Case KJC Doc 468 Filed 08/02/13 Page 1 of 8 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE. x : : : : : : : x.

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1 Case KJC Doc 468 Filed 08/02/13 Page 1 of 8 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: EXIDE TECHNOLOGIES, Debtor x : : : : : : : x Chapter 11 Case No (KJC) SUPPLEMENTAL APPLICATION OF THE DEBTOR PURSUANT TO 11 U.S.C. 105(a) AND 363(b) TO DESIGNATE (I) ROBERT M. CARUSO AS PRESIDENT AND CHIEF EXECUTIVE OFFICER FOR THE DEBTOR AND (II) ED MOSLEY AS CHIEF RESTRUCTURING OFFICER FOR THE DEBTOR The debtor and debtor in possession in the above-captioned case ( Exide or the Debtor ) hereby submits this supplemental application to this Court for entry of an order, under sections 105(a) and 363(b) of title 11 of the United States Code (the Bankruptcy Code ), authorizing the Debtor to designate (i) Robert M. Caruso as president ( President ) and chief executive officer ( CEO ) for the Debtor and (ii) Ed Mosley as chief restructuring officer ( CRO ) for the Debtor (the Supplemental Application ). In support of the Supplemental Application, the Debtor, by and through its undersigned counsel, respectfully represents: JURISDICTION AND VENUE 1. This Court has jurisdiction to consider the Supplemental Application under 28 U.S.C. 157 and This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue of the Chapter 11 Case (defined below) and the Supplemental Application in this District is proper under 28 U.S.C and The last four digits of the Debtor s taxpayer identification number are The Debtor s corporate headquarters are located at Deerfield Parkway, Building 200, Milton, Georgia

2 Case KJC Doc 468 Filed 08/02/13 Page 2 of 8 2. The statutory predicates for the relief requested herein are Bankruptcy Code sections 105(a) and 363(b). 3. Pursuant to Rule (f) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the Local Rules ), the Debtor consents to the entry of a final judgment or order with respect to the Supplemental Application if it is determined that this Court would lack Article III jurisdiction to enter such final order or judgment absent the consent of the parties. BACKGROUND A. The Chapter 11 Case 4. On June 10, 2013 (the Petition Date ), the Debtor commenced a case by filing a petition for relief under chapter 11 of the Bankruptcy Code (the Chapter 11 Case ). 5. The Debtor continues to operate its business and manage its property as debtor and debtor in possession pursuant to Bankruptcy Code sections 1107(a) and On June 18, 2013, the United States Trustee for the District of Delaware (the U.S. Trustee ) appointed an Official Committee of Unsecured Creditors (the Creditors Committee ) in the Chapter 11 Case pursuant to Bankruptcy Code section No trustee or examiner has been appointed in the Chapter 11 Case. 7. On June 19, 2013, the Debtor filed its Application Pursuant to 11 U.S.C. 105(a) and 363(b) for Entry of an Order to (i) Retain Alvarez & Marsal North America, LLC to Provide the Debtor a Chief Restructuring Officer and Certain Additional Personnel and (ii) Designate Robert M. Caruso to Serve as Chief Restructuring Officer for the Debtor nunc pro tunc to the Petition Date (the Application ). 2 2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Application. 2

3 Case KJC Doc 468 Filed 08/02/13 Page 3 of 8 8. On July 11, 2013, this Court entered an order (the Initial Retention Order ) granting the relief requested in the Application. 3 RELIEF REQUESTED 9. Effective as of 11:59 p.m. on July 31, 2013, James R. Bolch voluntarily resigned from his positions as President, CEO, and member of the board of directors (the Board ) of Exide. With the departure of Mr. Bolch, the Board decided it was in the Debtor s best interest to appoint Robert M. Caruso as President and CEO and Ed Mosley as CRO. 10. To effectuate this change, A&M entered into an amendment to its engagement letter (the letter, as amended, the Amended Engagement Letter ). The Engagement Letter is attached hereto as Exhibit A. The Amended Engagement Letter is attached hereto as Exhibit B. 11. Notably, although Mr. Caruso s title is changing, there will be no change in his compensation or how it is structured. He will continue to be paid the same flat, monthly fee of $130,000. Mr. Mosley s compensation will change from an hourly rate to a flat, monthly fee of $120, Under paragraph 4(b) of the Initial Retention Order, In the event the Debtor seeks to have A&M personnel assume executive officer positions that are different than the positions disclosed in the Application, or to materially change the terms of the engagement by either (i) modifying the functions of personnel, (ii) adding new executive officers, or (iii) altering or expanding the scope of the engagement, an application or motion to modify the retention shall be filed. 3 The portion of the Application seeking approval of paragraph 4(d) of the Engagement Letter regarding the terms and conditions of Alvarez & Marsal North America, LLC s ( A&M s ) right to seek approval of a completion fee was adjourned to the August 15, 2013 hearing. 3

4 Case KJC Doc 468 Filed 08/02/13 Page 4 of Accordingly, by the Supplemental Application, consistent with the terms of the Initial Retention Order, the Debtor requests entry of an order (the Order ), permitting the Debtor to modify A&M s retention as described herein. 14. Mr. Caruso is a managing director of A&M, who was previously serving as the Debtor s CRO pursuant to the Initial Retention Order. He has worked as a turnaround consultant and financial advisor for more than 23 years. Mr. Caruso has substantial knowledge and experience serving either in senior management positions or as a restructuring advisor in large companies and in assisting troubled companies with stabilizing their financial condition, analyzing their operations and developing an appropriate business plan to accomplish the necessary restructuring of their operations and finances. Specifically, Mr. Caruso has advised and/or served as a senior executive for, among others, A123 Systems, Inc., a Severstal North America subsidiary, Delphi Corporation, Meridian Lightweight Technologies, Ruff Hewn, Meridian Automotive Systems, Federal-Mogul Corporation, Harnischfeger Industries, and Morris Material Handling, Inc. Further, Mr. Caruso has served in senior management positions and as a restructuring advisor for a number of companies in a variety of industries, including automotive, manufacturing, consumer products, gaming, and retail. 15. Mr. Mosley is a senior director of A&M. He has a diverse background in financial restructuring, operational restructuring, investment banking, and finance and operational experience. With more than 12 years of restructuring experience, Mr. Mosley is an experienced advisor to companies in distressed and bankruptcy situations. Mr. Mosley has worked with both private and public companies across various industries, including manufacturing, transportation, automotive, retail, industrial construction, telecommunications, healthcare and direct selling. His more recent advisory assignments have included Aurora Bank, 4

5 Case KJC Doc 468 Filed 08/02/13 Page 5 of 8 Vitro America, Visteon Corporation, Chesapeake Corporation, Sypris Solutions, Inc., and Acument Global Technologies. He also spent three years serving as interim management of a $400 million direct-selling company in a turnaround situation for a private equity sponsor. 16. Importantly, Mr. Caruso and Mr. Mosley are intimately familiar with the Debtor s business, financial affairs, and capital structure. Beginning on April 26, 2013, and continuing through the Petition Date, several professionals of A&M, including Mr. Caruso and Mr. Mosley, devoted substantial amounts of time and effort working with members of the Debtor s senior management to, among other things, assist in the development of near-term projections, assist in short-term cash management activities, assist with liquidity management and the sizing of the debtor in possession financing needs, and coordinate the Debtor s efforts to prepare for a chapter 11 filing. Since the Petition Date, Mr. Caruso and Mr. Mosley have continued to work with the members of the Debtor s senior management team to assist the Debtor in effecting a smooth transition into chapter 11. APPLICABLE AUTHORITY 17. The Debtor seeks approval to retain Mr. Caruso as CEO. Section 363(b)(1) of the Bankruptcy Code provides in relevant part 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). Further, pursuant to Bankruptcy Code section 105(a), the court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a). 18. Under applicable case law, in this and other circuits, if a debtor s proposed use of its assets under Bankruptcy Code section 363(b) represents a reasonable business judgment on the part of the debtor, such use should be approved. See, e.g., Comm. of Equity 5

6 Case KJC Doc 468 Filed 08/02/13 Page 6 of 8 Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1070 (2d Cir. 1983) ( The rule we adopt requires that a judge determining a 363(b) application expressly find from the evidence presented before him at the hearing a good business reason to grant such an application. ); Comm. of Asbestos-Related Litigants v. Johns-Manville Corp. (In re Johns- Manville Corp.), 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986) ( Where the debtor articulates a reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), courts will generally not entertain objections to the debtor s conduct. ). 19. The retention of Mr. Caruso as President and CEO and Mr. Mosley as CRO is a sound exercise of the Debtor s business judgment. They have extensive experience as senior officers and as advisors for many troubled companies, and are familiar with the Debtor s business, financial affairs, and capital structure. 20. This Court has authorized retention of officers utilizing Bankruptcy Code section 363 on numerous occasions. See, e.g., In re School Specialty, Inc., Case No (KJC) (Bankr. D. Del. Feb. 25, 2013); In re Vertis Holdings, Inc., Case No (CSS) (Bankr. D. Del. Nov. 20, 2012); In re Filene s Basement, LLC, Case No (KJC) (Bankr. D. Del. Jan. 24, 2012); In re Harry & David Holdings, Inc., Case No (MFW) (Bankr. D. Del. April 27, 2011); In re Trico Marine Services, Inc., Case No (BLS) (Bankr. D. Del. Oct, 6, 2010); In re Orleans Homebuilders Inc., Case No (PJW) (Bankr. D. Del. Apr. 6, 2010); In re Hines Horticulture, Inc., Case No (KJC) (Bankr. D. Del. Oct. 1, 2008); In re Powermate Holding Corp., Case No (Bankr. D. Del. Apr. 15, 2008); In re Medicor Ltd., Case No (Bankr. D. Del. Aug. 24, 2007). 21. Based upon the foregoing, the Debtor submits that the designation of Robert M. Caruso as President and CEO and Ed Mosley as CRO on the terms set forth in the 6

7 Case KJC Doc 468 Filed 08/02/13 Page 7 of 8 Amended Engagement Letter, is essential, appropriate, and in the best interest of the Debtor s estate, creditors, and other parties in interest and should be granted in the Chapter 11 Case. NOTICE 22. Notice of the Supplemental Application will be given to: (i) the Office of the U.S. Trustee; (ii) counsel to the agent under the debtor in possession financing; (iii) counsel to the agent for the Debtor s prepetition secured lenders; (iv) the indenture trustee for each of the Debtor s secured and unsecured outstanding bond issuances; (v) counsel to the unofficial committee of senior secured noteholders; (vi) proposed counsel to the Creditors Committee; and (vii) all parties entitled to notice pursuant to Bankruptcy Rule The Debtor submits that no other or further notice need be provided. Court or any other court. NO PREVIOUS REQUEST 23. No previous request for the relief sought herein has been made to this 7

8 Case KJC Doc 468 Filed 08/02/13 Page 8 of 8 CONCLUSION WHEREFORE, the Debtor respectfully requests that the Court enter an order, substantially in the form annexed hereto, granting the relief requested in the Supplemental Application and such other and further relief as may be just and proper. Dated: August 2, 2013 EXIDE TECHNOLOGIES /s/ Phillip A. Damaska Name: Phillip A. Damaska Title: Executive Vice President and Chief Financial Officer 8

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26 Case KJC Doc Filed 08/02/13 Page 1 of 7 Exhibit B Amended Engagement Letter

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33 Case KJC Doc Filed 08/02/13 Page 1 of 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: EXIDE TECHNOLOGIES, Debtor x : : : : : : : x Chapter 11 Case No (KJC) Related Docket No. ORDER AUTHORIZING THE DEBTOR, PURSUANT TO 11 U.S.C. 105(a) AND 363(b), TO DESIGNATE (I) ROBERT M. CARUSO AS PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE DEBTOR AND (II) ED MOSLEY AS CHIEF RESTRUCTURING OFFICER FOR THE DEBTOR Upon the supplemental application of the Debtor Pursuant to 11 U.S.C. 105(a) and 363(b) to Designate Robert M. Caruso as Chief Executive Officer for the Debtor (the Supplemental Application ); 2 and due and sufficient notice of the Supplemental Application having been given under the particular circumstances; and it appearing that no other or further notice is necessary; and it appearing that the relief requested is in the best interests of the Debtor, its estate, creditors, and other parties in interest; and after due deliberation thereon; and good and sufficient cause appearing therefor, it is hereby 1 2 The last four digits of the Debtor s taxpayer identification number are The Debtor s corporate headquarters are located at Deerfield Parkway, Building 200, Milton, Georgia Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Application.

34 Case KJC Doc Filed 08/02/13 Page 2 of 2 ORDERED, ADJUDGED, AND DECREED THAT: 1. The Supplemental Application is granted. 2. The terms of the Amended Engagement Letter, including without limitation, the compensation provisions and the indemnification provisions, are reasonable terms and conditions of employment and are hereby approved. 3. The Debtor s designation of (i) Robert M. Caruso as the Debtor s President and CEO, effective August 1, 2013, and (ii) Ed Mosley as the Debtor s CRO, effective August 1, 2013, on the terms set forth in the Amended Engagement Letter are hereby approved. 4. To the extent there is inconsistency between the terms of the Amended Engagement Letter, the Supplemental Application, and this Order, the terms of this Order shall govern. 5. This Court shall retain jurisdiction with respect to all matters arising from or related to the implementation or interpretation of this Order and the Amended Engagement Letter. Dated: Wilmington, Delaware, 2013 The Honorable Kevin J. Carey UNITED STATES BANKRUPTCY JUDGE CHISR02A - MSW 2