01: 11819732.5 Hearing Date: April 18, 2012 at 11:00 a.m. (Eastern Time) Objection Deadline: April...

01: 11819732.5

Hearing Date: April 18, 2012 at 11:00 a.m. (Eastern Time) Objection Deadline: April 11, 2012 at 4:00 p.m. (Eastern Time)

Andrew G. Dietderich John J. Jerome Michael H. Torkin Mark U. Schneiderman 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

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 Possession1

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

In re:

EASTMAN KODAK COMPANY, et al.,2

Debtors.

) ) ) ) ) ) )

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

DEBTORS’ APPLICATION FOR AN ORDER AUTHORIZING THE

RETENTION AND EMPLOYMENT OF DELOITTE CONSULTING LLP AS ACTUARIAL CONSULTING SERVICES PROVIDER TO THE DEBTORS AND

DEBTORS IN POSSESSION NUNC PRO TUNC TO THE PETITION DATE

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

1 All parties in interest with inquiries regarding this Application should direct such inquiries to Young Conaway

Stargatt & Taylor, LLP. 2 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s 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.

12-10202-alg Doc 619 Filed 03/15/12 Entered 03/15/12 17:05:34 Main Document Pg 1 of 23

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Docket #0619 Date Filed: 3/15/2012

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this application (the “Application”) for entry of an order, substantially in the form attached

hereto as Exhibit A (the “Proposed Order”), authorizing the Debtors to employ and retain

Deloitte Consulting LLP (“Deloitte Consulting”) as actuarial consulting services provider to the

Debtors, nunc pro tunc to the Petition Date, pursuant to the terms and conditions of the

Engagement Agreement (as defined below), subject to the limitations and modifications

proposed herein and provided for in the Proposed Order. In support of this Application, the

Debtors respectfully represent and set forth as follows:

Background

1. On January 19, 2012 (the “Petition Date”), each of the Debtors filed a

voluntary petition in this Court 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 continue to operate their

businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and

1108 of the Bankruptcy Code. No request for appointment of a trustee or examiner has been

made in these chapter 11 cases. On January 25, 2012, the United States Trustee for the Southern

District of New York (the “U.S. Trustee”) appointed the Official Committee of Unsecured

Creditors (the “Creditors’ Committee”) pursuant to section 1102 of the Bankruptcy Code.

2. Founded in 1880 and long one of the world’s 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.

3. Additional factual background relating to the Debtors’ businesses and the

commencement of these chapter 11 cases is set forth in detail in the Declaration of Antoinette P.


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McCorvey Pursuant to Rule 1007-2 of the Local Bankruptcy Rules for the Southern District of

New York in Support of First Day Pleadings dated January 18, 2012 [Docket No. 2].

Facts Specific to the Relief Requested

A. Qualifications

4. The Debtors seek to continue to employ Deloitte Consulting to provide

actuarial consulting services to the Debtors because, among other things, Deloitte Consulting and

its affiliates have considerable experience providing actuarial consulting services to businesses in

a chapter 11 environment, and have been employed in numerous cases under the Bankruptcy

Code, including the chapter 11 cases of AbitibiBowater Inc., Borders Group, Inc. and Winn-

Dixie Stores, Inc. Accordingly, the Debtors believe that Deloitte Consulting is both well-

qualified and uniquely able to provide services during these chapter 11 cases in an efficient and

timely manner.

5. As set forth in the Declaration of Jason Flynn in support of the

Application, sworn to on March 12, 2012 (the “Flynn Declaration”), a copy of which is

attached hereto as Exhibit B, prior to the Petition Date, Kodak and Deloitte & Touche USA LLP

entered into that certain Master Services Agreement Dated as of January 1, 2006 and certain

amendments thereto (as amended through Amendment #1, dated October 25, 2007, Amendment

#2, dated November 12, 2008, and Amendment #3, dated November 26, 2008, the “MSA”). A

copy of the MSA is attached hereto as Exhibit C.

6. Prior to the Petition Date, Kodak and Deloitte Consulting entered into the

following Work Orders issued under, and incorporated in, the MSA:

a. Work Order for the performance of US GAAP actuarial valuation services for select FAS 87, 106, and 112 employee benefit programs of Kodak and its affiliates for the 2011-12 cycle (the “Employee Benefit Plans Work Order – Recurring Services,” a copy of which is attached hereto as Exhibit D);


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b. Work Order for the provision of actuarial consulting services for global employee benefit programs of Kodak and its affiliates for the 2011-12 cycle (the “Employee Benefit Plans Work Order – Special Projects,” a copy of which is attached hereto as Exhibit E);

c. Work Order for the performance of recurring US GAAP actuarial valuation services with respect to workers compensation exposures for Kodak for the 2011 cycle (the “Workers Compensation Work Order,” a copy of which is attached hereto as Exhibit F); and

d. Work Order for the provision of actuarial support related to the preparation of components of Kodak’s 2011 SEC proxy disclosure (the “2011 SEC Proxy Work Order,” a copy of which is attached hereto as Exhibit G).

7. Subsequent to the Petition Date, Kodak and Deloitte Consulting entered

into the following Work Orders issued under, and incorporated in, the MSA:

a. Work Order for the provision of assistance in responding to employee benefits related inquiries related to the commencement of these chapter 11 cases (the “Employee Benefit Plans Work Order – Bankruptcy Services,” a copy of which is attached hereto as Exhibit H);

b. Work Order for the provision of actuarial support related to the preparation of components of Kodak’s 2012 SEC proxy disclosure (the “2012 SEC Proxy Work Order,” a copy of which is attached hereto as Exhibit I, and together with the 2011 SEC Proxy Work Order, the “SEC Proxy Work Orders”); and

c. Work Order for the provision of medical rate consultation services (the “Medical Rate Work Order,” a copy of which is attached hereto as Exhibit J, and together with the Employee Benefit Plans Work Order – Recurring Services, the Employee Benefit Plans Work Order – Special Projects, the Workers Compensation Work Order, the SEC Proxy Work Orders, and the Employee Benefit Plans Work Order – Bankruptcy Services, the “Work Orders,” and collectively with the MSA, the “Engagement Agreement”).3

3 Any summary of or reference to the terms and conditions of the Engagement Agreement provided in this

Application is for the Court’s convenience. To the extent that any such summary or reference conflicts with the actual terms and conditions of the Engagement Agreement, as the same may be limited or modified herein or by the Proposed Order, the actual terms and conditions of the Engagement Agreement shall control.


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8. The Debtors have specifically selected Deloitte Consulting to provide

these services because of Deloitte Consulting’s extensive knowledge and experience in providing

such services to large and complex entities, and because, during the prepetition period, Deloitte

Consulting had been providing actuarial consulting services to the Debtors pursuant to the terms

of the Engagement Agreement. As a result of Deloitte Consulting’s prepetition employment by

the Debtors, Deloitte Consulting has developed institutional knowledge concerning the Debtors’

business practices and is already familiar with their practices related to the scope of ongoing and

anticipated services to be provided by Deloitte Consulting under the Engagement Agreement.

The Debtors seek to continue Deloitte Consulting’s employment to perform such services.

9. Deloitte Consulting has indicated a desire and willingness to act in these

chapter 11 cases and render the necessary professional services as actuarial consulting advisors

to the Debtors, on the terms set forth in the Engagement Agreement, as the same may be limited

or modified herein or by the Proposed Order, and described herein. Pursuant to the Engagement

Agreement and subject to the Court’s entry of the Proposed Order, all services that Deloitte

Consulting will provide to the Debtors will be: (a) at the request of the Debtors; and (b)

appropriately directed by the Debtors so as to avoid duplicative efforts among the other

professionals retained in these chapter 11 cases.

B. Scope of Services

10. Prior to the Petition Date and in the ordinary course of business, the

Debtors engaged Deloitte Consulting to provide actuarial consulting services under the

Employee Benefit Plans Work Order – Recurring Services, the Employee Benefit Plans Work

Order – Special Projects, the Workers Compensation Work Order, and the 2011 SEC Proxy

Work Order. Deloitte Consulting has continued to provide such services from the dates of its

engagements up to the Petition Date. Furthermore, as set forth above, subsequent to the Petition


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Date, the Debtors engaged Deloitte Consulting, pursuant to the Employee Benefit Plans Work

Order – Bankruptcy Services, the 2012 SEC Proxy Work Order and the Medical Rate Work

Order, to provide additional services described more fully below.

11. The services under the Employee Benefit Plans Work Order – Recurring

Services include the following services, among others, as stated in the Employee Benefit Plans

Work Order – Recurring Services:

a. Preparation and delivery of data requests;

b. Processing and reconciliation of electronically provided data from Kodak and/or external administrators;

c. Completion of data summary memorandum summarizing the data reconciliation process for use in the Controls Framework (Tier I plans only);

d. Discussion with Kodak of actuarial assumptions to be used as of December 31, 2011;

e. Determination of actuarial liabilities as of December 31, 2011 based upon census information provided by Kodak and based upon assumptions selected by Kodak management;

f. Preparation of financial footnote disclosure information for Tier I plans for compilation by Kodak into its fiscal 2011 financial statements and SEC filings, including liability adjustment information related to FAS 158;

g. Preparation of December 31, 2011 disclosure reports (Tier I plans only);

h. Calculation of a budget expense for Tier I plans. These results are to be recorded as an estimate of expense for January and February;

i. Calculation of preliminary expense for Tier I plans reflecting update asset values. These results are to be recorded monthly for the 2012 fiscal year (after reflecting true-ups for January/February) unless reimbursements occur;

j. Preparation of final actuarial report detailing December 31, 2011 disclosure information and the calculation of fiscal 2012 preliminary expense (all plans); and


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k. Global coordination activities, including valuation process oversight, completion of recurring actuarial forms within EKCBARS (including Tier III plans not on-cycle), general EKCBARS support to Kodak end-users, preparation of draft FAS 132/158 footnote information, and participation in routine conference calls/meetings to discuss topics related to the recurring actuarial services outlined above.

12. The services under the Employee Benefit Plans Work Order – Special

Projects include the following services, among others, as stated in the Employee Benefit Plans

Work Order – Special Projects:

a. Special accounting calculations pursuant to FAS 88 or FAS 106 for Q4 2011, Q1 2012, Q2 2012 and Q3 2012 for impacted plans;

b. Development and presentation of 2012 Kodak Annual Operating Planning (AOP) results; and

c. Incremental US GAAP valuation services required due to other restructuring activity.

13. The services under the Workers Compensation Work Order include the

following services, among others, as stated in the Workers Compensation Work Order:

a. Providing Kodak a range of reasonable unpaid loss and allocated loss adjustment expenses as of December 31, 2011 using underlying data evaluated as of July 31, 2011;

b. Providing Kodak an estimate of the required funding and expected payment for the 2012 fiscal year;

c. Providing Kodak with actual versus expected loss emergence testing at December 31, 2011 for New York Self-Insured and the Insured States exposures using underlying data evaluated as of November 30, 2011; and

d. Proving Kodak with an allocation of unpaid loss estimates between short-term liabilities (i.e., estimated amounts anticipated to be paid within the upcoming year) and long-term liabilities.

14. The services under the Employee Benefit Plans Work Order – Bankruptcy

Services include the following services, among others, as stated in the Employee Benefit Plans

Work Order – Bankruptcy Services:


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a. Evaluating the cash, liability, and expense impact of potential benefit plan changes that are part of the bankruptcy process;

b. Collecting, analyzing, and providing employee benefit related data (e.g., census data, cost information, etc.) related to requests from interested parties to the bankruptcy filing; and

c. Participating in meetings and conference calls to discuss bankruptcy related benefits issues.

15. The services under the SEC Proxy Work Orders include the following

services, among others, as stated in the SEC Proxy Work Orders:

a. Preparing the following schedules for identified Named Executive Officers for purposes of Kodak’s 2011 and 2012 SEC proxy disclosure: Pension Benefits Table, Change in Pension Value for use in the Summary Compensation Table, and pension portion of the Termination/Change in Control Table; and

b. Providing supporting details for the calculations to be included and assisting in drafting wording for use in the proxy disclosure.

16. The services under the Medical Rate Work Order include the following

services, among others, as stated in the Medical Rate Work Order:

a. Calculating premium equivalent rates for self-insured medical plans for the 2013 plan year;

b. Benchmarking medical benefits against the market and suggest areas in which benefits may be adjusted to remain competitive;

c. Assessing the impact of various benefit changes on the premium equivalent amounts;

d. Working with MVP Health Care and CVS Caremark to receive de-identified medical and pharmacy claims data to determine the premium equivalent rates;

e. Calculating a separate premium equivalent for carved out pharmacy benefits;

f. Assessing the impact on premium equivalents of any rebates received under the Early Retirement Reinsurance Program and clearly document those impacts;


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g. Calculating separate premium equivalent rates for active employees and retirees based on the respective experience of each cohort; and

h. Assisting Kodak in evaluating the advantages and issues of adding a fourth coverage tier.

17. The Debtors submit that the services to be rendered by Deloitte Consulting

will not duplicate the services to be provided by other professionals in these chapter 11 cases and

that the Debtors have not hired any other professionals to perform the services enumerated in the

Engagement Agreement, including, without limitation, Ernst & Young LLP and

PricewaterhouseCoopers LLP and PricewaterhouseCoopers Aarata, which the Debtors have

previously filed applications with this Court to employ and retain in these chapter 11 cases to

perform professional services unrelated to those to be performed by Deloitte Consulting.

18. To the extent that Deloitte Consulting, at the request of the Debtors,

performs services other than those set forth and approved in the Proposed Order, Deloitte

Consulting shall file with the Court a supplemental retention application authorizing

performance of such services nunc pro tunc to the date such services were performed by Deloitte

Consulting, and Deloitte Consulting will submit a proposed order approving the supplemental

retention under a Notice of Presentment, pursuant to Local Rule 9074-1 and the Order

Authorizing the Establishment of Certain Notice, Case Management and Administrative

Procedures [Docket No. 362], which shall be served and filed at least seven (7) calendar days

before the presentment date; and any objections thereto must be filed at least one (1) calendar

day before the presentment date.

C. Professional Compensation

19. Pursuant to the terms and conditions of the Engagement Agreement, and

subject to the Court’s approval, in consideration for the services to be rendered by Deloitte


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Consulting in these chapter 11 cases, the Debtors propose to: (a) compensate Deloitte

Consulting for the services set forth in the Employee Benefit Plans Work Order – Special

Projects, the Workers Compensation Work Order, the Employee Benefit Plans Work Order –

Bankruptcy Services, and the SEC Proxy Work Orders on an hourly basis in accordance with

Deloitte Consulting’s ordinary and customary rates in effect on the date such services are

rendered; (b) compensate Deloitte Consulting for the services set forth in the Employee Benefit

Plans Work Order – Recurring Services and the Medical Rate Work Order in accordance with

the terms thereof; and (c) reimburse actual and necessary costs and expenses incurred by Deloitte

Consulting in connection with all services performed on behalf of the Debtors in these chapter 11

cases (collectively, the “Fee and Expense Structure”).

20. Deloitte Consulting provided prepetition services to the Debtors. Deloitte

Consulting also performs certain services for non-Debtor affiliates of the Debtors and certain of

the Debtors’ pension plans and is paid directly by such non-Debtor affiliates or plans. The

Debtors paid Deloitte Consulting approximately $790,000, including certain retainers, in the

ninety (90) days prior to the Petition Date. As of the Petition Date, approximately (a) $75,000

was remaining with respect to the retainer (the “Retainer”) and (b) $48,000 was outstanding

with respect to services performed for the Debtors by Deloitte Consulting prior to the Petition

Date. After applying the Retainer to Deloitte Consulting’s outstanding prepetition fees and

expenses, Deloitte Consulting intends to apply the remaining Retainer as a credit towards

postpetition fees and expenses incurred by Deloitte Consulting in these chapter 11 cases, after

such postpetition fees and expenses are approved pursuant to the first order of the Court

awarding fees and expenses to Deloitte Consulting.

21. The hourly rates, subject to periodic adjustments, that Deloitte Consulting


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professionals will charge pursuant to the Employee Benefit Plans Work Order – Special Projects

are as follows:

Personnel Classification Hourly Billing Rate for Annual Special

Projects

Hourly Billing Ratefor Other Actuarial

Consulting Partner/Principal $435 $525 Director $435 $470 Senior Manager $345 $415 Manager $300 $370 Senior Staff $225 $285 Staff $175 $200


professionals will charge pursuant to the Workers Compensation Work Order are as follows:

Personnel Classification Hourly Billing Rate Principal/Director $435 Senior Manager $345 Manager $300 Senior Staff $225 Staff $175


professionals will charge pursuant to the Employee Benefit Plans Work Order – Bankruptcy

Services are as follows:

Personnel Classification Hourly Billing Rate Principal/Director $525 Senior Manager $415 Manager $370 Senior Staff $285 Staff $200


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professionals will charge pursuant to the SEC Proxy Work Orders are as follows:

Personnel Classification Hourly Billing Rate Principal/Director $435 Senior Manager $345 Manager $300 Staff $175

25. The hourly rates set forth above are similar to Deloitte Consulting’s hourly

rates for the work of its professionals and staff members for similar engagements. These hourly

rates reflect Deloitte Consulting’s normal and customary billing practices for engagements of

this complexity and magnitude. The Debtors believe that these compensation arrangements are

reasonable considering Deloitte Consulting’s vast knowledge and experience.

26. Deloitte Consulting’s hourly rates are subject to periodic adjustment from

time to time in accordance with Deloitte Consulting’s established billing practices and

procedures. In the event that the rates of compensation for the services increase from the rates

disclosed for such services in the Engagement Agreement, Deloitte Consulting will file a

supplemental affidavit with this Court and give ten business days’ notice to the Debtors, the U.S.

Trustee and the Creditors’ Committee, which supplemental affidavit will explain the basis for the

requested rate increases in accordance with section 330(a)(3)(F) of the Bankruptcy Code and

indicate whether the client has received notice of and approved the proposed rate increase.

27. With respect to the services that Deloitte Consulting provides in

connection with the Employee Benefit Plans Work Order – Recurring Services and the Medical

Rate Work Order, compensation is primarily on a fixed-fee basis, including the approximately

$1.269 million fixed fee under the Employee Benefit Plans Work Order – Recurring Services4

4 As set forth in the Flynn Declaration, for postpetition services under the Employee Benefit Plans Work Order –

Recurring Services, Deloitte Consulting expects to bill the Debtors approximately $534,500 on a fixed fee basis.


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and the approximately $35,100 fixed fee under the Medical Rate Work Order.

28. Additionally, to the extent permitted under the Engagement Agreement,

Deloitte Consulting will invoice the Debtors for its reasonable out-of-pocket expenses charged

during these chapter 11 cases, which include, among other things, telephone and other charges,

mail and express mail charges, travel expenses, expenses for “working meals” and computerized

research, as well as non-ordinary costs such as secretarial and other overtime.

29. The Debtors reserve the right to modify the terms of the Engagement

Agreement, subject to Deloitte Consulting’s agreement to such modifications, prior to entry of

the Proposed Order. If the Engagement Agreement is so modified, the Debtors will promptly file

such amended Engagement Agreement with the Court, and promptly notify each of the notice

parties set forth in paragraph 53 hereof of such filing.

30. Deloitte Consulting will file interim and final fee applications for

allowance of its compensation and reimbursement of it expenses with respect to services

rendered with the Court in accordance with applicable provisions of the Bankruptcy Code, the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), the Local Bankruptcy Rules

for the Southern District of New York (the “Local Rules”), the guidelines for compensation and

reimbursement of expenses (the “U.S. Trustee Guidelines”) established by the U.S. Trustee and

any applicable orders of the Court (collectively, the “Compensation Procedures”).

31. The Debtors are advised that it is not the practice of Deloitte Consulting’s

professionals to keep detailed time records in one-tenth-of-an-hour (0.1) increments as

Deloitte Consulting performed certain of the services under the Employee Benefit Plans Work Order – Recurring Services prior to the Petition Date and billed and collected $412,125 with respect to such services prior to such date. Certain DTT Member Firms (as defined in the Flynn Declaration) will perform services under the Employee Benefit Plans Work Order – Recurring Services and will bill and be paid by non-Debtor affiliates of the Debtors either directly or through Deloitte Consulting.


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customarily kept by attorneys who are compensated subject to approval of the Court. Instead,

the customary practice of Deloitte Consulting’s professionals is to keep reasonably detailed

records of services rendered during the course of an engagement in half-hour (0.5) increments.

The Debtors request that the Court allow Deloitte Consulting’s professionals to provide the

following in its monthly, interim and final fee applications: (a) a narrative summarizing each

project category and the services rendered under each project category; (b) as an exhibit to each

monthly, interim and final fee application that Deloitte Consulting files in these chapter 11 cases,

a summary, by project category, of services rendered to the Debtors, which identifies each

professional rendering services, the number of hours expended by each professional, and the

amount of compensation requested with respect to the services rendered by each professional;

and (c) reasonably detailed records of time in half-hour (0.5) increments, describing the services

rendered by each professional and the amount of time spent on each date.

32. To the extent that the Compensation Procedures would require Deloitte

Consulting to submit more detailed time records for its professionals, the Debtors request that

Deloitte Consulting be permitted to submit summary time records kept, in the manner set forth

above, in half-hour (0.5) increments in applications for payment of compensation. The Debtors

submit that given the nature of the services to be provided by Deloitte Consulting, such billing

format and associated time details will be sufficient for the Debtors and other parties in interest

to make informed judgments regarding the nature and appropriateness of Deloitte Consulting’s

services and fees. Accordingly, to the extent necessary, based on the foregoing, the Debtors

respectfully seek waiver of the information requirements set forth in the Compensation

Procedures.

33. Deloitte Consulting has received no promises regarding compensation in


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these chapter 11 cases other than in accordance with the Bankruptcy Code and as set forth in the

Flynn Declaration. Deloitte Consulting has no agreement with any nonaffiliated entity to share

any compensation paid by the Debtors in these chapter 11 cases.

D. Indemnification

34. As part of the overall compensation payable to Deloitte Consulting under

the terms of the Engagement Agreement, pursuant to the MSA, the Debtors have agreed to

indemnify and hold harmless Deloitte Consulting, its subcontractors, and their respective

personnel (each, an “Indemnified Person” and, collectively, the “Indemnified Persons”) from

all third party claims, liabilities and expenses (“Claims”) relating to the MSA, any Work Order,

or the Services under any Work Order to the extent that the aggregate amount of the Claims

exceeds five times the aggregate fees paid by the Debtors to Deloitte Consulting pursuant to the

Work Order giving rise to such Claims, except to the extent finally determined to have resulted

primarily from the bad faith or intentional misconduct of Deloitte Consulting or its

subcontractors. The Debtors believe that the indemnification provision of the MSA, subject to

the limitations and modifications described below and provided for in the Proposed Order, are

customary and reasonable for engagements of this nature.

E. Nunc Pro Tunc Retention

35. Deloitte Consulting has provided services to the Debtors in advance of the

Court’s approval of this Application in anticipation that its retention would be approved nunc pro

tunc to the Petition Date. The Debtors submit that these circumstances are of a nature warranting

retroactive approval. See In re AroChem Corp., 176 F.3d 610, 621 (2d Cir. 1999) (noting that

bankruptcy courts have discretion to authorize nunc pro tunc approval of professional

retentions); In re Keren, 189 F.3d 86, 87 (2d Cir. 1999) (explaining factors to consider in

determining whether nunc pro tunc approval is appropriate). Accordingly, the Debtors


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respectfully request that Deloitte Consulting’s retention be made effective nunc pro tunc to the

Petition Date so that Deloitte Consulting may be compensated for the services it has provided

before this Application is heard by the Court.

F. Disinterestedness

36. In reliance on the Flynn Declaration, the Debtors believe that, except as

set forth in the Flynn Declaration: (a) Deloitte Consulting has no connection with the Debtors

and their creditors, the U.S. Trustee, any person employed in the Office of the U.S. Trustee or

any other party with an actual or potential interest in these chapter 11 cases or their respective

attorneys or accountants; (b) Deloitte Consulting is not a creditor, equity security holder, or

insider of any of the Debtors; (c) neither Deloitte Consulting (nor any of its principals

performing services for the Debtors under the Engagement Agreement) is or was, within two

years of the Petition Date, a director, officer, or employee of the Debtors; and (d) Deloitte

Consulting does not have an interest materially adverse to the Debtors, their respective estates or

any class of creditors or equity security holders by reason of any direct or indirect relationship to,

connection with, or interest in the Debtors, or for any other reason. Accordingly, the Debtors

believe that Deloitte Consulting is a “disinterested person,” as defined in section 101(14) of the

Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code, and as required by

section 327(a) of the Bankruptcy Code. Additionally, none of the professionals performing

services for the Debtors described herein own the common stock of Kodak, the parent entity of

the Debtors.

37. As set forth above, Deloitte Consulting provided prepetition services to

the Debtors. Deloitte Consulting also performs certain services for non-Debtor affiliates of the

Debtors and certain of the Debtors’ pension plans and is paid directly by such non-Debtor

affiliates or plans. The Debtors paid Deloitte Consulting approximately $790,000, including


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certain retainers, in the ninety (90) days prior to the Petition Date. As of the Petition Date:

approximately $75,000 was remaining with respect to the retainer; and approximately $48,000

was outstanding with respect to services performed for the Debtors by Deloitte Consulting prior

to the Petition Date.

38. The Debtors’ knowledge, information, and belief regarding certain of the

matters set forth in this Application, including, without limitation, Deloitte Consulting’s

disinterestedness, are based on, and are made in reliance upon, the Flynn Declaration.

39. To the extent that Deloitte Consulting discovers any additional facts

bearing on the matters described herein during the period of Deloitte Consulting’s retention in

connection with these chapter 11 cases, Deloitte Consulting will supplement the information

contained in the Flynn Declaration.

Jurisdiction

40. The Court has jurisdiction to consider this matter pursuant to 28 U.S.C. §§

157 and 1334. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. This matter is a core

proceeding pursuant to 28 U.S.C. § 157(b). The statutory predicates for the relief requested

herein are sections 327(a) and 328(a) of the Bankruptcy Code, Bankruptcy Rules 2014(a) and

2016(a) and Local Rules 2014-1, 2016-1 and 9013-1(a).

Relief Requested

41. By this Application, the Debtors request entry of the Proposed Order,

authorizing the retention and employment of Deloitte Consulting as actuarial consulting services

provider to the Debtors, nunc pro tunc to the Petition Date, pursuant to the terms and conditions

of the Engagement Agreement, subject to the limitations and modifications proposed herein and

provided for in the Proposed Order. The facts and circumstances supporting this Application are

set forth in the Flynn Declaration.


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Basis for Relief

A. The Debtors’ Retention and Employment of Deloitte Consulting Is Appropriate Pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code and Bankruptcy Rule 2014.

42. Section 327 (a) of the Bankruptcy Code provides, in relevant part, as

follows:

Except as otherwise provided in this section, the trustee, with the court’s approval, may employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee’s duties under this title.

11 U.S.C. § 327(a).

43. Section 328 (a) of the Bankruptcy Code provides, in relevant part, as

follows:

The trustee . . . with the court’s approval, may employ or authorize the employment of a professional person under section 327 . . . of this title . . . on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, or on a contingent fee basis. Notwithstanding such terms and conditions, the court may allow compensation different from the compensation provide under such terms and conditions after the conclusion of such employment, if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions.

Id. at 328(a).

44. Bankruptcy Rule 2014 provides, in relevant part, as follows:

An order approving the employment of attorneys, accountants, appraisers, auctioneers, agents, or other professionals pursuant to § 327 . . . of the Code shall be made only on application of the trustee or committee.

Fed. R. Bankr. P. 2014.

45. As set forth above, the Debtors have selected Deloitte Consulting to

provide the services set forth in the Engagement Agreement and described herein because


19 01: 11819732.5

Deloitte Consulting is a well-respected and experienced professional services firm. Deloitte

Consulting has considerable experience providing actuarial consulting services that will be

useful to the Debtors, and has indicated a desire and willingness to act in these chapter 11 cases

and render the necessary professional services for the Debtors. Furthermore, because of Deloitte

Consulting’s prepetition employment by the Debtors, Deloitte Consulting has developed

institutional knowledge concerning the Debtors’ business practices relevant to the ongoing and

anticipated services to be provided by Deloitte Consulting. In light of this, Deloitte Consulting is

well-suited to provide the Debtors with the services contemplated by the Engagement

Agreement.

46. The Debtors believe that the Fee and Expense Structure appropriately

reflects the nature of the services to be provided by Deloitte Consulting, and is consistent with,

and typical of, arrangements entered into by Deloitte Consulting and other professional services

firms with respect to rendering comparable services for clients similar to the Debtors, both in and

out of chapter 11. Deloitte Consulting and the Debtors also believe that the Fee and Expense

Structure is reasonable and at negotiated rates. The Fee and Expense Structure contains

reasonable terms and conditions of employment and should be approved by the Court under

section 328(a) of the Bankruptcy Code in light of: (a) industry practice; (b) market rates charged

for comparable services both in and out of the chapter 11 context; (c) Deloitte Consulting’s

substantial experience with respect to actuarial consulting services; and (d) the nature and scope

of work anticipated to be performed by Deloitte Consulting in connection with these chapter 11

cases.

47. Furthermore, not granting the relief requested herein would deprive the

Debtors of the assistance of a highly qualified professional actuarial consulting firm, which


20 01: 11819732.5

would disadvantage the Debtors and all parties in interest in these chapter 11 cases. With respect

to the services to be performed under the Engagement Agreement, the Debtors would be forced

to engage a services provider lacking the same understanding of the Debtors’ business practices.

Also, engaging a new firm to fill this void would necessarily require the Debtors to needlessly

expend additional time and resources at a critical stage of these chapter 11 cases. Accordingly,

the Debtors submit that the services provided by Deloitte Consulting are critical to the success of

these chapter 11 cases.

48. Courts in this district have previously granted relief similar to that

requested herein. See, e.g., Borders Group, Inc., Case No. 11-10614 (Bankr. S.D.N.Y. Apr. 7,

2011) (order authorizing retention of Deloitte Consulting). The Debtors submit that the present

circumstances warrant similar relief in these chapter 11 cases.

B. Approval of the Indemnification Provision of the MSA, As Limited and Modified by the Proposed Order, Is Appropriate.

49. The MSA provides, among other things, that the Debtors will indemnify

and hold harmless the Indemnified Persons from all Claims relating to the MSA, any Work

Order, or the Services under any Work Order to the extent that the aggregate amount of the

Claims exceeds five times the aggregate fees paid by the Debtors to Deloitte Consulting pursuant

to the Work Order giving rise to such Claims, except to the extent finally determined to have

resulted primarily from the bad faith or intentional misconduct of an Indemnified Person (the

“Indemnification Provision”). The Indemnification Provision is a standard engagement

provision, both in chapter 11 cases and outside chapter 11, and reflects the qualifications and

limits on such terms that are customary for Deloitte Consulting and other similar tax consulting

service providers as approved in this and other jurisdictions.

50. In connection with this Application, Deloitte Consulting has agreed to


21 01: 11819732.5

certain limitations and modifications to the Indemnification Provision, which are reflected in the

Proposed Order and are as follows:

a. All requests of Indemnified Persons for payment of indemnity, contribution or otherwise pursuant to the Engagement Agreement shall be made by means of an interim or final fee application and shall be subject to the approval of, and review by, the Court to ensure that such payment conforms to the terms of the Engagement Agreement, the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and the orders of the Court; provided, however, that in no event shall an Indemnified Person be indemnified or receive contribution to the extent that any claim or expense has resulted from the bad-faith, self-dealing, breach of fiduciary duty, if any, gross negligence or willful misconduct on the part of that or any other Indemnified Person.

b. In no event shall an Indemnified Person be indemnified or receive contribution or other payment under the indemnification provisions of the Engagement Agreement if the Debtors, their estates or the Creditors’ Committee assert a claim, to the extent that the Court determines by final order that such claim resulted from the bad faith, self-dealing, breach of fiduciary duty, if any, gross negligence or willful misconduct on the part of that or any other Indemnified Person.

c. In the event that an Indemnified Person seeks reimbursement for attorneys’ fees from the Debtors pursuant to the Engagement Agreement, the invoices and supporting time records from such attorneys shall be annexed to Deloitte Consulting’s own interim and final fee applications, and such invoices and time records shall be subject to the U.S. Trustee Guidelines and the approval of the Court under the standards of section 330 and 331 of the Bankruptcy Code without regard to whether such attorney has been retained under section 327 of the Bankruptcy Code and without regard to whether such attorney’s services satisfy section 330(a)(3)(C) of the Bankruptcy Code.

51. The Debtors and Deloitte Consulting believe that the Indemnification

Provision, as limited and modified by the Proposed Order, is customary and reasonable for tax

consulting service providers, both out of court and in chapter 11 proceedings. See United Artists

Theatre Co. v. Walton (In re United Artists Theatre Co.), 315 F.3d 217, 234 (3d Cir. 2003)

(finding that indemnification agreement between debtor and financial advisor was reasonable


22 01: 11819732.5

under section 328 of the Bankruptcy Code).

52. Furthermore, courts in this district have previously granted relief similar to

that requested herein. See, e.g., Borders Group, Inc., Case No. 11-10614 (Bankr. S.D.N.Y. Apr.

7, 2011) (approving indemnification provision in connection with debtors’ retention of Deloitte

Consulting). The Debtors submit that the present circumstances warrant similar relief in these

chapter 11 cases.

Notice

53. Notice of this Application has been provided to: (a) the U.S. Trustee; (b)

counsel to the agent under the prepetition revolving credit facility; (c) U.S. Bank, National

Association, as indenture trustee; (d) Wilmington Trust, National Association, as indenture

trustee; (e) counsel to the Ad Hoc Committee of Second Lien Noteholders; (f) proposed counsel

to the Creditors’ Committee; (g) counsel to Citicorp North America, Inc., as agent for the

Debtors’ postpetition secured lenders; and (h) all parties requesting notice in these chapter 11

cases pursuant to Bankruptcy Rule 2002. The Debtors respectfully submit that further notice of

this Application is neither required nor necessary.

No Prior Request

54. The Debtors have not previously sought the relief requested herein from

this or any other court.

Remainder of page intentionally left blank


21

WHEREFORE, the Debtors respectfully request that the Court (a) enter the

Proposed Order, authorizing the Debtors to employ and retain Deloitte Consulting as actuarial

consulting services provider to the Debtors, nunc pro tunc to the Petition Date, pursuant to the

terms and conditions of the Engagement Agreement, subject to the limitations and modifications

proposed herein and provided for in the Proposed Order, and (b) grant such other and further

relief as may be just and proper.

Dated: March 15,2012 Respectfully submitted,Rochester, New York

Patrick M. ShellerSenior Vice President, General Counsel, Secretary and ChiefAdministrative Officer

r


01: 11859446.1

Hearing Date: April 18, 2012 at 11:00 a.m. (Eastern Time) Objection Deadline: April 11, 2012 at 4:00 p.m. (Eastern Time)

Andrew G. Dietderich John J. Jerome Michael H. Torkin Mark U. Schneiderman 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

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 Possession1


In re:


Debtors.

) ) ) ) ) ) )


NOTICE OF DEBTORS’ APPLICATION FOR AN ORDER AUTHORIZING THE

RETENTION AND EMPLOYMENT OF DELOITTE CONSULTING LLP AS ACTUARIAL CONSULTING SERVICES PROVIDER TO THE DEBTORS AND


PLEASE TAKE NOTICE that on the date hereof, Eastman Kodak Company, et

al. (collectively, the “Debtors”), filed the Debtors’ Application for an Order Authorizing the

Retention and Employment of Deloitte Consulting LLP as Actuarial Consulting Services 1 All parties in interest with inquiries regarding the Application should direct such inquiries to Young Conaway

Stargatt & Taylor, LLP. 2 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification


12-10202-alg Doc 619-1 Filed 03/15/12 Entered 03/15/12 17:05:34 Notice Pg 1 of 3

2

01: 11859446.1

Provider to the Debtors and Debtors in Possession Nunc Pro Tunc to the Petition Date (the

“Application”). The undersigned counsel will present the Application to the Honorable Allan L.

Gropper, Bankruptcy Judge of the United States Bankruptcy Court for the Southern District of

New York (the “Court”), at One Bowling Green, New York, New York 10004, at a hearing to

be held on April 18, 2012 at 11:00 a.m. (ET) (the “Hearing”).

PLEASE TAKE FURTHER NOTICE that responses or objections, if any, to

the relief requested in the Application must be filed electronically with the Court on the docket

of In re Eastman Kodak Company, Case No. 12-10202 (ALG), pursuant to the Court’s General

Order M-399 (available at http://www.nysb.uscourts.gov/orders/m399.pdf), by registered users

of the Court’s case filing system and by all other parties in interest on a 3.5 inch disc, preferably

in portable document format, Microsoft Word or any other Windows-based word processing

format and served by U.S. mail, overnight delivery, hand delivery or, with the exception of the

Court and the United States Trustee, facsimile upon each of the following: (a) the Chambers of

the Honorable Allan L. Gropper, United States Bankruptcy Court for the Southern District of

New York, One Bowling Green, New York, New York 10004; (b) the Debtors and their counsel;

(c) the Office of the United States Trustee for the Southern District of New York; (d) Milbank,

Tweed, Hadley & McCloy LLP, proposed counsel to the Official Committee of Unsecured

Creditors; (e) U.S. Bank, National Association, as indenture trustee; (f) Wilmington Trust,

National Association, as indenture trustee; (g) the Securities and Exchange Commission; (h) the

Internal Revenue Service; (i) Davis Polk & Wardwell LLP, counsel to Citicorp North America,

Inc., as agent for the Debtors’ postpetition secured lenders; (j) the Environmental Protection

Agency; (k) Akin Gump Strauss Hauer & Feld LLP, counsel to the Ad Hoc Committee of

Second Lien Noteholders; and (l) all parties requesting notice in these chapter 11 cases pursuant


3

01: 11859446.1

to Bankruptcy Rule 2002, so as to be actually received no later than April 11, 2012 at 4:00 p.m.

(ET).

PLEASE TAKE FURTHER NOTICE that only those objections that are timely

filed, served and received will be considered at the Hearing. Failure to file a timely objection

may result in entry of a final order granting the Application as requested by the Debtors without

further notice. The parties are required to attend the Hearing, and failure to attend in person or

by counsel may result in relief being granted or denied upon default.

PLEASE TAKE FURTHER NOTICE that copies of the Application may be

obtained from the Court’s website, https://ecf.nysb.uscourts.gov/ or, free of charge, the website

of the claims and noticing agent, http://www.kccllc.net/kodak.

Dated: March 15, 2012 New York, New York

/s/ Pauline K. Morgan 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

- and - Andrew G. Dietderich John J. Jerome Michael H. Torkin Mark U. Schneiderman 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


01: 11819732.5

EXHIBIT A

Proposed Order

12-10202-alg Doc 619-2 Filed 03/15/12 Entered 03/15/12 17:05:34 Exhibit A - Proposed Order Pg 1 of 11

01: 11819732.5


In re:


Debtors.

) ) ) ) ) ) )


ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT

OF DELOITTE CONSULTING LLP AS ACTUARIAL CONSULTING SERVICES PROVIDER TO THE DEBTORS AND


Upon the application (the “Application”)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 authorizing the Debtors to employ and retain

Deloitte Consulting LLP (“Deloitte Consulting”) as actuarial consulting services provider to the

Debtors, nunc pro tunc to the Petition Date, pursuant to the terms and conditions of the

Engagement Agreement, subject to the limitations and modifications proposed in the Application

and provided for herein; and it appearing that this Court has jurisdiction to consider the

Application pursuant to 28 U.S.C. §§ 157 and 1334; and it appearing that venue of these chapter

11 cases and the Application in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409;

and it appearing that 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 Application is in the best interests of the

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification


2 All capitalized terms used but otherwise not defined herein shall have the meanings set forth in the Application.


2 01: 11819732.5

Debtors, their estates, their creditors and other parties in interest; and it appearing that proper and

adequate notice of the Application has been given and that no other or further notice is

necessary; and after due deliberation thereon; and good and sufficient cause appearing therefor;

IT IS HEREBY ORDERED THAT:

1. The Application is GRANTED to the extent provided for herein.

2. The Debtors are authorized, pursuant to sections 327(a) and 328(a) of the

Bankruptcy Code, Bankruptcy Rules 2014(a) and 2016(a) and Local Rules 2014-1 and 2016-1,

to employ and retain Deloitte Consulting as actuarial consulting services provider to the Debtors,

nunc pro tunc to the Petition Date, in accordance with the terms and conditions set forth in the

Engagement Agreement, as limited and modified by this Order.

3. Except as limited and modified by this Order, the terms of the

Engagement Agreement are approved in all respects.

4. Consistent with the terms of the Employee Benefit Plans Work Order –

Recurring Services, Deloitte Consulting shall be authorized to perform the services identified

therein, including, without limitation, the following enumerated services:

a. Preparation and delivery of data requests;

b. Processing and reconciliation of electronically provided data from Kodak and/or external administrators;

c. Completion of data summary memorandum summarizing the data reconciliation process for use in the Controls Framework (Tier I plans only);

d. Discussion with Kodak of actuarial assumptions to be used as of December 31, 2011;

e. Determination of actuarial liabilities as of December 31, 2011 based upon census information provided by Kodak and based upon assumptions selected by Kodak management;


3 01: 11819732.5

f. Preparation of financial footnote disclosure information for Tier I plans for compilation by Kodak into its fiscal 2011 financial statements and SEC filings, including liability adjustment information related to FAS 158;

g. Preparation of December 31, 2011 disclosure reports (Tier I plans only);

h. Calculation of a budget expense for Tier I plans. These results are to be recorded as an estimate of expense for January and February;

i. Calculation of preliminary expense for Tier I plans reflecting update asset values. These results are to be recorded monthly for the 2012 fiscal year (after reflecting true-ups for January/February) unless reimbursements occur;

j. Preparation of final actuarial report detailing December 31, 2011 disclosure information and the calculation of fiscal 2012 preliminary expense (all plans); and

k. Global coordination activities, including valuation process oversight, completion of recurring actuarial forms within EKCBARS (including Tier III plans not on-cycle), general EKCBARS support to Kodak end-users, preparation of draft FAS 132/158 footnote information, and participation in routine conference calls/meetings to discuss topics related to the recurring actuarial services outlined above.


Special Projects, Deloitte Consulting shall be authorized to perform the services identified


a. Special accounting calculations pursuant to FAS 88 or FAS 106 for Q4 2011, Q1 2012, Q2 2012 and Q3 2012 for impacted plans;

b. Development and presentation of 2012 Kodak Annual Operating Planning (AOP) results; and

c. Incremental US GAAP valuation services required due to other restructuring activity.

6. Consistent with the terms of the Workers Compensation Work Order,

Deloitte Consulting shall be authorized to perform the services identified therein, including,

without limitation, the following enumerated services:


4 01: 11819732.5

a. Providing Kodak a range of reasonable unpaid loss and allocated loss adjustment expenses as of December 31, 2011 using underlying data evaluated as of July 31, 2011;

b. Providing Kodak an estimate of the required funding and expected payment for the 2012 fiscal year;

c. Providing Kodak with actual versus expected loss emergence testing at December 31, 2011 for New York Self-Insured and the Insured States exposures using underlying data evaluated as of November 30, 2011; and

d. Proving Kodak with an allocation of unpaid loss estimates between short-term liabilities (i.e., estimated amounts anticipated to be paid within the upcoming year) and long-term liabilities.


Bankruptcy Services, Deloitte Consulting shall be authorized to perform the services identified


a. Evaluating the cash, liability, and expense impact of potential benefit plan changes that are part of the bankruptcy process;

b. Collecting, analyzing, and providing employee benefit related data (e.g., census data, cost information, etc.) related to requests from interested parties to the bankruptcy filing; and

c. Participating in meetings and conference calls to discuss bankruptcy related benefits issues.

8. Consistent with the terms of the SEC Proxy Work Orders, Deloitte

Consulting shall be authorized to perform the services identified therein, including, without

limitation, the following enumerated services:

a. Preparing the following schedules for identified Named Executive Officers for purposes of Kodak’s 2011 and 2012 SEC proxy disclosure: Pension Benefits Table, Change in Pension Value for use in the Summary Compensation Table, and pension portion of the Termination/Change in Control Table; and

b. Providing supporting details for the calculations to be included and assisting in drafting wording for use in the proxy disclosure.

9. Consistent with the terms of the Medical Rate Work Order, Deloitte


5 01: 11819732.5

Consulting shall be authorized to perform the services identified therein, including, without

limitation, the following enumerated services:

a. Calculating premium equivalent rates for self-insured medical plans for the 2013 plan year;

b. Benchmarking medical benefits against the market and suggest areas in which benefits may be adjusted to remain competitive;

c. Assessing the impact of various benefit changes on the premium equivalent amounts;

d. Working with MVP Health Care and CVS Caremark to receive de-identified medical and pharmacy claims data to determine the premium equivalent rates;

e. Calculating a separate premium equivalent for carved out pharmacy benefits;

f. Assessing the impact on premium equivalents of any rebates received under the Early Retirement Reinsurance Program and clearly document those impacts;

g. Calculating separate premium equivalent rates for active employees and retirees based on the respective experience of each cohort; and

h. Assisting Kodak in evaluating the advantages and issues of adding a fourth coverage tier.

10. Deloitte Consulting shall use its reasonable efforts to avoid any

duplication of services provided by any of the Debtors’ other retained professionals in these

chapter 11 cases.

11. Deloitte Consulting shall file interim and final fee applications for

allowance of its compensation and reimbursement of its expenses with respect to services

rendered in these chapter 11 cases with this Court in accordance with the applicable provisions

of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, the U.S. Trustee Guidelines and

any applicable orders of this Court; provided, however, that Deloitte Consulting shall be excused

from keeping time records for services rendered in one-tenth (0.1) of an hour increments, and


6 01: 11819732.5

instead Deloitte Consulting shall include in its fee applications: (a) a narrative summarizing each

project category and the services rendered under each project category; (b) as an exhibit to each

fee application that Deloitte Consulting files in these chapter 11 cases, a summary, by project

category, of services rendered to the Debtors, which identifies each professional rendering

services, the number of hours expended by each professional, and the amount of compensation

requested with respect to the services rendered by each professional; and (c) reasonably detailed

records of time in half-hour (0.5) increments, describing the services rendered by each

professional and the amount of time spent on each date.

12. Deloitte Consulting shall apply any Retainer amounts outstanding as a

credit toward postpetition fees and expenses, after such postpetition fees and expenses are

approved pursuant to the first order of this Court awarding fees and expenses to Deloitte

Consulting.

13. All fixed fee compensation payable to Deloitte Consulting pursuant to the

Employee Benefit Plans Work Order – Recurring Services and the Medical Rate Work Order

shall be subject to review pursuant to the standards set forth in section 328(a) of the Bankruptcy

Code; provided, that, notwithstanding anything to the contrary in this Order, the Application, the

Engagement Agreement or the Flynn Declaration, the U.S. Trustee shall be entitled to review

applications for payment of fixed fee compensation by Deloitte Consulting under the standards

set forth in sections 330 and 331 of the Bankruptcy Code, and that, in the event the U.S. Trustee

objects to any application for payment of fixed fee compensation, this Court retains the right to

review such application pursuant to section 330 of the Bankruptcy Code.

14. To the extent that Deloitte Consulting, at the request of the Debtors,

performs services other than those set forth and approved in this Order, Deloitte Consulting shall


7 01: 11819732.5

file with this Court a supplemental retention application authorizing performance of such

services nunc pro tunc to the date such services were performed by Deloitte Consulting, and

Deloitte Consulting will submit a proposed order approving the supplemental retention under a

Notice of Presentment, pursuant to Local Rule 9074-1 and the Order Authorizing the

Establishment of Certain Notice, Case Management and Administrative Procedures [Docket No.

362], which shall be served and filed at least seven (7) calendar days before the presentment

date; and any objections thereto must be filed at least one (1) calendar day before the

presentment date.

15. In the event that the rates of compensation for the services increase from

the rates disclosed for services in the Engagement Agreement, Deloitte Consulting shall file a

supplemental affidavit with this Court and give ten business days’ notice to the Debtors, the U.S.

Trustee and the Creditors’ Committee, which supplemental affidavit shall explain the basis for

the requested rate increases in accordance with section 330(a)(3)(F) of the Bankruptcy Code and

indicate whether the client has received notice of and approved the proposed rate increase. The

U.S. Trustee retains the right to object to any rate increase on all grounds, including, but not

limited to, the reasonableness standard provided for in section 330 of the Bankruptcy Code, and

the Court retains the right to review any rate increase pursuant to section 330 of the Bankruptcy

Code.

16. Notwithstanding anything to the contrary in the Application, the

Engagement Agreement or the Flynn Declaration, without further approval of this Court,

Deloitte Consulting shall not use independent contractors in performing for the Debtors the

services described in the Engagement Agreement.


8 01: 11819732.5


Engagement Agreement or the Flynn Declaration, with respect to the MSA solely as it pertains to

services performed by Deloitte Consulting for the Debtors from the inception of these chapter 11

cases to the effective date of any plan of reorganization of the Debtors:

a. The fourth sentence of Section 5 of the MSA, starting with the words “Without limiting its rights or remedies,” shall be deemed inapplicable;

b. The first sentence of Section 9 of the MSA, starting with the words “Client agrees that Consultant,” shall be deemed to include the term “gross negligence” prior to the phrase “bad faith”;

c. The second and third sentences of Section 9 of the MSA, starting with the words “Other than with respect to any breach” and “In no event shall Consultant,” respectively, shall be deemed inapplicable; and

d. Nothing contained in Section 15 of the MSA shall alter the duties imposed by law on Deloitte Consulting. It is understood and agreed that Deloitte Consulting is being engaged as, and shall be deemed to be, an independent contractor, and that Deloitte Consulting shall have no authority to bind, or otherwise act as agent, executor, administrator, trustee, lawyer or guardian for the Debtors, nor shall Deloitte Consulting have the authority to manage money or property of the Debtors.

18. The Debtors shall be bound by the Indemnification Provision pursuant to

the Engagement Agreement and, during the pendency of these chapter 11 cases, subject to the

following conditions:

a. All requests of Indemnified Persons for payment of indemnity, contribution or otherwise pursuant to the Engagement Agreement shall be made by means of an interim or final fee application and shall be subject to the approval of, and review by, this Court to ensure that such payment conforms to the terms of the Engagement Agreement, the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and the orders of this Court; provided, however, that in no event shall an Indemnified Person be indemnified or receive contribution to the extent that any claim or expense has resulted from the bad-faith, self-dealing, breach of fiduciary duty, if any,


9 01: 11819732.5

gross negligence or willful misconduct on the part of that or any other Indemnified Person;

b. In no event shall an Indemnified Person be indemnified or receive contribution or other payment under the indemnification provisions of the Engagement Agreement if the Debtors, their estates or the Creditors’ Committee assert a claim, to the extent that this Court determines by final order that such claim resulted from the bad faith, self-dealing, breach of fiduciary duty, if any, gross negligence or willful misconduct on the part of that or any other Indemnified Person.

c. In the event that an Indemnified Person seeks reimbursement for attorneys’ fees from the Debtors pursuant to the Engagement Agreement, the invoices and supporting time records from such attorneys shall be annexed to Deloitte Consulting’s own interim and final fee applications, and such invoices and time records shall be subject to the U.S. Trustee Guidelines and the approval of this Court under the standards of section 330 and 331 of the Bankruptcy Code without regard to whether such attorney has been retained under section 327 of the Bankruptcy Code and without regard to whether such attorney’s services satisfy section 330(a)(3)(C) of the Bankruptcy Code.


Engagement Agreement or the Flynn Declaration, Deloitte Consulting shall not be entitled to

reimbursement of any attorneys’ fees incurred in connection with the preparation and filing of

the Application, any fee applications, or monthly fee statements.

20. To the extent that the provisions of this Order are inconsistent with the

provisions of the Application, the Engagement Agreement or the Flynn Declaration, the

provisions of this Order shall govern.

21. The Debtors and Deloitte Consulting are authorized and empowered to

take all actions necessary to implement the relief granted in this Order.

22. The requirements set forth in Local Rule 9013-1(b) are satisfied.

23. This Order is immediately effective and enforceable, notwithstanding the

possible applicability of Bankruptcy Rule 6004(h) or otherwise.


10 01: 11819732.5

24. Notwithstanding any provision to the contrary in the Application, the

Engagement Agreement or the Flynn Declaration, this Court shall retain jurisdiction to hear and

to determine all matters arising from or related to implementation of this Order.

New York, New York Date: April [•], 2012

Allan L. Gropper United States Bankruptcy Judge


01: 11819732.5

EXHIBIT B

Flynn Declaration

12-10202-alg Doc 619-3 Filed 03/15/12 Entered 03/15/12 17:05:34 Exhibit B - Flynn Declaration Pg 1 of 19


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

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

DECLARATION OF JASON FLYNN IN SUPPORT OF THE APPLICATION OF THE DEBTORS FOR ENTRY OF AN ORDER AUTHORIZING THE EMPLOYMENT AND RETENTION OF DELOITTE CONSULTING LLP AS ACTUARIAL CONSULTING

SERVICES PROVIDER TO THE DEBTORS AND DEBTORS IN POSSESSION NUNC PRO TUNC TO THE PETITION DATE

Pursuant to Rule 2014(a) of the Federal Rules of Bankruptcy Procedure (the

“Bankruptcy Rules”), Jason Flynn, under penalty of perjury, declares as follows:

1. I am a principal of the firm of Deloitte Consulting LLP (“Deloitte Consulting”),

which has an office at 200 Renaissance Center, Suite 3900, Detroit, Michigan 48243. I am duly

authorized to make and submit this declaration (the “Declaration”) on behalf of Deloitte

Consulting in accordance with section 327(a) of title 11 of the United States Code (the

“Bankruptcy Code”) and Rule 2014(a) of the Federal Rules of Bankruptcy Procedures (the

“Bankruptcy Rules”) in support of the application of the above-caption debtors (the “Debtors”)

for entry of an order authorizing the employment and retention of Deloitte Consulting as

actuarial consulting services provider to the Debtors (the “Application”), nunc pro tunc to

January 19, 2012 (the “Petition Date”), pursuant to the terms and conditions set forth in the

work orders (and associated master services agreement), attached as Exhibit C to the Application

(collectively, the “Engagement Agreement”).


2

Disinterestedness

2. The statements set forth in this Declaration are based upon my personal

knowledge, upon information and belief, and upon client matter records kept in the ordinary

course of business that were reviewed by me or other personnel of Deloitte Consulting or its

affiliates.

3. Subject to the foregoing, except as set forth herein, and in the attachments hereto,

to the best of my information, knowledge and belief based on reasonable inquiry, (1) neither I,

Deloitte Consulting, nor any partner, principal or director of Deloitte Consulting that is

anticipated to provide the services for which Deloitte Consulting is to be retained (the “Deloitte

Consulting Engagement Partners/Principals/Directors”) holds any interest adverse to the

Debtors or its affiliates with respect to the matters on which Deloitte Consulting is to be retained

in the above-captioned chapter 11 cases (the “Cases”), and (2) Deloitte Consulting and the

Deloitte Consulting Engagement Partners/Principals/Directors have no relationship to the

Debtors, their significant creditors, certain other parties-in-interest herein, or to the attorneys that

are known to be assisting the Debtors in the Cases, except as stated herein or on any attachment

hereto. Additionally, none of the professionals performing services for the Debtors described

herein own the common stock of Eastman Kodak Company, the parent entity of the Debtors.

4. From time to time, Deloitte Consulting and its affiliates have provided or may

currently provide services and likely will continue to provide services, to certain creditors of the

Debtors and various other parties potentially adverse to the Debtors in matters unrelated to the

Cases except as set forth herein or in the attachments hereto.

5. In connection with Deloitte Consulting’s proposed retention by the Debtors in

these Cases, Deloitte Consulting undertook a search to determine, and to disclose, whether it or


3

its affiliates is or has been employed by or has other relationships with any of the Debtors or

their affiliates, subsidiaries, directors or officers, or any of the Debtors’ significant creditors,

customers, equity security holders, professionals or other entities with significant relationships

with the Debtors identified on a schedule provided to Deloitte Consulting. Specifically, Deloitte

Consulting obtained from the Debtors and/or their representatives the names of individuals and

entities that may be parties-in-interest in these Cases. To check upon and disclose possible

relationships with significant parties-in-interest in these Cases, Deloitte Consulting researched its

client databases and performed reasonable due diligence to determine whether it or its affiliates

had any relationships with any of the Debtors or their affiliates, subsidiaries, directors or officers,

or any of the Debtors’ significant creditors, equity security holders, professionals or other such

entities with significant relationships with the Debtors.

6. Except as set forth herein or in the attachments hereto, Deloitte Consulting and its

affiliates have or may have provided professional services to or may currently provide

professional services to, and may in the future provide professional services in matters unrelated

to these Cases to certain of the Debtors’ potential parties-in-interest. Additionally, certain of

these potential parties-in-interest have or may have provided goods or services to or may

currently provide goods or services to, and may in the future provide goods or services to,

Deloitte Consulting or its affiliates and the Deloitte Consulting Engagement

Partners/Principals/Directors in matters unrelated to these Cases.

7. Deloitte Consulting provided prepetition services to the Debtors. Deloitte

Consulting also performs certain services for non-debtor affiliates of the Debtors and certain of

the Debtors’ pension plans and is paid directly by such non-debtor affiliates or plans. The

Debtors paid Deloitte Consulting approximately $790,000, including certain retainers, in the


4

ninety (90) days prior to the Petition Date. As of the Petition Date, approximately $75,000 was

remaining with respect to the retainer. As of the Petition Date, approximately $48,000 was

outstanding with respect to services performed for the Debtors by Deloitte Consulting prior to

the Petition Date.

8. Deloitte Tax LLP (“Deloitte Tax”) and Deloitte & Touche LLP (“Deloitte &

Touche”), affiliates of Deloitte Consulting, have performed services in the past for the Debtors.

They have not received any amounts from the Debtors in the 90 days prior to the Petition Date

and there are no amounts outstanding with respect to such services as of such date.

9. Despite the efforts described above to identify and disclose Deloitte Consulting’s

connections with the potential parties-in-interest in these Cases, because Deloitte Consulting is a

nationwide firm with thousands of personnel, and because the Debtors are a large enterprise,

Deloitte Consulting is unable to state with certainty that every client relationship or other

connection has been disclosed. In this regard, if Deloitte Consulting discovers additional

material information that it determines requires disclosure, it will file a supplemental disclosure

promptly with the Court.

10. From the internal search discussed above, Deloitte Consulting has determined that

certain relationships should be disclosed as follows.

a. Deloitte Consulting provides services in matters unrelated to these Cases to certain of the Debtors’ largest unsecured creditors and other potential parties-in-interest listed on Schedule 1 or their affiliates.

b. Law firms identified on Schedule 1, including Harter, Secrest & Emery LLP; Linklaters LLP; Preston Gates & Ellis LLP; Reed Smith LLP; and Sullivan & Cromwell LLP, have provided, currently provide and may in the future provide legal services to Deloitte Consulting or its affiliates in matters unrelated to these Cases, and/or Deloitte Consulting or its affiliates have provided, currently provide and may in the future provide services to such firms or their clients.


5

c. In the ordinary course of its business, Deloitte Consulting and its affiliates have business relationships in unrelated matters with its principal competitors, which together with their affiliates may be potential parties-in-interest in these Cases. For example, from time to time, Deloitte Consulting and one or more of such entities may work on assignments for the same client or may otherwise engage each other for various purposes.

d. Certain financial institutions or their respective affiliates (including Bank of America, N.A., Citigroup USA, Inc., and Wells Fargo Bank, N.A.) listed on Schedule 1 (i) are lenders to an affiliate of Deloitte Consulting (Deloitte Consulting is a guarantor of such indebtedness) and/or (ii) have financed a portion of the capital and/or capital loan requirements of various partners and principals, respectively, of Deloitte Consulting and its affiliates. Additionally, certain financial institutions or their respective affiliates listed on Schedule 1 (including Vanguard Group, Inc. and Bank of New York Mellon) provide asset management services to certain retirement plans of Deloitte Consulting and its affiliates.

e. Certain firms around the world, including Deloitte LLP, an affiliate of Deloitte Consulting, are members of Deloitte Touche Tohmatsu Limited (“DTTL”), a United Kingdom company limited by guaranty. Certain of the non-US member firms of DTT or their affiliates (the “DTT Member Firms”) have provided, currently provide or may in the future provide professional services to certain of the Debtors’ affiliates.1 In particular, as discussed below, the DTT Member Firms in Barbados, France, Japan and the United Kingdom will perform certain services related to the Debtors’ non-debtor affiliates in such countries and be paid for these services by such non-debtor affiliate either directly or through Deloitte Consulting.

f. Deloitte Tax provides professional services to a vice-president of the Debtors in matters unrelated to these Cases.

g. A member of the board of directors of Eastman Kodak Company, William Parrett, is a retired partner of Deloitte LLP and Deloitte & Touche, the former chief executive officer (from 2003 to 2007) of an entity with a function that is the equivalent of the current DTTL and the former managing partner (from 1999 to 2003) of Deloitte LLP (formerly known as Deloitte &

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01: 11819732.5 Hearing Date: April 18, 2012 at 11:00 a.m. (Eastern Time) Objection Deadline: April...

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