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Litigation and Other Contingencies
6 Months Ended
Jun. 30, 2018
Commitments And Contingencies Disclosure [Abstract]  
Litigation and Other Contingencies

Note Ten — Litigation and Other Contingencies

The company is a party to various agreements, including all its client contracts, under which it may be obligated to indemnify the other party with respect to certain matters, including, but not limited to, indemnification against third-party claims of (i) infringement of intellectual property rights with respect to services, software, and other deliverables provided by the company, and (ii) failure to comply with various data security and privacy regulations. These obligations may be subject to various limitations on the remedies available to the other party, including, without limitation, limits on the amounts recoverable and the time during which claims may be made, and may be supported by indemnities given to the company by applicable third parties. Payment by the company under these indemnification clauses is generally subject to the other party making a claim that is subject to challenge by the company. Historically, the company has not been obligated to pay any claim for indemnification under its agreements, and management is not aware of future indemnification payments that it would be obligated to make.

Under its by-laws, subject to certain exceptions, the company has agreed to indemnify its corporate officers and directors for certain events or occurrences while the officer or director is, or was, serving at its request in such capacity or in certain related capacities. The company has separate indemnification agreements with each of its corporate officers and directors that requires it, subject to certain exceptions, to indemnify them to the fullest extent authorized or permitted by its by-laws and the Delaware General Corporation Law. The maximum potential amount of future payments the company could be required to make under these indemnification agreements is unlimited; however, the company has a director and officer liability insurance policy that limits its exposure and enables it to recover a portion of any amounts paid under these indemnification agreements. As a result of its insurance policy coverage, the company believes the estimated fair value of these indemnification agreements is minimal. The company had no liabilities recorded for these agreements as of June 30, 2018.

Between May 16 and May 21, 2018, three stockholders filed putative class action complaints in the federal and state courts located in Delaware challenging the transactions contemplated under the Merger Agreement. While each of these actions was subsequently withdrawn or voluntarily dismissed, there is no guarantee that similar actions will not be filed against the company, its board of directors, the Parent company and others in connection with the transactions contemplated by the Merger Agreement in the future.  The outcome of litigation is uncertain and the company may not be successful in defending against any such future claims. Additional lawsuits that may be filed to challenge the Merger Agreement could delay or prevent the acquisition by Parent, divert the attention of management and employees from the day-to-day business, and otherwise adversely affect the company financially.

The company’s products are subject to sales tax in certain jurisdictions. In a recent ruling by the Supreme Court of the United States, online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state.  In response to the Court’s decision, states or local governments may now enforce the collection and remittance of sales tax in their jurisdiction. A successful assertion by the taxing authority that the company has not properly collected sales or other transaction taxes, could result in the company incurring substantial tax liabilities. The company has considered the changing nature of tax laws, the terms of its customer contracts and its recent audit experience in assessing its exposure to possible and probable sales tax liabilities. Based on its assessment as of June 30, 2018, the company has recorded a sales tax liability of $0.5 million, which includes a $0.1 million reserve, as well as $0.4 million current sales tax collections from customers prior to remittance to taxing authorities.