EK Financing Motion

12-10202-alg
Doc 2492
Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 1 of 103
Main Document
Hearing Date: December 14, 2012 at 10:00 a.m. (Eastern Time) Objection Deadline: December 10, 2012 at 5:00 p.m. (Eastern Time)
Andrew G. Dietderich Michael H. Torkin Alexa J. Kranzley David R. Zylberberg SULLIVAN & CROMWELL LLP 125 Broad Street New York, New York 10004 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: EASTMAN KODAK COMPANY, et al.,1 Debtors. ) ) ) ) ) ) ) Chapter 11 Case No. 12-10202 (ALG) (Jointly Administered)
DEBTORS AMENDED MOTION FOR AN ORDER AUTHORIZING THE DEBTORS TO (A) (I) ENTER INTO FINANCING COMMITMENT DOCUMENTS FOR SECURED SUPPLEMENTAL POSTPETITION AND EXIT FINANCING, (II) INCUR AND PAY ASSOCIATED FEES, COSTS AND EXPENSES AND (III) FURNISH RELATED INDEMNITIES, AND (B) (I) ENTER INTO A WORK FEE LETTER AND (II) INCUR AND PAY ASSOCIATED FEES Eastman Kodak Company (Kodak), on behalf of itself and its affiliated debtors and debtors-in-possession in these chapter 11 cases (collectively, the Debtors), hereby submits this amended motion (the Motion) for the entry of an order substantially in the form attached hereto as Exhibit A (the Proposed Order), authorizing the Debtors to (a) enter into (i) the
The Debtors in these chapter 11 cases, along with the last four digits of each Debtors federal tax identification number, are: Eastman Kodak Company (7150); Creo Manufacturing America LLC (4412); Eastman Kodak International Capital Company, Inc. (2341); Far East Development Ltd. (2300); FPC Inc. (9183); Kodak (Near East), Inc. (7936); Kodak Americas, Ltd. (6256); Kodak Aviation Leasing LLC (5224); Kodak Imaging Network, Inc. (4107); Kodak Philippines, Ltd. (7862); Kodak Portuguesa Limited (9171); Kodak Realty, Inc. (2045); Laser-Pacific Media Corporation (4617); NPEC Inc. (5677); Pakon, Inc. (3462); and Qualex Inc. (6019). The location of the Debtors corporate headquarters is: 343 State Street, Rochester, NY 14650.
SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
financing commitment letter (for secured supplemental postpetition and exit financing) in the form attached hereto as Exhibit B (including the exhibits and attachments thereto, collectively, the Commitment Letter) with ten institutional lenders comprising the Steering Committee for the Ad Hoc Committee of Second Lien Noteholders2 and (ii) the fee letter with Wilmington Trust, National Association (the Agent), as administrative agent and collateral agent for the Proposed Supplemental DIP Facility (as defined below) (the Agent Fee Letter and, together with the Commitment Letter the Improved Commitment Documents); (b) incur and pay associated fees and expenses to the Steering Committee Lenders and the Agent in connection with the Improved Commitment Documents; (c) furnish related indemnities provided for in the Improved Commitment Documents; (d) enter into the work fee letter (the Work Fee Letter) with Citigroup Global Markets Inc. (Citi) in relation to a proposed amendment to the Debtors Existing DIP Facility (as defined below) and (e) incur and pay fees to Citi in connection therewith (the Work Fee). In support of the Motion, the Debtors submit the Supplemental Kurtz Declaration,3 attached as Exhibit C and incorporated by reference herein, and respectfully represent and set forth as follows:
The Steering Committee Lenders are: (a) Archview Fund L.P. and Archview Master Fund LTD; (b) Bennett Management Corporation; (c) Contrarian Funds, LLC; (d) D.E. Shaw Galvanic Portfolios, L.L.C., D.E. Shaw Oculus Portfolios, L.L.C. and D.E. Shaw Heliant Portfolios, L.L.C.; (e) Goldentree Asset Management LP; (f) Litespeed Master Fund LTD; (g) P. Schoenfeld Asset Management L.P.; (h) Serengeti Lyacon MM L.P., Serengeti Opportunities MM L.P. and Serengeti Opportunities Partners LP; (i) Stone Lion Capital Partners L.P.; and (j) Capital Ventures International. The Steering Committee Lenders have represented to the Debtors that they collectively hold approximately $342 million in principal amount of Prepetition Second Lien Notes (as defined below). Supplemental Declaration of David S. Kurtz in Support of the Debtors Amended Motion for an Order Authorizing the Debtors to (A) (I) Enter Into Financing Commitment Documents for Secured Supplemental Postpetition and Exit Financing, (II) Incur and Pay Associated Fees, Costs and Expenses and (III) Furnish Related Indemnities, and (B) (I) Enter Into a Work Fee Letter and (II) Incur and Pay Associated Fees (the Supplemental Kurtz Declaration).
-2SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
Preliminary Statement 1. On November 14, 2012, the Debtors filed a motion (the Original
Commitment Motion)4 seeking authorization to enter into a commitment (the Original Commitment) for supplemental postpetition and exit financing (the Original Proposal)5 and to incur and pay related obligations. 2. Although the Debtors had ceased negotiations with other lenders and were
moving forward to implement the Original Proposal, on November 26, 2012, the Debtors received a fully committed and executed, unsolicited offer of financing from the Steering Committee Lenders to provide supplemental postpetition and exit financing with a structure similar to the Original Proposal, but on significantly more favorable economic terms and with other improved terms (the Improved Proposed Financing). After careful consideration of the offer, the Debtors have determined to accept the Steering Committee Lenders commitment for the Improved Proposed Financing (the Improved Commitment). The Debtors seek, at this time, approval only of the Improved Commitment Documents and will file separate motions with the Court seeking approval of (x) the Improved Proposed Financing and (y) procedures to permit the participation of other holders of Prepetition Second Lien Notes in respect thereof.
Debtors' Motion for an Order Authorizing the Debtors to (A) Enter Into Financing Commitment Documents for Secured Supplemental Postpetition and Exit Financing, (B) Incur and Pay Associated Fees, Costs and Expenses and (C) Furnish Related Indemnities [Docket No. 2384]. In support of the Original Commitment Motion, the Debtors filed the Declaration of David S. Kurtz in Support of the Debtors' Motion for an Order Authorizing the Debtors to (A) Enter Into Financing Commitment Documents for Secured Supplemental Postpetition and Exit Financing, (B) Incur and Pay Associated Fees, Costs and Expenses and (C) Furnish Related Indemnities [Docket No. 2413] (the Kurtz Declaration; together with the Original Commitment Motion, the Original Commitment Pleadings). The parties providing the Original Commitment (the Original Commitment Parties) were (a) Centerbridge Advisors II, LLC, (b) GSO Capital Partners LP, (c) J.P. Morgan Securities LLC, and (d) UBS Securities LLC and UBS AG, Stamford Branch. The Debtors understand that the Original Commitment Parties hold, in aggregate, $274 million in principal amount of Prepetition Second Lien Notes (as defined below).
-3SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
3.
Ultimately, the Debtors choice to pursue the Improved Proposed
Financing over the Original Proposal was an exercise of business judgment based on the superior economics and other improved terms of the Improved Proposed Financing. The Debtors estimate the Improved Proposed Financing will save over $35 million in fees and interest compared to the Original Proposal over the remainder of these chapter 11 cases, with additional savings to be realized after emergence. Significantly, the Improved Proposed Financing also permits pro rata participation in the Second Lien Roll-Up (as defined below) by all Second Lien Noteholders who elect to participate in the Improved Proposed Financingimportant to the Debtors and all Second Lien Noteholdersat a much lower cost than the Original Proposal.6 4. The Improved Proposed Financing consists of a supplemental debtor-in-
possession facility in an aggregate principal amount of up to $830 million7 (the Proposed Supplemental DIP Facility) which consists of $455 million8 in fully committed new money loans and up to $375 million in roll-up loans issued in dollar-for-dollar exchange for Prepetition Second Lien Notes. The Improved Proposed Financing preserves and improves upon an essential feature of the Original Proposal: the entire amount of the Roll-Up Loans plus the substantial portion of the new money loans are convertibleat the option of the Debtorsinto long-term exit financing. A total of $630 million of the Proposed Supplemental DIP Facility may convert into an exit term loan facility upon the effective date of the Debtors chapter 11 plan (the Proposed Exit Facility). The term of the Proposed Exit Facility has also been extended.
Prior to the Petition Date, Kodak issued $500 million in 9.75% Senior Secured Notes due 2018 (the 9.75% Notes) and $250 million in 10.625% Senior Secured Notes due 2019 (the 10.625% Notes, together with the 9.75% Notes, the Prepetition Second Lien Notes). Each of the Steering Committee Lenders are holders of Prepetition Second Lien Notes (Second Lien Noteholders). This amount may be increased to $843.65 million pursuant to the Put Option Premium. This amount may be increased to $468.65 million pursuant to the Put Option Premium.
7 8
-4SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
If the Debtors elect to roll-over the Proposed Supplemental DIP Facility into the Proposed Exit Facility, the Improved Proposed Financing will mature on the date that is five years following the effective date of the Debtors chapter 11 planone year later than under the Original Proposal. 5. The Revised Commitment Obligations for which the Debtors now
seek approval include: (i) reimbursement of the Steering Committee Lenders, the Agent and their respective affiliates for reasonable out-of-pocket expenses; (ii) indemnification of the Steering Committee Lenders, the Agent and their respective affiliates; (iii) a reduced backstop commitment fee (referred to as a put option premium in the Improved Proposed Financing) (the Put Option Premium); (iv) if the commitment is extended beyond January 31, 2013, a contingent fee in an amount equal to 2.00% of the Steering Committee Lenders commitment to make new money loans, payable on February 28, 2013, but only if the Improved Proposed Financing has not closed by that date; and (v) an agency fee payable to the Agent. The Debtors have the option to pay the Put Option Premium either (a) in kind with additional loans under the Proposed Supplemental DIP Facility in a principal amount equal to 3.00% of the Steering Committee Lenders commitment to make new money loans, or (b) in cash in an amount equal to 2.00% of the Steering Committee Lenders commitment to make new money loans. In either case, the Put Option Premium is not paid until closing of the Improved Proposed Financing. Notably, the Improved Proposed Financing does not require payment of a break-up fee or similar protections that were payable under the Original Proposal in the event that the Debtor pursued and closed an alternative debtor-in-possession financing. 6. All holders of Prepetition Second Lien Notes will be permitted to
participate in the Improved Proposed Financing on a pro rata basis, other than with respect to the -5SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
Revised Commitment Obligations. In addition, the Debtors obtained permission from the Steering Committee Lenders to offer to the Original Commitment Parties the opportunity to join as backstop commitment parties prior to public announcement of the Improved Proposed Financing. The Original Commitment Parties have declined to join in the Improved Proposed Financing at this time, although the Debtors continue discussions with the Original Commitment Parties with respect to the possibility that they will participate in the Improved Proposed Financing. 7. Approval of the Revised Commitment Obligations is a condition to the
continuation of the Improved Commitment beyond December 20, 2012. The Debtors believe this to be a reasonable schedule in light of the fact that the Improved Proposed Financing is based upon and bears similar terms to the Original Proposal. Blacklined copies showing differences between the Improved Proposed Financing and Original Proposal are being submitted with this motion. If the Revised Commitment Obligations are approved, the terms of the Improved Commitment provide the Debtors until January 24, 2013 to obtain approval of the Improved Proposed Financing, until February 28, 2013 to close the Improved Proposed Financing (subject to certain closing conditions including, among other things, consummation of the sale of the Debtors IP portfolio), and until September 30, 2013 to emerge from chapter 11. 8. The Improved Commitment provides a solid foundation for emergence,
preserves considerable optionality at different stages of the Debtors chapter 11 cases, provides improved terms and is significantly less expensive than the Original Commitment. Accordingly, in the business judgment of the Debtors, replacing the Original Commitment with the Improved Commitment and incurring and paying the Revised Commitment Obligations is in the best interests of the Debtors and their estates. -6SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
Background 9. On January 19, 2012 (the Petition Date), each of the Debtors filed
voluntary petitions for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code). The Debtors are operating their businesses and managing their property as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. These chapter 11 cases are being jointly administered. 10. On January 25, 2012, the Office of the United States Trustee for the
Southern District of New York (the U.S. Trustee) appointed an Official Committee of Unsecured Creditors (the Creditors Committee) pursuant to section 1102 of the Bankruptcy Code [Docket No. 115]. 11. Founded in 1880 and long one of the worlds leading material science
companies, the Debtors and their non-Debtor affiliates operate an integrated global business involving a diverse collection of mature and growth businesses and an array of valuable intellectual property. In order to address a shortfall in liquidity in the United States, monetize non-strategic intellectual property, fairly resolve legacy liabilities and focus on their most valuable business lines, the Debtors commenced these chapter 11 cases. 12. As stated in previous filings, the Debtors are pursuing a path to emerge
from chapter 11 in 2013 with a strategic focus on their Commercial Imaging business, which is centered on commercial, packaging and functional printing solutions and enterprise services. Facts Specific to the Relief Requested A. Existing DIP Facility 13. The Debtors currently have a fully-committed $950 million debtor-in-
possession credit facility (the Existing DIP Facility) from Citicorp North America, Inc., acting for itself and as syndication agent and administrative agent for certain lenders (the -7SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
Existing DIP Agent). The proceeds of the Existing DIP Facility have been and continue to be used, among other things, (a) for general working capital and other strategic purposes and (b) to fund the costs of administering these chapter 11 cases. The obligations under the Existing DIP Facility are secured by a first priority senior security interest in and lien upon substantially all pre- and post-petition property of the Debtors. B. Benefits of the Improved Proposed Financing 14. The status of these chapter 11 cases and the benefits of entering into a
commitment for supplemental postpetition and emergence financing at this time were described to the Court in the Original Commitment Pleadings. (Original Commitment Motion 15-18; Kurtz Decl. 10-15.) The Improved Commitment is modeled closely upon, and is generally similar to, the Original Commitment, while providing the Debtors with additional liquidity during these chapter 11 cases and approximately the same amount of emergence financing, in each case on significantly better economic terms than the Original Proposal. Thus, the rationale for entering into and performing the Revised Commitment Obligations remains unchangedthe Improved Commitment provides the Debtors with access to funding they believe in their business judgment is prudent to consummate their reorganization, following a path to emergence that is supported by each of the main stakeholders in these chapter 11 cases. (Kurtz Decl. 14.) C. Receipt of the Unsolicited Proposals and Entry Into the Improved Commitment 15. As described in the Kurtz Declaration, the Debtors, following a lengthy
and competitive financing process, entered into the Original Commitment Papers on November 12, 2012. (Kurtz Decl. 16-38.) After filing of the Original Commitment Motion, the Debtors ceased negotiations with other potential lenders, were negotiating definitive documentation with the Original Commitment Parties and intended to seek authorization from the Court to enter into the Original Commitment Papers at a hearing scheduled for December 3, 2012. -8SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
16.
On November 26, 2012, the Debtors received an unsolicited offer from the
Steering Committee Lenders to provide the Improved Proposed Financing (the Steering Committee Proposal). The Steering Committee Proposal comprised fully executed commitment papers and a comparison showing the benefits of the new unsolicited proposal as compared to the Original Proposal. (Supp. Kurtz Decl. 8.) On November 27, 2012, the Debtors received an unsolicited financing proposal from a third party lender (the Third Party Proposal and together with the Steering Committee Proposal, the Unsolicited Proposals). The Debtors, with the assistance of their advisors, carefully considered both Unsolicited Proposals alongside the Original Proposal and concluded that the Steering Committee Proposal was significantly superior to the other proposals, primarily because of the vastly superior economic terms. Moreover, the Third Party Proposal was not fully committed and was subject to satisfactory completion of diligence. Because of these contingencies, and because of their view that the Steering Committee Proposal was economically superior, the Debtors determined not to pursue the Third Party Proposal. (Id.) 17. The Debtors believed that in light of the significant potential benefits to
their estates, they had a fiduciary obligation to consider the Steering Committee Proposal, and had a series of clarifying discussions regarding the Steering Committee Proposal with representatives of the Steering Committee Lenders on November 26 and 27, 2012. The Steering Committee Lenders and the Debtors also informed the Original Commitment Parties that a proposal had been made and of these discussions. (Supp. Kurtz Decl. 9.) The Steering Committee Lenders indicated that the material terms of their executed offer were final; however, in an effort to bring holders of the great majority of the Prepetition Second Lien Notes together in one financing proposal, the Debtors requested that the Steering Committee Lenders allow the -9SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
Original Commitment Parties the opportunity to join the Improved Proposed Financing as additional backstop parties. The Steering Committee Lenders agreed to this concession, and on the morning of November 28, 2012, the Debtors executed the Improved Commitment Documents and offered the Original Commitment Parties the opportunity to join the Improved Proposed Financing. (Id.) However, the Original Commitment Parties declined to join the Improved Proposed Financing. In determining to proceed with the Improved Proposed Financing, the Debtors noted that the Improved Commitment Papers do not provide for a break fee, exclusivity or other similar terms, and as a result do not preclude the Original Commitment Parties or other parties from making competing financing proposals. D. The Improved Proposed Financing and Improved Commitment Documents 18. A term sheet summarizing the material terms of the Improved Proposed
Financing is attached as Exhibit A to the Commitment Letter, which is attached to this Motion as Exhibit B (the Term Sheet).9 A blackline of the Term Sheet against the term sheet for the Original Proposal is attached to this Motion as Exhibit D. The Improved Proposed Financing is generally similar to the Original Proposal, but is superior in several important respects. (Supp. Kurtz Decl 11). a. Enhanced Economics for the Debtors. The economic terms for the Debtors are improved significantly, including reduced coupon rates, original issue discount and fees. The Debtors project that the Improved Proposed Financing is approximately $35 million less expensive over the remainder of these chapter 11 cases than the Original Proposal. The Debtors anticipate additional savings upon and after emergence. b. No Upfront Cash Commitment Fee; No Priority Roll-Up. The Debtors have the option to pay the Put Option Premium to the Steering Committee Lenders with additional loans under the Proposed Supplemental DIP Facility. There is therefore no upfront cash commitment fee for the
9
All capitalized terms not otherwise defined herein are to be given the meanings ascribed to them in the Term Sheet.
-10SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
Improved Commitment, even though the Second Lien Roll-Up is available to all Second Lien Noteholders. c. No Deal Protection. There is no break-up fee or similar protections. d. Extended Maturity Date. The term of the Proposed Exit Facility is extended from four years to five years. 19. Given the continuing efforts of the Steering Committee Lenders in
connection with the negotiation of the Improved Proposed Financing, the Debtors seek authorization to incur and pay the Revised Commitment Obligations. In light of the limited changes to the Original Commitment, which are clearly shown in the blacklined documents submitted, the Debtors believe that all parties have sufficient time to review the Improved Commitment before the Court considers the Motion on December 14, 2012. 20. The Improved Proposed Financing (which relates directly to the Proposed
Exit Facility) includes up to $375 million in roll-up loans issued in dollar-for-dollar exchange for Prepetition Second Lien Notes (the Second Lien Roll-Up). The Debtors, in consultation with Lazard and other professionals, have concluded in their sound business judgment that roll-up loans are a necessary inducement to achieve the most favorable terms in a supplemental postpetition financing, to reduce the cost of the Proposed Supplemental DIP Facility and to receive a commitment for emergence financing. (Kurtz Decl. 22, 27.) However, unlike with respect to the Original Proposal, the Second-Lien Roll-Up is available, pro rata, to all Second Lien Noteholders who elect to participate in the Improved Proposed Financing by providing the Debtors new money commitments. The Debtors believe that entry into the Improved Commitment Documents will benefit all creditors, including unsecured creditors and holders of Prepetition Second Lien Notes who are not Steering Committee Lenders.
-11SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
E.
The Work Fee Letter and the Work Fee 21. Upon funding of the Proposed Supplemental DIP Facility, the term loan
component of the Existing DIP Facility (as defined below) will be repaid in full; however, the revolver component of the Existing DIP Facility (the Citi ABL) will remain in place. As a result, the Debtors intend to request an amendment of the Existing DIP Facility (the Citi Amendment) to, among other things, permit the Debtors to incur the Proposed Supplemental DIP Facility, extend the maturity of the Citi ABL to September 30, 2013, and effect certain other changes to the Citi ABL (including reducing the maximum availability from $250 million to $200 million). The Debtors have requested that Citi begin work immediately to structure the Citi Amendment and anticipate engaging Citi to solicit consents for the Citi Amendment. The Debtors also expect to request related modifications to the order authorizing the Existing DIP Facility in connection with the Improved Proposed Financing. 22. In connection with the above and the substantial services Citi will be
providing to the Debtors in the near term in connection with the Citi Amendment, prior to the solicitation of consents, including structuring activities, Kodak will be entering into a Work Fee Letter with Citi. Pursuant to the Work Fee Letter, the Debtors will pay Citi the Work Fee10 not later than one business day following the date on which the Proposed Order is entered. Jurisdiction 23. The Court has jurisdiction to consider this matter pursuant to 28 U.S.C.
1334. Venue is proper pursuant to 28 U.S.C. 1408. This matter is a core proceeding
10
Should Kodak enter into an engagement letter with Citi in connection with the arrangement of the Citi Amendment, the Work Fee shall be credited against any arrangement fee payable to Citi pursuant to such engagement letter, but, for the avoidance of doubt, not against any consent fees payable to consenting Lenders in their capacity as such.
-12SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
pursuant to 28 U.S.C. 157(b). The statutory predicates for the relief requested herein are sections 105(a), 363 and 503(b) of the Bankruptcy Code, rule 6004(h) of the Federal Rules of Bankruptcy Procedure (Bankruptcy Rules) and rule 9013-1(a) of the Local Rules for the United States Bankruptcy Court for the Southern District of New York (the Local Rules). Relief Requested 24. By this Motion, the Debtors seek entry of an order (a) authorizing the
Debtors to (i) enter into the Improved Commitment Documents, (ii) incur and pay the Revised Commitment Obligations, (iii) enter into the Work Fee Letter and (iv) incur and pay the Work Fee and (b) such other relief as the Court deems just and proper. Basis for Relief 25. Section 363(b)(1) of the Bankruptcy Code provides that [t]he trustee,
after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate. 11 U.S.C. 363(b)(1). Though section 363 of the Bankruptcy Code does not specify a standard for determining when it is appropriate for a court to authorize the use, sale, or lease of property of the estate, the Second Circuit has required that such use, sale or lease be based upon the sound business judgment of the debtor. See In re MF Global Inc., 467 B.R. 726, 730 (Bankr. S.D.N.Y. 2012); see also In re Chateaugay Corp., 973 F.2d 141, 143 (2d Cir. 1992) (requiring evidence of a good business reason to authorize the use, sale, or lease of property under section 363(b)). When a valid business justification exists, the debtors decision to use property out of the ordinary course of business is entitled to a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company. Official Comm. of Subordinated Bondholders v. Integrated Res., Inc. (In re Integrated Res., Inc.), 147 B.R. 650, 656 (S.D.N.Y. 1992) (citations and internal quotations omitted) (applying business -13SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
judgment rule presumption to the use of debtors property to authorize a break-up fee for financing commitment under section 363(b)).11 26. The Debtors respectfully submit that entering into the Improved
Commitment Documents and incurring and paying the Revised Commitment Obligations both represent a sound exercise of their business judgment and are supported by a valid business justification. As discussed above and in the Original Commitment Pleadings, the Improved Proposed Financing is prudent and facilitates the path to emerge from these chapter 11 cases. (Kurtz Decl. 14.) Additionally, the Revised Commitment Obligations are reasonable, represent the best terms available to the Debtors at this time and significantly improve the Original Commitment obligations. (Supp. Kurtz Decl. 12-13.) Accordingly, the Debtors believe that authorization to enter into the Improved Commitment Documents and incur and pay the Revised Commitment Obligations at the present time is in the best interests of the Debtors estates, creditors and other parties in interest. 27. Bankruptcy courts in this district and others have approved the entry into
commitment documents and the incurrence of obligations in connection with financing by debtors on the basis of such debtors reasonable business judgment. See, e.g., In re Broadview Networks Holdings, Inc., Case No. 12-13581 (Bankr. S.D.N.Y. Oct. 3, 2012) (authorizing the debtors to enter into, execute and perform their obligations under a commitment letter); In re The Great Atlantic and Pacific Tea Company, Inc., Case No. 10-24549 (Bankr. S.D.N.Y. Jan. 27, 2012) (authorizing, but not directing, the debtor to accept, incur and perform all of their obligations under commitment documents); In re Tronox Inc., Case No. 09-10156 (Bankr.
11
Section 105(a) of the Bankruptcy Code provides that the court may issue any order, process, or judgment that is necessary to carry out the provisions of [the Bankruptcy Code]. 11 U.S.C. 105(a); see Adelphia Commcns Corp. v. The America Channel (In re Adelphia Commcns Corp.), 345 B.R. 69, 85 (Bankr. S.D.N.Y. 2005) ( 105(a) provides broad equitable power for a Bankruptcy Court to . . . facilitate the reorganization process).
-14SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
S.D.N.Y. Oct. 27, 2010) (authorizing the debtor to enter into and perform its obligations under commitment documents); In re Lyondell Chemical Corp., et al., Case No. 09-10023 (Bankr. S.D.N.Y. Mar. 24, 2010) (authorizing the debtors to enter into certain agreements relating to exit financing); In re Smurfit-Stone Container Corp., Case No. 09-10235 (Bankr. D. Del. Jan. 14, 2010) (approving and authorizing motion for exit facility engagement and arrangement letter and fee letter); In re Premier International Holdings Inc., Case No. 09-12019 (Bankr. D. Del. Dec. 18, 2009) (approving payment of 5% commitment fee and expense reimbursement on a $450 million rights offering proposed to fund the debtors exit from bankruptcy); and In re Calpine Corp., Case No. 05-60200 (Bankr. S.D.N.Y. Dec. 17, 2007) (approving entry into exit facility commitment papers). 28. The Debtors also submit that entering into the Work Fee Letter and
incurring and paying the Work Fee both represent a sound exercise of their business judgment and are supported by a valid business justification. Given the expected timeline to complete necessary work and to receive consents, the scope of Citis services, and the need to amend the Existing DIP Facility in order to incur the Proposed Supplemental DIP Facility, the Debtors have concluded that the Work Fee is reasonable and justified. Accordingly, the Debtors believe that authorization to enter into the Work Fee Letter and incur and pay the Work Fee at the present time is in the best interests of the Debtors estates, creditors and other parties in interest. Request for Relief Under Bankruptcy Rule 6004(h) 29. Bankruptcy Rule 6004(h) provides that an order authorizing the use, sale,
or lease of property . . . is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise. A court may reduce or waive the stay period, however, when there is a sufficient business need to close the transaction. In re Borders Group, Inc., 453 B.R. 477, 486 (Bankr. S.D.N.Y. 2011) (citations omitted). In this case, the Debtors request that the -15SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
Proposed Order authorizing the Debtors entry into the Improved Commitment be effective immediately to bring certainty to the transactions. 30. There is no reason to delay the effectiveness of the Proposed Order.
Further progress in all aspects of these chapter 11 cases will be hindered until the Debtors have received final authorization to enter into the Improved Commitment Documents and to pay and incur the Revised Commitment Obligations. Thus, it is important that authorization to (a) enter into the Improved Commitment Documents and incur and pay the Revised Commitment Obligations and (b) enter into the Work Fee Letter and incur and pay the Work Fee become effective immediately to give the Debtors the ability to complete their financing process and continue their progress towards emergence. Accordingly, a waiver of the 14-day stay period under Bankruptcy Rule 6004(h) is appropriate. Notice 31. Notice of this Motion shall be provided to: (a) the U.S. Trustee;
(b) Milbank, Tweed, Hadley & McCloy LLP, counsel to the Creditors Committee; (c) U.S. Bank, National Association, as indenture trustee; (d) Wilmington Trust, National Association, as indenture trustee; (e) the Securities and Exchange Commission; (f) the Internal Revenue Service; (g) Davis Polk & Wardwell LLP, counsel to the agent for the Existing DIP Facility; (h) the Environmental Protection Agency; (i) Akin Gump Strauss Hauer & Feld LLP, counsel to the Ad Hoc Committee of Second Lien Noteholders and the Steering Committee Lenders; (j) Arent Fox LLP, counsel to the Official Committee of Retired Employees; (k) all parties requesting notice in these chapter 11 cases pursuant to Bankruptcy Rule 2002; and (l) Simpson Thacher & Bartlett LLP, counsel to the Original Commitment Parties. The Debtors respectfully submit that further notice of this Motion is neither required nor necessary.
-16SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
No Prior Request 32. any other Court. No prior motion for the relief requested herein has been made to this or
-17SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
WHEREFORE, for the reasons set forth herein, the Debtors respectfully request that the Court grant the relief requested herein and further relief as is just and proper. December 3, 2012 New York, New York /s/ Andrew G. Dietderich Andrew G. Dietderich Michael H. Torkin Alexa J. Kranzley David R. Zylberberg SULLIVAN & CROMWELL LLP 125 Broad Street New York, New York 10004 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 - and Pauline K. Morgan Joseph M. Barry YOUNG CONAWAY STARGATT & TAYLOR, LLP 1270 Avenue of the Americas Suite 2210 New York, New York 10020 Telephone: (212) 332-8840 Facsimile: (212) 332-8855 Counsel to the Debtors and Debtors in Possession
-18SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
EXHIBIT A Proposed Order
SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) ) ) ) ) ) )
In re: EASTMAN KODAK COMPANY, et al.,1 Debtors.
Chapter 11 Case No. 12-10202 (ALG) (Jointly Administered)
ORDER AUTHORIZING THE DEBTORS TO (A) (I) ENTER INTO FINANCING COMMITMENT DOCUMENTS FOR SECURED SUPPLEMENTAL POSTPETITION AND EXIT FINANCING, (II) INCUR AND PAY ASSOCIATED FEES, COSTS AND EXPENSES AND (III) FURNISH RELATED INDEMNITIES, AND (B) (I) ENTER INTO A WORK FEE LETTER AND (II) INCUR AND PAY ASSOCIATED FEES Upon the motion (the Motion)2 of Eastman Kodak Company, on behalf of itself and its affiliated debtors and debtors-in-possession in these chapter 11 cases (collectively, the Debtors), for entry of an order (this Order) authorizing the Debtors to (a)(i) enter into the Improved Commitment Documents, (ii) incur and pay associated fees, costs and expenses, and (iii) furnish related indemnities and (b)(i) enter into the Work Fee Letter and (ii) incur and pay associated fees; and it appearing that this Court has jurisdiction to consider the Motion pursuant to 28 U.S.C. 157 and 1334; and it appearing that venue of these chapter 11 cases and the Motion in this district is proper pursuant to 28 U.S.C. 1408 and 1409; and it appearing that
The Debtors in these chapter 11 cases, along with the last four digits of each Debtors federal tax identification number, are: Eastman Kodak Company (7150); Creo Manufacturing America LLC (4412); Eastman Kodak International Capital Company, Inc. (2341); Far East Development Ltd. (2300); FPC Inc. (9183); Kodak (Near East), Inc. (7936); Kodak Americas, Ltd. (6256); Kodak Aviation Leasing LLC (5224); Kodak Imaging Network, Inc. (4107); Kodak Philippines, Ltd. (7862); Kodak Portuguesa Limited (9171); Kodak Realty, Inc. (2045); Laser-Pacific Media Corporation (4617); NPEC Inc. (5677); Pakon, Inc. (3462); and Qualex Inc. (6019). The location of the Debtors corporate headquarters is: 343 State Street, Rochester, NY 14650. All capitalized terms not otherwise defined herein are to be given the meanings ascribed to them in the Motion.
SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
this matter is a core proceeding pursuant to 28 U.S.C. 157(b); and this Court having determined that the relief requested in the Motion is in the best interests of the Debtors, their estates, their creditors and other parties in interest; and this Court having found that proper and adequate notice of the Motion and the relief requested therein has been provided in accordance with the Bankruptcy Rules, the Local Rules and the Case Management Procedures for these chapter 11 cases, and that, except as otherwise ordered herein, no other or further notice is necessary; and any objections (if any) to the Motion having been withdrawn or overruled on the merits; and after due deliberation thereon; and good and sufficient cause appearing therefor; IT IS HEREBY ORDERED THAT: 1. 2. The Motion is GRANTED. The Debtors are authorized, but not directed, to enter into, execute,
deliver, and perform under the Improved Commitment Documents. 3. The Debtors are authorized, but not directed, to incur and pay the Revised
Commitment Obligations on the terms and conditions set forth in the Improved Commitment Documents. 4. The right of the Steering Committee Lenders to receive payment of
Revised Commitment Obligations shall be entitled to priority as administrative expense claims under section 503(b)(1) of the Bankruptcy Code, whether or not the Improved Proposed Financing is entered into or funded. 5. The Debtors are authorized, but not directed, to enter into, execute,
deliver, and perform under the Work Fee Letter. 6. The Debtors are authorized, but not directed, to incur and pay the Work
Fee on the terms and conditions set forth in the Work Fee Letter. -2SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
7.
The right of Citi to receive payment of the Work Fee shall be entitled to
priority as an administrative expense claim under section 503(b)(1) of the Bankruptcy Code, whether or not the Citi Amendment is entered into. 8. The Debtors are further authorized to take any and all actions necessary or
appropriate to effectuate the relief granted pursuant to this Order in accordance with the Motion and to implement the Improved Commitment Documents and the Work Fee Letter. 9. Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of
this Order shall be immediately effective and enforceable upon its entry. 10. This Court shall retain jurisdiction to hear and decide any dispute related
to or arising from this Order. Dated: December __, 2012 New York, New York
Allan L. Gropper United States Bankruptcy Judge
-3SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
EXHIBIT B Commitment Letter
SC1:3338870.7
12-10202-alg
Doc 2492
Filed 12/03/12 Entered 12/03/12 22:12:14 Main Document Pg 24 of 103 EXECUTION VERSION
November 28, 2012
Eastman Kodak Company 343 State Street Rochester, New York 14650 Attention: William Love, Treasurer $830,000,000 Debtor-in-Possession Facility Commitment Letter Ladies and Gentlemen: On January 19, 2012 (the Petition Date), Eastman Kodak Company (you or the Borrower) and certain of its subsidiaries (collectively, the Debtors and each a Debtor) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. 101 et seq. (as amended, the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). In connection with the foregoing, you have requested that the parties listed on Schedule I hereto (the Lead Lenders, us, we or the Commitment Parties), agree to structure and arrange a junior secured priming superpriority debtor-in-possession term loan facility (the Junior DIP Facility) in an aggregate amount of up to $830,000,000 under Sections 364(c)(1), (2) and (3) and (d)(1) of the Bankruptcy Code, consisting of (i) first lien first-out term loans in the aggregate principal amount of $200,000,000 of new money (such loans, the First Lien First Out Loans), (ii) first lien lastout term loans in the aggregate principal amount of $255,000,000 (such loans, the First Lien Last Out Loans and together with the First Lien First Out Loans, the New Money Loans) and (iii) last-out term loans in the aggregate principal amount of up to $375,000,000 consisting of a dollar-for-dollar roll-up (such loans, the Rolled-Up Loans) for amounts outstanding under the Borrowers (x) 10.625% Senior Secured Notes due March 15, 2019 issued under or in connection with that certain Indenture dated as of March 15, 2011 and (y) 9.75% Senior Secured Notes due March 1, 2018 issued under or in connection with that certain Indenture dated as of March 5, 2010 (collectively, and as amended prior to the Petition Date, the Pre-Petition Second Lien Notes) and the Commitment Parties commit to backstop the entire amount of the Junior DIP Facility. Capitalized terms used but not defined herein are used with the meanings assigned to them on the Exhibit A attached hereto (such Exhibit, together with this letter, collectively, the Commitment Letter). 1. Commitment
In connection with the foregoing, the Commitment Parties are pleased to advise you of their commitment to provide the New Money Loans, on a several and not joint basis, in the amounts set forth opposite each such Commitment Partys name on Schedule I hereto (the Commitments) upon the terms and conditions set forth in this letter and Exhibit A hereto (the Term Sheet) (or as otherwise agreed in writing to by the Borrower and the Commitment Parties). The Commitment Parties Commitments hereunder shall be reduced (pursuant to the procedures set forth in the Term Sheet) in an aggregate amount equal to any commitment
12-10202-alg
Doc 2492
Main Document
allocated to holders (other than the Commitment Parties) of Pre-Petition Second Lien Notes (Other Pre-Petition Second Lien Noteholders). Notwithstanding the foregoing, if any Other Pre-Petition Second Lien Noteholder fails to fund any portion of its commitment on the Closing Date, then the Commitment Parties shall fund such amount on the Closing Date as if there were no reductions in the respective commitment amounts set forth above as a result of the commitment allocated to such Other Pre-Petition Second Lien Noteholder. 2. Titles and Roles
You hereby appoint Wilmington Trust, National Association (the Agent or Wilmington Trust) to act, and Wilmington Trust hereby agrees to act, as sole administrative agent and sole collateral agent for the Junior DIP Facility, upon the terms and subject to the conditions set forth in this Commitment Letter. You agree that no agents, co-agents, arrangers, co-arrangers, bookrunners, co-bookrunners, managers or co-managers will be appointed, no titles will be awarded and no compensation (other than that expressly contemplated by the Term Sheet and the Fee Letter referred to below) will be paid in connection with the Junior DIP Facility unless you and we shall so reasonably agree (it being understood and agreed that no agent, co-agent, arranger, co-arranger, bookrunner, co-bookrunner, manager or co-manager shall be entitled to greater economics in respect of the Junior DIP Facility than the Commitment Parties). 3. Information
You hereby represent and warrant that (a) all information, other than the Projections (as defined below), other forward looking information and information of a general economic or industry specific nature (the Information), that has been or will be made available to us by you or any of your representatives in connection with the transactions contemplated hereby, when taken as a whole, does not or will not, when furnished to us, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made (giving effect to all supplements thereto) and (b) the financial projections and other forward-looking information (the Projections) that have been or will be made available to us by you or any of your representatives in connection with the transactions contemplated hereby have been or will be prepared in good faith based upon assumptions believed by you to be reasonable at the time furnished to us. It is understood and agreed that (i) the Projections are as to future events and are not to be viewed as facts, (ii) the Projections are subject to significant uncertainties and contingencies, many of which are beyond your control, (iii) no assurance can be given that any particular Projection will be realized and (iv) actual results during the period or periods covered by any such Projections may differ significantly from the projected results and such differences may be material. You agree that if, at any time prior to the Closing Date, you become aware that any of the representations in the preceding sentence would be incorrect if the same was remade, in any material respect, then you will promptly supplement the Information and the Projections so that such representations when remade would be correct, in all material respects, under those circumstances. 4. Fees
12-10202-alg
Doc 2492
Main Document
As consideration for the commitments and agreements of the Commitment Parties hereunder, you agree to pay or cause to be paid the nonrefundable fees described in the Term Sheet and the fee letter dated as of the date hereof, between you and the Agent, and delivered herewith (the Fee Letter) on the terms and subject to the conditions set forth therein. 5. Conditions
Each Commitment Partys and the Agents commitments and agreements hereunder are subject only to the conditions set forth in this Section 5 and in Exhibit A under the heading II CONDITIONS PRECEDENT FOR BORROWING. Each Commitment Partys and the Agents commitments and agreements hereunder are further subject to (a) such Commitment Partys reasonable satisfaction with the approval by the Bankruptcy Court of, (i) of the Junior DIP Facility, including without limitation, the superpriority administrative expense priority of, and the junior priming and other liens to be granted to secure, the Junior DIP Facility, the Rolled-Up Loans and all definitive documentation in connection therewith consistent with the Term Sheet and (ii) all actions to be taken, undertakings to be made and obligations to be incurred by the Debtors in connection with the Junior DIP Facility and all liens or other security to be granted by the Debtors in connection with the Junior DIP Facility (all such approvals to be evidenced by the entry of one or more orders of the Bankruptcy Court reasonably satisfactory in form and substance to the Commitment Parties, which orders shall, among other things, approve the payment by the Debtors of all of the fees that are provided for in, and the other terms of, this Commitment Letter); (b) Since June 30, 2012, there not having been any Material Adverse Effect (as defined in the Term Sheet attached hereto as Exhibit A); (c) your compliance in all material respects with your obligation to supplement Information as set forth in Section 4 hereof; and (d) your compliance in all material respects with the terms of this Commitment Letter. 6. Indemnification and Expenses
You agree (a) to indemnify and hold harmless the Commitment Parties, the Agent, their respective affiliates and their respective directors, officers, employees, advisors, agents and other representatives (each, an Indemnified Person) from and against any and all losses, claims, damages and liabilities to which any such Indemnified Person may become subject arising out of or in connection with this Commitment Letter, the Fee Letter, the Junior DIP Facility, the use of the proceeds thereof or any claim, litigation, investigation or proceeding (a Proceeding) relating to any of the foregoing, regardless of whether any indemnified person is a party thereto, whether or not such Proceedings are brought by you, your equity holders, affiliates, creditors or any other person, and to reimburse each indemnified person upon demand for any reasonable legal or other out-of-pocket expenses incurred in connection with investigating or defending any of the foregoing, provided that the foregoing indemnity will not, as to any Indemnified Person, apply to losses, claims, damages, liabilities or related expenses to the extent they are found by a final, nonappealable judgment of a court of competent jurisdiction to arise from (i) the willful misconduct or gross negligence of, or material breach of this Commitment Letter or the Fee Letter by such Indemnified Person or its control affiliates, directors, officers or employees (collectively, the Related Parties) and (ii) any disputes solely among Indemnified Persons and not arising out of any act or omission of you or any of your subsidiaries (other than disputes
12-10202-alg
Doc 2492
Main Document
involving claims against any Indemnified Person in its capacity as, or fulfilling its role as, an Administrative Agent or similar role in respect of the transactions contemplated hereby) and (b) regardless of whether the Closing Date occurs, to reimburse each Commitment Party, the Agent and their respective affiliates on the Closing Date (to the extent an invoice therefor is received by the Closing Date or following termination or expiration of the commitments hereunder ) or, if invoiced after the Closing Date or if the Closing Date does not occur, within 30 days, for all reasonable and documented out-of-pocket expenses (including due diligence expenses, applicable syndication expenses and travel expenses, but limited, in the case of legal fees and expenses, to the reasonable fees, charges and disbursements of one lead counsel (and any special or local counsel) of the Commitment Parties and one lead counsel for the Agent (and any special or local counsel)), incurred in connection with the Junior DIP Facility and any related documentation (including this Commitment Letter and the Definitive Financing Documentation) or the administration, amendment, modification or waiver thereof. It is further agreed that each Commitment Party shall only have liability to you (as opposed to any other person) and that each Commitment Party shall be liable solely in respect of its own commitment to the Junior DIP Facility on a several, and not joint, basis with any other Commitment Party. No indemnified person shall be liable for any damages arising from the use by others of Information or other materials obtained through electronic, telecommunications or other information transmission systems, except to the extent any such damages are found by a final, nonappealable judgment of a court of competent jurisdiction to arise from the gross negligence or willful misconduct of, or material breach of this Commitment Letter or the Fee Letter by such indemnified person (or any of its Related Parties). None of the indemnified persons or you or any of your affiliates or the respective directors, officers, employees, advisors, and agents of the foregoing shall be liable for any indirect, special, punitive or consequential damages in connection with this Commitment Letter, the Fee Letter, the Junior DIP Facility or the transactions contemplated hereby, provided that nothing contained in this sentence shall limit your indemnity obligations to the extent set forth in this Section 6. 7. Sharing of Information, Absence of Fiduciary Relationship, Affiliate Activities
You acknowledge that each Commitment Party (or an affiliate) may from time to time effect transactions, for its own or its affiliates account or the account of customers, and hold positions in loans, securities or options on loans or securities of you, your affiliates and of other companies that may be the subject of the transactions contemplated by this Commitment Letter. In addition, each Commitment Party and its affiliates will not use confidential information obtained from you or your affiliates or on your or their behalf by virtue of the transactions contemplated hereby in connection with the performance by such Commitment Party and its affiliates of services for other companies or persons and the Commitment Party and its affiliates will not furnish any such information to any of their other customers. You also acknowledge that the Commitment Parties and their respective affiliates have no obligation to use in connection with the transactions contemplated hereby, or to furnish to you, confidential information obtained from other companies or persons. You further acknowledge and agree that (a) no fiduciary, advisory or agency relationship between you and the Commitment Parties is intended to be or has been created in respect of any of the transactions contemplated by this Commitment Letter, irrespective of whether the Commitment Parties have advised or are advising you on other matters, (b) the Commitment
12-10202-alg
Doc 2492
Main Document
Parties, on the one hand, and you, on the other hand, have an arms length business relationship that does not directly or indirectly give rise to, nor do you rely on, any fiduciary duty to you or your affiliates on the part of the Commitment Parties, (c) you are capable of evaluating and understanding, and you understand and accept, the terms, risks and conditions of the transactions contemplated by this Commitment Letter, (d) you have been advised that the Commitment Parties are engaged in a broad range of transactions that may involve interests that differ from your interests and that the Commitment Parties have no obligation to disclose such interests and transactions to you, (e) you have consulted your own legal, accounting, regulatory and tax advisors to the extent you have deemed appropriate, (f) each Commitment Party has been, is, and will be acting solely as a principal and, except as otherwise expressly agreed in writing by it and the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for you, any of your affiliates or any other person or entity and (g) none of the Commitment Parties has any obligation or duty (including any implied duty) to you or your affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein or in any other express writing executed and delivered by such Commitment Party and you or any such affiliate. 8. Confidentiality
This Commitment Letter is delivered to you on the understanding that neither this Commitment Letter, the Fee Letter nor any of their terms or substance shall be disclosed by you, directly or indirectly, to any other person except (a) you and your officers, directors, employees, affiliates, members, partners, stockholders, attorneys, accountants, agents and advisors, in each case on a confidential and need-to-know basis, (b) to the extent required in any legal, judicial or administrative proceeding or as otherwise required by law or regulation or as requested by a governmental authority (in which case you agree, to the extent permitted by law, to inform us promptly in advance thereof), (c) in a Bankruptcy Court filing in order to implement the transactions contemplated hereunder, provided that the Fee Letter may be disclosed to the Bankruptcy Court, the US Trustee or, on a confidential and professional eyes only basis, to any statutorily appointed committee in the Cases (provided the Fee Letter shall be filed under seal with the Bankruptcy Court pursuant to an order reasonably acceptable to the Agent with the understanding that the fee amounts set forth therein may be incorporated in and made a part of a generic disclosure in a form reasonably acceptable to us of the aggregate transaction costs associated with the transactions contemplated hereunder to the Bankruptcy Court on a nonconfidential basis), (d) with the consent of the Commitment Parties, this Commitment Letter and the existence and contents hereof may be disclosed in any syndication or other marketing materials in connection with the Junior DIP Facility, (e) upon notice to the Commitment Parties, in connection with any public filing requirement you are legally obligated to satisfy, and (f) with the consent of the Commitment Parties, the Term Sheet may be disclosed to potential Lenders in connection with the Junior DIP Facility. Once information has been publicly filed as permitted by this Section, you no longer need to obtain our consent to share such information. 9. Miscellaneous
This Commitment Letter shall not be assignable by you without the prior written consent of each Commitment Party (and any purported assignment without such consent shall be null and void), is intended to be solely for the benefit of the parties hereto and the Indemnified Persons
12-10202-alg
Doc 2492
Main Document
and is not intended to and does not confer any benefits upon, or create any rights in favor of, any person other than the parties hereto and the Indemnified Persons to the extent expressly set forth herein. Assignments by any Commitment Party shall be subject to Section 1 hereof. The Commitment Parties reserve the right to employ the services of their affiliates in providing services contemplated hereby, and to satisfy its obligations hereunder through, or assign its rights and obligations hereunder to, one or more of its affiliates, separate accounts within its control or investments funds under its or its affiliates management (collectively, Commitment Party Affiliates); and to allocate, in whole or in part, to their affiliates certain fees payable to the Commitment Parties in such manner as the Commitment Parties and their affiliates may agree in their sole discretion; provided further that, no delegation or assignment to a Commitment Party Affiliate shall relieve such Commitment Party from its obligations hereunder to the extent that any Commitment Party Affiliate fails to satisfy the Commitments hereunder at the time required. This Commitment Letter may not be amended or waived except by an instrument in writing signed by you and each Commitment Party. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Commitment Letter by facsimile or electronic transmission (e.g., pdf or tif) shall be effective as delivery of a manually executed counterpart hereof. This Commitment Letter and the Fee Letter are the only agreements that have been entered into among us and you with respect to the Junior DIP Facility and set forth the entire understanding of the parties with respect thereto, and supersede all prior agreements and understandings related to the subject matter hereof. This Commitment Letter shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York and the Bankruptcy Code, to the extent applicable. You and we hereby irrevocably and unconditionally submit to the exclusive jurisdiction of the Bankruptcy Court and any other Federal court having jurisdiction over the Cases from time to time, over any suit, action or proceeding arising out of or relating to the transactions contemplated hereby, this Commitment Letter, the Fee Letter or the performance of services hereunder or thereunder. You and we agree that service of any process, summons, notice or document by registered mail addressed to you or us shall be effective service of process for any suit, action or proceeding brought in any such court. You and we hereby irrevocably and unconditionally waive any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in any inconvenient forum. You and we hereby irrevocably agree to waive trial by jury in any suit, action, proceeding, claim or counterclaim brought by or on behalf of any party related to or arising out of this Commitment Letter or the Fee Letter or the performance of services hereunder or thereunder. Each of the Commitment Parties hereby notifies you that, pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law on October 26, 2001) (the PATRIOT Act), it is required to obtain, verify and record information that identifies the Debtors, which information includes names, addresses, tax identification numbers and other information that will allow such Lender to identify the Debtors in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act and is effective for the Commitment Parties and each Lender.
12-10202-alg
Doc 2492
Main Document
The Fee Letter, the provisions contemplated by the Disclosure of MNPI paragraph of the Term Sheet and the indemnification, expense reimbursement, expense, jurisdiction, syndication, confidentiality, governing law, sharing of information, no agency or fiduciary duty, waiver of jury trial, service of process and venue provisions contained herein shall remain in full force and effect regardless of whether the Definitive Financing Documentation shall be executed and delivered and notwithstanding the termination of this Commitment Letter or the commitments hereunder; provided that your obligations under this Commitment Letter (other than your obligations with respect to confidentiality) shall automatically terminate and be superseded, by the provisions of the Definitive Financing Documentation upon the initial funding thereunder, and you shall automatically be released from all liability in connection therewith at such time, in each case to the extent the Definitive Financing Documentation has comparable provisions with comparable coverage. You and we hereto agree that each of this Commitment Letter and the Fee Letter is a binding and enforceable agreement with respect to the subject matter herein or therein; it being acknowledged and agreed that the funding of the Junior DIP Facility is subject to the conditions specified herein, including the execution and delivery of the Definitive Financing Documentation by the parties hereto in a manner consistent with this Commitment Letter. Each of the Commitment Parties and you will use their commercially reasonable efforts to promptly prepare, negotiate and finalize the Definitive Financing Documentation as contemplated by the Term Sheet. If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms of this Commitment Letter and the Fee Letter by returning to us executed counterparts of this Commitment Letter and the Fee Letter no later than 12:00 Noon, New York City time, on December 4, 2012 (it being understood that your acceptance of the terms hereof shall be of no force or effect if the Bankruptcy Court shall fail to enter an order described in clause (b) of this paragraph). This offer will automatically expire if we have not received (a) such executed counterparts in accordance with the preceding sentence and (b) a copy of the order entered by the Bankruptcy Court no later than December 20, 2012 approving this Commitment Letter and the Fee Letter, which order shall be in form and substance reasonably satisfactory to the Commitment Parties (and which order shall be in full force and effect and shall not be stayed or modified). In addition you agree you will use your commercially reasonable efforts to file a motion on the Bankruptcy Courts docket no later than December 5, 2012, seeking the Bankruptcy Courts approval no later than December 20, 2012 of this Commitment Letter and the Fee Letter, which motion shall be in form and substance reasonably satisfactory to the Lead Lenders. In addition, the commitment and agreements of the Commitment Parties hereunder shall expire at 11:59 p.m. (New York City time) on January 24, 2013 (the Termination Date) unless, prior to that time, the Closing Date shall have occurred and the Debtors shall have paid to the Commitment Parties and the Agent the fees that are specified in this Commitment Letter, the Term Sheet and the Fee Letter to be due on or prior to the Closing Date provided that each of the Termination Date and the Closing Date deadline shall be extended to February 28, 2013 so long as (a) the DIP Order shall have been entered on or prior to January 24, 2013 and shall be in full force and effect and shall not be stayed and (b) on or before January 31, 2013, the Borrower shall have executed a binding agreement for the sale of intellectual property relating to its digitalimage capture portfolio and other patents currently contemplated to be sold in the transaction assigned the code name Komodo for not less than the IP Amount (as defined in the Term 7
12-10202-alg
Doc 2492
Main Document
Sheet), which agreement shall at all times remain in full force and effect and shall at all times be conditioned on a closing date of no later than February 28, 2013; provided further, that if the Closing Date has not occurred on or before January 31, 2013, an additional fee in the amount of 2% of the aggregate amount of commitments under this Commitment Letter shall then be fully earned, in each case payable to the Commitment Parties in cash no later than February 28, 2013 in the event (but only in the event) the Closing Date shall not have occurred by February 28, 2013.
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
Schedule 1 Commitment Parties

Lender First Lien First Out Loans First Lien Last Out Loans
Entities signatory hereto managed by Archview Investment Group, LP (Archview) Bennett Management Corporation (Bennett) Entities signatory hereto managed by Contrarian Capital Management, LLC (Contrarian) D.E. Shaw Galvanic Portfolios, L.L.C., D.E. Shaw Oculus Portfolios, L.L.C. and D.E. Shaw Heliant Portfolios, L.L.C. (D.E. Shaw) GoldenTree Asset Management LP (GoldenTree) Litespeed Master Fund Ltd. (Litespeed) P. Schoenfeld Asset Management LP (PSAM) Entities signatory hereto managed by Serengeti Asset Management LP (Serengeti) Stone Lion Capital Partners L.P. (Stone Lion) Capital Ventures International (Capital Ventures) Total
$13,976,000 $46,738,000
$17,820,000 $59,593,000
$20,942,000
$26,700,000
$24,887,000 $12,292,000 $19,341,000 $11,533,000
$31,731,000 $15,672,000 $24,659,000 $14,705,000
$10,319,000 $14,781,000 $25,191,000 $200,000,000
$13,157,000 $18,845,000 $32,118,000 $255,000,000
12-10202-alg
Doc 2492

Exhibit A Term Sheet [See Attached]
Main Document
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
EASTMAN KODAK COMPANY $830,000,000 Junior Debtor-in-Possession Term Loan Facility Preliminary Summary of Terms and Conditions Capitalized terms used but not defined herein shall have the meaning set forth in the Commitment Letter to which this Term Sheet is attached. I. JUNIOR DIP FACILITY Eastman Kodak Company (the Borrower) All obligations of the Borrower (collectively, the Obligations) in respect of the Junior DIP Facility will be unconditionally guaranteed by each direct and indirect domestic subsidiary of the Borrower that is a debtor and debtor in possession in the jointly administered chapter 11 cases (the Cases) pending in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) (collectively, the Debtors). Wilmington Trust, National Association (in such capacity, the Junior DIP Agent) The Junior DIP Agent. All holders of Pre-Petition Second Lien Notes, including the Lead Lenders, shall be provided the opportunity to subscribe as Lenders and fund the New Money Loans (as defined below) (the New Money Commitments) pursuant to procedures consistent with this Term Sheet and acceptable to Lead Lenders holding a majority in principal amount of the Commitments on the date hereof (the Required Lead Lenders) and the Borrower, including procedures allowing for affiliated holders of Pre-Petition Second Lien Notes (as define below) to allocate New Money Commitments and Rolled-Up Loans (as defined below) among themselves in a manner that is consistent with the principles outlined below. Each holder of Pre-Petition Second Lien Notes shall initially be permitted to subscribe for New Money Commitments in an amount up to the principal amount of Pre-Petition Second Lien Notes it holds (to be allocated ratably to the First Lien First Out Loans (as defined below) and First Lien Last Out Loans (as defined below)), with each Lead Lender being deemed to have subscribed for New Money Commitments in an amount equal to the principal amount of Pre-Petition Second Lien Notes it holds as of the date hereof and set forth on Annex II hereto (such initial New Money Commitment allocations, the Initial Commitment Amounts and, any holder of Pre-Petition Second Lien Notes who subscribes for or is deemed to have subscribed for an Initial Commitment Amount, an Initial Participating Holder). To the extent that the Initial Commitment Amounts equals or exceeds $455,000,000, the New Money Commitments will be allocated to each Initial Participating Holder
Borrower: Guarantors:
Administrative Agent: Collateral Agent: Lenders:
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
ratably based on its principal amount of Pre-Petition Second Lien Notes, with each Lead Lender being deemed to have the principal amount of Pre-Petition Second Lien Notes as of the date hereof and set forth on Annex II hereto. To the extent that the Initial Commitment Amounts aggregate to less than $455,000,000 (the difference between $455,000,000 and the total Initial Commitment Amounts, the Shortfall Amount), each Initial Participating Holder may elect to provide additional New Money Commitments up to an amount designated by such Initial Participating Holder (such designated amount, an Additional Commitment) ratably between the First Lien First Out Loans and First Lien Last Out Loans to cover the Shortfall Amount, with any Lead Lender, whose Initial Commitment Amount is less than its Commitment, being deemed to have made such an election for up to an amount equal the difference between such Lead Lenders Commitment and its Initial Commitment Amount (any Initial Participating Holder making or being deemed to have made such election, a Secondary Backstop Party). The Shortfall Amount shall be allocated to each Secondary Backstop Party in an amount equal to the lesser of (x) its pro rata share of the Shortfall Amount, based on principal amount of PrePetition Secured Notes held by the Secondary Backstop Parties, with any Lead Lenders principal amount of Pre-Petition Second Lien Notes being deemed the principal amount it held as of the date hereof and set forth on Annex II hereto and (y) (i) in the case of any Lead Lender, the amount of its Commitment minus New Money Commitments already allocated to it and (ii) in the case of any other Secondary Backstop Party, its Additional Commitment, in each case, in a manner consistent with Annex II; provided that, in the event that the New Money Loans are not fully subscribed for after completion of such procedure, the Lead Lenders shall be deemed to have made New Money Commitments and shall provide additional New Money Loans pursuant to the terms of their Commitments set forth in the Commitment Letter in order to provide the Borrower the full amount of New Money Loans contemplated by this Term Sheet. In consideration for funding New Money Loans, each Lender shall be permitted to roll-up obligations under its Pre-Petition Second Lien Notes into Rolled-Up Loans. To the extent that only the Lead Lenders provide New Money Commitments, the aggregate amount of Rolled-Up Loans will be $330,666,000, which shall be allocated to each Lead Lender as set forth under Scenario 1 in Annex II hereto. To the extent that holders of Pre-Petition Second Lien Notes other than the Lead Lenders provide New Money Loans, the aggregate amount of Rolled-Up Loans will be between $330,666,000 and $375,000,000 (determined in a manner consistent with the illustrative scenarios set forth on Annex II to this Term Sheet), which shall be allocated to each Lender in an amount equal to the lesser of (x) its pro rata portion of the aggregate amount of RolledUp Loans, based on New Money Loans funded, and (y) the principal amount of Pre-Petition Second Lien Notes it holds, with each Lead Lenders principal amount of Pre-Petition Second Lien Notes being deemed the amount it holds as of the date hereof as set forth on Annex II hereto. Notwithstanding anything herein to the contrary, to the extent that
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
any Lead Lender acquires additional Pre-Petition Second Lien Notes after the date hereof, solely with respect to the principal amount of PrePetition Second Lien Notes in excess of the amount owned as of the date hereof and set forth on Annex II hereto, such Lead Lender shall not be treated as a Lead Lender in the above procedures and it will be permitted and required to follow the same procedures as other holders that are not Lead Lenders if it wishes to provide New Money Commitments and receive the applicable Rolled-Up Loans with respect to such additional Pre-Petition Second Lien Notes. For greater clarity, the aggregate amount of Rolled-Up Loans and the allocation of Rolled-Up Loans at various levels of participation by holders of Pre-Petition Second Lien Notes in the New Money Loans are set forth on Annex II to this Term Sheet. Type, Amount and Maturity: A junior term loan facility (the Junior DIP Facility) in the aggregate principal amount of up to $830 million, consisting of (i) first lien firstout term loans in the aggregate principal amount of $200 million of new money (the First Lien First Out Loans), (ii) first lien last-out term loans in the aggregate principal amount of $255 million of new money (such loans, the First Lien Last Out Loans, together with the First Lien First Out Loans, the New Money Loans) and (iii) junior lien term loans (such loans, the Rolled-Up Loans; together with the New Money Loans, the Loans) in the aggregate principal amount of up to $375 million issued to the Lenders in exchange for amounts outstanding due the Lenders under the Borrowers (i) 10.625% Senior Secured Notes due March 15, 2019 issued under or in connection with that certain Indenture dated as of March 15, 2011 and (ii) 9.75% Senior Secured Notes due March 1, 2018 issued under or in connection with that certain Indenture dated as of March 5, 2010 (collectively, and as amended prior to the Petition Date, the Pre-Petition Second Lien Notes). The Junior DIP Facility will mature and shall be paid in full in cash on the date (the Maturity Date) that is the earliest to occur of (i) September 30, 2013, (ii) the effective date (the Effective Date) of the chapter 11 plan for the reorganization of the Borrower (the Chapter 11 Plan), to the extent amounts outstanding under the Junior DIP Facility are not converted into exit term loans as described below, and (iii) the acceleration of the Loans in accordance with the Definitive Financing Documentation. Notwithstanding anything in the immediately preceding paragraph to the contrary, the Junior DIP Facility may be converted into an exit facility with a maturity date that is the date that is five (5) years from the Maturity Date provided that (i) the Borrower shall be in compliance as of the Effective Date with the financial tests set forth on Annex I attached hereto, (ii) the Effective Date shall have occurred no later than September 30, 2013 pursuant to an order the terms of which that are material to their interests as lenders under the Junior DIP Facility are reasonably acceptable to counsel to the Lead Lenders, (which order be in full force and effect and shall not have been reversed, vacated or modified or stayed), provided that terms of the final order that are
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
substantially consistent with parameters to be set forth in the Definitive Financing Documentation shall be deemed to be reasonably acceptable, (iii) no default or event of default shall have occurred and be continuing under the Junior DIP Facility (on a pro forma basis after giving effect to the consummation of the Chapter 11 Plan), (iv) the consummation of all or a portion of the asset sale transactions assigned the code names Rockford and Walden (collectively, the Specified Sale) for an aggregate gross cash purchase price (for the U.S. and non-U.S. portions of those businesses taken together) at consummation of not less than the minimum proceeds amount agreed between the Borrower and the Lenders pursuant to the Side Letter1 (the Minimum Proceeds Amount) shall have occurred, (v) the First Lien First Out Loans shall have been repaid in full in cash (with proceeds of the Specified Sale or otherwise), (vi) no Material Adverse Effect (as defined below) shall have occurred since the date of approval by the Bankruptcy Court of the disclosure statement for the Chapter 11 Plan and (vii) resolution of all obligations owing in respect of the Kodak Limited UK pension scheme (the UK Pension Scheme) on parameters set forth in the Definitive Financing Documentation (as defined below) shall have occurred. Material Adverse Effect shall be defined as an event or occurrence that has had a material adverse effect, or any event or occurrence which could reasonably be expected to have a material adverse effect, on (A) the business, properties, financial condition results of operations or liabilities of the Borrower and its subsidiaries, taken as a whole, other than any change, event or occurrence, arising individually or in the aggregate, from (i) events leading up to the commencement of proceedings under Chapter 11 of the Bankruptcy Code, (ii) events that would reasonably be expected to result from the filing or commencement of the Cases or the announcement of the filing or commencement of the Cases, (iii) the failure to obtain an aggregate gross cash purchase price in excess of the Minimum Proceeds Amount for the Specified Sale or a cash purchase price in excess of the amount agreed between the Borrower and the Lenders pursuant to the Side Letter (the IP Amount)for the sale of intellectual property relating to their digital-image capture portfolio and other patents currently contemplated to be sold in the transaction assigned the code name Komodo or (iv) the DIP Order (as defined below) or the order entered by the Bankruptcy Court approving the Commitment Letter (including, in each case, taking any actions required by such orders) or actions required to be taken under the terms of the Junior DIP Facility or Exit Facility, including in respect to any changes to the corporate governance of the Borrower, (B) the ability of the Borrower or the guarantors to perform their respective obligations under the loan agreement, guarantees and security documents relating to the facilities (the Loan Documents) or (C) the ability of the Junior DIP Agent, the Collateral Agent and/or the Lenders to enforce their rights and remedies under the Loan Documents.
1
The Side Letter shall mean that certain side letter, dated as of November 12, 2012, by and among Centerbridge Advisors II, LLC, GSO Capital Partners LP, J.P. Morgan Securities LLC, UBS Securities LLC, UBS AG, Stamford Branch and the Borrower.
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
The following terms will apply to the exit term loans: (1) there will be no OID or other fees payable in connection with conversion of the Junior DIP Facility into the exit term facility, (2) the exit term loans will be tranched as follows:2 (a) a first lien term loan tranche of $255 million (or $268.65 million if the put option premium described below is paid in the form of additional First Lien Last Out Loans) that will bear interest at the rate of L+ 9.5%, with a Libor floor of 100 basis points and (b) a second lien term loan tranche of $375 million that will bear interest at the rate of L+ 12.00%, with a Libor floor of 100 basis points, (3) call protection of 102% and 101% will apply to any principal amount of exit term loans voluntarily repaid, in whole or in part, in years one and two, respectively, of the exit term facility, with the proceeds of a refinancing (including a repricing transaction under the Definitive Financing Documentation) (4) the covenants (including reporting requirements), events of default and other terms in the Junior DIP Facility will contain adjustments (to be set forth in the Definitive Financing Documentation) as appropriate for an exit term facility that apply upon conversion (the covenants will be based on projections that are substantially similar to the projections provided to the Lead Lenders as of the date hereof) and (5) the exit term loans shall be guaranteed by the same entities guaranteeing the Junior DIP Facility and secured by the same collateral securing the Junior DIP Facility; provided that, pledges of stock of foreign subsidiaries will be limited to 65% of the voting stock and 100% of the non-voting stock of material first-tier foreign subsidiaries. Liens/Priority: Subject to the Carve-Out (substantially similar, to the extent applicable, to that defined in the Existing DIP Order (as defined below) but to include additional references to AP Services, LLC, advisors to the 1114 Committee, the fee examiner and any other advisors to be agreed (and their successors and replacements), and to provide for a higher amount as may be agreed), the Junior DIP Facility shall be secured by first, second and third priority postpetition liens on all the Collateral (as defined in the Final Order (I) Authorizing Debtors (A) To Obtain Post-Petition Financing Pursuant to 11 U.S.C. 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) and 364(e) and (B) To Utilize Cash Collateral Pursuant To 11 U.S.C. 363 and (II) Granting Adequate Protection To Pre-Petition Secured Parties Pursuant To 11 U.S.C. 361, 362, 363 and 364 [Docket No. 375] (the Existing DIP Order) securing the $950,000,000 debtor in possession financing facility (the Existing DIP Facility) and 100% of the equity interests of material first-tier foreign subsidiaries of the Borrower subject to any exceptions that may be acceptable to the Required Lead Lenders3 (such liens securing the Junior DIP Facility, the Junior DIP Liens and the related collateral, the Junior DIP Collateral). The Junior DIP Liens shall prime the liens securing the Borrowers outstanding obligations under the Pre-Petition
The Lead Lenders may re-tranche the exit term loans after the signing of the Commitment Letter in a manner that is reasonably acceptable to the Borrower 3 The parties acknowledge and agree that the Borrower shall be entitled to provide similar pledges to lenders under the Existing DIP Facility, consistent with the relative priorities for security for pledges of shares of foreign subsidiaries for the Existing DIP Facility as between the revolving and term loan facilities.
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
Second Lien Notes that are not Rolled-Up Loans (the Outstanding PrePetition Second Lien Notes) and liens securing any obligations under the Borrowers pre-petition first lien credit facility. All obligations under the Junior DIP Facility shall constitute allowed superpriority administrative expense claims with priority under section 364(c)(1) of the Bankruptcy Code over all other administrative expense claims in the Chapter 11 cases, subject to the Carve-Out, junior only to the superpriority administrative expense claims under the Existing DIP Order in favor of the Existing DIP Facility; provided, that the Junior DIP Liens in respect of the Rolled-Up Loans shall be junior in priority to the liens securing the Existing DIP Facility; provided, further, however the obligations under the Junior DIP Facility including the Rolled-Up Loans need not be paid in cash on the effective date of a Chapter 11 Plan if the Junior DIP Facility is converted to an exit facility on the conditions described above. Intercreditor Agreement: Intercreditor arrangements between Citicorp North America, Inc., in its capacity as administrative and collateral agent for the lenders under the Existing DIP Facility, and the Junior DIP Agent shall be agreed and set forth in an intercreditor agreement and confirmed in the DIP Order (as defined below), each of which shall be in form, substance and scope reasonably satisfactory to the Required Lead Lenders and Citicorp North America, Inc. As a result of the priming of their liens and use of their cash collateral, holders of Outstanding Pre-Petition Second Lien Notes will be entitled to receive as additional adequate protection (i) replacement liens on Junior DIP Collateral that are junior to the liens securing the Existing DIP Facility and the Junior DIP Facility, (ii) guarantees from all entities that guarantee the Existing DIP Facility and Junior DIP Facility that are subordinate to the guarantee in respect of the Existing DIP Facility and Junior DIP Facility, (iii) administrative claims as provided for in section 507(b) of the Bankruptcy Code, junior to the superpriority administrative expense claims granted to the lenders under the Existing DIP Facility and the Lenders and (iv) the payment at or following the Closing Date of an amount equal to current non-default interest, to include a catch-up in an amount equal to non-default interest accrued from November 1, 2012.4 All lenders participating in the Junior DIP Facility will consent to the sufficiency of such adequate protection in connection with the approval of the Junior DIP Facility. All of the New Money Loans and the Rolled-Up Loans shall be available on the Closing Date.
Adequate Protection:
Availability and Use of Proceeds:
For the avoidance of doubt, any currently existing adequate protection set forth in the Existing DIP Order will continue in favor of the holders of Outstanding Pre-Petition Second Lien Notes and the trustee with respect to the Outstanding Pre-Petition Second Lien Notes other than to the extent necessary to give full effect to the terms specifically agreed to in this Term Sheet.
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
Proceeds of Loans to be used to (i) refinance the term loans outstanding under the Existing DIP Facility,5 (ii) fund working capital requirements described in the Budget (as defined below), (iii) at the Borrowers option, fund adequate protection payments in respect of the Pre-Petition Second Lien Notes, if any, or make payments to other creditors to the extent permitted by the Definitive Financing Documentation, and (iv) fund settlement payments (if any) in respect of the UK Pension Scheme. The lenders agree that they shall not be entitled to adequate protection cash interest payments to the extent (but only to the extent) of rolled-up accrued interest in connection with the Rolled-Up Loans even if cash adequate protection payments in respect of accrued interest are made to other holders of Outstanding Pre-Petition Second Lien Notes. Interest Rates: New Money Loans: The First Lien First Out Loans shall bear interest at the rate of L+ 9.5% per annum. The First Lien Last Out Loans shall bear interest at the rate of L+ 11.0% per annum. Both loans shall have Libor floors of 100 bps.. Rolled-Up Loans: The Rolled-Up Loans shall bear interest at a rate per annum, payable in kind, equal to applicable non default rate on the PrePetition Second Lien Notes that are subject to the roll up; provided however that to the extent the obligations under the outstanding PrePetition Second Lien Notes receive current interest in cash as adequate protection in accordance with the Existing DIP Order (including, without limitation, Current Interest (as defined in the Existing DIP Order)), interest on the Rolled-Up Loans shall be likewise payable in cash; provided further that to the extent the Rolled-Up Loans are converted into a portion of the exit facility, accrued and unpaid interest shall be capitalized (to the extent not otherwise paid in cash) and current interest on the Rolled-Up Loans shall be payable in cash as of the date of conversion. After the occurrence and during the continuance of a payment6 event of default, interest on all Loans and all other outstanding amounts under the Definitive Financing Documentation (as defined below) will bear interest at a rate equal to 2.0% per annum plus the otherwise applicable rate. Put Option Premium: At the Borrowers option, a put option premium in an amount equal to (x) 2% of the Commitments held by each Lead Lender on the date hereof, which shall be earned upon the date hereof and shall be payable in cash to each Lead Lender on the Closing Date or (y) 3% of the Commitments held by each Lead Lender on the date hereof, which shall
Upon the refinancing of the term loans outstanding under the Existing DIP Facility, (i) the New Money Loans will have a first lien on the Term Facility Collateral (as defined in the Existing DIP Facility), (ii) the New Money Loans will have a second lien on the Revolving Credit Facility Collateral (as defined in the Existing DIP Facility and (iii) the Rolled-Up Loans will have third lien on both the Term Facility Collateral and Revolving Credit Facility Collateral. For the avoidance of doubt, these lien priorities shall apply both before and after effectiveness of a Chapter 11 Plan. 6 It is understood that on and after the Effective Date, the default interest rate will apply after the occurrence and during the continuance of any event of default.
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
be earned upon the date hereof and shall be payable in the form of additional First Lien Last Out Loans issued to each Lead Lender on the Closing Date (and the additional First Lien Last Out Loans shall be permitted to be converted to exit term loans on the same terms as the other First Lien Last Out Loans). Original Issue Discount: Prepayments: With respect to the First Lien Last Out Loans only, 98.0%. Voluntary: Prepayments under the Junior DIP Facility may be made at any time without premium or penalty (other than breakage costs to the extent applicable) except as set forth below. Voluntary prepayments of the exit term loans, in whole or in part, with the proceeds of a refinancing (including a repricing transaction under the Definitive Financing Documentation) shall be at par plus accrued interest plus a premium. The premium shall initially be 2% of the aggregate principal amount prepaid, from and after the first anniversary of the Effective Date through the second anniversary thereof, shall be 1% and, from and after the second anniversary of the Effective Date, shall be 0%. Mandatory: Mandatory prepayments will be limited to the following: (i) 100% of the net cash proceeds from debt issuances other than permitted debt, (ii) 100% of the net cash proceeds of insurance/condemnation and other extraordinary events, subject to reinvestment rights to be agreed and other customary exceptions and (iii) 100% of the net cash proceeds of asset sales (other than the (i) Specified Sale and (ii) assets over which the lenders under the ABL facility have a first priority lien to the extent such net cash proceeds are required to be applied thereunder) that are allocated and paid to the Debtors estates (provided that (A) the Debtors shall use commercially reasonable efforts to ensure that net cash proceeds of asset sales are allocated and paid to the Borrower or its U.S. guarantor subsidiaries as promptly as practicable and to the maximum extent possible and such net cash proceeds will be applied to the prepayment of the Junior DIP Facility at such time that they are allocated and paid to the Borrower or its U.S. guarantor subsidiaries and (B) to the extent that (I) an asset sale involves the sale of collateral securing the Junior DIP Facility or the sale of stock or assets held directly or indirectly by an entity the shares of which have been pledged to the lenders as collateral (other than shares of or assets held by a foreign subsidiary that is not a guarantor) and (II) the percentage of net cash proceeds of such asset or stock sale that is allocated and paid to the Borrower and its guarantor subsidiaries is less than a threshold to be agreed and the total amount of net cash proceeds of the sale exceeds an amount to be agreed, the method of allocation of the net cash proceeds of such an asset or stock sale shall be reasonably acceptable to the Required Lead Lenders), subject to limited customary exceptions, to the prepayment of the Junior DIP Facility. From and after the Effective Date, the Borrower shall obtain a fairness opinion with respect to asset sales in excess of a threshold to be agreed.
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
With respect the net cash proceeds of the Specified Sale, (i) 100% of the first $200 million in net cash proceeds allocated and paid to the Debtors estates shall be applied to the prepayment of the First Lien First Out Loans, (ii) to the extent aggregate net cash proceeds from the Specified Sale exceed the Minimum Proceeds Amount, 75% of net cash proceeds in excess of the Minimum Proceeds Amount that are allocated and available to the Debtors estates shall be used to prepay obligations outstanding under the Junior DIP Facility. In addition to the foregoing, from and after the Effective Date, Excess Cash Flow (to be defined in a manner to be agreed) shall be used to prepay obligations outstanding under the exit facility as follows: (i) the Excess Cash Flow prepayment shall be triggered only if there is an $800 million consolidated worldwide cash balance at the end of the fiscal year for which Excess Cash Flow is being calculated (the Cash Trigger), (ii) subject to clause (v) below, 50% of the Excess Cash Flow above the Cash Trigger shall be used to prepay obligations outstanding under the exit facility, (iii) Excess Cash Flow will be tested on an annual basis no later than June 30 of each year, with prepayments beginning in 2015 (for any Excess Cash Flow for 2014), (iv) subject to clause (v), Excess Cash Flow prepayments shall be made within 45 days following the delivery of test results to the lenders in accordance with clause (iii) of this paragraph and (v) Excess Cash Flow prepayments shall not be required (A) to the extent it would cause liquidity to fall below the Cash Trigger or the required Minimum U.S. liquidity covenant level or (B) for so long as and in such amount as may be prohibited by law or regulation (including laws and regulations limiting the repatriation of funds by foreign subsidiaries). Mandatory prepayments will be applied first to the payment in full of the New Money Loans (applied first to the First-Lien First Out Loans and second to the First Lien Last Out Loans) prior to being applied to prepay the Rolled-Up Loans. Any asset sale proceeds not required to be applied to prepayment of the Junior DIP Facility shall be available to the Borrower and its subsidiaries to use for their general corporate purposes. For the avoidance of doubt, no such proceeds or other funds may be used to repay any pre-petition indebtedness other than payments of adequate protection as contemplated herein, provided that up to $70 million, less the amount of any cash payment in reduction of pre-November 1, 2012 accrued interest on the Pre- Petition Second Lien Notes, may be used to fund distributions made pursuant to the Chapter 11 Plan. Representations and Warranties: Substantially consistent with those types of representations and warranties in the Existing DIP Facility, with certain exceptions to be agreed to account for the differences in the nature of the facilities and to give full effect to the terms specifically agreed to in this term sheet.
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
The Definitive Financing Documentation shall require the Borrower to make the following representation as of the Closing Date (as defined below): The Borrower believes in good faith, based upon information known to it as of the date hereof and assumptions believed by it to be reasonable as of the date hereof, that the Specified Sale shall have occurred on or prior to the Maturity Date for an aggregate gross cash purchase price at consummation of not less than the Minimum Proceeds Amount. Covenants: Substantially consistent with those types of affirmative and negative covenants in the Existing DIP Facility (with appropriate thresholds and baskets to be agreed) with certain exceptions to be agreed to account for the differences in the nature of the facilities7 and to give full effect to the terms specifically agreed to in this term sheet. The Junior DIP Facility shall include a covenant providing that a final order confirming the Chapter 11 Plan shall have been entered by the Bankruptcy Court on or prior to July 31, 2013. Covenants shall include providing an updated 13 week forecast on a weekly basis and reporting against the most recent forecast provided. The Junior DIP Facility shall include a covenant providing that intercompany loans or investments by the Borrower or its guarantor subsidiaries (Loan Parties) to subsidiaries that are not Loan Parties (Non-Loan Parties) shall not exceed a threshold to be agreed (both individually and in the aggregate), with such intercompany loan or investment to be structured as an intercompany note and pledged to the Collateral Agent for the benefit of the lenders. The Junior DIP Facility shall also include a covenant providing that intercompany loans, if any, by Non-Loan Parties to Loan Parties shall be subordinated to the obligations under the Junior DIP Facility, as well as other limitations on intercompany indebtedness to be agreed. The Junior DIP Facility shall (a) provide a basket for (i) an ABL facility in an amount not to exceed $2258 million to fund the Debtors working capital requirements, which may be secured by liens consistent with those for the ABL facility that is part of the Existing DIP Facility and also any additional security granted to the lenders under the Junior DIP Facility in a manner that is junior and subordinated to the liens securing the Junior DIP Facility (in each case, consistent with the relative lien priorities described in Footnote 5) and (ii) pre or post confirmation settlement payments in respect of the UK Pension Scheme within certain parameters to be agreed and (b) contain sufficient allowances to be agreed to permit the transactions needed to implement the Chapter 11 Plan.
Covenants will provide additional flexibility to be agreed for the Company post emergence to the extent necessary to accommodate the Companys business plan. 8 The basket for an ABL facility in the exit facility shall be in an amount not to exceed $200 million.
10
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
Prior to the Effective Date, financial covenants shall be limited to minimum LTM EBITDA and minimum U.S. Liquidity, in each case as set forth in the Existing DIP Facility. On and after the Effective Date, financial covenants shall include minimum U.S. Liquidity, Secured Leverage Ratio, Cash Interest Coverage Ratio and maximum Capital Expenditures. Prior to the Effective Date and except as otherwise agreed herein with respect to the definition of EBITDA, the definitions used in the financial covenants shall be substantially consistent with those in the Existing DIP Facility, with additional add-backs and other exceptions providing for adjustments relating to consummation of the Chapter 11 Plan as may be agreed. Events of Default: Substantially consistent with those types of events of default in the Existing DIP Facility (with appropriate thresholds to be agreed) with certain exceptions to be agreed to account for the differences in the nature of the facilities and to give full effect to the terms specifically agreed to in this term sheet. Substantially consistent with those types of remedies in the Existing DIP Facility with certain exceptions to be agreed to account for the differences in the nature of the facilities and to give full effect to the terms specifically agreed to in this term sheet. Lenders holding greater than 50% of the outstanding commitments and/or exposure under the Junior DIP Facility in each of no more than two tranches. Assignments under the Junior DIP Facility must be in a minimum amount of $1 million (or, if less, the remaining commitments of any assigning lender), may not be made to disqualified lenders (parties identified by the Borrower prior to the date hereof or competitors of the company), and are subject to the consent of the Administrative Agent, which consent shall not be unreasonably withheld or delayed, except, in each case, with respect to any assignment to a lender, an affiliate of such a lender or a fund engaged in investing in commercial loans that is advised or managed by such a lender. No participation shall include voting rights, other than for matters requiring consent of 100% of the lenders. State of New York (and, to the extent applicable, the Bankruptcy Code). Standard yield protection provisions consistent with and limited in form and substance to those in the Existing DIP Facility, subject to prompt notice and MFN requirements.
Remedies:
Required Lenders:
Assignments and Participations:
Governing Law: Miscellaneous:
11
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
II.
CONDITIONS PRECEDENT FOR BORROWING
Conditions precedent including the following and otherwise substantially consistent with those types of conditions precedent in the Existing DIP Facility with certain additional conditions to be agreed to account for the differences in the nature of the facilities in order to give full effect to the terms specifically agreed to in this term sheet (but in no event to include additional financial conditions, milestones relating to the Cases or assets sales or similar requirements not specifically set forth herein) (the date upon which all such conditions precedent shall be satisfied, the Closing Date): Junior DIP Facility Documentation: The definitive documentation evidencing the Junior DIP Facility (including, without limitation, collateral documentation, an intercreditor agreement and an amendment to the Existing DIP Facility to permit the Junior DIP Facility) shall be negotiated as promptly as practicable between the parties and shall be substantially consistent with this Term Sheet and otherwise reasonably satisfactory to the Required Lead Lenders (the Definitive Financing Documentation). All other terms and conditions in the Definitive Financing Documentation not specifically provided for in this Term Sheet shall be substantially consistent with the Existing DIP Facility with certain exceptions to be agreed. A final order approving the Junior DIP Facility (in form and substance satisfactory to the Required Lead Lenders, including with respect to the provision of adequate protection for primed liens) (the DIP Order) shall have been entered by the Bankruptcy Court on or prior to 11:59 P.M. (prevailing New York City time) on January 24, 2013 and shall be in full force and effect and unstayed. The Lenders shall have received certified copies of (i) a monthly budget through the maturity of the Junior DIP Facility, and (ii) a 13-week cash flow forecast prepared by the Borrower, in each case, in form and detail substantially consistent with prior budgets and forecasts delivered to the Lenders (as supplemented from time to time in accordance with the Junior DIP Facility, the Budget).
DIP Order:
Budget:
IP Asset Sale: Payment of Interest under Existing DIP Order:
The Debtors shall have consummated the sale of their intellectual property relating to their digital-image capture portfolio and other patents currently contemplated to be sold in the transaction assigned the code name Komodo for aggregate cash consideration of not less than the IP Amount. The term loans outstanding under the Existing DIP Facility shall have been paid down to an aggregate principal amount outstanding immediately prior to the Closing Date of not greater than $170 million.
Repayment of Term Loans Under Existing DIP Facility:
The Junior DIP Agent and Lead Lenders shall have received satisfactory evidence that subject to funding of the Junior DIP Facility, all term loans outstanding under the Existing DIP Facility shall have been repaid.
12
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
Disclosure of MNPI:
To the extent that the Borrower or its affiliates shall have provided the Lead Lenders with any additional MNPI, the Borrower shall have publicly disclosed all material non-public information provided to the Lead Lenders no later than December 31, 2012; provided that the Borrower shall use commercially reasonable efforts to publicly disclose all material non-public information provided to the Lead Lenders as promptly as possible after the date hereof as long as such disclosure would not reasonably be expected to have a material adverse impact on the Borrower. Since September 30, 2012, no Material Adverse Effect shall have occurred. All reasonable and documented costs, fees, expenses (including, without limitation, legal and financial advisory fees and expenses) and other compensation contemplated hereby, payable to the Lead Lenders and the other Lenders or otherwise payable in respect of the transaction, shall have been paid to the extent due and, with respect to legal fees, invoiced at least two days prior to the Closing. The transactions contemplated by the Commitment Letter and this Term Sheet shall have been consummated in accordance with applicable securities laws, rules and regulations in all material respects. The Lenders shall have received (x) customary legal opinions from counsel (including, without limitation, New York counsel) substantially consistent in form and scope to the legal opinion provided to the Administrative Agent and Lenders under the Existing DIP and (y) customary officer and secretary certificates.
No Material Adverse Effect: Miscellaneous:
13
12-10202-alg
Doc 2492
Main Document
Annex I Exit Conditions Minimum U S Liquidity: Secured Leverage Ratio: Minimum Trailing 6-Month EBITDA: $150 million Not greater than 4.0x. As set forth in the Side Letter.
Minimum U.S. Liquidity will be calculated based on unrestricted cash held by the Borrower and its U.S. subsidiaries and amounts available to be drawn under any revolving credit facility, and will be calculated on a pro forma basis after giving effect to the conversion into the exit facility, any revolving credit facility that is effective on the Effective Date and the other transactions occurring on the Effective Date and described herein. Secured Leverage Ratio shall mean, as of the Effective Date, as calculated on a pro forma basis giving effect to the transactions occurring on or prior to the Effective Date, the ratio of the Borrowers consolidated secured debt to pro forma forecasted 2013 EBITDA. Forecasted 2013 EBITDA will be a combination of (1) the actual pro forma EBITDA results for 2013 year to date and (2) forecasted pro forma EBITDA for the remainder of 2013, which will be based upon the forecast previously provided to the Lead Lenders. The Company may revise its forecasted pro forma EBITDA, provided that such revised forecast is based upon a business plan that is substantially consistent with the business plan underlying the forecasted pro forma EBITDA previously provided to the Lead Lenders, the assumptions underlying such revised forecast are made in good faith and believed to be reasonable by the Borrower and the methodology underlying such assumptions are reasonably acceptable to the Required Lead Lenders. EBITDA will be prepared in good faith by the Borrower on a pro forma basis for the business at emergence, shall not be required to be reviewed or audited by independent accountants or other third parties and shall be prepared by the Borrower on a basis substantially consistent with the Disclosure Statement Forecast. EBITDA means, for any period, Consolidated Net Income for such period plus, without duplication and to the extent deducted in determining Consolidated Net Income, the sum of: (a) (b) (c) (d) (e) interest expense for such period, income tax expense for such period, depreciation expense for such period, amortization expense (including with respect to intangibles) for such period, deferred financing fees (and any writeoffs thereof) for such period,
(f) (i) any extraordinary expenses or losses during such period and (ii) any non-recurring expenses or losses during such period not to exceed for purposes of subclause (ii) the greater of an amount and percentage of EBITDA to be agreed, (g) any loss or expense from discontinued operations or discontinued business lines and loss or expense on disposal of discontinued operations or discontinued business lines during such period;
12-10202-alg
Doc 2492
Main Document
(h) any non-cash charges or expenses, including, in respect of (A) any pre-petition obligations, liabilities or claims or (B) goodwill or asset writeoffs or writedowns; provided, that to the extent any such non-cash charges represent an accrual or reserve for potential cash items in any future period, any cash payment made in respect thereof in a future period shall be subtracted from EBITDA for such future period to such extent, (i) pension, equity awards, other post-employment benefits expense during such period and any noncash compensation expense realized during such period from grants of stock appreciation rights or similar rights, stock options or other rights to directors, officers or employees, (j) any non-cash loss on foreign exchange during such period,
(k) fees, costs and expenses (including (i) fees, costs and expenses related to legal, financial and other advisors, auditors and accountants, (ii) printer costs and expenses, (iii) SEC and other filing fees and (iv) underwriting, arrangement, syndication, backstop and placement premiums, discounts, fees, charges and expenses) incurred during such period in connection with the Cases, obtaining confirmation and effectiveness of the Chapter 11 Plan, negotiation and funding of the Junior DIP Facility and, in each case, any transaction (including any financing or disposition) or litigation related thereto, in each case, regardless of whether initially incurred by the Company or paid by the Company to reimburse others for such fees, costs and expenses, (l) any non-cash loss relating to hedging activities (including any non-cash ASC 815 loss) during such period, (m) corporate restructuring charges (including retention, severance, contract termination costs, plant closure or consolidation costs, employee relocation and business optimization expenses) (i) incurred during such period up to the periods ending on the date that is 180 days after the Effective Date and (ii) incurred or accrued in any period thereafter, in an aggregate amount to be agreed, and (n) any cash expenses or losses funded during such period with payments from assets of the Kodak Retirement Income Plan, minus, without duplication and to the extent included determining Consolidated Net Income: (i) (ii) (iii) (iv) (v) (vi) (vii) interest income for such period, revenues from IP licensing transactions effected in connection with IP Settlement Agreements during such period, pension and other post-employment benefits income and credit during such period, any non-cash gains on foreign exchange during such period, any extraordinary income or gains or non-recurring income during such period, any non-cash gain relating to hedging activities (including any non-cash ASC 815 gain) for such period, any income or gain from discontinued operations or discontinued business lines and any income or gain on disposal of discontinued operations or discontinued business lines in each case for such period, and
I-2
12-10202-alg
Doc 2492
Main Document
(viii)
any non-cash income (other than the accrual of revenue in the ordinary course of business) for such period excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced EBITDA in any prior period.
Consolidated Net Income means the consolidated net income of such person and its subsidiaries for that period. All financial tests and covenants shall be calculated on a pro forma basis so that any disposition, acquisition, asset sale, wind-down of the consumer inkjet business, investment or incurrence of indebtedness (and certain other transactions) that occur during a period will be given effect as if they had been consummated at the beginning of such period; provided that the terms of such pro forma calculations will be on a basis to be agreed.
I-3
12-10202-alg
Doc 2492
Main Document
Annex II Illustrative Scenarios The examples and accompanying tables below illustrate the funding of the New Money Loans and allocation of Rolled-Up Loans at various levels of participation of the holders of the PrePetition Second Lien Notes. Scenario Example 1: No Outside Participation
($inmillions) NewMoneyLoans InitialFundingtoHoldingsRatioBeforeAllocationofShortfallAmount OutsideParticipation OutsideParticipants'PrincipalofPrePetitionSecondLienNotes OutsideParticipants'FundingtoHoldingsRatio PrePetitionSecondLienNoteHoldings Participation Principal Basedon Holdings ParHoldings Archview $23.0 6.7% Bennett 77.0 22.5% CapitalVentures 41.5 12.1% Contrarian 34.5 10.1% D.E.Shaw 41.0 12.0% GoldenTree 20.3 5.9% Litespeed 44.0 12.9% PSAM 19.0 5.6% Serengeti 17.0 5.0% StoneLion 24.4 7.1% OutsideParticipation 0.0% TotalParticipants $341.6 100.0% $455.0 100.0%
$ 0.00x NewMoneyLoanFunding RolledUpLoans %of Total 7.0% 23.4% 12.6% 10.5% 12.4% 6.1% 9.7% 5.8% 5.2% 7.4% 0.0% 100.0% Funding toHoldings Ratio 1.38x 1.38x 1.38x 1.38x 1.38x 1.38x 1.00x 1.38x 1.38x 1.38x n/a 1.33x RolledUp Loans $23.0 77.0 41.5 34.5 41.0 20.3 33.0 19.0 17.0 24.4 $330.7 RolledUp Ratio 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 75.1% 100.0% 100.0% 100.0% n/a 96.8%
Initial Funding $23.0 77.0 41.5 34.5 41.0 20.3 44.0 19.0 17.0 24.4 $341.6
Shortfall Funding $8.8 29.3 15.8 13.1 15.6 7.7 7.2 6.5 9.3 $113.4
Total Funding $31.8 106.3 57.3 47.6 56.6 28.0 44.0 26.2 23.5 33.6 $455.0
Note:Fundingof$200millionFirstLien,FirstOutand$255millionFirstLien,LastOuttranchesallocatedproratabasedonFundingasapercentage ofTotalFunding.
In this scenario, holders of Pre-Petition Second Lien Notes outside the Lead Lenders (Outside Participants) fund no New Money Loans i.e., the Lead Lenders fund the entire $455 million.
II-1
12-10202-alg
Doc 2492
Main Document
Scenario Example 2: $1 million Outside Participation at 1.38x Funding-to-Holdings Ratio

($inmillions) NewMoneyLoans InitialFundingtoHoldingsRatioBeforeAllocationofShortfallAmount OutsideParticipation OutsideParticipants'PrincipalofPrePetitionSecondLienNotes OutsideParticipants'FundingtoHoldingsRatio PrePetitionSecondLienNoteHoldings Participation Principal Basedon Holdings ParHoldings Archview $23.0 6.7% Bennett 77.0 22.5% CapitalVentures 41.5 12.1% Contrarian 34.5 10.1% D.E.Shaw 41.0 12.0% GoldenTree 20.3 5.9% Litespeed 44.0 12.8% PSAM 19.0 5.5% Serengeti 17.0 5.0% StoneLion 24.4 7.1% OutsideParticipation 1.0 0.3% TotalParticipants $342.6 100.0% $455.0 100.0%
$1.0 1.38x NewMoneyLoanFunding RolledUpLoans %of Total 7.0% 23.3% 12.6% 10.4% 12.4% 6.1% 9.7% 5.7% 5.1% 7.4% 0.3% 100.0% Funding toHoldings Ratio 1.38x 1.38x 1.38x 1.38x 1.38x 1.38x 1.00x 1.38x 1.38x 1.38x 1.38x 1.33x RolledUp Loans $23.0 77.0 41.5 34.5 41.0 20.3 33.1 19.0 17.0 24.4 1.0 $331.8 RolledUp Ratio 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 75.3% 100.0% 100.0% 100.0% 100.0% 96.8%
Initial Funding $23.0 77.0 41.5 34.5 41.0 20.3 44.0 19.0 17.0 24.4 1.0 $342.6
Shortfall Funding $8.7 29.0 15.6 13.0 15.4 7.6 7.1 6.4 9.2 0.4 $112.4
Total Funding $31.7 106.0 57.1 47.5 56.4 27.9 44.0 26.1 23.4 33.5 1.4 $455.0
In this scenario, Outside Participants holding $1.0 million in principal amount of Pre-Petition Second Lien Notes fund New Money Loans at a ratio of Total Funding to Principal Holdings (the Funding-to-Holdings Ratio) of 1.38x i.e., these holders fund approximately $1.4 million of New Money Loans. The Lead Lenders will fund the remaining $453.6 million. As shown in the table above, by participating at the same Funding-to-Holdings Ratio as Archview, Bennett, Capital Ventures, Contrarian, D.E. Shaw, GoldenTree, PSAM, Serengeti and Stone Lion, the ratio of Pre-Petition Second Lien Notes rolled-up to Principal Holdings (the Rolled-Up Ratio) for the Outside Participants is equal to the highest Rolled-Up Ratio among the Lead Lenders, in this case 100%.
II-2
12-10202-alg
Doc 2492
Main Document
Scenario Example 3: $113.4 million Outside Participation at 1.00x Funding-to-Holdings Ratio

Initial Funding $23.0 77.0 41.5 34.5 41.0 20.2 44.0 19.0 17.0 24.3 113.4 $455.0
Shortfall Funding $ $
Total Funding $23.0 77.0 41.5 34.5 41.0 20.2 44.0 19.0 17.0 24.3 113.4 $455.0
Note:Fundingof$200millionFirstLien,FirstOutand$255millionFirstLien,LastOuttranchesallocatedproratabasedonFundingasapercentage
In this scenario, Outside Participants holding $113.4 million in principal amount of Pre-Petition Second Lien Notes fund New Money Loans at a Funding-to-Holdings Ratio of 1.00x i.e., these holders fund $113.4 million of New Money Loans. The Lead Lenders will fund the remaining $341.6 million. As shown in the table above, all participants roll-up Pre-Petition Second Lien Notes at the same Rolled-Up Ratio of 82.4%, which represents the maximum rolled-up amount of $375 million divided by the total principal amount of Pre-Petition Second Lien Notes held by the participants ($455 million).
II-3
12-10202-alg
Doc 2492
Main Document

Initial Funding $14.0 46.7 25.2 20.9 24.9 12.3 26.7 11.5 10.3 14.8 247.8 $455.0
Shortfall Funding $ $
Total Funding $14.0 46.7 25.2 20.9 24.9 12.3 26.7 11.5 10.3 14.8 247.8 $455.0
In this scenario, Outside Participants holding $408.4 million of principal amount of Pre-Petition Second Lien Notes fund at a Funding-to-Holdings Ratio of 0.61x i.e., these holders fund $247.7 million of New Money Loans. The Lead Lenders will fund the remaining $207.3 million. It is important to note that, in this scenario, the New Money Loans are now oversubscribed and given that all holders of Pre-Petition Second Lien Notes are participating, no holder can fund at a higher Funding-to-Holdings Ratio than 0.61x ($455 million of New Money Loans divided by the $750 million of principal amount of Pre-Petition Second Lien Notes). As shown in the table above, all participants roll-up Pre-Petition Second Lien Notes at the same Rolled-Up Ratio of 50%, which represents the maximum rolled-up amount of $375 million divided by the total principal amount of Pre-Petition Second Lien Notes held by the participants ($750 million).
II-4
12-10202-alg
Doc 2492
Main Document
Sensitivity Tables The sensitivity tables below show the Rolled-Up Ratios and corresponding Funding-to-Holdings Ratios at various levels of participation by Outside Participants for each Lead Lender and the Outside Participants.
Archview OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x $ 1 25 100 113 175 250 325 408
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.5% 91.3% 85.5% 100.0% 100.0% 100.0% 100.0% 98.1% 89.6% 79.6% 70.6% 60.5% 100.0% 100.0% 100.0% 97.0% 94.8% 84.4% 73.2% 62.2% 50.0% 100.0% 100.0% 100.0% 86.1% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0%
Archview OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x OutsideParticipants' PrincipalofPre PetitionSecured Notes $ 1 25 100 113 175 250 325 408
1.38x 1.38x 1.38x 1.38x 1.38x 1.38x 1.38x 1.38x 1.38x 1.38x 1.38x 1.36x 1.30x 1.29x 1.23x 1.17x 1.11x 1.04x 1.38x 1.38x 1.34x 1.21x 1.19x 1.09x 0.97x 0.86x 0.73x 1.38x 1.38x 1.33x 1.18x 1.15x 1.02x 0.89x 0.75x 0.61x 1.38x 1.38x 1.30x 1.04x 1.00x 0.88x 0.77x 0.68x 0.61x 1.38x 1.38x 1.28x 1.03x 1.00x 0.88x 0.77x 0.68x 0.61x 1.38x 1.38x 1.27x 1.03x 1.00x 0.88x 0.77x 0.68x 0.61x
Bennett OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x $ 1 25 100 113 175 250 325 408
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.5% 91.3% 85.5% 100.0% 100.0% 100.0% 100.0% 98.1% 89.6% 79.6% 70.6% 60.5% 100.0% 100.0% 100.0% 97.0% 94.8% 84.4% 73.2% 62.2% 50.0% 100.0% 100.0% 100.0% 86.1% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0%
OutsideParticipants' PrincipalofPre PetitionSecured Notes
Bennett OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x OutsideParticipants' PrincipalofPre PetitionSecured Notes $ 1 25 100 113 175 250 325 408
CapitalVentures OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x $ 1 25 100 113 175 250 325 408
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.5% 91.3% 85.5% 100.0% 100.0% 100.0% 100.0% 98.1% 89.6% 79.6% 70.6% 60.5% 100.0% 100.0% 100.0% 97.0% 94.8% 84.4% 73.2% 62.2% 50.0% 100.0% 100.0% 100.0% 86.1% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0%
CapitalVentures OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x OutsideParticipants' PrincipalofPre PetitionSecured Notes $ 1 25 100 113 175 250 325 408
Contrarian OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x $ 1 25 100 113 175 250 325 408
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.5% 91.3% 85.5% 100.0% 100.0% 100.0% 100.0% 98.1% 89.6% 79.6% 70.6% 60.5% 100.0% 100.0% 100.0% 97.0% 94.8% 84.4% 73.2% 62.2% 50.0% 100.0% 100.0% 100.0% 86.1% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0%
Contrarian OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x OutsideParticipants' PrincipalofPre PetitionSecured Notes $ 1 25 100 113 175 250 325 408
D.E.Shaw OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x $ 1 25 100 113 175 250 325 408
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.5% 91.3% 85.5% 100.0% 100.0% 100.0% 100.0% 98.1% 89.6% 79.6% 70.6% 60.5% 100.0% 100.0% 100.0% 97.0% 94.8% 84.4% 73.2% 62.2% 50.0% 100.0% 100.0% 100.0% 86.1% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0%
D.E.Shaw OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x OutsideParticipants' PrincipalofPre PetitionSecured Notes $ 1 25 100 113 175 250 325 408
GoldenTree $ 1 25 100 113 175 250 325 408 OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.5% 91.3% 85.5% 100.0% 100.0% 100.0% 100.0% 98.1% 89.6% 79.6% 70.6% 60.5% 100.0% 100.0% 100.0% 97.0% 94.8% 84.4% 73.2% 62.2% 50.0% 100.0% 100.0% 100.0% 86.1% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0%
GoldenTree $ 1 25 100 113 175 250 325 408 OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x
II-5
12-10202-alg
Doc 2492
Main Document
Litespeed OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x $ 1 25 100 113 175 250 325 408
75.1% 75.1% 75.1% 75.1% 75.1% 75.1% 75.1% 75.1% 75.1% 75.1% 75.1% 76.5% 80.6% 81.3% 82.4% 82.4% 82.4% 82.4% 75.1% 75.2% 77.8% 82.4% 82.4% 82.4% 79.6% 70.6% 60.5% 75.1% 75.2% 78.4% 82.4% 82.4% 82.4% 73.2% 62.2% 50.0% 75.1% 75.3% 80.6% 82.4% 82.4% 72.6% 63.4% 56.3% 50.0% 75.1% 75.3% 80.6% 82.4% 82.4% 72.6% 63.4% 56.3% 50.0% 75.1% 75.3% 80.6% 82.4% 82.4% 72.6% 63.4% 56.3% 50.0%
Litespeed OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x OutsideParticipants' PrincipalofPre PetitionSecured Notes $ 1 25 100 113 175 250 325 408
PSAM OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x $ 1 25 100 113 175 250 325 408
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.5% 91.3% 85.5% 100.0% 100.0% 100.0% 100.0% 98.1% 89.6% 79.6% 70.6% 60.5% 100.0% 100.0% 100.0% 97.0% 94.8% 84.4% 73.2% 62.2% 50.0% 100.0% 100.0% 100.0% 86.1% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0%
PSAM OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x OutsideParticipants' PrincipalofPre PetitionSecured Notes $ 1 25 100 113 175 250 325 408
Serengeti $ 1 25 100 113 175 250 325 408 OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.5% 91.3% 85.5% 100.0% 100.0% 100.0% 100.0% 98.1% 89.6% 79.6% 70.6% 60.5% 100.0% 100.0% 100.0% 97.0% 94.8% 84.4% 73.2% 62.2% 50.0% 100.0% 100.0% 100.0% 86.1% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0%
Serengeti $ 1 25 100 113 175 250 325 408 OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x
StoneLion OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x $ 1 25 100 113 175 250 325 408
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.5% 91.3% 85.5% 100.0% 100.0% 100.0% 100.0% 98.1% 89.6% 79.6% 70.6% 60.5% 100.0% 100.0% 100.0% 97.0% 94.8% 84.4% 73.2% 62.2% 50.0% 100.0% 100.0% 100.0% 86.1% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0% 100.0% 100.0% 100.0% 85.2% 82.4% 72.6% 63.4% 56.3% 50.0%
StoneLion OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x OutsideParticipants' PrincipalofPre PetitionSecured Notes $ 1 25 100 113 175 250 325 408
OutsideParticipation OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x $ 1 25 100 113 175 250 325 408
n/a 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% n/a 18.8% 19.1% 20.1% 20.3% 20.6% 20.6% 20.6% 20.6% n/a 37.6% 38.9% 41.2% 41.2% 41.2% 41.2% 41.2% 41.2% n/a 45.6% 47.6% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% n/a n/a n/a 75.3% 94.1% 100.0% 80.6% 100.0% 100.0% 82.4% 85.2% 85.2% 82.4% 82.4% 82.4% 72.6% 72.6% 72.6% 63.4% 63.4% 63.4% 56.3% 56.3% 56.3% 50.0% 50.0% 50.0%
OutsideParticipation OutsideParticipants'Commitmentsas%ofFaceHoldings 0.00x 0.25x 0.50x 0.61x 1.00x 1.25x 1.38x OutsideParticipants' PrincipalofPre PetitionSecured Notes $ 1 25 100 113 175 250 325 408
n/a n/a 0.25x 0.25x 0.25x 0.25x 0.25x 0.25x 0.25x 0.25x n/a 0.50x 0.50x 0.50x 0.50x 0.50x 0.50x 0.50x 0.50x n/a 0.61x 0.61x 0.61x 0.61x 0.61x 0.61x 0.61x 0.61x n/a 1.00x 1.00x 1.00x 1.00x 0.88x 0.77x 0.68x 0.61x n/a 1.25x 1.25x 1.03x 1.00x 0.88x 0.77x 0.68x 0.61x n/a 1.38x 1.27x 1.03x 1.00x 0.88x 0.77x 0.68x 0.61x
Representsexamplescenariosdescribedabove
II-6
12-10202-alg
Doc 2492
Main Document
EXHIBIT C Supplemental Kurtz Declaration
SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: EASTMAN KODAK COMPANY, et al.,1 Debtors. ) ) ) ) ) ) ) Chapter 11 Case No. 12-10202 (ALG) (Jointly Administered)
SUPPLEMENTAL DECLARATION OF DAVID S. KURTZ IN SUPPORT OF THE DEBTORS AMENDED MOTION FOR AN ORDER AUTHORIZING THE DEBTORS TO (A) (I) ENTER INTO FINANCING COMMITMENT DOCUMENTS FOR SECURED SUPPLEMENTAL POSTPETITION AND EXIT FINANCING, (II) INCUR AND PAY ASSOCIATED FEES, COSTS AND EXPENSES AND (III) FURNISH RELATED INDEMNITIES, AND (B) (I) ENTER INTO A WORK FEE LETTER AND (II) INCUR AND PAY ASSOCIATED FEES I, David S. Kurtz, declare, pursuant to 28 U.S.C. 1746, under penalty of perjury: 1. I am over the age of 18 and am competent to testify. I am a Vice
Chairman and the Global Head of the Restructuring Group at Lazard Frres & Co. LLC (Lazard), which has its principal office at 30 Rockefeller Plaza, New York, New York 10020. Lazards and my qualifications are set forth in detail in the Declaration of David S. Kurtz in Support of the Debtors Motion for an Order Authorizing the Debtors to (A) Enter Into Financing Commitment Documents for Secured Supplemental Postpetition and Exit Financing, (B) Incur and Pay Associated Fees, Costs and Expenses and (C) Furnish Related Indemnities, 5-9 (the Original Commitment Declaration) [Docket No. 2413].
The Debtors in these chapter 11 cases, along with the last four digits of each Debtors federal tax identification number, are: Eastman Kodak Company (7150); Creo Manufacturing America LLC (4412); Eastman Kodak International Capital Company, Inc. (2341); Far East Development Ltd. (2300); FPC Inc. (9183); Kodak (Near East), Inc. (7936); Kodak Americas, Ltd. (6256); Kodak Aviation Leasing LLC (5224); Kodak Imaging Network, Inc. (4107); Kodak Philippines, Ltd. (7862); Kodak Portuguesa Limited (9171); Kodak Realty, Inc. (2045); Laser-Pacific Media Corporation (4617); NPEC Inc. (5677); Pakon, Inc. (3462); and Qualex Inc. (6019). The location of the Debtors corporate headquarters is: 343 State Street, Rochester, NY 14650.
SC1:3338891.3
12-10202-alg
Doc 2492
Main Document
2.
I submit this supplemental declaration in support of the Debtors Amended
Motion for an Order Authorizing the Debtors to (A) (I) Enter Into Financing Commitment Documents for Secured Supplemental Postpetition and Exit Financing, (II) Incur and Pay Associated Fees, Costs and Expenses and (III) Furnish Related Indemnities, and (B) (I) Enter into a Work Fee Letter and (II) Incur and Pay Associated Fees (the Amended Commitment Motion).2 3. Except as otherwise indicated, the facts and opinions set forth herein are
based upon (a) my personal knowledge, including my experience with postpetition financing facilities and exit financing facilities generally, (b) my review of the relevant documents, (c) information provided to me or verified by executives or employees of the Debtors or the Debtors professional advisors, (d) Lazards analyses regarding the Improved Proposed Financing (as defined below), (e) discussions with and proposals by prospective sources of postpetition and exit financing, including with regard to the Improved Proposed Financing, and (f) my opinion based upon my experience with and knowledge of the business and operations of the Debtors. 4. I am authorized to make this declaration on behalf of the Debtors. I am
not being compensated specifically for this testimony other than through payments received by Lazard as a professional retained by the Debtors in these chapter 11 cases. If called upon to testify, I would testify competently to the facts set forth herein. A. Background 5. The Original Commitment Declaration sets forth the details leading up to
the filing of the Debtors Motion for an Order Authorizing the Debtors to (A) Enter Into
2
Capitalized terms not otherwise defined herein are to be given the meanings ascribed to them in the Amended Commitment Motion.
-2SC1:3338891.3
12-10202-alg
Doc 2492
Main Document
Financing Commitment Documents for Secured Supplemental Postpetition and Exit Financing, (B) Incur and Pay Associated Fees, Costs and Expenses and (C) Furnish Related Indemnities (the Original Commitment Motion) [Docket No. 2384]. The comprehensive, competitive process of obtaining plan and exit financing, and the reasons for the Debtors selection of the financing proposed by the Centerbridge Group (the Original Proposal) are discussed fully therein. However, in the intervening period, the Debtors received an unsolicited proposal by the Steering Committee Lenders containing significantly better economic terms (the Improved Proposed Financing). After careful consideration, the Debtors accepted the commitment from the Steering Committee Lenders to provide the Improve Proposed Financing and now seek the Courts approval to enter into the Improved Commitment. 6. On November 12, 2012, the Debtors announced that they had accepted the
Original Commitment Parties proposal (the Original Commitment), and filed the Original Commitment Motion on November 14, 2012 seeking the Bankruptcy Courts approval of the commitment obligations associated with the Original Commitment. B. A Superior Bid Emerges 7. On November 26, 2012, the Debtors received an unsolicited commitment
offer from the Steering Committee Lenders to provide the Improved Proposed Financing, comprising fully executed commitment papers and a comparison showing the benefits of the new unsolicited proposal as compared to the Original Proposal. The Steering Committee Lenders have represented to the Debtors that they collectively hold approximately $342 million in principal amount of Prepetition Second Lien Notes. On November 27, 2012, the Debtors received another unsolicited financing proposal from a third party lender. The Debtors, with the assistance of their advisors, carefully considered the two new unsolicited proposals as well as the Original Proposal, and concluded that the Steering Committee Lenders proposal was -3SC1:3338891.3
12-10202-alg
Doc 2492
Main Document
significantly superior to all other proposals, including the Original Proposal. The unsolicited proposal from the third party was inferior to the Improved Proposed Financing, was not fully committed, and was subject to satisfactory completion of diligence; therefore it was rejected. 8. On November 26, 2012, the Debtors and their advisors, including Lazard,
determined that the Steering Committee Lenders unsolicited Improved Commitment should be pursued, and had a series of clarifying discussions regarding the proposal with representatives of the Steering Committee Lenders on November 26 and 27, 2012. The Steering Committee Lenders and the Debtors also informed the Original Commitment Parties that a proposal had been made and of these discussions. The Debtors obtained a concession from the Steering Committee Lenders to allow the Original Commitment Parties the opportunity to join the Improved Proposed Financing as additional backstop parties. The Original Commitment Parties have declined to join the Improved Proposed Financing as backstop parties, although the Debtors continue discussions with the Original Commitment Parties with respect to the possibility that they will participate in the Improved Proposed Financing. 9. On November 27, 2012, the Debtors Board of Directors convened a
special meeting to discuss the Improved Proposed Financing with the Debtors management and advisors. After due consideration, the Board elected to accept the Improved Commitment, and the Debtors executed the Improved Commitment Documents on November 28, 2012. 10. The Improved Proposed Financing is based largely on the Original
Proposal, but contains significantly better economic terms. The result is that the Steering Committee Lenders have substantially improved the terms when compared to the Original Commitment Parties Original Proposal. The Improved Proposed Financing contains materially better terms that include:
-4SC1:3338891.3
12-10202-alg
Doc 2492
Main Document
a. significantly improved economic terms when compared to the Original Proposal, including coupon rates, OID and fees, resulting in estimated savings of (i) over $35 million for the remainder of the chapter 11 cases, and (ii) if the Improved Proposed Financing is converted into an exit facility as is contemplated, tens of millions of dollars of additional savings after emergence, depending on how long it were to remain outstanding; b. an extended maturity date of the proposed exit facility from four years to five years; c. an offer to all second lien noteholders of pro rata participation in the new money loans and roll-up, without the requirement that the Debtors incur a cash backstop commitment fee; d. no arrangement or break-up fees; and e. no right to appoint a Vice Chairman to the Board of Directors of Eastman Kodak Company or a director to the Board of Directors of the reorganized company. C. The Revised Commitment Obligations 11. The Revised Commitment Obligations represent the best terms available
to the Debtors at this time. Those Revised Commitment Obligations are: (i) reimbursement of the Steering Committee Lenders, the Agent and their respective affiliates for reasonable out-ofpocket expenses, (ii) indemnification of the Steering Committee Lenders, the Agent and their respective affiliates, (iii) a reduced backstop commitment fee (referred to as a put option premium in the Improved Proposed Financing) (the Put Option Premium), (iv) if the commitment is extended beyond January 31, 2013, a contingent fee in an amount equal to 2.00% -5SC1:3338891.3
12-10202-alg
Doc 2492
Main Document
of the Steering Committee Lenders commitment to make new money loans, payable on February 28, 2013, but only if the Improved Proposed Financing has not closed by that date, and (v) an agency fee payable to the Agent. The Debtors have the option to pay the Put Option Premium either (a) in kind with additional loans under the Proposed Supplemental DIP Facility in a principal amount equal to 3.00% of the Steering Committee Lenders commitment to make new money loans, or (b) in cash in an amount equal to 2.00% of the Steering Committee Lenders commitment to make new money loans. In either case, the Put Option Premium is not paid until closing of the Improved Proposed Financing. Notably, the Improved Proposed Financing does not require payment of a break-up fee or similar protections that were payable under the Original Proposal in the event that the Debtor pursued and closed an alternative debtorin-possession financing. 12. The Revised Commitment Obligations significantly improve the
reasonable Original Commitment Obligations. Based on my personal participation in the process as well as my prior experience and professional judgment, I believe that the Revised Commitment Obligations are reasonable and the best available to the Debtors at this time. In reaching this conclusion I considered the factors that led me to believe that the Original Commitment Obligations were reasonable (see Original Commitment Declaration 36), as well as the improved terms provided in the Revised Commitment Obligations, among others. D. The Work Fee 13. The Debtors anticipate engaging Citigroup Global Markets Inc. (Citi) in
relation to a necessary proposed amendment to the Debtors Existing DIP Facility (the Citi Amendment) in connection with the Improved Proposed Financing. The Debtors separately will enter into a Work Fee Letter with Citi with respect to Citis activities to structure the Citi Amendment. Citi will be providing substantial services to the Debtors in connection with the -6SC1:3338891.3
12-10202-alg
Doc 2492
Main Document
Citi Amendment prior to the solicitation of consents, including structuring activities. Based on my personal participation in the process as well as my prior experience and professional judgment, I believe that entering into the Work Fee Letter and paying the associated Work Fee is reasonable and justified under the circumstances. E. Conclusion 14. I believe that the Improved Proposed Financing provides the Debtors with
materially better financing terms than the Original Proposal, and, accordingly, represents the superior financing option and best meets the Debtors projected financial and strategic needs for the rest of these chapter 11 cases and through emergence from chapter 11.
Remainder of Page Intentionally Left Blank
-7SC1:3338891.3
12-10202-alg
Doc 2492
Main Document
12-10202-alg
Doc 2492
Main Document
EXHIBIT D Term Sheet Blackline
SC1:3338870.7
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
EASTMAN KODAK COMPANY $793,000,000830,000,000 Junior Debtor-in-Possession Term Loan Facility Preliminary Summary of Terms and Conditions Capitalized terms used but not defined herein shall have the meaning set forth in the Commitment Letter to which this Term Sheet is attached. I. JUNIOR DIP FACILITY Eastman Kodak Company (the Borrower). All obligations of the Borrower (collectively, the Obligations) in respect of the Junior DIP Facility will be unconditionally guaranteed by each direct and indirect domestic subsidiary of the Borrower that is a debtor and debtor in possession in the jointly administered chapter 11 cases (the Cases) pending in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) (collectively, the Debtors). UBS AG, Stamford BranchWilmington Trust, National Association (in such capacity, the Junior DIP Agent). The Junior DIP Agent. Centerbridge and GSO (collectively, the Lead Lenders), JPMorgan and UBS (collectively, with the Lead Lenders, the Lenders). The rights of the Lead Lenders in their capacity as Lead Lenders shall run solely to Centerbridge and GSO and shall not be assignable. No party shall succeed to the rights of the Lead Lenders. Lenders: All holders of Pre-Petition Second Lien Notes, including the Lead Lenders, shall be provided the opportunity to subscribe as Lenders and fund the New Money Loans (as defined below) (the New Money Commitments) pursuant to procedures consistent with this Term Sheet and acceptable to Lead Lenders holding a majority in principal amount of the Commitments on the date hereof (the Required Lead Lenders) and the Borrower, including procedures allowing for affiliated holders of Pre-Petition Second Lien Notes (as define below) to allocate New Money Commitments and Rolled-Up Loans (as defined below) among themselves in a manner that is consistent with the principles outlined below. Each holder of Pre-Petition Second Lien Notes shall initially be permitted to subscribe for New Money Commitments in an amount up to the principal amount of Pre-Petition Second Lien Notes it holds (to be allocated ratably to the First Lien First Out Loans (as defined below) and First Lien Last Out Loans (as defined below)), with each Lead Lender being deemed to have subscribed for New Money Commitments in an amount equal to the principal amount of Pre-Petition Second Lien Notes
Borrower: Guarantors:
Administrative Agent: Collateral Agent: Lenders:
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
it holds as of the date hereof and set forth on Annex II hereto (such initial New Money Commitment allocations, the Initial Commitment Amounts and, any holder of Pre-Petition Second Lien Notes who subscribes for or is deemed to have subscribed for an Initial Commitment Amount, an Initial Participating Holder). To the extent that the Initial Commitment Amounts equals or exceeds $455,000,000, the New Money Commitments will be allocated to each Initial Participating Holder ratably based on its principal amount of PrePetition Second Lien Notes, with each Lead Lender being deemed to have the principal amount of Pre-Petition Second Lien Notes as of the date hereof and set forth on Annex II hereto. To the extent that the Initial Commitment Amounts aggregate to less than $455,000,000 (the difference between $455,000,000 and the total Initial Commitment Amounts, the Shortfall Amount), each Initial Participating Holder may elect to provide additional New Money Commitments up to an amount designated by such Initial Participating Holder (such designated amount, an Additional Commitment) ratably between the First Lien First Out Loans and First Lien Last Out Loans to cover the Shortfall Amount, with any Lead Lender, whose Initial Commitment Amount is less than its Commitment, being deemed to have made such an election for up to an amount equal the difference between such Lead Lenders Commitment and its Initial Commitment Amount (any Initial Participating Holder making or being deemed to have made such election, a Secondary Backstop Party). The Shortfall Amount shall be allocated to each Secondary Backstop Party in an amount equal to the lesser of (x) its pro rata share of the Shortfall Amount, based on principal amount of PrePetition Secured Notes held by the Secondary Backstop Parties, with any Lead Lenders principal amount of Pre-Petition Second Lien Notes being deemed the principal amount it held as of the date hereof and set forth on Annex II hereto and (y) (i) in the case of any Lead Lender, the amount of its Commitment minus New Money Commitments already allocated to it and (ii) in the case of any other Secondary Backstop Party, its Additional Commitment, in each case, in a manner consistent with Annex II; provided that, in the event that the New Money Loans are not fully subscribed for after completion of such procedure, the Lead Lenders shall be deemed to have made New Money Commitments and shall provide additional New Money Loans pursuant to the terms of their Commitments set forth in the Commitment Letter in order to provide the Borrower the full amount of New Money Loans contemplated by this Term Sheet. In consideration for funding New Money Loans, each Lender shall be permitted to roll-up obligations under its Pre-Petition Second Lien Notes into Rolled-Up Loans. To the extent that only the Lead Lenders provide New Money Commitments, the aggregate amount of Rolled-Up Loans will be $330,666,000, which shall be allocated to each Lead Lender as set forth under Scenario 1 in Annex II hereto. To the extent that holders of Pre-Petition Second Lien Notes other than the Lead Lenders provide New Money Loans, the aggregate amount of Rolled-Up Loans will be between $330,666,000 and $375,000,000 (determined in a manner consistent with the illustrative scenarios set forth on Annex II to this 2
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
Term Sheet), which shall be allocated to each Lender in an amount equal to the lesser of (x) its pro rata portion of the aggregate amount of RolledUp Loans, based on New Money Loans funded, and (y) the principal amount of Pre-Petition Second Lien Notes it holds, with each Lead Lenders principal amount of Pre-Petition Second Lien Notes being deemed the amount it holds as of the date hereof as set forth on Annex II hereto. Notwithstanding anything herein to the contrary, to the extent that any Lead Lender acquires additional Pre-Petition Second Lien Notes after the date hereof, solely with respect to the principal amount of PrePetition Second Lien Notes in excess of the amount owned as of the date hereof and set forth on Annex II hereto, such Lead Lender shall not be treated as a Lead Lender in the above procedures and it will be permitted and required to follow the same procedures as other holders that are not Lead Lenders if it wishes to provide New Money Commitments and receive the applicable Rolled-Up Loans with respect to such additional Pre-Petition Second Lien Notes. For greater clarity, the aggregate amount of Rolled-Up Loans and the allocation of Rolled-Up Loans at various levels of participation by holders of Pre-Petition Second Lien Notes in the New Money Loans are set forth on Annex II to this Term Sheet. Type, Amount and Maturity: A junior term loan facility (the Junior DIP Facility) in the aggregate principal amount of up to $767830 million (subject to increase as set forth below), consisting of (i) first lien first-out term loans in the aggregate principal amount of $200 million of new money (the First Lien First Out Loans), (ii) first lien last-out term loans in the aggregate principal amount of $250255 million of new money, which amount may be increased to up to $276 million as set forth under Availability and Use of Proceeds below (such loans, the First Lien Last Out Loans, together with the First Lien First Out Loans, the New Money Loans) and (iii) secondjunior lien term loans (such loans, the Rolled-Up Loans; together with the New Money Loans, the Loans) in the aggregate principal amount of up to $3171375 million issued to the Lenders in exchange for amounts outstanding due the Lenders under the Borrowers (i) 10.625% Senior Secured Notes due March 15, 2019 issued under or in connection with that certain Indenture dated as of March 15, 2011 and (ii) 9.75% Senior Secured Notes due March 1, 2018 issued under or in connection with that certain Indenture dated as of March 5, 2010 (collectively, and as amended prior to the Petition Date, the Pre-Petition Second Lien Notes). The Junior DIP Facility will mature and shall be paid in full in cash on the date (the Maturity Date) that is the earliest to occur of (i) September 30, 2013, (ii) the effective date (the Effective Date) of the chapter 11 plan for the reorganization of the Borrower (the Chapter 11 Plan), to the extent amounts outstanding under the Junior DIP Facility are not converted into exit term loans as described below, and (iii) the
1
This number shall be adjusted so that the Lenders accrued interest at the non-default rate in respect of the PrePetition Second Lien Notes on the Closing Date is included in the roll-up and shall be increased to up to $375 million to the extent provided in clause (v) of Adequate Protection below. The $317 million figure assumes a February 28, 2013 Closing Date.
3
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
acceleration of the Loans in accordance with the Definitive Financing Documentation. Notwithstanding anything in the immediately preceding paragraph to the contrary, the Junior DIP Facility may be converted into an exit facility with a maturity date that is the date that is fourfive (45) years from the Maturity Date provided that (i) the Borrower shall be in compliance as of the Effective Date with the financial tests set forth on Annex I attached hereto, (ii) the Effective Date shall have occurred no later than September 30, 2013 pursuant to an order the terms of which that are material to their interests as lenders under the Junior DIP Facility are reasonably acceptable to counsel to the Lead Lenders, (which order be in full force and effect and shall not have been reversed, vacated or modified or stayed), provided that terms of the final order that are substantially consistent with parameters to be set forth in the Definitive Financing Documentation shall be deemed to be reasonably acceptable, (iii) no default or event of default shall have occurred and be continuing under the Junior DIP Facility (on a pro forma basis after giving effect to the consummation of the Chapter 11 Plan), (iv) the consummation of all or a portion of the asset sale transactions assigned the code names Rockford and Walden (collectively, the Specified Sale) for an aggregate gross cash purchase price (for the U.S. and non-U.S. portions of those businesses taken together) at consummation of not less than the minimum proceeds amount agreed between the Borrower and the Lenders pursuant to the side letter dated the date hereofSide Letter1 (the Minimum Proceeds Amount) shall have occurred, (v) the First Lien First Out Loans shall have been repaid in full in cash (with proceeds of the Specified Sale or otherwise), (vi) no Material Adverse Effect (as defined below) shall have occurred since the date of approval by the Bankruptcy Court of the disclosure statement for the Chapter 11 Plan, and (vii) resolution of all obligations owing in respect of the Kodak Limited UK pension scheme (the UK Pension Scheme) on parameters set forth in the Definitive Financing Documentation (as defined below) shall have occurred and (viii) the holders of First Lien Last Out Loans shall have received a 2% exit fee (payable in kind) (the Exit Fee). Material Adverse Effect shall be defined as an event or occurrence that has had a material adverse effect, or any event or occurrence which could reasonably be expected to have a material adverse effect, on (A) the business, properties, financial condition results of operations or liabilities of the Borrower and its subsidiaries, taken as a whole, other than any change, event or occurrence, arising individually or in the aggregate, from (i) events leading up to the commencement of proceedings under Chapter 11 of the Bankruptcy Code, Chapter 15 of the Bankruptcy Code and/or proceedings commenced under the CCAA by a Canadian loan party in connection with an Approved Canadian Case, and/or the commencement of the Cases or an Approved Canadian Case, (ii) events that would reasonably be expected to result from the
1
The Side Letter shall mean that certain side letter, dated as of November 12, 2012, by and among Centerbridge Advisors II, LLC, GSO Capital Partners LP, J.P. Morgan Securities LLC, UBS Securities LLC, UBS AG, Stamford Branch and the Borrower.
4
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
filing or commencement of the Cases or an Approved Canadian Case or the announcement of the filing or commencement of the Cases or an Approved Canadian Case, (iii) the failure to obtain an aggregate gross cash purchase price in excess of the Minimum Proceeds Amount for the Specified Sale or a cash purchase price in excess of the amount agreed between the Borrower and the Lenders pursuant to the side letter dated the date hereofSide Letter (the IP Amount)for the sale of intellectual property relating to their digital-image capture portfolio and other patents currently contemplated to be sold in the transaction assigned the code name Komodo or (iv) the DIP Order (as defined below) or the order entered by the Bankruptcy Court approving the Commitment Letter (including, in each case, taking any actions required by such orders) or actions required to be taken under the terms of the Junior DIP Facility or Exit Facility, including in respect to any changes to the corporate governance of the Borrower, (vB) the ability of the Borrower or the guarantors to perform their respective obligations under the loan agreement, guarantees and security documents relating to the facilities (the Loan Documents) or (viC) the ability of the Junior DIP Agent, the Collateral Agent and/or the Lenders to enforce their rights and remedies under the Loan Documents. The following terms will apply to the exit term loans: (1) there will be no OID or other fees payable in connection with conversion of the Junior DIP Facility into the exit term facility except as described above, (2) the exit term loans will be tranched as follows:2 : (a) a first lien term loan tranche of $250255 million (which amount may be increased to up to $276or $268.65 million toif the extent the amount ofput option premium described below is paid in the form of additional First Lien Last Out Loans is so increased as set forth under Availability and Use of Proceeds below) that will bear interest at the rate of L+ 9.5%, with a Libor floor of 100 basis points and (b) a second lien term loan tranche of $3173375 million that will bear interest at the rate of L+ 13.512.00%,4 with a Libor floor of 100 basis points, (3) call protection of 102% and 101% will apply to any principal amount of exit term loans voluntarily repaid, in whole or in part, in years one and two, respectively, of the exit term facility, with the proceeds of a refinancing (including a repricing transaction under the Definitive Financing Documentation) (4) the covenants (including reporting requirements), events of default and other terms in the Junior DIP Facility will contain adjustments (to be set forth in the Definitive Financing Documentation) as appropriate for an exit term facility that apply upon conversion (the covenants will be based on projections that are substantially similar to the projections provided to the Lead Lenders as of the date hereof) and (5) the exit term loans shall be (x) guaranteed by the Borrowers material first-tiersame entities
2
The Lead Lenders may re-tranche the exit term loans after the signing of the Commitment Letter in a manner that is reasonably acceptable to the Borrower. 3 Subject to adjustments in accordance with footnote 2 and the Adequate Protection section of this Term Sheet. 4 The LIBOR spreads for each tranche will be reduced by 50 basis points in the event that the pledges and guaranties set forth in clause (5) of this paragraph are provided by or in respect of foreign subsidiaries representing more than percentages to be agreed of total revenue and total assets of the foreign subsidiaries contemplated to provide guaranties or the shares of which are contemplated to be pledged.
5
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
guaranteeing the Junior DIP Facility and secured by the same collateral securing the Junior DIP Facility; provided that, pledges of stock of foreign subsidiaries, (y) secured by pledges of 100% of the stock of the Borrowers material first- tier foreign subsidiaries and (z) secured by pledges of will be limited to 65% of the voting stock of Eastman Kodak Sarl and Kodak China Limited; provided that the Borrower shall have no obligation to cause a foreign subsidiary to provide such a guaranty or for the Borrower to or to cause a subsidiary to provide a pledge in excess of 65% of theand 100% of the non-voting stock of any such material first-tier subsidiary or for the Borrower to cause a subsidiary to provide a pledge of the stock of Eastman Kodak Sarl or Kodak China Limited if doing so would (a) be prohibited by any law applicable to such foreign subsidiary or if the directors of a subsidiary reasonably determine (based on advice of counsel) the provision of such a guarantee to be inconsistent with their duties as directors of that subsidiary, (b) constitute a breach or default under any contract to which the grantor of a pledge or such foreign subsidiary is a party, or (c) reasonably be expected to cause the Borrower to incur or be subject to material adverse tax liabilities or other material adverse tax consequences. Any guarantee by a foreign subsidiary may contain customary limitations as required under applicable law or practice for a subsidiary in the relevant jurisdiction. foreign subsidiaries. Liens/Priority: Subject to the Carve-Out (substantially similar, to the extent applicable, to that defined in the Existing DIP Order (as defined below) but to include additional references to AP Services, LLC, advisors to the 1114 Committee, the fee examiner and any other advisors to be agreed (and their successors and replacements), and to provide for a higher amount as may be agreed), the Junior DIP Facility shall be secured by first and, second and third priority postpetition liens on all the Collateral (as defined in the Final Order (I) Authorizing Debtors (A) To Obtain PostPetition Financing Pursuant to 11 U.S.C. 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) and 364(e) and (B) To Utilize Cash Collateral Pursuant To 11 U.S.C. 363 and (II) Granting Adequate Protection To Pre-Petition Secured Parties Pursuant To 11 U.S.C. 361, 362, 363 and 364 [Docket No. 375] (the Existing DIP Order) securing the $950,000,000 debtor in possession financing facility (the Existing DIP Facility) and 100% of the equity interests of material first-tier foreign subsidiaries of the Borrower subject to any exceptions that may be acceptable to the Required Lead Lenders53 (such liens securing the Junior DIP Facility, the Junior DIP Liens and the related collateral, the Junior DIP Collateral). The Junior DIP Liens shall prime the liens securing the Borrowers outstanding obligations under the Pre-Petition Second Lien Notes that are not Rolled-Up Loans (the Outstanding Pre-Petition Second Lien Notes) and liens securing any obligations under the Borrowers pre-petition first lien credit facility. All obligations under the Junior DIP Facility shall constitute allowed superpriority administrative expense claims with priority under section
53
The Partiesparties acknowledge and agree that the Borrower shall be entitled to provide similar pledges to lenders under the Existing DIP Facility, consistent with the relative priorities for security for pledges of shares of foreign subsidiaries for the Existing DIP Facility as between the revolving and term loan facilities.
6
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
364(c)(1) of the Bankruptcy Code over all other administrative expense claims in the Chapter 11 cases, subject to the Carve-Out, junior only to the superpriority administrative expense claims under the Existing DIP Order in favor of the Existing DIP Facility; provided, that the Junior DIP Liens in respect of the Rolled-Up Loans shall be junior in priority to the liens securing the Existing DIP Facility; provided, further, however the obligations under the Junior DIP Facility including the Rolled-Up Loans need not be paid in cash on the effective date of a Chapter 11 Plan if the Junior DIP Facility is converted to an exit facility on the conditions described above. Intercreditor Agreement: Intercreditor arrangements between Citicorp North America, Inc., in its capacity as administrative and collateral agent for the lenders under the Existing DIP Facility, and the Junior DIP Agent shall be agreed and set forth in an intercreditor agreement and confirmed in the DIP Order (as defined below), each of which shall be in form, substance and scope reasonably satisfactory to the Required Lead Lenders and Citicorp North America, Inc. As a result of the priming of their liens and use of their cash collateral, holders of Outstanding Pre-Petition Second Lien Notes will be entitled to receive as additional adequate protection (i) replacement liens on Junior DIP Collateral that are junior to the liens securing the Existing DIP Facility and the Junior DIP Facility, (ii) guarantees from all entities that guarantee the Existing DIP Facility and Junior DIP Facility that are subordinate to the guarantee in respect of the Existing DIP Facility and Junior DIP Facility, (iii) administrative claims as provided for in section 507(b) of the Bankruptcy Code, junior to the superpriority administrative expense claims granted to the lenders under the Existing DIP Facility and the Lenders, and (iv) the payment at or following the Closing Date of an amount equal to current non-default interest, to include a catch-up in an amount equal to non-default interest accrued from November 1, 2012, and (v) on or prior to the Closing Date, up to a $58 million dollar increase in the principal amount of the Rolled-Up Loans (but not the New Money Loans) to a maximum of $375 million in the aggregate for all Rolled-Up Loans (subject to adjustments as set forth in footnote 2), provided that (A) holders of Pre-Petition Second Lien Notes other than the Lenders shall be entitled to participate in such $58 million increase based on each holders pro rata interest as of the record date the Borrower establishes for such election in the aggregate principal amount of all outstanding Pre-Petition Second Lien Notes held by holders electing to so participate, (B) such holders shall provide commitments and participate in the New Money Loans such that the amount of RolledUp Loans (up to an aggregate of $58 million) in which they are participating bears the same proportion to the amount of the New Money Loans to be provided by them as the total amount of Rolled-Up Loans (after giving effect to such participation) bears to the total amount of New Money Loans6and (C) the amount of New Money Loans to be
Adequate Protection:
For purposes of illustration, if there is $20 million of participation in the $58 million allotment, the proportion would be $337 million (the total amount of Rolled-Up Loans) to $450 million (the total amount of New Money Loans).
7
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
provided by such holders shall be allocated ratably among the firstout and last-out portions thereof. Notwithstanding anything in clause (v) to the contrary, no holder shall be entitled under clause (v) to an exchange of Rolled-Up Loans in an aggregate amount that exceeds 90% of the amount owing to such holder under the Pre-Petition Second Lien Notes..4 All lenders participating in the Junior DIP Facility will consent to the sufficiency of such adequate protection in connection with the approval of the Junior DIP Facility. Availability and Use of Proceeds: Not less than $450 millionAll of the New Money Loans and the RolledUp Loans shall be available on the Closing Date. Additional New Money Loans (up to an aggregate amount for all New Money Loans of $476 million) shall be available on the Closing Date as may be necessary to pay fees and expenses in respect of the Junior DIP Facility; provided that if more than $450 million of New Money Loans are funded, the incremental New Money Loans funded in excess of $450 million shall be First Lien Last Out Loans. Proceeds of Loans to be used to (i) refinance the term loans outstanding under the Existing DIP Facility7,5 (ii) fund working capital requirements described in the Budget (as defined below), (iii) at the Borrowers option, fund adequate protection payments in respect of the Pre-Petition Second Lien Notes, if any, or make payments to other creditors to the extent permitted by the Definitive Financing Documentation, and (iv) fund settlement payments (if any) in respect of the UK Pension Scheme. The lenders agree that they shall not be entitled to adequate protection cash interest payments to the extent (but only to the extent) of rolled-up accrued interest in connection with the RolledUp Loans even if cash adequate protection payments in respect of accrued interest are made to other holders of Outstanding Pre-Petition Second Lien Notes. Interest Rates: New Money Loans: The First Lien First Out Loans shall bear interest at the rate of L+ 10.59.5% per annum. The First Lien Last Out Loans shall bear interest at the rate of L+ 12.511.0% per annum. Both loans shall have Libor floors of 100 bps..
For the avoidance of doubt, any currently existing adequate protection set forth in the Existing DIP Order will continue in favor of the holders of Outstanding Pre-Petition Second Lien Notes and the trustee with respect to the Outstanding Pre-Petition Second Lien Notes other than to the extent necessary to give full effect to the terms specifically agreed to in this Term Sheet. 7 Upon the refinancing of the term loans outstanding under the Existing DIP Facility, the Lenders under the Junior DIP Facility will step into the first and second lien collateral position of the term loan lenders under the Existing DIP Facility, with certain exceptions to be agreed, and with a second and third lien on ABL Collateral. 5 Upon the refinancing of the term loans outstanding under the Existing DIP Facility, (i) the New Money Loans will have a first lien on the Term Facility Collateral (as defined in the Existing DIP Facility), (ii) the New Money Loans will have a second lien on the Revolving Credit Facility Collateral (as defined in the Existing DIP Facility and (iii) the Rolled-Up Loans will have third lien on both the Term Facility Collateral and Revolving Credit Facility Collateral. For the avoidance of doubt, these lien priorities shall apply both before and after effectiveness of a Chapter 11 Plan.
8
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
Rolled-Up Loans: The Rolled-Up Loans shall bear interest at a rate per annum, payable in kind, equal to applicable non default rate on the PrePetition Second Lien Notes that are subject to the roll up; provided however that to the extent the obligations under the outstanding PrePetition Second Lien Notes receive current interest in cash as adequate protection in accordance with the Existing DIP Order (including, without limitation, Current Interest (as defined in the Existing DIP Order)), interest on the Rolled-Up Loans shall be likewise payable in cash; provided further that to the extent the Rolled-Up Loans are converted into a portion of the exit facility, accrued and unpaid interest shall be capitalized (to the extent not otherwise paid in cash) and current interest on the Rolled-Up Loans shall be payable in cash as of the date of conversion. After the occurrence and during the continuance of a payment86 event of default, interest on all Loans and all other outstanding amounts under the Definitive Financing Documentation (as defined below) will bear interest at a rate equal to 2.0% per annum plus the otherwise applicable rate. Put Option Premium: At the Borrowers option, a put option premium in an amount equal to (x) 2% of the Commitments held by each Lead Lender on the date hereof, which shall be earned upon the date hereof and shall be payable in cash to each Lead Lender on the Closing Date or (y) 3% of the Commitments held by each Lead Lender on the date hereof, which shall be earned upon the date hereof and shall be payable in the form of additional First Lien Last Out Loans issued to each Lead Lender on the Closing Date (and the additional First Lien Last Out Loans shall be permitted to be converted to exit term loans on the same terms as the other First Lien Last Out Loans). If any of the Debtors consummates a debtor in possession financing, including by way of an amendment to the Existing DIP Facility that has the effect of providing incremental financing (other than to permit the Junior DIP Facility contemplated herein) (Other Financing), the Lead Lenders, J.P. Morgan Securities LLC and UBS Securities LLC shall receive a break-up fee in an amount equal to 3.00% (the Break-Up Fee) of their respective commitments to make New Money Loans, payable in cash upon the effective date of a funding in respect of such Other Financing, provided that the Lead Lenders, J.P. Morgan Securities LLC and UBS Securities LLC shall not be in breach of or have terminated their commitments to provide New Money Loans other than in accordance with the provisions of the Commitment Letter and this Term Sheet. In lieu of a backstop and/or commitment fee the Lead Lenders shall be entitled to an allocation of Rolled-Up Loans equal to their respective holdings of amounts due and owing in respect of the Pre-Petition Second Lien Notes including all accrued and unpaid interest and J.P. Morgan
Break-Up Fee:
Backstop Fee:
86
It is understood that on and after the Effective Date, the default interest rate will apply after the occurrence and during the continuance of any event of default.
9
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
Securities LLC and UBS Securities LLC shall be entitled to an allocation of Rolled-Up Loans agreed to by the Lead Lenders. Any portion of amounts owing to J.P. Morgan Securities LLC and UBS Securities LLC in respect of the Pre-Petition Second Lien Notes that are not rolled-up shall be deemed, first, to consist of any accrued and unpaid interest and thereafter principal. Original Issue Discount: Prepayments: With respect to the First Lien Last Out Loans only, 96.098.0%. Voluntary: Prepayments under the Junior DIP Facility may be made at any time without premium or penalty (other than breakage costs to the extent applicable) except as set forth below. Voluntary prepayments of the exit term loans, in whole or in part, with the proceeds of a refinancing (including a repricing transaction under the Definitive Financing Documentation) shall be at par plus accrued interest plus a premium. The premium shall initially be 2% of the aggregate principal amount prepaid, from and after the first anniversary of the Effective Date through the second anniversary thereof, shall be 1% and, from and after the second anniversary of the Effective Date, shall be 0%. Mandatory: Mandatory prepayments will be limited to the following: (i) 100% of the net cash proceeds from debt issuances other than permitted debt, (ii) 100% of the net cash proceeds of insurance/condemnation and other extraordinary events, subject to reinvestment rights to be agreed and other customary exceptions and (iii) 100% of the net cash proceeds of asset sales (other than the (i) Specified Sale and (ii) assets over which the lenders under the ABL facility have a first priority lien to the extent such net cash proceeds are required to be applied thereunder) that are allocated and paid to the Debtors estates (provided that (A) the Debtors shall use commercially reasonable efforts to ensure that net cash proceeds of asset sales are allocated and paid to the Borrower or its U.S. guarantor subsidiaries as promptly as practicable and to the maximum extent possible and such net cash proceeds will be applied to the prepayment of the Junior DIP Facility at such time that they are allocated and paid to the Borrower or its U.S. guarantor subsidiaries and (B) to the extent that (I) an asset sale involves the sale of collateral securing the Junior DIP Facility or the sale of stock or assets held directly or indirectly by an entity the shares of which have been pledged to the lenders as collateral (other than shares of or assets held by a foreign subsidiary that is not a guarantor) and (II) the percentage of net cash proceeds of such asset or stock sale that is allocated and paid to the Borrower and its guarantor subsidiaries is less than a threshold to be agreed and the total amount of net cash proceeds of the sale exceeds an amount to be agreed, the method of allocation of the net cash proceeds of such an asset or stock sale shall be reasonably acceptable to the Required Lead Lenders), subject to limited customary exceptions, to the prepayment of the Junior DIP Facility. From and after the Effective 10
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
Date, the Borrower shall obtain a fairness opinion with respect to asset sales in excess of a threshold to be agreed. With respect the net cash proceeds of the Specified Sale, (i) 100% of the first $200 million in net cash proceeds allocated and paid to the Debtors estates shall be applied to the prepayment of the First Lien First Out Loans, (ii) to the extent aggregate net cash proceeds from the Specified Sale exceed the Minimum Proceeds Amount, 75% of net cash proceeds in excess of the Minimum Proceeds Amount that are allocated and available to the Debtors estates shall be used to prepay obligations outstanding under the Junior DIP Facility. In addition to the foregoing, from and after the Effective Date, Excess Cash Flow (to be defined in a manner to be agreed) shall be used to prepay obligations outstanding under the exit facility as follows: (i) the Excess Cash Flow prepayment shall be triggered only if there is an $800 million consolidated worldwide cash balance at the end of the fiscal year for which Excess Cash Flow is being calculated (the Cash Trigger), (ii) subject to clause (v) below, 50% of the Excess Cash Flow above the Cash Trigger shall be used to prepay obligations outstanding under the exit facility, (iii) Excess Cash Flow will be tested on an annual basis no later than June 30 of each year, with prepayments beginning in 2015 (for any Excess Cash Flow for 2014), (iv) subject to clause (v), Excess Cash Flow prepayments shall be made within 45 days following the delivery of test results to the lenders in accordance with clause (iii) of this paragraph and (v) Excess Cash Flow prepayments shall not be required (A) to the extent it would cause liquidity to fall below the Cash Trigger or the required Minimum U.S. liquidity covenant level or (B) for so long as and in such amount as may be prohibited by law or regulation (including laws and regulations limiting the repatriation of funds by foreign subsidiaries). Mandatory prepayments will be applied first to the payment in full of the New Money Loans (applied first to the First-Lien First Out Loans and second to the First Lien Last Out Loans) prior to being applied to prepay the Rolled-Up Loans. Any asset sale proceeds not required to be applied to prepayment of the Junior DIP Facility shall be available to the Borrower and its subsidiaries to use for their general corporate purposes. For the avoidance of doubt, no such proceeds or other funds may be used to repay any pre-petition indebtedness other than payments of adequate protection as contemplated herein, provided that up to $70 million, less the amount of any cash payment in reduction of pre-November 1, 2012 accrued interest on the Pre- Petition Second Lien Notes, may be used to fund distributions made pursuant to the Chapter 11 Plan. Representations and Warranties: Substantially consistent with those types of representations and warranties in the Existing DIP Facility, with certain exceptions to be
11
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
agreed to account for the differences in the nature of the facilities and to give full effect to the terms specifically agreed to in this term sheet. The Definitive Financing Documentation shall require the Borrower to make the following representation as of the Closing Date (as defined below): The Borrower believes in good faith, based upon information known to it as of the date hereof and assumptions believed by it to be reasonable as of the date hereof, that the Specified Sale shall have occurred on or prior to the Maturity Date for an aggregate gross cash purchase price at consummation of not less than the Minimum Proceeds Amount. Covenants: Substantially consistent with those types of affirmative and negative covenants in the Existing DIP Facility (with appropriate thresholds and baskets to be agreed) with certain exceptions to be agreed to account for the differences in the nature of the facilities97 and to give full effect to the terms specifically agreed to in this term sheet. The Junior DIP Facility shall include a covenant providing that a final order confirming the Chapter 11 Plan shall have been entered by the Bankruptcy Court on or prior to July 31, 2013. Covenants shall include providing an updated 13 week forecast on a weekly basis and reporting against the most recent forecast provided. The Junior DIP Facility shall include a covenant providing that intercompany loans or investments by the Borrower or its guarantor subsidiaries (Loan Parties) to subsidiaries that are not Loan Parties (Non-Loan Parties) shall not exceed a threshold to be agreed (both individually and in the aggregate), with such intercompany loan or investment to be structured as an intercompany note and pledged to the Collateral Agent for the benefit of the lenders. The Junior DIP Facility shall also include a covenant providing that intercompany loans, if any, by Non-Loan Parties to Loan Parties shall be subordinated to the obligations under the Junior DIP Facility, as well as other limitations on intercompany indebtedness to be agreed. The Junior DIP Facility shall also include a covenant providing that prior to the Effective Date and upon the request of the Lead Lenders, a vice chairman that is satisfactory to the Lead Lenders and reasonably acceptable to the Borrower shall be added to the Borrowers board of directors, with appropriate authority as is satisfactory to the Lead Lenders and reasonably acceptable to the Borrower. On or after the Effective Date, the Lead Lenders shall be entitled to request the appointment of a director to the board of directors of the reorganized Borrower who is satisfactory to the Lead Lenders and reasonably acceptable to the Borrower (and such director shall be so appointed).
97
Covenants will provide additional flexibility to be agreed for the Company post emergence to the extent necessary to accommodate the Companys business plan.
12
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
The Junior DIP Facility shall (a) provide a basket for (i) an ABL facility in an amount not to exceed $225108 million to fund the Debtors working capital requirements, which may be secured by liens consistent with those for the ABL facility that is part of the Existing DIP Facility and also any additional security granted to the lenders under the Junior DIP Facility in a manner that is junior and subordinated to the liens securing the Junior DIP Facility (in each case, consistent with the relative lien priorities described in Footnote 5) and (ii) pre or post confirmation settlement payments in respect of the UK Pension Scheme within certain parameters to be agreed and (b) contain sufficient allowances to be agreed to permit the transactions needed to implement the Chapter 11 Plan. Prior to the Effective Date, financial covenants shall be limited to minimum LTM EBITDA and minimum U.S. Liquidity, in each case as set forth in the Existing DIP Facility. On and after the Effective Date, financial covenants shall include minimum U.S. Liquidity, Secured Leverage Ratio, Cash Interest Coverage Ratio and maximum Capital Expenditures. Prior to the Effective Date and except as otherwise agreed herein with respect to the definition of EBITDA, the definitions used in the financial covenants shall be substantially consistent with those in the Existing DIP Facility, with additional add-backs and other exceptions providing for adjustments relating to consummation of the Chapter 11 Plan as may be agreed. Events of Default: Substantially consistent with those types of events of default in the Existing DIP Facility (with appropriate thresholds to be agreed) with certain exceptions to be agreed to account for the differences in the nature of the facilities and to give full effect to the terms specifically agreed to in this term sheet. Substantially consistent with those types of remedies in the Existing DIP Facility with certain exceptions to be agreed to account for the differences in the nature of the facilities and to give full effect to the terms specifically agreed to in this term sheet. Lenders holding greater than 50% of the outstanding commitments and/or exposure under the Junior DIP Facility in each of no more than two tranches. Assignments under the Junior DIP Facility must be in a minimum amount of $1 million (or, if less, the remaining commitments of any assigning lender), may not be made to Disqualified Lendersdisqualified lenders (parties identified by the Borrower prior to the date hereof or competitors of the company), and are subject to the consent of the Administrative Agent, which consent shall not be unreasonably withheld or delayed, except, in each case, with respect to any assignment to a lender, an affiliate of such a lender or a fund engaged in investing in commercial loans that is advised or managed by such a lender. No
Remedies:
Required Lenders:
Assignments and Participations:
108
The basket for an ABL facility in the exit facility shall be in an amount not to exceed $200 million.
13
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
participation shall include voting rights, other than for matters requiring consent of 100% of the lenders. Governing Law: Miscellaneous: State of New York (and, to the extent applicable, the Bankruptcy Code). Standard yield protection provisions consistent with and limited in form and substance to those in the Existing DIP Facility, subject to prompt notice and MFN requirements.
II.
CONDITIONS PRECEDENT FOR BORROWING
Conditions precedent including the following and otherwise substantially consistent with those types of conditions precedent in the Existing DIP Facility with certain additional conditions to be agreed to account for the differences in the nature of the facilities in order to give full effect to the terms specifically agreed to in this term sheet (but in no event to include additional financial conditions, milestones relating to the Cases or assets sales or similar requirements not specifically set forth herein) (the date upon which all such conditions precedent shall be satisfied, the Closing Date): Junior DIP Facility Documentation: The definitive documentation evidencing the Junior DIP Facility (including, without limitation, collateral documentation, an intercreditor agreement and an amendment to the Existing DIP Facility to permit the Junior DIP Facility) shall be negotiated as promptly as practicable between the parties and shall be substantially consistent with this Term Sheet and otherwise reasonably satisfactory to the Required Lead Lenders (the Definitive Financing Documentation). All other terms and conditions in the Definitive Financing Documentation not specifically provided for in this Term Sheet shall be substantially consistent with the Existing DIP Facility with certain exceptions to be agreed. A final order approving the Junior DIP Facility (in form and substance satisfactory to the Required Lead Lenders, including with respect to the provision of adequate protection for primed liens) (the DIP Order) shall have been entered by the Bankruptcy Court on or prior to 11:59 P.M. (prevailing New York City time) on December 31, 2012January 24, 2013 and shall be in full force and effect and unstayed. The Lenders shall have received certified copies of (i) a monthly budget through the maturity of the Junior DIP Facility, and (ii) a 13-week cash flow forecast prepared by the Borrower, in each case, in form and detail substantially consistent with prior budgets and forecasts delivered to the Lenders (as supplemented from time to time in accordance with the Junior DIP Facility, the Budget).
DIP Order:
Budget:
IP Asset Sale: Payment of Interest under Existing DIP Order:
The Debtors shall have consummated the sale of their intellectual property relating to their digital-image capture portfolio and other patents currently contemplated to be sold in the transaction assigned the code name Komodo for aggregate cash consideration of not less than 14
103801198 v1
12-10202-alg
Doc 2492
Main Document
EXHIBIT A
the IP Amount. The term loans outstanding under the Existing DIP Facility shall have been paid down to an aggregate principal amount outstanding immediately prior to the Closing Date of not greater than $170 million. Repayment of Term Loans Under Existing under Existing DIP Facility:
The Junior DIP Agent and Lead Lenders shall have received satisfactory evidence that subject to funding of the Junior DIP Facility, all term loans outstanding under the Existing DIP Facility shall have been repaid. TheTo the extent that the Borrower or its affiliates shall have provided the Lead Lenders with any additional MNPI, the Borrower shall have publicly disclosed all material non-public information provided to the Lead Lenders no later than December 31, 2012; provided that the Borrower shall use commercially reasonable efforts to publicly disclose all material non-public information provided to the Lead Lenders as promptly as possible after the date hereof as long as such disclosure would not reasonably be expected to have a material adverse impact on the Borrower. After giving effect to the making of the extension of credit on the Closing Date, unrestricted cash owned or possessed by the Debtors (Liquidity) shall not be less than $100 million. Since September 30, 2012, no Material Adverse Effect shall have occurred. All reasonable and documented costs, fees, expenses (including, without limitation, legal and financial advisory fees and expenses) and other compensation contemplated hereby, payable to the Lead Lenders and the other Lenders or otherwise payable in respect of the transaction, shall have been paid to the extent due and, with respect to legal fees, invoiced at least two days prior to the Closing. The transactions contemplated by the Commitment Letter and this Term Sheet shall have been consummated in accordance with applicable securities laws, rules and regulations in all material respects. The Lenders shall have received (x) customary legal opinions from counsel (including, without limitation, New York counsel) substantially consistent in form and scope to the legal opinion provided to the Administrative Agent and Lenders under the Existing DIP and (y) customary officer and secretary certificates.
Disclosure of MNPI:
Minimum Liquidity:
No Material Adverse Effect: Miscellaneous:
15
103801198 v1
12-10202-alg
Doc 2492
Main Document
Annex I Exit Conditions Minimum U S Liquidity: Secured Leverage Ratio: $150 million Not greater than 4.0x.
Minimum Trailing 6-Month EBITDA: As set forth in the side letter between the Lenders and the Borrower dated the date of the Commitment Letter to which this Term Sheet is attachedSide Letter. Minimum U.S. Liquidity will be calculated based on unrestricted cash held by the Borrower and its U.S. subsidiaries and amounts available to be drawn under any revolving credit facility, and will be calculated on a pro forma basis after giving effect to the conversion into the exit facility, any revolving credit facility that is effective on the Effective Date and the other transactions occurring on the Effective Date and described herein. Secured Leverage Ratio shall mean, as of the Effective Date, as calculated on a pro forma basis giving effect to the transactions occurring on or prior to the Effective Date, the ratio of the Borrowers consolidated secured debt to pro forma forecasted 2013 EBITDA. Forecasted 2013 EBITDA will be a combination of (1) the actual pro forma EBITDA results for 2013 year to date and (2) forecasted pro forma EBITDA for the remainder of 2013, which will be based upon the forecast previously provided to the Lead Lenders. The Company may revise its forecasted pro forma EBITDA, provided that such revised forecast is based upon a business plan that is substantially consistent with the business plan underlying the forecasted pro forma EBITDA previously provided to the Lead Lenders, the assumptions underlying such revised forecast are made in good faith and believed to be reasonable by the Borrower and the methodology underlying such assumptions are reasonably acceptable to the Required Lead Lenders. EBITDA will be prepared in good faith by the Borrower on a pro forma basis for the business at emergence, shall not be required to be reviewed or audited by independent accountants or other third parties and shall be prepared by the Borrower on a basis substantially consistent with the Disclosure Statement Forecast. EBITDA means, for any period, Consolidated Net Income for such period plus, without duplication and to the extent deducted in determining Consolidated Net Income, the sum of: III.(a) interest expense for such period, IV.(b) income tax expense for such period, V.(c) depreciation expense for such period,
VI.(d) amortization expense (including with respect to intangibles) for such period, VII.(e) deferred financing fees (and any writeoffs thereof) for such period, VIII.(f) (i) any extraordinary expenses or losses during such period and (ii) any non-recurring expenses or losses during such period not to exceed for purposes of subclause (ii) the greater of an amount and percentage of EBITDA to be agreed,
103804178 v1
12-10202-alg
Doc 2492
Main Document
IX.(g) any loss or expense from discontinued operations or discontinued business lines and loss or expense on disposal of discontinued operations or discontinued business lines during such period; X.(h) any non-cash charges or expenses, including, in respect of (A) any pre-petition obligations, liabilities or claims or (B) goodwill or asset writeoffs or writedowns; provided, that to the extent any such non-cash charges represent an accrual or reserve for potential cash items in any future period, any cash payment made in respect thereof in a future period shall be subtracted from EBITDA for such future period to such extent, XI.(i) pension, equity awards, other post-employment benefits expense during such period and any noncash compensation expense realized during such period from grants of stock appreciation rights or similar rights, stock options or other rights to directors, officers or employees, XII.(j) any non-cash loss on foreign exchange during such period, XIII.(k) fees, costs and expenses (including (i) fees, costs and expenses related to legal, financial and other advisors, auditors and accountants, (ii) printer costs and expenses, (iii) SEC and other filing fees and (iv) underwriting, arrangement, syndication, backstop and placement premiums, discounts, fees, charges and expenses) incurred during such period in connection with the Cases, obtaining confirmation and effectiveness of the Chapter 11 Plan, negotiation and funding of the Junior DIP Facility and, in each case, any transaction (including any financing or disposition) or litigation related thereto, in each case, regardless of whether initially incurred by the Company or paid by the Company to reimburse others for such fees, costs and expenses, XIV.(l) any non-cash loss relating to hedging activities (including any non-cash ASC 815 loss) during such period, XV.(m) corporate restructuring charges (including retention, severance, contract termination costs, plant closure or consolidation costs, employee relocation and business optimization expenses) (i) incurred during such period up to the periods ending on the date that is 180 days after the Effective Date and (ii) incurred or accrued in any period thereafter, in an aggregate amount to be agreed, and XVI.(n) any cash expenses or losses funded during such period with payments from assets of the Kodak Retirement Income Plan, minus, without duplication and to the extent included determining Consolidated Net Income: (ai) (bii) (ciii) (div) (ev) (fvi) interest income for such period, revenues from IP licensing transactions effected in connection with IP Settlement Agreements during such period, pension and other post-employment benefits income and credit during such period, any non-cash gains on foreign exchange during such period, any extraordinary income or gains or non-recurring income during such period, any non-cash gain relating to hedging activities (including any non-cash ASC 815 gain) for such period,
I- 2
103804178 v1
12-10202-alg
Doc 2492
Main Document
(gvii)
any income or gain from discontinued operations or discontinued business lines and any income or gain on disposal of discontinued operations or discontinued business lines in each case for such period, and
(hviii) any non-cash income (other than the accrual of revenue in the ordinary course of business) for such period excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced EBITDA in any prior period. Consolidated Net Income means the consolidated net income of such person and its subsidiaries for that period. All financial tests and covenants shall be calculated on a pro forma basis so that any disposition, acquisition, asset sale, wind-down of the consumer inkjet business, investment or incurrence of indebtedness (and certain other transactions) that occur during a period will be given effect as if they had been consummated at the beginning of such period; provided that the terms of such pro forma calculations will be on a basis to be agreed.
I- 3
103804178 v1
12-10202-alg
Doc 2492
Main Document
Annex II Illustrative Scenarios The examples and accompanying tables below illustrate the funding of the New Money Loans and allocation of Rolled-Up Loans at various levels of participation of the holders of the PrePetition Second Lien Notes. Scenario Example 1: No Outside Participation
In this scenario, holders of Pre-Petition Second Lien Notes outside the Lead Lenders (Outside Participants) fund no New Money Loans i.e., the Lead Lenders fund the entire $455 million.
103804178 v1
12-10202-alg
Doc 2492
Main Document
Scenario Example 2: $1 million Outside Participation at 1.38x Funding-to-Holdings Ratio
In this scenario, Outside Participants holding $1.0 million in principal amount of Pre-Petition Second Lien Notes fund New Money Loans at a ratio of Total Funding to Principal Holdings (the Funding-to-Holdings Ratio) of 1.38x i.e., these holders fund approximately $1.4 million of New Money Loans. The Lead Lenders will fund the remaining $453.6 million. As shown in the table above, by participating at the same Funding-to-Holdings Ratio as Archview, Bennett, Capital Ventures, Contrarian, D.E. Shaw, GoldenTree, PSAM, Serengeti and Stone Lion, the ratio of Pre-Petition Second Lien Notes rolled-up to Principal Holdings (the Rolled-Up Ratio) for the Outside Participants is equal to the highest Rolled-Up Ratio among the Lead Lenders, in this case 100%.
II- 2
12-10202-alg
Doc 2492
Main Document
In this scenario, Outside Participants holding $113.4 million in principal amount of Pre-Petition Second Lien Notes fund New Money Loans at a Funding-to-Holdings Ratio of 1.00x i.e., these holders fund $113.4 million of New Money Loans. The Lead Lenders will fund the remaining $341.6 million. As shown in the table above, all participants roll-up Pre-Petition Second Lien Notes at the same Rolled-Up Ratio of 82.4%, which represents the maximum rolled-up amount of $375 million divided by the total principal amount of Pre-Petition Second Lien Notes held by the participants ($455 million).
II- 3
12-10202-alg
Doc 2492
Main Document
In this scenario, Outside Participants holding $408.4 million of principal amount of Pre-Petition Second Lien Notes fund at a Funding-to-Holdings Ratio of 0.61x i.e., these holders fund $247.7 million of New Money Loans. The Lead Lenders will fund the remaining $207.3 million. It is important to note that, in this scenario, the New Money Loans are now oversubscribed and given that all holders of Pre-Petition Second Lien Notes are participating, no holder can fund at a higher Funding-to-Holdings Ratio than 0.61x ($455 million of New Money Loans divided by the $750 million of principal amount of Pre-Petition Second Lien Notes). As shown in the table above, all participants roll-up Pre-Petition Second Lien Notes at the same Rolled-Up Ratio of 50%, which represents the maximum rolled-up amount of $375 million divided by the total principal amount of Pre-Petition Second Lien Notes held by the participants ($750 million).
II- 4
12-10202-alg
Doc 2492
Main Document
Sensitivity Tables The sensitivity tables below show the Rolled-Up Ratios and corresponding Funding-to-Holdings Ratios at various levels of participation by Outside Participants for each Lead Lender and the Outside Participants.
II- 5
12-10202-alg
Doc 2492
Main Document
II- 6

EK Financing Motion

Enviado por

Dados do documento

Descrição original:

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

EK Financing Motion

Enviado por

Direitos autorais:

Formatos disponíveis

12-10202-alg

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 1 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 2 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 3 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 4 of 103

Ultimately, the Debtors choice to pursue the Improved Proposed

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 5 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 6 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 7 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 8 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 9 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 10 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 11 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 12 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 13 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 14 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 15 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 16 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 17 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 18 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 19 of 103

EXHIBIT A Proposed Order

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 20 of 103

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) ) ) ) ) ) )

In re: EASTMAN KODAK COMPANY, et al.,1 Debtors.

Chapter 11 Case No. 12-10202 (ALG) (Jointly Administered)

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 21 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 22 of 103

Allan L. Gropper United States Bankruptcy Judge

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 23 of 103

EXHIBIT B Commitment Letter

November 28, 2012

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 25 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 26 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 27 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 28 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 29 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 30 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 31 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 32 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 33 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 34 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 35 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 36 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 37 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 38 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 39 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 40 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 41 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 42 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 43 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 44 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 45 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 46 of 103

Schedule 1 Commitment Parties

$24,887,000 $12,292,000 $19,341,000 $11,533,000

$31,731,000 $15,672,000 $24,659,000 $14,705,000

$10,319,000 $14,781,000 $25,191,000 $200,000,000

$13,157,000 $18,845,000 $32,118,000 $255,000,000

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 47 of 103

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 48 of 103

Administrative Agent: Collateral Agent: Lenders:

Filed 12/03/12 Entered 12/03/12 22:12:14 Pg 49 of 103