Kodak 2011 Annual Report Download - page 13

permit consolidated adjusted EBITDA to be less than a specified level for certain periods, and to maintain minimum U.S. Liquidity (as defined in the DIP
Credit Agreement).
A breach of any of the covenants contained in the DIP Credit Agreement, or our inability to comply with the required financial covenants in the DIP Credit
Agreement, when applicable, could result in an event of default under the DIP Credit agreement, subject, in certain cases, to applicable grace and cure
periods. If any event of default occurs and we are not able either to cure it or obtain a waiver from the requisite lenders under the DIP Credit Agreement,
the administrative agent of the DIP Credit Agreement may, and at the request of the requisite lenders shall, declare all of our outstanding obligations under
the DIP Credit Agreement, together with accrued interest and fees, to be immediately due and payable, and the agent under the DIP Credit Agreement may,
and at the request of the requisite lenders shall, terminate the lenders’ commitments under the DIP Credit Agreement and cease making further loans, and if
applicable, the agent could institute foreclosure proceedings against our pledged assets. This could adversely affect our operations and our ability to satisfy
our obligations as they come due.
The Company’s future pension and other postretirement benefit plan costs and required level of contributions could be unfavorably impacted by
changes in actuarial assumptions, future market performance of plan assets and obligations imposed by legislation or pension authorities which
could adversely affect the Company’s financial position, results of operations, and cash flow.
We have significant defined benefit pension and other postretirement benefit obligations. The funded status of the Company’s U.S. and non U.S. defined
benefit pension plans and other postretirement benefit plans, and the related cost reflected in the Company’s financial statements, are affected by various
factors that are subject to an inherent degree of uncertainty, particularly in the current economic environment. Key assumptions used to value these benefit
obligations, funded status and expense recognition include the discount rate for future payment obligations, the long term expected rate of return on plan
assets, salary growth, healthcare cost trend rates, and other economic and demographic factors. Significant differences in actual experience, or significant
changes in future assumptions or obligations imposed by legislation, pension authorities, or the Bankruptcy Court could lead to a potential future need to
contribute cash or assets to the Company’s plans in excess of currently estimated contributions and benefit payments and could have an adverse effect on
the Company’s consolidated results of operations, financial position or liquidity.
If we cannot continue to license or enforce the intellectual property rights on which the Company’s business depends, or if third parties assert that
we violate their intellectual property rights, the Company’s revenue, earnings, expenses and liquidity may be adversely impacted.
We rely upon patent, copyright, trademark and trade secret laws in the United States and similar laws in other countries, and non-disclosure, confidentiality
and other types of agreements with the Company’s employees, customers, suppliers and other parties, to establish, maintain and enforce the Company’s
intellectual property rights. Despite these measures, any of the Company’s direct or indirect intellectual property rights could, however, be challenged,
invalidated, circumvented, infringed or misappropriated, or such intellectual property rights may not be sufficient to permit us to take advantage of current
market trends or otherwise to provide competitive advantages, which could result in costly product redesign efforts, discontinuance of certain product
offerings or other competitive harm. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United
States. Therefore, in certain jurisdictions, we may be unable to protect the Company’s proprietary technology adequately against unauthorized third party
copying, infringement or use, which could adversely affect the Company’
s competitive position. Also, because of the rapid pace of technological change in
the information technology industry, much of the Company’s business and many of the Company’
s products rely on key technologies developed or licensed
by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on reasonable terms.
The execution and enforcement of licensing agreements protects the Company’s intellectual property rights and provides a revenue stream in the form of
up-front payments and royalties that enables us to further innovate and provide the marketplace with new products and services. The Company’s ability to
execute the Company’s intellectual property licensing strategies, including litigation strategies, such as the Company’s legal actions against Apple Inc. and
Research in Motion Limited, could affect the Company’s revenue, earnings and liquidity. Additionally, the uncertainty around the timing, outcome and
magnitude of the Company’s intellectual property-related litigation (including the Company’s legal action against Apple Inc. and Research in Motion
Limited before the International Trade Commission), judgments and settlements could have an adverse effect on the Company’s revenues, earnings, and
liquidity. A potential sale of the Company’s digital imaging patent portfolios could also result in a reduction or the cessation of license revenue related to
these patents. The Company’s failure to develop and properly manage new intellectual property could adversely affect the Company’
s market positions and
business opportunities.
We have made substantial investments in new, proprietary technologies and have filed patent applications and obtained patents to protect the Company’s
intellectual property rights in these technologies as well as the interests of the Company’s licensees. There can be no assurance that the Company’s patent
applications will be approved, that any patents issued will adequately protect the Company’
s intellectual property or that such patents will not be challenged
by third parties.
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