Cincinnati Bell 2014 Annual Report Download - page 53

Table of Contents
Form 10-K Part II
Cincinnati Bell Inc.
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We are subject to various lawsuits, actions, proceedings, claims and other matters asserted under laws and regulations in the normal course of business. We
believe the amounts provided in our consolidated financial statements, as prescribed by GAAP, are adequate in light of the probable and estimable
contingencies. However, there can be no assurances that the actual amounts required to satisfy alleged liabilities from various legal proceedings, claims, tax
examinations, and other matters, including the matters discussed below, and to comply with applicable laws and regulations, will not exceed the amounts
reflected in our consolidated financial statements. As such, costs, if any, that may be incurred in excess of those amounts provided as of December 31, 2014,
cannot be reasonably determined.
Based on information currently available, consultation with counsel, available insurance coverage and established reserves, management believes the
eventual outcome of all outstanding claims will not individually, or in the aggregate, have a material effect on the Company's financial position, results of
operations or cash flows.
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Indemnifications
During the normal course of business, the Company makes certain indemnities, commitments, and guarantees under which it may be required to make
payments in relation to certain transactions. These include (a) intellectual property indemnities to customers in connection with the use, sale, and/or license
of products and services, (b) indemnities to customers in connection with losses incurred while performing services on their premises, (c) indemnities to
vendors and service providers pertaining to claims based on negligence or willful misconduct, (d) indemnities involving the representations and warranties in
certain contracts, and (e) outstanding letters of credit which totaled $6.9 million as of December 31, 2014. In addition, the Company has made contractual
commitments to several employees providing for payments upon the occurrence of certain prescribed events. The majority of these indemnities,
commitments, and guarantees do not provide for any limitation on the maximum potential for future payments.
On November 20, 2012, certain subsidiaries of the Company (the “Contributors”) entered into contribution agreements (the “Contribution Agreements”) with
CyrusOne LP, pursuant to which, on November 20, 2012, the Contributors contributed direct or indirect interests in a portfolio of properties and certain other
assets related to such properties to CyrusOne LP in exchange for units of limited partnership interest in CyrusOne LP and the assumption of liabilities by
CyrusOne LP.
The Contribution Agreements provide that CyrusOne LP assumed or succeeded to all of the Contributors' rights, liabilities and obligations with respect to the
property entity, property interests and assets contributed. The Contribution Agreements contain customary representations and warranties by the Contributors
with respect to the property entity, property interests and assets contributed to CyrusOne LP, such as title to any owned property, compliance with laws
(including environmental laws), enforceability of certain material contracts and leases and certain other matters. In the event of a breach of such
representations and warranties, the Contributors will indemnify CyrusOne LP for any resulting losses.
No Contributor will be liable unless and until the amount of losses exceeds 1% of the aggregate value of the units of limited partnership interest in CyrusOne
LP received by the Contributor that contributed the property to which such losses relate. The liability of each Contributor will be limited to 10% of the
aggregate value of the units of limited partnership interest in CyrusOne LP received by such Contributor in connection with the contribution transactions,
and, with respect to any liability that arises from a specific contributed property, such indemnification will be limited to 10% of the aggregate value of the
units of limited partnership interest in CyrusOne LP issued in respect of such contributed property. The foregoing limitations on the Contributors'
indemnification obligations will not apply to the Contributors' representations and warranties with respect to title to any owned property contributed to
CyrusOne LP until such time as CyrusOne LP obtains title insurance policies with respect to such properties.
The representations and warranties made by the Contributors expired on November 20, 2013 without a claim of breach being filed. As such, CyrusOne LP has
no further recourse against the Contributors.
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