PREM14A 1 d693429dprem14a.htm PREM14A PREM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

Information Required in Proxy Statement

Schedule 14a Information

Proxy Statement Pursuant to Section 14(a) of The

Securities Exchange Act of 1934

 

 

Filed by the Registrant  x                             Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

x   Preliminary Proxy Statement
¨   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
¨   Definitive Proxy Statement
¨   Definitive Additional Materials
¨   Soliciting Material Under Rule 14a-12

QUINPARIO ACQUISITION CORP.

 

(Name of Registrant as Specified in Its Charter)

 

 

(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

¨   No fee required.
x   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies: Not applicable

 

     

  (2)  

Aggregate number of securities to which transaction applies: Not applicable

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): Not applicable

 

     

  (4)  

Proposed maximum aggregate value of transaction: $308,900,000(1)

 

     

  (5)  

Total fee paid: $39,786.32(2)

 

     

¨   Fee paid previously with preliminary materials:
¨   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
  (1)  

Amount previously paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

1 Our estimate of the transaction value is based on the following estimated values: $308.9 million in cash and other non-cash consideration.
2 The amount is the product of $308,900,000 multiplied by the SEC’s filing fee of $128.80 per million.

 

 

 


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QUINPARIO ACQUISITION CORP.

12935 N. Forty Drive, Suite 201,

St. Louis, Missouri 63141

Dear Quinpario Acquisition Corp. Stockholders:

You are cordially invited to attend the special meeting in lieu of the 2014 annual meeting of stockholders of Quinpario Acquisition Corp., which we refer to as “we,” “us,” “our,” “Quinpario” or the “Company,” on                     , 2014, at                     , Eastern time, at         .

At the special meeting, our stockholders will be asked to consider and vote upon a proposal, which we refer to as the “Business Combination Proposal,” to approve a stock purchase agreement (the “Purchase Agreement”) providing for the acquisition of all of the capital stock of Jason Partners Holdings Inc., which we refer to as “Jason,” and which acquisition we refer to as the “Business Combination,” by JPHI Holdings Inc., a wholly owned subsidiary of Quinpario (“Quinpario Sub”), from Jason Partners Holdings LLC (“Seller”) and certain members of Seller. Pursuant to the Purchase Agreement, the purchase price for the Business Combination is $538.65 million (the “Purchase Price”). The consideration to be paid to certain members of Seller and former management of Jason (collectively, the “Rollover Participants”) and Seller for their respective shares of Jason common stock will be funded through a combination of cash held in our trust account, the contribution of Jason common stock to Quinpario Sub by the Rollover Participants (such contribution, the “rollover”), the proceeds of our debt financing and the anticipated proceeds from the sale of preferred stock, as further discussed in the accompanying proxy statement. Additionally, we have received commitments from certain investors pursuant to which they have collectively agreed to purchase shares of Quinpario common stock through open market or privately negotiated transactions, a private placement or a combination thereof. To the extent not utilized for the payment of the Purchase Price, the proceeds from our trust account and the financings will be used for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. A copy of the Purchase Agreement is attached to the accompanying proxy statement as Annex A.

Our stockholders will also be asked to consider and vote upon proposals (a) to approve and adopt an amendment to the Company’s amended and restated certificate of incorporation to (i) increase the Company’s authorized common stock and preferred stock, which we refer to as “Proposal 2”, (ii) provide for the classification of our board of directors into three classes of directors with staggered terms of office and to make certain related changes, which we refer to as “Proposal 3,” (iii) provide for certain additional changes, including changing the Company’s name from “Quinpario Acquisition Corp.” to “Jason Industries, Inc.”, which our board of directors believes are necessary to adequately address the post-Business Combination needs of the Company, which we refer to as “Proposal 4,” (b) to elect three directors to serve as Class III directors on our board of directors until the 2017 annual meeting of stockholders and until their respective successors are duly elected and qualified, which we refer to as the “Director Election Proposal,” (c) to approve and adopt the Jason Industries, Inc. 2014 Omnibus Incentive Plan (an equity-based incentive plan), a copy of which is attached to the accompanying proxy statement as Annex D, which we refer to as the “Incentive Plan Proposal,” and (d) to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Business Combination Proposal or Proposal 2. A copy of our proposed second amended and restated certificate of incorporation incorporating Proposal 2, Proposal 3 and Proposal 4 is attached as Annex C to the accompanying proxy statement.

Each of these proposals is more fully described in the accompanying proxy statement, which each stockholder is encouraged to review carefully.

Our common stock, units and warrants are currently listed on The NASDAQ Stock Market under the symbols “QPAC,” “QPACU” and “QPACW,” respectively. We have applied to continue the listing of our common stock on The NASDAQ Stock Market under the symbol “[            ]” upon the closing of the Business Combination. Following the closing, we expect that our warrants will trade on the OTC market under the symbol “[            ]W.” At the closing, our units will separate into their component shares of Quinpario common stock, par value $0.0001 (“Quinpario Common Stock”), and warrants to purchase one share of Quinpario Common Stock and cease separate trading.


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Pursuant to our amended and restated certificate of incorporation, we are providing our public stockholders with the opportunity to redeem, upon the closing of the transactions contemplated by the Purchase Agreement, shares of Quinpario Common Stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the transactions contemplated by the Purchase Agreement) in the trust account that holds the proceeds (less taxes payable and any interest that we may withdraw for working capital) of our initial public offering closed on August 14, 2013 (the “IPO”). For illustrative purposes, based on funds in the trust account of approximately $177.1 million on December 31, 2013, the estimated per share redemption price would have been approximately $10.26. Public stockholders may elect to redeem their shares even if they vote for the Business Combination Proposal. A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 20% of the outstanding public shares (the “20% threshold”). Holders of our outstanding public warrants do not have redemption rights in connection with the Business Combination. The holders of shares of Quinpario Common Stock issued prior to our IPO, which we refer to as “founder shares,” have agreed to waive their redemption rights with respect to any shares of our capital stock they may hold in connection with the consummation of the Business Combination, and the founder shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Currently, Quinpario Partners I, LLC, which we refer to as our “Sponsor,” certain of its affiliates and our independent directors own approximately 29.9% of our issued and outstanding shares of common stock, including all of the founder shares. Our Sponsor and other founders have agreed to vote any shares of Quinpario Common Stock owned by them in favor of the Business Combination Proposal.

We are providing this proxy statement and accompanying proxy card to our stockholders in connection with the solicitation of proxies to be voted at the special meeting and at any adjournments or postponements of the special meeting. Whether or not you plan to attend the special meeting, we urge you to read this proxy statement (and any documents incorporated into this proxy statement by reference) carefully. Please pay particular attention to the section entitled “Risk Factors.”

After careful consideration, our board of directors has unanimously approved and adopted the Purchase Agreement and unanimously recommends that our stockholders vote FOR adoption and approval of the Business Combination, FOR approval of Proposal 2 and FOR all other proposals presented to our stockholders in the accompanying proxy statement. When you consider the board recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section entitled “Proposal No. 1—Approval of the Business Combination—Certain Benefits of Quinpario’s Directors and Officers and Others in the Business Combination.”

Approval of the Business Combination Proposal, Incentive Plan Proposal and Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. Approval of Proposal 2, Proposal 3 and Proposal 4 requires the affirmative vote of holders of a majority of our outstanding shares of common stock. Approval of the Director Election Proposal requires the affirmative vote of the holders of a plurality of the shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. The board of directors and stockholders of Jason have already approved the Business Combination.

Unless waived by the Company, it is a condition to closing under the Purchase Agreement that at least $115.0 million remain in our trust account at closing. Each redemption of shares of Quinpario Common Stock by our public stockholders will decrease the amount in our trust account, which holds approximately $177.1 million as of December 31, 2013. If, however, redemptions by our public stockholders cause us to have less than $115.0 million in our trust account at the closing of the Business Combination, certain of the Rollover Participants will have the option (but not the obligation) to contribute in connection with the rollover an additional aggregate amount of their current equity in Jason to Quinpario Sub equal to the shortfall between the cash then in the trust account and $115.0 million. In no event, however, will we redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001. We anticipate raising additional proceeds through the sale of preferred stock, which could be used to consummate the Business Combination or for general corporate


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purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. Additionally, we have received commitments from certain investors pursuant to which they have collectively agreed to purchase shares of Quinpario common stock through open market or privately negotiated transactions, a private placement or a combination thereof.

Your vote is very important. If you are a registered stockholder, please vote your shares as soon as possible using one of the following methods to ensure that your vote is counted, regardless of whether you expect to attend the special meeting in person: (1) call the toll-free number specified on the enclosed proxy card and follow the instructions when prompted, (2) access the Internet website specified on the enclosed proxy card and follow the instructions provided to you, or (3) complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the special meeting. A failure to vote your shares is the equivalent of a vote “AGAINST” Proposal 2, Proposal 3 and Proposal 4 but, assuming a quorum is otherwise validly established, will have no effect on the other proposals to be considered at the special meeting of stockholders. Unless waived by the parties to the Purchase Agreement, the closing of the Business Combination is conditioned upon the adoption and approval of the Business Combination Proposal and Proposal 2.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the special meeting. If you fail to return your proxy card or fail to submit your proxy by telephone or over the Internet, or fail to instruct your bank, broker or other nominee how to vote, and do not attend the special meeting in person, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and, if a quorum is present, will have the same effect as a vote AGAINST Proposal 2, Proposal 3 and Proposal 4 but will have no effect on the other proposals (but, in the case of Proposal 2, is the practical equivalent to a vote AGAINST the Business Combination Proposal). If you are a stockholder of record and you attend the special meeting and wish to vote in person, you may withdraw your proxy and vote in person.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST AFFIRMATIVELY VOTE EITHER FOR OR AGAINST THE BUSINESS COMBINATION PROPOSAL AND DEMAND THAT QUINPARIO REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT NO LATER THAN THE CLOSE OF THE VOTE ON THE BUSINESS COMBINATION PROPOSAL AT THE SPECIAL MEETING, AND TENDER YOUR SHARES TO QUINPARIO’S TRANSFER AGENT AT LEAST TWO DAYS PRIOR TO THE VOTE AT SUCH MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

On behalf of our board of directors, I thank you for your support and look forward to the successful completion of the Business Combination.

 

    Sincerely,
                    , 2014       /s/ Jeffry N. Quinn
      Jeffry N. Quinn
      Chairman, President and Chief Executive Officer


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This proxy statement is dated             , 2014, and is first being mailed to stockholders of the Company on or about                 , 2014.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.


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QUINPARIO ACQUISITION CORP.

12935 N. Forty Drive, Suite 201,

St. Louis, Missouri 63141

NOTICE OF SPECIAL MEETING IN LIEU OF 2014 ANNUAL MEETING

OF STOCKHOLDERS OF QUINPARIO ACQUISITION CORP.

To Be Held On                 , 2014

To the Stockholders of Quinpario Acquisition Corp.:

NOTICE IS HEREBY GIVEN that a special meeting in lieu of the 2014 annual meeting of stockholders (the “special meeting”) of Quinpario Acquisition Corp., a Delaware corporation (“we,” “us,” “our,” “Quinpario” or the “Company”), will be held on                 , 2014, at                 , Eastern time, at                 . You are cordially invited to attend the special meeting for the following purposes:

(1) The Business Combination Proposal—to consider and vote upon a proposal to approve and adopt the Stock Purchase Agreement, dated as of March 16, 2014, as it may be amended (the “Purchase Agreement”), by and among the Company, JPHI Holdings Inc., a Delaware corporation and wholly-owned subsidiary of Quinpario (“Quinpario Sub”), Jason Partners Holdings Inc., a Delaware corporation (“Jason”), and Jason Partners Holdings LLC, a Delaware limited liability company (“Seller”), and the transactions contemplated thereby (the “Business Combination Proposal”);

(2) Proposal 2—To consider and act upon a proposed amendment to the Company’s amended and restated certificate of incorporation to increase the Company’s authorized common stock (“Proposal 2”);

(3) Proposal 3—To consider and act upon a proposed amendment to the Company’s amended and restated certificate of incorporation to provide for the classification of our board of directors into three classes of directors with staggered terms of office and to make certain related changes (“Proposal 3”);

(4) Proposal 4—To consider and act upon a proposed amendment to the Company’s amended and restated certificate of incorporation to provide for certain additional changes, including changing the Company’s corporate name from “Quinpario Acquisition Corp.” to “Jason Industries, Inc.”, which our board of directors believes are necessary to adequately address the post-Business Combination needs of the Company (“Proposal 4”);

(5) The Director Election Proposal—to consider and vote upon a proposal to elect three directors upon consummation of the Business Combination to serve as Class III directors on Quinpario’s board of directors until the 2017 annual meeting of stockholders and until their respective successors are duly elected and qualified (the “Director Election Proposal”);

(6) The Incentive Plan Proposal—to consider and vote upon a proposal to approve and adopt the Jason Industries, Inc. 2014 Omnibus Incentive Plan (the “Incentive Plan Proposal”); and

(7) The Adjournment Proposal—to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Business Combination Proposal or Proposal 2 (the “Adjournment Proposal”).

Only holders of record of our common stock at the close of business on                 , 2014 are entitled to notice of the special meeting and to vote at the special meeting and any adjournments or postponements of the special meeting. A complete list of our stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at our principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.

Pursuant to our amended and restated certificate of incorporation, we will provide our public stockholders with the opportunity to redeem, upon the closing of the transactions contemplated by the Purchase Agreement, shares of


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Quinpario Common Stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the consummation of the transactions contemplated by the Purchase Agreement) in the trust account that holds the proceeds (less taxes payable and any interest that we may withdraw for working capital) of our initial public offering closed on August 14, 2013 (the “IPO”). For illustrative purposes, based on funds in the trust account of approximately $177.1 million on December 31, 2013, the estimated per share redemption price would have been approximately $10.26. Public stockholders may elect to redeem their shares even if they vote for the Business Combination Proposal. A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 20% of the outstanding public shares (the “20% threshold”). The holders of shares of Quinpario Common Stock issued prior to our IPO (“founder shares”) have agreed to waive their redemption rights with respect to any shares of our capital stock they may hold in connection with the consummation of the Business Combination, and the founder shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Currently, Quinpario Partners I, LLC, our Sponsor, certain of its affiliates and our independent directors own approximately 29.9% of our issued and outstanding shares of common stock, including all of the founder shares. We may raise additional funds through public or private offerings of our capital stock in order to effectuate the acquisition of Jason using the proceeds of such offerings rather than using the amounts held in the trust account, as described further in the accompanying proxy statement.

The transactions contemplated by the Purchase Agreement will be consummated only if the Business Combination Proposal and Proposal 2 are approved at the special meeting. In addition, (i) the Director Election Proposal is conditioned on the approval of Proposal 2 and the Business Combination Proposal, (ii) the Incentive Plan Proposal is conditioned on the approval of Proposal 2 and the Business Combinational Proposal and (iii) Proposal 2, Proposal 3 and Proposal 4 are conditioned on the approval of the Business Combination Proposal. Each of Proposal 3 and Proposal 4 is also conditioned on the approval of Proposal 2. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth on this proxy statement.

We have no specified maximum redemption threshold under our charter other than the 20% threshold. However, unless waived by the Company, it is a condition to closing under the Purchase Agreement that at least $115.0 million remain in our trust account at closing. Each redemption of shares of our outstanding common stock by our public stockholders will decrease the amount in our trust account, which holds approximately $177.1 million. If, however, redemptions of our outstanding common stock by our public stockholders cause us to have less than $115.0 million in our trust account at the closing of the Business Combination, certain of the Rollover Participants will have the option (but no obligation) to contribute in connection with the rollover an additional aggregate amount of their current equity in Jason to Quinpario Sub in exchange for shares of Quinpario Sub common stock equal in value to the cash shortfall. In no event, however, will we redeem shares of our outstanding common stock in an amount that would cause our net tangible assets to be less than $5,000,001. We anticipate raising additional proceeds through the sale of preferred stock, which could be used to consummate the Business Combination or for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. Additionally, we have received commitments from certain investors pursuant to which they have collectively agreed to purchase shares of Quinpario common stock through open market or privately negotiated transactions, a private placement or a combination thereof.

Your attention is directed to the proxy statement accompanying this notice (including the annexes thereto) for a more complete description of the proposed business combination and related transactions and each of our proposals. We encourage you to read this proxy statement carefully. If you have any questions or need assistance voting your shares, please call us at (314) 548-6200.

 

    By Order of the Board of Directors,
                , 2014     /s/ Paul J. Berra III
    Paul J. Berra III
    Vice President, General Counsel and Secretary


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TABLE OF CONTENTS

SUMMARY TERM SHEET

     1   

FREQUENTLY USED TERMS

     5   

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS

     7   

SUMMARY OF THE PROXY STATEMENT

     18   

SELECTED HISTORICAL FINANCIAL INFORMATION OF QUINPARIO

     26   

SELECTED HISTORICAL FINANCIAL INFORMATION OF JASON

     27   

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     30   

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     32   

RISK FACTORS

     33   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     57   

COMPARATIVE SHARE INFORMATION

     69   

SPECIAL MEETING IN LIEU OF 2014 ANNUAL MEETING OF QUINPARIO STOCKHOLDERS

     70   

PROPOSAL NO. 1—APPROVAL OF THE BUSINESS COMBINATION

     76   

The Purchase Agreement

     76   

Background of the Business Combination

     92   

Quinpario’s Board of Directors’ Reasons for the Approval of the Business Combination

     100   

Satisfaction of 80% Test

     104   

Description of Fairness Opinion of Stifel

     104   

Certain Benefits of Quinpario’s Directors and Officers and Others in the Business Combination

     112   

Potential Purchases of Public Shares

     112   

Warrant Tender Offer

     113   

Total Quinpario Sub Shares, and Shares of Quinpario Common Stock exchangeable therefrom, to be Issued in the Business Combination

     113   

Certificate of Incorporation; Bylaws

     114   

Name; Headquarters

     114   

Redemption Rights

     114   

Acquisition Financing

     115   

Appraisal Rights

     116   

Accounting Treatment

     116   

Material U.S. Federal Income Tax Considerations for Stockholders Exercising Redemption Rights

     116   

Vote Required for Approval

     119   

Recommendation of the Board

     119   

PROPOSAL NO. 2—AUTHORIZATION TO INCREASE THE COMPANY’S AUTHORIZED CAPITAL

     120   

Vote Required for Approval

     121   

Recommendation of the Board

     121   

PROPOSAL NO. 3—CLASSIFICATION OF THE BOARD

     122   

Overview

     122   

Vote Required for Approval

     122   

Recommendation of the Board

     122   

PROPOSAL NO. 4—APPROVAL OF ADDITIONAL AMENDMENTS TO CURRENT CERTIFICATE IN CONNECTION WITH THE BUSINESS COMBINATION

     123   

Vote Required for Approval

     125   

Recommendation of the Board

     125   

PROPOSAL NO. 5—ELECTION OF DIRECTORS TO THE BOARD

     126   

Vote Required for Approval

     127   

Recommendation of the Board

     127   

PROPOSAL NO. 6—APPROVAL AND ADOPTION OF THE JASON INDUSTRIES, INC. 2014 OMNIBUS INCENTIVE PLAN

     128   

2014 Omnibus Incentive Plan

     128   

Vote Required for Approval

     132   

Recommendation of the Board

     132   

 

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PROPOSAL NO. 7—THE ADJOURNMENT PROPOSAL

     133   

Consequences if the Adjournment Proposal is Not Approved

     133   

Required Vote

     133   

Recommendation of the Board

     133   

INFORMATION ABOUT QUINPARIO

     134   

QUINPARIO MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     145   

INFORMATION ABOUT JASON

     150   

EXECUTIVE COMPENSATION

     163   

JASON MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     176   

MANAGEMENT AFTER THE BUSINESS COMBINATION

     202   

DESCRIPTION OF SECURITIES

     206   

BENEFICIAL OWNERSHIP OF SECURITIES

     217   

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     220   

PRICE RANGE OF SECURITIES AND DIVIDENDS

     223   

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

     224   

APPRAISAL RIGHTS

     224   

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

     224   

TRANSFER AGENT AND REGISTRAR

     224   

SUBMISSION OF STOCKHOLDER PROPOSALS

     224   

FUTURE STOCKHOLDER PROPOSALS

     224   

WHERE YOU CAN FIND MORE INFORMATION

     225   

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

     F-1   
ANNEXES   

Annex A—Stock Purchase Agreement

  

Annex B—Fairness Opinion of Stifel

  

Annex C—Second Amended and Restated Certificate of Incorporation of Quinpario

  

Annex D—Jason Industries, Inc. 2014 Omnibus Incentive Plan

  

Annex E—Stockholder Voting Agreement

  

 

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SUMMARY TERM SHEET

This Summary Term Sheet, together with the sections entitled “Questions and Answers About the Proposals for Stockholders” and “Summary of the Proxy Statement,” summarize certain information contained in this proxy statement, but do not contain all of the information that is important to you. You should read carefully this entire proxy statement, including the attached Annexes, for a more complete understanding of the matters to be considered at the special meeting. In addition, for definitions of terms commonly used throughout this proxy statement, including this Summary Term Sheet, see the section entitled “Frequently Used Terms.”

 

    Quinpario is a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. There currently are 24,608,333 shares of Quinpario’s common stock issued and outstanding, consisting of 17,250,000 shares originally sold as part of units in Quinpario’s IPO, 6,208,333 founder shares that were issued to our Sponsor prior to Quinpario’s IPO (of which (i) 469,000 were subsequently transferred to our independent directors and to certain employees of Quinpario Partners LLC and (ii) 75,000 are subject to forfeiture by our Sponsor (but not its transferees) in the event that extension units are not purchased) and 1,150,000 shares sold as part of units issued to our Sponsor in a private placement simultaneously with the consummation of our IPO. In addition, there currently are 18,400,000 warrants of Quinpario outstanding, consisting of 17,250,000 public warrants originally sold as part of units in Quinpario’s IPO and 1,150,000 placement warrants sold as part of the units issued to our Sponsor in a private placement simultaneously with the consummation of Quinpario’s IPO. Each warrant entitles its holder to purchase one share of Quinpario’s common stock at an exercise price of $12.00 per share. The public warrants will become exercisable on the later of 30 days after the completion of Quinpario’s initial Business Combination or 12 months from the consummation of Quinpario’s IPO, and expire at 5:00 p.m., New York time, five years after the completion of Quinpario’s initial Business Combination or earlier upon redemption or liquidation. Once the warrants become exercisable, Quinpario may redeem the outstanding warrants at a price of $0.01 per warrant, if the last sale price of Quinpario’s common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading day period ending on the third business day before Quinpario sends the notice of redemption to the warrant holders. The placement warrants, however, are non-redeemable so long as they are held by our Sponsor or its permitted transferees. For more information about Quinpario and its securities, see the sections entitled “Information About Quinpario,” “Quinpario Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Securities.”

 

    Jason is a global industrial manufacturing company operating through four businesses: finishing, seating, acoustics and components. Jason was founded in 1985 and today provides critical components and manufacturing solutions to customers across a wide range of end markets, industries and geographies through its global network of 33 manufacturing facilities and 16 sales offices, warehouses and joint venture facilities throughout the United States and 14 foreign countries. Jason is led by an experienced corporate and business management team and has embedded relationships with long standing customers, superior scale and resources and industry leading capability to design and manufacture specialized products on which its customers rely. For more information about Jason, see the sections entitled “Information About Jason,” “Jason Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Management After the Business Combination.”

 

    Pursuant to the Stock Purchase Agreement, dated as of March 16, 2014, as it may be amended (the “Purchase Agreement”), by and among the Company, Quinpario Sub, Jason and Seller, the Company proposes to acquire Jason through the acquisition of the outstanding shares of Jason’s common stock by Quinpario Sub, a wholly owned subsidiary of the Company. For more information about the transactions contemplated by the Purchase Agreement, which is referred to herein as the “Business Combination,” see the section entitled “Proposal No. 1—Approval of the Business Combination” and the copy of the Purchase Agreement attached to this proxy statement as Annex A.

 

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    Pursuant to the Purchase Agreement, the purchase price for the Business Combination is $538.65 million (the “Purchase Price”). Upon the effectiveness of the Business Combination, shares of common stock of Jason will be exchanged for cash, in the case of Seller, and validly issued shares of Quinpario Sub’s common stock (“Quinpario Sub Shares”), in the case of the Rollover Participants. The Purchase Price is subject to working capital and other customary adjustments to be determined at the closing of the Business Combination in accordance with the terms of the Purchase Agreement. Assuming the Business Combination was consummated on December 31, 2013, the consideration that would have been paid to Seller and certain members of Seller for their respective shares of Jason common stock would have been $282.2 million, consisting of $246.9 million in cash (the “Cash Consideration”) and $35.3 million in common equity issued by Quinpario Sub in exchange for the contribution of shares of Jason common stock by such members of Seller (“rollover”). Such consideration reflects a reduction of $9.1 million representing the working capital adjustment based on a target working capital level of $80.0 million and a $17.5 million reduction for estimated transaction expenses paid on behalf of Seller by Jason. We intend to pay the Cash Consideration using proceeds of at least $115.0 million held in our trust account and the balance of the Cash Consideration (approximately $131.9 million) will be paid through a redemption by Jason of the remaining shares of its common stock held by Seller using the proceeds of our debt financing. An additional $256.5 million of such debt financing proceeds will be used by Jason to pay certain of its existing indebtedness and other transaction expenses, as well as for general working capital purposes after closing. For more information on the Quinpario Sub Shares, see the section entitled “Proposal No. 1—Approval of the Business Combination— Total Quinpario Sub Shares, and Shares of Quinpario Common Stock exchangeable therefrom, to be Issued in the Business Combination.” For more information about the Purchase Agreement and related transaction agreements, see the section entitled “Proposal No. 1—Approval of the Business Combination—The Purchase Agreement.”

 

    It is anticipated that, upon completion of the Business Combination, Quinpario’s public stockholders will retain an ownership interest of 70.3% in Quinpario and our initial stockholders, including our Sponsor, will retain an ownership interest of approximately 29.7% in Quinpario. In turn, Quinpario will retain an ownership interest of approximately 87.7% in Quinpario Sub, and, through the rollover, certain former equity holders and management of Jason (the “Rollover Participants”) will own approximately 12.3% of the outstanding common stock of Quinpario Sub. If any of Quinpario’s stockholders exercise their redemption rights, the ownership interest in Quinpario of Quinpario’s public stockholders will decrease and the ownership interest in Quinpario of our initial stockholders, including our Sponsor, will increase, although Quinpario’s and the Rollover Participants’ respective ownership interests in Quinpario Sub will change, at the option of the Rollover Participants, only in the event that redemptions by Quinpario stockholders cause us to maintain less than $115.0 million in our trust account. Upon completion of the Business Combination, Quinpario Sub will own 100% of the outstanding capital stock of Jason. The ownership percentage with respect to Quinpario following the Business Combination does not take into account (i) the option of each Rollover Participant to exchange, after the consummation of the Business Combination, all or a portion of such Rollover Participant’s Quinpario Sub Shares into the same number of shares of Quinpario Common Stock pursuant to the terms of a rollover agreement, (ii) warrants to purchase Quinpario Common Stock that may remain outstanding following the Business Combination and the Warrant Tender Offer (as defined below), (iii) the issuance of any shares upon completion of the Business Combination under the Company’s proposed 2014 Omnibus Incentive Plan, (iv) the issuance of any shares of Quinpario preferred stock convertible into shares of Quinpario Common Stock or (v) the issuance of any shares pursuant to the Backstop Commitment (as defined below). If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Quinpario’s existing stockholders in Quinpario will be different and the percentage ownership retained by Quinpario in Quinpario Sub will be different.

See “Summary—Impact of the Business Combination on Quinpario’s Public Float” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information.

 

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    We have obtained a commitment letter from a syndicate of lenders to provide debt financing to Jason in the aggregate amount of approximately $460.0 million to refinance Jason’s existing indebtedness, pay transaction fees and expenses and pay a portion of the Cash Consideration, as well as for working capital purposes.

 

    Our management and board of directors considered various factors in determining whether to approve the Purchase Agreement and the transactions contemplated thereby, and that the value of the Business Combination is equal to at least 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $5.175 million payable to the underwriters of our IPO). For more information about our decision-making process, see the section entitled “Proposal No. 1—Approval of the Business Combination—Quinpario’s Board of Directors’ Reasons for the Approval of the Business Combination.”

 

    Pursuant to our amended and restated certificate of incorporation, in connection with the Business Combination holders of our public shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with our amended and restated certificate of incorporation. As of December 31, 2013 this would have amounted to approximately $10.26 per share. If a holder exercises its redemption rights, then such holder will be exchanging its shares of our common stock for cash and will no longer own shares of the Company and will not participate in the future growth of the Company, if any. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to our transfer agent at least two business days prior to the special meeting. See the section entitled “Special Meeting in Lieu of 2014 Annual Meeting of Quinpario Stockholders—Redemption Rights.”

 

    In addition to voting on the proposal to approve and adopt the Purchase Agreement and the Business Combination contemplated thereby at the special meeting, the stockholders of Quinpario will be asked to vote on proposals (a) to amend the Company’s amended and restated certificate of incorporation to (i) increase the Company’s authorized common stock and preferred stock, (ii) provide for the classification of our board of directors into three classes of directors with staggered terms of office and to make certain related changes, (iii) provide for certain additional changes, including changing the Company’s corporate name from “Quinpario Acquisition Corp.” to “Jason Industries, Inc.”, which our board of directors believes are necessary to adequately address the post-Business Combination needs of the Company, (b) to elect three directors to the board of Quinpario, (c) to adopt an equity incentive plan, and (d) to postpone or adjourn the special meeting, if necessary, to permit further solicitation of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination or Proposal 2. See the sections entitled “Proposal No. 2—Authorization to Increase the Company’s Authorized Capital,” “Proposal No. 3—Classification of the Board,” “Proposal No. 4—Approval of Additional Amendments to Current Certificate in Connection with the Business Combination,” “Proposal No. 5—Election of Directors to the Board,” “Proposal No. 6—Approval and Adoption of the Jason Industries, Inc. 2014 Omnibus Incentive Plan,” “Proposal No. 7—The Adjournment Proposal” and “Special Meeting in Lieu of 2014 Annual Meeting of Quinpario Stockholders.” The Director Election Proposal is conditioned on the approval of Proposal 2 and the Business Combination Proposal. The Incentive Plan Proposal is conditioned on the approval of Proposal 2 and the Business Combination Proposal. Proposal 2, Proposal 3 and Proposal 4 are conditioned on the approval of the Business Combination Proposal. Each of Proposal 3 and Proposal 4 is also conditioned on the approval of Proposal 2.

 

    Upon the closing of the Business Combination, our board of directors will consist of seven directors, three of whom will be voted upon by our stockholders at the special meeting. If all director nominees are elected and the Business Combination is consummated, our board will consist of [            ]. See the sections entitled “Proposal No. 5—Election of Directors to the Board” and “Management After the Business Combination.”

 

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    Unless waived by the parties to the Purchase Agreement, in accordance with applicable law, the closing of the Business Combination is subject to a number of conditions set forth in the Purchase Agreement including, among others, receipt of the requisite stockholder approval contemplated by this proxy statement. For more information about the closing conditions to the Business Combination, see the section entitled “Proposal No. 1—Approval of the Business Combination—The Purchase Agreement.”

 

    The Purchase Agreement may be terminated at any time prior to the consummation of the Business Combination upon agreement of the parties thereto, or by Seller or the Company acting alone, in specified circumstances. For more information about the termination rights under the Purchase Agreement, see the section entitled “Proposal No. 1—Approval of the Business Combination—The Purchase Agreement.”

 

    The proposed Business Combination involves numerous risks. For more information about these risks, see the section entitled “Risk Factors.”

 

    In considering the recommendation of Quinpario’s board of directors to vote FOR the proposals presented at the special meeting, you should be aware that our executive officers and members of our board of directors have interests in the Business Combination that are different from, or in addition to, the interests of our stockholders generally. The members of our board of directors were aware of these differing interests and considered them, among other matters, in evaluating and negotiating the transaction agreements and in recommending to our stockholders that they vote in favor of the proposals presented at the special meeting. These interests include, among other things:

 

    the continued right of our Sponsor, our Chief Executive Officer and certain directors to hold our common stock following the Business Combination, subject to lock-up agreements;

 

    the continued right of our Sponsor to hold placement warrants to purchase shares of our common stock;

 

    the fact that our Sponsor and our Chief Executive Officer paid an aggregate of $11,525,000 for their founder shares, placement shares and placement warrants and such securities should have a significantly higher value at the time of the Business Combination;

 

    if Quinpario is unable to complete a business combination within the required time period, our Sponsor and Chief Executive Officer will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Quinpario for services rendered or contracted for or products sold to Quinpario, but only if such a vendor or target business has not executed such a waiver;

 

    if the proposed Business Combination has not been consummated on or prior to August 15, 2014, Quinpario must promptly reimburse Jason for half of its actual out-of-pocket third party expenses (not to exceed $500,000 in the aggregate) incurred relating to the proposed Business Combination that it would not have otherwise incurred in the normal course of operations;

 

    the continuation of certain of our directors as directors of the Company; and

 

    the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Business Combination.

 

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FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company” and “Quinpario” refer to Quinpario, and the terms “combined company” and “post-combination company” refers to Quinpario following the consummation of the Business Combination.

In this document:

“Backstop Commitment” means the commitment between Quinpario and certain investors pursuant to which investors collectively agreed to purchase up to $[] million of shares of Quinpario Common Stock, through (x) open market or privately negotiated transactions, at a purchase price of up to $10.255 per share, (y) a private placement or (z) a combination thereof.

“Business Combination” means the acquisition of all the capital stock of Jason by Quinpario Sub pursuant to the Purchase Agreement.

“Cash Consideration” means the portion of the Purchase Price which is payable in cash.

“current certificate” means our amended and restated certificate of incorporation filed with the Secretary of State of the State of Delaware on August 8, 2013.

“extension units” means an aggregate of up to 225,000 extension units which may be purchased separately by our Sponsor or its designee in the event we are unable to consummate our initial business combination within 16 months of the consummation of our IPO.

“founder shares” means the 6,208,333 shares of Quinpario Common Stock issued prior to Quinpario IPO, 469,000 of which have been transferred by our Sponsor to our independent directors and to certain employees of an affiliate of our Sponsor, and up to 75,000 founder shares which are subject to forfeiture by our Sponsor (but not its transferees) in the event that the extension units are not purchased.

“initial stockholders” means our Sponsor and each of our officers and directors and certain employees of an affiliate of our Sponsor, in each case, that hold founder shares.

“IPO” means our initial public offering, consummated on August 14, 2013 through the sale of 17,250,000 public units (including 2,250,000 units sold pursuant to the underwriters’ exercise in full of their over-allotment option) at $10.000 per share.

“Jason” means Jason Partners Holdings Inc., a Delaware corporation and wholly-owned subsidiary of Seller.

“PIPE Investment” means the private placement of shares of Quinpario’s 8.0% Series A Convertible Perpetual Preferred Stock.

“placement shares” means 1,150,000 shares of Quinpario Common Stock included within the placement units purchased separately in the private placement by our Sponsor.

“placement units” means 1,150,000 units purchased separately by our Sponsor in the private placement, each placement unit consisting of one placement share and one placement warrant.

“placement warrants” means the 1,150,000 warrants included within the placement units purchased by our Sponsor in the private placement, each of which is exercisable for one share of Quinpario Common Stock, in accordance with its terms.

 

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“Preferred Stock” means the 8.0% Series A Convertible Perpetual Preferred Stock to be issued in the PIPE Investment.

“private placement” means the private sale of 1,150,000 units purchased by our Sponsor that occurred simultaneously with the consummation of our IPO for a purchase price of $10.00 per placement unit for a total purchase price of $11,500,000.

“proposed certificate” means the proposed second amended and restated certificate of incorporation of Quinpario, which will become the Company’s certificate of incorporation upon the approval of Proposal 2, Proposal 3, Proposal 4 and the Business Combination Proposals and the consummation of the Business Combination. A copy of the proposed certificate is attached hereto as Annex C.

“public shares” means shares of Quinpario Common Stock issued in Quinpario’s IPO.

“public stockholders” means holders of public shares, including the initial stockholders to the extent the initial stockholders hold public shares, provided that the initial stockholders will be considered a “public stockholder” only with respect to any public shares held by them.

“public warrants” means the warrants issued in Quinpario’s IPO, each of which is exercisable for one share of Quinpario Common Stock, in accordance with its terms.

“Purchase Agreement” means the Stock Purchase Agreement, dated as of March 16, 2014, as it may be amended, by and among the Company, Quinpario Sub, Jason and Seller.

“Quinpario” means Quinpario Acquisition Corp., a Delaware corporation.

“Quinpario Common Stock” means common stock, par value $0.0001 per share, of Quinpario.

“Quinpario Sub” means JPHI Holdings Inc., a Delaware corporation and wholly-owned subsidiary of Quinpario.

“Quinpario Sub Shares” means shares of common stock, par value $0.0001 per share, of Quinpario Sub.

“Rollover Agreement” means that certain agreement to be entered into in connection with the consummation of the Business Combination by and among Quinpario, Quinpario Sub and the Rollover Participants pursuant to which, among other things, the Rollover Participants shall receive the option to exchange all or a portion of their Quinpario Sub Shares into the same number of shares of Quinpario Common Stock. For the sake of clarity, the Rollover Agreement refers to the agreement defined as the Investor Rights Agreement in the Purchase Agreement.

“Rollover Funds” means Saw Mill Capital LLC, Falcon Investment Advisors, LLC and Hamilton Lane Co-Investment Fund II, LP.

“Rollover Participants” means the Rollover Funds and other former equity holders of Seller together with certain members of Jason’s management.

“Seller” means Jason Partners Holdings LLC, a Delaware limited liability company.

“special meeting” means the special meeting in lieu of the 2014 annual meeting of stockholders of Quinpario Acquisition Corp. that is the subject of this proxy statement.

“Sponsor” means Quinpario Partners I, LLC, a Delaware limited liability company.

“Warrant Tender Offer” means the offer by Quinpario to purchase up to 9,200,000 of its public warrants, subject to certain conditions, at a purchase price of $0.75 per public warrant in a proposed tender offer that would commence sometime after the filing of this preliminary proxy statement and will expire prior to the consummation of the Business Combination.

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the special meeting of stockholders, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to our stockholders. We urge stockholders to read carefully this entire proxy statement, including the annexes and the other documents referred to herein.

 

Q: Why am I receiving this proxy statement?

 

A: Our stockholders are being asked to consider and vote upon a proposal to approve and adopt the Purchase Agreement, among other proposals. We have entered into the Purchase Agreement with Seller providing for the acquisition of all the capital stock of Jason Partners Holdings Inc., which we refer to as “Jason,” and which acquisition we refer to as the “Business Combination,” by JPHI Holdings Inc., a wholly-owned subsidiary of Quinpario (“Quinpario Sub”). Pursuant to the Purchase Agreement, the purchase price for the Business Combination is $538.65 million (the “Purchase Price”), subject to working capital and other customary adjustments in accordance with the terms of the Purchase Agreement, as described further herein. A copy of the Purchase Agreement is attached to the accompanying proxy statement as Annex A.

Our common stock, units and warrants are currently listed on The NASDAQ Stock Market under the symbols “QPAC,” “QPACU” and “QPACW,” respectively. We have applied to continue the listing of our common stock on The NASDAQ Stock Market under the symbol “[            ]” upon the closing of the Business Combination. Following the closing, we expect that our warrants will trade on the OTC market under the symbol “[            ]W.” At the closing, our units will separate into their component shares of common stock and warrants to purchase one share of our common stock.

This proxy statement and its annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the special meeting. You should read this proxy statement and its annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement and its annexes.

 

Q: What is being voted on at the special meeting?

 

A: Below are proposals on which our stockholders are being asked to vote.

 

1. To approve and adopt the Business Combination and the other transactions contemplated by the Purchase Agreement (this proposal is referred to herein as the “Business Combination Proposal”);

 

2. To consider and act upon a proposed amendment to the Company’s amended and restated certificate of incorporation (“current certificate”) to increase the Company’s authorized common stock (this proposal is referred to herein as “Proposal 2”);

 

3. To consider and act upon a proposed amendment to the Company’s current certificate to provide for the classification of our board of directors into three classes of directors with staggered terms of office and to make certain related changes (this proposal is referred to herein as “Proposal 3”);

 

4. To consider and act upon a proposed amendment to the Company’s current certificate to provide for certain additional changes, including changing the Company’s corporate name from “Quinpario Acquisition Corp.” to “Jason Industries, Inc.”, which our board of directors believes are necessary to adequately address the post-Business Combination needs of the Company (this proposal is referred to herein as “Proposal 4”);

 

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5. To elect three directors to our board of directors to serve as Class III directors on our board of directors until the 2017 annual meeting of stockholders and until their respective successors are duly elected and qualified (this proposal is referred to herein as the “Director Election Proposal”);

 

6. To approve and adopt the Jason Industries, Inc. 2014 Omnibus Incentive Plan (this proposal is referred to herein as the “Incentive Plan Proposal”); and

 

7. To approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Business Combination Proposal or Proposal 2 (this proposal is referred to herein as the “Adjournment Proposal”). This proposal will only be presented at the special meeting if there are not sufficient votes to approve the Business Combination Proposal or Proposal 2.

 

Q: Are the proposals conditioned on one another?

 

A: The Business Combination Proposal is conditioned on the approval of Proposal 2. In addition, (i) the Director Election Proposal is conditioned on the approval of Proposal 2 and the Business Combination Proposal (ii) the Incentive Plan Proposal is conditioned on the approval of Proposal 2 and the Business Combinational Proposal and (iii) Proposal 2, Proposal 3 and Proposal 4 are conditioned on the approval of the Business Combination Proposal. Each of Proposal 3 and Proposal 4 is also conditioned on the approval of Proposal 2. The Adjournment Proposal does not require the approval of any other proposal to be effective. It is important for you to note that in the event that either of the Business Combination Proposal or Proposal 2 does not receive the requisite vote for approval, then we will not consummate the Business Combination. If we do not consummate the Business Combination and fail to complete an initial business combination within 16 months (or up to 24 months in case of extensions) of August 14, 2013, we will be required to dissolve and liquidate our trust account by returning the then remaining funds in such account to the public stockholders.

 

Q: Why is Quinpario providing stockholders with the opportunity to vote on the Business Combination?

 

A: Under our current certificate, we must provide all holders of public shares with the opportunity to have their public shares redeemed upon the consummation of our initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, we have elected to provide our stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, we are seeking to obtain the approval of our stockholders of the Business Combination Proposal in order to allow our public stockholders to effectuate redemptions of their public shares in connection with the closing of our Business Combination.

 

Q: What will happen in the Business Combination?

 

A: At the closing of the Business Combination, Quinpario Sub, a wholly-owned subsidiary of the Company, will acquire all the outstanding common stock of Jason which comprise all of the issued and outstanding shares of capital stock of Jason. Shares of common stock of Jason will be exchanged for cash, in the case of Seller, and Quinpario Sub Shares, in the case of the Rollover Participants.

 

Q: What equity stake will (i) current Quinpario stockholders and former Jason stockholders hold in the Company after the closing and (ii) Quinpario hold in the Company after the closing?

 

A:

It is anticipated that, upon completion of the Business Combination, Quinpario’s public stockholders will retain an ownership interest of approximately 70.3% of Quinpario and our initial stockholders, including our Sponsor, will retain an ownership interest of approximately 29.7% of Quinpario. In turn, Quinpario will retain an ownership interest of approximately 87.7% in Quinpario Sub, and the Rollover Participants will own approximately 12.3% of the outstanding common stock of Quinpario Sub. If any of Quinpario’s stockholders exercise their redemption rights, the ownership interest in Quinpario of Quinpario’s public

 

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  stockholders will decrease and the ownership interest in Quinpario of our initial stockholders, including our Sponsor, will increase, although Quinpario’s and the Rollover Participants’ respective ownership interests in Quinpario Sub will change, at the option of the Rollover Participants, only in the event that redemptions by Quinpario stockholders cause us to maintain less than $115.0 million in our trust account at closing. Upon the closing of the Business Combination, Quinpario Sub will own 100% of the outstanding common stock of Jason. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Quinpario’s existing stockholders in Quinpario will be different and the percentage ownership retained by Quinpario in Quinpario Sub will be different (with our sponsor and its affiliate, above certain redemption levels, owning a majority of our outstanding shares of common stock). The ownership percentage with respect to Quinpario following the Business Combination does not take into account (i) the option of each Rollover Participant to (at its election) exchange, after the consummation of the Business Combination, all or a portion of such Rollover Participant’s Quinpario Sub Shares into the same number of shares of Quinpario Common Stock pursuant to the terms of the Rollover Agreement, (ii) warrants to purchase Quinpario’s common stock that may remain outstanding following the Business Combination and the Warrant Tender Offer, (iii) the issuance of any shares under the Company’s proposed 2014 Omnibus Incentive Plan, (iv) the issuance of any shares of Quinpario preferred stock convertible into shares of Quinpario Common Stock or (v) the issuance of any shares pursuant to the Backstop Commitment. If the actual facts are different than these assumptions, the percentage ownership retained by Quinpario’s existing stockholders in Quinpario will be different and the percentage ownership retained by Quinpario in Quinpario Sub will be different.

See “Summary—Impact of the Business Combination on Quinpario’s Public Float” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information.

 

Q: Will Quinpario obtain new financing in connection with the Business Combination?

 

A: We have obtained a commitment letter from a syndicate of lenders to provide debt financing to Jason in the aggregate amount of approximately $460.0 million to refinance Jason’s existing indebtedness, pay transaction fees and expenses and pay a portion of the Purchase Price.

 

Q: What conditions must be satisfied to complete the Business Combination?

 

A: There are a number of closing conditions in the Purchase Agreement, including that our stockholders have approved and adopted the Purchase Agreement. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, see the section entitled “Proposal No. 1—Approval of the Business Combination—The Purchase Agreement.”

 

Q: Are there any arrangements to help ensure that the Company will have sufficient funds, together with the proceeds in its trust account and from the Debt Financing, to fund the total Purchase Price?

 

A: Yes. On [], 2014, certain investors entered into commitments (subject to the negotiation of mutually agreeable definitive documentation) to purchase up to $[] million of shares of 8.0% Series A Convertible Perpetual Preferred Stock, the proceeds of which could be used to consummate the Business Combination or for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions (the “PIPE Investment”). Pursuant to the terms of the commitment letters, the PIPE Investment is to be consummated simultaneously with the closing of the Business Combination.

Additionally, we have received commitments (subject to the negotiation of mutually agreeable definitive documentation) from certain investors pursuant to which such investors collectively agreed to purchase up to $[] million of shares of Quinpario Common Stock, through (x) open market or privately negotiated transactions, at a purchase price of up to $10.255 per share, (y) a private placement or (z) a combination thereof (the “Backstop Commitment”).

 

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Quinpario and such investors will also enter into a registration rights agreement that provides for the registration of the common stock and the preferred stock (including the common stock into which the preferred stock is convertible) so purchased.

 

Q: Why is Quinpario proposing Proposal 2, Proposal 3 and Proposal 4?

 

A: The proposed certificate that we are asking our stockholders to approve in connection with the Business Combination provides an increase in the number of authorized shares of our common stock, the classification of our board of directors into three separate classes and certain additional changes which our board of directors believes are necessary to adequately address the post-Business Combination needs of the Company. In addition, to the extent that the Rollover Participants elect to exchange a significant portion of their Quinpario Sub Shares into the same number of shares of Quinpario Common Stock and the 2014 Omnibus Incentive Plan is approved, we will need to have additional authorized capital stock. Approval of Proposal 2 is a condition to consummation of the Business Combination pursuant to the Purchase Agreement.

 

Q: Why is Quinpario proposing the Director Election Proposal?

 

A: In connection with the Business Combination, our board of directors believes it is in the best interests of the Company for the board of directors to consist of seven members having three year terms, including, if all director nominees are elected, [            ]. See the sections entitled “Proposal No. 5—Election of Directors to the Board of Directors” and “Management After the Business Combination” for additional information.

 

Q: Why is Quinpario proposing the Incentive Plan Proposal?

 

A: The purpose of the 2014 Omnibus Incentive Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling us to offer eligible employees, directors and consultants cash and stock-based incentive awards in order to attract, retain and reward these individuals and strengthen the mutuality of interests between them and our stockholders.

 

Q: What happens if I sell my shares of Quinpario Common Stock before the special meeting of stockholders?

 

A: The record date for the special meeting of stockholders is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of Quinpario Common Stock after the record date, but before the special meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the special meeting. However, you will not be able to seek redemption of your shares because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. If you transfer your shares of Quinpario Common Stock prior to the record date, you will have no right to vote those shares at the special meeting or redeem those shares for a pro rata portion of the proceeds held in our trust account.

 

Q: What vote is required to approve the proposals presented at the special meeting of stockholders?

 

A: The approval of the Business Combination Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. Accordingly, a Quinpario stockholder’s failure to vote by proxy or to vote in person at the special meeting or the failure of a Quinpario stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee (a “broker non-vote”) will not be counted towards the number of shares of Quinpario Common Stock required to validly establish a quorum, but if a valid quorum is otherwise established, it will have no effect on the outcome of any vote on the Business Combination Proposal, the Incentive Plan Proposal or the Adjournment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established and will have the same effect as a vote AGAINST these proposals.

 

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The approval of Proposal 2, Proposal 3 and Proposal 4 each require the affirmative vote of the holders of a majority of the outstanding shares of our common stock. Accordingly, a Quinpario stockholder’s failure to vote by proxy or to vote in person at the special meeting, an abstention from voting or a broker non-vote with regard to any such proposal will have the same effect as a vote “AGAINST” such proposal.

Directors are elected by a plurality of all of the votes cast by holders of shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. This means that the three nominees will be elected if they receive more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes with respect to the election of directors. Abstentions and broker non-votes will have no effect on the election of directors.

 

Q: May Quinpario or the Sponsor, Quinpario’s directors, officers, advisors or their affiliates purchase shares in connection with the Business Combination?

 

A: In connection with the stockholder vote to approve the proposed Business Combination, the Sponsor, our directors, officers, or advisors or their respective affiliates may privately negotiate transactions to purchase shares from stockholders who would have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules for a per-share pro rata portion of the trust account. None of our directors, officers or advisors or their respective affiliates will make any such purchases when they are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Such a purchase would include a contractual acknowledgement that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights, and could include a contractual provision that directs such stockholder to vote such shares in a manner directed by the purchaser. In the event that the Sponsor, our directors, officers or advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per-share pro rata portion of the trust account.

 

Q: How many votes do I have at the special meeting of stockholders?

 

A: Our stockholders are entitled to one vote at the special meeting for each share of Company common stock held of record as of                     , 2014, the record date for the special meeting. As of the close of business on the record date, there were 24,608,333 outstanding shares of our common stock.

 

Q: What constitutes a quorum at the special meeting of stockholders?

 

A: Holders of a majority in voting power of the Company’s common stock issued and outstanding and entitled to vote at the special meeting, present in person or represented by proxy, constitute a quorum. In the absence of a quorum, a majority of our stockholders, present in person or represented by proxy, will have power to adjourn the special meeting. As of the record date for the special meeting, 12,304,167 shares of our common stock would be required to achieve a quorum.

 

Q: How will Quinpario’s Sponsor, directors and officers vote?

 

A:

In connection with our IPO, we entered into agreements with each of our initial stockholders, consisting of the Sponsor, our independent directors and our executive officers, pursuant to which each agreed to vote any shares of Quinpario Common Stock owned by them in favor of the Business Combination Proposal. None of our initial stockholders has purchased any shares during or after our IPO and neither we nor our Sponsor,

 

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  directors or officers have entered into agreements, and are not currently in negotiations, to purchase shares. Currently, our Sponsor, certain of its affiliates and our independent directors own approximately 29.9% of our issued and outstanding shares of common stock, including all of the founder shares.

In addition, simultaneously with the execution of the Purchase Agreement, our Sponsor and certain affiliates of our Sponsor, including Quinpario Partners LLC (collectively, the “Quinn Stockholders”), entered into a Stockholder Voting Agreement with Seller and Jason (the “Stockholder Voting Agreement”). Pursuant to the Stockholder Voting Agreement, the Quinn Stockholders have agreed, among other things, to vote the shares of Quinpario Common Stock held by the Quinn Stockholders (representing as of the date hereof approximately 28% of the voting power of the Company) in favor of the adoption of the Purchase Agreement and approval of the Business Combination and other transactions contemplated by the Purchase Agreement.

 

Q: What interests do Quinpario’s current officers and directors have in the Business Combination?

 

A: Our directors and executive officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interest. These interests include:

 

    the continued right of our Sponsor, our Chief Executive Officer and certain directors to hold our common stock following the Business Combination, subject to lock-up agreements;

 

    the continued right of our Sponsor to hold placement warrants to purchase shares of our common stock;

 

    the fact that our Sponsor and our Chief Executive Officer paid an aggregate of $11,525,000 for their founder shares, placement shares and placement warrants and such securities should have a significantly higher value at the time of the Business Combination;

 

    if Quinpario is unable to complete a business combination within the required time period, our Sponsor and Chief Executive Officer will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Quinpario for services rendered or contracted for or products sold to Quinpario, but only if such a vendor or target business has not executed such a waiver;

 

    if the proposed Business Combination has not been consummated on or prior to August 15, 2014, Quinpario must promptly reimburse Jason for half of its actual out-of-pocket third party expenses (not to exceed $500,000 in the aggregate) incurred relating to the proposed Business Combination that it would not have otherwise incurred in the normal course of operations;

 

    the continuation of certain of our directors as directors of the Company; and

 

    the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Business Combination.

These interests may influence our directors in making their recommendation that you vote in favor of the approval of the Business Combination.

 

Q: What happens if I vote against the Business Combination Proposal?

 

A: If the Business Combination Proposal is not approved and we do not otherwise consummate an alternative business combination within 16 months (or up to 24 months in case of extensions) of August 14, 2013, we will be required to dissolve and liquidate our trust account by returning the then remaining funds in such account to the public stockholders.

 

Q: Do I have redemption rights?

 

A:

If you are a holder of public shares, you may redeem your public shares for cash equal to a pro rata share of the aggregate amount on deposit in the trust account which holds the proceeds of our IPO as of two business

 

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  days prior to the consummation of the Business Combination, less franchise and income taxes payable, upon the consummation of the Business Combination. A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 20% of the outstanding public shares. Our Sponsor and initial stockholders have agreed to waive their redemption rights with respect to the any shares of our capital stock they may hold in connection with the consummation of the Business Combination, and the founder shares will be excluded from the pro rata calculation used to determine the per-share redemption price. For illustrative purposes, based on funds in the trust account of approximately $177.1 million on December 31, 2013, the estimated per share redemption price would have been approximately $10.26. Additionally, shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise holders of such shares will only be entitled to a pro rata portion of the trust account (including interest but net of franchise and income taxes payable and dissolution expenses) in connection with the liquidation of the trust account.

 

Q: Will how I vote affect my ability to exercise redemption rights?

 

A: No. You may exercise your redemption rights whether you vote your shares of Quinpario Common Stock for or against the Business Combination Proposal or any other proposal described by this proxy statement. As a result, the Purchase Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a less liquid trading market, fewer stockholders, less cash and the potential inability to meet the listing standards of NASDAQ.

 

Q: How do I exercise my redemption rights?

 

A: In order to exercise your redemption rights, you must, prior to                 , Eastern time on                 , 2014 (two business days before the special meeting), (i) submit a written request to our transfer agent that we redeem your public shares for cash, and (ii) deliver your stock to our transfer agent physically or electronically through Depository Trust Company, or DTC. The address of Continental Stock Transfer & Trust Company, our transfer agent, is listed under the question “Who can help answer my questions?”

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the vote is taken with respect to the Business Combination. If you delivered your shares for redemption to our transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that our transfer agent return the shares (physically or electronically). You may make such request by contacting our transfer agent at the phone number or address listed under the question “Who can help answer my questions?” below.

 

Q: What are the federal income tax consequences of exercising my redemption rights?

 

A: Quinpario stockholders who exercise their redemption rights to receive cash from the trust account in exchange for their shares of Quinpario Common Stock generally will be required to treat the transaction as a sale of such shares and recognize gain or loss upon the redemption in an amount equal to the difference, if any, between the amount of cash received and the tax basis of the shares of Quinpario Common Stock redeemed. Such gain or loss should be treated as capital gain or loss if such shares were held as a capital asset on the date of the redemption. The redemption, however, may be treated as a distribution if it does not effect a meaningful reduction in the redeeming stockholder’s percentage ownership in Quinpario. Any such distribution will be treated as dividend income to the extent of our current or accumulated earnings and profits. Any distribution in excess of our earnings and profits will reduce the redeeming stockholder’s basis in the Quinpario Common Stock, and any remaining excess will be treated as gain realized on the sale or other disposition of the Quinpario Common Stock. See the section entitled “Material U.S. Federal Income Tax Considerations for Stockholders Exercising Redemption Rights.”

 

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Q: If I am a Quinpario warrantholder, can I exercise redemption rights with respect to my warrants?

 

A: No. The holders of our warrants have no redemption rights with respect to our warrants. However, holders of our public warrants may participate in the Warrant Tender Offer (discussed below) to be commenced by Quinpario, pursuant to which Quinpario expects to offer to purchase up to 9,200,000 of its public warrants, subject to certain conditions at $0.75 per public warrant in connection with the Business Combination. The Warrant Tender Offer will be withdrawn if it is reasonably likely to impair or delay the consummation of the Business Combination or the receipt of any portion of our proposed debt financing, and will be consummated, if at all, upon the consummation of the Business Combination.

 

Q: What is the Warrant Tender Offer?

 

A: Quinpario expects to offer to purchase up to 9,200,000 of its public warrants, subject to certain conditions, at a purchase price of $0.75 per public warrant in a proposed tender offer that would commence sometime after the filing of this preliminary proxy statement and will expire prior to the consummation of the Business Combination (the “Warrant Tender Offer”). The purpose of the Warrant Tender Offer is to provide holders of public warrants that may not wish to retain their public warrants following the Business Combination the possibility of receiving cash for their public warrants. The Warrant Tender Offer will be consummated, if at all, upon the consummation of the Business Combination. The Warrant Tender Offer will not be consummated if it is reasonably likely to impair or delay the closing of the Business Combination or the receipt of any portion of our proposed debt financing.

 

Q: Do I have appraisal rights if I object to the proposed Business Combination?

 

A: No. There are no appraisal rights available to holders of Quinpario Common Stock in connection with the Business Combination.

 

Q: What happens to the funds held in the trust account upon consummation of the Business Combination?

 

A: If the Business Combination is consummated, the funds held in the trust account will be released to pay (i) a portion of the Purchase Price pursuant to the Purchase Agreement, (ii) Quinpario stockholders who properly exercise their redemption rights, (iii) up to $5.175 million in deferred underwriting compensation to the underwriters of our IPO and other designated persons and certain additional fees for advisory services, (iv) all fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees, and other professional fees) that were incurred by the Company, Quinpario Sub, Seller or Jason in connection with the transactions contemplated by the Business Combination and (v) unpaid franchise and income taxes of the Company.

 

Q: What happens if the Business Combination is not consummated?

 

A: There are certain circumstances under which the Purchase Agreement may be terminated. See the section entitled “Proposal No. 1—Approval of the Business Combination—The Purchase Agreement” for information regarding the parties’ specific termination rights.

If, as a result of the termination of the Purchase Agreement or otherwise, we are unable to complete the Business Combination or another business combination transaction within 16 months (or up to 24 months in case of extensions) of August 14, 2013, our amended and restated certificate of incorporation provides that we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible, subject to lawfully available funds therefor, redeem 100% of the public shares in consideration of a per-share price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable and dissolution expenses, by (B) the total number of then outstanding public shares, which redemption will completely extinguish rights of the public stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemptions,

 

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subject to the approval of the remaining stockholders and the board of directors in accordance with applicable law, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to Quinpario’s obligations under the DGCL to provide for claims of creditors and other requirements of applicable law.

We expect that the amount of any distribution our public stockholders will be entitled to receive upon our dissolution will be approximately the same as the amount they would have received if they had redeemed their shares in connection with the Business Combination, subject in each case to Quinpario’s obligations under the DGCL to provide for claims of creditors and other requirements of applicable law. Holders of our founder shares have waived any right to any liquidation distribution with respect to those shares.

In the event of liquidation, there will be no distribution with respect to Quinpario’s outstanding warrants. Accordingly, the warrants will expire worthless.

 

Q: When is the Business Combination expected to be completed?

 

A: It is currently anticipated that the Business Combination will be consummated promptly following the special meeting, provided that all other conditions to the consummation of the Business Combination have been satisfied or waived. In any event, we expect the closing of the Business Combination to occur, on or prior to August 15, 2014.

For a description of the conditions to the completion of the Business Combination, see the section entitled “Proposal No. 1—Approval of the Business Combination.”

 

Q: What do I need to do now?

 

A: You are urged to read carefully and consider the information contained in this proxy statement, including the annexes, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

 

Q: How do I vote?

 

A: If you were a holder of record of our common stock on                 , 2014, the record date for the special meeting, you may vote with respect to the proposals in person at the special meeting, or by (1) calling the toll-free number specified on the enclosed proxy card and following the instructions when prompted, (2) accessing the Internet website specified on the enclosed proxy card and following the instructions provided to you, or (3) completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a proxy from your broker, bank or nominee.

 

Q: What will happen if I abstain from voting or fail to vote at the special meeting?

 

A: At the special meeting, we will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, an abstention or failure to vote will have no effect on the Director Election Proposal. A failure to vote or an abstention will have the same effect as a vote “AGAINST” Proposal 2, Proposal 3 and Proposal 4, while only an abstention (and not a failure to vote) will have the same effect as a vote “AGAINST” the Business Combination Proposal, the Incentive Plan Proposal and the Adjournment Proposal.

 

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Q: What will happen if I sign and return my proxy card without indicating how I wish to vote?

 

A: Signed and dated proxies received by us without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented to the stockholders.

 

Q: If I am not going to attend the special meeting of stockholders in person, should I return my proxy card instead?

 

A: Yes. Whether you plan to attend the special meeting or not, please read the enclosed proxy statement carefully, and vote your shares by one of the following methods: (1) call the toll-free number specified on the enclosed proxy card and follow the instructions when prompted, (2) access the Internet website specified on the enclosed proxy card and follow the instructions provided to you, or (3) complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided.

 

Q: If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A: No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe the proposals presented to the stockholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your bank, broker, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will be not counted for the purpose of determining the existence of a quorum or for purposes of determining the number of votes cast at the special meeting. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

 

Q: May I change my vote after I have mailed my signed proxy card?

 

A: Yes. You may change your vote by sending a later-dated, signed proxy card to our secretary at the address listed below so that it is received by our secretary prior to the special meeting or attend the special meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to our secretary, which must be received by our secretary prior to the special meeting.

 

Q: What should I do if I receive more than one set of voting materials?

 

A: You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

 

Q: Who will solicit and pay the cost of soliciting proxies?

 

A: Quinpario will pay the cost of soliciting proxies for the special meeting. Quinpario will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Quinpario’s common stock for their expenses in forwarding soliciting materials to beneficial owners of the Quinpario’s common stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

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Q: Who can help answer my questions?

 

A: If you have questions about the proposals or if you need additional copies of the proxy statement or the enclosed proxy card you should contact:

Paul J. Berra III, Vice President, General Counsel & Secretary

Quinpario Acquisition Corp.

12935 N. Forty Drive, Suite 201,

St. Louis, Missouri 63141

Tel: (314) 548-6200

Email: pjberra@quinpario.com

To obtain timely delivery, our stockholders must request the materials no later than five business days prior to the special meeting.

You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

If you intend to seek redemption of your public shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to our transfer agent prior to the special meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Tel: (212) 845-3287

Attn: Mark Zimkind

E-mail: mzimkind@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT

This summary highlights selected information from this proxy statement and does not contain all of the information that is important to you. To better understand the Business Combination and the proposals to be considered at the special meeting, you should read this entire proxy statement carefully, including the annexes. See also the section entitled “Where You Can Find More Information.”

Unless otherwise specified, all share calculations (i) assume no exercise of redemption rights by Quinpario’s public stockholders and (ii) do not include any shares of Quinpario Common Stock issuable upon exercise of Quinpario’s warrants or (iii) shares of Quinpario Common Stock that will be issuable upon exercise of the option, under the Rollover Agreement, of each Rollover Participant to exchange, after the consummation of the Business Combination, all or a portion of such Rollover Participant’s Quinpario Sub Shares into the same number of shares of Quinpario Common Stock.

Parties to the Business Combination

Quinpario Acquisition Corp.

Quinpario is a Delaware special purpose acquisition company formed in May 2013 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving Quinpario and one or more businesses.

Quinpario’s securities are traded on NASDAQ under the ticker symbols “QPAC,” “QPACU” and “QPACW.” We have applied to continue the listing of our common stock on The NASDAQ Stock Market under the symbol “[            ]” and our warrants on the OTC market under the symbol “[            ]W” upon the closing of the Business Combination.

The mailing address of Quinpario’s principal executive office is 12935 N. Forty Drive, Suite 201, St. Louis, Missouri 63141.

JPHI Holdings Inc.

Quinpario Sub, a Delaware corporation, is a wholly-owned subsidiary formed by us on March 11, 2014 to consummate the Business Combination. In the Business Combination, Quinpario Sub will acquire all the outstanding common stock of Jason. Shares of common stock of Jason will be exchanged for cash, in the case of Seller, and shares of Quinpario Sub Shares, in the case of the Rollover Participants.

The mailing address of Quinpario Sub’s principal executive office is 12935 N. Forty Drive, Suite 201, St. Louis, Missouri 63141.

Jason Partners Holdings Inc.

Jason is a global industrial manufacturing company operating through four businesses: finishing, seating, acoustics and components. Jason was founded in 1985 and today provides critical components and manufacturing solutions to customers across a wide range of end markets, industries and geographies through its global network of 33 manufacturing facilities and 16 sales offices, warehouses and joint venture facilities throughout the United States and 14 foreign countries. Jason is led by an experienced corporate and business management team and has embedded relationships with long standing customers, superior scale and resources and industry leading capability to design and manufacture specialized products on which its customers rely.

 

 

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The mailing address of Jason’s principal executive office is 411 East Wisconsin Avenue, Suite 2100, Milwaukee, Wisconsin 53202.

Jason Partners Holdings LLC

Seller, a Delaware limited liability company, was formed on behalf of the Rollover Funds and the other members of Seller on July 26, 2010, as a holding company, for the purpose of holding shares of capital stock of Jason and matters ancillary and otherwise related thereto. With the expection of the foregoing, Seller has not conducted any other business or operations.

The mailing address of Seller’s principal executive office is 555 Pleasantville Road, South Building, Suite 220, Briarcliff Manor, NY 10510.

Consideration to Jason Stockholders in the Business Combination

Pursuant to the Purchase Agreement, upon the effectiveness of the Business Combination, shares of common stock of Jason will be exchanged for cash, in the case of Seller, and validly issued shares of Quinpario Sub’s common stock, in the case of the Rollover Participants. Pursuant to the Purchase Agreement, the purchase price for the Business Combination is $538.65 million. The Purchase Price is subject to working capital and other customary adjustments to be determined at the closing of the Business Combination in accordance with the terms of the Purchase Agreement. Assuming the Business Combination was consummated on December 31, 2013, the consideration that would have been paid to Seller and certain members of Seller for their shares of Jason common stock would have been $282.2 million, consisting of $246.9 million in cash (the “Cash Consideration”) and $35.3 million in Quinpario Sub Shares. Such consideration reflects a reduction of $9.1 million representing the working capital adjustment based on a target working capital level of $80.0 million and a $17.5 million reduction for estimated transaction expenses paid on behalf of Seller by Jason. We intend to pay the Cash Consideration using proceeds of at least $115.0 million held in our trust account and the balance of the Cash Consideration (approximately $131.9 million) will be paid through a redemption by Jason of the remaining shares of its common stock held by Seller using the proceeds of our debt financing. An additional $256.5 million of such debt financing proceeds will be used by Jason to pay certain of its existing indebtedness and other transaction expenses, as well as for general working capital purposes after closing.

Opinion of Stifel to Quinpario’s Board of Directors

In connection with the Business Combination, the Company’s financial advisor, Stifel, Nicolaus & Company, Incorporated (“Stifel”), delivered a written opinion, dated March 14, 2014, to the board of directors that, as of March 14, 2014, and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in such opinion, (i) the purchase price to be paid by Quinpario in the Business Combination pursuant to the Purchase Agreement was fair to Quinpario, from a financial point of view, and (ii) the fair market value of Jason (measured by the enterprise values implied by the various financial analyses Stifel conducted in connection with its opinion) equaled or exceeded 80% of the amount held by the Company in trust for the benefit of its public stockholders (excluding any deferred underwriter fees and taxes payable on the income earned on the trust account).

The full text of the written opinion, which describes the assumptions made, procedures followed, matters considered, limitations on the review undertaken and qualifications contained in such opinion, is attached to this proxy statement as Annex B and is incorporated herein by reference. You should read the opinion carefully in its entirety. Stifel’s opinion does not constitute a recommendation to any holder of shares of Quinpario Common Stock as to how such holder should vote or act with respect to the Purchase Agreement or the Business Combination Proposal, whether such holder should exercise its redemption rights with respect to its shares of Quinpario Common Stock or any other matter.

 

 

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Redemption Rights

Pursuant to our current certificate, holders of public shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with our current certificate. As of December 31, 2013, this would have amounted to approximately $10.26 per share. If a holder exercises its redemption rights, then such holder will be exchanging its shares of Quinpario Common Stock for cash and will no longer own shares of Quinpario Common Stock and will not participate in the future growth of the Company, if any. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to our transfer agent in accordance with the procedures described herein. See the section entitled “Special Meeting in Lieu of 2014 Annual Meeting of Quinpario Stockholders — Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.

Impact of the Business Combination on Quinpario’s Public Float

It is anticipated that, upon completion of the Business Combination, Quinpario’s public stockholders will retain an ownership interest of approximately 70.3% in Quinpario and our initial stockholders, including our Sponsor, will retain an ownership interest of approximately 29.7% in Quinpario. In turn, Quinpario will retain an ownership interest of approximately 87.7% in Quinpario Sub, and, through the rollover, the Rollover Participants will own approximately 12.3% of the outstanding common stock of Quinpario Sub. If Quinpario’s stockholders exercise their redemption rights, the ownership interest in Quinpario of Quinpario’s public stockholders will decrease and the ownership interest in Quinpario of our initial stockholders, including our Sponsor, will increase, although Quinpario’s and the Rollover Participants’ respective ownership interests in Quinpario Sub will change, at the option of the Rollover Participants, only in the event that redemptions by Quinpario stockholders cause us to maintain less than $115.0 million in our trust account. Upon completion of the Business Combination, Quinpario Sub will own 100% of the outstanding capital stock of Jason. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Quinpario’s existing stockholders in Quinpario will be different and the percentage ownership retained by Quinpario in Quinpario Sub will be different.

The following table illustrates varying ownership levels in Quinpario assuming varying levels of redemptions by Quinpario’s public stockholders:

 

     Assumed % of Quinpario Public Shares Redeemed
(or Proceeds Remaining in Trust Account)
 
     0%
(or $177,075,000 in trust)
    35%
(or $115,000,000 in trust)
 

Quinpario public stockholders

     70.3     60.6

Quinpario founders*

     29.7     39.4

 

* Includes 200,000 founder shares and 269,000 founder shares transferred from our Sponsor to certain employees of Quinpario Partners LLC, an affiliate of our Sponsor, and to our independent directors, respectively.

The above ownership percentages with respect to Quinpario following the Business Combination do not take into account (i) the option of each Rollover Participant to exchange, after the consummation of the Business Combination, all or a portion of such Rollover Participant’s Quinpario Sub Shares into the same number of shares of Quinpario Common Stock pursuant to the Rollover Agreement, (ii) warrants to purchase Quinpario’s Common Stock that may remain outstanding following the Business Combination and the Warrant Tender Offer, (iii) the issuance of any shares under the Company’s proposed 2014 Omnibus Incentive Plan, (iv) the issuance of any shares of Quinpario preferred stock convertible into shares of Quinpario Common Stock or (v) the issuance

 

 

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of any shares pursuant to the Backstop Commitment. See “Summary— Impact of the Business Combination on Quinpario’s Public Float” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information.

The following table illustrates varying ownership levels in Quinpario assuming (i) the post-combination exercise by all Rollover Participants of their options to exchange their Quinpario Sub Shares into shares of Quinpario Common Stock pursuant to the Rollover Agreement and (ii) varying levels of redemptions by Quinpario’s public stockholders:

 

     Assumed % of Quinpario Public Shares Redeemed  
     0%
(or $177,075,000 in trust)
    35%
(or $115,000,000 in trust)
 

Quinpario public stockholders

     61.7     51.1

Quinpario founders

     26.0     33.2

Rollover Funds*

     8.7     11.1

Rollover Participants (other than the Rollover Funds) *

     3.6     4.6

 

* Assumes no syndication by the Rollover Funds of their investment in Quinpario Sub to other Rollover Participants (other than the Rollover Funds) or other members of Seller pursuant to certain side letters between the Rollover Funds and Quinpario Sub.

Unless waived by the Company or unless the Rollover Funds elect to contribute additional Jason equity in connection with the rollover, it is a condition to closing under the Purchase Agreement that at least $115.0 million remain in our trust account at closing. We anticipate having additional proceeds from the sale of up to $[] of shares of convertible preferred stock, which could be used to consummate the Business Combination or for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. Additionally, the Company has entered into the Backstop Commitment pursuant to which certain investors collectively agreed (subject to the negotiation of mutually agreeable definitive documentation) to purchase up to $[] million of shares of Quinpario Common Stock through (x) open market or privately negotiated transactions at a purchase price of up to $10.255 per share, (y) a private placement or (z) a combination thereof. To the extent the Backstop Commitment is utilized, the convertible preferred stock is issued and converted or the Rollover Funds elect to contribute additional Jason equity in connection with the rollover, the ownership percentages of Quinpario’s public stockholders reflected above will decrease.

Debt Financing

We have obtained a commitment letter from a syndicate of lenders led by Deutsche Bank AG New York Branch to provide debt financing to Jason in the aggregate amount of approximately $460.0 million to refinance Jason’s existing indebtedness, pay transaction fees and expenses and pay a portion of the Purchase Price.

Board of Directors of Quinpario Following the Business Combination

The Purchase Agreement provides that in connection with the Business Combination, the board of directors of the Company will be expanded to seven members having three-year terms, subject to the approval of Proposal 3. The board will consist of [            ]. See the sections entitled “Proposal No. 5—Election of Directors to the Board” and “Management After The Business Combination” for additional information.

 

 

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Approval and Adoption of Proposals Related to the Proposed Second Amended and Restated Certificate of Incorporation

Upon the closing of the Business Combination, our current certificate will be amended promptly to reflect the following proposals, subject to approval by our stockholders at the special meeting:

Proposal 2— To consider and act upon a proposed amendment to the Company’s amended and restated certificate of incorporation to increase the Company’s authorized common stock.

Proposal 3— To consider and act upon a proposed amendment to the Company’s amended and restated certificate of incorporation to provide for the classification of our board of directors into three classes of directors with staggered terms of office and to make certain related changes.

Proposal 4— To consider and act upon a proposed amendment to the Company’s amended and restated certificate of incorporation to provide for certain additional changes, including changing the Company’s corporate name from “Quinpario Acquisition Corp. to “Jason Industries, Inc.”, which our board of directors believes are necessary to adequately address the post-Business Combination needs of the Company.

See the sections entitled “Proposal No. 2—Authorization to Increase the Company’s Authorized Capital,” “Proposal No. 3—Classification of the Board” and “Proposal No. 4—Approval of Additional Amendments to Current Certificate in Connection with the Business Combination” for more information.

Accounting Treatment

The Business Combination will be accounted for using the acquisition method of accounting under the provisions of Accounting Standards Codification 805, “Business Combinations.” Quinpario Sub will be considered the accounting acquirer and Jason will be considered the accounting acquiree.

Appraisal Rights

Appraisal rights are not available to our stockholders in connection with the Business Combination.

Reasons for the Business Combination

We were organized for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. We have sought to capitalize on the global network and investing and operating experience of our management team and board of directors to identify, acquire and operate one or more businesses within or outside of the United States.

In particular, our board considered the following positive factors, although not weighted or in any order of significance:

 

    Opportunities for Platform Growth. Jason’s four divisions, finishing, acoustics, seating and components, serve a large diversified set of end markets globally. Based on Jason’s internal research and analysis, this global market is estimated to be approximately $20.0 billion. Jason’s innovations and product pipeline provide opportunity for significant organic and inorganic growth opportunities.

 

    Established Company with Proven Track Record. Jason was founded in 1985 and today provides critical components and manufacturing solutions to customers across a wide range of end markets, industries and geographies through its global network of 33 manufacturing facilities and 16 sales offices, warehouses and joint venture facilities throughout the United States and 14 foreign countries. Jason is led by an experienced corporate and business management team and has embedded relationships with long standing customers, superior scale and resources and industry leading capability to design and manufacture specialized products on which its customers rely. Jason employs approximately 4,000 employees.

 

 

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    Company with Strong Free Cash Flow Generation. As a result of organic growth initiatives, ongoing operational improvements and disciplined working capital management, Jason has historically generated strong and consistent cash from operating activities. Jason has a long standing, stable customer base that provides it with meaningful revenue and cost visibility which, when combined with its scalable and stable cost structure, helps Jason to maximize cash flow and efficiency through economic cycles.

 

    Strong Competitive Position. Jason’s businesses have developed and sustained leading positions across various niche markets. In many of Jason’s product lines, it is more than twice the size of the next largest direct competitor. Jason’s market share positions have created a stable platform with strong profitability upon which to grow. Jason’s products’ significant brand recognition in multiple markets helps to sustain its market share positions. Across its industries, Jason is regularly viewed as the brand of choice for service, quality, dependability, value and continuous innovation. In several niche markets, Jason is the only provider of certain products or manufacturing capabilities. Jason has served many of its customers for over 25 years.

 

    Experienced and Motivated Management Team. Central to Jason’s platform is its management team, which positions it to (i) outperform the competition, (ii) execute numerous strategic and performance improvement initiatives, (iii) substantially grow revenue through the execution of a global organic growth plan, and (iv) identify, execute and integrate value-enhancing acquisitions. Jason’s Chief Executive Officer, David Westgate, and current management team have a tenured history in diversified industrial manufacturing and have overseen several milestone initiatives, including the execution of several acquisitions. Jason’s management has brought discipline and entrepreneurship to the company, which allows for strong, focused teamwork and innovation. To effectively utilize the collective strengths of its platform, Jason created an Executive Committee consisting of Mr. Westgate, Stephen Cripe, Jason’s Chief Financial Officer and each of Jason’s business presidents to provide a forum for corporate leadership to identify opportunities to leverage Jason’s scale and develop corporate strategy.

 

    Business with Revenue and Earnings Growth. For the year ended December 31, 2013, Jason generated net sales of $680.8 million, income from operations of $53.7 million and adjusted EBITDA of $79.8 million (see reconciliation within the section entitled “Jason Management’s Discussion and Analysis of Financial Condition and Results of Operations”). Jason’s adjusted EBITDA margins have improved from 9.7% in 2011 to 11.7% in 2013 as a result of volume recovery across its businesses following the recession, operational restructuring initiatives and the relocation of manufacturing facilities to strategically located, lower cost regions. We anticipate that as Jason’s product mix continues to shift towards innovative higher-value engineered products, its pricing and profitability will continue to improve. Jason’s scalable operating platform will allow it to grow revenue in each of its markets with limited fixed operating costs and capital investment. We believe that as Jason’s volumes continue to increase from new markets, new customers and the continuing economic recovery, the operating leverage it has created through its platform will continue to have a positive impact on its profitability. Among other initiatives, Jason is focused on redesigning products to reduce materials costs, optimizing their operating footprint and reducing their overall cost to serve.

 

    Quinpario’s Experience. The board of directors deems the Quinpario team’s skill set to be complimentary and additive to the already capable Jason management team. Quinpario’s team has significant experience managing public companies. In addition, Quinpario’s expertise in the area of strategy development and optimizing business processes across diverse businesses will further emphasize focus and execution. Quinpario will share best practices to extract operational efficiency and to refine the company’s commercial approach for faster growth and margin improvement. Moreover, the Quinpario team’s demonstrated merger and acquisition experience will further supplement Jason’s growth plans, especially in the area of synergistic bolt-on acquisition.

 

 

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Quorum and Required Vote for Proposals for the Special Meeting of Stockholders

A quorum of Quinpario stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting of stockholders if a majority of the common stock outstanding and entitled to vote at the special meeting is represented in person or by proxy. Abstentions will count as present for the purposes of establishing a quorum. Broker non-votes will not be counted for purposes of establishing a quorum.

The approval of the Business Combination Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. Accordingly, a Quinpario stockholder’s failure to vote by proxy or to vote in person at the special meeting or the failure of a Quinpario stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee (a “broker non-vote”) will, assuming a valid quorum is established, have no effect on the outcome of any vote on the Business Combination Proposal, the Incentive Plan Proposal or the Adjournment Proposal. Abstentions will have the same effect as a vote “AGAINST” the Business Combination Proposal, the Incentive Plan Proposal and the Adjournment Proposal.

The approval of Proposal 2, Proposal 3 and Proposal 4 requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock. Accordingly, a Quinpario stockholder’s failure to vote by proxy or to vote in person at the special meeting, an abstention from voting or a broker non-vote will have the same effect as a vote “AGAINST” Proposal 2, Proposal 3 and Proposal 4.

Directors are elected by a plurality of all of the votes cast by holders of shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. This means that the three nominees will be elected if they receive more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes with respect to the election of directors. Assuming a valid quorum is established, abstentions and broker non-votes will have no effect on the election of directors.

The Business Combination Proposal is conditioned on the approval of Proposal 2, but not on any other proposal. In addition, (i) the Director Election Proposal is conditioned on the approval of Proposal 2 and the Business Combination Proposal (ii) the Incentive Plan Proposal is conditioned on the approval of Proposal 2 and the Business Combinational Proposal and (iii) Proposal 2, Proposal 3 and Proposal 4 are conditioned on the approval of the Business Combination Proposal. Each of Proposal 3 and Proposal 4 is also conditioned on Proposal 2. The Adjournment Proposal does not require the approval of any other proposal to be effective. It is important for you to note that in the event either the Business Combination Proposal or Proposal 2 does not receive the requisite vote for approval, then we will not consummate the Business Combination. If we do not consummate the Business Combination and fail to complete an initial business combination within 16 months (or up to 24 months in case of extensions) of August 14, 2013, we will be required to dissolve and liquidate our trust account by returning the then remaining funds in such account to the public stockholders.

 

 

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Recommendation to Quinpario Stockholders

Our board of directors believes that each of the Business Combination Proposal, Proposal 2, Proposal 3, Proposal 4, the Director Election Proposal, the Incentive Plan Proposal and the Adjournment Proposal to be presented at the special meeting is in the best interests of the Company and our stockholders and unanimously recommends that our stockholders vote “FOR” each of the proposals.

When you consider the recommendation of our board of directors in favor of approval of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests as a stockholder. These interests include, among other things:

 

    the continued right of our Sponsor, our Chief Executive Officer and certain directors to hold our common stock following the Business Combination, subject to lock-up agreements;

 

    the continued right of our Sponsor to hold placement warrants to purchase shares of our common stock;

 

    the fact that our Sponsor and our Chief Executive Officer paid an aggregate of $11,525,000 for their founder shares, placement shares and placement warrants and such securities should have a significantly higher value at the time of the Business Combination;

 

    if Quinpario is unable to complete a business combination within the required time period, our Sponsor and Chief Executive Officer will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Quinpario for services rendered or contracted for or products sold to Quinpario, but only if such a vendor or target business has not executed such a waiver;

 

    if the proposed Business Combination has not been consummated on or prior to August 15, 2014, Quinpario must promptly reimburse Jason for half of its actual out-of-pocket third party expenses (not to exceed $500,000 in the aggregate) incurred relating to the proposed Business Combination that it would not have otherwise incurred in the normal course of operations;

 

    the continuation of certain of our directors as directors of the combined company; and

 

    the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Business Combination.

RISK FACTORS

In evaluating the proposals set forth in this proxy statement, you should carefully read this proxy statement, including the annexes, and especially consider the factors discussed in the section entitled “Risk Factors.”

 

 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF QUINPARIO

The following table sets forth selected historical financial information derived from Quinpario’s audited financial statements included elsewhere in this proxy statement as of December 31, 2013 and for the period May 31, 2013 (inception) to December 31, 2013. You should read the following selected financial information in conjunction with the section entitled “Quinpario Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Quinpario’s financial statements and the related notes appearing elsewhere in this proxy statement.

 

     May 31, 2013 (inception) to
December 31, 2013
 

Statement of Operations Data:

  

General and administrative expenses

   $ 535,627   

Loss from operations

     (535,627

Other income:

  

Interest income

     22,040   
  

 

 

 

Net loss attributable to common stock not subject to possible redemption

   $ (513,587
  

 

 

 

Net loss per share, excluding shares subject to possible redemption, basic and diluted

   $ (0.07

Weighted average number of shares outstanding, excluding shares subject to possible redemption, basic and diluted

     7,526,526   

Balance Sheet Data:

  

Cash

   $ 741,632   

Prepaid insurance

     113,967   

Investments held in trust account

     177,097,040   
  

 

 

 

Total assets

     177,952,639   

Common stock subject to possible redemption; 16,344,282 shares (at redemption value) at December 31, 2013

     167,692,330   

Total stockholders’ equity, net

     5,000,001   

Cash Flow Data:

  

Net cash used in operating activities

   $ (542,256

Net cash used in investing activities

     (177,097,040

Net cash provided by financing activities

     178,380,928   

 

 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF JASON

We are providing the following selected financial information of Jason to assist you in your analysis of the financial aspects of the Business Combination. The consolidated statement of operations data for the years ended December 31, 2013, 2012 and 2011 and the balance sheet data as of December 31, 2013 and 2012 have been derived from Jason’s audited consolidated financial statements included elsewhere in this proxy statement. The consolidated statements of operations data for the period September 22, 2010 to December 31, 2010, the period December 26, 2009 to September 21, 2010, and for the year ended December 25, 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 and as of December 25, 2009 has been derived from Jason’s historical consolidated financial statements not included in this proxy statement.

Effective September 21, 2010, Jason effectuated a balance sheet recapitalization of Jason (the “2010 Recapitalization”). Jason reflected the 2010 Recapitalization as a business combination reflecting a new accounting and reporting basis as of September 22, 2010. Accordingly, the consolidated statements of operations data, consolidated statements of comprehensive income data and consolidated balance sheet data for the period December 26, 2009 to September 21, 2010 and for the year ended December 25, 2009 (“Predecessor” periods) are not comparable to the same information presented for periods after September 21, 2010 (“Successor” periods) due to the significant change in the reporting basis. The 2010 Recapitalization was necessitated by the fact that the obligations outstanding under Jason’s then existing debt agreements matured (or were maturing) in April 2010 and November 2010 and the lenders associated with those debt agreements required a substantial equity infusion as a condition precedent to entering into new agreements with Jason with the proceeds from the equity infusion used to reduce debt outstanding under the debt agreements. As a result of the 2010 Recapitalization, Jason’s financial results are not comparable across the periods presented herein primarily due to the change in depreciation and amortization expense that results from the new accounting basis of its property plant and equipment and intangible assets. The changes in these expenses affect the comparability of cost of sales, gross profit and selling and administrative expense between Predecessor and Successor periods.

As a result of the 2010 Recapitalization, Jason expensed $12.4 million in the predecessor period related to advisor services, legal advice, and other professional fees to effectuate the 2010 Recapitalization. In addition, Jason recognized cancellation of debt income related to the restructuring of its debt obligations of $77.4 million. Both items have been included as separate line items in the consolidated statements of operations for the period from December 26, 2009 to September 21, 2010.

Prior to the 2010 Recapitalization, Jason operated on a 52 or 53 week fiscal year ending on the Friday closest to December 31. Following the 2010 Recapitalization, Jason operates on a calendar year basis. Fiscal year 2009 ended on the Friday closest to the end of the year which was December 25, 2009. The period from December 26, 2009 to September 21, 2010 therefore began on the last Saturday of 2009, whereas the period from September 22, 2010 to December 31, 2010 ends on Jason’s new fiscal year end date being the last day of the calendar year.

 

 

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The historical results presented below are not necessarily indicative of the results to be expected for any future period. This information should be read in conjunction with “Risk Factors,” “Jason Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Jason’s consolidated financial statements and the related notes included elsewhere in this proxy statement.

 

    Predecessor     Successor  
    Year Ended
December 25,
    Period from
December 26,
2009 to
September 21,
    Period from
September 22,
2010 to
December 31,
    Year Ended December 31,  
    2009     2010     2010     2011     2012     2013  
    (in thousands, except per share data)  

Consolidated Statement of Operations Data:

             

Net sales

  $ 437,630      $ 416,548      $ 141,672      $ 600,557      $ 655,020      $ 680,845   

Cost of goods sold

    367,351        331,253        114,465        469,943        515,154        527,371   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    70,279        85,295        27,207        130,614        139,866        153,474   

Selling and administrative expenses

    74,728        61,340        24,438        96,302        99,139        109,962   

Newcomerstown fire costs, net of recoveries

    —          —          —          2,947        4,736        (12,483

Impairment of long-lived assets

    9,457        —          —          1,288        544        —     

Loss (gain) on disposals of fixed assets—net

    518        (343     68        62        472        22   

Restructuring

    9,348        1,938        —          710        1,631        2,950   

Advisory, legal and professional fees

    3,104        12,436        547        —          —          —     

Multiemployer pension plan withdrawal expense

    —          —          —          —          3,395        (696
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    (26,876     9,924        2,154        29,305        29,949        53,719   

Interest expense—long-term debt

    (27,482     (23,489     (4,228     (17,011     (18,612     (20,716

Cancellation of debt income

    —          77,358        —          —          —          —     

Interest income—common stock purchase warrants

    7,961        —          —          —          —          —     

Equity income

    468        773        410        865        1,510        2,345   

Gain from involuntary conversion of equipment

      —          —          —          6,103        6,351   

Other income (expense)—net

    204        81        (29     266        543        636   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

    (45,725     64,647        (1,693     13,425        19,493        42,335   

Tax provision (benefit)

    5,995        2,845        (1,021     4,117        4,828        18,247   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ (51,720   $ 61,802      $ (672   $ 9,308      $ 14,665      $ 24,088   

Accretion of preferred stock and redemption premium

    —          —          9,597        3,733        6,312        2,405   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) available to common shareholders

  $ (51,720   $ 61,802      $ (10,269   $ 5,575      $ 8,353      $ 21,683   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share:

             

Basic and diluted

  $ (2.93   $ 3.50      $ (10,269.00   $ 5,575.00      $ 8,353.00        21,863.00   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding:

             

Basic and diluted

    17,656,923        17,656,923        1,000        1,000        1,000        1,000   

Cash dividends paid per common share

  $ —        $ —        $ —        $ —        $ —        $ 43,055   

 

 

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     Predecessor     Successor  
     As of December 25,     As of December 31,  
     2009     2010      2011      2012      2013  
     (in thousands)  

Consolidated Balance Sheet Data:

  

Cash and cash equivalents

   $ 27,145      $ 23,704       $ 14,734       $ 29,557       $ 16,318   

Total assets

   $ 307,377      $ 376,770       $ 411,091       $ 431,354       $ 423,017   

Total liabilities

   $ 431,284      $ 303,896       $ 331,557       $ 336,428       $ 392,545   

Redeemable preferred stock

   $ —        $ 35,965       $ 39,698       $ 46,010       $ —     

Total stockholders’ equity (deficit)

   $ (123,907   $ 36,909       $ 39,836       $ 48,916       $ 30,472   

 

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The selected unaudited pro forma condensed combined financial information has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information included elsewhere in this proxy statement.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 gives pro forma effect to the Business Combination and the related proposed financing transactions as if they had occurred on January 1, 2013. The unaudited pro forma condensed combined balance sheet as of December 31, 2013 assumes that the Business Combination and the related proposed financing transactions were completed on December 31, 2013.

The unaudited pro forma condensed combined balance sheet as of December 31, 2013 was derived from Jason’s audited consolidated balance sheet and Quinpario’ audited consolidated balance sheet, in each case, as of December 31, 2013. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 was derived from Jason’s audited consolidated statement of operations for the year ended December 31, 2013 and Quinpario’s audited consolidated statement of income for the period May 31 (inception) to December 31, 2013.

The pro forma adjustments are based on the information currently available. The assumptions and estimates underlying the pro forma adjustments are described in the section entitled “Unaudited Pro Forma Condensed Financial Information.” The unaudited pro forma condensed combined statement of operations is not necessarily indicative of what the actual results of operations would have been had the Business Combination taken place on the date indicated, nor is it indicative of the future consolidated results of operations of the post-combination company. The selected unaudited pro forma condensed combined financial information below should be read in conjunction with the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information,” “Jason Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements and notes thereto of Quinapario and Jason.

The “no redemption” and “maximum redemption” scenarios are presented in the following pro forma information as follows:

 

    Assuming No Redemption: This presentation assumes that no Quinpario stockholders exercise redemption rights with respect to their public shares for a pro rata portion of the trust account; and

 

    Assuming Redemption of 6,049,263 shares by holders of Quinpario Common Stock: This presentation assumes that Quinpario stockholders exercise their redemption rights with respect to 6,049,263 public shares, which is the maximum number of shares redeemable that would allow us to maintain at least $115.0 million in our trust account. Unless waived by the Company or unless the Rollover Funds elect to contribute additional Jason equity in connection with the rollover, it is a condition to closing under the Purchase Agreement that at least $115.0 million remain in our trust account at closing. We anticipate having additional proceeds from the sale of up to $[] of shares of convertible preferred stock, which could be used to consummate the Business Combination or for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. Additionally, the Company has entered into the Backstop Commitment pursuant to which certain investors collectively agreed (subject to the negotiation of mutually agreeable definitive documentation) to purchase up to $[] million of shares of Quinpario Common Stock through (x) open market or privately negotiated transactions at a purchase price of up to $10.255 per share, (y) a private placement or (z) a combination thereof. To the extent the Backstop Commitment is utilized, the convertible preferred stock is issued and converted or the Rollover Funds elect to contribute additional Jason equity in connection with the rollover, the pro forma information presented below will change.

 

 

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Selected Unaudited Pro Forma Condensed Combined Statement of Operations

Year Ended December 31, 2013 (in thousands except share and per share
information)

   Pro Forma
Combined
(Assuming No
Tender of
Common Stock)
     Pro Forma
Combined
(Assuming
Maximum
Allowable
Tender of
Common Stock)
 

Net sales

   $ 680,845       $ 680,845   

Net income attributable to common shareholders of controlling interest

   $ 6,668       $ 6,668   

Net income per share—basic and diluted

   $ 0.27       $ 0.36   

Weighted-average shares outstanding—basic and diluted

     24,608,333         18,559,070   

Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data

     

At December 31, 2013 (in thousands)

     

Total assets

   $ 895,374       $ 833,277   

Total liabilities

   $ 650,902       $ 650,902   

Total equity

   $ 244,472       $ 182,375   

 

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this proxy statement. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business, and the timing and ability for us to complete the Business Combination. Specifically, forward-looking statements may include statements relating to:

 

    the benefits of the Business Combination;

 

    the future financial performance of the Company following the Business Combination;

 

    changes in the market for Jason products;

 

    expansion plans and opportunities; and

 

    other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions.

These forward-looking statements are based on information available as of the date of this proxy statement, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should not place undue reliance on these forward-looking statements in deciding how to grant your proxy or instruct how your vote should be cast or vote your shares on the proposals set forth in this proxy statement. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

 

    the occurrence of any event, change or other circumstances that could give rise to the termination of the Purchase Agreement;

 

    the outcome of any legal proceedings that may be instituted against Jason or Quinpario following announcement of the proposed Business Combination and transactions contemplated thereby;

 

    the inability to complete the transactions contemplated by the proposed Business Combination due to the failure to obtain approval of the stockholders of Quinpario, or other conditions to closing in the Purchase Agreement;

 

    the inability to obtain or maintain the listing of the Company’s common stock on NASDAQ following the Business Combination;

 

    the risk that the proposed Business Combination disrupts current plans and operations as a result of the announcement and consummation of the transactions described herein;

 

    the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability to integrate the Jason and Quinpario businesses, and the ability of the combined business to grow and manage growth profitably;

 

    costs related to the Business Combination;

 

    changes in applicable laws or regulations;

 

    the possibility that Jason or Quinpario may be adversely affected by other economic, business, and/or competitive factors; and

 

    other risks and uncertainties indicated in this proxy statement, including those under “Risk Factors.”

 

 

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RISK FACTORS

The following risk factors apply to the business and operations of Jason and its consolidated subsidiaries and will also apply to the business and operations of the combined company following the completion of the Business Combination. These risk factors are not exhaustive and investors are encouraged to perform their own investigation with respect to the business, financial condition and prospects of Jason. You should carefully consider the following risk factors in addition to the other information included in this proxy statement, including matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statement.” We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.

Risk Factors Relating to Jason’s Business

Jason is affected by developments in the industries in which its customers operate.

Jason derives its revenues largely from customers in the following industry sectors: agricultural, construction and industrial manufacturing. Factors affecting any of these industries in general, or any of its customers in particular, could adversely affect Jason because its revenue growth largely depends on the continued growth of its customers’ businesses in their respective industries. These factors include:

 

    seasonality of demand for Jason’s customers’ products which may cause its manufacturing capacity to be underutilized for periods of time;

 

    its customers’ failure to successfully market their products, to gain or retain widespread commercial acceptance of their products or to compete effectively in their industries;

 

    loss of market share for Jason’s customers’ products, which may lead its customers to reduce or discontinue purchasing Jason’s products and to reduce prices, thereby exerting pricing pressure on Jason;

 

    economic conditions in the markets in which Jason’s customers operate, in particular, the United States and Europe, including recessionary periods such as the global economic downturn; and

 

    product design changes or manufacturing process changes that may reduce or eliminate demand for the components Jason supplies.

Jason expects that future sales will continue to depend on the success of its customers. If economic conditions and demand for its customers’ products deteriorate, Jason may experience a material adverse effect on its business, operating results and financial condition.

Some of Jason’s business segments are cyclical. A downturn or weakness in overall economic activity can have a material negative impact on Jason.

Historically, sales of products that Jason manufactures have been subject to cyclical variations caused by changes in general economic conditions. During recessionary periods, such as the recent global economic recession, Jason has been adversely affected by reduced demand for its products. In addition, the strength of the economy generally may affect the rates of expansion, consolidation, renovation and equipment replacement in the industries Jason serves.

Volatility in the prices of raw materials and energy prices could adversely affect Jason’s results of operations.

The prices of raw materials critical to Jason’s business and performance, such as steel, are based on global supply and demand conditions. While Jason strives to pass through the price of raw materials to its customers (other than increases in order amounts which are subject to negotiation), Jason may not be able to do so in the

 

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future, and volatility in the prices of raw materials may affect customer demand for certain products. In addition, Jason, along with its suppliers and customers, rely on various energy sources for a number of activities connected with its business, such as the transportation of raw materials and finished products. Energy and utility prices, including electricity and water prices, and in particular prices for petroleum-based energy sources, are volatile and have been on an upward trend. Increased supplier and customer operating costs arising from volatility in the prices of energy sources, such as increased energy and utility costs and transportation costs, could be passed through to Jason and it may not be able to increase its product prices sufficiently or at all to offset such increased costs. The impact of any volatility in the prices of energy or the raw materials on which Jason relies, including the reduction in demand for certain products caused by such price volatility, could result in a loss of revenue and profitability and adversely affect Jason’s results of operations.

Jason competes with numerous other manufacturers in each of its segments and competition from these providers may affect the profitability of Jason’s business.

The industries Jason serves are highly competitive. Jason competes with numerous companies that manufacture finishing, seating, automotive acoustics and components products. Many of Jason’s competitors have international operations and significant financial resources and some have substantially greater manufacturing, research and design and marketing resources than Jason. These competitors may, among others:

 

    respond more quickly to new or emerging technologies;

 

    have greater name recognition, critical mass or geographic market presence;

 

    be better able to take advantage of acquisition opportunities;

 

    adapt more quickly to changes in customer requirements;

 

    devote greater resources to the development, promotion and sale of their products;

 

    be better positioned to compete on price for their products, due to any combination of low-cost labor, raw materials, components, facilities or other operating items, or willingness to make sales at lower margins than Jason;

 

    consolidate with other competitors in the industry which may create increased pricing and competitive pressures on Jason’s business; and

 

    be better able to utilize excess capacity which may reduce the cost of their products or services.

Competitors with lower cost structures may have a competitive advantage when bidding for business with Jason’s customers. Jason also expects its competitors to continue to improve the performance of their current products or services, to reduce prices of their existing products or services and to introduce new products or services that may offer greater performance and improved pricing. Additionally, Jason may face competition from new entrants to the industry in which Jason operates. Any of these developments could cause a decline in sales and average selling prices, loss of market share of Jason’s products or profit margin compression.

Jason may not be able to manage the expansion of its operations effectively in order to achieve projected levels of growth.

Jason’s business plan calls for further expansion over the next several years. Jason anticipates that further development of its infrastructure and an increase in the number of its employees will be required to achieve Jason’s planned broadening of its product offerings and client base, improvements in its machines and materials used in its machines, and its planned international growth. In particular, Jason must increase its marketing and services staff to support new marketing and service activities and to meet the needs of both new and existing customers. Jason’s future success will depend in part upon the ability of its management to manage its growth effectively. If Jason’s management is unsuccessful in meeting these challenges, it may not be able to achieve its anticipated level of growth which would adversely affect Jason’s results of operations.

 

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Jason may not be able to maintain its engineering, technological and manufacturing expertise.

The markets for Jason’s products are characterized by changing technology and evolving process development. The continued success of Jason’s business will depend upon its ability to:

 

    hire, retain and expand its pool of qualified engineering and technical personnel;

 

    maintain technological leadership in its industry;

 

    successfully anticipate or respond to changes in manufacturing processes in a cost-effective and timely manner; and

 

    successfully anticipate or respond to changes in cost to serve in a cost-effective and timely manner.

Jason cannot be certain that it will develop the capabilities required by its customers in the future. The emergence of new technologies, industry standards or customer requirements may render Jason’s equipment, inventory or processes obsolete or uncompetitive. Jason may have to acquire new technologies and equipment to remain competitive. The acquisition and implementation of new technologies and equipment may require Jason to incur significant expense and capital investment, which could reduce its margins and affect its operating results. When Jason establishes or acquires new facilities, it may not be able to maintain or develop its engineering, technological and manufacturing expertise due to a lack of trained personnel, effective training of new staff or technical difficulties with machinery. Failure to anticipate and adapt to customers’ changing technological needs and requirements or to hire and retain a sufficient number of engineers and maintain engineering, technological and manufacturing expertise may have a material adverse effect on Jason’s business.

Jason may encounter difficulties in completing or integrating acquisitions, which could adversely affect its operating results.

Jason expects to expand its presence in new end markets, expand its capabilities and acquire new customers, some of which may occur through acquisitions. These transactions may involve acquisitions of entire companies, portions of companies, the entry into joint ventures and acquisitions of businesses or selected assets. Potential challenges related to Jason’s acquisitions and joint ventures include:

 

    paying an excessive price for acquisitions and incurring higher than expected acquisition costs;

 

    difficulty in integrating acquired operations, systems, assets and businesses;

 

    difficulty in implementing financial and management controls, reporting systems and procedures;

 

    difficulty in maintaining customer, supplier, employee or other favorable business relationships of acquired operations and restructuring or terminating unfavorable relationships;

 

    ensuring sufficient due diligence prior to an acquisition and addressing unforeseen liabilities of acquired businesses;

 

    making acquisitions in new end markets, geographies or technologies where Jason’s knowledge or experience is limited;

 

    failing to realize the benefits from goodwill and intangible assets resulting from acquisitions which may result in write-downs;

 

    failing to achieve anticipated business volumes; and

 

    making acquisitions which force Jason to divest other businesses.

Any of these factors could prevent Jason from realizing the anticipated benefits of an acquisition, including additional revenue, operational synergies and economies of scale. Jason’s failure to realize the anticipated benefits of acquisitions could adversely affect its business and operating results.

 

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Acquisitions, expansions or infrastructure investments may require Jason to increase its level of indebtedness or issue additional equity.

Should Jason desire to consummate significant additional acquisition opportunities, undertake significant additional expansion activities or make substantial investments in its infrastructure, Jason’s capital needs would increase and it may need to increase available borrowings under its credit facilities or access public or private debt and equity markets. There can be no assurance, however, that Jason will be successful in raising additional debt or equity on terms that it would consider acceptable.

An increase in the level of indebtedness could, among other things:

 

    make it difficult for Jason to obtain financing in the future for acquisitions, working capital, capital expenditures, debt service requirements or other purposes;

 

    limit Jason’s flexibility in planning for or reacting to changes in its business;

 

    affect Jason’s ability to pay dividends;

 

    make Jason more vulnerable in the event of a downturn in its business; and

 

    affect certain financial covenants with which Jason must comply in connection with its credit facilities.

Additionally, a further non pro rata equity issuance would dilute your ownership interest.

If Jason fails to develop new and innovative products or if customers in its markets do not accept them, Jason’s results would be negatively affected.

Jason’s products must be kept current to meet its customers’ needs. To remain competitive, Jason therefore must develop new and innovative products on an ongoing basis. If Jason fails to make innovations or the market does not accept Jason’s new products, its sales and results would suffer. Jason invests significantly in the research and development of new products. These expenditures do not always result in products that will be accepted by the market. To the extent they do not, whether as a function of the product or the business cycle, Jason will have increased expenses without significant sales to benefit it. Failure to develop successful new products may also cause potential customers to purchase competitors’ products, rather than invest in products manufactured by Jason.

The potential impact of failing to deliver products on time could increase the cost of the products.

In most instances, Jason guarantees that it will deliver a product by a scheduled date. If Jason subsequently fails to deliver the product as scheduled, Jason may be held responsible for cost impacts and/or other damages resulting from any delay. To the extent that these failures to deliver may occur, the total damages for which Jason could be liable could significantly increase the cost of the products; as such, Jason could experience reduced profits or, in some cases, a loss for that contract. Additionally, failure to deliver products on time could result in damage to customer relationships, the potential loss of customers, and reputational damage which could impair Jason’s ability to attract new customers.

Increasing costs of doing business in many countries in which Jason operates may adversely affect its business and financial results.

Increasing costs such as labor and overhead costs in the countries in which Jason operates may erode its profit margins and compromise its price competitiveness. Historically, the low cost of labor in certain of the countries in which Jason operates had been a competitive advantage but labor costs in these countries, such as China, have been increasing. Jason’s profitability also depends on its ability to manage and contain its other operating expenses such as the cost of utilities, factory supplies, factory space costs, equipment rental, repairs and maintenance and freight and packaging expenses. In the event Jason is unable to manage any increase in its labor and other operating expenses in an environment where revenue does not increase proportionately, Jason’s financial results would be adversely affected.

 

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Jason’s international scope will require it to obtain financing in various jurisdictions.

Jason operates manufacturing facilities in the United States and 11 foreign countries, which creates financing challenges for it. These challenges include navigating local legal and regulatory requirements associated with obtaining debt or equity financing in the respective foreign jurisdictions in which Jason operates. In the event that Jason is not able to obtain financing on satisfactory terms in any of these jurisdictions, it could significantly impair its ability to run its foreign operations on a cost effective basis or to grow such operations. Failure to manage such challenges may adversely affect Jason’s business and results of operations.

Security breaches and other disruptions could compromise Jason’s information and expose it to liability, which would cause its business and reputation to suffer.

In the ordinary course of business, Jason collects and stores sensitive data, including its proprietary business information and that of its customers, suppliers and business partners, as well as personally identifiable information of its customers and employees, in its data centers and on its networks. The secure processing, maintenance and transmission of this information is critical to Jason’s operations and business strategy. Despite Jason’s security measures, its information technology and infrastructure may be vulnerable to malicious attacks or breached due to employee error, malfeasance or other disruptions, including as a result of rollouts of new systems. Any such breach could compromise Jason’s networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings and/or regulatory penalties, disrupt Jason’s operations, damage its reputation, and/or cause a loss of confidence in its products and services, which could adversely affect its business.

Jason has operations in many countries and such operations may be subject to a number of risks specific to these countries.

Jason’s international operations across many different jurisdictions may be subject to a number of risks specific to these countries, including:

 

    less flexible employee relationships which can be difficult and expensive to terminate;

 

    labor unrest;

 

    political and economic instability (including war and acts of terrorism);

 

    inadequate infrastructure for its operations (i.e. lack of adequate power, water, transportation and raw materials);

 

    health concerns and related government actions;

 

    risk of governmental expropriation of its property;

 

    less favorable, or relatively undefined, intellectual property laws;

 

    unexpected changes in regulatory requirements and laws;

 

    longer customer payment cycles and difficulty in collecting trade accounts receivable;

 

    export duties, tariffs, import controls and trade barriers (including quotas);

 

    adverse trade policies or adverse changes to any of the policies of either the United States or any of the foreign jurisdictions in which Jason operates;

 

    adverse changes in tax rates or regulations;

 

    legal or political constraints on its ability to maintain or increase prices;

 

    burdens of complying with a wide variety of labor practices and foreign laws, including those relating to export and import duties, environmental policies and privacy issues;

 

    inability to utilize net operating losses incurred by Jason’s foreign operations against future income in the same jurisdiction;

 

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    economies that are emerging or developing, that may be subject to greater currency volatility, negative growth, high inflation, limited availability of foreign exchange and other risks; and

 

    ability to repatriate cash on a tax effective basis.

These factors may harm Jason’s results of operations, and any measures that Jason may implement to reduce the effect of volatile currencies and other risks of its international operations may not be effective. In Jason’s experience, entry into new international markets requires considerable management time as well as start-up expenses for market development, hiring and establishing office facilities before any significant revenue is generated. As a result, initial operations in a new market may operate at low margins or may be unprofitable.

Jason’s international sales and operations are subject to applicable laws relating to trade, export controls and foreign corrupt practices, the violation of which could adversely affect its operations.

Jason must comply with all applicable international trade, customs, export controls and economic sanctions laws and regulations of the United States and other countries. Jason is also subject to the Foreign Corrupt Practices Act and other anti-bribery laws that generally bar bribes or unreasonable gifts to foreign governments or officials. Changes in trade sanctions laws may restrict Jason’s business practices, including cessation of business activities in sanctioned countries or with sanctioned entities, and may result in modifications to compliance programs. Violation of these laws or regulations could result in sanctions or fines and could have a material adverse effect on Jason’s financial condition, results of operations and cash flows.

Failure to successfully complete or integrate joint ventures into Jason’s existing operations could have an adverse impact on its business, financial condition and results of operations.

Jason regularly evaluates its joint ventures. Potential issues associated with these joint ventures could include, among other things, Jason’s ability to realize the full extent of the benefits or cost savings that it expects to realize as a result of the formation of a joint venture within the anticipated time frame, or at all; receipt of necessary consents, clearances and approvals in connection with a joint venture; and diversion of management’s attention from base strategies and objectives. In Jason’s joint ventures, it shares ownership and management responsibility of a company with one or more parties who may or may not have the same goals, strategies, priorities or resources as Jason does and joint ventures are intended to be operated for the benefit of all co-owners, rather than for Jason’s exclusive benefit. In addition, joint ventures outside of the United States increase exposure to risks associated with operations outside of the United States, including fluctuations in exchange rates and compliance with laws and regulations outside the United States. If a joint venture is not successfully completed or integrated into Jason’s existing operations, financial condition and results of operations could be adversely impacted.

Jason is subject to risks of currency fluctuations and related hedging operations, and the appreciation of the currencies of countries in which Jason conducts its manufacturing operations, particularly the Euro, may negatively affect the profitability of its business.

Jason reports its financial results in U.S. dollars. Approximately 20% of Jason’s net sales are in currencies other than the U.S. dollar. Changes in exchange rates among other currencies, especially the Euro, to the U.S. dollar may negatively affect Jason’s net sales, cost of sales, gross profit and net income where Jason’s expenses and revenues are denominated in different currencies. Jason cannot predict the effect of future exchange rate fluctuations. Jason may from time to time use financial instruments, primarily short-term forward contracts, to hedge Euro and other currency commitments arising from foreign currency obligations. Jason does not have a fixed hedging policy currently. Where possible, Jason endeavors to match its non-functional currency exchange requirements to its receipts. If Jason’s hedging activities are not successful or if Jason changes or reduces these hedging activities in the future, it may experience significant unexpected expenses from fluctuations in exchange rates.

 

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Jason depends on its key executive officers, managers and skilled personnel and may have difficulty retaining and recruiting qualified employees.

Jason’s success depends to a large extent upon the continued services of its executive officers, senior management personnel, managers and other skilled personnel and its ability to recruit and retain skilled personnel to maintain and expand its operations. Jason could be affected by the loss of any of its executive officers who are responsible for formulating and implementing Jason’s business plan and strategy, and who have been instrumental in its growth and development. In addition, in order to manage Jason’s growth, it will need to recruit and retain additional management personnel and other skilled employees. However, competition is high for skilled technical personnel among companies that rely on engineering and technology, and the loss of qualified employees or an inability to attract, retain and motivate additional skilled employees required for the operation and expansion of its business could hinder Jason’s ability to conduct design, engineering and manufacturing activities successfully and develop marketable products. Jason may not be able to attract the skilled personnel it requires or retain those whom it has trained at its own cost. If Jason is not able to do so, its business and its ability to continue to grow could be negatively affected.

Many of Jason’s customers do not commit to long-term production schedules, which makes it difficult for Jason to schedule production accurately and achieve maximum efficiency of its manufacturing capacity.

Generally, Jason’s customers do not commit to long-term contracts. Many of its customers do not commit to firm production schedules and Jason continues to experience reduced lead-times in customer orders. Additionally, customers may change production quantities or delay production with little lead-time or advance notice. Therefore, Jason relies on and plans its production and inventory levels based on its customers’ advance orders, commitments or forecasts, as well as Jason’s internal assessments and forecasts of customer demand. The volume and timing of sales to Jason’s customers may vary due to, among others:

 

    variation in demand for or discontinuation of its customers’ products;

 

    its customers’ attempts to manage their inventory;

 

    design changes;

 

    changes in Jason’s customers’ manufacturing strategies; and

 

    acquisitions of or consolidation among customers.

The variations in volume and timing of sales make it difficult to schedule production and optimize utilization of manufacturing capacity. This uncertainty may require Jason to increase staffing and incur other expenses in order to meet an unexpected increase in customer demand, potentially placing a significant burden on Jason’s resources. Additionally, an inability to respond to such increases may cause customer dissatisfaction, which may negatively affect Jason’s customers’ relationships.

Further, in order to secure sufficient production scale, Jason may make capital investments in advance of anticipated customer demand. Such investments may lead to low utilization levels if customer demand forecasts change and Jason is unable to utilize the additional capacity. Because fixed costs make up a large proportion of Jason’s total production costs, a reduction in customer demand can have a significant adverse impact on its gross profits and operating results. Additionally, Jason orders materials and components based on customer forecasts and orders and suppliers may require it to purchase materials and components in minimum quantities that exceed customer requirements, which may have an adverse impact on Jason’s gross profits and operating results. In the past, anticipated orders from some of Jason’s customers have failed to materialize and delivery schedules have been deferred as a result of changes in its customers’ business needs. Jason has also allowed long-term customers to delay orders to absorb excess inventory. Such order fluctuations and deferrals may have an adverse effect on Jason’s business, operating results and financial conditions.

 

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Jason may incur additional expenses and delays due to technical problems or other interruptions at its manufacturing facilities.

Disruptions in operations due to technical problems or other interruptions such as floods or fire could adversely affect the manufacturing capacity of Jason’s facilities. Such interruptions could cause delays in production and cause it to incur additional expenses such as charges for expedited deliveries for products that are delayed. Additionally, Jason’s customers have the ability to cancel purchase orders in the event of any delays in production and may decrease future orders if delays are persistent. Additionally, to the extent that such disruptions do not result from damage to Jason’s physical property, these may not be covered by its business interruption insurance. Any such disruptions may adversely affect Jason’s operations and its financial results.

The operations of Jason’s manufacturing facilities may be disrupted by union activities and other labor-related problems.

Jason has labor unions at certain of its facilities. As of December 31, 2013, Jason had approximately 740 unionized personnel in the United States. For such employees, Jason has entered into collective bargaining agreements with the respective labor unions. In the future, such agreements may limit Jason’s ability to contain increases in its labor costs as its ability to control future labor costs depends partly on the outcome of wage negotiations with its employees. Any future collective bargaining agreements may lead to further increases in Jason’s labor costs. Although Jason’s employees in certain other facilities are currently not unionized, there can be no assurance that they will continue to remain as such.

Union activities and other labor-related problems not linked to union activities may disrupt Jason’s operations and adversely affect its business and results of operations. Jason cannot provide any assurance that it will not be affected by any such labor unrest, or increase in labor cost, or interruptions to the operations of its existing manufacturing plants or new manufacturing plants that Jason may set up in the future. Any disruptions to Jason’s manufacturing facilities as a result of labor-related disturbances could affect its ability to meet delivery and efficiency targets resulting in an adverse effect on Jason’s customer relationships and its financial results. Such disruptions may not be covered by Jason’s business interruption insurance.

Any disruption in Jason’s information systems could disrupt its operations and would be adverse to its business and financial operations.

Jason depends on various information systems to support its customers’ requirements and to successfully manage its business, including managing orders, supplies, accounting controls and payroll. Any inability to successfully manage the procurement, development, implementation or execution of Jason’s information systems and back-up systems, including matters related to system security, reliability, performance and access, as well as any inability of these systems to fulfill their intended purpose within Jason’s business, could have an adverse effect on its business and financial performance. Such disruptions may not be covered by Jason’s business interruption insurance.

Natural disasters, epidemics and other events outside Jason’s control, and the ineffective management of such events, may harm its business.

Some of Jason’s facilities are located in areas that may be affected by natural disasters such as hurricanes, earthquakes, water shortages, tsunamis and floods. All facilities are subject to other natural or man-made disasters such as fires, acts of terrorism, failures of utilities and epidemics. If such an event were to occur, Jason’s business could be harmed due to the event or its inability to effectively manage the effects of the particular event. Potential harms include the loss of business continuity, the loss of business data and damage to infrastructure.

Jason’s production could be severely affected if its employees or the regions in which its facilities are located are affected by a significant outbreak of any disease or epidemic. For example, a facility could be closed

 

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by government authorities for a sustained period of time, some or all of its workforce could be unavailable due to quarantine, fear of catching the disease or other factors, and local, national or international transportation or other infrastructure could be affected, leading to delays or loss of production. In addition, Jason’s suppliers and customers are subject to similar risks, which could lead to a shortage of components or a reduction in Jason’s customers’ demand for its services.

Jason relies on a variety of common carriers to transport its materials from its suppliers, and to transport products from Jason to its customers. Problems suffered by any of these common carriers, whether due to a natural disaster, labor problem, act of terrorism, increased energy prices or some other issue, could result in shipping delays, increased costs or some other supply chain disruption and could therefore have a material adverse effect on Jason’s operations.

In addition, some of Jason’s facilities possess certifications, machinery, equipment or tooling necessary to work on specialized products that its other locations lack. If work is disrupted at one of these facilities, it may not be practicable or feasible to transfer such specialized work to another facility without significant costs and delays. Thus, any disruption in operations at a facility possessing specialized certifications, machinery, equipment or tooling could adversely affect Jason’s ability to provide products to its customers and thus negatively affect its relationships and financial results.

Political and economic developments could adversely affect Jason’s business.

Increased international political instability and social unrest, evidenced by the threat or occurrence of terrorist attacks, enhanced national security measures and the related decline in consumer confidence may hinder Jason’s ability to do business. Any escalation in these events or similar future events may disrupt its operations or those of its customers and suppliers and could affect the availability of raw materials and components needed to manufacture Jason’s products or the means to transport those materials to manufacturing facilities and finished products to customers. These events have had and may continue to have an adverse effect, generally, on the world economy and consumer confidence and spending, which could adversely affect Jason’s revenue and operating results. The effect of these events on the volatility of the world financial markets could in future lead to volatility of the market price of Jason’s securities and may limit the capital resources available to Jason, its customers and suppliers.

Sales of Jason’s products may result in exposure to product liability, intellectual property infringement and other claims.

Jason’s manufactured products can expose it to potential liabilities. For instance, Jason’s manufacturing businesses expose it to potential product liability claims resulting from injuries caused by defects in products it designs or manufactures, as well as potential claims that products Jason designs or processes it uses infringe on third-party intellectual property rights. Such claims could subject Jason to significant liability for damages, subject the infringing portion of its business to injunction and, regardless of their merits, could be time-consuming and expensive to resolve. Jason may also have greater potential exposure from warranty claims and product recalls due to problems caused by product design. Although Jason has product liability insurance coverage, it may not be sufficient to cover the full extent of its product liability, if at all, and may also be subject to the satisfaction of a deductible amount of up to $250,000. A successful product liability claim in excess or outside of Jason’s insurance coverage or any material claim for which insurance coverage was denied or limited and for which indemnification was not available could have a material adverse effect on Jason’s business, results of operations and/or financial condition.

Jason may experience work-related accidents that may expose it to liability claims.

Due to the nature of its operations, Jason is subject to the risks of its employees being exposed to industrial-related accidents at its premises. If such accidents occur in the future, Jason may be required to pay compensation and may also suffer reputational harm. Under such circumstances, Jason’s business and financial performance could be adversely affected.

 

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If Jason’s manufacturing processes and products do not comply with applicable statutory and regulatory requirements, or if Jason manufactures products containing design or manufacturing defects, demand for its products may decline and Jason may be subject to liability claims.

Jason’s designs, manufacturing processes and facilities need to comply with applicable statutory and regulatory requirements. Jason may also have the responsibility to ensure that products it designs satisfy safety and regulatory standards including those applicable to its customers and to obtain any necessary certifications. In addition, Jason’s customers’ products and the manufacturing processes that Jason uses to produce them are often highly complex. As a result, products that Jason manufactures may at times contain manufacturing or design defects, and its manufacturing processes may be subject to errors or not be in compliance with applicable statutory and regulatory requirements or demands of its customers. Defects in the products Jason manufactures or designs, whether caused by a design, manufacturing or component failure or error, or deficiencies in its manufacturing processes, may result in delayed shipments to customers, replacement costs or reduced or cancelled customer orders. If these defects or deficiencies are significant, Jason’s business reputation may also be damaged. The failure of the products that Jason manufactures or its manufacturing processes and facilities to comply with applicable statutory and regulatory requirements may subject Jason to legal fines or penalties and, in some cases, require Jason to shut down or incur considerable expense to correct a manufacturing process or facility. In addition, these defects may result in liability claims against Jason or expose it to liability to pay for the recall of a product or to indemnify its customers for the costs of any such claims or recalls which they face as a result of using items manufactured by Jason in their products. Even if Jason’s customers are responsible for the defects, they may not assume, or may not have resources to assume, responsibility for any costs or liabilities arising from these defects, which could expose Jason to additional liability claims.

Compliance or the failure to comply with regulations and governmental policies could cause Jason to incur significant expense.

Jason is subject to a variety of local and foreign laws and regulations including those relating to labor and health and safety concerns and import/export duties and customs. Such laws may require Jason to pay mandated compensation in the event of workplace accidents and penalties in the event of incorrect payments of duties or customs. Additionally, Jason may need to obtain and maintain licenses and permits to conduct business in various jurisdictions. If Jason or the businesses or companies it acquires have failed or fail in the future to comply with such laws and regulations, then Jason could incur liabilities and fines and its operations could be suspended. Such laws and regulations could also restrict Jason’s ability to modify or expand its facilities, could require it to acquire costly equipment, or could impose other significant expenditures.

If Jason’s products are subject to warranty claims, its business reputation may be damaged and it may incur significant costs.

Jason generally provides warranties to its customers for manufacturing defects where Jason’s products do not conform to the specifications stipulated by its customers. A successful claim for damages arising as a result of such defects or deficiencies may affect Jason’s business reputation. In addition, a successful claim for which Jason is not insured or where the damages exceed insurance coverage, or any material claim for which insurance coverage is denied or limited and for which indemnification is not available, could have a material adverse effect on Jason’s business, operating results and financial condition. In addition, as Jason pursues new end-markets, warranty requirements will vary and Jason may be less effective in pricing its products to appropriately capture the warranty costs.

Jason is or may be required to obtain and maintain quality or product certifications for certain markets.

In some countries, Jason’s customers require or prefer that it obtain certain certifications for its products and testing facilities with regard to specifications/quality standards. For example, Jason is required to obtain American Railroad Association approval for certain of its products. Consequently, Jason needs to obtain and

 

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maintain the relevant certifications so that its customers are able to sell their products, which are manufactured by Jason, in these countries. If Jason is unable to meet and maintain the requirements needed to secure or renew such certifications, it may not be able to sell its products to certain customers and its financial results may be adversely affected.

Jason’s income tax returns are subject to review by taxing authorities, and the final determination of its tax liability with respect to tax audits and any related litigation could adversely affect its financial results.

Although Jason believes that its tax estimates are reasonable and that it prepares its tax filings in accordance with all applicable tax laws, the final determination with respect to any tax audits, and any related litigation, could be materially different from Jason’s estimates or from its historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments. Jason is undergoing tax audits in various jurisdictions and it regularly assesses the likelihood of an adverse outcome resulting from such examinations to determine the adequacy of its tax reserves.

Failure of Jason’s customers to pay the amounts owed to it in a timely manner may adversely affect its financial condition and operating results.

Jason generally provides payment terms ranging from 30 to 50 days. As a result, Jason generates significant accounts receivable from sales to its customers, representing 38% of current assets as of December 31, 2013. Accounts receivable from sales to customers were $77.0 million as of December 31, 2013. As of December 31, 2013, the largest amount owed by a single customer was approximately 9% of total accounts receivable. As of December 31, 2013, Jason’s allowance for doubtful accounts was approximately $2.2 million. If any of Jason’s significant customers have insufficient liquidity, Jason could encounter significant delays or defaults in payments owed to it by such customers, and Jason may need to extend its payment terms or restructure the receivables owed to it, which could have a significant adverse effect on its financial condition. Any deterioration in the financial condition of Jason’s customers will increase the risk of uncollectible receivables. Global economic uncertainty could also affect Jason’s customers’ ability to pay its receivables in a timely manner or at all or result in customers going into bankruptcy or reorganization proceedings, which could also affect Jason’s ability to collect its receivables.

New regulations related to conflict minerals may force Jason to incur additional expenses and affect the manufacturing and sale of its products.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), signed into law on July 21, 2010, includes Section 1502, which requires the SEC to adopt additional disclosure requirements related to certain minerals sourced from the Democratic Republic of Congo and surrounding countries, or “conflict minerals,” for which such conflict minerals are necessary to the functionality of a product manufactured, or contracted to be manufactured, by an SEC reporting company. The metals covered by the final rules, adopted on August 22, 2012, are commonly referred to as “3TG” and include tin, tantalum, tungsten and gold. Implementation of the new disclosure requirements could affect the sourcing and availability of some of the minerals used in the manufacture of Jason’s products. Jason’s supply chain is complex, and if Jason is not able to conclusively verify the origins for all conflict minerals used in its products or that its products are “conflict free,” Jason may face reputational challenges with its customers or investors. Furthermore, Jason may also encounter challenges to satisfy customers who require that its products be certified as “conflict free,” which could place Jason at a competitive disadvantage if it is unable to do so. Additionally, as there may be only a limited number of suppliers offering “conflict free” metals, Jason cannot be sure that it will be able to obtain necessary metals from such suppliers in sufficient quantities or at competitive prices. Jason could incur significant costs related to the compliance process, including potential difficulty or added costs in satisfying the disclosure requirements. Jason’s first report thereon is expected to be required in 2015.

 

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An adverse change in the interest rates for Jason’s borrowings could adversely affect its financial condition.

Jason pays interest on outstanding borrowings under its credit facilities at interest rates that fluctuate based upon changes in certain short term prevailing interest rates. An adverse change in these rates could have a material adverse effect on Jason’s financial position, results of operations and cash flows and its ability to borrow money in the future. At times, Jason enters into interest rate swaps to hedge some of this risk. If the duration of interest rate swaps exceeds one month, Jason will have to mark-to-market the value of such swaps which could cause Jason to recognize losses in its accounts.

Jason’s credit facility contains restrictive covenants that may impair its ability to conduct business.

Jason’s credit facility contains operating covenants and, to the extent the revolving facility thereunder is drawn in excess of a certain threshold, a financial covenant that may in each case limit its management’s discretion with respect to certain business matters. Among other things, these covenants restrict Jason’s and its subsidiaries’ ability to incur additional debt, change the nature of its business, sell or otherwise dispose of assets, make acquisitions, and merge or consolidate with other entities. Failure to comply with such restrictive covenants may lead to default and acceleration under Jason’s new credit facility and may impair its ability to conduct business. See “Jason Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness” for a description of our credit facility.

Jason’s failure to comply with environmental laws could adversely affect its business and financial condition.

Jason is subject to various federal, state, local and foreign environmental laws and regulations, including regulations governing the use, storage, discharge and disposal of hazardous substances used in its manufacturing processes.

Jason is also subject to laws and regulations governing the recyclability of products, the materials that may be included in products, and its obligations to dispose of these products after end-users have finished with them. Additionally, Jason may be exposed to liability to its customers relating to the materials that may be included in the components that Jason procures for its customers’ products. Any violation or alleged violation by Jason of environmental laws could subject it to significant costs, fines or other penalties.

Jason is also required to comply with an increasing number of product environmental compliance regulations focused on the restriction of certain hazardous substances. Non-compliance could result in significant costs and penalties.

In addition, increasing governmental focus on climate change may result in new environmental regulations that may negatively affect Jason, its suppliers and its customers by requiring Jason to incur additional direct costs to comply with new environmental regulations, as well as additional indirect costs as a result of its customers or suppliers passing on additional compliance costs. These costs may adversely affect Jason’s operations and financial condition.

Environmental liabilities that may arise in the future could be material to Jason.

Jason’s operations, facilities and properties are subject to extensive and evolving laws and regulations pertaining to air emissions, wastewater discharges, the handling and disposal of solid and hazardous materials and wastes, the remediation of contamination, and otherwise relating to health, safety and the protection of the environment. As a result, Jason is involved from time to time in administrative or legal proceedings relating to environmental and health and safety matters, and have in the past and will continue to incur capital costs and other expenditures relating to such matters. Jason also cannot be certain that identification of presently unidentified environmental conditions, more vigorous enforcement by regulatory authorities or other unanticipated events will not arise in the future and give rise to additional environmental liabilities, compliance costs and/or penalties that could be material. Further, environmental laws and regulations are constantly evolving

 

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and it is impossible to predict accurately the effect they may have upon Jason’s financial condition, results of operations or cash flows.

The loss of Jason’s key personnel could negatively impact the operations and profitability of the post-combination company.

The role of Jason’s key personnel upon the consummation of the Business Combination cannot be ascertained at this time. Although Quinpario contemplates that key personnel of Jason will remain associated with the post-combination company following the Business Combination, it is possible that members of Jason’s key personnel will not wish to remain in place. The loss of Jason’s key personnel could negatively impact the operations and profitability of the post-combination company.

Risk Factors Relating to Jason’s Indebtedness

The combined company will have a substantial amount of indebtedness following the Business Combination, which may limit its operating flexibility and could adversely affect its results of operations and financial condition.

On a pro forma basis after giving effect to the Business Combination, Jason would have had approximately $430.8 million of indebtedness as of December 31, 2013, consisting of the proposed $420.0 million term loan, borrowings outstanding under the proposed $40.0 million revolver and borrowings under existing non-U.S. debt agreements.

The combined company’s indebtedness could have important consequences to our investors, including, but not limited to:

 

    increasing the combined company’s vulnerability to, and reducing its flexibility to respond to, general adverse economic and industry conditions;

 

    requiring the dedication of a substantial portion of the combined company’s cash flow from operations to the payment of principal of, and interest on, its indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, joint ventures or other general corporate purposes;

 

    limiting the combined company’s flexibility in planning for, or reacting to, changes in its business, the competitive environment and the industry in which it operates;

 

    placing the combined company at a competitive disadvantage as compared to its competitors that are not as highly leveraged; and

 

    limiting the combined company’s ability to borrow additional funds and increasing the cost of any such borrowing.

An increase in interest rates would adversely affect the combined company’s profitability. To the extent that the combined company’s access to credit was to be restricted because of its own performance or conditions in the capital markets generally, the combined company’s financial condition would be materially adversely affected. The combined company’s level of indebtedness may make it difficult to service its debt and may adversely affect its ability to obtain additional financing, use operating cash flow in other areas of its business or otherwise adversely affect its operations.

We may not be able to complete the proposed financing transactions in connection with the Business Combination.

We may not be able to complete the proposed financing transactions in connection with the Business Combination on terms that are acceptable to us, or at all. If we do not complete the proposed financing

 

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transactions described in this proxy statement, we will be required to obtain alternative financing in order to fund a portion of the cash consideration for the Business Combination. If we are unable do so on terms that are acceptable to us, or at all, we may not be able to complete the Business Combination, as completing the proposed acquisition financing is a condition to the Business Combination under the Purchase Agreement.

Risk Factors Relating to Quinpario and the Business Combination

Following the consummation of the Business Combination, our only significant asset will be ownership of 87.7% of Jason (assuming no more than 6,049,263 public shares are redeemed) through Quinpario Sub and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations.

Following the consummation of the Business Combination, we will have no direct operations and no significant assets other than the ownership of 87.7% of Jason (assuming no more than 6,049,263 public shares are redeemed) through Quinpario Sub. Certain investors and officers of Seller will become stockholders of Quinpario Sub along with us at that time. We will depend on Jason for distributions, loans and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company, and to pay any dividends with respect to our preferred stock and common stock. Legal and contractual restrictions in agreements governing the Debt Financing and future indebtedness of Jason, as well as the financial condition and operating requirements of Jason, and the fact that we may be required to obtain the consent from the other stockholders of Quinpario Sub, may limit our ability to obtain cash from Jason. The earnings from, or other available assets of, Jason may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy its other financial obligations.

We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002 that will be applicable to us after the Business Combination.

Jason is not currently subject to Section 404 of the Sarbanes-Oxley Act of 2002. However, following the Business Combination, the combined company will be required to provide management’s attestation on internal controls commencing with the Company’s annual report for the year ending December 31, 2015. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act of 2002 are significantly more stringent than those required of Jason as a privately-held company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable to the Company after the Business Combination. If we are not able to implement the additional requirements of Section 404 in a timely manner or with adequate compliance, we may not be able to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our common stock.

Subsequent to the consummation of the Business Combination, we may be required to take writedowns or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

Although we have conducted due diligence on Jason, we cannot assure you that this diligence revealed all material issues that may be present in Jason’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of our and Jason’s control will not later arise. As a result, we may be forced to later writedown or write-off assets, restructure its operations, or incur impairment or other charges that could result in losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions

 

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about the combined company or its securities. In addition, charges of this nature may cause us to be unable to obtain future financing on favorable terms or at all.

Our initial stockholders have agreed to vote in favor of our initial business combination, regardless of how our public stockholders vote.

Unlike many other blank check companies in which the founders agree to vote their founder shares in accordance with the majority of the votes cast by the public stockholders in connection with an initial business combination, our initial stockholders have agreed to vote any shares of Quinpario Common Stock owned by them in favor of our initial business combination. As of the date hereof, our initial stockholders own shares equal to 29.9% of our issued and outstanding shares of common stock (which includes 1,150,000 placement shares). Accordingly, it is more likely that the necessary stockholder approval will be received for the Business Combination than would be the case if our initial stockholders agreed to vote any shares of Quinpario Common Stock owned by them in accordance with the majority of the votes cast by our public stockholders.

We will incur significant transaction and transition costs in connection with the Business Combination.

We expect to incur significant, non-recurring costs in connection with consummating the Business Combination and Jason operating as a public company. We may incur additional costs to maintain employee morale and to retain key employees. We will also incur significant fees and expenses relating to financing arrangements and legal, accounting and other transaction fees and costs associated with the Business Combination. Some of these costs are payable regardless of whether the Business Combination is completed.

The unaudited pro forma financial information included in this document may not be indicative of what our actual financial position or results of operations would have been.

The unaudited pro forma financial information in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

We may waive one or more of the conditions to the Business Combination.

We may agree to waive, in whole or in part, some of the conditions to our obligations to complete the Business Combination, to the extent permitted by our memorandum and articles of association and applicable laws. For example, it is a condition to our obligations to close the Business Combination that there be no breach of Jason’s representations and warranties as of the closing date. However, if our board of directors determines that any such breach is not material to the business of Jason, then the board may elect to waive that condition and close the Business Combination. We are not able to waive the condition that our stockholders approve the Business Combination.

Even if we consummate the Business Combination, there is no guarantee that the public warrants will ever be in the money, and they may expire worthless and the terms of our warrants may be amended.

The exercise price for our warrants is $12.00 per share. There is no guarantee that the public warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless.

In addition, the warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of

 

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the warrants with the consent of at least 65% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a warrant.

Our Sponsor, directors and officers have a conflict of interest in determining to pursue the acquisition of Jason, since certain of their interests, and certain interests of their affiliates and associates, are different from or in addition to (and which may conflict with) the interests of our stockholders.

Our initial stockholders, including our officers and directors, have interests in and arising from the Business Combination that are different from or in addition to (and which may conflict with) the interests of our public stockholders, which may result in a conflict of interest. These interests include:

 

    the continued right of our Sponsor, our Chief Executive Officer and certain directors to hold our common stock following the Business Combination, subject to lock-up agreements;

 

    the continued right of our Sponsor to hold placement warrants to purchase shares of our common stock;

 

    the fact that our Sponsor and our Chief Executive Officer paid an aggregate of $11,525,000 for their founder shares, placement shares and placement warrants and such securities should have a significantly higher value at the time of the Business Combination;

 

    if Quinpario is unable to complete a business combination within the required time period, our Sponsor and Chief Executive Officer will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Quinpario for services rendered or contracted for or products sold to Quinpario, but only if such a vendor or target business has not executed such a waiver;

 

    if the proposed Business Combination has not been consummated on or prior to August 15, 2014, Quinpario must promptly reimburse Jason for half of its actual out-of-pocket third party expenses (not to exceed $500,000 in the aggregate) incurred relating to the proposed Business Combination that it would not have otherwise incurred in the normal course of operations;

 

    the continuation of certain of our directors as directors of the combined company; and

 

    the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Business Combination.

These interests may influence our directors in making their recommendation that you vote in favor of the Business Combination Proposal, and the transactions contemplated thereby.

Our ability to successfully effect the Business Combination and successfully operate the business thereafter will be largely dependent upon the efforts of certain key personnel, including the key personnel of Jason, all of whom we expect to stay with Jason following the Business Combination. The loss of such key personnel could negatively impact the operations and profitability of the post-combination business.

Our ability to successfully effect the Business Combination and successfully operate the business is dependent upon the efforts of certain key personnel, including the key personnel of Jason. Although we expect all of such key personnel to remain with Jason following the Business Combination, it is possible that we will lose some key personnel, the loss of which could negatively impact the operations and profitability of our post-combination business. Furthermore, while we have scrutinized individuals we intend to engage to stay with Jason following the Business Combination, our assessment of these individuals may not prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.

 

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A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.

Following the Business Combination, the price of our securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for our securities following the Business Combination may never develop or, if developed, it may not be sustained. In addition, the price of our securities after the Business Combination can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. Additionally, if our securities are not listed on, or become delisted from, NASDAQ for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on NASDAQ or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act for so long as we are an “emerging growth company.”

Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting, and generally requires in the same report a report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. Following the Business Combination, the combined company will be required to provide management’s attestation on internal controls effective December 31, 2015. However, under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until we are no longer an “emerging growth company.” We could be an “emerging growth company” for up to five years from August 14, 2013, the date of our IPO.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An “emerging growth company” can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we have chosen to “opt out” of such extended transition period and, as a result, we must comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

If the Business Combination’s benefits do not meet the expectations of investors, stockholders or financial analysts, the market price of our securities may decline.

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of the Company’s securities prior to the closing of the Business Combination may decline. The market values of our securities at the time of the Business Combination may vary significantly from their prices on the date the Purchase Agreement was executed, the date of this proxy statement, or the date on which our stockholders vote on the Business Combination.

In addition, following the Business Combination, fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been a public market for Jason’s stock and trading in the shares of the Company’s common stock has not been active. Accordingly, the valuation ascribed to Jason and our common stock in the Business Combination may not be indicative of the price that will prevail in the trading market following the Business Combination. If an active market for our securities develops and continues, the trading price of our securities following the Business

 

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Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

Factors affecting the trading price of the Company’s securities following the Business Combination may include:

 

    actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

 

    changes in the market’s expectations about our operating results;

 

    success of competitors;

 

    our operating results failing to meet the expectation of securities analysts or investors in a particular period;

 

    changes in financial estimates and recommendations by securities analysts concerning the Company or the consumer goods market in general;

 

    operating and stock price performance of other companies that investors deem comparable to the Company;

 

    our ability to market new and enhanced products on a timely basis;

 

    changes in laws and regulations affecting our business;

 

    commencement of, or involvement in, litigation involving the Company;

 

    changes in the Company’s capital structure, such as future issuances of securities or the incurrence of additional debt;

 

    the volume of shares of our common stock available for public sale;

 

    any major change in our board or management;

 

    sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and

 

    general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and NASDAQ have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to the Company could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

Following the Business Combination, if securities or industry analysts do not publish or cease publishing research or reports about the Company, its business, or its market, or if they change their recommendations regarding our common stock adversely, the price and trading volume of our common stock could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors. Securities and industry

 

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analysts do not currently, and may never, publish research on the Company. If no securities or industry analysts commence coverage of the Company, our stock price and trading volume would likely be negatively impacted. If any of the analysts who may cover the Company change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock would likely decline. If any analyst who may cover the Company were to cease coverage of the Company or fail to regularly publish reports on it, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.

We have not registered the shares of our common stock issuable upon exercise of the warrants under the Securities Act or states securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless.

We have not registered the public shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis under certain circumstances specified in the warrant agreement. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, unless an exemption is available. In no event will we be required to issue cash, securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified, the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of common stock included in the units. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of common stock for sale under all applicable state securities laws.

The grant of registration rights to our initial stockholders and our Sponsor may make it more difficult to complete our initial business combination, including the Business Combination, and the future exercise of such rights may adversely affect the market price of our common stock.

Pursuant to the registration rights agreement entered into concurrently with the closing of our IPO, our Sponsor, initial stockholders and their permitted transferees can demand that we register the founder shares, placement units, placement shares and placement warrants, and the shares of common stock issuable upon exercise of the placement warrants, as well as the extension units and their component securities, as the case may be. The registration rights will be exercisable with respect to the founder shares, the placement units, placement shares and the placement warrants and the shares of common stock issuable upon exercise of such placement warrants as well as the extension units and their component securities, as the case may be, at any time commencing upon the date that such shares are released from transfer restrictions. We will bear the cost of registering these securities. If such persons exercise their registration rights in full, there will be an additional 7,283,333 shares of common stock (assuming no extension) and up to 1,150,000 shares of common stock issuable on exercise of the placement warrants eligible for trading in the public market. In addition, pursuant to the Rollover Agreement (as described below) to be entered into at the closing of the Business Combination, the Rollover Participants will be granted certain registration rights with respect to the registration of their Quinpario Common Stock, assuming the Rollover Participants exchange all or a portion of their Quinpario Sub Shares into shares of Quinpario Common Stock. If the Rollover Participants exercise their registration rights in full, there will be an additional 3,441,720 shares of Quinpario Common Stock eligible for trading in the public market. Quinpario and Preferred Stock investors will also enter into a registration rights agreement that provides for the registration of the common stock and the preferred stock (including the common stock into which the preferred stock is convertible) so purchased in the PIPE Investment.

 

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The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our common stock. In addition, the existence of the registration rights may make our initial business combination (including the Business Combination) more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our common stock that is expected when the securities owned by our initial stockholders are registered.

Warrants will become exercisable for our common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

Assuming no public warrants are tendered pursuant to the Warrant Tender Offer, outstanding warrants to purchase an aggregate of 18,400,000 shares of our common stock will become exercisable for a like number of shares of our common stock in accordance with the terms of the warrant agreement governing those securities. These warrants consist of 17,250,000 warrants originally sold as part of units in our IPO and 1,150,000 warrants that were sold to our Sponsor in a private sale simultaneously with the consummation of our IPO. Each warrant entitles its holder to purchase one share of Quinpario’s common stock at an exercise price of $12.00 per share. The warrants will become exercisable on the later of 30 days after the completion of Quinpario’s initial business combination or 12 months from the consummation of Quinpario’s IPO, and expire at 5:00 p.m., New York time, five years after the completion of Quinpario’s initial business combination or earlier upon redemption or liquidation. To the extent such warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to the then existing holders of common stock of the Company and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our common stock.

Our public stockholders may experience dilution as a consequence of, among other transactions, the utilization of the Backstop Commitment, issuance of any shares of Quinpario preferred stock convertible into shares of Quinpario Common Stock and the issuance of Quinpario Common Stock after the Business Combination pursuant to the Rollover Agreement. Having a minority share position may reduce the influence that our current stockholders have on the management of the Company.

It is anticipated that, upon completion of the Business Combination, Quinpario’s public stockholders will retain an ownership interest of approximately 70.3% in Quinpario and our initial stockholders, including our Sponsor, will retain an ownership interest of approximately 29.7% in Quinpario, assuming none of Quinpario’s stockholders exercise their redemption rights. If Quinpario’s stockholders exercise their redemption rights, the ownership interest in Quinpario of Quinpario’s public stockholders will decrease and the ownership interest in Quinpario of our initial stockholders, including our Sponsor, will increase, although Quinpario’s and the Rollover Participants’ respective ownership interests in Quinpario Sub will change, at the option of the Rollover Participants, only in the event that redemptions by Quinpario stockholders cause us to maintain less than $115.0 million in our trust account. To the extent that those are redemptions of Quinpario common stock which cause us to maintain $115.0 million in our trust account, Quinpario’s public stockholders will retain an ownership interest of approximately 60.6% and our initial stockholders, including our Sponsor, will retain an ownership interest of approximately 39.4%. The ownership percentage with respect to Quinpario following the Business Combination does not take into account (i) the option of each Rollover Participant to exchange, after the consummation of the Business Combination, all or a portion of such Rollover Participant’s shares in Quinpario Sub Shares into the same number of shares of Quinpario Common Stock pursuant to the terms of a rollover agreement, (ii) warrants to purchase Quinpario Common Stock that may remain outstanding following the Business Combination and the Warrant Tender Offer, (iii) the issuance of any shares under the Company’s proposed 2014 Omnibus Incentive Plan, (iv) the issuance of any shares of Quinpario preferred stock convertible into shares of Quinpario Common Stock or (v) the issuance of any shares pursuant to the Backstop Commitment. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Quinpario’s existing stockholders in Quinpario will be different and the percentage ownership retained by Quinpario in Quinpario Sub will be different. See “Unaudited Pro Forma Condensed Combined Financial Information” for further

 

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information. To the extent that any of the warrants or shares of Quinpario preferred stock are converted into Quinpario Common Stock, or any shares of Quinpario Common Stock are issued under the Rollover Agreement or proposed 2014 Omnibus Incentive Plan, current stockholders may experience substantial dilution. Such dilution could, among other things, limit the ability of our current stockholders to influence management of the Company through the election of directors following the Business Combination.

We may redeem the public warrants prior to their exercise at a time that is disadvantageous to warrantholders, thereby making their warrants worthless.

In addition to the Warrant Tender Offer, we will have the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to their expiration at a price of $0.01 per warrant, provided that (i) the last reported sale price of our common stock equals or exceeds $18.00 per share for any 20 trading days within the 30 trading-day period ending on the third business day before we send the notice of such redemption and (ii) on the date we give notice of redemption and during the entire period thereafter until the time the warrants are redeemed, there is an effective registration statement under the Securities Act covering the shares of our common stock issuable upon exercise of the public warrants and a current prospectus relating to them is available. Redemption of the outstanding public warrants could force holders of public warrants:

 

    to exercise their warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so;

 

    to sell their warrants at the then-current market price when they might otherwise wish to hold their warrants; or

 

    to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of their warrants.

Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

The Company’s certificate of incorporation and bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors. These provisions include:

 

    no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

 

    the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

 

    the ability of our board of directors to determine whether to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

 

    a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

 

    the requirement that an annual meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

 

    limiting the liability of, and providing indemnification to, our directors and officers;

 

    controlling the procedures for the conduct and scheduling of stockholder meetings;

 

    providing that directors may be removed prior to the expiration of their terms by stockholders only for cause; and

 

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    advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.

These provisions, alone or together, could delay hostile takeovers and changes in control of the Company or changes in our board of directors and management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of Quinpario’s outstanding common stock. Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

Activities taken by affiliates of the Company to purchase, directly or indirectly, public shares will increase the likelihood of approval of the Business Combination Proposal and other proposals and may affect the market price of the Company’s securities during the buyback period.

Our Sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions either prior to or following the consummation of the Business Combination. None of our Sponsor, directors, officers, advisors or their affiliates will make any such purchases when such parties are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Although none of our Sponsor, directors, officers, advisors or their affiliates currently anticipate paying any premium purchase price for such public shares, in the event such parties do, the payment of a premium may not be in the best interest of those stockholders not receiving any such additional consideration. There is no limit on the number of shares that could be acquired by our Sponsor, directors, officers, advisors or their affiliates, or the price such parties may pay.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the Business Combination Proposal and other proposals and would likely increase the chances that such proposals would be approved. If the market does not view the Business Combination positively, purchases of public shares may have the effect of counteracting the market’s view, which would otherwise be reflected in a decline in the market price of our securities. In addition, the termination of the support provided by these purchases may materially adversely affect the market price of our securities.

As of the date of this proxy statement, no agreements with respect to the private purchase of public shares by the Company or the persons described above have been entered into with any such investor or holder. We will file a Current Report on Form 8-K with the SEC to disclose private arrangements entered into or significant private purchases made by any of the aforementioned persons that would affect the vote on the Business Combination Proposal or other proposals.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.

We are subject to laws and regulations enacted by national, regional and local governments, including non-U.S. governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and

 

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those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.

Risk Factors Relating to the Redemption

Unlike many blank check companies, we do not have a specified maximum percentage redemption threshold, but it is a condition to closing under the Purchase Agreement that at least $115.0 million remain in our trust account at closing. Accordingly, unless this provision is waived, we may be unable to consummate the Business Combination or if there are substantial redemptions by our public stockholders. The absence of such a redemption threshold would make it easier for us to consummate a business combination with which a substantial number of our stockholders do not agree.

Since we have no specified percentage threshold for redemption in our amended and restated certificate of incorporation other than the 20% threshold, our structure is different in this respect from the structure that has been used by many blank check companies. Many blank check companies would not be able to consummate a business combination if the holders of the company’s public shares voted against a proposed business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company’s initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. However, it is a condition to closing under the Purchase Agreement that at least $115.0 million remain in our trust account at closing. Each redemption of public shares by our public stockholders will decrease the amount in our trust account, which holds approximately $177.1 million as of December 31, 2013. If, however, redemptions by our public stockholders cause us to have less than $115.0 million in our trust account at the closing of the Business Combination, the Rollover Funds will have the option (but not the obligation) to contribute in connection with the rollover an additional aggregate amount of their current equity in Jason to Quinpario Sub equal to the shortfall between the cash then in the trust account and $115.0 million.

However, we are limited by the need to have at least $5,000,001 in net tangible assets. This condition effectively requires that holders of no more than 16,344,282 shares redeem their public shares. Accordingly, holders of no more than 16,344,282 of the 17,250,000 public shares outstanding may redeem their shares in connection with the Business Combination. As a result, we may be able to consummate the Business Combination even though holders of a majority of our public shares have chosen to redeem their shares.

If you or a “group” of stockholders of which you are a part are deemed to hold an aggregate of 20.0% or more of our common stock issued in the IPO, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 20.0% of our common stock issued in the IPO.

A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 20% of the outstanding public shares. We refer to such shares aggregating 20% or more of the shares sold in the offering as “Excess Shares”. Your inability to redeem any Excess Shares will reduce your influence over our ability to consummate the Business Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we consummate the Business Combination. And as a result, you will continue to hold that number of shares aggregating to 20.0% or more of the shares sold in our IPO and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss.

 

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There is no guarantee that a stockholder’s decision whether to redeem their shares for a pro rata portion of the trust account will put the stockholder in a better future economic position.

We can give no assurance as to the price at which a stockholder may be able to sell its public shares in the future following the completion of the Business Combination or any alternative business combination. Certain events following the consummation of any business combination, including the Business Combination, may cause an increase in our share price, and may result in a lower value realized now than a stockholder of Quinpario might realize in the future had the stockholder redeemed their shares. Similarly, if a stockholder does not redeem their shares, the stockholder will bear the risk of ownership of the public shares after the consummation of any business combination, and there can be no assurance that a stockholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement. A stockholder should consult the stockholder’s own tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.

If our stockholders fail to comply with the redemption requirements specified in this proxy statement, they will not be entitled to redeem their shares of our common stock for a pro rata portion of the funds held in our trust account.

Holders of public shares are not required to affirmatively vote against the Business Combination Proposal in order to exercise their rights to redeem their shares for a pro rata portion of the trust account. In order to exercise their redemption rights, they are required to submit a request in writing and deliver their stock (either physically or electronically) to our transfer agent at least two business days prior to the closing. Stockholders electing to redeem their shares will receive their pro rata portion of the trust account less franchise and income taxes payable, calculated as of two business days prior to the anticipated consummation of the Business Combination. See the section entitled Special Meeting in Lieu of 2014 Annual Meeting of Quinpario Stockholders—Redemption Rights for additional information on how to exercise your redemption rights.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined balance sheet as of December 31, 2013 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 are based on the historical financial statements of Jason and Quinpario after giving effect to the Business Combination and the proposed related financing transactions.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 gives pro forma effect to the Business Combination and the related proposed financing transactions as if they had occurred on January 1, 2013. The unaudited pro forma condensed combined balance sheet as of December 31, 2013 assumes that the Business Combination and the related proposed financing transactions were completed on December 31, 2013.

The unaudited pro forma condensed combined balance sheet as of December 31, 2013 was derived from Jason’s audited consolidated balance sheet and Quinpario’s audited consolidated balance sheet, in each case, as of December 31, 2013. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 was derived from Jason’s audited consolidated statement of operations for the year ended December 31, 2013 and Quinpario’s audited consolidated statement of income for the period May 31, 2013 (inception) to December 31, 2013.

The Business Combination will be accounted for using the acquisition method of accounting under the provisions of Accounting Standards Codification (“ASC”) 805, “Business Combinations”, (“ASC 805”). The pro forma adjustments are based on the information currently available and the assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined statement of operations is not necessarily indicative of what the actual results of operations would have been had the Business Combination taken place on the date indicated, nor is it indicative of the future consolidated results of operations of the post-combination company. The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes and the sections entitled “Jason Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements and notes thereto of Quinpario and Jason.

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only. The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the Business Combination, (2) factually supportable and (3) with respect to the statement of operations, expected to have a continuing impact on the results of the post-combination company.

The unaudited pro forma condensed combined financial statements have been prepared using two different levels of redemptions of Quinpario Common Stock:

 

    Assuming No Redemption: This presentation assumes that no Quinpario stockholders exercise redemption rights with respect to their public shares for a pro rata portion of the trust account; and

 

   

Assuming Redemption of 6,049,263 public shares: Unless waived by the Company or unless the Rollover Funds elect to contribute additional Jason equity in connection with the rollover, a condition to completing the transactions contemplated by the Purchase Agreement is that, after giving effect to the redemptions, no less than $115.0 million remains in the trust account. This presentation assumes

 

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that all Quinpario stockholders exercise their redemption rights with respect to a maximum of 6,049,263 public shares. Quinpario has no specified maximum redemption threshold except that it must retain $5,000,001 of net tangible book value. We anticipate having additional proceeds from the sale of up to $[] of shares of convertible preferred stock, which could be used to consummate the Business Combination or for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. Additionally, the Company has entered into the Backstop Commitment pursuant to which certain investors collectively agreed (subject to the negotiation of mutually agreeable definitive documentation) to purchase up to $[] million of shares of Quinpario Common Stock through (x) open market or privately negotiated transactions at a purchase price of up to $10.255 per share, (y) a private placement or (z) a combination thereof. To the extent the Backstop Commitment is utilized, the convertible preferred stock is issued and converted or the Rollover Funds elect to contribute additional Jason equity in connection with the rollover, the pro forma information will change.

Quinpario expects to offer to purchase up to 9,200,000 of its public warrants at a purchase price of $0.75 per public warrant in a proposed tender offer that would expire prior to the consummation of the Business Combination (the “Warrant Tender Offer”). The purpose of the Warrant Tender Offer is to provide holders of public warrants that may not wish to retain their public warrants following the Business Combination the possibility of receiving cash for their public warrants. Quinpario expects to commence the Warrant Tender Offer in connection with the Business Combination at sometime after the filing of this preliminary proxy statement. Because the Warrant Tender Offer would not be consummated if (i) the maximum number of public shares were redeemed or (ii) such offer would reasonably be likely to impair or delay the closing of the Business Combination or the ability of Quinpario to obtain any portion of the debt financing proceeds, the unaudited pro forma condensed combined financial information does not give effect to the Warrant Tender Offer.

 

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Unaudited Pro Forma Condensed Combined Balance Sheet

As of December 31, 2013

(in thousands)

 

    Quinpario
Acquisition
Corp.
    Jason
Partners
Holdings
Inc.
    Pro Forma
Adjustments
for the
Business
Combination
    Footnote
Reference
  Pro Forma
Adjustments
for
Refinancing
(Assuming
No Tender
of Common
Stock)
    Footnote
Reference
  Pro Forma
Combined
(Assuming No
Tender of
Common
Stock)
    Pro Forma
Adjustments
for Maximum
Allowable
Tender of
Common
Stock
    Footnote
Reference
  Pro
Forma
Combined
(Assuming
Maximum
Allowable
Tender of
Common
Stock)
 

ASSETS

                   

Current assets:

                   

Cash and cash equivalents

  $ 742      $ 16,318      $ (246,918   3a   $ 177,097      3k   $ 134,218        (62,097   3s   $ 72,121   
        (17,500   3b     405,550      3m        
        (10,050   3p     (229,438   3n        
            (2,908   3n        
            46,500      3o        
            (5,175   3q        

Accounts receivable—net

    —          77,003        —            —            77,003        —            77,003   

Inventories

    —          72,259        3,765      3d     —            76,024        —            76,024   

Other current assets

    114        34,712        (1,340 )     3h     —            33,486        —            33,486   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

Total current assets

    856        200,292        (272,043       391,626          320,731        (62,097       258,634   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

Investments held in trust account

    177,097        —          —            (177,097   3k     —          —            —     

Property, plant, and equipment—net

    —          126,286        71,113      3e     —            197,399        —            197,399   

Goodwill

    —          34,198        138,786      3i     —            172,984        —            172,984   

Other intangible assets—net

    —          49,131        134,190      3f, 3g     —            183,321        —            183,321   

Other assets—net

    —          13,110        (3,721   3n     11,550      3m     20,939        —            20,939   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

Total long-term assets

    177,097        222,725        340,368          (165,547       574,643        —            574,643   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

TOTAL ASSETS

  $ 177,953      $ 423,017      $ 68,325        $ 226,079        $ 895,374      $ (62,097     $ 833,277   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

 

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    Quinpario
Acquisition
Corp.
    Jason
Partners
Holdings
Inc.
    Pro Forma
Adjustments
for the
Business
Combination
    Footnote
Reference
    Pro Forma
Adjustments
for
Refinancing
(Assuming
No Tender
of Common
Stock)
    Footnote
Reference
  Pro Forma
Combined
(Assuming No
Tender of
Common
Stock)
    Pro Forma
Adjustments
for Maximum
Allowable
Tender of
Common
Stock
    Footnote
Reference
  Pro
Forma
Combined
(Assuming
Maximum
Allowable
Tender of
Common
Stock)
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

                   

Current liabilities:

                   

Current portion of long-term debt

  $ —        $ 6,904      $ —          $ 3,000      3m   $ 6,966        —            6,966   
            (2,938   3n        

Accounts payable and accrued expenses

    86        84,635        —            (2,908   3n     81,813        —            81,813   

Other current liabilities

    —          20,784        —            —            20,784        —            20,784   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

Total current liabilities

    86        112,323        —            (2,846       109,563        —            109,563   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

Long-term liabilities:

                   

Deferred underwriters’ fee

    5,175        —          —            (5,175   3q     —          —            —     

Long-term debt

    —          235,831        429        3n        417,100      3m     423,860        —            423,860   
            (226,500   3n        
            (3,000   3m        

Deferred income taxes

    —          27,774        73,088        3h        —            100,862        —            100,862   

Other long-term liabilities

    —          16,617        —            —            16,617        —            16,617   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

Total long-term liabilities

    5,175        280,222        73,517          182,425          541,339        —            541,339   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

TOTAL LIABILITIES

    5,261        392,545        73,517          179,579          650,902        —            650,902   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 
                   

Redeemable securities

    167,692        —          —            (167,692   3r     —          —            —     

EQUITY

                   

CONTROLLING INTEREST STOCKHOLDERS’ EQUITY(DEFICIT)

                   

Convertible perpetual preferred stock

    —          —          —            46,500      3o     46,500        —            46,500   

Common stock

    1        —          —            2      3r     3        (1   3s     2   

Additional paid-in capital

    4,999        25,358        (25,358     3j        167,690      3r     172,689        (62,096   3s     110,593   

Retained earnings (accumulated deficit)

    —          4,640        (4,640     3j        —            (10,050     —            (10,050
        (10,050     3p               

Accumulated other comprehensive income

    —          474        (474     3j        —            —          —            —     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

TOTAL STOCKHOLDERS’ EQUITY(DEFICIT) FOR CONTROLLING INTEREST

    5,000        30,472        (40,522       214,192          209,142        (62,097       147,045   

NONCONTROLLING INTEREST

    n/a        n/a        35,330        3l        —            35,330        —            35,330   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

TOTAL EQUITY

    5,000        30,472        (5,192       214,192          244,472        (62,097       182,375   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

  $ 177,953      $ 423,017      $ 68,325        $ 226,079        $ 895,374      $ (62,097     $ 833,277   
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

 

 

     

 

 

 

 

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Table of Contents

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Fiscal Year Ended December 31, 2013

(in thousands, except share and per share information)

 

    Quinpario
Acquisition
Corp.
(Period from
May 31,

2013
(Inception) to
December 31,
2013)
    Jason
Partners
Holdings

Inc.
(Period
from
January 1,
2013 to
December 31,
2013)
    Pro
Forma
Adjustments
for the
Business
Combination
    Footnote
Reference
  Pro Forma
Adjustments
for
Refinancing
(Assuming
No Tender
of Common
Stock)
    Footnote
Reference
  Pro Forma
Combined
(Assuming
No Tender of
Common
Stock)
    Footnote
Reference
  Pro Forma
Adjustments
for
Maximum
Allowable
Tender of
Common
Stock
    Footnote
Reference
  Pro Forma
Combined
(Assuming
Maximum
Allowable
Tender of
Common
Stock)
    Footnote
Reference

Revenue

  $ —        $ 680,845      $ —          $ —          $ 680,845        $ —          $ 680,845     

Cost of sales

    —          527,371        (19,889   4a     —            530,867          —            530,867     
        23,385      4b                
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Gross profit

    —          153,474        (3,496       —            149,978          —            149,978     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Operating expenses

                       

Selling and administrative expenses

    536        109,962        (1,692   4a     —            119,929          —            119,929     
        3,462      4b                
        (5,424   4c                
        13,085      4d                

Newcomerstown fire gain

    —          (12,483     —            —            (12,483       —            (12,483  

Restructuring

    —          2,950        —            —            2,950          —            2,950     

Other net charges (gains)

    —          (674     —            —            (674       —            (674  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total operating expense

    536        99,755        9,431          —            109,722          —            109,722     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Operating income (loss)

    (536     53,719        (12,927       —            40,256          —            40,256     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Other income (expenses)

                       

Interest (expense)

    —          (20,716     —            18,896      4e     (26,234       —            (26,234  
            (24,414   4f            

Interest income

    22        —          —            —            22          —            22     

Gain from involuntary conversion of property, plant and equipment

    —          6,351        —            —            6,351          —            6,351     

Other income

    —          2,981        —            —            2,981          —            2,981     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total other income (expense)

    22        (11,384     —            (5,518       (16,880       —            (16,880  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Pre-tax income (loss)

    (514     42,335        (12,927       (5,518       23,376          —            23,376     

Tax provision (benefit)

    —          18,247        (4,602   4g     (2,114   4g     11,531          —            11,531     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Net income (loss)

    (514     24,088        (8,325       (3,404       11,845          —            11,845     

Less: Net income attributable to the noncontrolling interest

    —          —          —            (1,457       (1,457       —            (1,457  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

 

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Table of Contents
    Quinpario
Acquisition
Corp.
(Period
from
May 31,

2013
(Inception) to
December 31,
2013)
     Jason
Partners
Holdings

Inc.
(Period
from
January 1,
2013 to
December 31,
2013)
    Pro Forma
Adjustments
for the
Business
Combination
    Footnote
Reference
  Pro Forma
Adjustments
for
Refinancing
(Assuming
No Tender
of Common
Stock)
    Footnote
Reference
  Pro Forma
Combined
(Assuming
No Tender of
Common
Stock)
    Footnote
Reference
  Pro Forma
Adjustments
for
Maximum
Allowable
Tender of
Common
Stock
    Footnote
Reference
  Pro Forma
Combined
(Assuming
Maximum
Allowable
Tender of
Common
Stock)
    Footnote
Reference

Net income (loss) attributable to controlling interest

    (514      24,088        (8,325       (4,861       10,388          —            10,388     

Accretion of preferred stock dividends and redemption premium

    —           (2,405     2,405      3j     (3,720   5c     (3,720       —            (3,720  
 

 

 

    

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Net income (loss) attributable to common shareholders of controlling interest

  $ (514    $ 21,683      $ (5,920     $ (8,581     $ 6,668        $ —          $ 6,668     
 

 

 

    

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Earnings (loss) per share available to common shareholders of controlling interest—basic

  $ (0.07              $ 0.27            $ 0.36     

Earnings (loss) per share available to common shareholders of controlling interest—diluted

  $ (0.07              $ 0.27            $ 0.36     

Weighted average shares outstanding—basic

    7,526,526         —          17,081,807      5a     —            24,608,333      5a     (6,049,263   3s     18,559,070      5a

Weighted average shares outstanding—diluted

    7,526,526         —          17,081,807      5a     —            24,608,333      5a, 5b     (6,049,263   3s     18,559,070      5a, 5b

 

62


Table of Contents

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

1. Description of Transaction

Pursuant to the Stock Purchase Agreement, dated as of March 16, 2014, as it may be amended (the “Purchase Agreement”), by and among Quinpario Acquisition Corp. (“Quinpario”), JPHI Holdings Inc. (“Quinpario Sub”), Jason Partners Holdings Inc. (“Jason”) and Jason Partners Holdings LLC (“Seller”), the Company proposes to acquire Jason through the acquisition of the outstanding shares of Jason’s common stock by Quinpario Sub, a wholly owned subsidiary of the Company (the “Business Combination”). Pursuant to the Purchase Agreement, upon the effectiveness of the Business Combination, shares of common stock of Jason will be exchanged for cash, in the case of Seller, and validly issued shares of Quinpario Sub’s common stock in the case of certain former members and management of Jason (the “Rollover Participants”). The Business Combination purchase price of $538.65 million is subject to working capital and other customary adjustments to be determined at the closing of the Business Combination in accordance with the terms of the Purchase Agreement. Assuming the Business Combination occurred on December 31, 2013, the consideration that would have been paid to Seller and the Rollover Participants for their respective shares of Jason common stock would have been $282.2 million, consisting of $246.9 million in cash (the “Cash Consideration”) and $35.3 million in common equity issued by Quinpario Sub (“Quinpario Sub Shares”) in exchange for the contribution of shares of Jason common stock by such members of Seller (“rollover”). Such consideration reflects a reduction of $9.1 million representing the working capital adjustment based on a target working capital level of $80.0 million and a $17.5 million reduction for estimated transaction expenses paid on behalf of Seller by Jason. We intend to pay the Cash Consideration using proceeds of at least $115.0 million held in our trust account and the balance of the Cash Consideration (approximately $131.9 million) will be paid through a redemption by Jason of the remaining shares of its common stock held by Seller using the proceeds of our debt financing. The remainder of such debt financing, or $256.5 million, will be used by Jason to pay certain of its existing indebtedness and other transaction expenses. Such borrowed funds will be assumed by Quinpario at closing.

2. Basis of Presentation

The unaudited pro forma condensed combined balance sheet as of December 31, 2013 assumes that the Business Combination and the related proposed financing transactions were completed on December 31, 2013. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 gives pro forma effect to the Business Combination and the related proposed financing transactions as if they had occurred on January 1, 2013. The unaudited pro forma condensed combined balance sheet as of December 31, 2013 was derived from Jason’s audited consolidated balance sheet and Quinpario’s audited consolidated balance sheet, in each case, as of December 31, 2013. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 was derived from Jason’s audited consolidated statement of operations for the year ended December 31, 2013 and Quinpario’s audited consolidated statement of income for the period May 31, 2013 (inception) to December 31, 2013.

Jason’s audited consolidated statement of operations for the year ended December 31, 2013 includes certain insurance gains related to the resolution of insurance claims for a fire that destroyed its Newcomerstown, OH facility in 2011. These gains include $12.4 million associated with business interruption activities and $6.4 million associated with the involuntary conversion of property, plant and equipment. These gains are more fully described in Note 18 of Jason’s audited consolidated financial statements.

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of Jason and Quinpario. The acquisition method of accounting, based on ASC 805, uses the fair value concepts defined in ASC 820, “Fair Value Measurement” (“ASC 820”). The historical consolidated financial information has been adjusted in the accompanying unaudited pro forma condensed combined financial information to give effect to pro forma events that are (i) directly attributable to the Business Combination, (ii) factually supportable, and (iii) with respect to the unaudited pro forma condensed combined statements of operations, expected to have a continuing impact on

 

63


Table of Contents

the consolidated results. Unless indicated otherwise, all amounts presented in the unaudited pro forma condensed combined financial information section are in thousands, except per share information.

ASC 820 defines fair value, establishes the framework for measuring fair value for any asset acquired or liability assumed under U.S. GAAP, expands disclosures about fair value measurements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. This is an exit price concept for the valuation of an asset or liability. Market participants are assumed to be buyers or sellers in the most advantageous market for the asset or liability. Fair value measurement for an asset assumes the highest and best use by these market participants, and as a result, assets may be required to be recorded which are not intended to be used or sold and/or to value assets at a fair value measurement that do not reflect management’s intended use for those assets. Fair value measurements can be highly subjective and it is possible the application of reasonable judgment could develop different assumptions resulting in a range of alternative estimates using the same facts and circumstances. ASC 805 requires, among other things, that most assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

3. Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments

The estimated purchase price and the allocation of the estimated purchase price discussed below are preliminary. An independent third-party valuation firm assisted in performing a preliminary valuation. The final allocation of the purchase price will be determined at a later date and is dependent on a number of factors, including the determination of the final aggregate consideration paid in connection with the Business Combination as a result of all adjustments set forth in the Purchase Agreement and the final evaluation of Jason’s tangible and identifiable intangible assets acquired and liabilities assumed. Such final adjustments, including increases or decreases to depreciation or amortization resulting from the allocation of purchase price to depreciable property, plant and equipment and amortizable intangible assets, respectively, may be material. The allocation is expected to occur within one year of the consummation of the Business Combination.

The preliminary consideration and allocation of the purchase price to the fair value of Jason’s assets acquired and liabilities assumed as if the acquisition date was December 31, 2013 is presented as follows (in thousands):

 

Calculation of consideration    Note      Amount  

Purchase price

     3a       $ 538,650   

Purchase price adjustments in accordance with the Purchase Agreement

     

Less: Working capital adjustment

     3a         (9,058

Less: Bank debt, including accrued interest

     3a         (246,162

Add: Cash and cash equivalents

     3a         16,318   

Less: Seller transaction costs to be paid by Jason

     3b         (17,500
     

 

 

 

Total consideration to be transferred

     3a       $ 282,248   

Recognized amounts of identifiable assets acquired and liabilities assumed

     

Book value of Jason’s net assets

     3c         30,472   

Less: Transaction costs expected to be incurred by Jason

     3b         (17,500

Less: Historical deferred financing costs and debt discount

     3n         (4,150

Less: Historical Jason goodwill

     3i         (34,198
     

 

 

 
        (25,376

Fair value adjustments of net assets acquired

     

Inventories

     3d         3,765   

Property, plant and equipment

     3e         71,113   

Identifiable intangible assets

     

Patents

     3f         1,271   

Trademarks and other intangibles

     3f         36,236   

Customer relationships

     3g         96,683   

Deferred tax liabilities

     3h         (74,428
     

 

 

 

Goodwill

     3i       $ 172,984   
     

 

 

 

 

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(a) In accordance with the Purchase Agreement, the purchase price of $538,650 is to be adjusted based on a target net working capital level of $80,000; the purchase price will be increased by the amount that working capital exceeds the target level or will be decreased by the amount that working capital falls below the target level. The purchase price is to be further reduced for transaction expenses of Seller and for the amount of Jason’s net bank debt. Net bank debt refers to total gross bank debt, including accrued interest, less the amount of Jason’s cash and cash equivalents. Assuming a December 31, 2013 transaction date, the net purchase price paid to Seller would total $282,248, consisting of $246,918 in cash and $35,330 in common equity as described in note 3l.
(b) Represents the estimated amount of Seller transaction costs to be paid by Jason of $17,500 including investment banking fees of $8,100, fees payable to Saw Mill Capital LLC and Falcon Investment Advisors LLC (Seller’s significant shareholders) in accordance with the Management Services Agreement dated September 21, 2010 of $5,380, fees for legal, accounting, tax and valuation services of $2,700, and other expenses of $1,320. These costs will result in a reduction to Jason’s historical net assets and are not included in the pro forma statement of operations as they are directly related to the Business Combination and will be non-recurring.
(c) Reflects the acquisition of the historical book value of Jason’s net assets as of December 31, 2013.
(d) Represents the write-up of inventories by $3,765 to their estimated fair value of $76,024. Jason carries approximately 50 days of inventory to meet its production requirements and customer orders. Therefore, it is expected that the inventory fair value write-up will result in an increase to cost of goods sold during the period immediately following the Business Combination. The fair value estimate of raw materials was based on the purchase cost of such materials reduced provisions for estimated obsolescence. The fair value of work-in process inventories was determined by estimating and adding the costs to bring these inventories to a finished state to the book value of such inventories, estimating the selling price of such inventories and then subtracting the cost to complete, disposal costs, holding costs and a normal profit. The fair value of finished goods inventories was determined based on the estimated selling price of such inventories then subtracting disposal costs, holding costs and a normal profit for the selling effort still to be undertaken.
(e) Represents the write-up of property, plant and equipment by $71,113 to their estimated fair value of $197,399. Excluding land, the property, plant and equipment amount is expected to be depreciated over an average period of 7 years. The fair value estimate of property, plant and equipment is preliminary. The fair value of land and buildings was determined using a value-in-use premise of value. The estimated cost to reproduce these assets and the value of recent market exchanges for similar assets were both used to determine an appropriate fair value. The fair value of personal property was determined using the indirect cost approach. In this method, inflation cost index trends were applied to the original costs of the assets to estimate current reproduction or replacement cost. Depreciation was then subtracted to calculate fair value. The indirect cost approach was used because it was believed to most accurately reflect all of the value attributable to an asset valued on an in-use premise, including the freight, engineering and installation costs.
(f) Represents the increase in carrying value of patents by $1,271 to reflect their estimated fair value of $2,660 and the increase in carrying value of trademarks and other intangibles by $36,236 to reflect their estimated fair value of $54,300. The fair value estimates of patents, trademarks and other intangibles are preliminary and were determined using the relief from royalty method, which is a variation of the income approach. The relief from royalty method utilizes the present value of royalty streams to provide an estimate of the fair value of the asset. Patents are expected to be amortized over a period of approximately 7 years and trademarks and other intangibles are expected to be amortized over a period of approximately 13 years.
(g) Represents the increase in carrying value of customer relationships by $96,683 to reflect their estimated fair value of $126,361. The fair value estimate of customer relationships is preliminary and was determined using the income approach. This approach evaluates the present worth of the future economic benefits that accrue to the investors in a business. The present value of expected future cash flows indicates the fair value of the asset. Customer relationships are expected to be amortized over a period of approximately 15 years.
(h)

Represents the recording of current and non-current deferred income tax liabilities of $1,340 and $73,088, respectively, resulting from fair value adjustments for inventories, property, plant and equipment and identifiable intangible assets of $3,765, $71,113 and $134,190, respectively. This estimate of deferred tax liabilities was determined based on the excess book basis over the tax basis of the fair value write-ups at a 35.6% weighted average statutory income tax rate taking into account applicable U.S. federal, U.S. state and non U.S. rates. This estimate of deferred income tax liabilities is preliminary and is subject to change based upon management’s final determination of the fair values of tangible and intangible assets acquired and liabilities assumed by jurisdiction.

 

65


Table of Contents
(i) Prior to the Business Combination, Jason’s historical goodwill totaled $34,198. As a result of the Business Combination, goodwill is calculated as the difference between the fair value of the consideration expected to be transferred and the values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. The acquisition of Jason by Quinpario as of December 31, 2013 would have resulted in a net increase in goodwill of $138,786 to $172,984.
(j) Represents the elimination of Jason’s historic common stock, additional paid-in capital, accumulated other comprehensive income, retained earnings and accretion of preferred stock dividends and redemption premium.
(k) Represents the reclassification of the cash equivalents in the Quinpario investments held in trust account to cash and cash equivalents to reflect the fact that these investments are available for use in connection with the Business Combination.
(l) The total net purchase price to be paid to Seller’s shareholders has been reduced by $35,330 representing the expected value of the amount to be reinvested by the Rollover Participants. Pursuant to the Purchase Agreement, the Rollover Participants will exchange certain of their existing shares of Seller for Quinpario Sub Shares and will receive the option to exchange all or a portion of their Quinpario Sub Shares into the same number of shares of Quinpario Common Stock. As a result, Rollover Participants will have a 12.3% ownership interest in Quinpario Sub (and thereby Jason). Therefore a non-controlling interest has been recorded at its estimated fair value.
(m) Represents the issuance of $420,000 of new debt, reduced by the amount of original issue debt discount of $2,900. The new debt is comprised of a seven year $300,000 first lien term loan and a seven year $120,000 second lien term loan. The first lien term loan is to be repaid in the amount of $750 each quarter; therefore, $3,000 of this loan is classified as current portion of long-term debt. The full amount of the second lien term loan is due on the seventh anniversary of the loan. The proceeds from the new debt will be used to retire debt of $229,438 and accrued interest of $2,908 outstanding under Jason’s existing U.S. senior credit facility and to finance a portion of the Purchase Price. Jason’s existing non U.S. debt of $13,726 will remain outstanding. In connection with the incurrence of the new debt, $11,550 of debt issuance costs are expected to be capitalized and amortized over the life of the underlying issuances.
(n) Represents the extinguishment of amounts outstanding under Jason’s existing U.S. senior credit facility, including the short-term and long-term portion of term loans of $2,938 and $226,500, respectively, and accrued interest of $2,908. Capitalized debt issuance costs and debt discount of $3,721 and $429, respectively, will be written off resulting in a reduction to Jason’s historical net assets. These costs are not included in the pro forma statement of operations as they are directly related to the Business Combination and will be non-recurring.
(o) Represents the issuance of 46,500 shares of 8.0% Series A Convertible Perpetual Preferred Stock (“Preferred Stock”) in the amount of $46,500. Each share of Preferred Stock will be convertible into shares of common stock of Quinpario.
(p) To record estimated acquisition-related transaction costs of $10,050. In accordance with ASC 805, acquisition-related transaction costs and certain acquisition restructuring and related charges are not included as a component of consideration transferred but are required to be expensed as incurred. The unaudited pro forma condensed combined balance sheet reflects these costs as a reduction of cash with a corresponding decrease in retained earnings. These costs are not included in the pro forma statement of operations as they are directly related to the Business Combination and will be non-recurring.
(q) To record the payment of the deferred underwriters’ fee arising in connection with Quinpario’s initial public offering in the amount of $5,175. This transaction is reflected as a reduction in cash and accrued liabilities.
(r) At the time of issuance, certain of Quinpario’s common shares were subject to a possible redemption and, as such, an amount of $167,692 was classified outside the equity section in Quinpario’s historical balance sheet. Under the assumption that none of the shareholders elect to redeem these shares in connection with the Business Combination, the shares are no longer redeemable and have been classified as a component of shareholders equity.

 

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(s) In accordance with the terms of the Purchase Agreement, unless waived or the Rollover Funds elect to increase their rollover investment, the Business Combination is conditioned upon at least $115,000 remaining in the Quinpario trust account immediately after Quinpario shareholders exercise their redemption rights. Therefore, the maximum allowable tender of common shares is assumed to total 6,049,263 shares, which is the number of shares that would result in a $62,097 reduction in the trust account to $115,000 assuming a redemption price of approximately $10.26 per share. The impact of the redemption by Quinpario shareholders is to reduce the remaining cash balance on hand following the Business Combination. In accordance with the Purchase Agreement, if Redemptions result in the trust fund balance declining below $115,000, Rollover Participants have the right, but not the obligation, to increase their rollover investment in Quinpario Sub by an amount equal to the difference between the amount remaining in the trust fund and $115,000.

4. Unaudited Pro Forma Condensed Combined Statement of Operations Adjustments

 

(a) Represents the elimination of Jason’s historic depreciation expense, a portion of which was recorded in cost of goods sold and a portion in selling and administrative expenses.

 

(b) To record pro forma depreciation expense on the portion of the purchase price allocated to property, plant and equipment as shown below. Depreciation expense associated with assets used in Jason’s manufacturing operations is recorded in cost of goods sold while depreciation expense associated with assets used in selling, general and administrative activities is recorded in selling and administrative expenses. Estimated depreciation expense is as follows (in thousands):

 

     Preliminary
Fair Value
     Estimated Useful
Life in Years
     Estimated
Depreciation
 

Land

   $ 9,220         n/a       $ —     

Buildings

     29,450         20.0         1,473   

Improvements

     5,640         5.0         1,128   

Machinery and Equipment

     117,072         8.2         14,276   

Furniture and Fixtures

     5,632         5.0         1,126   

Tooling

     12,687         3.0         4,229   

Vehicles

     1,238         3.0         413   

Computers and Software

     6,390         2.0         3,195   

Construction in Progress

     10,070         10.0         1,007   
  

 

 

       

 

 

 
   $ 197,399          $ 26,847   
  

 

 

       

 

 

 

 

(c) Represents the elimination of Jason’s historic amortization expense.

 

(d) To record pro forma amortization expense on the portion of the purchase price allocated to identifiable intangible assets as follows (in thousands):

 

     Preliminary
Fair Value
     Estimated Useful
Life in Years
     Estimated
Amortization
 

Customer Relationships

     126,361         14.8         8,541   

Patents

     2,660         7.0         380   

Trademarks and Other

     54,300         13.0         4,164   
  

 

 

       

 

 

 
     183,321            13,085   
  

 

 

       

 

 

 

 

(e) Represents the elimination of Jason’s historic interest expense associated with the U.S. senior credit facility term loans that will be extinguished in connection with the issuance of new debt as described in note 3n.

 

(f)

To record the $24,414 of interest expense from the issuance of $420,000 of new debt, including $1,650 of debt issuance cost amortization and $414 of debt discount amortization. The interest rates under the new financing agreements are expected to be based on LIBOR, with a minimum LIBOR amount (i.e. floor) of 1.00%. First lien term loans totaling $300,000 will carry a margin of 3.25% and second lien term loans

 

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  totaling $120,000 will carry a margin of 7.00%. Therefore, the total interest rate on the first lien term loans is estimated to be 4.25% and the interest rate on the second lien term loans is estimated to be 8.00%. For the purposes of these unaudited pro forma condensed combined financial statements, the LIBOR floor of 1.00% has been assumed in view of the fact that applicable LIBOR rates are currently less than 1.00%. If the LIBOR interest rate on the first and second lien term loans were to increase by 0.125%, the pro forma interest expense would increase by $525.

 

(g) Represents the income tax effect of the pro forma adjustments related to the acquisition of Jason calculated using the U.S. statutory income tax rate of 35.0%, U.S. state tax rates, and non U.S. tax rates. The effective tax rate of the combined company could be significantly different depending on the mix of post-acquisition income and other activities. The effective tax rate used to calculate the income tax effect of the purchase accounting adjustments of 35.6% differs from the effective income tax rate of 38.3% used to calculate the income tax effect of the refinancing adjustments due to the mix of U.S. and non U.S. tax jurisdictions impacted by such adjustments.

 

(h) Reflects the non-controlling interest share of historical net income and related pro forma adjustments.

5. Earnings per Share

 

(a) The unaudited pro forma condensed combined basic and diluted earnings per share calculations are based on the historic Quinpario weighted average number of shares outstanding of 7,526,526 adjusted by 17,081,807 shares to increase the weighted average share amount to 24,608,333 representing the number of total shares outstanding as of December 31, 2013 inclusive of the 16,344,282 shares that are no longer subject to possible redemption as a result of the Business Combination. Quinpario currently has 18,400,000 redeemable common stock purchase warrants as well as Preferred Stock outstanding. Because the warrants are exercisable and the preferred shares are convertible at per share amounts exceeding the current market price of Quinpario shares and the approximate per share redemption price of $10.26, the warrants and Preferred Stock are considered antidilutive and any shares that would be issued upon exercise of the warrants or conversion of the Preferred Stock are not included in the earnings per share calculations.

 

(b) Pursuant to the Purchase Agreement, the Rollover Participants will exchange certain of their existing membership interests of Seller valued at $35,330 for shares of Jason of equal value, which will immediately be contributed to Quinpario Sub in exchange for 3,441,720 Quinpario Sub Shares and will receive the option to exchange all or a portion of their Quinpario Sub Shares into the same number of shares of Quinpario Common Stock. The pro forma diluted weighted average shares do not give effect to an assumed conversion through the exchange of Quinpario Sub Shares into shares of Quinpario Common Stock because the resulting effect would be antidilutive.

 

(c) Represents the accretion of dividends on the Preferred Stock at a dividend rate of 8%.

 

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COMPARATIVE SHARE INFORMATION

The following table sets forth historical comparative share information for Jason and Quinpario and unaudited pro forma combined share information after giving effect to the Business Combination, assuming (i) that no holders of public shares exercise their redemption rights and (ii) that holders of 17,250,000 public shares exercise their redemption rights. The historical information should be read in conjunction with “Selected Historical and Pro Forma Financial Information of Jason” and “Selected Historical Financial Information of Quinpario” included elsewhere in this proxy statement and the historical financial statements of Jason and Quinpario included elsewhere in this proxy statement. The unaudited pro forma combined share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and related notes included elsewhere in this proxy statement.

The unaudited pro forma combined share information does not purport to represent what the actual results of operations of Jason and Quinpario would have been had the Business Combination been completed or to project Jason and Quinpario’s results of operations that may be achieved after the Business Combination. The unaudited pro forma book value per share information below does not purport to represent what the value of Jason and Quinpario would have been had the Business Combination been completed nor the book value per share for any future date or period.

 

     Jason
(Historical)
     Quinpario
(Historical)
    Pro Forma
Assuming No
Redemption
(Unaudited)
     Pro Forma Assuming
Redemption of
6,049,263 Shares
(Unaudited)
 

As of and for the Year Ended December 31, 2013

          

Book value (deficit) per share(a)

   $ 30,472       $ 0.20      $ 6.61       $ 5.42   

Shares outstanding (including redeemable stock)(b)

     1,000         24,608,333        24,608,333         18,559,070   

Basic and diluted earnings per share(b)

   $ 21,683       $ (0.07   $ 0.27       $ 0.36   

Cash dividends declared per share

   $ 43,055         —          —           —     

 

(a) Book value per share is calculated using the following formula:

Book value per share = (Total Stockholders’ Equity excluding Preferred Equity)/(Total Outstanding Shares)

(b) The shares outstanding and basic and diluted earnings (loss) per share calculation for Quinpario includes shares subject to possible redemption.

 

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SPECIAL MEETING IN LIEU OF 2014 ANNUAL MEETING OF QUINPARIO STOCKHOLDERS

General

We are furnishing this proxy statement to our stockholders as part of the solicitation of proxies by our board of directors for use at the special meeting in lieu of 2014 annual meeting of stockholders to be held on                 , 2014, and at any adjournment or postponement thereof. This proxy statement is first being furnished to our stockholders on or about                , 2014. This proxy statement provides you with information you need to know to be able to vote or instruct your vote to be cast at the special meeting.

Date, Time and Place of Special Meeting

The special meeting of stockholders of Quinpario will be held at                 , Eastern time, on                 , 2014, at                 , or such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals.

Voting Power; Record Date

You will be entitled to vote or direct votes to be cast at the special meeting of stockholders if you owned shares of our common stock at the close of business on                 , 2014, which is the record date for the special meeting. You are entitled to one vote for each share of our common stock that you owned as of the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were 24,608,333 shares of Quinpario Common Stock outstanding, of which 17,250,000 are public shares, 1,150,000 are private placement shares held by our Sponsor, 5,739,333 are founder shares (of which 75,000 are subject to forfeiture if a business combination is completed within 16 months of Quinpario consummating its IPO) held by our Sponsor and 269,000 are founder shares held by our independent directors, Messrs. James P. Heffernan, Walter Thomas Jagodinski, Edgar G. Hotard, Dr. John Rutledge and Ilan Kaufthal, and 200,000 are founder shares held by employees of an affiliate of our Sponsor, Quinpario Partners LLC.

Vote of Quinpario Founders and Chairman and CEO

In connection with our IPO, we and JVB Financial Group LLC, the representative of the underwriters of the IPO, entered into agreements with each of initial stockholders pursuant to which the initial stockholders agreed to vote any shares of Quinpario Common Stock owned by them in favor of the Business Combination Proposal. Our Chairman of the Board and Chief Executive Officer has also agreed to vote his shares in favor of the Business Combination Proposal. This agreement applies to our Sponsor as it relates to the founder shares and the requirement to vote its founder shares in favor of the Business Combination Proposal. Our Sponsor’s investment and voting decisions are determined by Quinpario Partners LLC, as its managing manager. Jeffry N. Quinn, our Chairman and Chief Executive Officer, is the managing member of Quinpario Partners LLC.

Our initial stockholders have waived any redemption rights, including with respect to shares of common stock purchased in our IPO or in the aftermarket, in connection with Business Combination. The founder shares and placement shares held by our initial stockholders and our Sponsor have no redemption rights upon our liquidation and will be worthless if no business combination is effected by us within 16 months (or up to 24 months in case of extensions) of August 14, 2013. However, our initial stockholders are entitled to redemption rights upon our liquidation with respect to any public shares they may own.

 

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Quorum and Required Vote for Proposals for the Special Meeting of Stockholders

A quorum of our stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting if a majority of the common stock outstanding and entitled to vote at the special meeting is represented in person or by proxy. Abstentions will count as present for the purposes of establishing a quorum. Broker non-votes will not be counted for the purpose of determining the existence of a quorum.

The approval of the Business Combination Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires the affirmative vote of the holders of a majority of the shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. Accordingly, a Quinpario stockholder’s failure to vote by proxy or to vote in person at the special meeting or a broker non-vote will not be counted towards the number of shares of Quinpario Common Stock required to validly establish a quorum, but if a valid quorum is otherwise established, it will have no effect on the outcome of any vote on the Business Combination Proposal and the Incentive Plan Proposal. Abstentions will have the same effect as a vote “AGAINST” the Business Combination Proposal, the Incentive Proposal and the Adjournment Proposal.

The approval of Proposal 2, Proposal 3 and Proposal 4 each require the affirmative vote of the holders of a majority of the shares of our common stock. Accordingly, a Quinpario stockholder’s failure to vote by proxy or to vote in person at the special meeting, an abstention from voting, or a broker non-vote with regard to any such proposal will have the same effect as a vote “AGAINST” such proposal.

Directors are elected by a plurality of all of the votes cast by holders of shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. This means that the three nominees will be elected if they receive more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes with respect to the election of directors. Abstentions and broker non-votes will have no effect on the election of directors.

The Business Combination Proposal is conditioned on Proposal 2 but not the on the approval of any other proposal. In addition, (i) the Director Election Proposal is conditioned on the approval of Proposal 2 and the Business Combination Proposal (ii) the Incentive Plan Proposal is conditioned on the approval of Proposal 2 and the Business Combinational Proposal and (iii) Proposal 2, Proposal 3 and Proposal 4 are conditioned on the approval of the Business Combination Proposal. Proposal 3 is also conditioned on the approval of Proposal 2. The Adjournment Proposal does not require the approval of any other proposal to be effective. It is important for you to note that in the event that either the Business Combination Proposal or Proposal 2 does not receive the requisite vote for approval, then we will not consummate the Business Combination. If we do not consummate the Business Combination and fail to complete an initial business combination within 16 months (or up to 24 months in case of extensions) of August 14, 2013, we will be required to dissolve and liquidate our trust account by returning the then remaining funds in such account to the public stockholders.

Recommendation to Quinpario Stockholders

Our board of directors believes that each of the Business Combination Proposal, Proposal 2, Proposal 3, Proposal 4, the Director Election Proposal, the Incentive Plan Proposal and the Adjournment Proposal to be presented at the special meeting is in the best interests of, the Company and our stockholders and unanimously recommends that its stockholders vote “FOR” each of the proposals.

 

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When you consider the recommendation of our board of directors in favor of approval of the Business Combination Proposal, you should keep in mind that our directors and officers have interests in the Business Combination that are different from or in addition to (or which may conflict with) your interests as a stockholder. These interests include, among other things:

 

    the continued right of our Sponsor, our Chief Executive Officer and certain directors to hold our common stock following the Business Combination, subject to lock-up agreements;

 

    the continued right of our Sponsor to hold placement warrants to purchase shares of our common stock;

 

    the fact that our Sponsor and our Chief Executive Officer paid an aggregate of $11,525,000 for their founder shares, placement shares and placement warrants and such securities should have a significantly higher value at the time of the Business Combination;

 

    if Quinpario is unable to complete a business combination within the required time period, our Sponsor and Chief Executive Officer will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Quinpario for services rendered or contracted for or products sold to Quinpario, but only if such a vendor or target business has not executed such a waiver;

 

    if the proposed Business Combination has not been consummated on or prior to August 15, 2014, Quinpario must promptly reimburse Jason for half of its actual out-of-pocket third party expenses (not to exceed $500,000 in the aggregate) incurred relating to the proposed Business Combination that it would not have otherwise incurred in the normal course of operations;

 

    the continuation of certain of our directors as directors of the post-combination company; and

 

    the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Business Combination.

Broker Non-Votes and Abstentions

Under the rules of various national and regional securities exchanges your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. We believe the proposals presented to our stockholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your bank, broker or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker or nominee is not voting your shares is referred to as a “broker non-vote.”

Abstentions are considered present for the purposes of establishing a quorum but will have the same effect as a vote “AGAINST” the Business Combination Proposal, Proposal 2, Proposal 3, Proposal 4, the Incentive Plan Proposal and the Adjournment Proposal, but will have no effect on the Director Election Proposal. Broker non-votes will have the effect of a vote “AGAINST” Proposal 2, Proposal 3 and Proposal 4 but will have no effect on the Business Combination Proposal, the Incentive Plan Proposal, the Director Election Proposal and the Adjournment Proposal.

Voting Your Shares

Each share of our common stock that you own in your name entitles you to one vote on each of the proposals for the special meeting. Your one or more proxy cards show the number of shares of our common stock that you own. There are several ways to vote your shares of common stock:

 

   

You can vote your shares by one of the following methods: (1) call the toll-free number specified on the enclosed proxy card and follow the instructions when prompted, (2) access the Internet website

 

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specified on the enclosed proxy card and follow the instructions provided to you, or (3) complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the special meeting. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares of our common stock will be voted as recommended by our board of directors. Our board of directors recommends voting “FOR” the Business Combination Proposal, “FOR” Proposal 2, “FOR” Proposal 3, “FOR” Proposal 4, “FOR” the Director Election Proposal, “FOR” the Incentive Plan Proposal and “FOR” the Adjournment Proposal.

 

    You can attend the special meeting and vote in person even if you have previously voted by submitting a proxy pursuant to any of the methods noted above. You will be given a ballot when you arrive. However, if your shares of common stock are held in the name of your broker, bank or other nominee, you must get a proxy from the broker, bank or other nominee. That is the only way we can be sure that the broker, bank or nominee has not already voted your shares of common stock.

Revoking Your Proxy

If you give a proxy, you may revoke it at any time before the special meeting or at such meeting by doing any one of the following:

 

    you may send another proxy card with a later date;

 

    you may notify Paul J. Berra III, the Company’s Secretary, by telephone at (314) 548-6200, by email at pjberra@quinpario.com or in writing to c/o Quinpario Acquisition Corp., 12935 N. Forty Drive, Suite 201, St. Louis, Missouri 63141, before the special meeting that you have revoked your proxy; or

 

    you may attend the special meeting, revoke your proxy, and vote in person, as indicated above.

No Additional Matters May Be Presented at the Special Meeting

The special meeting has been called only to consider the approval of the Business Combination Proposal, the Incentive Plan Proposal, the Director Election Proposal, Proposal 2, Proposal 3, Proposal 4 and the Adjournment Proposal. Under our bylaws, other than procedural matters incident to the conduct of the special meeting, no other matters may be considered at the special meeting if they are not included in this proxy statement, which serves as the notice of the special meeting.

Who Can Answer Your Questions About Voting

If you have any questions about how to vote or direct a vote in respect of your shares of our common stock, you may call us at (314) 548-6200.

Redemption Rights

Pursuant to our current certificate, any holders of our public shares may demand that such shares be redeemed in exchange for a pro rata share of the aggregate amount on deposit in the trust account, less franchise and income taxes payable, calculated as of two business days prior to the consummation of the Business Combination. If demand is properly made and the Business Combination is consummated, these shares, immediately prior to the Business Combination, will cease to be outstanding and will represent only the right to receive a pro rata share of the aggregate amount on deposit in the trust account which holds the proceeds of our IPO (calculated as of two business days prior to the consummation of the Business Combination, less franchise and income taxes payable) (upon the consummation of the Business Combination or within 3 business days after the conditions to the receipt of such amounts by the holders of shares under the Purchase Agreement are

 

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satisfied). For illustrative purposes, based on funds in the trust account of approximately $177.1 million on December 31, 2013, the estimated per share redemption price would have been approximately $10.26.

In order to exercise your redemption rights, you must both:

 

    submit a request in writing that we redeem your public shares for cash to Continental Stock Transfer & Trust Company, our transfer agent, at the following address:

Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Tel: (212) 845-3287
Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com

and

 

    deliver your public shares either physically or electronically through DTC to our transfer agent at least two business days before the special meeting. Stockholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the transfer agent and time to effect delivery. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, we do not have any control over this process and it may take longer than two weeks. Stockholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically. If you do not submit a written request and deliver your public shares as described above, your shares will not be redeemed.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests (and submitting shares to the transfer agent) and thereafter, with our consent, until the vote is taken with respect to the Business Combination. If you delivered your shares for redemption to our transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that our transfer agent return the shares (physically or electronically). You may make such request by contacting our transfer agent at the phone number or address listed above.

Unless waived by the Company or unless the Rollover Funds elect to contribute additional Jason equity in connection with the rollover as described below, it is a condition to closing under the Purchase Agreement that at least $115.0 million remain in our trust account at closing. Each redemption of shares of Quinpario Common Stock by our public stockholders will decrease the amount in our trust account. Therefore, in order to satisfy the condition to closing, the maximum redemption threshold is the amount that would allow us to maintain, in the aggregate, at least $115.0 million of available cash to pay the Cash Consideration when aggregated with the proceeds of Jason’s acquisition financing. If, however, redemptions by our public stockholders cause us to have less than $115.0 million in our trust account at the closing of the Business Combination, the Rollover Funds will have the option (but not the obligation) to contribute in connection with the rollover an additional aggregate amount of their current equity in Jason to Quinpario Sub equal to the shortfall between the cash then in the trust account and $115.0 million. We anticipate raising additional proceeds through the sale of preferred stock, which could be used to consummate the Business Combination or for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. Additionally, we have received commitments from certain investors pursuant to which they have collectively agreed to purchase up to $[] million of shares of Quinpario Common Stock through open market or privately negotiated transactions, a private placement or a combination thereof.

Prior to exercising redemption rights, stockholders should verify the market price of our common stock as they may receive higher proceeds from the sale of their common stock in the public market than from exercising

 

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their redemption rights if the market price per share is higher than the redemption price. We cannot assure you that you will be able to sell your shares of our common stock in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in our common stock when you wish to sell your shares.

If you exercise your redemption rights, your shares of our common stock will cease to be outstanding immediately prior to the Business Combination and will only represent the right to receive a pro rata share of the aggregate amount on deposit in the trust account. You will no longer own those shares and will have no right to participate in, or have any interest in, the future growth of the Company, if any. You will be entitled to receive cash for these shares only if you properly and timely demand redemption.

If the Business Combination is not approved and we do not consummate an initial business combination within 16 months (or 24 months in case of extensions) of August 14, 2013, we will be required to dissolve and liquidate our trust account by returning the then remaining funds in such account to the public stockholders and our warrants will expire worthless.

Appraisal Rights

Appraisal rights are not available to holders of shares of our common stock in connection with the Business Combination.

 

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PROPOSAL NO. 1—APPROVAL OF THE BUSINESS COMBINATION

We are asking our stockholders to approve and adopt the Purchase Agreement and the transactions contemplated thereby, including the Business Combination. Our stockholders should read carefully this proxy statement in its entirety for more detailed information concerning the Purchase Agreement, which is attached as Annex A to this proxy statement. Please see the subsection entitled “The Purchase Agreement,” below, for additional information and a summary of certain terms of the Purchase Agreement. You are urged to read carefully the Purchase Agreement in its entirety before voting on this proposal.

Because we are holding a stockholder vote on the Business Combination, our amended and restated certificate of incorporation provides that we may consummate the Business Combination only if it is approved by the affirmative vote of the holders of a majority of the shares of our common stock that are voted at the special meeting.

The Purchase Agreement

This section describes the material provisions of the Purchase Agreement, but does not purport to describe all of the terms of the Purchase Agreement. The following summary is qualified in its entirety by reference to the complete text of the Purchase Agreement, a copy of which is attached as Annex A hereto, which is incorporated herein by reference. Stockholders and other interested parties are urged to read the Purchase Agreement, carefully and in its entirety (and, if appropriate, with the advice of financial and legal counsel) because it is the primary legal document that governs the Business Combination.

The Purchase Agreement has been included to provide you with information regarding its terms. It is not intended to provide any other factual information about Quinpario, Quinpario Sub, Seller, Jason or their respective affiliates. The representations, warranties and covenants contained in the Purchase Agreement were made only for the purposes of that agreement and as of the specific dates, were solely for the benefit of the parties to the Purchase Agreement, and may be subject to limitations agreed upon by the parties, including being qualified by information in confidential disclosure schedules that the parties have exchanged in connection with signing the Purchase Agreement and made for the purposes of allocating contractual risk among the parties to the Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Stockholders are not third-party beneficiaries of the Purchase Agreement and should not rely on the representations, warranties or covenants or any description thereof as characterizations of the actual state of facts at the time they were made or otherwise. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures.

General Description of the Purchase Agreement

On March 16, 2014, we entered into the Purchase Agreement with Quinpario Sub, Jason and Seller pursuant to which, among other things and subject to the terms and conditions contained in the Purchase Agreement, we will effect an acquisition of Jason whereby Quinpario Sub will acquire all shares of common stock of Jason then outstanding from certain members of Seller and current and former management of Jason (collectively, with each other member of Seller and/or current and former management of Jason who after the date of the Purchase Agreement executes and delivers a commitment to effect the rollover, the “Rollover Participants”) and Seller.

As of the date of the Purchase Agreement, Seller owned all of the issued and outstanding capital stock of Jason, comprised solely of shares of Jason common stock. At the signing, certain of the Rollover Participants entered into binding commitments to effect, at the closing of the Business Combination, the acquisition of Quinpario Sub Shares through a contribution of shares of Jason common stock (of equal value held by them as of such time) to Quinpario Sub (the “rollover”). To facilitate the rollover, Seller has agreed that, immediately prior to the consummation of the Business Combination, Seller shall distribute in-kind to each Rollover Participant (in

 

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exchange for the redemption of certain of each such person’s equity interests in Seller) a number of shares of Jason common stock equal in value to the aggregate amount committed by such person to be contributed to Quinpario Sub in connection with the rollover.

Pursuant to the terms of the Purchase Agreement, the Business Combination Purchase Price is $538.65 million, subject to certain customary adjustments and escrow requirements in accordance with the terms of the Purchase Agreement. The consideration to be paid to Seller and the Rollover Participants for their shares of Jason common stock will be funded by a combination of the Cash Consideration and at least $35.0 million in common equity issued by Quinpario Sub in exchange for the contribution of shares of Jason common stock by the Rollover Participants to Quinpario Sub in connection with the rollover, subject to customary adjustments (including a working capital adjustment using a target working capital of $80.0 million) and escrow requirements as set forth in the Purchase Agreement. Quinpario intends to pay a portion of the Cash Consideration using proceeds held in the trust account maintained for the benefit of the Company’s public stockholders, if any, after giving effect to the exercise by Quinpario public stockholders of their redemption rights described below. The remainder of the Cash Consideration will be paid from the proceeds of our debt financing. In addition, a portion of the remaining proceeds of such debt financing will be used to pay certain of Jason’s existing indebtedness and transaction expenses of Jason and Seller.

As promptly as practicable after the date of the Purchase Agreement described herein, Quinpario has agreed to provide its public stockholders with the opportunity to redeem shares of Quinpario Common Stock in conjunction with a stockholder vote on the transactions contemplated by the Purchase Agreement. Quinpario has further agreed (i) not to terminate or withdraw such redemption rights other than in connection with a valid termination of the Purchase Agreement and (ii) extend such period for public stockholders to exercise their redemption rights for any period required by any rule, regulation, interpretation or position of the SEC or NASDAQ.

Post-Business Combination Ownership of Jason, Quinpario Sub and Quinpario

After the Business Combination, Quinpario Sub will own 100.0% of Jason, and:

 

    assuming no redemptions of public shares and no exchange of Quinpario Sub Shares for shares of Quinpario Common Stock by the Rollover Participants following consummation of the Business Combination, (i) the Rollover Participants and Quinpario each will own approximately 12.3% and 87.7% of Quinpario Sub, respectively, and (ii) our current stockholders and our initial stockholders will each own approximately 70.9% and 29.1% of Quinpario, respectively. However, assuming an exchange by the Rollover Participants immediately after Closing, of all of their Quinpario Sub Shares for shares of Quinpario Common Stock, Quinpario will own 100% of Quinpario Sub stock and the Rollover Participants, our current stockholders and our initial stockholders will each own approximately 12.3%, 61.7% and 26.0% of Quinpario, respectively;

 

    assuming redemption by holders of 6,049,263 public shares for cash, and no exchange of Quinpario Sub Shares into shares of Quinpario Common Stock by the Rollover Participants, in each case, following consummation of the Business Combination, (i) the Rollover Participants and Quinpario each will own approximately 12.3% and 87.7% of Quinpario Sub, respectively, and (ii) our current stockholders and our initial stockholders will own approximately 60.6% and 39.4% of Quinpario, respectively. However, assuming redemptions at such level and the exchange by Rollover Participants immediately after Closing of all of their Quinpario Sub Shares for shares of Quinpario Common Stock, Quinpario will own 100% of Quinpario Sub’s outstanding capital stock and the Rollover Participants, our current stockholders and our initial stockholders will own approximately 15.7%, 51.1% and 33.2% of Quinpario, respectively;

See the subsection entitled “Rollover Agreement” for further discussion regarding each Rollover Participant’s option, after consummation of the Business Combination, to exchange its Quinpario Sub Shares into an equal number of shares of Quinpario Common Stock pursuant to the terms of the Rollover Agreement.

 

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Closing of the Business Combination

The closing of the Business Combination is expected to take place no later than the second business day following the day on which the last of the conditions to the closing of the Business Combination (described under the subsection entitled “Conditions to Closing of the Business Combination”) have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing of the Business Combination, but subject to the fulfillment or waiver of those conditions) or such other date as may be specified in writing by Quinpario Sub and Seller. Assuming timely satisfaction of the necessary closing conditions, Quinpario and Seller currently expect the closing of the Business Combination to occur in the second quarter of 2014.

Conditions to Closing of the Business Combination

The obligation of the parties to complete the Business Combination are subject to the fulfillment of certain closing conditions, including:

 

    the approval of the Purchase Agreement and the transactions contemplated thereby (including the Business Combination) by our stockholders holding a majority of our shares of common stock that are present and voted at the special meeting;

 

    the approval of the Proposal 2 by our stockholders holding a majority of our outstanding shares of common stock;

 

    the expiration or termination of the regulatory waiting periods under the HSR Act (as defined below);

 

    the absence of any order or law, judgment or ruling of any governmental entity that restrains, prohibits or otherwise prevents the consummation of the Business Combination;

 

    the exercise by Quinpario public stockholders to redeem Quinpario Common Stock by our public stockholders having been completed in accordance with the terms of the Purchase Agreement and, after giving effect to any such redemptions (i) Quinpario having at least $5,000,001 in net tangible assets and (ii) subject to the Rollover Funds’ option to fund any such shortfall, there being at least $115.0 million remaining in our trust account;

 

    our receipt of certificates evidencing all shares of Jason common stock being purchased from Seller;

 

    Quinpario Common Stock remaining listed on NASDAQ;

 

    the absence of a material adverse effect on Quinpario and Jason;

 

    receipt by Quinpario, Quinpario Sub and/or Jason of debt financing proceeds, which together with the funds then remaining in our trust account and the rollover equity to be contributed by the Rollover Participants, will be sufficient to pay the Purchase Price;

 

    the accuracy of the representations and warranties of Quinpario, Quinpario Sub, Seller and Jason (subject in certain cases to certain materiality, knowledge and other qualifications);

 

    Quinpario’s, Quinpario Sub’s, Jason’s and Seller’s performance in all material respects of the pre-closing obligations of Quinpario, Quinpario Sub, Jason and Seller under the Purchase Agreement; and

 

    the exchange by the parties of the Rollover Agreement, an escrow agreement, customary closing certificates, debt payoff letters, director resignation letters and board and shareholder approvals (as applicable, duly executed and delivered).

We cannot provide assurance as to when or if all of the conditions to the Business Combination will be satisfied or waived by the appropriate party. As of the date of this proxy statement, we have no reason to believe that any of these conditions will not be satisfied.

 

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Efforts to Obtain Stockholder Approval and Consummate the Business Combination; Regulatory Matters

Unless the Purchase Agreement is terminated in accordance with its terms, we have agreed to call a special meeting of our stockholders, for the purpose of such stockholders considering and voting on the approval and adoption of the Purchase Agreement and any other matters required to be voted upon by such stockholders in connection with the transactions contemplated in the Purchase Agreement (including the Business Combination). We may delay, postpone or adjourn such special meeting of our stockholders if, as of the time for which the stockholders meeting is originally scheduled, there are insufficient shares of our common stock represented (either in person or by proxy) and voting to adopt the Purchase Agreement or Proposal 2 or to constitute a quorum necessary to conduct the business of the special meeting. Our board of directors has, by a unanimous vote, approved the Business Combination and directed that the Purchase Agreement and the Business Combination be submitted to our stockholders for their consideration.

Moreover, each party to the Purchase Agreement has agreed to use commercially reasonable efforts to take or cause to be taken all actions reasonably necessary, proper or advisable under applicable law to consummate the transactions contemplated by the Purchase Agreement (including the Business Combination).

More specifically, each party to the Purchase Agreement will use its reasonable best efforts to obtain all necessary consents or other authorizations of all governmental authorities, including making all appropriate filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1975, as amended (“HSR Act”), and using commercially reasonable efforts to take all necessary or reasonably advisable actions to avoid or resolve any impediment or objection under any antitrust, competition or trade regulation that may be asserted by any such governmental authority with respect to the Business Combination and other transactions contemplated by the Purchase Agreement and related agreements. The Business Combination is subject to such HSR Act requirements. Quinpario and Jason filed an appropriate notification and report form required under the HSR Act with respect to the Business Combination with applicable governmental authorities on Tuesday, March 25, 2014. The parties’ request for early termination was granted effective [            ], 2014.

The parties also agreed to promptly advise the other upon receiving any material communication from any governmental entity, consent or approval of which is required to complete the transactions contemplated by the Purchase Agreement. At any time before or after consummation of the Business Combination, notwithstanding the early termination of the waiting period under the HSR Act, the applicable competition authorities could take such action under applicable antitrust laws as each deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.

We cannot assure you that any of the regulatory approvals described above will be obtained, and, if obtained, we cannot assure you as to the date of any approvals or the absence of any litigation challenging such approvals. Likewise, we cannot assure you that the Antitrust Division of the United States Department of Justice, the U.S. Federal Trade Commission or any state attorney general will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, we cannot assure you as to its result.

None of Quinpario, Quinpario Sub, Seller or Jason is aware of any material governmental approvals or actions that are required for completion of the merger other than those described above. It is presently contemplated that if any such additional governmental approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.

Termination

Quinpario and Seller may terminate the Purchase Agreement by mutual written consent at any time before the closing of the Business Combination, whether before or after Quinpario’s stockholders have voted in favor the Purchase Agreement.

 

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In addition, either Quinpario or Seller may terminate the Purchase Agreement at any time before the closing of the Business Combination by written notice to the other party:

 

    if the Business Combination has not been completed on or before August 15, 2014 (the “termination date”), but only so long as the failure of the Business Combination to have been completed by the termination date was not the result of the terminating party’s breach of its representations, warranties, obligations or covenants under the Purchase Agreement;

 

    if any governmental authority of competent jurisdiction issues any final and non-appealable order, decree, ruling or other action that has the effect of permanently enjoining, restraining, or otherwise prohibiting the consummation of the Business Combination, but only so long as the terminating party has used all commercially reasonable efforts to remove such order, decree, ruling, judgment or injunction;

 

    if there is a breach by the non-terminating party of any of its representations or warranties contained in the Purchase Agreement, which breach would give rise to the failure to satisfy the closing condition regarding the accuracy of representations and warranties of such party (described above under “Conditions to the Completion of the Business Combination”) that is either not curable by the termination date or, if capable of being cured, has not been cured within 30 calendar days following receipt of written notice from the terminating party stating its intention to terminate the Purchase Agreement; or

 

    if the Business Combination Proposal or Proposal 2 is not approved by our shareholders at the special meeting and, as a consequence thereof, the exercise by Quinpario public stockholders of their redemption rights has not been completed in accordance with the terms of the Purchase Agreement.

In the event of the termination of the Purchase Agreement, there will be no liability on the part of Quinpario, Quinpario Sub, Seller, Jason, or any of their respective directors, officers, equityholders and affiliates under the Purchase Agreement, other than liability arising out of any willful act taken by any party to the Purchase Agreement that is a material breach of such party’s covenants or agreements under the Purchase Agreement and which was taken with the knowledge that such act would reasonably be expected to result in such material breach.

Fees and Expenses

Termination Fees

If the Purchase Agreement is validly terminated, no party thereto will have any liability or any further obligation whatsoever to any other party under the Purchase Agreement in respect of any termination fees.

Fees and Expenses

All expenses incurred in connection with the Purchase Agreement and the transactions contemplated thereby (including the Business Combination), including all legal, accounting, investment banking and other fees, expenses and costs, will be paid by the party incurring such fees, expense and costs, whether or not the Business Combination is consummated. Pursuant to the Purchase Agreement, however, if the Business Combination is successfully consummated, Quinpario will be obligated to pay, or cause Jason and its subsidiaries to, pay all expenses incurred by Seller in accordance with the terms of the Purchase Agreement and as a reduction from the Purchase Price ultimately paid to Seller. Under the terms of the letter of intent signed by Jason and Quinpario, dated March 6, 2014, Quinpario has agreed to reimburse Jason and its affiliates for half of its actual, out-of-pocket third party expenses incurred by them (relating to the proposed Business Combination that it would not have otherwise incurred in the normal course of operations, up to an aggregate amount of $500,000) if for any reason the Business Combination is not consummated on or prior to August 15, 2014. The expenses incurred in connection with the filing, printing and mailing of this proxy statement and the solicitation of the approval of our stockholders, and all filing and other fees paid to the SEC will be borne by Quinpario.

 

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As a result of the Business Combination, we will owe $5,175,000 in non-deferred underwriting commissions to the underwriters of our IPO, and fees for other advisors we may engage, which will be paid at the Closing with the cash in the trust account. In addition, we owe Stifel a fee of $250,000 for the delivery of its fairness opinion and a transaction fee, upon the successful consummation of the Business Combination, of $3,250,000.

As a result of the Business Combination, we will also owe $6,059,688 as a transaction fee (net of retainers paid) to Baird, Jason’s financial advisor, as well as $2,000,000 as a transaction fee to Moelis & Company, Jason’s additional financial advisor which will be paid by Jason and reduce the portion of the Purchase Price paid to Seller at closing.

Conduct of Business Pending the Business Combination

Each of Quinpario and Jason has undertaken covenants that place customary restrictions on it and its subsidiaries until the consummation of the Business Combination (or, if earlier, the date the Purchase Agreement is validly terminated). Each has agreed to operate its business in the regular and ordinary course in substantially the same manner heretofore conducted and to use commercially reasonable efforts to preserve intact certain of its present business relationships. Except with Quinpario’s prior consent (which consent shall not be unreasonably withheld conditioned or delayed), Jason has also agreed that, subject to certain specifically scheduled and identified exceptions set forth in the Purchase Agreement or as may be required by law or the Purchase Agreement, Jason will not, and will not permit any of its subsidiaries to, among other things, undertake the following actions:

 

    issue any capital stock, options or convertible securities or enter into similar commitments;

 

    incur certain indebtedness in excess of $2 million (other than pursuant to existing credit facilities up to an amount not to exceed the facility limit applicable to each such credit facility as of the date of the Purchase Agreement) or create any lien other than specified liens;

 

    sell, assign or otherwise dispose of, or agree to sell, assign or otherwise dispose of, any of the material fixed assets having a value in excess of $500,000;

 

    acquire any business unless the transaction is valued at less than $500,000;

 

    except in the ordinary course of business, enter into or amend any material contract or material lease;

 

    other than in the ordinary course of business consistent with past practice, (i) enter into or amend any employment or similar agreement, except for any employment agreement providing for an annual base salary of less than $200,000, (ii) increase the compensation payable to any directors or officers, (iii) pay or make provision for the payment of any bonuses, options or similar arrangements, or (iv) increase the coverage under any employment benefit plan other than as required by applicable law;

 

    make any capital expenditures in excess of $2,500,000 individually or $10,000,000 in the aggregate;

 

    adopt or materially change any accounting practice other than as required by law;

 

    allow any material insurance policy to lapse;

 

    change any material practices with respect to certain customers or suppliers;

 

    waive or compromise any material rights or claims with a value in excess of $1,000,000;

 

    amend its or its subsidiaries governing documents;

 

    adopt or effect a plan of complete or partial liquidation; or

 

    enter into any agreement to take any of the above actions.

 

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Quinpario has also agreed, except as otherwise contemplated by the Purchase Agreement or as required by applicable law, subject to certain specifically scheduled and identified exceptions, that it will not, and will not permit any of its subsidiaries to, among other things, undertake the following actions without the prior consent of Seller (which consent shall not be unreasonably withheld, conditioned or delayed):

 

    issue any capital stock, options or convertible securities or enter into similar commitments;

 

    amend its or its subsidiaries governing documents;

 

    acquire any capital stock or other interest in any other person or merge or purchase a substantial portion of any other person or business;

 

    create, issue, pledge or sell (or propose or authorize the same) any options or other awards with respect to shares of its capital stock or adopt a stockholder rights plan;

 

    subject to certain exceptions, permit any disbursements from the trust account;

 

    split, combine, purchase (or propose to do the same) any shares of its capital stock;

 

    increase the compensation or benefits payable to any initial stockholder;

 

    adopt or effect a plan of complete or partial liquidation or other reorganization; or

 

    enter into any agreement to take any of the above actions or publicly recommend or announce an intention to do so.

Additional Covenants of the Parties

The Purchase Agreement also contains customary mutual covenants relating to the preparation of this document, the granting of access to information, the filing of tax returns and other tax matters (including Seller’s right, subject to certain exceptions, to receive refunds and credits actually received by Jason and its subsidiaries in respect of pre-closing tax periods), confidentiality, public announcements with respect to the transactions contemplated by the Purchase Agreement, notification in certain events, the procurement of applicable third party consents, exclusivity with respect to the transactions contemplated by the Purchase Agreement (and with respect to any alternative transactions), the retention of various books and records of Jason and its subsidiaries, contact with Jason customers, suppliers and other business relations prior to the consummation of the Business Combination, permissible stockholder votes, the termination of specifically identified related party agreements, transactions involving shares of Quinpario Common Stock, and the preservation of Quinpario’s status as a listed company on NASDAQ.

Acquisition Financing

Debt Financing

In connection with Quinpario’s and Quinpario Sub’s obligation to pay the Purchase Price at the closing of the Business Combination, each party has agreed to certain customary obligations, including using their respective reasonable best efforts to take, or cause to be taken, all actions and do, or cause to be done, all things necessary, proper or advisable to arrange and obtain the proceeds of the Debt Financing as promptly as reasonably practicable after the date of the Purchase Agreement, which efforts shall, as necessary, include the following:

 

    maintaining in effect the commitment letter delivered to Quinpario from the lenders party thereto in respect of the Debt Financing (and, in certain circumstances, enforcing its rights against such lenders thereunder);

 

    negotiating definitive agreements with respect to such debt which, subject to certain limited exceptions, are consistent with the terms and conditions contained in such commitment letter (and the related fee letter);

 

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    satisfying on a timely basis all conditions to the debt financing that are within its control and complying in all material respects with its obligations under such debt commitment letter;

 

    obtaining such reasonably required third-party consents; and

 

    consummating the Debt Financing at the closing of the Business Combination.

Quinpario and Quinpario Sub have each further agreed to keep Seller and Jason reasonably informed of the status of their efforts to arrange the Debt Financing, including by giving prompt oral and written notice of any (i) breach, default or purported termination or repudiation by any party to such commitment letter and (ii) any material dispute or disagreement between or among the parties to such commitment letter. If any portion of the Debt Financing (or any alternative debt financing) becomes unavailable, regardless of the reason therefor, Quinpario and Quinpario Sub shall use reasonable best efforts to obtain as promptly as practicable alternative financing (in an amount sufficient to enable them to consummate the Business Combination, to effect the redemptions of Quinpario Common Stock contemplated hereby, and to pay the Purchase Price and all related fees and expenses) on terms and conditions equivalent or no less favorable in the aggregate to Quinpario and Quinpario Sub than those contained in the commitment letter (and related fee letter). Seller and Jason shall provide customary assistance and cooperation (provided that such assistance and cooperation does not unreasonably interfere with the ongoing operations of Jason and its subsidiaries) to Quinpario and Quinpario Sub in connection with the foregoing, including using their reasonable best efforts to, among other things, participate in road shows, sessions with rating agencies and prospective lenders, assist with the preparation of rating agency presentations, offering documents, private placement memoranda and similar documents and furnishing financial and other pertinent information as may be reasonably requested by Quinpario. Quinpario and Quinpario Sub have each agreed to indemnify and hold harmless Seller, Jason and their subsidiaries and affiliates for and against any and all liabilities and other obligations suffered or incurred by them in connection with their provision of such assistance and cooperation (except if such liabilities and other obligations arise from information provided by, or misconduct of, such indemnified parties).

Equity Financing

In addition to the Debt Financing described above, Seller and Jason have agreed that Quinpario may issue up to $50 million of Quinpario’s 8.0% Series A Convertible Perpetual Preferred Stock pursuant to the PIPE Investment, which could be used to consummate the Business Combination or for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions, so long as such financing would not be reasonably likely to impair or delay the consummation of the Business Combination or the ability of Quinpario or Quinpario Sub to obtain any portion of the Debt Financing. If such financing is sought, Quinpario may be required pursuant to the terms of the Purchase Agreement to terminate all activity with respect to such issuance if any of the foregoing effects is reasonably likely to occur. There is no assurance that, if sought, any such equity financing would be successful. See “Description of Securities—Authorized and Outstanding Stock—Series A Convertible Preferred Stock” for further information.

Indemnification of Directors and Officers; Directors’ and Officers’ Insurance

Quinpario and Quinpario Sub each agree that all rights to indemnification that exist in favor of Jason’s and its subsidiaries’ directors, officers, employees and agents prior to the Business Combination under the Jason or its subsidiaries governing documents or otherwise will survive the Business Combination and continue in full force and effect and that Jason and its subsidiaries will perform and discharge their respective obligations to provide such indemnity. Quinpario will advance (or cause Jason and/or its subsidiaries to advance) expenses in connection with such indemnification as provided in the applicable governing documents of Jason and its subsidiaries or other agreements.

Quinpario and Quinpario Sub will cause Jason and its subsidiaries to, and Jason and its subsidiaries will, purchase and maintain a fully pre-paid six-year “tail” policy to the current directors’ and officers’ liability insurance policy and fiduciary insurance policy maintained as of the date of the Purchase Agreement by Seller, Jason or Jason’s subsidiaries, which tail policy will cover a period of at least six years from the date of

 

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consummation of the Business Combination with respect to matters occurring prior to the same date, and which tail policies will contain at least the same coverage as the coverage set forth in the current policies (provided that the cost of such tail policies will not exceed more than 200% of the premium paid by Jason and its subsidiaries for its current policies).

Employee Matters

For a period of one year following the Closing Date, Quinpario and Quinpario Sub will provide employees of Jason and its subsidiaries with compensation no less favorable in the aggregate than the compensation provided to such employees immediately prior to the Business Combination and with employee benefits substantially similar in the aggregate to the employee benefits and other benefit plans and arrangements maintained by Jason and its subsidiaries as of the closing of the Business Combination. Among other things, Quinpario and Quinpario Sub will grant all employees of Jason and its subsidiaries credit for any service earned prior to the Closing Date for eligibility and vesting purposes and for purposes of vacation accrual and severance benefit determinations under any plan or arrangement that may be established or maintained by Quinpario or any of its affiliates or by Jason or any of its subsidiaries on or after the Closing Date.

Prior to the Closing, Jason will (i) attempt in good faith to secure from each person who has a right to any payments or benefits as a result of or in connection with the transactions contemplated by the Purchase Agreement that would be deemed to constitute “parachute payments” (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended) a waiver of such person’s right to all such payments and/or benefits so that all remaining payments and/or benefits shall not be deemed “excess parachute payments”, and (ii) to the extent such waivers are obtained, solicit the approval of Jason’s stockholders of such waived benefits.

Trust Account Waiver

Jason and Seller have acknowledged that the trust account is for the benefit of Quinpario’s public stockholders and that Quinpario may disburse funds from the trust account only in certain limited circumstances. Accordingly, Jason and Seller (each for itself and its directors, officers, employees, shareholders, representatives, advisors and other affiliates) have waived all rights, title, interests or claims of any kind against Quinpario to collect from the trust account any amounts that may be owed to them by Quinpario for any reason whatsoever, including to a breach of the Purchase Agreement.

Remedies

Post-Closing Indemnification; Specific Performance

Subject to certain specific performance rights described below, following the closing of the Business Combination, the indemnification rights outlined below will be the sole and exclusive remedy of each party to the Purchase Agreement, any of their respective affiliates and any of their respective directors, officers, employees, stockholders or representatives for any loss suffered with respect to the Purchase Agreement and the transactions contemplated thereby (including the Business Combination).

Following the consummation of the Business Combination and subject to the limitations described below (as applicable), each of Quinpario, Quinpario Sub and their respective affiliates, representatives, successors and assigns (collectively, the “Quinpario Indemnified Parties”) shall be entitled to indemnification from Seller for any losses, liabilities or other obligations actually incurred by them as a result of:

 

    any breach of any of Jason’s or Seller’s representations or warranties set forth in the Purchase Agreement (generally determined without regard to material adverse effect, materiality and other similar qualifications contained therein);

 

    any breach by Jason or Seller of any of their respective covenants or other agreements contained in the Purchase Agreement that are required to be performed prior to the consummation of the Business Combination; and

 

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    any taxes attributable to or arising from any tax period ending (or portion thereof) on or prior to the date on which the Business Combination is consummated (subject to certain limitations related to taxes arising from the sale of one of Jason’s foreign joint ventures occuring prior to execution of the Purchase Agreement).

Following the consummation of the Business Combination and subject to the limitations described below (as applicable), Seller and its affiliates, representatives, successors and assigns (collectively, the “Seller Indemnified Parties”) shall be entitled to indemnification from Quinpario for any losses, liabilities or other obligations actually incurred by them as a result of:

 

    any breach of any of Quinpario’s or Quinpario Sub’s representations or warranties set forth in the Purchase Agreement;

 

    any breach by Quinpario or Quinpario Sub of any of their respective covenants or other agreements contained in the Purchase Agreement; and

 

    any taxes attributable to or arising from any tax period (or portion thereof) ending on or after the date on which the Business Combination is consummated.

Additionally, the parties are entitled to an injunction, specific performance and other equitable relief to prevent breaches of the Purchase Agreement in addition to any other remedy to which they are entitled at law or in equity. Such remedies shall not be available to Seller or Jason to cause Quinpario or Quinpario Sub to consummate the Business Combination unless the proceeds of the Debt Financing are available and would be funded at closing.

Survival

Generally, the representations and warranties and covenants of the parties to the Purchase Agreement will survive for a period of eighteen (18) months after the closing of the Business Combination (such period, the “survival period”). However, representations and warranties under which an indemnification claim shall have been timely made prior to the expiration of such eighteen (18) month period shall survive solely with respect to such indemnification claim until the final disposition thereof. All covenants and agreements that contemplate performance following the closing of the Business Combination shall survive until performed.

Escrowed Amounts for the Benefit of Quinpario Indemnified Parties

In order to provide security in respect of Seller’s indemnification obligations in favor of any Quinpario Indemnified Party arising after the closing of the Business Combination, at the closing, Quinpario will deposit $5,386,500 (the “escrow amount”) of the Purchase Price into an escrow account (the “escrow account”) to be held pursuant to the terms of the Purchase Agreement and an escrow agreement to which Seller and Quinpario are parties.

The escrow agent under the escrow agreement will hold the escrow amount (less any disbursements therefrom agreed in writing by Quinpario and Seller) until the expiration of the survival period, at which time the escrow amount then remaining in the escrow account, if any, will be distributed to Seller, subject to retention of any portion of such remaining escrow amount that is subject to an unresolved or unsatisfied claim specified in a notice timely delivered by any Quinpario Indemnified Party to Seller prior to the expiration of the survival period.

Limits on Indemnification

Except in respect of claims for fraud and actions to seek specific performance or other injunctive relief, the sole and exclusive remedy of the parties to the Purchase Agreement with respect to any breach of covenants, agreements, representations or warranties set forth in the Purchase Agreement (including with respect to any matters arising under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or other environmental laws relating hazardous substances) is the right to be indemnified as noted above (subject to the limitations noted below).

Notwithstanding the foregoing, in no event shall any Quinpario Indemnified Party be entitled to indemnification under the Purchase Agreement for any breach of any representation or warranty of Seller or Jason set forth therein unless and until the total of indemnifiable losses (i) arising out of or related to such breach

 

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exceeds $50,000 and (ii) suffered by all Quinpario Indemnified Parties in respect of all indemnifiable breaches of representations and warranties exceeds $5,386,500 (the “deductible”), and, in such event, the Quinpario Indemnified Parties shall only be entitled to recover for such indemnifiable losses in excess of the deductible. Moreover, except in respect of claims for fraud, the maximum aggregate amount all Quinpario Indemnified Parties shall be entitled to recover from Seller shall equal the escrow amount. Further, once the funds in the escrow account are finally disbursed from the escrow account, other than in respect of claims for fraud, the Quinpario Indemnified Parties shall have no further right to indemnification under or otherwise recover for losses the Purchase Agreement.

Among other limitations, recoverable indemnifiable losses must be reduced by the amount of net proceeds recovered under insurance policies and net tax benefits actually received or realized (other than pursuant to the R&W Policy (defined below)) and any other amounts recovered by the applicable indemnified party from third parties.

The Purchase Agreement contains customary provisions relating to the defense of third party claims for which either party may have a right to indemnity under the Purchase Agreement.

R&W Insurance

Prior to the closing of the Business Combination, Quinpario will procure a transaction representations and warranties insurance policy (the “R&W policy”), for which Seller will bear fifty percent of the cost up to $750,000. On or about the date of the Purchase Agreement, Seller paid a deposit to the insurance underwriter(s) of approximately $150,000. Losses suffered by the Quinpario Indemnified Parties in excess of the escrow amount shall, subject to the terms and conditions set forth therein, be satisfied from the proceeds recovered under the R&W policy.

Representations and Warranties

The Purchase Agreement contains representations and warranties made by each of Jason, Seller, Quinpario and Quinpario Sub relating to their respective businesses which are customary for transactions similar to the Business Combination. With the exception of certain representations that must be true and correct in all material respects, no representation will be deemed untrue or incorrect for purposes of satisfying applicable closing conditions as a consequence of the existence or absence of any fact, state of facts, circumstance, change, effect, development, occurrence or combination of the foregoing unless that event, state of facts, circumstance, change, effect, development, occurrence or combination of the foregoing, has had or is reasonably likely to have a material adverse effect on, either (i) the ability of the party making such representations to consummate the Business Combination and the other transactions contemplated by the Purchase Agreement or (ii) the business, condition (financial or otherwise) or results of operations of the party (and its subsidiaries, taken as a whole) making the representation.

In the Purchase Agreement, each of Seller, Jason, Quinpario and Quinpario Sub has made representations and warranties to the others, as applicable, regarding (among other things):

 

    corporate matters, including due organization and qualification;

 

    authority relative to execution and delivery of the Purchase Agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the Business Combination;

 

    required governmental approvals;

 

    legal proceedings;

 

    broker’s fees payable in connection with the Business Combination and/or the Purchase Agreement;

 

    related party agreements; and

 

    the accuracy of information supplied for inclusion in this document and other similar documents.

 

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In addition, Jason has made other representations and warranties about itself to Quinpario and Quinpario Sub as to:

 

    capitalization;

 

    financial statements, internal controls and accounting books and records;

 

    the absence of undisclosed liabilities;

 

    material contracts;

 

    the absence of material adverse changes;

 

    compliance with applicable laws (including anti-bribery and similar laws) and permits;

 

    employee benefits matters;

 

    environmental matters;

 

    intellectual property;

 

    employment law matters;

 

    insurance coverage;

 

    tax matters;

 

    real and personal property;

 

    customer and suppliers; and

 

    absence of anti-takeover provisions.

Seller also has made additional representations and warranties to Quinpario and Quinpario Sub as to ownership of Jason’s outstanding capital stock.

Quinpario and Quinpario Sub also has made additional representations and warranties to Seller and Jason as to:

 

    solvency of such parties (together with their respective subsidiaries, which after the closing shall include Jason and its subsidiaries) on a basis pro forma for the Business Combination;

 

    sufficiency of funds and the financing required to consummate the Business Combination;

 

    the funds in our trust account;

 

    the listing of our shares of common stock on NASDAQ;

 

    the approval of the Purchase Agreement and the transactions contemplated thereby (including the Business Combination) by our board of directors; and

 

    the formation of Quinpario Sub and its activities since formation.

The representations and warranties described above and included in the Purchase Agreement were made by each of the parties thereto for the benefit of the other parties thereto, as applicable. These representations and warranties were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement and may be subject to important qualifications and limitations agreed to by Quinpario, Quinpario Sub, Seller and Jason in connection with negotiating the terms of the Purchase Agreement, including being qualified by disclosures between those parties. The representations and warranties in the Purchase Agreement may have been made to allocate risks among the parties to the Purchase Agreement, including where the parties do not have complete knowledge of all facts, instead of establishing matters as facts. Furthermore, the representations and warranties may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. The assertions embodied in such representations and warranties are qualified by information contained in disclosure schedules to the Purchase Agreement that the

 

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parties exchanged in connection with the execution of such agreement. Accordingly, investors and security holders should not rely on such representations and warranties as characterizations of the actual state of facts or circumstances related to the parties to the Purchase Agreement or any of their respective subsidiaries or affiliates, since they were only made as of the date of the Purchase Agreement and are modified in important part by the underlying disclosure schedules. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures.

The Purchase Agreement is described in, and included as an annex to, this document only to provide you with information regarding its terms and conditions, and not to provide any other factual information regarding Quinpario, Quinpario Sub, Seller, Jason or their respective businesses. Accordingly, the representations and warranties and other provisions of the Pursuant Agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this document and in the documents incorporated by reference into this document. See “Where You Can Find More Information.”

Definition of Material Adverse Effect

For the purposes of the Purchase Agreement, material adverse effect means:

 

    with respect to Jason, any event, circumstance, change, development or effect that, individually or in the aggregate with all other events, circumstances, changes, developments or effects, has had, or would reasonably be expected to have, a material adverse effect upon (i) the assets, liabilities, condition (financial or otherwise), business or results of operations of Jason and its subsidiaries, taken as a whole or (ii) the ability of Jason to timely consummate the transactions contemplated by the Purchase Agreement in accordance with the terms thereof; and

 

    with respect to Quinpario, Quinpario Sub, and Seller, any change, effect, event, or occurrence that, individually or in the aggregate with all other changes, events or occurrences, has had a material adverse effect on (i) the business, financial condition or results of operations of Quinpario and its subsidiaries, taken as a whole, or (ii) the ability of Quinpario or any of its subsidiaries to perform its obligations under the Purchase Agreement and to consummate the transactions contemplated thereby.

In determining whether a material adverse effect has occurred or is reasonably likely to occur with respect to Jason, the parties will disregard effects resulting from:

 

    conditions affecting the United States economy or any foreign economy generally (except to the extent they have a disproportionate impact on Jason and its subsidiaries relative to other participants in the same industries);

 

    any national or international political or social conditions, including, engagement in hostilities, whether or not pursuant to the declaration of a national emergency or war, the occurrence of any military or terrorist attack or otherwise (except to the extent they have a disproportionate impact on Jason and its subsidiaries relative to other participants in the same industries);

 

    financial, banking or securities markets (except to the extent they have a disproportionate impact on Jason and its subsidiaries relative to other participants in the same industries);

 

    changes in generally accepted accounting principles (or in the interpretation thereof) (except to the extent they have a disproportionate impact on Jason and its subsidiaries relative to other participants in the same industries);

 

    changes in (or in the interpretation of) any laws, rules, regulations, orders or other binding directives issued by any governmental authority or any action required to be taken under any law, rule, regulation, order or existing contract by which Jason or any of its subsidiaries (or any of their respective assets or properties) is bound (except to the extent they have a disproportionate impact on Jason and its subsidiaries relative to other participants in the same industries);

 

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    any change that is generally applicable to the industries or markets in which Jason and its subsidiaries operate (except to the extent they have a disproportionate impact on Jason and its subsidiaries relative to other participants in the same industries);

 

    the public announcement of the transactions contemplated by the Purchase Agreement;

 

    any failure by Jason or any of its subsidiaries to meet any internal or published projections, forecasts or revenue or earnings predictions for any period ending on or after the date of the Purchase Agreement (but, in each case, the underlying cause of such failure may be considered);

 

    the taking of any action contemplated by the Purchase Agreement or any ancillary document or with Quinpario’s or Quinpario Sub’s consent; and

 

    any adverse change in or effect on the business of Jason or any of its subsidiaries that is cured prior to the closing.

Amendment of the Purchase Agreement

At any time prior to the closing of the Business Combination, the Purchase Agreement may be amended or supplemented by written agreement of the parties thereto.

Governing Law and Venue; Waiver of Jury Trial

The parties have agreed that the Purchase Agreement will be governed by Delaware law. Each party has irrevocably and unconditionally submitted to the exclusive jurisdiction of any state or federal court sitting in Delaware. Each party has further irrevocably waived any right such party may have to a trial by jury with respect to any action or proceeding between the parties arising out of or relating to the Purchase Agreement, the transactions contemplated thereby, or any action of the parties thereto in the negotiation, administration, performance or enforcement of the Purchase Agreement.

Related Agreements

This section describes the material provisions of certain additional agreements to be entered into pursuant to the Purchase Agreement (the “Related Agreements”) but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements. A copy of the Stockholder Voting Agreement is attached hereto as Annex E. The remaining Related Agreements will be filed with the SEC at a future date. Stockholders and other interested parties are urged to read such Related Agreements in their entirety.

Debt Financing

Quinpario Sub has obtained a commitment letter (the “Debt Commitment Letter”) from Deutsche Bank AG New York Branch (the “Lenders”) to provide, severally but not jointly, upon the terms and subject to the conditions set forth in the Debt Commitment Letter, in the aggregate up to $460 million in debt financing, consisting of the following:

 

    $300 million senior secured first lien term loan facility;

 

    $40 million senior secured first lien revolving credit facility (which is expected to be undrawn as of closing of the Business Combination); and

 

    $120 million senior secured second lien term loan facility.

We refer to the financing described above collectively as the “Debt Financing.” The aggregate principal amount of the senior secured term loan facilities may be increased to fund certain original issue discount or upfront fees in connection with the Debt Financing. The proceeds of the senior secured term loan facilities will

 

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be used to refinance Jason’s existing indebtedness, pay transaction fees and expenses and pay a portion of the Purchase Price. The proceeds of the revolving credit facility may be used (i) to fund certain original issue discount or upfront fees in connection with the Debt Financing, (ii) to provide ongoing working capital and (iii) for other general corporate purposes of Jason and its subsidiaries after the closing of the Business Combination.

The Debt Financing contemplated by the Debt Commitment Letter is conditioned on the consummation of the Business Combination in accordance with the Purchase Agreement, as well as other customary conditions, including:

 

    Quinpario Sub having received cash proceeds from equity contributions of Quinpario in an aggregate amount equal to 25% of the sum of such equity contributions and the amount of the initial borrowings under the Debt Financing;

 

    the repayment of certain existing indebtedness of Jason, substantially simultaneously with the initial borrowing under the term loan facilities;

 

    subject to certain limitations the absence of a material adverse effect of Jason and its subsidiaries since March 16, 2014;

 

    subject to certain limitations, the execution and delivery of guarantees by the guarantors and the taking of certain actions necessary to establish and perfect a security interest in specified items of collateral;

 

    the execution and delivery by the borrowers and guarantors of definitive documentation for the Debt Financing, consistent with the terms of the Debt Commitment Letter;

 

    receipt by the lead arrangers of documentation and other information about the borrower and guarantors required under applicable “know your customer” and anti-money laundering rules and regulations (including the PATRIOT Act);

 

    execution and delivery of customary legal opinions, evidence of authorization, officer’s certificates, good standing certificates and a solvency certificate;

 

    delivery of certain audited, unaudited and pro forma financial statements;

 

    payment of all applicable fees and expenses; and

 

    the accuracy in all material respects of certain representations and warranties in the Purchase Agreement and certain specified representations and warranties in the definitive documentation for the Debt Financing.

If any portion of the Debt Financing becomes unavailable, Quinpario is required under the terms of the Purchase Agreement to promptly notify the Seller and use its reasonable best efforts to obtain alternative financing (in an amount sufficient to replace such unavailable Debt Financing) from the same or other sources on terms and conditions equivalent or no less favorable in the aggregate Quinpario than such unavailable Debt Financing (including the “flex” provisions contained in the fee letter referenced in the Debt Commitment Letter). As of [], 2014, the last practicable date before the printing of this proxy statement, neither Quinpario or Quinpario Sub has any reason to believe that the conditions to the Debt Financing being funded at closing will not be satisfied or that the proceeds of the Debt Financing will not be received at closing and, therefore, as of the date of this filing no alternative financing arrangements or alternative financing plans have been made in the event the Debt Financing is not available. Except as described herein, there is no plan or arrangement regarding the refinancing or repayment of the Debt Financing. The definitive documentation governing Debt Financing contemplated by the Debt Commitment Letter has not been finalized and, accordingly, the actual terms of the Debt Financing may differ from those described in this proxy statement.

 

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Stockholder Voting Agreement

Simultaneously with the execution of the Purchase Agreement, our Sponsor and certain affiliates of our Sponsor, including Quinpario Partners LLC (collectively, the “Quinn Stockholders”), entered into a Stockholder Voting Agreement with Seller and Jason (the “Stockholder Voting Agreement”). Pursuant to the Stockholder Voting Agreement, the Quinn Stockholders have agreed, among other things, to vote all of the shares of Quinpario Common Stock held by the Quinn Stockholders (representing as of the date hereof approximately 28% of the voting power of the Company):

 

    in favor of the adoption of the Purchase Agreement and approval of the Business Combination and other transactions contemplated by the Purchase Agreement;

 

    against any actions that would result in a breach by Quinpario of any of its covenants, obligations, representations or warranties contained in the Purchase Agreement or the Stockholder Voting Agreement;

 

    against alternative proposals or transactions to the Business Combination (other than as contemplated by the Purchase Agreement);

 

    against any material changes in the present capitalization of Quinpario or any amendment of the of Quinpario’s constitutive documents (except for those contemplated by Proposal 2, Proposal 3, Proposal 4 and Incentive Equity Proposal);

 

    against any changes in Quinpario’s corporate structure or business (except for those contemplated by the Business Combination Proposal); and

 

    against any other action or proposal involving Quinpario or any of its subsidiaries that is intended, or could reasonably be expected to, adversely affect the transactions contemplated by the Purchase Agreement.

The Stockholder Voting Agreement generally prohibits the Quinn Stockholders from transferring, or permitting to exist any liens on, their shares of Quinpario Common Stock prior to the consummation of the Business Combination. The Stockholder Voting Agreement will automatically terminate upon the first to occur of (i) the mutual written consent of Seller, Jason and the Quinn Stockholders, (ii) the closing of the Business Combination, or (iii) the termination of the Purchase Agreement in accordance with its terms. Due to the Quinn Stockholders’ percentage ownership of Quinpario Common Stock, the terms of the Stockholder Voting Agreement may substantially increase the probability of obtaining approval of the Business Combination Proposal and other proposals to be presented at the special meeting. The foregoing discussion summarizes material terms of the Stockholder Voting Agreement. We urge you to read carefully the full text of the Stockholder Voting Agreement, which is attached hereto as Annex E and is incorporated herein by reference.

Rollover Agreement

It is a condition to closing under the Purchase Agreement that Quinpario and Quinpario Sub will enter into the Rollover Agreement with the Rollover Participants. Negotiations relating to the Rollover Agreement are in process and Quinpario and Quinpario Sub do not expect any material issues with respect to reaching an agreement with the Rollover Participants prior to closing (especially in light of the Rollover Agreement term sheet having been attached as an exhibit to the Purchase Agreement). In accordance with the rollover term sheet, the Rollover Agreement will provide that each Rollover Participant shall have the option to exchange, after the consummation of the Business Combination, all or from time to time any portion of such Rollover Participant’s Quinpario Sub Shares into the same number of shares of Quinpario Common Stock, with such number adjusted to reflect stock splits, stock dividends, stock combinations, recapitalizations and similar transactions at Quinpario and/or Quinpario Sub. Assuming all Rollover Participants exchange their Quinpario Sub Shares into shares of Quinpario Common Stock, and:

 

    assuming no redemptions of public shares before the Business Combination, Quinpario public stockholders will own approximately 61.7% of Quinpario, our initial stockholders will own approximately 26.0% of Quinpario, the Rollover Funds will own 8.7% of Quinpario and the Rollover Participants (other than the Rollover Funds) will own 3.6% of Quinpario;

 

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    assuming redemption by holders of 6,049,263 public shares for cash before the Business Combination, Quinpario public stockholders will own approximately 51.1% of Quinpario, our initial stockholders will own approximately 33.2% of Quinpario, the Rollover Funds will own approximately 11.1% of Quinpario and the Rollover Participants (other than the Rollover Funds) will own approximately 4.6% of Quinpario.

It is expected that the Rollover Agreement will also contain customary governance provisions and transfer restrictions (including drag-along rights that are triggered in certain circumstances and consent rights over changes to Quinpario Sub’s governing documents if the changes are material and adverse to the Rollover Participants).

The Rollover Agreement will also contain registration rights provisions pursuant to which the Rollover Participants will be granted certain registration rights with respect to the registration of their Quinpario Common Stock. Quinpario will be required to file a shelf registration statement within 10 business days of the closing of the Business Combination and use its reasonable best efforts to cause the shelf registration statement to be declared effective by the SEC as soon as reasonably practicable to permit these holders to sell their Quinpario Common Stock. Quinpario will only be required to conduct one underwritten offering for the first 6 months after closing the Business Combination using the initial registration statement, which offering must reasonably be expected to result in gross proceeds of at least $15 million. Quinpario will not be required to effect more than one demand registration in any 4 month period following an effective registration statement, and the Rollover Participants will only be allowed to demand a total of two additional underwritten offerings.

Background of the Business Combination

Quinpario is a blank check company formed in Delaware on May 31, 2013, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Business Combination was the result of an extensive search for a potential transaction utilizing the global network and investing and operating experience of our management team and board of directors. The terms of the Business Combination were the result of extensive negotiations between the representatives of Quinpario and Jason. The following is a brief description of the background of these negotiations, the Business Combination and related transactions.

From the date of our IPO through execution of the Purchase Agreement on March 16, 2014 Quinpario considered a number of potential target companies with the objective of consummating an acquisition. Representatives of Quinpario and Quinpario Partners LLC, an affiliate of our Sponsor with the same officers and directors as Quinpario (“Quinpario Partners”), contacted and were contacted by a number of individuals and entities who offered to present ideas for acquisition opportunities, including financial advisors and companies within the specialty chemicals, performance materials, and other industries. Quinpario compiled a list of high priority potential targets and updated and supplemented such list from time to time.

During that period, Quinpario and representatives of Quinpario:

 

    Considered and conducted analysis of over 35 potential acquisition targets;

 

    Participated in in-person or telephonic discussions with representatives of approximately 23 potential acquisition targets (other than Jason);

 

    Entered into non-disclosure agreements with approximately 10 potential acquisition targets (other than Jason) or their representatives; and

 

    Submitted letters of intent or conducted diligence with respect to approximately 10 potential acquisition targets (other than Jason).

 

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While we initially planned to seek an acquisition in the specialty chemicals and performance materials industries, we were not precluded from pursuing a business combination outside of these industries. The management and board of directors believed that the experience, skill set and expertise of Quinpario’s management team is directly applicable to other industries, including the industrials segments, and the proposed transaction with Jason.

The efforts of the Company to find a business combination transaction progressed to the point that beginning in early October 2013 and continuing through the execution of the Purchase Agreement, Quinpario was engaged in detailed discussions, due diligence and negotiations with a small subset of the target businesses that Quinpario had identified as high priority potential targets. These targets included (i) Jason, (ii) a European-based company participating in an attractive segment of the global chemical industry (“Company A”), and (iii) a global chemical manufacturer and distributor that was looking to divest a significant division which participated in that same attractive industry segment as Company A (“Company B”). Quinpario also analyzed a potential combination of Company A and the division being divested by Company B. During this time, as more fully described below, Quinpario also secured committed debt financing for each of the potential transactions and engaged in significant discussions regarding raising additional equity capital that might be necessary to consummate one or more of the potential transactions.

Quinpario reviewed the potential acquisitions based on the same criteria discussed below and used in evaluating the Business Combination, which included opportunities for platform growth, history of and potential financial results including free cash flow generation and revenue and earnings growth, established and proven track record, experienced and motivated management team, and strong competitive industry position.

On September 29, 2013, a Managing Director of Moelis & Company, an investment banking firm (“Moelis”), sent an email to Mr. Jeffry N. Quinn, Chairman and Chief Executive Officer of Quinpario Partners, with information concerning the Jason opportunity. The banker had previously worked with the management of Quinpario and also had extensive experience with Jason. Jason was described as a highly leverageable asset operated by an experienced management team that was one of the market leaders in each of its four business segments and which could potentially serve as a scalable platform for future acquisitions. The Moelis banker offered to facilitate an introduction to the Jason management team. In a subsequent telephone conversation Mr. Quinn expressed interest in Jason, but also indicated the Company’s preference to look for potential targets in the chemical sector.

In early October 2013, an investment banker specializing in the chemical sector facilitated an introductory meeting between Mr. Quinn and a representative of Company A to discuss a potential transaction. In addition, in mid-October Quinpario learned that Company B had initiated a process to divest one of its business divisions. Quinpario expressed interest in learning more about the Company B opportunity and was provided with information from Company B’s financial advisor. From this point through the early part of March, as more fully described below, Quinpario conducted significant due diligence and analysis of these two acquisition opportunities.

On October 8, 2013, Mr. Quinn and other partners of Quinpario Partners met in person with representatives of Moelis to discuss potential acquisition targets, including Jason. Mr. Quinn indicated that while Quinpario had a preference for doing a deal in the chemical sector and was considering several high potential targets in that space, that Quinpario Partners would have an interest in meeting with Jason management and learning more about Jason’s business. During this meeting, Mr. Quinn also explained that Quinpario Partners had been contacted by the sponsor of a special purpose acquisition company that was nearing the end of its tenure (“Alternative SPAC 1”) to potentially assist them in looking for acquisition opportunities that might not be pursued by Quinpario. Mr. Quinn further explained that to the extent Quinpario decided not to pursue Jason or the other potential acquisition targets discussed at the meeting, Alternative SPAC 1 might be an appropriate alternative vehicle to consummate a transaction.

 

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On October 14, 2013, the Moelis banker met with Mr. David C. Westgate, Chief Executive Officer of Jason, to discuss whether Jason would consider a potential transaction with Quinpario or Quinpario Partners. Mr. Westgate explained that Jason was interested in a transaction that created liquidity for its existing owners. Later that day the banker introduced Mr. Quinn to Mr. Westgate via email.

On October 15, 2013, Mr. Quinn and Mr. Westgate exchanged emails and agreed to meet in person on November 1, 2013.

On October 29, 2013, Quinpario Partners entered into a confidentiality agreement with Jason to facilitate the sharing of information between Quinpario Partners and Jason. After the confidentiality agreement was entered into, Jason began providing Quinpario Partners with confidential information related to its business.

During this period Quinpario continued to review a potential acquisition of Company A. Based upon a limited amount of information that had been furnished by Company A, Quinpario concluded that Company A had the potential for being a highly attractive target for the Company.

On October 31, 2013, Quinpario entered into a confidentiality agreement with Company B and shortly thereafter began to receive confidential information.

On November 1, 2013, Mr. Quinn met with Mr. Westgate at Jason’s headquarters in Milwaukee, Wisconsin. Mr. Westgate provided a management overview of the business, including a discussion on potential growth opportunities for Jason. Mr. Quinn expressed to Mr. Westgate that Quinpario was pursuing two opportunities in the chemical sector, but discussed with Mr. Westgate on a preliminary basis a potential transaction utilizing Alternative SPAC 1. Mr. Westgate indicated potential interest in such a transaction.

On November 7, 2013, Mr. Westgate, other representatives of Jason and representatives of Quinpario Partners met at a hotel near Jason’s headquarters in Milwaukee, Wisconsin for a management presentation by Jason. The parties discussed the business, operations, financial condition and prospects of Jason. Based on this discussion, Quinpario Partners determined to proceed with further discussions regarding a potential business combination. There was no discussion of the valuation at this meeting.

On November 11, 2013, Quinpario’s board of directors held its regularly scheduled meeting. Mr. Quinn discussed the level of deal flow that the Company was witnessing and indicated that a number of strategic opportunities had surfaced that the Company was in the process of exploring. Following such discussion, certain officers of Quinpario reviewed with the board of directors the three potential business combination opportunities identified and being actively pursued by Quinpario thus far: Company A, Company B and Jason. The officers of Quinpario relayed that, in their view, Company B was a good opportunity on a standalone basis and further discussed the potential synergies that could be recognized as part of a business combination with Company A. The officers of Quinpario also presented an overview of the Jason business, including its various product lines, market positions and potential growth opportunities. After a full discussion regarding the various target opportunities and business sectors, the board of directors agreed that Quinpario should continue to pursue strategic opportunities with Company A and Company B.

Mr. Quinn also advised the board of directors that Quinpario Partners had been approached by a Managing Director of JVB Financial Group LLC (formerly, C&Co/PrinceRidge) the underwriters of Quinpario’s IPO (“JVB”), about potentially assisting Alternative SPAC 1 in identifying and analyzing proposed business combinations between Alternative SPAC 1 and one or more target businesses that might not be pursued by Quinpario in exchange for an option to purchase a portion of the securities held by certain shareholders of Alternative SPAC 1. After a full discussion, the board of directors, based on the recommendation of management and in light of the deal flow the Company was experiencing, reaffirmed its preference to continue to look for potential acquisitions in the chemical sector. The board also determined that Quinpario Partners could assist other

 

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entities, including Alternative SPAC 1, in identifying and completing a business combination, provided that such activities did not materially interfere with Quinpario’s own active search to identify and complete a business combination.

On or around November 12, 2013 Quinpario Partners learned that Alternative SPAC 1 had made a decision to pursue an alternative transaction that it had identified on its own. On November 13, 2014 the JVB Banker introduced the possibility of consummating the Jason transaction with another special purpose acquisition company (“Alternative SPAC 2”). The JVB Banker arranged a telephone conversation between Mr. Quinn and a representative of Alternative SPAC 2 and the parties agreed to meet at the offices of JVB on November 17, 2013. Mr. Quinn advised Mr. Westgate on that date that Quinpario Partners would send a letter of intent to Jason over the next few days and that Quinpario Partners had been approached by another blank check company expressing an interest in working collaboratively on a potential business combination and which might be a potential acquisition vehicle for a transaction with Jason.

On November 17, 2013 Mr. Quinn and another partner of Quinpario Partners met with a representative of Alternative SPAC 2 in New York and agreed to jointly pursue the acquisition of Jason.

On November 18, 2013, Mr. Quinn and another partner of Quinpario Partners separately met with representatives of Stifel to discuss Stifel’s engagement as an investment bank to advise on a potential transaction, perform certain investment banking services and evaluate the fairness, from a financial point of view, of the purchase price to be paid in a potential transaction with any target business.

Additionally, on November 18, 2013, Quinpario entered into a confidentiality agreement with Company A to facilitate the sharing of information between Quinpario and Company A. Soon thereafter, Company A provided Quinpario with certain financial and operating due diligence.

On November 21, 2013, Mr. Quinn and other partners of Quinpario Partners held a preliminary in-person meeting with potential investors to introduce the Jason opportunity and to gauge interest in making an equity investment in a potential transaction. The potential equity investors expressed interest in participating in a potential transaction with Quinpario Partners involving Jason and in performing more detailed due diligence on Jason.

On November 23, 2013, Quinpario Partners delivered a draft non-binding letter of intent to Moelis for their review and comment. Later that day Moelis responded with several suggested changes to the letter of intent.

On November 24, 2013, Mr. Quinn sent a revised letter of intent to Moelis for delivery to Jason. The letter of intent outlined the basic terms for a potential transaction. The consideration payable under the draft letter of intent consisted of a proposed purchase price and the possibility of a rollover of equity for certain members of Jason’s management, subject to confirmatory due diligence and certain other conditions. The draft letter of intent also requested an exclusivity period and referenced both Alternative SPAC 2 and Quinpario as possible acquisition vehicles.

On November 24 and 25, 2013, Mr. Quinn and other representatives of Quinpario and certain of its professional advisors attended a two-day management presentation in Europe with management personnel of Company A.

On November 25, 2013, Mr. Quinn sent an email to Mr. Westgate following up on the letter of intent sent the previous day. Mr. Westgate responded and the parties agreed to schedule a telephone call for November 26, 2013 to discuss the letter.

On November 25, 2013, Alternative SPAC 2 entered into a joinder agreement to the confidentiality agreement entered into between Quinpario Partners and Jason to facilitate the sharing of information regarding Jason.

 

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On December 2, 2013, representatives of Quinpario Partners and Stifel held a telephonic meeting with representatives of Jason, Robert W. Baird & Co. Incorporated, Jason’s financial advisor (“Baird”), and Kirkland & Ellis LLP, Jason’s outside legal counsel (“K&E”), to review the draft letter of intent. The parties also discussed the possibility of effecting a potential business combination with Alternative SPAC 2.

Between early December 2013 and the middle of January 2014, Quinpario Partners and Jason continued to negotiate the terms of a potential transaction and exchanged multiple drafts of the letter of intent and continued to negotiate the terms of the proposed business combination. The revisions to the letter of intent related principally to the purchase price, the amount of the rollover equity, and the terms of exclusivity and expense reimbursement. Quinpario Partners and Jason also continued to discuss alternative structures for the transaction and and timing of a potential business combination.

Additionally, during this time Quinpario Partners and its representatives began preliminary discussions with several potential debt financing sources regarding Jason and the potential business combination with Alternative SPAC 2. In these discussions, Quinpario Partners provided summary information on Jason’s business, its customers, historical and projected operating and financial metrics and general terms for a proposed transaction.

On December 9, 2013, at a meeting held in New York, New York, Jason’s management and representatives of Baird provided a detailed presentation of Jason’s business, operations, financial condition and prospects to Quinpario Partners, Alternative SPAC 2, Stifel and potential debt and equity investors.

On December 18, 2013, Mr. Quinn and another partner of Quinpario Partners met with representatives of Alternative SPAC 2 to discuss the potential transaction. During the meeting, the representatives of Alternative SPAC 2 informed Mr. Quinn that they were also considering another transaction and could not commit to working exclusively with Quinpario on the Jason transaction and that it would require an economic sharing of downside risk in order to pursue a transaction with Quinpario Partners. Mr. Quinn also learned on that day that Alternative SPAC 1 had not yet completed the alternative transaction it had been pursuing and had encountered hurdles to consummation that may not be capable of being resolved.

On December 19, 2013 Mr. Quinn informed the representatives of Alternative SPAC 2 that Quinpario Partners had given much consideration to the discussions of the previous day and needed greater certainty than Alternative SPAC 2 was willing to provide. Furthermore, Alternative SPAC 2’s request for a sharing of downside risk was not acceptable and, as a result, Quinpario Partners had decided to pursue other alternatives for the Jason transaction.

On December 19, 2013, Mr. Quinn and other representatives of Quinpario attended a management presentation in New York, New York, followed by a dinner, with the senior management team of Company B. On that date Mr. Quinn also reengaged representatives of Alternative SPAC 1 and raised the possibility of working with Quinpario Partners on an acquisition of Jason. Alternative SPAC 1 indicated that it would be interested in pursuing the Jason transaction with Quinpario Partners.

On December 20, 2013, Quinpario Partners entered into an agreement with Alternative SPAC 1to identify and analyze the proposed business combinations between Alternative SPAC 1 and one or more target businesses, including Jason. On December 21, 2013, Alternative SPAC 1 entered into a joinder agreement to the confidentiality agreement entered into between Quinpario Partners and Jason to facilitate the sharing of information regarding Jason.

On December 23, 2013, Quinpario entered into a non-binding letter of intent with Company A in which the parties agreed to a value for the company, a plan for conducting due diligence and a date by which Quinpario would be required to submit a re-affirmation bid based on its due diligence findings.

On January 6, 2014, Olshan Frome Wolosky LLP (“Olshan”) was formally engaged by Alternative SPAC 1 to represent it in negotiations with Jason. Quinpario Partners had previously engaged Olshan in December 2013.

 

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On January 15, 16 and 17, 2014, representatives of Quinpario Partners, Stifel and potential debt financing sources conducted in-person site tours of several of Jason’s manufacturing facilities, including those relating to Jason’s seating business in Jackson, Michigan, the acoustics business in Battle Creek, Michigan, the finishing business in Richmond, Indiana and the components business in Libertyville, Illinois and Buffalo Grove, Illinois.

On January 17, 2014, Quinpario Partners and Jason executed the non-binding letter of intent. The non-binding letter of intent provided that Quinpario Partners was prepared to pay $538.65 million to acquire the business of Jason on a cash-free, debt-free and transaction expense-free basis. The non-binding letter of intent stated that Quinpario Partners had entered into an agreement with Alternative SPAC 1 that it believed was an appropriate acquisition vehicle for the proposed transaction. The non-binding letter of intent also provided Quinpario Partners and Alternative SPAC 1 with an exclusivity period to negotiate the transaction with Jason.

Between January 17, 2014 and February 20, 2014, Quinpario Partners continued to conduct business, financial, legal and accounting due diligence of Jason.

On January 20, 2014, representatives of Quinpario Partners, Jason, K&E, Olshan and Graubard Miller (“Graubard”) held a telephonic meeting to discuss Jason’s preliminary unaudited 2013 financial results.

On January 20, 21, and 22, 2014, representatives of Quinpario and certain of their professional advisors conducted three days of in person due diligence with Company A. Also during this time the Company continued its evaluation of the Company B divestiture.

On January 23, 2014, representatives of Quinpario Partners and Stifel conducted an in-person site tour of Jason’s finishing manufacturing facility in Burgwald, Germany.

Between late January 2014 and the middle of February 2014, representatives of Quinpario Partners and Stifel continued to contact and meet with representatives of several financial institutions to discuss Jason, the potential business combination with Alternative SPAC 1 and their recommendations regarding debt financing alternatives for the transaction. Over the course of such discussions, Quinpario Partners provided these debt financing sources with updated summary information on Jason’s business, its customers, historical and projected financial and operating metrics, general terms for a proposed transaction, and discussed debt financing alternatives, transaction valuation generally and the valuations of comparable publicly traded companies. Throughout this process, Quinpario Partners exchanged preliminary debt term sheet proposals with these debt-financing sources and discussed with representatives of Jason and Baird the debt financing process, desired leverage and term sheet proposals from certain financial institutions.

On January 29 and 30, 2014, Mr. Quinn and representatives of Quinpario met with representatives of Company B for two days of expert due diligence sessions.

On February 9, 2014, Quinpario Partners received the initial draft of a stock purchase agreement from K&E incorporating the terms of the Jason non-binding letter of intent.

On February 16, 2014, Jason informed Quinpario Partners that it had no interest in further pursuing a transaction with Alternative SPAC 1.

On February 18, 2014, Quinpario submitted a revised non-binding indication of interest to acquire the Company B division.

Between February 18, 2014 and February 20, 2014, representatives of Quinpario Partners, Jason and Baird held multiple telephonic and in-person meetings to discuss the possibility of effecting a business combination with Quinpario rather than Alternative SPAC 1. On February 20, 2014 Mr. Westgate informed representatives of

 

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Alternative SPAC 1 that Jason had no interest in further pursuing a transaction with Alternative SPAC 1. On that date Mr. Westgate also inquired with Mr. Quinn as to whether there was interest in discussing a potential transaction involving Quinpario and Jason. On February 21 and 22, 2014 Mr. Quinn and Mr. Westgate had a series of discussions concerning a potential transaction between Quinpario and Jason.

On February 23, 2014, representatives of Quinpario delivered to representatives of Jason a new preliminary non-binding letter of intent whereby Quinpario would acquire Jason and included, among other things, the same proposed transaction price as the previous non-binding letter of intent between Jason and Quinpario Partners.

On February 24, 2014, Mr. Quinn and other officers of Quinpario met with Mr. Westgate and other officers of Jason at a hotel in Chicago, Illinois to discuss the non-binding letter of intent and to set a tentative timetable for signing a definitive purchase agreement and consummating the transaction. The parties also reviewed Jason’s business and discussed certain due diligence items.

On February 26, 2014, Quinpario’s board of directors convened a telephonic meeting. Mr. Quinn updated the board of directors on the status of the Company’s discussions with Company A and Company B. Mr. Quinn indicated that the Company continued to conduct due diligence on Company A. The board discussed the various attributes of Company A. While there was a general view that the specific sector in which Company A participates was very attractive, there were several aspects of Company A that were potential areas of concern. Primarily among these concerns was the level of competition in the sector, the regional nature of Company A, and the risk of being able to get to a definitive agreement with Company A. With respect to the divestiture of the Company B division, Mr. Quinn informed the Board that he believed that the Company was one of the few bidders that remained in the process and that Quinpario management continued to view the potential acquisition of the Company B division as a high priority, potentially high-value acquisition opportunity for the Company. Our board of directors and management discussed these opportunities in significant detail.

The board of directors then discussed the potential business combination with Jason. Mr. Quinn advised that Jason had notified Quinpario Partners that it was no longer interested in pursuing a business combination with Alternative SPAC 1. Mr. Quinn indicated that during the course of exploring a potential transaction with Jason, Quinpario Partners had conducted extensive due diligence on Jason, including management presentations and site visits and legal, operational, functional, accounting, financial and environmental due diligence. Mr. Quinn and certain other officers of Quinpario then presented a detailed review of Jason’s business and recommended that, given Jason’s performance and potential for growth, as an attractive alternative to the potential transaction with Company B that Quinpario also pursue a potential business combination with Jason along substantially the same terms as what had been contemplated with Quinpario Partners.

The outcome of the discussion was a mandate from the board of directors that management continue to explore all three opportunities. The board and management agreed that the potential acquisition of the Company B division, and combining it with Company A would be the most attractive transaction. It was also the consensus of the board of directors that the Company should also explore a potential business combination with Jason. The board relayed their feeling that the potential acquisition of Company A on a stand-alone basis would be the least attractive of three opportunities. Following the board meeting, the Company pursued the three deals in parallel.

On February 28, 2014, Quinpario provided a re-affirmation of its bid to acquire Company A on the same financial terms as its original non-binding letter of intent of December 23, 2013, including providing committed debt and equity financing sufficient to fund the transaction.

Between the February 26 board meeting and March 6, 2014, representatives of Quinpario and Jason continued to negotiate, and exchange, drafts of the non-binding letter of intent which expressly outlined the agreement among the parties regarding certain material terms to be incorporated into the Purchase Agreement.

 

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The Company also continued its efforts to secure committed financing for the Jason transaction. On March 3, 2014, representatives of Quinpario and Stifel discussed with potential debt financing sources using Quinpario as the vehicle for effecting a business combination. On March 4, 2014, representatives of Quinpario, Jason, Stifel and Baird met with potential debt financing sources in New York, New York to discuss the new proposed business combination between Quinpario and Jason, including a detailed review of Jason. Between March 4, 2014 and March 16, 2014, representatives of Quinpario and the debt financing sources negotiated and exchanged drafts of commitment and fee letters relating to the acquisition financing.

On March 3, 2014 Mr. Quinn met with a representative of Company A to discuss Quinpario’s letter of February 28, 2014. After the meeting, the Company decided not to pursue a transaction with Company A.

On March 5, 2014, Company B advised Mr. Quinn that it had elected to proceed with another party and had entered into exclusivity with that party. Mr. Quinn advised the board of directors of Quinpario of this development later in the day and updated the board on the status of negotiations with Jason and Company A.

On March 6, 2014, Quinpario and Jason executed the non-binding letter of intent. The principal changes to the executed non-binding letter of intent from the preliminary non-binding letter of intent circulated on February 23, 2014 included the option of the Rollover Funds to rollover an additional aggregate amount of equity equal to any shortfall in the Trust Account below a certain redemption threshold and a statement that Quinpario would seek to procure a representations and warranties insurance policy in connection with a definitive stock purchase agreement with Seller bearing $750,000 of such cost and that would not require indemnification from Seller other than a 1% (of the Purchase Price) layer of indemnification coverage after a 1% deductible.

Also on March 6, 2014, Quinpario entered into an engagement letter with Stifel. The engagement letter provided for Stifel, among other things, if requested by Quinpario, to deliver an oral opinion, to be subsequently confirmed in writing, that the consideration to be paid by Quinpario pursuant to the stock purchase agreement was fair, from a financial point of view, to Quinpario.

Still later on March 6, 2014, Olshan circulated a revised draft stock purchase agreement to K&E. The revisions were to the original stock purchase agreement circulated by K&E to Quinpario Partners in connection with the prior proposed transaction, and included changes, among other things, reflecting Quinpario as the new acquisition vehicle and the terms of the new non-binding letter of intent.

On March 7, 2014, Mr. Quinn met with a representative of Company A and advised him that Quinpario had made a decision to proceed forward with another opportunity.

Between March 7, 2014 and March 16, 2014, representatives of Quinpario and Jason and their respective legal counsel and financial advisors met several times, telephonically and in-person, to negotiate and discuss the terms of the stock purchase agreement and related documentation.

On March 14, 2014, Quinpario’s board of directors met telephonically to consider the potential acquisition of Jason including the approval of the definitive stock purchase agreement, which was in substantially final form as described below. Also in attendance were certain officers of Quinpario and representatives of Olshan, Graubard, JVB and Stifel. Mr. Quinn reviewed with the board of directors of Quinpario the terms of the proposed acquisition of Jason, including the transaction value of $538.65 million,and the rollover of ownership interests by certain equity holders and management of Jason of approximately $35 million. Certain officers of Quinpario then provided an overview of the sources and uses of the transaction, the expected pro forma capitalization at closing and returns analysis, an overview of the debt financing, an overview of the key terms of the stock purchase agreement and related transaction documents, an overview of the diligence process, the expected timeline to closing, and a detailed review of Jason’s business and how Quinpario’s capabilities and expertise would benefit Jason. Following that discussion, representatives of Stifel reviewed for our board of directors the various financial analyses it performed. Thereafter, Stifel provided its oral opinion, subsequently confirmed in writing, to

 

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our board of directors to the effect that, as of March 14, 2014, and subject to and based upon the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in such opinion, the Purchase Price to be paid by Quinpario in the Business Combination pursuant to the stock purchase agreement was fair to Quinpario, from a financial point of view. After considering the proposed terms of the stock purchase agreement and other related transaction agreements and the various presentations of Quinpario management and Stifel, including receipt of Stifel’s oral opinion, and taking into account the other factors described below under the heading title “Quinpario’s Board of Directors’ Reasons for the Approval of the Business Combination,” our board of directors unanimously approved the stock purchase agreement and related agreements and determined that it was advisable and in the best interests of Quinpario to consummate the business combination and other transactions contemplated by the stock purchase agreement and related agreements, subject to the negotiation of the final terms of the stock purchase agreement and the related agreements.

Following the meeting of our board of directors, Quinpario and Jason continued to negotiate the final terms of the stock purchase agreement. Among the changes from the draft stock purchase agreement reviewed by Quinpario’s board of directors was a reduction from $135.0 million to $115.0 million in the amount required to remain in the Trust Account following the completion of the redemption by Quinpario’s stockholders of its public shares, which was a condition to Quinpario’s and Quinpario Sub’s obligation to close.

On March 16, 2014, Quinpario and Jason entered into the Purchase Agreement.

On March 17, 2014, a press release was issued announcing the Business Combination and shortly thereafter Quinpario furnished to the SEC a Current Report on Form 8-K attaching the press release.

On March 18, 2014, Quinpario furnished to the SEC a Current Report on Form 8-K attaching an investor presentation to be used in making presentations to certain existing and potential shareholders of Quinpario with respect to the Business Combination, as well as a copy of the Purchase Agreement and Stockholder Voting Agreement.

The parties have continued and expect to continue regular discussions regarding the execution and timing of the Business Combination.

Quinpario’s Board of Directors’ Reasons for the Approval of the Business Combination

Quinpario’s board of directors met telephonically on November 11, 2013 and February 26, 2014 to, among other matters, discuss Jason and the possibility of a Business Combination. On March 14, 2014, Quinpario’s board of directors met telephonically and unanimously (i) approved the Purchase Agreement and the transactions contemplated thereby, (ii) determined that the Business Combination is in the best interests of Quinpario and its stockholders, (iii) directed that the Purchase Agreement be submitted to our stockholders for approval and adoption, and (iv) recommended that our stockholders approve and adopt the Purchase Agreement.

Before reaching its decision, Quinpario’s board of directors reviewed the results of management’s due diligence, which included:

 

    research on comparable companies and transactions within the diversified industrial sector;

 

    extensive meetings and calls with Jason’s management team regarding operations and projections;

 

    personal visits to Jason’s headquarters in Milwaukee, Wisconsin, as well as its manufacturing locations in Jackson, Michigan; Battle Creek, Michigan; Richmond, Indiana; Libertyville, Illinois; Buffalo Grove, Illinois; and Burgwald, Germany;

 

    review of Jason’s material contracts, environmental matters, intellectual property matters, labor matters, and other legal diligence;

 

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    financial, tax, legal, environmental and accounting diligence; and

 

    creation of a detailed independent financial model.

Quinpario’s board of directors considered a wide variety of factors in connection with its evaluation of the Business Combination. In light of the complexity of those factors, its board of directors, as a whole, did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. Individual members of Quinpario’s board of directors may have given different weight to different factors.

In the prospectus for our IPO, we identified the following general criteria and guidelines that we believed would be important in evaluating prospective target businesses.

 

    Opportunities for Platform Growth: We will seek to acquire one or more businesses or assets that we can grow both organically and through acquisitions.

 

    History of and Potential for Strong Free Cash Flow Generation: We will seek to acquire one or more businesses that have the potential to generate strong free cash flow (i.e., companies that typically generate cash in excess of that required to maintain or expand the business’s asset base). We will focus on one or more businesses that have recurring revenue streams and low working capital and capital expenditure requirements. We may also seek to prudently leverage this cash flow in order to enhance stockholder value.

 

    Established Companies with Proven Track Records: We will seek to acquire established companies, particularly those focused on industries connected to the specialty chemicals and performance materials industries with sound historical financial performance, although we will consider a business combination outside these industries if a business combination candidate is presented to us and we determine that such candidate has sound historical financial performance. We will typically focus on companies with a history of strong operating and financial results. Although we are not restricted from doing so, we do not intend to acquire start-up companies.

 

    Experienced and Motivated Management Teams: We will seek to acquire businesses that have strong, experienced management teams with a substantial personal economic stake in the performance of the acquired business. We will focus on management teams with a proven track record of driving revenue growth, enhancing profitability and generating strong free cash flow. We will focus on companies where we expect that the operating expertise of our officers and directors will complement the target’s management team.

 

    Strong Competitive Industry Position: We will seek to acquire businesses focused on the specialty chemicals and performance materials industries that have strong fundamentals, although we will consider a business combination outside these industries if a business combination candidate is presented to us and we determine that such candidate encompasses strong fundamentals. The factors we will consider include growth prospects, competitive dynamics and position, level of consolidation, need for capital investment, potential for improvement and barriers to entry. We will focus on companies that have a leading or niche market position. We will analyze the strengths and weaknesses of target businesses relative to their competitors, focusing on technology, global positioning, product quality and services, customer loyalty, cost impediments associated with customers switching to competitors, intellectual property protection and brand positioning. We will seek to acquire one or more businesses that demonstrate advantages or have the potential to become advantaged when compared to their competitors, which may help to protect their market position and profitability.

In considering the Business Combination, Quinpario’s board of directors concluded that Jason met all of the above criteria. In particular, the board considered the following positive factors, although not weighted or in any order of significance:

 

   

Opportunities for Platform Growth. Jason’s four divisions, finishing, acoustics, seating and components, serve a large diversified set of end markets globally. Based on Jason’s internal research

 

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and analysis, this global market is estimated to be approximately $20.0 billion. Jason’s innovations and product pipeline provide opportunity for significant organic and inorganic growth opportunities.

 

    Established Company with Proven Track Record. Jason was founded in 1985 and today provides critical components and manufacturing solutions to customers across a wide range of end markets, industries and geographies through its global network of 33 manufacturing facilities and 16 sales offices, warehouses and joint venture facilities throughout the United States and 14 foreign countries. Jason is led by an experienced corporate and business management team and has embedded relationships with long standing customers, superior scale and resources and industry leading capability to design and manufacture specialized products on which its customers rely. Jason employs approximately 4,000 employees.

 

    Company with Strong Free Cash Flow Generation. As a result of organic growth initiatives, ongoing operational improvements and disciplined working capital management, Jason has historically generated strong and consistent cash from operating activities. Jason has a long standing, stable customer base that provides it with meaningful revenue and cost visibility which, when combined with its scalable and stable cost structure, helps Jason to maximize cash flow and efficiency through economic cycles.

 

    Strong Competitive Position. Jason’s businesses have developed and sustained leading positions across various niche markets. In many of Jason’s product lines, it is more than twice the size of the next largest direct competitor. Jason’s market share positions have created a stable platform with strong profitability upon which to grow. Jason’s products’ significant brand recognition in multiple markets helps to sustain its market share positions. Across its industries, Jason is regularly viewed as the brand of choice for service, quality, dependability, value and continuous innovation. In several niche markets, Jason is the only provider of certain products or manufacturing capabilities. Jason has served many of its customers for over 25 years.

 

    Experienced and Motivated Management Team. Central to Jason’s platform is its management team, which positions it to (i) outperform the competition, (ii) execute numerous strategic and performance improvement initiatives, (iii) substantially grow revenue through the execution of a global organic growth plan, and (iv) identify, execute and integrate value-enhancing acquisitions. Jason’s Chief Executive Officer, David Westgate, and current management team have a tenured history in diversified industrial manufacturing and have overseen several milestone initiatives, including the execution of several acquisitions. Jason’s management has brought discipline and entrepreneurship to the company, which allows for strong, focused teamwork and innovation. To effectively utilize the collective strengths of its platform, Jason created an Executive Committee consisting of Mr. Westgate, Stephen Cripe, Jason’s Chief Financial Officer, and each of Jason’s business presidents to provide a forum for corporate leadership to identify opportunities to leverage Jason’s scale and develop corporate strategy.

 

    Business with Revenue and Earnings Growth. For the year ended December 31, 2013, Jason generated net sales of $680.8 million, income from operations of $53.7 million and adjusted EBITDA of $79.8 million (see reconciliation within “Jason Management’s Discussion and Analysis of Financial Condition and Results of Operations”). Jason’s adjusted EBITDA margins have improved from 9.7% in 2011 to 11.7% in 2013 as a result of volume recovery across its businesses following the recession, operational restructuring initiatives and the relocation of manufacturing facilities to strategically located, lower cost regions. We anticipate that as Jason’s product mix continues to shift towards innovative higher-value engineered products, its pricing and profitability will continue to improve. Jason’s scalable operating platform will allow it to grow revenue in each of its markets with limited fixed operating costs and capital investment. We believe that as Jason’s volumes continue to increase from new markets, new customers and the continuing economic recovery, the operating leverage it has created through its platform will continue to have a positive impact on its profitability. Among other initiatives, Jason is focused on redesigning products to reduce materials costs, optimizing their operating footprint and reducing their overall cost to serve.

 

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    Quinpario’s Experience. The board of directors deems the Quinpario team’s skill set to be complimentary and additive to the already capable Jason management team. Quinpario’s team has significant experience managing public companies. In addition, Quinpario’s expertise in the area of strategy development and optimizing business processes across diverse businesses will further emphasize focus and execution. Quinpario will share best practices to extract operational efficiency and to refine the company’s commercial approach for faster growth and margin improvement. Moreover, the Quinpario team’s demonstrated merger and acquisition experience will further supplement Jason’s growth plans, especially in the area of synergistic bolt-on acquisition.

In making its determination with respect to the Business Combination, Quinpario’s board of directors also considered the financial analysis reviewed by Stifel, Nicolaus & Company, Incorporated (“Stifel”), the Company’s financial advisor in connection with the Business Combination, with the board of directors, and the oral opinion of Stifel to the board of directors, which was subsequently confirmed in writing by delivery of Stifel’s written opinion dated March 14, 2014 (the “Opinion”), as to whether, as of the date of the Opinion, and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in the Opinion, (i) the purchase price to be paid by the Company in the Business Combination pursuant to the Purchase Agreement was fair to the Company, from a financial point of view, and (ii) the fair market value of Jason (measured by the enterprise values implied by the various financial analyses Stifel conducted in connection with its Opinion) equaled or exceeded 80% of the amount held by the Company in trust for the benefit of its public stockholders (excluding any deferred underwriters fees and taxes payable on the income earned on the trust account). See “—Description of Fairness Opinion of Stifel.” The full text of the Opinion is attached to this proxy statement as Annex B.

Quinpario’s board of directors also gave consideration to the following negative factors (which are more fully described in the “Risk Factors” section of this proxy statement), although not weighted or in any order of significance:

Jason is affected by developments in the industries in which its customers operate.

Our board of directors considered the risk that Jason derives its revenues largely from customers in the following industry sectors: agricultural, construction and industrial manufacturing. Factors affecting any of these industries in general, or any of its customers in particular, could adversely affect Jason because its revenue growth largely depends on the continued growth of its customers’ business in their respective industries. These factors include, among others, seasonality of demand for Jason’s customers’ products, the failure of Jason’s customers to successfully market their products, loss of market share for Jason’s customers’ products and economic conditions in the markets in which Jason’s customers operate. If economic conditions and demand for Jason’s customers’ products deteriorate after the Business Combination, the combined company may experience a material adverse effect on its business, operating results and financial condition.

Jason may not be able to manage the expansion of its operations effectively in order to achieve projected levels of growth.

Our board of directors considered the risk that Jason’s future success will depend in part upon the ability of its management to manage its growth effectively. Further development of Jason’s infrastructure and an increase in the number of its employees will be required to achieve Jason’s planned broadening of its product offerings and client base, improvements in its machines and materials used in its machines, and its planned international growth. If the post-combination company’s management is unsuccessful in meeting these challenges, it may not be able to achieve its anticipated level of growth which would adversely affect Jason’s results of operations.

The Risk that our Public Stockholders would Vote Against the Business Combination Proposal or Exercise their Redemption Rights.

Our board of directors considered the risk that some of the current public stockholders would vote against the Business Combination Proposal or decide to exercise their redemption rights, thereby depleting the amount of cash

 

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available in the trust account to an amount below the minimum required to consummate the Business Combination. The board of directors concluded, however, that this risk was substantially mitigated because the board of directors believes the post-combination company will be able to obtain proceeds from the proposed acquisition financing in an amount necessary to provide the Cash Consideration even if the trust account were substantially reduced through redemptions. The board of directors also considered the fact that public stockholders may vote for the Business Combination Proposal while also exercising their redemption rights mitigates any incentive for a public stockholder to vote against the Business Combination Proposal, especially to the extent that they hold public warrants which would be worthless if the Business Combination is not completed.

We may not be Able to Complete the Proposed Financing Transactions in Connection with the Business Combination.

We may not be able to complete the proposed financing transaction in connection with the Business Combination on terms that are acceptable to us, or at all. If we do not complete the proposed financing transaction described in this proxy statement, we will be required to obtain alternative financing in order to fund a portion of the cash consideration for the Business Combination. If we are unable do so on terms that are acceptable to us, or at all, we may not be able to complete the Business Combination, as completing the proposed acquisition financing is a condition to the Business Combination under the Purchase Agreement.

Our Management and Directors may have Different Interests in the Business Combination than the Public Stockholders.

Our board of directors considered the fact that members of our management and board of directors may have interests in the Business Combination that are different from, or are in addition to, the interests of our stockholders generally, including the matters described under “—Certain Benefits of Quinpario’s Directors and Officers and Others in the Business Combination” below. However, our board of directors concluded that the potentially disparate interests would be mitigated because (i) these interests were disclosed in our initial public offering prospectus and are included in this proxy statement, (ii) these disparate interests would exist with respect to a business combination with any target company and (iii) the Business Combination was structured so that the Business Combination may be completed even if public stockholders redeem a substantial portion of common stock.

Satisfaction of 80% Test

It is a requirement under Quinpario’s amended and restated certificate of incorporation that any business acquired by Quinpario have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for an initial business combination. The Quinpario board of directors adopted the financial analysis reviewed by Stifel with the Quinpario board of directors, and the Opinion of Stifel to the Quinpario board of directors as to whether, as of the date of the Opinion, and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in the Opinion, the fair market value of Jason (measured by the enterprise values implied by the various financial analyses Stifel conducted in connection with its Opinion) equaled or exceeded 80% of the amount held by the Company in trust for the benefit of its public stockholders (excluding any deferred underwriters fees and taxes payable on the income earned on the trust account).

Description of Fairness Opinion of Stifel

Stifel began working with an affiliate of the Company in evaluating potential business combinations (including the Business Combination) in November 2013. The Company retained Stifel in connection with the Business Combination and to provide to the board of directors a fairness opinion in connection therewith on March 6, 2014. On March 14, 2014, Stifel delivered its Opinion, dated March 14, 2014, to our board of directors that, as of the date of the Opinion and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in such Opinion, (i) the purchase price to be paid by the Company in the Business Combination pursuant to the Purchase Agreement was

 

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fair to the Company, from a financial point of view, and (ii) the fair market value of Jason (measured by the enterprise values implied by the various financial analyses Stifel conducted in connection with its Opinion) equaled or exceeded 80% of the amount held by the Company in trust for the benefit of its public stockholders (excluding any deferred underwriters fees and taxes payable on the income earned on the trust account).

In selecting Stifel, our board of directors considered, among other things, the fact that Stifel is a reputable investment banking firm with substantial experience advising companies in the manufacturing sector and in providing strategic advisory services in general. Stifel, as part of its investment banking business, is continuously engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes.

The full text of the Opinion is attached hereto as Annex B and is incorporated into this document by reference. The summary of the Opinion set forth herein is qualified in its entirety by reference to the full text of the Opinion. Stockholders are urged to read the Opinion carefully and in its entirety for a discussion of the procedures followed, assumptions made, other matters considered and limits of the review undertaken by Stifel in connection with such Opinion.

Stifel’s Opinion was approved by its fairness committee. The Opinion was provided for the information of, and directed to, our board of directors for its information and assistance in connection with its consideration of the financial terms of the Business Combination.

In rendering its Opinion, Stifel, among other things:

 

  (i) discussed the Business Combination and related matters with the Company’s counsel and reviewed a draft copy of the Purchase Agreement, dated March 11, 2014;

 

  (ii) reviewed the audited consolidated financial statements of Jason for the three years ended December 31, 2012, and unaudited interim consolidated monthly financial statements of Jason for the period from January 1, 2012 through December 31, 2013;

 

  (iii) reviewed and discussed with the Company’s management certain other publicly available information concerning the Company and Jason;

 

  (iv) held discussions with the Company’s management, including, without limitation, with respect to estimates of certain transaction charges and the pro forma financial impact of the Business Combination on the Company;

 

  (v) reviewed certain non-publicly available information concerning Jason, including internal financial analyses and forecasts (A) as adjusted by management of the Company, or (B) prepared by management of the Company, which Stifel was directed by the Company to use for purposes of Stifel’s analysis, and held discussions with the Company’s senior management regarding recent developments;

 

  (vi) reviewed and analyzed certain publicly available information concerning the terms of selected merger and acquisition transactions that it considered relevant to its analysis;

 

  (vii) reviewed and analyzed certain publicly available financial and stock market data relating to selected public companies that it considered relevant to its analysis;

 

  (viii) compared the enterprise values of Jason implied by the various financial analyses it conducted to the amount held in trust by the Company for the benefit of its public stockholders (excluding any deferred underwriters fees and taxes payable on the income earned on the amount held in trust);

 

  (ix) participated in certain discussions and negotiations between representatives of the Company and Seller;

 

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  (x) conducted such other financial studies, analyses and investigations and considered such other information as Stifel deemed necessary or appropriate for purposes of its Opinion; and

 

  (xi) took into account its assessment of general economic, market and financial conditions and its experience in other transactions, as well as its experience in securities valuations and its knowledge of Jason’s industry generally.

In rendering its Opinion, Stifel relied upon and assumed, with the acknowledgement and consent of our board of directors, without independent investigation or verification, the accuracy and completeness of all of the financial and other information that was provided to Stifel by or on behalf of the Company or Seller, or that was otherwise reviewed by Stifel, and did not assume any responsibility for independently verifying any of such information.

With respect to the financial forecasts regarding Jason (i) as adjusted by management of the Company, or (ii) prepared by management of the Company and supplied to Stifel by Seller and the Company, as applicable, Stifel assumed, at the direction of the Company, that they were reasonably prepared on the basis reflecting the best currently available estimates and judgments of the management of the Company and Seller, as applicable, as to the future operating and financial performance of Jason and that they provided a reasonable basis upon which Stifel could form its Opinion. Such forecasts and projections were not prepared with the expectation of public disclosure. All such projected financial information was based on numerous variables and assumptions that are inherently uncertain, including, without limitation, factors related to general economic and competitive conditions. Accordingly, actual results could vary significantly from those set forth in such projected financial information. Stifel relied on this projected information without independent verification or analysis and did not in any respect assume any responsibility for the accuracy or completeness thereof. For purposes of the Opinion, Stifel also assumed, at the direction and with the consent of our board of directors, that the per share value of the Quinpario Sub Shares issued to the Rollover Participants in the Business Combination was equal to the current cash per share held in trust for the benefit of the Company’s public stockholders (subject to certain adjustments as provided in the Purchase Agreement).

Stifel also assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of the Company or Jason since the date of the last financial statements made available to Stifel. Stifel did not make or obtain any independent evaluation, appraisal or physical inspection of either the Company’s or Jason’s assets or liabilities, nor was Stifel furnished with any such evaluation or appraisal. The Opinion states that estimates of values of companies and assets do not purport to be appraisals or necessarily reflect the prices at which companies or assets may actually be sold. Because such estimates were inherently subject to uncertainty, Stifel assumed no responsibility for their accuracy.

Stifel assumed, with the consent of our board of directors, that there were no factors that would delay or subject to any adverse conditions any necessary regulatory or governmental approval and that all conditions to the Business Combination would be satisfied and not waived. In addition, Stifel assumed that the definitive Purchase Agreement would not differ materially from the draft Stifel reviewed. Stifel also assumed that the Business Combination would be consummated substantially on the terms and conditions described in the Purchase Agreement, without any waiver of material terms or conditions by the Company or any other party and without any adjustment to the Purchase Price, and that obtaining any necessary regulatory approvals or satisfying any other conditions for consummation of the Business Combination would not have an adverse effect on the Company, Jason or the Business Combination. Stifel assumed that the Business Combination will be consummated in a manner that complies with the applicable provisions of the Securities Act, the Securities Exchange Act of 1934, as amended, and all other applicable federal and state statutes, rules and regulations and all other laws applicable to the Company, Seller and Jason. Stifel further assumed that the Company had relied upon the advice of its counsel, independent accountants and other advisors (other than Stifel) as to all legal, financial reporting, tax, accounting and regulatory matters with respect to the Company, Jason, the Business Combination and the Purchase Agreement.

 

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The Opinion was limited to whether, as of the date of the Opinion, the purchase price to be paid by the Company in the Business Combination was fair to the Company, from a financial point of view, and whether the fair market value of Jason equaled or exceeded 80% of the amount held by the Company in trust for the benefit of its public stockholders (excluding any deferred underwriters fees and taxes payable on the income earned on the trust account) and did not address any other terms, aspects or implications of the Business Combination, including, without limitation, the form or structure of the Business Combination, any consequences of the Business Combination on the Company, its stockholders, creditors or any other constituencies of the Company, or any terms, aspects or implications of any voting, support, stockholder, or other agreements, arrangements or understandings contemplated or entered into in connection with the Business Combination or otherwise. The Opinion also did not consider, address or include: (i) any other strategic alternatives then contemplated (or which were or might have been contemplated) by the Company; (ii) the legal, tax or accounting consequences of the Business Combination on the Company, its stockholders or any other party; (iii) the fairness of the amount or nature of any compensation to any officers, directors or employees of Seller, the Company or Jason, or class of such persons, relative to the compensation paid to any other party; or (iv) whether the Company would have sufficient cash, available lines of credit or other sources of funds to enable it to pay the purchase price at the closing of the Business Combination. Furthermore, Stifel did not express any opinion as to the prices, trading range or volume at which the Company’s securities will trade following public announcement or consummation of the Business Combination.

Stifel’s Opinion was necessarily based on economic, market, financial and other conditions as they existed on, and on the information made available to Stifel by or on behalf of Seller or the Company or their respective advisors, or information otherwise reviewed by Stifel, as of the date of its Opinion. The Opinion states that it is understood that subsequent developments may affect the conclusions reached in the Opinion and that Stifel does not have any obligation to update, revise or reaffirm the Opinion. Further, the credit, financial and stock markets are often affected by periods of volatility and Stifel expressed no opinion or view as to any potential effects of such volatility on the Company, Jason or the Business Combination. Stifel’s Opinion was for the information of, and directed to, our board of directors for its information and assistance in connection with its consideration of the financial terms of the Business Combination. The Opinion did not constitute a recommendation to our board of directors as to how our board of directors should vote on the Business Combination or to any stockholder of the Company or member of Seller as to how any such stockholder or member should vote at any stockholders’ or members’ meeting at which the Business Combination may be considered, or whether or not any stockholder of the Company or member of Seller should enter into a voting, members’, stockholders’ or affiliates’ agreement with respect to the Business Combination, or exercise any redemption or repurchase or exchange rights that may be available to such stockholder or member. In addition, the Opinion did not compare the relative merits of the Business Combination with any other alternative transactions or business strategies which may have been available to our board of directors or the Company and did not address the underlying business decision of our board of directors or the Company to proceed with or effect the Business Combination.

Stifel is not a legal, tax, regulatory or bankruptcy advisor. Stifel did not consider any potential legislative or regulatory changes currently being considered or recently enacted by the United States Congress, the Securities and Exchange Commission (the “SEC”), or any other regulatory bodies, or any changes in accounting methods or generally accepted accounting principles that may be adopted by the SEC or the Financial Accounting Standards Board. Stifel’s Opinion was not a solvency opinion and did not in any way address the solvency or financial condition of the Company or Jason.

The summary set forth below does not purport to be a complete description of the analyses performed by Stifel, but describes, in summary form, the material elements of the presentation that Stifel made to our board of directors on March 14, 2014, in connection with Stifel’s Opinion.

In accordance with customary investment banking practice, Stifel employed generally accepted valuation methods and financial analyses in reaching its Opinion. The following is a summary of the material financial analyses performed by Stifel in arriving at its Opinion. These summaries of financial analyses alone do not

 

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constitute a complete description of the financial analyses Stifel employed in reaching its conclusions. None of the analyses performed by Stifel were assigned a greater significance by Stifel than any other, nor does the order of analyses described represent relative importance or weight given to those analyses by Stifel. The summary text describing each financial anal