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

Lease obligations

The Company currently has two major locations, our corporate office located in Olathe, KS, and our East Greenwich, RI, office. Both locations are under operating leases which expire in 2018 and 2019, respectively.

Through the acquisition of AHS in 2015, the Company acquired two leased properties in Des Moines, IA and Indianapolis, IN under operating leases which would have expired in 2018. The Company determined that neither lease was necessary for its operations, thus, in April 2017, settlement agreements for the remaining lease obligations were reached with both landlords. Additionally, the Company was obligated under a lease related to the discontinued Hooper Holmes Services operations center through 2018 and had ceased use of this facility, and on March 9, 2017, the parties to the lease reached a settlement agreement for the remaining lease obligation. The lease settlement liabilities for the three settled lease agreements of $0.1 million are accrued in other current liabilities in the accompanying condensed consolidated balance sheet as of June 30, 2018.

The Company also leases vehicles, copiers, and other miscellaneous office equipment. Many of our leases expire at various times through 2019; however, some extend beyond 2022.

Employment obligations

The Company has employment agreements with certain executive employees that provide for payment of base salary for a defined period in the event their employment with us is terminated in certain circumstances, including following a change in control, as further defined in the agreements.

The Company incurred certain severance and other costs related to its ongoing initiatives to increase the flexibility of its cost structure that were recorded in selling, general, and administrative expenses, and at June 30, 2018, and December 31, 2017, the Company recorded a $0.6 million and $0.6 million liability, respectively, related to these initiatives in other current liabilities in the accompanying condensed consolidated balance sheet.

On June 21, 2018, the Company adopted a Key Employee Retention Incentive Plan (the “Plan”) to provide incentives for key management personnel to make extraordinary efforts to execute the strategic objectives of the Company in connection with its previously announced plan to seek a significant equity investment or a transaction involving the merger or sale of the Company (a “Transaction”). The Plan provides an opportunity for key management personnel, including the Company’s executive officers among others, to earn a one-time cash bonus on closing of a Transaction on the condition that the participant affirmatively and continuously assists the Company in and through the successful completion of a Transaction. The maximum authorized size of the aggregate bonus pool under the Plan cannot exceed a cap of five percent of Gross Enterprise Value (as defined in the Plan), and the Company’s current expectation is that the actual aggregate bonuses to be awarded will total less than four percent of Gross Enterprise Value.

Loss contingencies

The Company accrued $1.3 million related to a vendor arrangement acquired in the Merger. The arrangement had a minimum purchase commitment for which it was probable that the Company would not achieve. This amount has been recorded in Accruals as part of the purchase price allocation disclosed in Note 3.

Legal contingencies and obligations

The Company is, in the normal course of business, a party to various claims and other legal proceedings. If management believes that a material loss not covered by insurance arising from these actions is probable and can reasonably be estimated, the Company may record the amount of the estimated loss or, if a loss cannot be estimated but the minimum liability may be estimated using a range and no point is more probable than another, the Company may record the minimum estimated liability. As additional information becomes available, any potential liability related to these actions is assessed and the estimates are revised, if necessary. The Company is not involved in any pending legal proceeding that, in the opinion of management after taking into account our loss reserves and insurance coverage, is likely to have a material adverse effect on our financial position or results of operations, with one exception. On June 21, 2018, Cantor Fitzgerald & Co. filed a complaint with the Supreme Court of the State of New York seeking $4.0 million in damages under a commercial contract. The Company intends to vigorously defend itself against the claim but the size of the claim, if successful, could have a material adverse effect on the Company’s operations. Litigation and claims are subject to inherent uncertainties and unfavorable outcomes can occur that exceed any amounts reserved for such losses. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on the results of operations in the period in which the outcome occurs or in future periods.

Prior to our merger with PHS, PHS settled a lawsuit filed in California state court in which a former employee claimed that PHS failed to follow specific requirements under California wage and hour laws and regulations. Under the settlement agreement, PHS agreed to pay the plaintiff approximately $0.8 million, a portion of which was covered by PHS's insurance, with final payment due by November 2018. The uninsured balance of $0.4 million has been accrued in other current liabilities in the condensed consolidated balance sheet as of June 30, 2018.

On September 30, 2016, a former employee filed a class action complaint against the Company in state court in California, alleging employment-related claims. The parties have agreed in principle to settle the case, subject to negotiation of a definitive settlement agreement. The Company has accrued $0.1 million in other current liabilities in the condensed consolidated balance sheet as of June 30, 2018.