of the vested PBUs will be paid in whole shares of common stock. 65% of the PBUs vest and become payable based on the cumulative revenue from continuing operations and 35% of the PBUs vest and become payable on the cumulative adjusted EBITDA from continuing operations that the Company achieves, in each case, for the two-year performance period ending December 31, 2018. At the threshold performance level, 35% of the PBUs will become vested and payable and at the target performance level, 100% of the PBUs will become vested and payable. If performance falls between the stated performance levels the percentage of PBUs that shall become vested and payable will be based on a straight-line interpolation between such stated performance levels (although the PBUs may not become vested and payable for more than 100% of the PBUs and no PBUs shall become vested and payable if performance does not equal or exceed the applicable threshold performance level).

During 2018, five executive officers and nine other senior leaders were granted 192,098 PBUs under the 2017 EICP and 54,180 PBUs outside of the existing stock-based compensation plan as an inducement for employment. If vested, 100% of the vested Units will be paid in whole shares of common stock. 50% of the PBUs vest and become payable based on the cumulative revenue from continuing operations,35% of the PBUs vest and become payable based on the cumulative adjusted EBITDA from continuing operations and 15% of the PBUs vest and become payable based on the cumulative adjacent services revenue that the Company achieves, in each case, for the two-year performance period ending December 31, 2019. At the threshold performance level, 35% of the PBUs will become vested and payable; at the target performance level, 100% of the PBUs will become vested and payable; and at the maximum performance level, 150% of the PBUs will become vested and payable. If performance falls between the stated performance levels the percentage of PBUs that shall become vested and payable will be based on a straight-line interpolation between such stated performance levels (although the PBUs may not become vested and payable for more than 150% of the PBUs and no PBUs shall become vested and payable if performance does not equal or exceed the applicable threshold performance level).

During 2017, certain employees of the company were granted 333,800 PBUs. If vested, 100% of the vested PBUs will be paid in whole shares of common stock. 65% of the PBUs vest and become payable based on the cumulative revenue from continuing operations and 35% of the PBUs vest and become payable on the cumulative adjusted EBITDA from continuing operations that the Company achieves, in each case, for the two-year performance period ending December 31, 2018. At the threshold performance level, 35% of the PBUs will become vested and payable and at the target performance level, 100% of the PBUs will become vested and payable. If performance falls between the stated performance levels the percentage of PBUs that shall become vested and payable will be based on a straight-line interpolation between such stated performance levels (although the PBUs may not become vested and payable for more than 100% of the PBUs and no PBUs shall become vested and payable if performance does not equal or exceed the applicable threshold performance level).

During 2016, certain employees of the Company were granted 1,350,750 PBUs. During the first quarter of 2018, the Company issued 483,623 shares of common stock and paid $5.4 million in cash as long-term incentive compensation related to the vesting of these awards.

The following table summarizes the PBUs granted during the years ended December 31, 2018, 2017 and 2016:

	Total PBUs Granted	PBUs to be Settled in Common Stock (1)	PBUs to be Settled in Cash (2)
2018	299,028	299,028	—
2017	333,800	333,800	—
2016	1,350,750	560,670	790,080

(1) Represents the number of PBUs to be settled in common stock at the target performance level.

(2) Represents the number of PBUs to be settled in cash at the target performance level.

In the fourth quarter of 2018, management determined that 80% of the PBUs with a two-year performance period ending December 31, 2018 would likely vest based on expected financial performance compared to the target financial objectives. As a result, the associated expense was adjusted down to reflect the new estimate. During 2017 and 2016, the PBUs that were granted in 2017 and 2016 were expensed at the target performance level based on management's estimates.

Stock Appreciation Rights

During 2018, certain employees were granted stock appreciation rights ("SARs") covering 350,000 shares of the Company's common stock under the 2017 EICP. The SARs will vest on March 1, 2020. Upon vesting, 25% of the SARs may be exercised on the last day of each of the first, second and third calendar quarters in 2020. Within 30 days after the SARs are exercised, the Company must settle the exercised SARs in a cash payment equal to the excess of (i) the lesser of the fair market value, as of the date on which the SARs are exercised, or $18 per share, over (ii) $9.15 per share, less any applicable tax withholding. Vested SARs not exercised during any previous quarter will remain outstanding and be automatically exercised as of December 31, 2020.

On April 27, 2016, the Company's Chief Executive Officer was granted SARs covering 200,000 shares of the Company’s common stock under the 2008 EIP. The SARs were issued with an initial value per share equal to $4.71. On June 30, 2018, the SARs vested and became payable in cash in a lump sum equal to $1.0 million (less applicable tax withholding), which represents the excess of the fair market value, as of June 30, 2018, of the shares of the Company's common stock over $4.71, the fair market value (closing price) of the Company's common stock on the date of grant, April 27, 2016.

Summary of Activity

A summary of option activity as of December 31, 2018, and changes during the year then ended is presented below:

Options	Shares		Weighted- Average Exercise Price (Per Share)		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value ($ 000’s)
Outstanding at January 1, 2018	3,399,293		$	6.54	4.05 years	$	2,367
Granted	535,000		8.91
Exercised	(676,649	)	6.54			$	1,585
Forfeited	(280,556	)	7.61
Expired	(126,271	)	6.53
Outstanding at December 31, 2018	2,850,817		$	6.84	3.74 years	$	7,384
Exercisable at December 31, 2018	1,735,149		$	6.40	2.73 years	$	5,225

The weighted-average grant date fair value of options granted was $2.89 per share in 2018, $2.91 per share in 2017 and $2.66 per share in 2016. The total intrinsic value of options exercised was $1.6 million in 2018, $0.3 million in 2017 and $0.1 million in 2016.

For time-vested option grants that resulted in compensation expense recognition, we used the following assumptions in our Black-Scholes valuation models:

	Years Ended December 31,
	2018	2017	2016
Risk-free interest rates (1)	2.3% - 2.99%	1.38% - 1.96%	0.58% - 1.20%
Dividend yields (2)	—%	—%	—%
Volatility factor of expected market price (3)	.362 - .371	.540 - .749	.391 - .779
Weighted-average expected term of options (4)	4 years	2.2 - 4 years	1.3 - 4.5 years
Forfeiture rate (5)	—%	—%	—%

(1) The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for periods corresponding to the expected term of the options.

(2) The Company has not historically declared dividends.

(3) The expected volatility is based on the historical volatility of the Company's stock.

(4) The expected term represents the weighted average period of time that the stock options are expected to be outstanding, giving consideration to the vesting schedules.

(5) The Company accounts for forfeitures as they occur rather than estimating expected forfeitures.

A summary of nonvested stock awards (including restricted stock, restricted stock units and performance-based restricted stock units) activity as of December 31, 2018 and changes during the year then ended is presented below:

Nonvested Stock	Shares		Weighted Average Grant Date Fair Value (Per Share)
Nonvested at January 1, 2018	2,116,696		$	5.36
Granted	713,746		9.42
Vested	(1,523,696	)	5.02
Forfeited	(340,796	)	7.51
Nonvested at December 31, 2018	965,950		$	8.18

The weighted-average grant date fair value of nonvested stock awards (restricted stock and restricted stock units) granted was $9.42 per share in 2018, $6.32 per share in 2017 and $4.86 per share in 2016. The total vest date fair value of stock awards vested during the year was $12.7 million in 2018, $0.3 million in 2017 and $0.7 million in 2016.

Stock-based compensation expense was $5.1 million in 2018, $7.1 million in 2017, and $5.1 million in 2016. We include these charges in Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. The total income tax benefit recognized in our Consolidated Statements of Operations was $1.3 million, $2.7 million and $1.9 million in 2018, 2017 and 2016, respectively.

Total unrecognized compensation expense related to nonvested stock-based compensation as of December 31, 2018 is as follows (dollars in thousands):

	Stock				Restricted		Restricted
	Options		SARs		Stock Awards		Stock Units		Total
Unrecognized compensation expense	$	2,145	$	313	$	2,614	$	2,125	$	7,197
Weighted-average remaining recognition period (in years)	2.5		1.2		2.1		1.2		1.9

XML

Business Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

BUSINESS ACQUISITIONS AND DIVESTITURES

BUSINESS ACQUISITIONS

We completed several acquisitions in recent years that we describe below. Generally, we acquire businesses that we believe will provide a strategic fit for our existing operations, cost savings and revenue synergies, or enable us to expand our capabilities.

Cost & Compliance Associates Acquisition

In February 2017, we completed the acquisition of Cost & Compliance Associates, LLC and Cost & Compliance Associates Limited (collectively "C&CA"). C&CA is a commercial recovery audit and contract compliance firm with operations in the U.S. and the UK. We acquired substantially all of the assets of C&CA for approximately $10.0 million in cash plus potential earnout consideration of up to $8.0 million.

The actual payment of the earnout consideration is based on achieving certain financial targets over a two year period that commenced on March 1, 2017 and will conclude on February 28, 2019. Management estimated that the fair value of the earnout consideration was approximately $5.9 million at the date of acquisition. During each of 2018 and 2017, the Company recognized accretion of $0.9 million on the fair value of the earnout amount which was included in Interest expense in the Consolidated Statements of Operations, and increased the related contingent consideration liability. The remaining potential earnout payment is $4.0 million. As of December 31, 2018, the contingent consideration liability related to the C&CA acquisition was $3.7 million, which is included in current Business acquisition obligations in our Consolidated Balance Sheet. We funded the purchase price and acquisition costs from borrowings under our credit facility, further described in Note 5.

Purchase Price Allocation

We allocated the aggregate purchase price for C&CA to the net tangible and intangible assets acquired based on their fair values as of February 23, 2017. We based the allocation of the purchase price on a valuation for intangible assets and the carrying value for the remaining assets and liabilities, as the carrying value approximates their fair value. The fair value of C&CA's identifiable intangible assets were measured using the income approach which includes a projection of estimated future discounted cash flows using a discount rate that is specific to the business risk, cost of capital and other factors. We recorded the excess of the purchase price over the net tangible and intangible assets as goodwill, which has been allocated and recognized as goodwill within our Recovery Audit Services-Americas and Recovery Audit Services-Europe/Asia-Pacific business segments. Factors that contributed to the recognition of goodwill included expected synergies and the trained workforce.

Our purchase price allocation was as follows (in thousands):

Accounts receivable	$	1,621
Commissions receivable	48
Prepaid expenses	109
Other current assets, net	6
Intangible assets	10,923
Goodwill	3,554
Fixed assets	323
Accounts payable	(125		)
Accrued commissions	(537		)
Total consideration paid	$	15,922
Contingent consideration (1)	(5,954		)
Total cash paid	$	9,968

⁽¹⁾ In the second quarter of 2018 we made an earnout payment of $4.0 million. As of December 31, 2018, the contingent consideration liability balance was $3.7 million.

The intangible assets acquired were as follows (in thousands):

	Fair Value		Remaining useful life
Customer relationships	$	9,556	14 years
Non-compete	1,232		4 years
Trademarks	135		4 years
	$	10,923

We have included the results of C&CA from the date of acquisition through December 31, 2018 in our Consolidated Statement of Operations. In fiscal year 2017, we included revenue of $7.8 million and income before income tax of $0.8 million in our Recovery Audit Services - Americas business segment, and revenue of $3.3 million and income before income tax of $1.0 million in our Recovery Audit Services - Europe/Asia-Pacific business segment. In fiscal year 2018, we included revenue of $9.6 million and loss before income tax of less than $0.6 million in our Recovery Audit Services - Americas business segment, and revenue of $4.4 million and income before income tax of $1.5 million in our Recovery Audit Services - Europe/Asia-Pacific business segment.

Unaudited Supplemental Financial Information

Our unaudited pro forma results presented below, including C&CA, for the years ended December 31, 2017 and 2016 are presented as if the acquisition had been completed on January 1, 2016. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the C&CA acquisition been completed on January 1, 2016. In addition, the unaudited pro forma information does not purport to project future operating results.

	Year Ended December 31,
(in thousands)	2017	2016
Unaudited pro forma revenue	162,459	155,626
Unaudited pro forma net income from continuing operations	3,886	5,365

Lavante Acquisition

In October 2016, we completed the acquisition of Lavante, Inc. ("Lavante"). Lavante is a SaaS-based procure-to-pay supplier information management (SIM) and recovery audit services firm, based in San Jose, California. We acquired substantially all of the assets of Lavante, which primarily consisted of its proprietary software applications, for $3.8 million in cash, plus potential earnout consideration of up to $4.5 million.

The actual payment of the earnout consideration is based on achieving certain financial targets over a two year period that commenced on October 31, 2016 and concluded on December 31, 2018. Management estimated that the fair value of the earnout consideration was approximately $3.8 million at the date of acquisition, of which $2.0 million was included in Other current liabilities and $1.8 million was included in Other long-term liabilities in our Consolidated Balance Sheet as of December 31, 2016. During 2018 and 2017, the Company recognized accretion of $0.1 million and $0.3 million, respectively, on the fair value of the earnout amount which was included in Interest expense in the Consolidated Statements of Operations, and increased the related contingent consideration liability. In the fourth quarter of 2017, we reduced the earnout liability by $2.1 million and in the third quarter of 2018, we further reduced the earnout liability by $1.6 million, after it was determined that a portion of the earnout consideration would not be achieved. These adjustments were included in Acquisition-related adjustments in the Consolidated Statements of Operations for the years ended December 31, 2018 and 2017. As of December 31, 2018, the contingent consideration liability related to the Lavante acquisition was $0.5 million, which was included in current Business acquisition obligations in our Consolidated Balance Sheet. We funded the purchase price and acquisition costs from borrowings on our credit facility, further described in Note 5.

Purchase Price Allocation

We allocated the aggregate purchase price for Lavante to the net tangible and intangible assets acquired based on their fair values as of October 31, 2016. We based the allocation of the purchase price on a valuation of intangible assets, and the carrying value for the remaining assets and liabilities as the carrying value approximated their fair value. The fair value of Lavante's identifiable intangible assets were measured using a form of the income approach, and a cost approach. The income approach includes a projection of estimated future discounted cash flows using a discount rate that is specific to the business risk, cost of capital and other factors. We recorded the excess of the purchase price over the net tangible and intangible assets as goodwill within our Adjacent Services business segment. Factors that contributed to the recognition of goodwill included expected synergies and the trained workforce.

Our purchase price allocation was as follows (in thousands):

Cash and cash equivalents	$	28
Accounts receivable, net	207
Other current assets	92
Intangible assets	6,178
Goodwill	2,286
Fixed assets, net	98
Accounts payable	(121		)
Deferred revenue	(370		)
Other current liabilities	(757		)
Total consideration paid	$	7,641
Contingent consideration(1)	(3,832		)
Total cash paid	$	3,809

⁽¹⁾ In the third quarter of 2018, we reduced the earnout liability by $1.6 million and in the fourth quarter of 2017, we reduced the earnout liability by $2.1 million. At December 31, 2018, the contingent consideration liability balance was $0.5 million.

The intangible assets acquired were as follows (in thousands):

	Fair Value		Remaining useful life
Trademarks	$	163	4 years
Patents	114		1 year
Software	5,901		4 years
Total intangible assets	$	6,178

We have included the results of Lavante from its date of acquisition through December 31, 2018 in our Consolidated Statement of Operations, which consisted of revenue of $0.4 million and a loss before income tax of $0.9 million in the year ended December 31, 2016, revenue of $1.9 million and a loss before income tax of $4.8 million in the year ended December 31, 2017, and revenue of $2.2 million and a loss before income tax of $2.3 million in the year ended December 31, 2018. The results from Lavante are included in our Adjacent Services business segment.

Unaudited Supplemental Financial Information

Our unaudited pro forma results presented below, including Lavante, for the years ended December 31, 2016 and 2015 are presented as if the acquisition had been completed on January 1, 2015. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the Lavante acquisition been completed on January 1, 2015. In addition, the unaudited pro forma information does not purport to project future operating results.

	Year Ended December 31,
(in thousands)	2016		2015
Unaudited pro forma revenue	143,198		140,994
Unaudited pro forma net (loss) income from continuing operations	(3,418	)	(5,516	)

XML

Quarterly Results (Unaudited)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

QUARTERLY RESULTS (UNAUDITED)

QUARTERLY RESULTS (UNAUDITED)

The following tables set forth certain unaudited condensed consolidated quarterly financial data for each of the last eight quarters during our fiscal years ended December 31, 2018 and 2017. We have derived the information from unaudited Condensed Consolidated Financial Statements that, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of such quarterly information. The operating results for any quarter are not necessarily indicative of the results to be expected for any future period. The quarterly results are updated for continuing operations.

	2018 Quarter Ended												2017 Quarter Ended
	Mar. 31			June 30			Sept. 30			Dec. 31			Mar. 31			June 30			Sept. 30			Dec. 31
	(In thousands, except per share data)
Revenue, net of refund liabilities	$	36,721		$	42,102		$	43,320		$	49,633		$	33,569		$	38,510		$	42,467		$	47,074
Operating expenses:
Cost of revenue	24,797			27,389			26,146			26,493			23,026			25,605			26,675			26,746
Selling, general and administrative expenses	11,264			12,809			12,521			13,862			10,536			11,424			12,189			12,792
Depreciation of property, equipment and software assets	1,223			2,360			1,713			2,074			1,220			1,109			1,133			1,107
Amortization of intangible assets	788			864			872			871			722			722			722			1,468
Acquisition-related adjustments (income) loss	—			—			(1,640		)	12			—			—			—			(2,283		)
Total operating expenses	38,072			43,422			39,612			43,312			35,504			38,860			40,719			39,830
Operating (loss) income from continuing operations	(1,351		)	(1,320		)	3,708			6,321			(1,935		)	(350		)	1,748			7,244
Foreign currency transaction (gains) losses on short-term intercompany balances	(220		)	880			70			272			(552		)	(957		)	(418		)	(263		)
Interest expense, net	398			486			416			363			37			48			142			1,312
Other loss (income)	12			5			(1		)	5			(199		)	5			17			17
(Loss) income from continuing operations before income taxes	(1,541		)	(2,691		)	3,223			5,681			(1,221		)	554			2,007			6,178
Income tax expense (benefit)	787			189			597			(252		)	627			879			930			526
Net (loss) income from continuing operations	(2,328		)	(2,880		)	2,626			5,933			(1,848		)	(325		)	1,077			5,652
Basic (loss) earnings per common share from continuing operations (1)	$	(0.10	)	$	(0.13	)	$	0.11		$	0.26		$	(0.08	)	$	(0.01	)	$	0.05		$	0.26
Diluted (loss) earnings per common share from continuing operations (1)	$	(0.10	)	$	(0.13	)	$	0.11		$	0.26		$	(0.08	)	$	(0.01	)	$	0.05		$	0.26

(1) We calculate each quarter as a discrete period; the sum of the four quarters may not equal the calculated full-year amount.

XML

Subsequent Events

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENT

On March 14, 2019, the Company, as co-borrower with PRGX USA, Inc. (“PRGX-USA”), a wholly owned subsidiary that is the Company’s principal domestic operating subsidiary, entered into a five-year Credit Agreement (the “BOA Credit Facility”) with Bank of America, N.A. (“BOA”), and Synovus Bank as the initial lenders thereunder, and with BOA as the letter-of-credit issuer thereunder, as the swingline lender thereunder, and as the administrative agent (the “Administrative Agent”) for the lenders from time to time party thereto. The BOA Credit Facility consists of a $60.0 million senior revolving credit facility (the “Revolver”), with a $5.0 million subfacility for the issuance of letters of credit, and a $5.0 million swingline loan subfacility (the “Swingline Loan”). The BOA Credit Facility is guaranteed by each of PRGX’s direct and indirect domestic wholly owned subsidiaries (other than PRGX-USA), except for certain immaterial domestic subsidiaries. None of PRGX’s direct or indirect foreign subsidiaries has guaranteed the BOA Credit Facility. The BOA Credit Facility is secured by substantially all of the assets of PRGX, PRGX-USA and each guarantor (including the equity interests in substantially all of the Company’s domestic subsidiaries and up to sixty-five percent (65%) of the equity interests of certain of the Company’s first-tier material foreign subsidiaries).

PRGX has borrowed $30.0 million under the Revolver, which was substantially used to prepay in full the approximately $29.0 million in outstanding indebtedness owed to the lenders under PRGX’s pre-existing Amended & Restated Revolving Credit Agreement, dated December 23, 2014, as amended from time to time, by and among PRGX, PRGX-USA, the several banks and other financial institutions and lenders from time to time party thereto and SunTrust Bank, in its capacity as administrative agent for the lenders, and to terminate that prior credit facility in its entirety. There were no early termination penalties associated with the termination of the pre-existing credit facility with SunTrust Bank.

The BOA Credit Facility will mature on March 14, 2024. Interest is payable quarterly in arrears. There are no prepayment penalties in the event the Company elects to prepay and terminate the BOA Credit Facility prior to its scheduled maturity date, subject to breakage and redeployment costs in certain limited circumstances.

The Revolver bears interest under the BOA Credit Facility at a rate per annum comprised of a specified index rate based on LIBOR plus an applicable interest rate margin determined under the BOA Credit Facility. For U.S. Dollar denominated loans under the Revolver, at the option of the Borrowers, such loans shall bear interest under the BOA Credit Facility at a rate per annum equal to (x) the LIBOR daily floating rate plus an applicable interest rate margin determined under the BOA Credit Facility or (y) the base rate plus the applicable interest rate margin, each as determined under the BOA Credit Facility. Although the Company does not anticipate the need for Swingline Loans, were any Swingline Loans to be made they would bear interest at the base rate plus the applicable interest rate margin for base rate loans, each as determined under the BOA Credit Facility. The applicable interest rate margin varies from 1.50% per annum to 2.25% per annum, for LIBOR daily floating rate loans, and from 0.50% per annum to 1.25% per annum, for loans based on the base rate, and in either case depending on the Company’s consolidated leverage ratio, and is determined in accordance with a pricing grid under the BOA Credit Facility. On March 14, 2019, the closing date under the BOA Credit Facility, the applicable interest rate (inclusive of the applicable interest rate margin) for LIBOR daily floating rate loans (the only type outstanding on the closing date) was 3.89% per annum.

The BOA Credit Facility includes customary affirmative, negative, and financial covenants binding on the Company, including delivery of financial statements and other reports and maintenance of existence. The negative covenants limit the ability of the Company, among other things, to incur debt, incur liens, make investments and sell assets, but does provide for certain permitted repurchases of shares of its capital stock and the declaration and payment of certain dividends on its capital stock. The financial covenants included in the BOA Credit Facility set forth a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio for the Company, each which will be tested on a quarterly basis; and with the Company having the ability to increase the maximum leverage ratio for a limited time when needed in connection with permitted acquisitions. In addition, the BOA Credit Facility includes customary events of default.

XML

Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2018

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016

(In thousands)

			Additions		Deductions
Description	Balance at Beginning of Year		Charge (Credit) to Costs and Expenses		Credit to the respective receivable (1)		Balance at End of Year
2018
Allowance for doubtful accounts receivable	$	1,499	(346	)	(129	)	$	1,024
Allowance for doubtful employee advances and miscellaneous receivables	$	292	(48	)	(68	)	$	176
Deferred tax valuation allowance	$	34,776	(3,179	)	—		$	31,597
2017
Allowance for doubtful accounts receivable	$	799	724		(24	)	$	1,499
Allowance for doubtful employee advances and miscellaneous receivables	$	500	1,665		(1,873	)	$	292
Deferred tax valuation allowance	$	50,114	(15,338	)	—		$	34,776
2016
Allowance for doubtful accounts receivable	$	930	(129	)	(2	)	$	799
Allowance for doubtful employee advances and miscellaneous receivables	$	681	2,184		(2,365	)	$	500
Deferred tax valuation allowance	$	45,565	4,549		—		$	50,114

-----------------------------

(1) Write-offs net of recoveries.

XML

Summary of Significant Accounting Policies and Basis of Presentation (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Consolidation

Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries.

Basis of Presentation

Basis of Presentation

During the fourth quarter of 2015 we discontinued the Healthcare Claims Recovery Audit ("HCRA") business. The results of our continuing and discontinued operations for the years ended December 31, 2018, 2017 and 2016 are presented in accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations.

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Subsequent events have been considered, and the appropriate changes have been made to our financial statements as of December 31, 2018 as required under U.S. generally accepted accounting principles (“GAAP”), through the date of filing this Annual Report on Form 10-K. Refer to Note 14 - Subsequent Event for a description of the credit agreement we entered into with Bank of America, N.A. on March 14, 2019.

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. GAAP. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition, Billed and Unbilled Receivables

The Company has revised its accounting policy as it relates to the Financial Accounting Standards Board (“FASB”) issuedAccounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and the subsequent amendments and modifications thereto. The revised policy requires the Company to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To adhere to this core principle, the Company applies the following five steps: (a) identify contract(s) with a customer; (b) identify the performance obligations in a contract; (c) determine the transaction price; (d) allocate the transaction price to the performance obligations in a contract; and (e) recognize revenue when (or as) performance obligations are satisfied. The Company determines that the performance obligations have been satisfied when its customers obtain control of the goods or services as evidenced by the customer’s ability to direct the use, or the ability to receive substantially all of the remaining economic benefit, of the contract assets. Additionally, for purposes of determining the appropriate timing of recognition, revenue will be recognized over time or at a point in time based on an evaluation of the specific criteria that is to be achieved to meet the performance obligations of each contract.

The determination that the core principle for revenue recognition has been met, and the five steps have been applied appropriately, requires significant judgment. Management considers the application of this judgment to be critical in determining the appropriate amount of revenue to be recognized. The most critical judgments are required in the determination of the transaction price, the identification of the performance obligations within a contract, and the determination as to whether or not and to what extent such performance obligations have been satisfied. A misapplication of this judgment could result in inappropriate recognition of revenue.

Revenue is recognized over time, on an invoice basis for the Company's recovery audit contracts, which is approximately 96% of consolidated revenue for the year ended December 31, 2018. The Company has adopted the Invoicing Expedient as provided for in FASB Accounting Standards Codification ("ASC") Topic 606, which allows for the recognition of revenue for an amount that an entity has a right to invoice its customer. It is management’s conclusion that the Company's right to consideration from its customers corresponds directly to the value provided to customers from its performance to-date, as represented by billable recoveries. A recovery is billable when it is determined that the customer has received the economic benefit from the service (generally through credits taken against existing accounts payable due to, or refund checks received from, the customer’s vendors). The manner in which a claim is recovered by a client often is dictated by industry practice. Many clients establish specific procedural guidelines that must be satisfied prior to submitting claims for client approval, and these guidelines are unique to each client.

On occasion, it is possible that a transaction has met the core principle for revenue recognition, but the Company does not recognize revenue until the customary business practices and processes specific to that client have been completed. Historically, there has been a certain amount of recovery audit revenue with respect to which, even though the Company has met the requirements of its revenue recognition policy, its clients’ vendors ultimately have rejected the claims underlying the revenue. In that case, the Company's clients may request a refund or offset of such amount even though the fees may have been previously collected. These refunds are accounted for as a variable consideration. The Company provides refund liabilities for these reductions in the economic value previously received by its clients with respect to vendor claims that have been identified and for which revenue has been previously recognized. The Company computes an estimate of its refund liabilities at any given time based on actual historical refund data.

Revenue is recognized over time for the Company's subscription services. Typically, implementation services, hosting services, unspecified upgrades, technical and support services, service level guarantees and subscription rights under contracts for subscription services are delivered concurrently and are therefore considered a single performance obligation. Generally, revenue will be recognized ratably over the subscription term as this represents the timing of when those services are transferred to the customer. The subscription term commences when the customer both has access to the software application and can benefit from its use.

Revenue is recognized at a point in time for certain services provided on a fixed fee basis and over time for certain services performed on a fee per unit of time-basis or other unit of performance. The revenue recognition method is determined based on the specific criteria that is to be achieved to meet the performance obligations of each transaction within a contract.

When a contract includes an option to acquire future goods or services that constitutes a material right to the customer, and those goods or services are similar to the original goods and services provided for in the contract, the Company has adopted the Practical Alternative as prescribed in ASC Topic 606 to estimate the standalone selling price of that option.

Billed receivables are stated at the amount expected to be collected and do not bear interest. The Company makes ongoing estimates relating to the collectability of billed receivables and maintains a reserve for estimated losses resulting from the inability of its clients to meet its financial obligations to the Company. This reserve is primarily based on the level of past-due accounts based on the contractual terms of the receivables; the Company's history of write-offs; and its relationships with, and the economic status of, its clients.

Unbilled receivables relate to claims for which the Company's customers have received economic value and for which they acknowledge that the unbilled receivable has been earned but has not yet been billed. The Company typically invoices the customer in the subsequent month.

The Company includes unbilled receivables and refund liabilities in determining revenue.

Contract assets will be recorded if a performance obligation is satisfied (and revenue recognized), but the Company is not entitled to payment until other conditions as specified in the contract are met.

Contract liabilities are recognized when consideration is received and the Company has not yet transferred the goods or services to the customer. The Company refers to this as deferred revenue.

The Company derives a relatively small portion of revenue on a fee-for-service basis whereby billing is based upon a fixed fee, a fee per unit of time, or a fee per other unit of service. The Company recognizes revenue for these types of services when the core principles for revenue recognition have been met.

Contract Balances

As of December 31, 2018 and December 31, 2017, we had the following balances (in thousands) included in our Consolidated Balance Sheets that relate to contracts with our clients.

	12/31/2018			12/31/2017			Change
Contract receivables from billed revenue	$	43,878		$	36,058		$	7,820
Contract receivables from unbilled revenue	2,987			2,709			278
Deferred revenue	(2,428		)	(1,431		)	(997		)
Refund liabilities	6,497			7,864			(1,367		)

The increase in our contract receivables balance from billed revenues at December 31, 2018 compared to December 31, 2017 is mainly due to higher revenue generated in the fourth quarter of fiscal year 2018 compared with the revenue generated in the fourth quarter of fiscal year 2017. This year-over-year increase in fourth quarter revenue is primarily due to higher revenue generated from our UK retail recovery audit business, as well as additional revenue contributed from businesses acquired in fiscal years 2016 and 2017. We recognized revenue, net of refund liabilities of $171.8 million in fiscal year 2018 and $161.6 million in fiscal year 2017, an increase of $10.2 million, which included additional revenue of $2.9 million from our C&CA business acquired in fiscal year 2017 and $0.3 million from our Lavante business acquired in fiscal year 2016.

The increase in our contract receivables balance from unbilled revenues at December 31, 2018 compared to December 31, 2017, is mainly due to the timing of revenue earned that was not yet billable to our clients that have scheduled billing arrangements as part of our contractual terms.

The increase in our deferred revenue balance at December 31, 2018 compared to December 31, 2017 is mainly due to an increase in revenue generated in fiscal year 2018 from our subscription services offerings for our SIM and PRGX OPTIX^® solutions as a result of increased market acceptance of those product offerings in fiscal year 2018. We recognized $1.2 million in fiscal year 2018 that was included in deferred revenue as of December 31, 2017.

The decrease in our refund liabilities balance at December 31, 2018 compared to December 31, 2017 is mainly due to the change in methodology used to determine refund liabilities as of December 31, 2018 as described in the section entitled Refund Liabilities below.

Disaggregation of Revenue

We depict revenue earned by country and by reporting segment in our Operating Segments and Related Information disclosure. Refer to Note 2 of the Notes to our Consolidated Financial Statements for further information pertaining to our disaggregation of revenue.

Refund Liabilities

Refund liabilities result from reductions in the economic value previously received by our clients with respect to vendor claims identified by us and for which we previously have recognized revenue. We compute the estimate of our refund liabilities at any given time based on actual historical refund data. We record periodic changes in refund liabilities as adjustments to revenue. We satisfy such refund liabilities either by offsets to amounts otherwise due from clients or by cash refunds to clients.

On an on-going basis, we evaluate our estimates and judgments, including those related to refund liabilities. We base our estimates and judgments on historical experience, information available prior to the issuance of the consolidated financial statements and on various other factors that we believe to be reasonable under the circumstances. This information forms the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Materially different results can occur as circumstances change and additional information becomes known, including changes in those estimates not deemed “critical."

An integral component of the methodology used to determine the refund liability includes applying a trendline to historical payback data extracted from our claims-tracking systems. As part of our on-going review of this process, we determined that a better correlation exists between the extracted data points and this trendline when the line takes the form of a cubic polynomial rather than our historical approach of a natural logarithm. As a result, effective in the interim period ended June 30, 2018, the Company refined its methodology to incorporate this new trendline for the estimation of refunds expected to occur in future periods.

Billed Receivables

Revenue Recognition, Billed and Unbilled Receivables

The Company has revised its accounting policy as it relates to the Financial Accounting Standards Board (“FASB”) issuedAccounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and the subsequent amendments and modifications thereto. The revised policy requires the Company to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To adhere to this core principle, the Company applies the following five steps: (a) identify contract(s) with a customer; (b) identify the performance obligations in a contract; (c) determine the transaction price; (d) allocate the transaction price to the performance obligations in a contract; and (e) recognize revenue when (or as) performance obligations are satisfied. The Company determines that the performance obligations have been satisfied when its customers obtain control of the goods or services as evidenced by the customer’s ability to direct the use, or the ability to receive substantially all of the remaining economic benefit, of the contract assets. Additionally, for purposes of determining the appropriate timing of recognition, revenue will be recognized over time or at a point in time based on an evaluation of the specific criteria that is to be achieved to meet the performance obligations of each contract.

The determination that the core principle for revenue recognition has been met, and the five steps have been applied appropriately, requires significant judgment. Management considers the application of this judgment to be critical in determining the appropriate amount of revenue to be recognized. The most critical judgments are required in the determination of the transaction price, the identification of the performance obligations within a contract, and the determination as to whether or not and to what extent such performance obligations have been satisfied. A misapplication of this judgment could result in inappropriate recognition of revenue.

Revenue is recognized over time, on an invoice basis for the Company's recovery audit contracts, which is approximately 96% of consolidated revenue for the year ended December 31, 2018. The Company has adopted the Invoicing Expedient as provided for in FASB Accounting Standards Codification ("ASC") Topic 606, which allows for the recognition of revenue for an amount that an entity has a right to invoice its customer. It is management’s conclusion that the Company's right to consideration from its customers corresponds directly to the value provided to customers from its performance to-date, as represented by billable recoveries. A recovery is billable when it is determined that the customer has received the economic benefit from the service (generally through credits taken against existing accounts payable due to, or refund checks received from, the customer’s vendors). The manner in which a claim is recovered by a client often is dictated by industry practice. Many clients establish specific procedural guidelines that must be satisfied prior to submitting claims for client approval, and these guidelines are unique to each client.

On occasion, it is possible that a transaction has met the core principle for revenue recognition, but the Company does not recognize revenue until the customary business practices and processes specific to that client have been completed. Historically, there has been a certain amount of recovery audit revenue with respect to which, even though the Company has met the requirements of its revenue recognition policy, its clients’ vendors ultimately have rejected the claims underlying the revenue. In that case, the Company's clients may request a refund or offset of such amount even though the fees may have been previously collected. These refunds are accounted for as a variable consideration. The Company provides refund liabilities for these reductions in the economic value previously received by its clients with respect to vendor claims that have been identified and for which revenue has been previously recognized. The Company computes an estimate of its refund liabilities at any given time based on actual historical refund data.

Revenue is recognized over time for the Company's subscription services. Typically, implementation services, hosting services, unspecified upgrades, technical and support services, service level guarantees and subscription rights under contracts for subscription services are delivered concurrently and are therefore considered a single performance obligation. Generally, revenue will be recognized ratably over the subscription term as this represents the timing of when those services are transferred to the customer. The subscription term commences when the customer both has access to the software application and can benefit from its use.

Revenue is recognized at a point in time for certain services provided on a fixed fee basis and over time for certain services performed on a fee per unit of time-basis or other unit of performance. The revenue recognition method is determined based on the specific criteria that is to be achieved to meet the performance obligations of each transaction within a contract.

When a contract includes an option to acquire future goods or services that constitutes a material right to the customer, and those goods or services are similar to the original goods and services provided for in the contract, the Company has adopted the Practical Alternative as prescribed in ASC Topic 606 to estimate the standalone selling price of that option.

Billed receivables are stated at the amount expected to be collected and do not bear interest. The Company makes ongoing estimates relating to the collectability of billed receivables and maintains a reserve for estimated losses resulting from the inability of its clients to meet its financial obligations to the Company. This reserve is primarily based on the level of past-due accounts based on the contractual terms of the receivables; the Company's history of write-offs; and its relationships with, and the economic status of, its clients.

Unbilled receivables relate to claims for which the Company's customers have received economic value and for which they acknowledge that the unbilled receivable has been earned but has not yet been billed. The Company typically invoices the customer in the subsequent month.

The Company includes unbilled receivables and refund liabilities in determining revenue.

Contract assets will be recorded if a performance obligation is satisfied (and revenue recognized), but the Company is not entitled to payment until other conditions as specified in the contract are met.

Contract liabilities are recognized when consideration is received and the Company has not yet transferred the goods or services to the customer. The Company refers to this as deferred revenue.

The Company derives a relatively small portion of revenue on a fee-for-service basis whereby billing is based upon a fixed fee, a fee per unit of time, or a fee per other unit of service. The Company recognizes revenue for these types of services when the core principles for revenue recognition have been met.

Contract Balances

As of December 31, 2018 and December 31, 2017, we had the following balances (in thousands) included in our Consolidated Balance Sheets that relate to contracts with our clients.

	12/31/2018			12/31/2017			Change
Contract receivables from billed revenue	$	43,878		$	36,058		$	7,820
Contract receivables from unbilled revenue	2,987			2,709			278
Deferred revenue	(2,428		)	(1,431		)	(997		)
Refund liabilities	6,497			7,864			(1,367		)

The increase in our contract receivables balance from billed revenues at December 31, 2018 compared to December 31, 2017 is mainly due to higher revenue generated in the fourth quarter of fiscal year 2018 compared with the revenue generated in the fourth quarter of fiscal year 2017. This year-over-year increase in fourth quarter revenue is primarily due to higher revenue generated from our UK retail recovery audit business, as well as additional revenue contributed from businesses acquired in fiscal years 2016 and 2017. We recognized revenue, net of refund liabilities of $171.8 million in fiscal year 2018 and $161.6 million in fiscal year 2017, an increase of $10.2 million, which included additional revenue of $2.9 million from our C&CA business acquired in fiscal year 2017 and $0.3 million from our Lavante business acquired in fiscal year 2016.

The increase in our contract receivables balance from unbilled revenues at December 31, 2018 compared to December 31, 2017, is mainly due to the timing of revenue earned that was not yet billable to our clients that have scheduled billing arrangements as part of our contractual terms.

The increase in our deferred revenue balance at December 31, 2018 compared to December 31, 2017 is mainly due to an increase in revenue generated in fiscal year 2018 from our subscription services offerings for our SIM and PRGX OPTIX^® solutions as a result of increased market acceptance of those product offerings in fiscal year 2018. We recognized $1.2 million in fiscal year 2018 that was included in deferred revenue as of December 31, 2017.

The decrease in our refund liabilities balance at December 31, 2018 compared to December 31, 2017 is mainly due to the change in methodology used to determine refund liabilities as of December 31, 2018 as described in the section entitled Refund Liabilities below.

Disaggregation of Revenue

We depict revenue earned by country and by reporting segment in our Operating Segments and Related Information disclosure. Refer to Note 2 of the Notes to our Consolidated Financial Statements for further information pertaining to our disaggregation of revenue.

Refund Liabilities

Refund liabilities result from reductions in the economic value previously received by our clients with respect to vendor claims identified by us and for which we previously have recognized revenue. We compute the estimate of our refund liabilities at any given time based on actual historical refund data. We record periodic changes in refund liabilities as adjustments to revenue. We satisfy such refund liabilities either by offsets to amounts otherwise due from clients or by cash refunds to clients.

On an on-going basis, we evaluate our estimates and judgments, including those related to refund liabilities. We base our estimates and judgments on historical experience, information available prior to the issuance of the consolidated financial statements and on various other factors that we believe to be reasonable under the circumstances. This information forms the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Materially different results can occur as circumstances change and additional information becomes known, including changes in those estimates not deemed “critical."

An integral component of the methodology used to determine the refund liability includes applying a trendline to historical payback data extracted from our claims-tracking systems. As part of our on-going review of this process, we determined that a better correlation exists between the extracted data points and this trendline when the line takes the form of a cubic polynomial rather than our historical approach of a natural logarithm. As a result, effective in the interim period ended June 30, 2018, the Company refined its methodology to incorporate this new trendline for the estimation of refunds expected to occur in future periods.

Unbilled Receivables

Revenue Recognition, Billed and Unbilled Receivables

The Company has revised its accounting policy as it relates to the Financial Accounting Standards Board (“FASB”) issuedAccounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and the subsequent amendments and modifications thereto. The revised policy requires the Company to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To adhere to this core principle, the Company applies the following five steps: (a) identify contract(s) with a customer; (b) identify the performance obligations in a contract; (c) determine the transaction price; (d) allocate the transaction price to the performance obligations in a contract; and (e) recognize revenue when (or as) performance obligations are satisfied. The Company determines that the performance obligations have been satisfied when its customers obtain control of the goods or services as evidenced by the customer’s ability to direct the use, or the ability to receive substantially all of the remaining economic benefit, of the contract assets. Additionally, for purposes of determining the appropriate timing of recognition, revenue will be recognized over time or at a point in time based on an evaluation of the specific criteria that is to be achieved to meet the performance obligations of each contract.

The determination that the core principle for revenue recognition has been met, and the five steps have been applied appropriately, requires significant judgment. Management considers the application of this judgment to be critical in determining the appropriate amount of revenue to be recognized. The most critical judgments are required in the determination of the transaction price, the identification of the performance obligations within a contract, and the determination as to whether or not and to what extent such performance obligations have been satisfied. A misapplication of this judgment could result in inappropriate recognition of revenue.

Revenue is recognized over time, on an invoice basis for the Company's recovery audit contracts, which is approximately 96% of consolidated revenue for the year ended December 31, 2018. The Company has adopted the Invoicing Expedient as provided for in FASB Accounting Standards Codification ("ASC") Topic 606, which allows for the recognition of revenue for an amount that an entity has a right to invoice its customer. It is management’s conclusion that the Company's right to consideration from its customers corresponds directly to the value provided to customers from its performance to-date, as represented by billable recoveries. A recovery is billable when it is determined that the customer has received the economic benefit from the service (generally through credits taken against existing accounts payable due to, or refund checks received from, the customer’s vendors). The manner in which a claim is recovered by a client often is dictated by industry practice. Many clients establish specific procedural guidelines that must be satisfied prior to submitting claims for client approval, and these guidelines are unique to each client.

On occasion, it is possible that a transaction has met the core principle for revenue recognition, but the Company does not recognize revenue until the customary business practices and processes specific to that client have been completed. Historically, there has been a certain amount of recovery audit revenue with respect to which, even though the Company has met the requirements of its revenue recognition policy, its clients’ vendors ultimately have rejected the claims underlying the revenue. In that case, the Company's clients may request a refund or offset of such amount even though the fees may have been previously collected. These refunds are accounted for as a variable consideration. The Company provides refund liabilities for these reductions in the economic value previously received by its clients with respect to vendor claims that have been identified and for which revenue has been previously recognized. The Company computes an estimate of its refund liabilities at any given time based on actual historical refund data.

Revenue is recognized over time for the Company's subscription services. Typically, implementation services, hosting services, unspecified upgrades, technical and support services, service level guarantees and subscription rights under contracts for subscription services are delivered concurrently and are therefore considered a single performance obligation. Generally, revenue will be recognized ratably over the subscription term as this represents the timing of when those services are transferred to the customer. The subscription term commences when the customer both has access to the software application and can benefit from its use.

Revenue is recognized at a point in time for certain services provided on a fixed fee basis and over time for certain services performed on a fee per unit of time-basis or other unit of performance. The revenue recognition method is determined based on the specific criteria that is to be achieved to meet the performance obligations of each transaction within a contract.

When a contract includes an option to acquire future goods or services that constitutes a material right to the customer, and those goods or services are similar to the original goods and services provided for in the contract, the Company has adopted the Practical Alternative as prescribed in ASC Topic 606 to estimate the standalone selling price of that option.

Billed receivables are stated at the amount expected to be collected and do not bear interest. The Company makes ongoing estimates relating to the collectability of billed receivables and maintains a reserve for estimated losses resulting from the inability of its clients to meet its financial obligations to the Company. This reserve is primarily based on the level of past-due accounts based on the contractual terms of the receivables; the Company's history of write-offs; and its relationships with, and the economic status of, its clients.

Unbilled receivables relate to claims for which the Company's customers have received economic value and for which they acknowledge that the unbilled receivable has been earned but has not yet been billed. The Company typically invoices the customer in the subsequent month.

The Company includes unbilled receivables and refund liabilities in determining revenue.

Contract assets will be recorded if a performance obligation is satisfied (and revenue recognized), but the Company is not entitled to payment until other conditions as specified in the contract are met.

Contract liabilities are recognized when consideration is received and the Company has not yet transferred the goods or services to the customer. The Company refers to this as deferred revenue.

The Company derives a relatively small portion of revenue on a fee-for-service basis whereby billing is based upon a fixed fee, a fee per unit of time, or a fee per other unit of service. The Company recognizes revenue for these types of services when the core principles for revenue recognition have been met.

Contract Balances

As of December 31, 2018 and December 31, 2017, we had the following balances (in thousands) included in our Consolidated Balance Sheets that relate to contracts with our clients.

	12/31/2018			12/31/2017			Change
Contract receivables from billed revenue	$	43,878		$	36,058		$	7,820
Contract receivables from unbilled revenue	2,987			2,709			278
Deferred revenue	(2,428		)	(1,431		)	(997		)
Refund liabilities	6,497			7,864			(1,367		)

The increase in our contract receivables balance from billed revenues at December 31, 2018 compared to December 31, 2017 is mainly due to higher revenue generated in the fourth quarter of fiscal year 2018 compared with the revenue generated in the fourth quarter of fiscal year 2017. This year-over-year increase in fourth quarter revenue is primarily due to higher revenue generated from our UK retail recovery audit business, as well as additional revenue contributed from businesses acquired in fiscal years 2016 and 2017. We recognized revenue, net of refund liabilities of $171.8 million in fiscal year 2018 and $161.6 million in fiscal year 2017, an increase of $10.2 million, which included additional revenue of $2.9 million from our C&CA business acquired in fiscal year 2017 and $0.3 million from our Lavante business acquired in fiscal year 2016.

The increase in our contract receivables balance from unbilled revenues at December 31, 2018 compared to December 31, 2017, is mainly due to the timing of revenue earned that was not yet billable to our clients that have scheduled billing arrangements as part of our contractual terms.

The increase in our deferred revenue balance at December 31, 2018 compared to December 31, 2017 is mainly due to an increase in revenue generated in fiscal year 2018 from our subscription services offerings for our SIM and PRGX OPTIX^® solutions as a result of increased market acceptance of those product offerings in fiscal year 2018. We recognized $1.2 million in fiscal year 2018 that was included in deferred revenue as of December 31, 2017.

The decrease in our refund liabilities balance at December 31, 2018 compared to December 31, 2017 is mainly due to the change in methodology used to determine refund liabilities as of December 31, 2018 as described in the section entitled Refund Liabilities below.

Disaggregation of Revenue

We depict revenue earned by country and by reporting segment in our Operating Segments and Related Information disclosure. Refer to Note 2 of the Notes to our Consolidated Financial Statements for further information pertaining to our disaggregation of revenue.

Refund Liabilities

Refund liabilities result from reductions in the economic value previously received by our clients with respect to vendor claims identified by us and for which we previously have recognized revenue. We compute the estimate of our refund liabilities at any given time based on actual historical refund data. We record periodic changes in refund liabilities as adjustments to revenue. We satisfy such refund liabilities either by offsets to amounts otherwise due from clients or by cash refunds to clients.

On an on-going basis, we evaluate our estimates and judgments, including those related to refund liabilities. We base our estimates and judgments on historical experience, information available prior to the issuance of the consolidated financial statements and on various other factors that we believe to be reasonable under the circumstances. This information forms the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Materially different results can occur as circumstances change and additional information becomes known, including changes in those estimates not deemed “critical."

An integral component of the methodology used to determine the refund liability includes applying a trendline to historical payback data extracted from our claims-tracking systems. As part of our on-going review of this process, we determined that a better correlation exists between the extracted data points and this trendline when the line takes the form of a cubic polynomial rather than our historical approach of a natural logarithm. As a result, effective in the interim period ended June 30, 2018, the Company refined its methodology to incorporate this new trendline for the estimation of refunds expected to occur in future periods.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less from date of purchase. We place our temporary cash investments with high credit quality financial institutions. At times, certain investments may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit or otherwise may not be covered by FDIC insurance. Some of our cash and cash equivalents are held at banks in jurisdictions outside the U.S. that have restrictions on transferring such assets outside of these countries on a temporary or permanent basis. Such restricted net assets are not significant in comparison to our consolidated net assets.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

We state cash equivalents at cost, which approximates fair market value. The carrying values for receivables from clients, unbilled receivables, accounts payable, deferred revenue and other accrued liabilities reasonably approximate fair market value due to the nature of the financial instrument and the short-term maturity of these items.

We record bank debt, if any, as of the period end date based on the effective borrowing rate and repayment terms when originated. As of December 31, 2018, we had $21.6 million in bank debt outstanding. As of December 31, 2017, we had $13.6 million in bank debt outstanding. We believe the carrying value of the bank debt approximates its fair value. We considered the factors used in determining the fair value of this debt to be Level 3 inputs (significant unobservable inputs).

We had $4.2 million of business acquisition obligations as of December 31, 2018, and $8.9 million as of December 31, 2017. Our business acquisition obligations represent the fair value of deferred consideration and earnout payments estimated to be due as of the date for which we recorded these amounts. We determine the preliminary estimated fair values based on our projections of future revenue and profits or other factors used in the calculation of the ultimate payment to be made. The discount rate that we use to value the liability is based on specific business risk, cost of capital, and other factors. We consider these factors to be Level 3 inputs (significant unobservable inputs).

We state certain assets at fair value on a nonrecurring basis as required by accounting principles generally accepted in the United States of America. Generally, these assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.

Property and Equipment

Property and Equipment

We report property and equipment at cost or estimated fair value at acquisition date and depreciate them over their estimated useful lives using the straight-line method. Our useful lives for fixed assets are three years for computer laptops, four years for desktops, five years for IT server, storage and network equipment, five years for furniture and fixtures and three years for purchased software. We amortize leasehold improvements using the straight-line method over the shorter of the lease term or ten years. Depreciation expense from continuing operations was $7.4 million in 2018, $4.6 million in 2017 and $5.0 million in 2016.

We review the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, we will recognize an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset. No impairment charges were necessary in the three years ended December 31, 2018.

Software Development Costs

Software Development Costs

We capitalize a portion of the costs we incur related to our internal development of software that we use in our operations and amortize these costs using the straight-line method over the expected useful lives of three to seven years.

We also capitalize a portion of the costs we incur related to our internal development of software that we intend to market to others. We amortize these costs over the products’ estimated economic lives, which typically are three years, beginning when the underlying products are available for general release to clients. We review the carrying value of capitalized software development costs for impairment whenever events and circumstances indicate that the carrying value of the asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, we will recognize an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset.

We consider software development activities to be research and development costs and expense them as incurred. However, we capitalize the costs incurred for the development of computer software that will be sold, leased, or otherwise marketed or that will be used in our operations beginning when technological feasibility has been established.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair market value of net identifiable assets of acquired businesses. We evaluate the recoverability of goodwill and other intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other, in the fourth quarter of each year or sooner if events or changes in circumstances indicate that the carrying amount may exceed its fair value. This evaluation includes a preliminary assessment of qualitative factors to determine if it is necessary to perform a two-step impairment testing process. The first step identifies potential impairments by comparing the fair value of the reporting unit with its carrying value, including goodwill. If the calculated fair value of a reporting unit exceeds the carrying value, goodwill is not impaired, and the second step is not necessary. If the carrying value of a reporting unit exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying value. If the fair value is less than the carrying value, we would record an impairment charge.

We are not required to calculate the fair value of our reporting units that hold goodwill unless we determine that it is more likely than not that the fair value of these reporting units is less than their carrying values. In this analysis, we consider a number of factors, including changes in our legal, business and regulatory climates, changes in competition or key personnel, macroeconomic factors impacting our company or our clients, our recent financial performance and expectations of future performance and other pertinent factors. Based on these analyses, we determined that it was not necessary for us to perform the two-step process.

Direct Expenses and Deferred Costs

Direct Expenses and Deferred Costs

We typically expense direct expenses that we incur during the course of recovery audit and delivery of Adjacent Services offerings as incurred. For certain implementation and set-up costs associated with our “fee for service” revenue that we earn over an extended period of time, we defer the related direct and incremental costs and recognize them as expenses over the life of the underlying contract.

Income Taxes

Income Taxes

We account for income taxes under the asset and liability method. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. We measure deferred tax assets and liabilities using enacted tax rates we expect to apply to taxable income in the years in which we expect to recover or settle those temporary differences. We recognize the effect on the deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date.

We reduce our deferred tax assets by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. In determining the amount of valuation allowance to record, we consider all available positive and negative evidence affecting specific deferred tax assets, including our past and anticipated future performance, the reversal of deferred tax liabilities, the length of carry-back and carry-forward periods and the implementation of tax planning strategies. Objective positive evidence is necessary to support a conclusion that a valuation allowance is not needed for all or a portion of deferred tax assets when significant negative evidence exists. Cumulative losses in recent years are the most compelling form of negative evidence we considered in this determination.

We apply a “more-likely-than-not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We refer to GAAP for guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. In accordance with FASB ASC 740, our policy for recording interest and penalties associated with tax positions is to record such items as a component of income before income taxes. A number of years may elapse before a particular tax position is audited and finally resolved or when a tax assessment is raised. The number of years subject to tax assessments also varies by tax jurisdictions.

Foreign Currency

Foreign Currency

We use the local currency as the functional currency in the majority of the countries in which we conduct business outside of the United States. We translate the assets and liabilities denominated in foreign currencies into U.S. dollars at the current rates of exchange at the balance sheet date. We include the translation gains and losses as a separate component of shareholders’ equity and in the determination of comprehensive income (loss). We translate revenue and expenses in foreign currencies at the weighted average exchange rates for the period. We separately state the foreign currency transaction gains and losses on short-term intercompany balances in the Consolidated Statements of Operations. We include all other realized and unrealized foreign currency transaction gains (losses) in “Selling, general and administrative expenses.”

Earnings (Loss) Per Common Share

Earnings (Loss) Per Common Share

We compute basic earnings (loss) per common share by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. We compute diluted earnings (loss) per common share by dividing net income (loss) available to common shareholders by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of stock options using the treasury stock method, and (3) the dilutive effect of other potentially dilutive securities. We exclude the potential dilutive effect of stock options and convertible instruments from the determination of diluted earnings (loss) per common share if the effect of including them would be antidilutive.

Stock-Based Compensation

Stock-Based Compensation

We account for awards of equity instruments issued to employees and directors under the fair value method of accounting and recognize such amounts in our Consolidated Statements of Operations. We measure compensation expense for time-based all stock-based awards at fair value on the date of grant and recognize compensation expense, less actual forfeitures, in our Consolidated Statements of Operations using the straight-line method over the service period over which we expect the awards to vest. We recognize compensation expense for awards with performance conditions based on the probable outcome of the performance conditions. We accrue compensation expense if we believe it is probable that the performance condition(s) will be achieved and do not accrue compensation expense if we believe it is not probable that the performance condition(s) will be achieved. In the event that it becomes probable that performance condition(s) will no longer be achieved, we reverse all of the previously recognized compensation expense in the period such a determination is made.

We estimate the fair value of all time-vested options as of the date of grant using the Black-Scholes option valuation model, which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation models require the input of highly subjective assumptions, including the expected stock price volatility, which we calculate based on the historical volatility of our common stock. We use a risk-free interest rate, based on the U.S. Treasury instruments in effect at the time of the grant, for the period comparable to the expected term of the option. We use the “simplified” method in estimating the expected term of options as we have concluded that our historical share option exercise experience is a less than reasonable basis upon which to estimate the expected term for our grants.

We estimate the fair value of nonvested stock awards (restricted stock and restricted stock units) as being equal to the market value of the common stock on the date of the award. We classify our share-based payments as either liability-classified awards or as equity-classified awards. We remeasure liability-classified awards to fair value at each balance sheet date until the award is settled. We measure equity-classified awards at their grant date fair value and do not subsequently remeasure them. We have classified our share-based payments which are settled in our common stock as equity-classified awards and our share-based payments that are settled in cash as liability-classified awards. Compensation expense related to equity-classified awards generally are equal to the fair value of the award at grant-date amortized over the vesting period of the award. The liability for liability-classified awards generally is equal to the fair value of the award as of the balance sheet date multiplied by the percentage vested at the time. We record the change in the liability amount from one balance sheet date to another to compensation expense.

Comprehensive Income (Loss) and Accumulated Other Comprehensive Income

Comprehensive Income (Loss) and Accumulated Other Comprehensive Income

Consolidated comprehensive income (loss) consists of consolidated net income (loss) and foreign currency translation adjustments. We present the calculation of consolidated comprehensive income (loss) in the accompanying Consolidated Statements of Comprehensive Income (Loss). No amounts have been reclassified out of Accumulated Other Comprehensive Income during the periods presented in our consolidated financial statements.

Segment Reporting

Segment Reporting

We report our operating segment information in three segments: Recovery Audit Services – Americas; Recovery Audit Services – Europe/Asia-Pacific and Adjacent Services. We include the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to our three operating segments in Corporate Support. Our business segments reflect the internal reporting that our Chief Executive Officer, who is our chief operating decision maker, uses for the purpose of making decisions about allocating resources and assessing performance. Our management, including our Chief Executive Officer, uses what we internally refer to as “Adjusted EBITDA” as the primary measure of profit or loss for purposes of assessing the operating performance of all operating segments. We define Adjusted EBITDA as earnings from continuing operations before interest, taxes, depreciation and amortization (“EBITDA”) as adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period.

EBITDA and Adjusted EBITDA are not financial measures determined in accordance with GAAP. Such non-GAAP financial measures do not measure the profit or loss of the reportable segments in accordance with GAAP. Given that we use Adjusted EBITDA as our primary measure of segment performance, GAAP rules on segment reporting require that we include this non-GAAP measure in our discussion of our operating segments. We also must reconcile Adjusted EBITDA to our operating results presented on a GAAP basis. We provide this reconciliation in Note 2 to these consolidated financial statements along with other information about our reportable segments. We do not intend the reconciling items to be, nor should they be, interpreted as non-recurring or extraordinary, or in any manner be deemed as adjustments made in accordance with GAAP. Because Adjusted EBITDA is not a financial measure determined in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies.

Loss Contingencies

Loss Contingencies

Certain conditions may exist as of the date the financial statements are issued that may result in a loss to the Company, but which will only be determined and resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss is likely to occur and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not accrued or disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. Legal costs relating to loss contingencies are expensed as incurred.

Reclassification of Prior Year Balance Sheet

Reclassification of Prior Year Balance Sheet

Certain reclassifications have been made in the prior year in order to conform to the current year presentation.

Impact of Recently Issued Accounting Standards, Adopted by the Company in 2017, and Accounting Standards Not Yet Adopted

Impact of Recently Issued Accounting Standards

A summary of the recently issued accounting standards issued by the Financial Accounting Standards Board (“FASB”) and included in the Accounting Standards Codification (“ASC”) that apply to us is set forth below.

Adopted by the Company in Fiscal Year 2018

FASB ASC Update No. 2014-09 - In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), as later amended, which resulted in a new accounting standard Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The new revenue recognition standard requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 has replaced most existing revenue recognition guidance within GAAP. The new standard became effective for the Company on January 1, 2018 and was adopted by the Company on that date. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements utilizing the modified retrospective approach.

FASB ASU No. 2018-07 - In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718)-Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The Company has elected early adoption of this standard, which is permitted, and adopted this standard on September 30, 2018. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

FASB ASU No. 2018-03 - In February 2018, the FASB issued ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10), which clarified certain aspects of the previously issued ASU 2016-01 issued in January 2016. This standard updates ASU guidance on the classification and measurement of financial instruments, including significant revisions in accounting related to the classification and measurement of investments in equity securities and presentation of certain fair value changes for financial liabilities when the fair value option is elected. This ASU requires equity securities to be measured at fair value with changes in fair value recognized through net earnings and amends certain disclosure requirements associated with the fair value of financial instruments. In the period of adoption, the Company is required to reclassify the unrealized gains/losses on equity securities within accumulated other comprehensive income (loss) to retained earnings. This standard became effective for the Company on September 30, 2018 and was adopted by the Company on that date. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Accounting Standards Not Yet Adopted

FASB ASU 2018-13 - In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. The new guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Upon the effective date, certain provisions are to be applied prospectively, while others are to be applied retrospectively to all periods presented. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until their effective date. We are currently evaluating the effect of this standard on our consolidated financial statement disclosures. Since this standard affects disclosure requirements only, it is not expected to have an impact on the Company's consolidated financial statements.

FASB ASU No. 2016-02 - In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The standard is effective for the first interim period within annual periods beginning after December 15, 2018, which will be January 1, 2019, for the Company. The standard is required to be adopted using a modified retrospective approach. The Company has applied the provisions of the new leasing standard at the effective date (January 1, 2019) rather than at the beginning of the earliest period presented under the transition method provided, and will recognize a cumulative-effect adjustment to the opening balance sheet on that date. The Company has made a policy decision to include all payments as lease payments for each category of listed assets with the exception of computer equipment. Computer equipment will be bifurcated between the lease payment and the contracted maintenance payment. This standard will become effective in the first quarter of 2019.

The Company has implemented a third-party supported software solution to manage and account for leases under the new standard. The Company has also established a new lease accounting process and has designed new internal controls for that process. The Company plans on electing the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company does not plan to elect the practical expedient to use hindsight in determining the lease term and in assessing impairment of right-of-use assets. The Company expects the adoption of this standard to increase lease assets and lease liabilities by approximately $13 million. The adoption of this standard is not expected to have a material impact on the Company's net income or its cash flow.

XML

Summary of Significant Accounting Policies and Basis of Presentation (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Contract with Client Balances

As of December 31, 2018 and December 31, 2017, we had the following balances (in thousands) included in our Consolidated Balance Sheets that relate to contracts with our clients.

	12/31/2018			12/31/2017			Change
Contract receivables from billed revenue	$	43,878		$	36,058		$	7,820
Contract receivables from unbilled revenue	2,987			2,709			278
Deferred revenue	(2,428		)	(1,431		)	(997		)
Refund liabilities	6,497			7,864			(1,367		)

XML

Operating Segments and Related Information (Tables)

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Schedule of Discontinued Operations Information

Discontinued operations information for the years ended December 31, 2018, 2017 and 2016 (in thousands) is as follows: 

Results of Discontinued Operations (in thousands)	Years Ended December 31,
	2018			2017			2016
Revenue, net of refund liability	$	959		$	—		$	(14	)
Cost of sales (adjustments)	(300		)	1,350			1,112
Selling, general and administrative expense	16			14			184
Depreciation of property, equipment and software assets	1			8			14
Pretax income (loss) from discontinued operations before income taxes	1,242			(1,372		)	(1,324		)
Income tax expense	—			—			—
Net income (loss) from discontinued operations	$	1,242		$	(1,372	)	$	(1,324	)

The following table presents the discontinued operations of the HCRA services business in the Consolidated Statements of Cash Flows, for the years ended December 31, 2018, 2017 and 2016 (in thousands):

	Years Ended December 31,
	2018			2017			2016
Net cash used in operating activities	$	(1,484	)	$	(1,364	)	$	(1,309	)
Net cash used in investing activities	—			—			—
Net cash provided by financing activities	—			—			—
Increase (decrease) in cash and cash equivalents	$	(1,484	)	$	(1,364	)	$	(1,309	)

Schedule of Segment Information

Segment information for the years ended December 31, 2018, 2017 and 2016 (in thousands) is as follows:

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific		Adjacent Services			Corporate Support			Total
2018
Revenue, net of refund liabilities	$	115,920		$	49,526	$	6,330		$	—		$	171,776
Net income from continuing operations												$	3,351
Income tax expense												1,321
Interest expense, net												1,663
EBIT	$	26,602		$	12,413	$	(5,231	)	$	(27,449	)	6,335
Depreciation of property, equipment and software assets	5,545			683		1,142			—			7,370
Amortization of intangible assets	1,664			172		1,559			—			3,395
EBITDA	33,811			13,268		(2,530		)	(27,449		)	17,100
Foreign currency transaction losses (gains) on short-term intercompany balances	367			1,044		14			(423		)	1,002
Acquisition-related adjustments (income) loss	—			—		—			(1,628		)	(1,628		)
Transformation and severance expenses	944			1,194		66			918			3,122
Other (income) loss	(4		)	8		—			17			21
Stock-based compensation	—			—		—			5,056			5,056
Adjusted EBITDA	$	35,118		$	15,514	$	(2,450	)	$	(23,509	)	$	24,673
Capital expenditures	$	2,050		$	1,200	$	257		$	6,891		$	10,398
Allocated assets	$	71,211		$	26,147	$	7,294		$	—		$	104,652
Unallocated assets:
Cash and cash equivalents	—			—		—			13,973			13,973
Restricted cash	—			—		—			46			46
Deferred income taxes	—			—		—			3,561			3,561
Prepaid expenses and other assets	—			—		—			910			910
Discontinued operations	—			—		—			1,687			1,687
Total assets	$	71,211		$	26,147	$	7,294		$	20,177		$	124,829

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Corporate Support			Total
2017
Revenue, net of refund liabilities	$	113,122		$	44,372		$	4,126		$	—		$	161,620
Net income from continuing operations													$	4,556
Income tax expense													2,962
Interest expense, net													1,539
EBIT	$	29,163		$	11,700		$	(7,942	)	$	(23,864	)	9,057
Depreciation of property, equipment and software assets	3,165			599			805			—			4,569
Amortization of intangible assets	1,919			142			1,573			—			3,634
EBITDA	34,247			12,441			(5,564		)	(23,864		)	17,260
Foreign currency transaction (gains) losses on short-term intercompany balances	(249		)	(1,769		)	(9		)	(163		)	(2,190		)
Acquisition-related adjustments (income) loss	—			—			—			(2,283		)	(2,283		)
Transformation and severance expenses	313			655			320			378			1,666
Other (income) loss	751			184			(195		)	(900		)	(160		)
Stock-based compensation	—			—			—			7,052			7,052
Adjusted EBITDA	$	35,062		$	11,511		$	(5,448	)	$	(19,780	)	$	21,345
Capital expenditures	$	2,389		$	2,383		$	1,335		$	3,248		$	9,355
Allocated assets	$	65,397		$	22,474		$	9,486		$	—		$	97,357
Unallocated assets:
Cash and cash equivalents	—			—			—			18,823			18,823
Restricted cash	—			—			—			51			51
Deferred loan costs	—			—			—			—			—
Deferred income taxes	—			—			—			1,538			1,538
Prepaid expenses and other assets	$	—		$	—		$	—		910			910
Discontinued operations	$	—		$	—		$	—		$	1,539		$	1,539
Total assets	$	65,397		$	22,474		$	9,486		$	22,861		$	120,218

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		Adjacent Services			Corporate Support			Total
2016
Revenue, net of refund liabilities	$	99,861	$	37,335	$	3,648		$	—		$	140,844
Net income from continuing operations											$	2,229
Income tax expense											1,242
Interest income, net											(153		)
EBIT	$	25,476	$	6,455	$	(4,617	)	$	(23,996	)	3,318
Depreciation of property, equipment and software assets	3,750		529		754			—			5,033
Amortization of intangible assets	1,477		—		355			—			1,832
EBITDA	30,703		6,984		(3,508		)	(23,996		)	10,183
Foreign currency transaction losses (gains) on short-term intercompany balances	31		107		17			(71		)	84
Transformation and severance expenses	517		312		258			242			1,329
Other income	—		—		(121		)	—			(121		)
Stock-based compensation	—		—		—			5,123			5,123
Adjusted EBITDA	$	31,251	$	7,403	$	(3,354	)	$	(18,702	)	$	16,598
Capital expenditures	$	4,393	$	600	$	894		$	—		$	5,887
Allocated assets	$	47,690	$	14,813	$	10,532		$	—		$	73,035
Unallocated assets:
Cash and cash equivalents	—		—		—			15,723			15,723
Restricted cash	—		—		—			47			47
Deferred income taxes	—		—		—			2,269			2,269
Prepaid expenses and other assets	—		—		—			800			800
Discontinued operations								1,600			1,600
Total assets	$	47,690	$	14,813	$	10,532		$	20,439		$	93,474

The following table presents revenue by country based on the location of clients served (in thousands):

	Years Ended December 31,
	2018		2017		2016
United States	$	100,458	$	93,447	$	80,857
United Kingdom	27,774		23,408		17,501
Canada	14,700		14,375		14,531
Australia	8,397		8,732		7,354
France	6,721		5,987		6,934
Mexico	3,793		5,385		4,900
Brazil	1,799		2,053		1,169
Spain	1,443		1,127		964
Hong Kong	1,219		889		824
Thailand	1,094		699		654
Ireland	741		929		337
Colombia	465		709		583
New Zealand	338		899		979
Other	2,834		2,981		3,257
	$	171,776	$	161,620	$	140,844

The following table presents long-lived assets by country based on the location of the asset (in thousands):

	December 31,
	2018		2017
United States	$	34,236	$	47,371
UK	2,909		5,510
All Other	395		1,125
	$	37,540	$	54,006

XML

Earnings (Loss) Per Common Share (Tables)

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Schedule of Computations of Basic and Diluted Earnings (Loss) Per Common Share

The following tables set forth the computations of basic and diluted earnings (loss) per common share (in thousands, except per share data):

	Years Ended December 31,
Basic earnings (loss) per common share:	2018		2017			2016
Numerator:
Net income from continuing operations	$	3,351	$	4,556		$	2,229
Net income (loss) from discontinued operations	$	1,242	$	(1,372	)	$	(1,324	)
Denominator:
Weighted-average common shares outstanding	22,811		21,937			21,969
Basic earnings per common share from continuing operations	$	0.14	$	0.21		$	0.10
Basic earnings (loss) per common share from discontinued operations	$	0.06	$	(0.06	)	$	(0.06	)

	Years Ended December 31,
Diluted earnings (loss) per common share:	2018		2017			2016
Numerator:
Net income from continuing operations	$	3,351	$	4,556		$	2,229
Net income (loss) from discontinued operations	$	1,242	$	(1,372	)	$	(1,324	)
Denominator:
Weighted-average common shares outstanding	22,811		21,937			21,969
Effect of dilutive securities from stock-based compensation plans	623		174			47
Denominator for diluted earnings per common share	23,434		22,111			22,016
Diluted earnings per common share from continuing operations	$	0.14	$	0.21		$	0.10
Diluted earnings (loss) per common share from discontinued operations	$	0.06	$	(0.06	)	$	(0.06	)

XML

Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill by Reportable Segment

Goodwill by reportable segments during 2018 and 2017 was as follows (in thousands):

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services		Total
Balance, January 1, 2017	$	10,755		$	680		$	2,388	$	13,823
Goodwill recorded in connection with business combinations	2,685			869			140		3,694
Foreign currency translation	—			131			—		131
Balance, December 31, 2017	13,440			1,680			2,528		17,648
Goodwill recorded in connection with business combinations	(20		)	—			—		(20		)
Foreign currency translation	—			(97		)	—		(97		)
Balance, December 31, 2018	$	13,420		$	1,583		$	2,528	$	17,531

Schedule of Changes in Noncurrent Intangible Assets

Changes in noncurrent intangible assets during 2018 and 2017 were as follows (in thousands):

	Customer Relationships			Trademarks			Non- compete Agreements			Software			Trade Names			Total
Gross carrying amount:
Balance, January 1, 2017	$	36,573		$	853		$	1,322		$	6,178		$	2,200		$	47,126
Acquisition of C&CA Assets	9,556			135			1,232			—			—			10,923
FX adjustments and other	777			38			75			—			—			890
Balance, December 31, 2017	46,906			1,026			2,629			6,178			2,200			58,939
FX adjustments and other	(547		)	138			(51		)	(164		)	—			(624		)
Balance, December 31, 2018	$	46,359		$	1,164		$	2,578		$	6,014		$	2,200		$	58,315
Accumulated amortization:
Balance, January 1, 2017	$	(31,481	)	$	(853	)	$	(1,322	)	$	(272	)	$	(2,200	)	$	(36,128	)
Amortization expense	(1,796		)	(22		)	(204		)	(1,612		)	—			(3,634		)
FX adjustments and other	(585		)	(38		)	(76		)	—			—			(699		)
Balance, December 31, 2017	(33,862		)	(913		)	(1,602		)	(1,884		)	(2,200		)	(40,461		)
Amortization expense	(1,607		)	(67		)	(246		)	(1,475		)	—			(3,395		)
FX adjustments and other	409			(22		)	51			48			—			486
Balance, December 31, 2018	$	(35,060	)	$	(1,002	)	$	(1,797	)	$	(3,311	)	$	(2,200	)	$	(43,370	)
Net carrying amount:
Balance, December 31, 2017	$	13,044		$	113		$	1,027		$	4,294		$	—		$	18,478
Balance, December 31, 2018	$	11,299		$	162		$	781		$	2,703		$	—		$	14,945
Estimated useful life (years)	10-15 years			4-5 years			5 years			4 years			4-5 years

XML

Debt (Tables)

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt as of December 31, 2018 and 2017 consists of the following (in thousands):

	As of December 31
	2018							2017
	Gross		DFC (1)			Net		Gross		DFC			Net
Revolving Facility	$	21,600	$	(65	)	$	21,535	$	13,600	$	(131	)	$	13,469
Capital lease obligations	66		—			66		105		—			105
Total long term debt	21,666		(65		)	21,601		13,705		(131		)	13,574
Less: Current portion of long-term debt	48		—			48		48		—			48
Long-term debt, excluding current portion	$	21,618	$	(65	)	$	21,553	$	13,657	$	(131	)	$	13,526

(1) DFC refers to deferred financing costs related to the Company's long-term debt.

Schedule of Debt

The applicable margin per annum on interest accruing on all borrowings under the credit facility outstanding on or after May 4, 2017, and the applicable percentage per annum commitment fee accruing on and after that date, respectively were determined as follows:

Pricing Level	Leverage Ratio	Applicable Margin for LIBOR Index Rate Loans	Applicable Margin for Base Rate Loans	Applicable Percentage for Commitment Fee
I	Less than 1.25:1.00	2.25% per annum	1.25% per annum	0.250% per annum
II	Greater than or equal to 1.25:1.00 but less than 1.75:1.00	2.50% per annum	1.50% per annum	0.375% per annum
III	Greater than or equal to 1.75:1.00	2.75% per annum	1.75% per annum	0.375% per annum

Schedule of Future Minimum Lease Payments for Capital Leases

The following is a summary of the combined principal maturities of all long-term debt and principal payments to be made under the Company’s capital lease agreements for each of the fiscal years presented in the table below (in thousands):

Year Ended December 31
2019	$	21,661
2020	5
Total	$	21,666

XML

Lease Commitments (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments

Future minimum lease payments under noncancelable operating leases including the amended lease for our principal executive offices, are as follows (in thousands):

Year Ending December 31,	Gross		Sublease Income			Amount
2019	$	4,974	$	(72	)	$	4,902
2020	3,882		(74		)	3,808
2021	3,248		(77		)	3,171
2022	1,168		—			1,168
2023	488		—			488
Total payments	$	13,760	$	(223	)	$	13,537

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of Income (Loss) Before Income Taxes

Income (loss) before income taxes from continuing operations relate to the following jurisdictions (in thousands):

	Years Ended December 31,
	2018			2017			2016
United States	$	(4,673	)	$	(6,502	)	$	(5,306	)
Foreign	9,345			14,020			8,777
	$	4,672		$	7,518		$	3,471

Schedule of Provision for Income Taxes

The provision for income taxes for continuing operations consists of the following (in thousands):

	Years Ended December 31,
	2018			2017			2016
Current:
Federal	$	—		$	—		$	—
State	70			1			—
Foreign	2,920			2,230			2,103
	2,990			2,231			2,103
Deferred:
Federal	(145		)	(155		)	—
State	—			—			—
Foreign	(1,524		)	886			(861		)
	(1,669		)	731			(861		)
Total	$	1,321		$	2,962		$	1,242

Schedule of Significant Differences Between the U.S. Federal Statutory Tax Rate and the Effective Income Tax Expense

The significant differences between the U.S. federal statutory tax rate and the Company’s effective income tax expense for earnings (in thousands) are as follows:

	Years Ended December 31,
	2018			2017			2016
Statutory federal income tax rate	$	981		$	2,631		$	1,180
State income taxes, net of federal effect	(285		)	(62		)	(173		)
Net operating loss limitation	—			2,975			—
Adjustment to deferred taxes	939			301			(4,103		)
Change in deferred tax asset valuation allowance	(2,867		)	(15,338		)	4,877
Change in tax law	(992		)	13,850			—
Foreign tax rate differential	1,306			(899		)	(1,153		)
Compensation and equity adjustments	1,474			—			113
Acquisition earnout adjustment	(320		)	87			60
Other permanent differences	183			(682		)	—
Withholding taxes	591			342			441
Changes in uncertain tax positions	19			(429		)	—
Return to provision adjustments	257			155			—
Other, net	35			31			—
Total	$	1,321		$	2,962		$	1,242

Schedule of the Tax Effects of Temporary Differences and Carry-Forwards That Give Rise to Deferred Tax Assets and Liabilities

The tax effects of temporary differences and carry-forwards that give rise to deferred tax assets and liabilities consist of the following (in thousands):

	Years Ended December 31,
	2018		2017
Deferred income tax assets:
Accounts payable and accrued expenses	$	714	$	1,215
Accrued payroll and related expenses	2,315		1,691
Stock-based compensation expense	2,336		3,508
Depreciation of property and equipment	853		1,711
Capitalized software	119		—
Unbilled receivables and refund liabilities	97		1,811
Operating loss carry-forwards of foreign subsidiary	9,484		11,000
Federal operating loss carry-forwards	17,109		17,161
State operating loss carry-forwards	4,537		3,591
Other	1,624		376
Gross deferred tax assets	39,188		42,064
Less valuation allowance	31,597		34,776
Gross deferred tax assets net of valuation allowance	7,591		7,288
Deferred income tax liabilities:
Intangible assets	1,269		1,987
Capitalized software	—		29
Other	3,427		3,734
Gross deferred tax liabilities	4,696		5,750
Net deferred tax assets	$	2,895	$	1,538

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits and Related Accrued Interest

A reconciliation of our beginning and ending amount of unrecognized tax benefits and related accrued interest thereon is as follows:

	Unrecognized Tax Benefits			Accrued Interest and Penalties
Balance at January 1, 2016	$	535		$	202
Additions based on tax positions related to the current year	—			—
Additions based on tax positions related to the prior years	—			11
Decrease based on payments made during the year	—			—
Decreases based on tax positions related to the prior years	$	(38	)	$	(59	)
Balance at December 31, 2016	$	497		$	154
Additions based on tax positions related to the current year	—			—
Additions based on tax positions related to the prior years	116			19
Decreases based on payments made during the year	—			—
Decreases based on tax positions related to the prior years	(420		)	(145		)
Balance at December 31, 2017	$	193		$	28
Additions based on tax positions related to the current year	4			—
Additions based on tax positions related to the prior years	10			6
Decreases based on payments made during the year	—			—
Decreases based on tax positions related to the prior years	—			—
Balance at December 31, 2018	$	207		$	34

XML

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Option Awards Granted

The following table summarizes stock option awards granted during the years ended December 31, 2018, 2017, and 2016:

Grantee Type	Number of Options Granted	Vesting Period	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
2018
Employee inducement (1)	535,000	3 years	$	8.91	$	2.89
2017
Director group	90,566	1 year or less	$	6.34	$	3.49
Director group(2)	35,000	3 years	$	6.25	$	3.50
CEO grant	500,000	4 years	$	7.35	$	2.36
Employee group	30,000	3 years	$	7.25	$	3.99
Employee inducement (3)	335,000	3 years	$	6.19	$	3.41
2016
Director group (4)	195,417	1 year or less	$	5.01	$	2.71
Director group (2)	35,000	3 years	$	4.80	$	2.66
Employee inducement (5)(6)	232,500	3 years	$	4.61	$	2.60

(1) The Company granted non-qualified stock options outside its existing stock-based compensation plan in 2018 to nine employees in connection with the employees joining the Company.

(2) The Company granted non-qualified stock options to one director in connection with the director joining the Company's board of directors.

(3) The Company granted non-qualified stock options outside its existing stock-based compensation plans to certain employees in connection with the employees joining the Company.

(4) Includes 20,417 non-qualified stock options granted to one director in connection with the director joining the Company's board of directors.

(5) The Company granted non-qualified stock options outside its existing stock-based compensation plans in 2016 in connection with an employee joining the Company.

(6) The Company granted non-qualified stock options outside its existing stock-based compensation plans in connection with the closing of the Lavante acquisition.

Summary of Nonvested Stock Awards Granted

The following table summarizes nonvested stock awards granted during the years ended December 31, 2018, 2017 and 2016:

Grantee Type	Number of Stock Awards Granted	Vesting Period	Weighted Average Grant Date Fair Value
2018
Director group	64,545	1 year or less	$	9.45
Employee group (1)	488,685	3 years or less	$	9.56
Employee inducement (2)	160,516	3 years or less	$	8.95
2017
Director group	51,179	1 year or less	$	6.35
Employee group (3)	641,751	3 years or less	$	6.31
Employee inducement (4)	100,000	3 years or less	$	6.33
2016
Employee group (5)	1,250,750	2 years	$	4.88
Employee inducement (6)	100,000	3 years	$	4.94

(1) The Company granted nonvested performance-based stock awards (restricted stock units), restricted stock awards, and restricted stock units in 2018 to certain key employees.

(2) The Company granted nonvested performance-based stock awards (restricted stock units) and restricted stock awards in 2018 to six employees in connection with the employees joining the Company.

(3) The Company granted nonvested performance-based stock awards (restricted stock units), restricted stock units and restricted stock awards in the first quarter of 2017 to twelve executive officers totaling 458,000 units. During the second quarter of 2017, the Company issued 183,751 restricted stock awards and restricted stock units to key employees.

(4) The Company granted nonvested performance-based stock awards (restricted stock units) and restricted stock awards in 2017 to two executive officers in connection with the employees joining the Company.

(5) The Company granted nonvested performance-based stock awards (restricted stock units) in 2016 to five executive officers and certain other key employees.

(6) The Company granted nonvested performance-based stock awards (restricted stock units) outside its existing stock-based compensation plans in 2016 to three employees in connection with the employees joining the Company.

Summary of PBUs Granted

The following table summarizes the PBUs granted during the years ended December 31, 2018, 2017 and 2016:

	Total PBUs Granted	PBUs to be Settled in Common Stock (1)	PBUs to be Settled in Cash (2)
2018	299,028	299,028	—
2017	333,800	333,800	—
2016	1,350,750	560,670	790,080

(1) Represents the number of PBUs to be settled in common stock at the target performance level.

(2) Represents the number of PBUs to be settled in cash at the target performance level.

Summary of Option Activity

A summary of option activity as of December 31, 2018, and changes during the year then ended is presented below:

Options	Shares		Weighted- Average Exercise Price (Per Share)		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value ($ 000’s)
Outstanding at January 1, 2018	3,399,293		$	6.54	4.05 years	$	2,367
Granted	535,000		8.91
Exercised	(676,649	)	6.54			$	1,585
Forfeited	(280,556	)	7.61
Expired	(126,271	)	6.53
Outstanding at December 31, 2018	2,850,817		$	6.84	3.74 years	$	7,384
Exercisable at December 31, 2018	1,735,149		$	6.40	2.73 years	$	5,225

Schedule of Assumptions Used in Black-Scholes Valuation Models

For time-vested option grants that resulted in compensation expense recognition, we used the following assumptions in our Black-Scholes valuation models:

	Years Ended December 31,
	2018	2017	2016
Risk-free interest rates (1)	2.3% - 2.99%	1.38% - 1.96%	0.58% - 1.20%
Dividend yields (2)	—%	—%	—%
Volatility factor of expected market price (3)	.362 - .371	.540 - .749	.391 - .779
Weighted-average expected term of options (4)	4 years	2.2 - 4 years	1.3 - 4.5 years
Forfeiture rate (5)	—%	—%	—%

(1) The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for periods corresponding to the expected term of the options.

(2) The Company has not historically declared dividends.

(3) The expected volatility is based on the historical volatility of the Company's stock.

(4) The expected term represents the weighted average period of time that the stock options are expected to be outstanding, giving consideration to the vesting schedules.

(5) The Company accounts for forfeitures as they occur rather than estimating expected forfeitures.

Summary of Nonvested Stock Awards Activity

A summary of nonvested stock awards (including restricted stock, restricted stock units and performance-based restricted stock units) activity as of December 31, 2018 and changes during the year then ended is presented below:

Nonvested Stock	Shares		Weighted Average Grant Date Fair Value (Per Share)
Nonvested at January 1, 2018	2,116,696		$	5.36
Granted	713,746		9.42
Vested	(1,523,696	)	5.02
Forfeited	(340,796	)	7.51
Nonvested at December 31, 2018	965,950		$	8.18

Schedule of Unrecognized Compensation Expense Related to Nonvested Stock-Based Compensation

Total unrecognized compensation expense related to nonvested stock-based compensation as of December 31, 2018 is as follows (dollars in thousands):

	Stock				Restricted		Restricted
	Options		SARs		Stock Awards		Stock Units		Total
Unrecognized compensation expense	$	2,145	$	313	$	2,614	$	2,125	$	7,197
Weighted-average remaining recognition period (in years)	2.5		1.2		2.1		1.2		1.9

XML

Business Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Summary of the allocation of the aggregate fair values of the assets acquired and purchase price for the associate migrations

Our purchase price allocation was as follows (in thousands):

Cash and cash equivalents	$	28
Accounts receivable, net	207
Other current assets	92
Intangible assets	6,178
Goodwill	2,286
Fixed assets, net	98
Accounts payable	(121		)
Deferred revenue	(370		)
Other current liabilities	(757		)
Total consideration paid	$	7,641
Contingent consideration(1)	(3,832		)
Total cash paid	$	3,809

⁽¹⁾ In the third quarter of 2018, we reduced the earnout liability by $1.6 million and in the fourth quarter of 2017, we reduced the earnout liability by $2.1 million. At December 31, 2018, the contingent consideration liability balance was $0.5 million.

Our purchase price allocation was as follows (in thousands):

Accounts receivable	$	1,621
Commissions receivable	48
Prepaid expenses	109
Other current assets, net	6
Intangible assets	10,923
Goodwill	3,554
Fixed assets	323
Accounts payable	(125		)
Accrued commissions	(537		)
Total consideration paid	$	15,922
Contingent consideration (1)	(5,954		)
Total cash paid	$	9,968

Schedule of finite-lived intangible assets acquired as part of business combination

The intangible assets acquired were as follows (in thousands):

	Fair Value		Remaining useful life
Trademarks	$	163	4 years
Patents	114		1 year
Software	5,901		4 years
Total intangible assets	$	6,178

The intangible assets acquired were as follows (in thousands):

	Fair Value		Remaining useful life
Customer relationships	$	9,556	14 years
Non-compete	1,232		4 years
Trademarks	135		4 years
	$	10,923

Business acquisition, revenues and loss from continuing operations since acquisition and pro forma information

Our unaudited pro forma results presented below, including Lavante, for the years ended December 31, 2016 and 2015 are presented as if the acquisition had been completed on January 1, 2015. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the Lavante acquisition been completed on January 1, 2015. In addition, the unaudited pro forma information does not purport to project future operating results.

	Year Ended December 31,
(in thousands)	2016		2015
Unaudited pro forma revenue	143,198		140,994
Unaudited pro forma net (loss) income from continuing operations	(3,418	)	(5,516	)

Our unaudited pro forma results presented below, including C&CA, for the years ended December 31, 2017 and 2016 are presented as if the acquisition had been completed on January 1, 2016. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the C&CA acquisition been completed on January 1, 2016. In addition, the unaudited pro forma information does not purport to project future operating results.

	Year Ended December 31,
(in thousands)	2017	2016
Unaudited pro forma revenue	162,459	155,626
Unaudited pro forma net income from continuing operations	3,886	5,365

XML

Quarterly Results (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Quarterly results (unaudited)

The operating results for any quarter are not necessarily indicative of the results to be expected for any future period. The quarterly results are updated for continuing operations.

	2018 Quarter Ended												2017 Quarter Ended
	Mar. 31			June 30			Sept. 30			Dec. 31			Mar. 31			June 30			Sept. 30			Dec. 31
	(In thousands, except per share data)
Revenue, net of refund liabilities	$	36,721		$	42,102		$	43,320		$	49,633		$	33,569		$	38,510		$	42,467		$	47,074
Operating expenses:
Cost of revenue	24,797			27,389			26,146			26,493			23,026			25,605			26,675			26,746
Selling, general and administrative expenses	11,264			12,809			12,521			13,862			10,536			11,424			12,189			12,792
Depreciation of property, equipment and software assets	1,223			2,360			1,713			2,074			1,220			1,109			1,133			1,107
Amortization of intangible assets	788			864			872			871			722			722			722			1,468
Acquisition-related adjustments (income) loss	—			—			(1,640		)	12			—			—			—			(2,283		)
Total operating expenses	38,072			43,422			39,612			43,312			35,504			38,860			40,719			39,830
Operating (loss) income from continuing operations	(1,351		)	(1,320		)	3,708			6,321			(1,935		)	(350		)	1,748			7,244
Foreign currency transaction (gains) losses on short-term intercompany balances	(220		)	880			70			272			(552		)	(957		)	(418		)	(263		)
Interest expense, net	398			486			416			363			37			48			142			1,312
Other loss (income)	12			5			(1		)	5			(199		)	5			17			17
(Loss) income from continuing operations before income taxes	(1,541		)	(2,691		)	3,223			5,681			(1,221		)	554			2,007			6,178
Income tax expense (benefit)	787			189			597			(252		)	627			879			930			526
Net (loss) income from continuing operations	(2,328		)	(2,880		)	2,626			5,933			(1,848		)	(325		)	1,077			5,652
Basic (loss) earnings per common share from continuing operations (1)	$	(0.10	)	$	(0.13	)	$	0.11		$	0.26		$	(0.08	)	$	(0.01	)	$	0.05		$	0.26
Diluted (loss) earnings per common share from continuing operations (1)	$	(0.10	)	$	(0.13	)	$	0.11		$	0.26		$	(0.08	)	$	(0.01	)	$	0.05		$	0.26

(1) We calculate each quarter as a discrete period; the sum of the four quarters may not equal the calculated full-year amount.

XML

Summary of Significant Accounting Policies and Basis of Presentation - Description of Business and Basis of Presentation (Details)	Dec. 31, 2018 country
Accounting Policies [Abstract]
Number of countries	30

XML

Summary of Significant Accounting Policies and Basis of Presentation - Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Contract receivables from billed revenue	$ 36,058								$ 43,878	$ 36,058
Contract receivables from unbilled revenue	2,709								2,987	2,709
Change in contract receivables from unbilled revenue									992	469	$ 509
Deferred revenue	(1,431)								(2,428)	(1,431)
Change in deferred revenue									(1,036)	(101)	5
Refund liabilities	7,864								6,497	7,864
Revenue, net of refund liabilities	$ 49,633	$ 43,320	$ 42,102	$ 36,721	$ 47,074	$ 42,467	$ 38,510	$ 33,569	171,776	$ 161,620	$ 140,844
Increase in revenue									10,200
Previously deferred revenue recognized during period									1,200
ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Change in contract receivables from billed revenue									7,820
Change in deferred revenue									(997)
Change in refund liabilities									(1,367)
Change due to adoption of ASU 2014-09 | ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Change in contract receivables from unbilled revenue									278
C&CA
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase in revenue									2,900
Lavante
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase in revenue									$ 300

XML

Summary of Significant Accounting Policies and Basis of Presentation - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 13,973	$ 18,823	$ 15,723	$ 15,122
Short-term investments	1,400	$ 1,900
United States
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	5,700
Canada
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	1,200
Other
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 7,100

XML

Summary of Significant Accounting Policies and Basis of Presentation - Fair Value of Financial Instruments (Details) - Level 3 - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Bank debt
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Bank debt outstanding	$ 21.6	$ 13.6
Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Business acquisition obligations	$ 4.2	$ 8.9

XML

Summary of Significant Accounting Policies and Basis of Presentation - Property and Equipment (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Depreciation expense from continuing operations	$ 7,400,000	$ 4,600,000	$ 5,000,000
Impairment charges	$ 0	$ 0	$ 0
Computer laptops
Property, Plant and Equipment [Line Items]
Useful life	3 years
Desktops
Property, Plant and Equipment [Line Items]
Useful life	4 years
IT server, storage and network equipment
Property, Plant and Equipment [Line Items]
Useful life	5 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Useful life	5 years
Purchased software
Property, Plant and Equipment [Line Items]
Useful life	3 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Useful life	10 years

XML

Summary of Significant Accounting Policies and Basis of Presentation - Software Development Costs (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Research and development costs from continuing operations, including the amortization of amounts previously capitalized	$ 8.3	$ 1.2	$ 1.6
Software Developed for Internal Use | Minimum
Finite-Lived Intangible Assets [Line Items]
Expected useful life	3 years
Software Developed for Internal Use | Maximum
Finite-Lived Intangible Assets [Line Items]
Expected useful life	7 years
Software Development
Finite-Lived Intangible Assets [Line Items]
Expected useful life	3 years

XML

Summary of Significant Accounting Policies and Basis of Presentation - Goodwill and Intangible Assets (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Impairment charges	$ 0	$ 0	$ 0

XML

Summary of Significant Accounting Policies and Basis of Presentation - Segment Reporting (Details)	12 Months Ended
	Dec. 31, 2018 segment
Accounting Policies [Abstract]
Number of segments	3

XML

Summary of Significant Accounting Policies and Basis of Presentation - Accounting Standards Not Yet Adopted (Details) - Scenario, Forecast - ASU 2016-02 $ in Millions	Jan. 01, 2019 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right of use assets expected to be recognized	$ 13
Subsequent Event
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease liabilities expected to be recognized	$ 13

XML

Operating Segments and Related Information - Narrative (Details) $ in Millions	12 Months Ended
	Dec. 31, 2018 USD ($) segment	Dec. 31, 2017	Dec. 31, 2016
Segment Reporting [Abstract]
Number of reportable segments | segment	3
HCRA
Revenue, Major Customer [Line Items]
Accrued liabilities	$ 2.0
Unpaid claims receivable	$ 1.7
Revenue from continuing operations | The Kroger Co.
Revenue, Major Customer [Line Items]
Concentration risk (as a percent)	12.00%	12.00%	11.00%

XML

Operating Segments and Related Information - Schedule of Discontinued Operations Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Segment Reporting [Abstract]
Revenue, net of refund liability	$ 959	$ 0	$ (14)
Cost of sales (adjustments)	(300)	1,350	1,112
Selling, general and administrative expense	16	14	184
Depreciation of property, equipment and software assets	1	8	14
Pretax income (loss) from discontinued operations before income taxes	1,242	(1,372)	(1,324)
Income tax expense	0	0	0
Net income (loss) from discontinued operations	$ 1,242	$ (1,372)	$ (1,324)

XML

Operating Segments and Related Information - Schedule of Discontinued Operations on Statement of Cash Flows (Details) - HCRA - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net cash used in operating activities	$ (1,484)	$ (1,364)	$ (1,309)
Net cash used in investing activities	0	0	0
Net cash provided by financing activities	0	0	0
Increase (decrease) in cash and cash equivalents	$ (1,484)	$ (1,364)	$ (1,309)

XML

Operating Segments and Related Information - Schedule of Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Segment information
Revenue, net of refund liabilities	$ 49,633	$ 43,320	$ 42,102	$ 36,721	$ 47,074	$ 42,467	$ 38,510	$ 33,569	$ 171,776	$ 161,620	$ 140,844
Net income from continuing operations									3,351	4,556	2,229
Income tax expense	(252)	597	189	787	526	930	879	627	1,321	2,962	1,242
Interest expense, net	363	416	486	398	1,312	142	48	37	1,663	1,539	(153)
EBIT									6,335	9,057	3,318
Depreciation of property, equipment and software assets	2,074	1,713	2,360	1,223	1,107	1,133	1,109	1,220	7,370	4,569	5,033
Amortization of intangible assets	871	872	864	788	1,468	722	722	722	3,395	3,634	1,832
EBITDA									17,100	17,260	10,183
Foreign currency transaction losses (gains) on short-term intercompany balances	272	70	880	(220)	(263)	(418)	(957)	(552)	1,002	(2,190)	84
Acquisition-related charges									(1,628)	(2,283)
Transformation and severance expenses									3,122	1,666	(1,329)
Other (income) loss	5	$ (1)	$ 5	$ 12	17	$ 17	$ 5	$ (199)	21	(160)	(121)
Stock-based compensation									5,056	7,052	5,123
Adjusted EBITDA									24,673	21,345	16,598
Capital expenditures									10,398	9,355	5,887
Allocated assets	97,357				73,035				104,652	97,357	73,035
Cash and cash equivalents	18,823				15,723				13,973	18,823	15,723	$ 15,122
Restricted cash	51								46	51
Deferred loan costs	131								65	131
Deferred income taxes	1,538								2,895	1,538
Total assets	120,218				93,474				124,829	120,218	93,474
Long-lived assets	54,006								37,540	54,006
Continuing operations
Segment information
Cash and cash equivalents	18,823				15,723				13,973	18,823	15,723
Restricted cash	51				47				46	51	47
Deferred loan costs	0									0
Deferred income taxes	1,538				2,269				3,561	1,538	2,269
Prepaid expenses and other assets	910				800				910	910	800
Discontinued Operations
Segment information
Discontinued operations	1,539				1,600				1,687	1,539	1,600
United States
Segment information
Revenue, net of refund liabilities									100,458	93,447	80,857
Cash and cash equivalents									5,700
Long-lived assets	47,371								34,236	47,371
United Kingdom
Segment information
Revenue, net of refund liabilities									27,774	23,408	17,501
Long-lived assets	5,510								2,909	5,510
Canada
Segment information
Revenue, net of refund liabilities									14,700	14,375	14,531
Cash and cash equivalents									1,200
Australia
Segment information
Revenue, net of refund liabilities									8,397	8,732	7,354
France
Segment information
Revenue, net of refund liabilities									6,721	5,987	6,934
Mexico
Segment information
Revenue, net of refund liabilities									3,793	5,385	4,900
Brazil
Segment information
Revenue, net of refund liabilities									1,799	2,053	1,169
Spain
Segment information
Revenue, net of refund liabilities									1,443	1,127	964
Hong Kong
Segment information
Revenue, net of refund liabilities									1,219	889	824
Thailand
Segment information
Revenue, net of refund liabilities									1,094	699	654
Ireland
Segment information
Revenue, net of refund liabilities									741	929	337
Colombia
Segment information
Revenue, net of refund liabilities									465	709	583
New Zealand
Segment information
Revenue, net of refund liabilities									338	899	979
Other
Segment information
Revenue, net of refund liabilities									2,834	2,981	3,257
Cash and cash equivalents									7,100
Long-lived assets	1,125								395	1,125
Recovery Audit Services – Americas
Segment information
Revenue, net of refund liabilities									115,920	113,122	99,861
EBIT									26,602	29,163	25,476
Depreciation of property, equipment and software assets									5,545	3,165	3,750
Amortization of intangible assets									1,664	1,919	1,477
EBITDA									33,811	34,247	30,703
Foreign currency transaction losses (gains) on short-term intercompany balances									367	(249)	31
Acquisition-related charges									0	0
Transformation and severance expenses									944	313	(517)
Other (income) loss									(4)	751	0
Stock-based compensation									0	0	0
Adjusted EBITDA									35,118	35,062	31,251
Capital expenditures									2,050	2,389	4,393
Allocated assets	65,397				47,690				71,211	65,397	47,690
Total assets	65,397				47,690				71,211	65,397	47,690
Recovery Audit Services – Europe/Asia- Pacific
Segment information
Revenue, net of refund liabilities									49,526	44,372	37,335
EBIT									12,413	11,700	6,455
Depreciation of property, equipment and software assets									683	599	529
Amortization of intangible assets									172	142	0
EBITDA									13,268	12,441	6,984
Foreign currency transaction losses (gains) on short-term intercompany balances									1,044	(1,769)	107
Acquisition-related charges									0	0
Transformation and severance expenses									1,194	655	(312)
Other (income) loss									8	184	0
Stock-based compensation									0	0	0
Adjusted EBITDA									15,514	11,511	7,403
Capital expenditures									1,200	2,383	600
Allocated assets	22,474				14,813				26,147	22,474	14,813
Total assets	22,474				14,813				26,147	22,474	14,813
Adjacent Services
Segment information
Revenue, net of refund liabilities									6,330	4,126	3,648
EBIT									(5,231)	(7,942)	(4,617)
Depreciation of property, equipment and software assets									1,142	805	754
Amortization of intangible assets									1,559	1,573	355
EBITDA									(2,530)	(5,564)	(3,508)
Foreign currency transaction losses (gains) on short-term intercompany balances									14	(9)	17
Acquisition-related charges									0	0
Transformation and severance expenses									66	320	(258)
Other (income) loss									0	(195)	(121)
Stock-based compensation									0	0	0
Adjusted EBITDA									(2,450)	(5,448)	(3,354)
Capital expenditures									257	1,335	894
Allocated assets	9,486				10,532				7,294	9,486	10,532
Total assets	9,486				10,532				7,294	9,486	10,532
Corporate Support
Segment information
Revenue, net of refund liabilities									0	0	0
EBIT									(27,449)	(23,864)	(23,996)
Depreciation of property, equipment and software assets									0	0	0
Amortization of intangible assets									0	0	0
EBITDA									(27,449)	(23,864)	(23,996)
Foreign currency transaction losses (gains) on short-term intercompany balances									(423)	(163)	(71)
Acquisition-related charges									(1,628)	(2,283)
Transformation and severance expenses									918	378	(242)
Other (income) loss									17	(900)	0
Stock-based compensation									5,056	7,052	5,123
Adjusted EBITDA									(23,509)	(19,780)	(18,702)
Capital expenditures									6,891	3,248	0
Allocated assets	0				0				0	0	0
Total assets	22,861				20,439				20,177	22,861	20,439
Corporate Support | Continuing operations
Segment information
Cash and cash equivalents	18,823				15,723				13,973	18,823	15,723
Restricted cash	51				47				46	51	47
Deferred loan costs	0									0
Deferred income taxes	1,538				2,269				3,561	1,538	2,269
Prepaid expenses and other assets	910				800				910	910	800
Corporate Support | Discontinued Operations
Segment information
Discontinued operations	$ 1,539				$ 1,600				$ 1,687	$ 1,539	$ 1,600

XML

Earnings (Loss) Per Common Share - Schedule of Computations of Basic and Diluted Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Numerator:
Net income from continuing operations	$ 3,351	$ 4,556	$ 2,229
Net income (loss) from discontinued operations	$ 1,242	$ (1,372)	$ (1,324)
Denominator:
Weighted-average common shares outstanding (shares)	22,811	21,937	21,969
Basic earnings per common share from continuing operations (in USD per share)	$ 0.14	$ 0.21	$ 0.10
Basic loss per common share from discontinued operations (in USD per share)	$ 0.06	$ (0.06)	$ (0.06)
Numerator:
Net income from continuing operations	$ 3,351	$ 4,556	$ 2,229
Net income (loss) from discontinued operations	$ 1,242	$ (1,372)	$ (1,324)
Denominator:
Weighted-average common shares outstanding (shares)	22,811	21,937	21,969
Effect of dilutive securities from stock-based compensation plans (shares)	623	174	47
Denominator for diluted earnings per common share (shares)	23,434	22,111	22,016
Diluted earnings per common share from continuing operations (in USD per share)	$ 0.14	$ 0.21	$ 0.10
Diluted loss per common share from discontinued operations (in USD per share)	$ 0.06	$ (0.06)	$ (0.06)

XML

Earnings (Loss) Per Common Share - Narrative (Details) - shares shares in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Earnings Per Share [Abstract]
Antidilutive shares underlying options (shares)	0.9	2.3	2.9

XML

Goodwill and Intangible Assets - Schedule of Goodwill by Reportable Segment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Goodwill
Beginning balance	$ 17,648	$ 13,823
Goodwill recorded in connection with business combinations	(20)	3,694
Foreign currency translation	(97)	131
Ending balance	17,531	17,648
Recovery Audit Services – Americas
Goodwill
Beginning balance	13,440	10,755
Goodwill recorded in connection with business combinations	(20)	2,685
Foreign currency translation	0	0
Ending balance	13,420	13,440
Recovery Audit Services – Europe/Asia- Pacific
Goodwill
Beginning balance	1,680	680
Goodwill recorded in connection with business combinations	0	869
Foreign currency translation	(97)	131
Ending balance	1,583	1,680
Adjacent Services
Goodwill
Beginning balance	2,528	2,388
Goodwill recorded in connection with business combinations	0	140
Foreign currency translation	0	0
Ending balance	$ 2,528	$ 2,528

XML

Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Feb. 23, 2017	Oct. 31, 2016
Goodwill [Line Items]
Goodwill	$ 17,531	$ 17,648	$ 13,823
Amortization expense relating to intangible assets	3,395	3,634	1,800
Projected amortization expense 2018	3,500
Projected amortization expense 2019	3,100
Projected amortization expense 2020	1,700
Projected amortization expense 2021	700
Projected amortization expense 2022	700
Recovery Audit Services – Americas
Goodwill [Line Items]
Goodwill	13,420	13,440	10,755
Adjacent Services
Goodwill [Line Items]
Goodwill	2,528	$ 2,528	$ 2,388
C&CA
Goodwill [Line Items]
Goodwill				$ 3,554
C&CA | Recovery Audit Services – Americas
Goodwill [Line Items]
Goodwill	$ 3,600
Lavante
Goodwill [Line Items]
Goodwill					$ 2,286

XML

Goodwill and Intangible Assets - Schedule of Changes in Noncurrent Intangible Assets (Details) - USD ($) $ in Thousands			12 Months Ended
	Feb. 23, 2017	Oct. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Gross carrying amount:
Beginning balance			$ 58,939	$ 47,126
FX adjustments and other			(624)	890
Ending balance			58,315	58,939	$ 47,126
Accumulated amortization:
Beginning balance			(40,461)	(36,128)
Amortization expense			(3,395)	(3,634)	(1,800)
FX adjustments and other			486	699
Ending balance			(43,370)	(40,461)	(36,128)
Net carrying amount:
Balance, December 31, 2017			18,478
Balance, December 31, 2018			14,945	18,478
Customer Relationships
Gross carrying amount:
Beginning balance			46,906	36,573
FX adjustments and other			(547)	777
Ending balance			46,359	46,906	36,573
Accumulated amortization:
Beginning balance			(33,862)	(31,481)
Amortization expense			(1,607)	(1,796)
FX adjustments and other			409	585
Ending balance			(35,060)	(33,862)	(31,481)
Net carrying amount:
Balance, December 31, 2017			13,044
Balance, December 31, 2018			$ 11,299	13,044
Customer Relationships | Minimum
Net carrying amount:
Estimated useful life (years)			10 years
Customer Relationships | Maximum
Net carrying amount:
Estimated useful life (years)			15 years
Trademarks
Gross carrying amount:
Beginning balance			$ 1,026	853
FX adjustments and other			138	38
Ending balance			1,164	1,026	853
Accumulated amortization:
Beginning balance			(913)	(853)
Amortization expense			(67)	(22)
FX adjustments and other			22	38
Ending balance			(1,002)	(913)	(853)
Net carrying amount:
Balance, December 31, 2017			113
Balance, December 31, 2018			$ 162	113
Trademarks | Minimum
Net carrying amount:
Estimated useful life (years)			4 years
Trademarks | Maximum
Net carrying amount:
Estimated useful life (years)			5 years
Non- compete Agreements
Gross carrying amount:
Beginning balance			$ 2,629	1,322
FX adjustments and other			(51)	75
Ending balance			2,578	2,629	1,322
Accumulated amortization:
Beginning balance			(1,602)	(1,322)
Amortization expense			(246)	(204)
FX adjustments and other			51	76
Ending balance			(1,797)	(1,602)	(1,322)
Net carrying amount:
Balance, December 31, 2017			1,027
Balance, December 31, 2018			$ 781	1,027
Estimated useful life (years)			5 years
Software
Gross carrying amount:
Beginning balance			$ 6,178	6,178
FX adjustments and other			(164)	0
Ending balance			6,014	6,178	6,178
Accumulated amortization:
Beginning balance			(1,884)	(272)
Amortization expense			(1,475)	(1,612)
FX adjustments and other			48	0
Ending balance			(3,311)	(1,884)	(272)
Net carrying amount:
Balance, December 31, 2017			4,294
Balance, December 31, 2018			$ 2,703	4,294
Estimated useful life (years)			4 years
Trade Names
Gross carrying amount:
Beginning balance			$ 2,200	2,200
FX adjustments and other			0	0
Ending balance			2,200	2,200	2,200
Accumulated amortization:
Beginning balance			(2,200)	(2,200)
Amortization expense			0	0
FX adjustments and other			0	0
Ending balance			(2,200)	(2,200)	$ (2,200)
Net carrying amount:
Balance, December 31, 2017			0
Balance, December 31, 2018			$ 0	0
Trade Names | Minimum
Net carrying amount:
Estimated useful life (years)			4 years
Trade Names | Maximum
Net carrying amount:
Estimated useful life (years)			5 years
Lavante
Gross carrying amount:
Acquisition of Assets		$ 6,178		10,923
Lavante | Customer Relationships
Gross carrying amount:
Acquisition of Assets				9,556
Lavante | Trademarks
Gross carrying amount:
Acquisition of Assets		163		135
Lavante | Non- compete Agreements
Gross carrying amount:
Acquisition of Assets				1,232
Lavante | Software
Gross carrying amount:
Acquisition of Assets		$ 5,901		0
Lavante | Trade Names
Gross carrying amount:
Acquisition of Assets				$ 0
C&CA
Gross carrying amount:
Acquisition of Assets	$ 10,923
C&CA | Customer Relationships
Gross carrying amount:
Acquisition of Assets	9,556
C&CA | Trademarks
Gross carrying amount:
Acquisition of Assets	135
C&CA | Non- compete Agreements
Gross carrying amount:
Acquisition of Assets	$ 1,232

XML

Debt (Details)				1 Months Ended	3 Months Ended	12 Months Ended
	Nov. 05, 2018 USD ($)	May 04, 2017 USD ($)	Jan. 19, 2010 USD ($)	Feb. 28, 2017 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Sep. 30, 2018	May 03, 2017 USD ($)
Line of Credit Facility [Line Items]
Unrestricted domestic cash holdings	100.00%
Unrestricted foreign cash holdings	70.00%
Earn out payment made						$ 0	$ 5,954,000	$ 3,834,000
SunTrust Bank
Line of Credit Facility [Line Items]
Period of term loan and the revolving credit facility			4 years
SunTrust Bank | Minimum
Line of Credit Facility [Line Items]
Applicable margin (percent)						1.75%
Sun Trust Revolving Credit Facility
Line of Credit Facility [Line Items]
Line of credit						$ 21,600,000
Remaining borrowing capacity						13,400,000
Sun Trust Revolving Credit Facility | SunTrust Bank
Line of Credit Facility [Line Items]
Committed revolving credit facility	$ 5,000,000.0	$ 35,000,000.0	$ 15,000,000.0			$ 30,000,000.0				$ 20,000,000.0
Sun Trust Term Loan | SunTrust Bank
Line of Credit Facility [Line Items]
Committed term loan			$ 15,000,000.0
Line of Credit | SunTrust Bank
Line of Credit Facility [Line Items]
Revolving credit facility commitment fee (percent)						0.25%
Interest rate during period						4.60%
C&CA
Line of Credit Facility [Line Items]
Earn out payment made				$ 900,000	$ (4,000,000)	$ 4,000,000	$ 900,000
Leverage Ratio I | Sun Trust Revolving Credit Facility | SunTrust Bank
Line of Credit Facility [Line Items]
Debt instrument, covenant, leverage ratio		1.25							1.25
Leverage Ratio I | Sun Trust Revolving Credit Facility | SunTrust Bank | LIBOR
Line of Credit Facility [Line Items]
Applicable margin (percent)		2.25%

XML

Debt - Debt Terms (Details) - SunTrust Bank		12 Months Ended
	May 04, 2017	Dec. 31, 2018	Sep. 30, 2018
Minimum
Debt Instrument [Line Items]
Applicable Margin		1.75%
Sun Trust Revolving Credit Facility | Leverage Ratio I
Debt Instrument [Line Items]
Leverage Ratio	1.25		1.25
Applicable Percentage For Commitment Fee	0.25%
Sun Trust Revolving Credit Facility | Leverage Ratio I | LIBOR
Debt Instrument [Line Items]
Applicable Margin	2.25%
Sun Trust Revolving Credit Facility | Leverage Ratio I | Base Rate
Debt Instrument [Line Items]
Applicable Margin	1.25%
Sun Trust Revolving Credit Facility | Leverage Ratio II
Debt Instrument [Line Items]
Applicable Percentage For Commitment Fee	0.375%
Sun Trust Revolving Credit Facility | Leverage Ratio II | Minimum
Debt Instrument [Line Items]
Leverage Ratio	1.25
Sun Trust Revolving Credit Facility | Leverage Ratio II | Maximum
Debt Instrument [Line Items]
Leverage Ratio	1.75
Sun Trust Revolving Credit Facility | Leverage Ratio II | LIBOR
Debt Instrument [Line Items]
Applicable Margin	2.50%
Sun Trust Revolving Credit Facility | Leverage Ratio II | Base Rate
Debt Instrument [Line Items]
Applicable Margin	1.50%
Sun Trust Revolving Credit Facility | Leverage Ratio III
Debt Instrument [Line Items]
Leverage Ratio	1.75
Applicable Percentage For Commitment Fee	0.375%
Sun Trust Revolving Credit Facility | Leverage Ratio III | LIBOR
Debt Instrument [Line Items]
Applicable Margin	2.75%
Sun Trust Revolving Credit Facility | Leverage Ratio III | Base Rate
Debt Instrument [Line Items]
Applicable Margin	1.75%

XML

Debt - Schedule of Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Long-term debt, gross	$ 21,666	$ 13,705
Debt issuance cost	(65)	(131)
Long-term debt, net	21,601	13,574
Less: Current portion of long-term debt	48	48
Long-term debt, excluding current portion, gross	21,618	13,657
Long-term debt, excluding current portion, net	21,553	13,526
Revolving Facility
Debt Instrument [Line Items]
Long-term debt, gross	21,600	13,600
Debt issuance cost	(65)	(131)
Long-term debt, net	21,535	13,469
Capital lease obligations
Debt Instrument [Line Items]
Long-term debt, gross	66	105
Debt issuance cost	0	0
Long-term debt, net	$ 66	$ 105

XML

Debt - Capital Lease Minimum Payments Due (Details) $ in Millions	Dec. 31, 2018 USD ($)
Debt Disclosure [Abstract]
2019	$ 21,661
2020	5
Total	$ 21,666

XML

Lease Commitments - Narrative (Details) ft² in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Feb. 29, 2016 ft²	Jan. 01, 2015 ft²	Jan. 31, 2014 ft²
Commitments and Contingencies Disclosure [Abstract]
Rent expense, excluding costs associated with the termination of noncancelable lease arrangements | $	$ 4.9	$ 5.1	$ 3.9
Long-term Purchase Commitment [Line Items]
Space under lease (sq ft)					58	132
Sublease
Long-term Purchase Commitment [Line Items]
Space under lease (sq ft)				3

XML

Lease Commitments - Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Gross
2018	$ 4,974
2019	3,882
2020	3,248
2021	1,168
2022	488
Total payments	13,760
Sublease Income
2018	(72)
2019	(74)
2020	(77)
2021	0
2022	0
Total payments	(223)
Amount
2018	4,902
2019	3,808
2020	3,171
2021	1,168
2022	488
Total payments	$ 13,537

XML

Income Taxes - Schedule of Income (Loss) Before Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
United States									$ (4,673)	$ (6,502)	$ (5,306)
Foreign									9,345	14,020	8,777
Net income from continuing operations before income tax	$ 5,681	$ 3,223	$ (2,691)	$ (1,541)	$ 6,178	$ 2,007	$ 554	$ (1,221)	$ 4,672	$ 7,518	$ 3,471

XML

Income Taxes - Schedule of Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Current:
Federal									$ 0	$ 0	$ 0
State									70	1	0
Foreign									2,920	2,230	2,103
Current provision for income taxes									2,990	2,231	2,103
Deferred:
Federal									(145)	(155)	0
State									0	0	0
Foreign									(1,524)	886	(861)
Deferred provision for income taxes									(1,669)	731	(861)
Total	$ (252)	$ 597	$ 189	$ 787	$ 526	$ 930	$ 879	$ 627	$ 1,321	$ 2,962	$ 1,242

XML

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 30, 2016
Income Tax Examination [Line Items]
Reported effective tax rate									28.30%	39.40%	35.80%
Deferred tax asset reduction									$ (13,900)
Change in valuation allowance									(3,200)	$ (13,900)
Increase (decrease) in deferred tax assets And Valuation Allowance									(600)
Valuation allowance	$ 34,776								31,597	34,776
Gross deferred tax assets	42,064								39,188	42,064
Credit to tax expense	252	$ (597)	$ (189)	$ (787)	$ (526)	$ (930)	$ (879)	$ (627)	(1,321)	(2,962)	$ (1,242)
Loss carry-forwards	17,161								17,109	17,161
U.S. federal
Income Tax Examination [Line Items]
Loss carry-forwards									81,500			$ 87,300
State
Income Tax Examination [Line Items]
Loss carry-forwards									70,900
Foreign subsidiary
Income Tax Examination [Line Items]
Gross deferred tax assets	$ 900				$ 8,400				6,600	900	$ 8,400
Credit to tax expense									200	$ 1,700
UK and US Subsidiary
Income Tax Examination [Line Items]
Credit to tax expense									(1,200)
2026 Through 2035
Income Tax Examination [Line Items]
Tax Credit Carryforward, Amount									80,900
No expiration
Income Tax Examination [Line Items]
Tax Credit Carryforward, Amount									$ 600

XML

Income Taxes - Schedule of Significant Differences Between the U.S. Federal Statutory Tax Rate and the Effective Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Statutory federal income tax rate									$ 981	$ 2,631	$ 1,180
State income taxes, net of federal effect									(285)	(62)	(173)
Net operating loss limitation									0	2,975	0
Adjustment to deferred taxes									939	301	(4,103)
Change in deferred tax asset valuation allowance									(2,867)	(15,338)	4,877
Change in tax law									(992)	13,850	0
Foreign tax rate differential									1,306	(899)	(1,153)
Compensation and equity adjustments									1,474	0	113
Effective Income Tax Rate Reconciliation, Acquisition Earnout Adjustment									(320)	87	60
Effective Income Tax Rate Reconciliation, Other Permanent Differences									183	(682)	0
Effective Income Tax Rate Reconciliation, Withholding Taxes									591	342	441
Effective Income Tax Rate Reconciliation, Changes In Uncertain Tax Provisions									19	(429)	0
Effective Income Tax Rate Reconciliation, Return To Provision Adjustments									257	155	0
Other, net									35	31	0
Total	$ (252)	$ 597	$ 189	$ 787	$ 526	$ 930	$ 879	$ 627	$ 1,321	$ 2,962	$ 1,242

XML

Income Taxes - Schedule of the Tax Effects of Temporary Differences and Carry-Forwards That Give Rise to Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Deferred income tax assets:
Accounts payable and accrued expenses	$ 714	$ 1,215
Accrued payroll and related expenses	2,315	1,691
Stock-based compensation expense	2,336	3,508
Depreciation of property and equipment	853	1,711
Capitalized software	119	0
Unbilled receivables and refund liabilities	97	1,811
Operating loss carry-forwards of foreign subsidiary	9,484	11,000
Federal operating loss carry-forwards	17,109	17,161
State operating loss carry-forwards	4,537	3,591
Other	1,624	376
Gross deferred tax assets	39,188	42,064
Less valuation allowance	31,597	34,776
Gross deferred tax assets net of valuation allowance	7,591	7,288
Deferred income tax liabilities:
Intangible assets	1,269	1,987
Capitalized software	0	29
Other	3,427	3,734
Gross deferred tax liabilities	4,696	5,750
Net deferred tax assets	$ 2,895	$ 1,538

XML

Income Taxes - Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits and Related Accrued Interest (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Unrecognized Tax Benefits
Beginning balance	$ 193	$ 497	$ 535
Additions based on tax positions related to the current year	4	0	0
Additions based on tax positions related to the prior years	10	116	0
Decrease based on payments made during the year	0	0	0
Decreases based on tax positions related to the prior years	0	(420)	(38)
Ending balance	207	193	497
Accrued Interest and Penalties
Beginning balance	28	154	202
Additions based on tax positions related to the current year	0	0	0
Additions based on tax positions related to the prior years	6	19	11
Decrease based on payments made during the year	0	0	0
Decreases based on tax positions related to the prior years	0	(145)	(59)
Ending balance	$ 34	$ 28	$ 154

XML

Employee Benefit Plans (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Employee Benefit Plans [Abstract]
Percentage of annual compensation per employee	6.00%
Defined contribution plan contributions by employer	$ 3,000
Defined contribution plan, employer contributions	$ 900,000	$ 800,000	$ 800,000

XML

Capital Structure (Details) - Common Stock - USD ($) $ in Millions			1 Months Ended			12 Months Ended
	Oct. 24, 2014	Mar. 25, 2014	Nov. 30, 2018	Dec. 31, 2016	Oct. 31, 2015	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Feb. 21, 2014
Class of Stock [Line Items]
Repurchase program, authorized amount	$ 40.0	$ 20.0	$ 75.0		$ 50.0	$ 0.0			$ 10.0
Share repurchase program, increase in shares authorized	$ 20.0	$ 10.0	$ 15.0	$ 10.0	$ 10.0
Repurchases of common stock, shares						440,286	27,599	905,403
Stock repurchased during period, value						$ 4.1

XML

Stock-Based Compensation - Plan Summary (Narrative) (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2008 shares	Dec. 31, 2018 compensation_plan	Jun. 27, 2017 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shareholder-approved stock-based compensation plans | compensation_plan		2
2008 EIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved for issuance (shares)	10,600,000
2017 EICP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved for issuance (shares)			3,400,000
Available for future grant (shares)			2,900,000
Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		3 years
Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		1 year
Options | 2008 EIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award expiration period	7 years
Options | Employees | 2008 EIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Options | Directors | 2008 EIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year

XML

Stock-Based Compensation - Summary of Stock Option Awards Granted (Details)	12 Months Ended
	Dec. 31, 2018 employee $ / shares shares	Dec. 31, 2017 employee $ / shares shares	Dec. 31, 2016 employee $ / shares shares
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Options Granted (shares) | shares	535,000
Weighted Average Exercise Price (usd per share)	$ 8.91
Employee inducement
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period			3 years
Weighted Average Grant Date Fair Value (usd per share)	8.95	$ 6.33	$ 4.94
Director group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Options Granted (shares) | shares			20,417
Director group (4)
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Weighted Average Grant Date Fair Value (usd per share)	9.45	6.35
Director Group Two
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period			3 years
Employee group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period			2 years
Weighted Average Grant Date Fair Value (usd per share)	$ 9.56	$ 6.31	$ 4.88
Options | Employee inducement
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Options Granted (shares) | shares	535,000	335,000	232,500
Vesting Period			3 years
Weighted Average Exercise Price (usd per share)	$ 8.91	$ 6.19	$ 4.61
Weighted Average Grant Date Fair Value (usd per share)	$ 2.89	$ 3.41	$ 2.60
Number of employees granted non-qualified stock options | employee	9
Options | Director group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Options Granted (shares) | shares		90,566
Weighted Average Exercise Price (usd per share)		$ 6.34
Weighted Average Grant Date Fair Value (usd per share)		$ 3.49
Number of employees granted non-qualified stock options | employee		1	1
Options | CEO grant
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Options Granted (shares) | shares		500,000
Vesting Period		4 years
Weighted Average Exercise Price (usd per share)		$ 7.35
Weighted Average Grant Date Fair Value (usd per share)		$ 2.36
Options | Director group (4)
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Options Granted (shares) | shares			195,417
Weighted Average Exercise Price (usd per share)			$ 5.01
Weighted Average Grant Date Fair Value (usd per share)			$ 2.71
Options | Employee group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Options Granted (shares) | shares		30,000	35,000
Vesting Period		3 years	3 years
Weighted Average Exercise Price (usd per share)		$ 7.25	$ 4.80
Weighted Average Grant Date Fair Value (usd per share)		$ 3.99	$ 2.66
Options | Director group(2)
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Options Granted (shares) | shares		35,000
Weighted Average Exercise Price (usd per share)		$ 6.25
Weighted Average Grant Date Fair Value (usd per share)		$ 3.50
Number of employees granted non-qualified stock options | employee	1
Maximum | Employee inducement
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period	3 years	3 years
Maximum | Director group (4)
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period	1 year	1 year
Maximum | Employee group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period	3 years	3 years
Maximum | Options | Employee inducement
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period		3 years
Maximum | Options | Director group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period			1 year
Maximum | Options | Director group (4)
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period		1 year
Maximum | Options | Director group(2)
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period		3 years

XML

Stock-Based Compensation - Summary of Nonvested Stock Awards Granted (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017 employee shares	Mar. 31, 2017 employee shares	Sep. 30, 2016 employee	Jun. 30, 2016 executive_officer	Dec. 31, 2018 $ / shares shares	Dec. 31, 2017 $ / shares shares	Dec. 31, 2016 $ / shares shares
Director group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Stock Awards Granted (shares)					64,545	51,179
Weighted Average Grant Date Fair Value (usd per share) | $ / shares					$ 9.45	$ 6.35
Employee group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Stock Awards Granted (shares)					488,685	641,751	1,250,750
Vesting Period							2 years
Weighted Average Grant Date Fair Value (usd per share) | $ / shares					$ 9.56	$ 6.31	$ 4.88
Employee inducement
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Stock Awards Granted (shares)					160,516	100,000	100,000
Vesting Period							3 years
Weighted Average Grant Date Fair Value (usd per share) | $ / shares					$ 8.95	$ 6.33	$ 4.94
Performance-based stock awards (restricted stock units), restricted stock units and restricted stock awards
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Stock Awards Granted (shares)	183,751				713,746
Weighted Average Grant Date Fair Value (usd per share) | $ / shares					$ 9.42	$ 6.32	$ 4.86
Performance-based stock awards (restricted stock units), restricted stock units and restricted stock awards | Employee group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of employees granted share-based compensation awards | executive_officer				5
Performance-based stock awards (restricted stock units), restricted stock units and restricted stock awards | Employee inducement
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of employees granted share-based compensation awards | employee	2		3
Performance-based stock awards (restricted stock units), restricted stock units and restricted stock awards | Executive officers
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of Stock Awards Granted (shares)		458,000
Number of employees granted share-based compensation awards | employee		12
Maximum | Director group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period					1 year	1 year
Maximum | Employee group
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period					3 years	3 years
Maximum | Employee inducement
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Vesting Period					3 years	3 years

XML

Stock-Based Compensation - Nonvested Stock Awards (Narrative) (Details)	12 Months Ended
	Dec. 31, 2018
Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year

XML

Stock-Based Compensation - Performance-Based Restricted Stock Units (Narrative) (Details) $ in Millions	1 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2018	Sep. 30, 2018 employee shares	Dec. 31, 2018 USD ($) employee shares	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
PBU expense reversed | $				$ 5.1	$ 7.1	$ 5.1
PBUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (shares)				299,028,000	333,800,000	1,350,750,000
Performance period		2 years
PBUs that will become vested and payable at the threshold performance level (as a percent)		80.00%		15.00%
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
PBUs that will become vested and payable at the threshold performance level (as a percent)				150.00%
PBU expense reversed | $						$ 5.4
Number of shares issued (shares)						483,623
2008 EIP | PBUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested PBUs to be paid in whole shares of common stock (as a percent)	100.00%			100.00%
Shares that vest and become payable based on the cumulative revenue from continuing operations (as a percent)	65.00%			50.00%
PBUs that vest and become payable on the cumulative adjusted EBITDA from continuing operations (as a percent)	35.00%			35.00%
Performance period	2 years			2 years
PBUs that will become vested and payable at the threshold performance level (as a percent)	35.00%
PBUs that will become vested and payable at the target performance level (as a percent)	100.00%			100.00%
Maximum PBUs that may become vested and payable (as a percent)	100.00%			150.00%
PBUs that shall become vested and payable if performance does not equal or exceed the applicable threshold performance level (as a percent)	0.00%			0.00%
Executive officers | PBUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of employees granted share-based compensation awards | employee			1
Executive officers | 2017 EICP | PBUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of employees granted share-based compensation awards | employee				5
Senior leaders | PBUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of employees granted share-based compensation awards | employee			2
Awards granted (shares)					333,800	1,350,750
Senior leaders | 2017 EICP | PBUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of employees granted share-based compensation awards | employee			1	9
Awards granted (shares)			12,000	54,180
Executive officers and senior leaders | 2017 EICP | PBUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (shares)			40,750	192,098

XML

Stock-Based Compensation - Summary of PBUs Granted (Details) - PBUs - shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total PBUs Granted	299,028,000	333,800,000	1,350,750,000
PBUs Settled in Common Stock	299,028,000	333,800,000	560,670,000
PBUs Settled in Cash	0	0	790,080,000

XML

Stock-Based Compensation - Stock Appreciation Rights (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions		6 Months Ended	12 Months Ended
	Apr. 27, 2016	Jun. 30, 2018	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share Price		$ 4.71	$ 9.15
SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period			350,000
Shares that vest and become payable based on the cumulative revenue from continuing operations (as a percent)			25.00%
Total vest date fair value of stock awards vested		$ 1.0
2017 EICP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share Price			$ 18.00
Chief Executive Officer | 2008 EIP | SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (shares)	200,000
Initial value per share (usd per share)	$ 4.71

XML

Stock-Based Compensation - Summary of Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Shares
Outstanding, beginning balance (shares)	3,399,293
Granted (shares)	535,000
Exercised (shares)	(676,649)
Forfeited (shares)	(280,556)
Expired (shares)	(126,271)
Outstanding, ending balance (shares)	2,850,817	3,399,293
Exercisable (shares)	1,735,149
Weighted- Average Exercise Price (Per Share)
Outstanding, beginning balance (usd per share)	$ 6.54
Granted (usd per share)	8.91
Exercised (usd per share)	6.54
Forfeited (usd per share)	7.61
Expired (usd per share)	6.53
Outstanding, ending balance (iusd per share)	6.84	$ 6.54
Exercisable (usd per share)	$ 6.40
Weighted- Average Remaining Contractual Term
Outstanding (term)	3 years 8 months 25 days	4 years 18 days
Exercisable (term)	2 years 8 months 23 days
Aggregate Intrinsic Value ($ 000’s)
Outstanding, beginning balance	$ 2,367
Exercised	1,585	$ 300	$ 100
Outstanding, ending balance	7,384	$ 2,367
Exercisable	$ 5,225

XML

Stock-Based Compensation - Summary of Activity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant date fair value of options granted (usd per share)	$ 2.89	$ 2.91	$ 2.66
Total intrinsic value of options exercised	$ 1,585	$ 300	$ 100
Stock-based compensation expense	5,100	7,100	5,100
Income tax expense	1,300	2,700	1,900
Nonvested stock awards (restricted stock and restricted stock units)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total vest date fair value of stock awards vested	$ 12,700	$ 300	$ 700

XML

Stock-Based Compensation - Schedule of Assumptions Used in Black-Scholes Valuation Models (Details) - Stock options	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yields (as a percent)	0.00%	0.00%	0.00%
Weighted-average expected term of options	4 years
Forfeiture rate	0.00%	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rates	2.30%	0.58%	0.80%
Volatility factor of expected market price (as a percent)	0.362%	0.391%	0.323%
Weighted-average expected term of options		1 year 3 months 18 days	3 years 1 month 6 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rates	2.99%	1.20%	1.59%
Volatility factor of expected market price (as a percent)	0.371%	0.779%	0.733%
Weighted-average expected term of options		4 years 6 months	5 years

XML

Stock-Based Compensation - Summary of Nonvested Stock Awards Activity (Details) - Nonvested stock awards (including restricted stock, restricted stock units and performance-based restricted stock units) - $ / shares	3 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Shares
Nonvested, beginning balance (shares)		2,116,696
Granted (shares)	183,751	713,746
Vested (shares)		(1,523,696)
Forfeited (shares)		(340,796)
Nonvested, ending balance (shares)		965,950	2,116,696
Weighted Average Grant Date Fair Value (Per Share)
Nonvested, beginning balance (usd per share)		$ 5.36
Granted (usd per share)		9.42	$ 6.32	$ 4.86
Vested (usd per share)		5.02
Forfeited (usd per share)		7.51
Nonvested, ending balance (usd per share)		$ 8.18	$ 5.36

XML

Stock-Based Compensation - Schedule of Unrecognized Compensation Expense Related to Nonvested Stock-Based Compensation (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 7,197
Weighted-average remaining recognition period	1 year 10 months 24 days
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 2,145
Weighted-average remaining recognition period	2 years 6 months
SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 313
Weighted-average remaining recognition period	1 year 2 months 12 days
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 2,614
Weighted-average remaining recognition period	2 years 1 month 6 days
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 2,125
Weighted-average remaining recognition period	1 year 2 months 12 days

XML

Business Acquisitions and Divestitures - Narrative (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended			12 Months Ended
	Feb. 28, 2017	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Feb. 23, 2017	Oct. 31, 2016
Business Acquisition [Line Items]
Reduction of earn-out liability		$ 1,600			$ 2,100
Fair value of contingent consideration liabilities at the date of acquisition					0	$ 5,954	$ 3,834
Payments for business acquisition					(19)	10,128	3,669
C&CA
Business Acquisition [Line Items]
Business combination, consideration transferred	$ 10,000
Contingent consideration, liability, maximum	8,000
Contingent consideration, liability	5,900				3,700
Fair value of contingent consideration liabilities at the date of acquisition	$ 900		$ (4,000)		4,000	900
Total cash paid								$ 9,968
C&CA | Recovery Audit Services – Americas | Audit Claim Recovery
Business Acquisition [Line Items]
Revenue					9,600	7,800
Income (loss) before income taxes due to acquisition					600	800
C&CA | Europe, Asia and Pacific | Audit Claim Recovery
Business Acquisition [Line Items]
Revenue					4,400	3,300
Income (loss) before income taxes due to acquisition					1,500	1,000
Lavante
Business Acquisition [Line Items]
Contingent consideration, liability, maximum									$ 4,500
Contingent consideration, liability					500				3,800
Fair value of contingent consideration liabilities at the date of acquisition		$ (1,600)		$ (2,100)	100	300
Revenue					2,200	1,900	400
Income (loss) before income taxes due to acquisition					$ (2,300)	$ (4,800)	(900)
Total cash paid									$ 3,809
Lavante | Other current liabilities
Business Acquisition [Line Items]
Contingent consideration, liability							2,000
Lavante | Other long-term liabilities
Business Acquisition [Line Items]
Contingent consideration, liability							$ 1,800

XML

Business Acquisitions and Divestitures - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Feb. 23, 2017	Dec. 31, 2016	Oct. 31, 2016
Business Acquisition [Line Items]
Goodwill	$ 17,531	$ 17,648		$ 13,823
C&CA
Business Acquisition [Line Items]
Account receivables			$ 1,621
Commissions receivable			48
Prepaid expenses			109
Other current assets, net			6
Intangible Assets			10,923
Goodwill			3,554
Fixed Assets			323
Accounts payable			(125)
Accrued commissions			(537)
Total consideration paid			15,922
Contingent consideration (1)			(5,954)
Total cash paid			$ 9,968
Lavante
Business Acquisition [Line Items]
Cash and cash equivalents					$ 28
Account receivables					207
Other current assets, net					92
Intangible Assets					6,178
Goodwill					2,286
Fixed Assets					98
Accounts payable					(121)
Deferred revenue					(370)
Other current liabilities					(757)
Total consideration paid					7,641
Contingent consideration (1)					(3,832)
Total cash paid					$ 3,809

XML

Business Acquisitions and Divestitures - Intangible Assets Acquired (Details) - USD ($) $ in Thousands			12 Months Ended
	Feb. 23, 2017	Oct. 31, 2016	Dec. 31, 2017
C&CA
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired, Fair Values	$ 10,923
Lavante
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired, Fair Values		$ 6,178	$ 10,923
Customer relationships | C&CA
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired, Fair Values	$ 9,556
Acquired finite-lived Intangible Assets, Remaining useful lives	14 years
Customer relationships | Lavante
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired, Fair Values			9,556
Non-compete | C&CA
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired, Fair Values	$ 1,232
Acquired finite-lived Intangible Assets, Remaining useful lives	4 years
Non-compete | Lavante
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired, Fair Values			1,232
Trademarks | C&CA
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired, Fair Values	$ 135
Acquired finite-lived Intangible Assets, Remaining useful lives	4 years
Trademarks | Lavante
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired, Fair Values		$ 163	135
Acquired finite-lived Intangible Assets, Remaining useful lives		4 years
Patents | Lavante
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired, Fair Values		$ 114
Acquired finite-lived Intangible Assets, Remaining useful lives		1 year
Software | Lavante
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired, Fair Values		$ 5,901	$ 0
Acquired finite-lived Intangible Assets, Remaining useful lives		4 years

XML

Business Acquisitions and Divestitures - Pro Forma Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
C&CA
Business Acquisition, Pro Forma Information [Abstract]
Unaudited pro forma revenue	$ 162,459	$ 155,626
Unaudited pro forma net (loss) income from continuing operations	$ 3,886	5,365
Lavante
Business Acquisition, Pro Forma Information [Abstract]
Unaudited pro forma revenue		143,198	$ 140,994
Unaudited pro forma net (loss) income from continuing operations		$ (3,418)	$ (5,516)

XML

Quarterly Results (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Quarterly financial data
Revenue, net of refund liabilities	$ 49,633	$ 43,320	$ 42,102	$ 36,721	$ 47,074	$ 42,467	$ 38,510	$ 33,569	$ 171,776	$ 161,620	$ 140,844
Operating expenses:
Cost of revenue	26,493	26,146	27,389	24,797	26,746	26,675	25,605	23,026	104,825	102,052	91,299
Selling, general and administrative expenses	13,862	12,521	12,809	11,264	12,792	12,189	11,424	10,536	50,456	46,941	39,399
Depreciation of property, equipment and software assets	2,074	1,713	2,360	1,223	1,107	1,133	1,109	1,220	7,370	4,569	5,033
Amortization of intangible assets	871	872	864	788	1,468	722	722	722	3,395	3,634	1,832
Acquisition-related adjustments (income) loss	12	(1,640)	0	0	(2,283)	0	0	0	(1,628)	(2,283)	0
Total operating expenses	43,312	39,612	43,422	38,072	39,830	40,719	38,860	35,504	164,418	154,913	137,563
Operating income from continuing operations	6,321	3,708	(1,320)	(1,351)	7,244	1,748	(350)	(1,935)	7,358	6,707	3,281
Foreign currency transaction losses (gains) on short-term intercompany balances	272	70	880	(220)	(263)	(418)	(957)	(552)	1,002	(2,190)	84
Interest expense, net	363	416	486	398	1,312	142	48	37	1,663	1,539	(153)
Other loss (income)	5	(1)	5	12	17	17	5	(199)	21	(160)	(121)
Net income from continuing operations before income tax	5,681	3,223	(2,691)	(1,541)	6,178	2,007	554	(1,221)	4,672	7,518	3,471
Income tax expense (benefit)	(252)	597	189	787	526	930	879	627	1,321	2,962	1,242
Net income from continuing operations	$ 5,933	$ 2,626	$ (2,880)	$ (2,328)	$ 5,652	$ 1,077	$ (325)	$ (1,848)	$ 4,593	$ 3,184	$ 905
Basic (loss) earnings per common share from continuing operations (usd per share)	$ 0.26	$ 0.11	$ (0.13)	$ (0.10)	$ 0.26	$ 0.05	$ (0.01)	$ (0.08)	$ 0.20	$ 0.15	$ 0.04
Diluted (loss) earnings per common share from continuing operations (usd per share)	$ 0.26	$ 0.11	$ (0.13)	$ (0.10)	$ 0.26	$ 0.05	$ (0.01)	$ (0.08)	$ 0.20	$ 0.15	$ 0.04

XML

Subsequent Events - (Details) - Subsequent Event $ in Millions	Mar. 14, 2019 USD ($)
Bank Of America | Revolving Facility | Line of Credit
Subsequent Event [Line Items]
Credit Facility, Term	5 years
Line of Credit Facility, Increase (Decrease), Net	$ 60.0
Line of Credit Facility, Maximum Borrowing Capacity	5.0
Long-term Line of Credit	30.0
Debt Outstanding, Prepayment	30.0
Bank Of America | Swingline | Line of Credit
Subsequent Event [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 5.0
Debt Instrument Secured, Equity Interest, Percentage	65.00%
Minimum | Senior Notes
Subsequent Event [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	1.50%
LIBOR | Maximum | Senior Notes
Subsequent Event [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	2.25%
LIBOR | Maximum | Bank Of America | Senior Notes
Subsequent Event [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	3.89%
Base Rate | Minimum | Senior Notes
Subsequent Event [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	0.50%
Base Rate | Maximum | Senior Notes
Subsequent Event [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	1.25%

XML

Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Allowance for doubtful accounts receivable
Movement in Valuation Allowances and Reserves
Balance at Beginning of Year	$ 1,499	$ 799	$ 930
Additions	(346)	724	(129)
Deductions	(129)	(24)	(2)
Balance at End of Year	1,024	1,499	799
Allowance for doubtful employee advances and miscellaneous receivables
Movement in Valuation Allowances and Reserves
Balance at Beginning of Year	292	500	681
Additions	(48)	1,665	2,184
Deductions	(68)	(1,873)	(2,365)
Balance at End of Year	176	292	500
Deferred tax valuation allowance
Movement in Valuation Allowances and Reserves
Balance at Beginning of Year	34,776	50,114	45,565
Additions	(3,179)	(15,338)	4,549
Deductions	0	0	0
Balance at End of Year	$ 31,597	$ 34,776	$ 50,114