UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended April 1, 2016
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from  __________ to __________ 

Commission File Number: 001-36051
  JASON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
46-2888322
(State or other jurisdiction of
 incorporation or organization)
 
(I.R.S. Employer
 Identification Number)
 
411 East Wisconsin Avenue
Suite 2100
Milwaukee, Wisconsin
 
53202
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code:   (414) 277-9300
 
Not Applicable
(Former name or former address, if changed since last report)
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý No ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ý No  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨
 
Accelerated filer ý
Non-accelerated filer ¨
 
Smaller reporting company ¨
(Do not check if a smaller reporting company) 
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ¨   No  ý

As of May 6, 2016 , there were 22,328,869 shares of common stock of the Company issued and outstanding. 




JASON INDUSTRIES, INC.
TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1




PART I – FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
Jason Industries, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited)
 
 
 
Three Months Ended
 
April 1, 2016
 
March 27, 2015
Net sales
$
190,974

 
$
175,836

Cost of goods sold
153,083

 
136,889

Gross profit
37,891

 
38,947

Selling and administrative expenses
32,301

 
31,493

Loss on disposals of property, plant and equipment - net
703

 
26

Restructuring
2,717

 
1,704

Transaction-related expenses

 
176

Operating income
2,170

 
5,548

Interest expense
(8,024
)
 
(7,506
)
Equity income
169

 
282

Other income - net
118

 
35

Loss before income taxes
(5,567
)
 
(1,641
)
Tax benefit
(2,551
)
 
(747
)
Net loss
$
(3,016
)
 
$
(894
)
Less net loss attributable to noncontrolling interests
(510
)
 
(151
)
Net loss attributable to Jason Industries
$
(2,506
)
 
$
(743
)
Accretion of preferred stock dividends
900

 
900

Net loss available to common shareholders of Jason Industries
$
(3,406
)
 
$
(1,643
)
 
 
 
 
Net loss per share available to common shareholders of Jason Industries:
 
 
 
Basic and diluted
$
(0.15
)
 
$
(0.07
)
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
Basic and diluted
22,388

 
21,991

The accompanying notes are an integral part of these condensed consolidated financial statements.


2




Jason Industries, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(In thousands) (Unaudited)
 
Three Months Ended
 
April 1, 2016
 
March 27, 2015
Net loss
$
(3,016
)
 
$
(894
)
Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustments
3,276

 
(9,894
)
Net change in unrealized losses on cash flow hedges, net of tax expense of ($1,284) for 2016 and $0 for 2015
(2,099
)
 

Total other comprehensive income (loss)
1,177

 
(9,894
)
Comprehensive loss
(1,839
)
 
(10,788
)
Less: Comprehensive loss attributable to noncontrolling interests
(311
)
 
(1,823
)
Comprehensive loss attributable to Jason Industries
$
(1,528
)
 
$
(8,965
)
The accompanying notes are an integral part of these condensed consolidated financial statements.


3





Jason Industries, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts) (Unaudited)
 
 
 
April 1, 2016
 
December 31, 2015
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
37,382

 
$
35,944

Accounts receivable - net of allowances for doubtful accounts of $2,673 at April 1, 2016 and $2,524 at December 31, 2015
98,052

 
79,088

Inventories - net
79,220

 
80,432

Other current assets
27,926

 
30,903

Total current assets
242,580

 
226,367

Property, plant and equipment - net of accumulated depreciation of $51,632 at April 1, 2016 and $44,254 at December 31, 2015
193,399

 
196,150

Goodwill
107,442

 
106,170

Other intangible assets - net
156,049

 
157,915

Other assets - net
10,072

 
10,490

Total assets
$
709,542

 
$
697,092

 
 
 
 
Liabilities and Equity
 
 
 
Current liabilities
 
 
 
Current portion of long-term debt
$
6,202

 
$
6,186

Accounts payable
66,914

 
56,838

Accrued compensation and employee benefits
25,683

 
18,750

Accrued interest
150

 
75

Other current liabilities
27,520

 
28,733

Total current liabilities
126,469

 
110,582

Long-term debt
427,367

 
426,150

Deferred income taxes
54,817

 
57,247

Other long-term liabilities
18,093

 
18,119

Total liabilities
626,746

 
612,098

 
 
 
 
Commitments and contingencies (Note 13)
 
 
 
 
 
 
 
Equity
 
 
 
Preferred stock, $0.0001 par value (5,000,000 shares authorized, 45,000 shares issued and outstanding at April 1, 2016 and December 31, 2015)
45,000

 
45,000

Jason Industries common stock, $0.0001 par value (120,000,000 shares authorized; issued and outstanding: 22,326,982 shares at April 1, 2016 and 22,295,003 shares at December 31, 2015)
2

 
2

Additional paid-in capital
143,174

 
143,533

Retained deficit
(98,503
)
 
(95,997
)
Accumulated other comprehensive loss
(20,478
)
 
(21,456
)
Shareholders’ equity attributable to Jason Industries
69,195

 
71,082

Noncontrolling interests
13,601

 
13,912

Total equity
82,796

 
84,994

Total liabilities and equity
$
709,542

 
$
697,092

The accompanying notes are an integral part of these condensed consolidated financial statements.

4




Jason Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 
Three Months Ended
 
April 1, 2016
 
March 27, 2015
Cash flows from operating activities
 
 
 
Net loss
$
(3,016
)
 
$
(894
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation
7,218

 
6,843

Amortization of intangible assets
3,079

 
3,568

Amortization of deferred financing costs and debt discount
752

 
753

Equity income
(169
)
 
(282
)
Deferred income taxes
(1,880
)
 
(2,713
)
Loss on disposals of property, plant and equipment - net
703

 
26

Non-cash stock compensation
576

 
2,063

Net increase (decrease) in cash due to changes in:
 
 
 
Accounts receivable
(18,238
)
 
(24,186
)
Inventories
2,164

 
(1,153
)
Other current assets
2,202

 
(1,157
)
Accounts payable
10,755

 
8,818

Accrued compensation and employee benefits
6,729

 
2,829

Accrued interest
75

 
6,460

Accrued income taxes
(1,057
)
 
1,083

Other - net
376

 
1,154

Total adjustments
13,285

 
4,106

Net cash provided by operating activities
10,269

 
3,212

Cash flows from investing activities
 
 
 
Proceeds from disposals of property, plant and equipment and other assets
91

 
18

Payments for property, plant and equipment
(6,449
)
 
(7,235
)
Acquisitions of business, net of cash acquired

 
(350
)
Acquisitions of patents
(31
)
 
(69
)
Net cash used in investing activities
(6,389
)
 
(7,636
)
Cash flows from financing activities
 
 
 
Payments of First Lien term loan
(775
)
 

Proceeds from other long-term debt
2,874

 
228

Payments of other long-term debt
(2,630
)
 
(612
)
Payments of preferred stock dividends
(1,800
)
 
(900
)
Other financing activities - net
(35
)
 

Net cash used in financing activities
(2,366
)
 
(1,284
)
Effect of exchange rate changes on cash and cash equivalents
(76
)
 
(1,643
)
Net increase (decrease) in cash and cash equivalents
1,438

 
(7,351
)
Cash and cash equivalents, beginning of period
35,944

 
62,279

Cash and cash equivalents, end of period
$
37,382

 
$
54,928

Supplemental disclosure of cash flow information
 
 
 
Non-cash investing activities:
 
 
 
Accrued purchases of property, plant and equipment
$
709

 
$
1,590

Non-cash financing activities:

 
 
Accretion of preferred stock dividends
$

 
$
900

The accompanying notes are an integral part of these condensed consolidated financial statements.

5



Jason Industries, Inc.
Condensed Consolidated Statements of Shareholders’ Equity
(In thousands) (Unaudited)

 
Preferred Stock
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Shareholders' Equity
Attributable to Jason
Industries, Inc.
 
Noncontrolling
Interests
 
Total Equity
Balance at December 31, 2015
$
45,000

 
$
2

 
$
143,533

 
$
(95,997
)
 
$
(21,456
)
 
$
71,082

 
$
13,912

 
$
84,994

Dividends declared

 

 
(900
)
 

 

 
(900
)
 

 
(900
)
Stock compensation expense

 

 
576

 

 

 
576

 

 
576

Tax withholding related to vesting of restricted stock units

 

 
(35
)
 

 

 
(35
)
 

 
(35
)
Net loss

 

 

 
(2,506
)
 

 
(2,506
)
 
(510
)
 
(3,016
)
Foreign currency translation adjustments

 

 

 

 
2,723

 
2,723

 
553

 
3,276

Net changes in unrealized losses on cash flow hedges

 

 

 

 
(1,745
)
 
(1,745
)
 
(354
)
 
(2,099
)
Balance at April 1, 2016
$
45,000

 
$
2

 
$
143,174

 
$
(98,503
)
 
$
(20,478
)
 
$
69,195

 
$
13,601

 
$
82,796


 
Preferred Stock
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Shareholders' Equity
Attributable to Jason
Industries, Inc.
 
Noncontrolling
Interests
 
Total Equity
Balance at December 31, 2014
$
45,000

 
$
2

 
$
140,312

 
$
(21,539
)
 
$
(12,065
)
 
$
151,710

 
$
30,965

 
$
182,675

Dividends declared

 

 
(900
)
 

 

 
(900
)
 

 
(900
)
Stock compensation expense

 

 
2,063

 

 

 
2,063

 

 
2,063

Net loss

 

 

 
(743
)
 

 
(743
)
 
(151
)
 
(894
)
Foreign currency translation adjustments

 

 

 

 
(8,222
)
 
(8,222
)
 
(1,672
)
 
(9,894
)
Balance at March 27, 2015
$
45,000

 
$
2

 
$
141,475

 
$
(22,282
)
 
$
(20,287
)
 
$
143,908

 
$
29,142

 
$
173,050



The accompanying notes are an integral part of these condensed consolidated financial statements.

6


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)



1.
Description of Business and Basis of Presentation
Description of Business
Jason Industries, Inc. (“Jason Industries”), including its subsidiaries (collectively, the “Company”), is a global industrial manufacturing company with four reportable segments: seating, finishing, acoustics, and components. The segments have operations within the United States and 14 foreign countries. Through these segments, the Company is a global or domestic leader in a number of product categories. The Company is a leading producer of seating for the motorcycle and off-road vehicle sectors, and a leading supplier of static seats to the commercial and residential lawn/turf sector. The Company is also a producer of non-woven acoustical fiber insulation for the automotive sector and a manufacturer of industrial consumables (brushes, buffing wheels and buffing compounds) and abrasives. The Company also manufactures precision components, expanded and perforated metal, and slip-resistant walking surfaces.

Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. For additional information, including the Company’s significant accounting policies, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 .
The Company’s fiscal year ends on December 31 . Throughout the year, the Company reports its results using a fiscal calendar whereby each three month quarterly reporting period is approximately thirteen weeks in length, ending on a Friday. The exceptions are the first quarter, which begins on January 1 , and the fourth quarter, which ends on December 31 . For 2016 , the Company’s fiscal quarters are comprised of the three months ending April 1 July 1 September 30 and December 31 . In 2015 , the Company’s fiscal quarters were comprised of the three months ended March 27 , June 26 , September 25 and December 31 .
In the opinion of management, all adjustments considered necessary for a fair statement of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Interim results are not necessarily indicative of the results that may be expected for the entire fiscal year.

Recently issued accounting standards
In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, “ Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). This standard requires the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. The standard does not affect the recognition and measurement of debt issuance costs; therefore, the amortization of such costs will continue to be reported as interest expense. For public entities, ASU 2015-03 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The new guidance is to be applied on a retrospective basis to all prior periods. The Company adopted ASU 2015-03 effective April 1, 2016. Accordingly, $9.1 million of debt issuance costs, previously included within other long-term assets, have been reclassified as a reduction of long-term debt on the December 31, 2015 consolidated balance sheet.

In August 2015, the FASB issued ASU 2015-15, “ Presentation and Subsequent Measurement of Debt Issuance Costs Association with Line of Credit Arrangements ” (“ASU 2015-15”). ASU 2015-15 indicates that previously issued guidance did not address presentation or subsequent measurement of debt issuance costs related to line of credit arrangements. Given the absence of authoritative guidance, the SEC staff has indicated that they would not object to an entity deferring and presenting debt issuance costs as assets and amortizing the deferred costs ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings on the line of credit arrangement. The guidance is effective for annual reporting periods beginning after December 15, 2015. The Company adopted ASU 2015-15 effective April 1, 2016. There was

7


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


no impact to previously reported condensed consolidated statements of operations, condensed consolidated statements of comprehensive loss, condensed consolidated balance sheets, or condensed consolidated statements of cash flows.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). This standard simplifies several aspects of the accounting for share-based payment award transactions, including recognition of income tax consequences of stock compensation, classification of awards as either equity or liabilities, accounting for forfeitures, and classification on the statement of cash flows. For public entities, ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permissible in any interim or annual period. The Company early adopted ASU 2016-09 effective April 1, 2016. As a result of the adoption, there was an immaterial impact to the condensed consolidated statement of cash flows for the period ended April 1, 2016 and no impact to the condensed consolidated statement of cash flows for the period ended March 27, 2015. There was no impact to reported condensed consolidated statements of operations, condensed consolidated statements of comprehensive loss, or condensed consolidated balance sheets for the periods ended April 1, 2016 and March 27, 2015.
The adoption will result in reclassification of cash paid for shares withheld for taxes from operating to financing activities on the consolidated statement of cash flows for comparative periods in future quarters. The impact of the reclassification will be an increase in operating activities and decrease in financing activities of $0.2 million , $0.7 million , and $1.1 million for the six month period ended June 26, 2015, the nine month period ended September 25, 2015, and the twelve month period ended December 31, 2015, respectively.
2.
Acquisitions
DRONCO GmbH (“DRONCO”)
On May 29, 2015, the Company acquired all of the outstanding shares of DRONCO. DRONCO is a European manufacturer of bonded abrasives. These abrasives are being manufactured and distributed by the finishing segment. The Company paid cash consideration of $34.4 million , net of cash acquired, and, pursuant to the transaction, assumed certain liabilities. The related purchase agreement includes customary representations, warranties and covenants between the named parties.
The acquisition was accounted for using the acquisition method. The operating results and cash flows of DRONCO are included in the Company’s condensed consolidated financial statements from May 29, 2015, the date the Company entered into the purchase agreement. No adjustments were made to the purchase price allocation during the three months ended April 1, 2016 . During the three months ended April 1, 2016 , $9.5 million of net sales from DRONCO were included in the Company’s condensed consolidated statements of operations. Pro forma historical results of operations related to the acquisition of DRONCO have not been presented as they are not material to the Company’s condensed consolidated statements of operations.
Herold Partco     
On March 25, 2015 , the Company acquired Herold Partco Manufacturing, Inc. for $0.4 million . Herold Partco Manufacturing, Inc. is a Cleveland-based manufacturer of industrial brushes. These brushes are now manufactured and distributed by the finishing segment and sold under the Osborn brand name. The purchase price allocation for this transaction resulted in goodwill of $0.1 million , other intangible assets of $0.2 million and inventory of $0.1 million .
The acquisition of Herold Partco Manufacturing, Inc. was not material to the Company’s condensed consolidated financial statements.
3.
Restructuring Costs
During the first quarter of 2016, as part of a strategic review of organizational structure and operations, the Company announced a global cost reduction and restructuring program (the “2016 program”). The 2016 program, as used herein, refers to costs related to various restructuring activities across business segments. This includes entering into severance and termination agreements with employees and footprint rationalization activities, including exit and relocation costs for the consolidation and closure of plant facilities and lease termination costs. These activities will be ongoing during 2016 and are expected to be completed in 2017.
In 2015, the Company incurred certain restructuring costs related to changes to its worldwide manufacturing footprint. These actions resulted in charges relating to employee severance and other related charges, such as exit costs for the consolidation

8


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


and closure of plant facilities, employee relocation and lease termination costs. These costs related to decisions that preceded the 2016 program and are therefore not considered to be part of such plan.
During the three months ended April 1, 2016 , the Company incurred $2.7 million of restructuring costs under the 2016 program. By segment, such costs totaled $1.3 million within the Finishing segment, $0.7 million within the Acoustics segment, $0.6 million within the Components segment, and $0.1 million in the Corporate segment. During the three months ended March 27, 2015 , the Company incurred $1.7 million of restructuring charges. By segment, such costs totaled $0.3 million within the Finishing segment and $1.4 million within the Acoustics segment. These restructuring costs are presented separately on the condensed consolidated statements of operations.
The following table presents the restructuring liabilities, including both the 2016 program and previous activities:
 
Severance
costs
 
Lease
termination
costs
 
Other costs
 
Total
Balance - December 31, 2015
$
594

 
$
1,038

 
$

 
$
1,632

Current period restructuring charges
2,613

 
104

 

 
2,717

Cash payments
(1,195
)
 
(344
)
 

 
(1,539
)
Balance - April 1, 2016
$
2,012

 
$
798

 
$

 
$
2,810

 
 
 
 
 
 
 
 
 
Severance
costs
 
Lease
termination
costs
 
Other costs
 
Total
Balance - December 31, 2014
$
88

 
$
1,056

 
$
97

 
$
1,241

Current period restructuring charges
141

 
905

 
658

 
1,704

Cash payments
(7
)
 
(150
)
 
(755
)
 
(912
)
Balance - March 27, 2015
$
222

 
$
1,811

 
$

 
$
2,033

The accruals for severance presented above are expected to be paid during the next twelve months and are recorded within other current liabilities on the condensed consolidated balance sheets. During the three months ended April 1, 2016 , the accrual for lease termination costs of $0.8 million relates to restructuring costs within the acoustics segment due to the 2015 closure of the Norwalk facility and restructuring costs associated with a 2016 lease termination in the finishing segment. At April 1, 2016 and December 31, 2015 , accruals for lease termination costs of $ 0.2 million and $ 0.3 million , respectively, are recorded within other long-term liabilities and $ 0.6 million and $ 0.7 million , respectively, are recorded within other current liabilities on the condensed consolidated balance sheets.
4.
Inventories
Inventories consisted of the following:
 
April 1, 2016
 
December 31, 2015
Raw material
$
39,006

 
$
40,310

Work-in-process
6,259

 
4,809

Finished goods
33,955

 
35,313

Total Inventories
$
79,220

 
$
80,432



9


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


5.
Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill by reporting segment was as follows:
 
Finishing
 
Acoustics
 
Components
 
Total
Balance as of December 31, 2015
$
43,229

 
$
29,758

 
$
33,183

 
$
106,170

Foreign currency impact
1,112

 
160

 

 
1,272

Balance as of April 1, 2016
$
44,341

 
$
29,918

 
$
33,183

 
$
107,442

    
The Company’s other amortizable intangible assets consisted of the following:
 
 
 
April 1, 2016
 
December 31, 2015
 
Gross
Carrying
Amount    
 
Accumulated
Amortization
 
Net        
 
Gross
Carrying    
Amount
 
Accumulated
Amortization
 
Net        
Patents
$
1,833

 
$
(147
)
 
$
1,686

 
$
1,800

 
$
(62
)
 
$
1,738

Customer relationships
111,512

 
(10,785
)
 
100,727

 
110,722

 
(8,745
)
 
101,977

Trademarks and other intangibles
59,479

 
(5,843
)
 
53,636

 
58,962

 
(4,762
)
 
54,200

Total amortized other intangible assets
$
172,824

 
$
(16,775
)
 
$
156,049

 
$
171,484

 
$
(13,569
)
 
$
157,915

6.
Debt and Hedging Instruments
The Company’s debt consisted of the following:
 
April 1, 2016
 
December 31, 2015
First Lien Term Loans
$
305,350

 
$
306,125

Second Lien Term Loans
110,000

 
110,000

Debt discount on Term Loans
(5,761
)
 
(6,010
)
Deferred financing costs on Term Loans
(8,691
)
 
(9,087
)
Foreign debt
31,061

 
29,731

Capital lease obligations
1,610

 
1,577

Total debt
433,569

 
432,336

Less: Current portion
(6,202
)
 
(6,186
)
Total long-term debt
$
427,367

 
$
426,150

    
Senior Secured Credit Facilities
As of April 1, 2016 , the Company’s U.S. credit facility (the “Senior Secured Credit Facilities”) included (i) term loans in an aggregate principal amount of $305.4 million (“First Lien Term Loans”) maturing in 2021, (ii) term loans in an aggregate principal amount of $110.0 million (“Second Lien Term Loans”) maturing in 2022, and (iii) a revolving loan of up to $40.0 million (“Revolving Credit Facility”) maturing in 2019.
The principal amount of the First Lien Term Loans amortizes in quarterly installments equal to $0.8 million , with the balance payable at maturity. At the Company’s election, the interest rate per annum applicable to the loans under the Senior Secured Credit Facilities is based on a fluctuating rate of interest determined by reference to either (i) a base rate determined by reference to the higher of (a) the “prime rate” of Deutsche Bank AG New York Branch, (b) the federal funds effective rate plus 0.50% and (c) the Eurocurrency rate applicable for an interest period of one month plus 1.00% , plus an applicable margin equal to (x)  3.50% in the case of the First Lien Term Loans, (y)  2.25% in the case of the Revolving Credit Facility or (z)  7.00% in the case of the Second Lien Term Loans or (ii) a Eurocurrency rate determined by reference to the London Interbank Offered Rate (“LIBOR”), adjusted for statutory reserve requirements, plus an applicable margin equal to (x)  4.50% in the case of the First Lien Term Loans, (y)  3.25% in the case of the Revolving Credit Facility or (z)  8.00% in the case of the Second Lien Term Loans. Borrowings under the First Lien Term Facility and Second Lien Term Facility are subject to a floor of 1.00% in the case

10


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


of Eurocurrency loans. The applicable margin for loans under the Revolving Credit Facility may be subject to adjustment based upon Jason Incorporated’s consolidated first lien net leverage ratio.
Under the Revolving Credit Facility, if the aggregate outstanding amount of all Revolving Loans, swingline loans and certain letter of credit obligations exceeds 25 percent of the revolving credit commitments at the end of any fiscal quarter, Jason Incorporated, an indirect majority-owned subsidiary of the Company, and its restricted subsidiaries will be required to not exceed a consolidated first lien net leverage ratio, initially specified at 5.50 to 1.00 , with periodic decreases beginning on July 1, 2016 to 5.25 to 1.00 , and decreasing to 4.50 to 1.00 on December 31, 2017 and remaining at that level thereafter. If such outstanding amounts do not exceed 25 percent of the revolving credit commitments at the end of any fiscal quarter, no financial covenants are applicable.
At April 1, 2016 , the interest rates on the outstanding balances of the First Lien Term Loans and Second Lien Term Loans were 5.5% and 9.0% , respectively. At April 1, 2016 , the Company had a total of $35.6 million of availability for additional borrowings under the Revolving Credit Facility since the Company had no outstanding borrowings and letters of credit outstanding of $4.4 million , which reduce availability under the facility.
Foreign debt
At April 1, 2016 and December 31, 2015 , the Company had $31.1 million and $29.7 million , respectively, in foreign debt obligations, including various overdraft facilities and term loans. The largest foreign debt balances are held by the Company’s subsidiaries in Germany (approximately $29.1 million and $27.6 million as of April 1, 2016 and December 31, 2015 , respectively), Mexico (approximately $1.3 million and $1.5 million as of April 1, 2016 and December 31, 2015 , respectively), and Brazil (approximately $0.4 million and $0.4 million as of April 1, 2016 and December 31, 2015 , respectively). These various foreign loans are comprised of individual outstanding obligations ranging from approximately $0.1 million to $13.7 million and $0.1 million to $13.1 million as of April 1, 2016 and December 31, 2015 , respectively.
In connection with the acquisition of DRONCO, the Company assumed $11.0 million of debt comprised of term loan borrowings totaling $8.5 million and revolving line of credit borrowings totaling $2.5 million . Borrowings bear interest at fixed and variable rates ranging from 2.3% to 4.6% and are subject to repayment in varying amounts through 2030. During the third quarter of 2015, the Company entered into a new $13.5 million term loan in Germany. Borrowings bear interest at a fixed rate of 2.25% and are subject to repayment in equal quarterly amounts of approximately $0.4 million beginning September 30, 2017 through June 30, 2025.
Interest Rate Hedge Contracts
To manage exposure to fluctuations in interest rates, the Company entered into forward starting interest rate swap agreements (“Swaps”) in 2015 with notional values totaling $210 million at April 1, 2016 and December 31, 2015 . The Swaps have been designated by the Company as cash flow hedges, and effectively fix the variable portion of interest rates on variable rate term loan borrowings at a rate of approximately 2.08% prior to financing spreads and related fees. The Swaps have a forward start date of December 30, 2016 and have an expiration date of June 30, 2020. The fair values of the Swaps totaled $3.7 million at April 1, 2016 and $0.3 million at December 31, 2015 , respectively. These amounts were recorded in other current liabilities at April 1, 2016 and other long-term liabilities at December 31, 2015 in the consolidated balance sheets. In 2015 there was no interest expense recognized. The Company will begin recognizing interest expense related to the interest rate hedge contracts in 2017.
7.
Share Based Compensation
In 2014, the Compensation Committee of the Company’s Board of Directors approved an initial grant under the 2014 Omnibus Incentive Plan (the “2014 Plan”) to certain executive officers, senior management employees, and members of the Board of Directors. The Company recognizes compensation expense based on estimated grant date fair values for all share-based awards issued to employees and directors, including restricted stock units (“RSUs”) and performance share units, which are restricted stock units with vesting conditions contingent upon achieving certain performance goals. Share based compensation expense is reported in selling and administrative expenses in the Company’s condensed consolidated statements of operations.
There were 3,473,435 shares of common stock reserved and authorized for issuance under the 2014 Plan. At April 1, 2016 , 614,041 shares of common stock remain authorized and available for future grant under the 2014 Plan.

11


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


The Company recognized the following share-based compensation expense:
 
Three Months Ended
 
April 1, 2016
 
March 27, 2015
Compensation Expense:
 
 
 
Restricted Stock Units
$
254

 
$
785

Adjusted EBITDA Vesting Awards
20

 
708

Stock Price Vesting Awards
29

 
570

ROIC Vesting Awards
45

 

 
348

 
2,063

Impact of accelerated vesting
228

 

Total share-based compensation expense
$
576

 
$
2,063

 
 
 
 
Total income tax benefit recognized
$
214

 
$
774


As of April 1, 2016 , total unrecognized compensation cost related to share-based compensation awards was approximately $2.4 million , which the Company expects to recognize over a weighted average period of approximately 1.8 years.    
The following table sets forth the restricted and performance share unit activity:
 
Restricted Stock Units
 
Adjusted EBITDA Vesting Awards
 
Stock Price Vesting Awards
 
ROIC Vesting Awards
 
Units
(thousands)
 
Weighted-Average Grant-Date Fair Value
 
Units
(thousands)
 
Weighted-Average Grant-Date Fair Value
 
Units
(thousands)
 
Weighted-Average Grant-Date Fair Value
 
Units
(thousands)
 
Weighted-Average Grant-Date Fair Value
Nonvested at December 31, 2015
401

 
$
8.70

 
871

 
$
9.81

 
878

 
$
3.27

 

 
$

Granted
74

 
3.46

 

 

 

 

 
381

 
3.46

Vested
(41
)
 
10.49

 

 

 

 

 

 

Forfeited
(64
)
 
9.83

 
(122
)
 
10.49

 
(30
)
 
3.54

 
(29
)
 
3.46

Nonvested at April 1, 2016
370

 
$
7.27

 
749

 
$
9.47

 
848

 
$
3.26

 
352

 
$
3.46

Restricted Stock Units     
As of April 1, 2016 , there was $1.1 million of unrecognized share-based compensation expense, which is expected to be recognized over a weighted-average period of 1.4 years. In connection with the vesting of RSUs previously issued by the Company, a number of shares sufficient to fund statutory minimum tax withholding requirements was withheld from the total shares issued or released to the award holder (under the terms of the 2014 Plan, the shares are considered to have been issued and are not added back to the pool of shares available for grant). During the three months ended April 1, 2016 , 8,545 shares were withheld to satisfy the requirement. The withholding is treated as a reduction in additional paid-in capital in the accompanying condensed consolidated statements of shareholders’ equity.
Performance Share Units
Adjusted EBITDA Vesting Awards
Compensation expense for cumulative Adjusted EBITDA based performance share unit awards is currently being recognized based on an estimated payout of 62.5% of target or 301,382 shares. As of April 1, 2016 , there was $0.5 million of unrecognized compensation expense related to cumulative Adjusted EBITDA based vesting performance share unit awards, which is expected to be recognized over a weighted average period of 1.3 years. There were no Adjusted EBITDA vesting awards granted during 2016.


12


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


Stock Price Vesting Awards
As of April 1, 2016 , there was $0.1 million of unrecognized compensation expense related to stock price based performance share unit awards, which is expected to be recognized over a weighted average period of 0.7 years. There were no stock price vesting awards granted during 2016.
ROIC Vesting Awards
In the first quarter of 2016, the Company granted performance share unit awards based on achievement of an average return on invested capital (“ROIC”) performance target during a three year measurement period. Performance share unit awards based on ROIC performance metrics are payable at the end of their respective performance period in common stock. The number of share units awarded can range from zero to 150% depending on achievement of a targeted performance metric, and are payable in common stock within a thirty day period following the end of the performance period. The Company expenses the cost of the performance-based share unit awards based on the fair value of the awards at the date of grant and the estimated achievement of the performance metric, ratably over the performance period of three years.
Compensation expense for ROIC based performance share unit awards is currently being recognized based on an estimated payout of 100.0% of target or 235,000 shares. As of April 1, 2016 , there was $0.8 million of unrecognized compensation expense related to ROIC based vesting performance share unit awards, which is expected to be recognized over a weighted average period of 2.9 years.
8.
Earnings per Share
Basic income (loss) per share is calculated by dividing net income (loss) attributable to Jason Industries’ common shareholders by the weighted average number of common shares outstanding for the period. In computing dilutive income (loss) per share, basic income (loss) per share is adjusted for the assumed issuance of all potentially dilutive share-based awards, including warrants, restricted stock units, performance share units, convertible preferred stock, and certain “Rollover Shares” of JPHI Holdings Inc. (“JPHI”), a majority owned subsidiary of the Company, convertible into shares of Jason Industries. Such Rollover Shares were invested by former owners and management of JPHI prior to the Company’s acquisition of JPHI.
The reconciliation of the numerator and denominator of the basic and diluted income (loss) per share calculation and the anti-dilutive shares is as follows:
 
Three Months Ended
 
April 1, 2016
 
March 27, 2015
Net loss per share attributable to Jason Industries common shareholders
 
 
 
Basic and diluted income (loss) per share
$
(0.15
)
 
$
(0.07
)
 
 
 
 
Numerator:
 
 
 
Net loss available to common shareholders of Jason Industries
$
(3,406
)
 
$
(1,643
)
Denominator:
 
 
 
Basic and diluted weighted-average shares outstanding
22,388

 
21,991

 
 
 
 
Weighted average number of anti-dilutive shares excluded from denominator:
 
 
 
Warrants to purchase Jason Industries common stock
13,994

 
13,994

Conversion of Series A 8% Perpetual Convertible Preferred
3,653

 
3,653

Conversion of JPHI rollover shares convertible to Jason Industries common stock
3,486

 
3,486

Restricted stock units
302

 
762

Performance share units
1,185

 
2,026

Total
22,620

 
23,921

Warrants are considered anti-dilutive and excluded when the exercise price exceeds the average market value of the Company’s common stock price during the applicable period. Performance share units are considered anti-dilutive if the performance targets upon which the issuance of the shares are contingent have not been achieved and the respective performance period has not been completed as of the end of the current period. Due to losses available to the Company’s

13


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


common shareholders for each of the periods presented, potentially dilutive shares are excluded from the diluted net loss per share calculation because they were anti-dilutive under the treasury stock method, in accordance with Accounting Standards Codification Topic 260.
9.
Income Taxes
At the end of each three month period, the Company estimates a base effective tax rate expected for the full year based on the most recent forecast of its pre-tax income (loss), permanent book and tax differences, and global tax planning strategies. The Company uses this base rate to provide for income taxes on a year-to-date basis, excluding the effect of significant, unusual, discrete or extraordinary items, and items that are reported net of their related tax effects. The Company records the tax effect of significant, unusual, discrete or extraordinary items, and items that are reported net of their tax effects in the period in which they occur.
The effective income tax rate was 45.8% and 45.5% for the three months ended April 1, 2016 and March 27, 2015 , respectively. The effective income tax rate for both 2016 and 2015 reflects the benefits of tax losses at the higher U.S. Federal statutory rate and taxable earnings derived in foreign jurisdictions with tax rates that are lower than the U.S. Federal statutory rate, and discrete items. Net discrete tax expense was immaterial for the three months ended April 1, 2016 and March 27, 2015 .
The amount of gross unrecognized tax benefits was $3.1 million and $2.9 million at April 1, 2016 and December 31, 2015 , respectively. Of the $3.1 million of unrecognized tax benefits, $1.7 million would reduce the Company’s effective tax rate if recognized.
During the next twelve months, the Company believes it is reasonably possible that the amount of unrecognized tax benefits could decrease by $1.2 million . The Company recognizes interest and penalties related to tax matters in tax expense. The Company has an immaterial amount of accrued interest and penalties that were recognized as a component of the income tax provision at April 1, 2016 and December 31, 2015 .
10.
Equity
The changes in the components of accumulated other comprehensive loss, net of taxes, for the three months ended April 1, 2016 and March 27, 2015 are as follows:
 
Employee
retirement plan
adjustments
 
Foreign currency
translation
adjustments
 
Net unrealized gains (losses) on cash flow hedges

 
Total    
Balance at December 31, 2015
$
(1,051
)
 
$
(20,237
)
 
$
(168
)
 
$
(21,456
)
Other comprehensive income (loss) before reclassifications

 
2,723

 
(1,745
)
 
978

Balance at April 1, 2016
$
(1,051
)
 
$
(17,514
)
 
$
(1,913
)
 
$
(20,478
)
 
 
 
 
 
 
 
 
 
Employee
retirement plan
adjustments
 
Foreign currency
translation
adjustments
 
Net unrealized gains (losses) on cash flow hedges

 
Total
Balance at December 31, 2014
$
(1,434
)
 
$
(10,631
)
 
$

 
$
(12,065
)
Other comprehensive (loss) before reclassifications

 
(8,222
)
 

 
(8,222
)
Balance at March 27, 2015
$
(1,434
)
 
$
(18,853
)
 
$

 
$
(20,287
)
Series A Preferred Stock Dividends
On January 1, 2016 , the Company paid a dividend on the Series A Preferred Stock of $20.00 per share to holders of record on November 15, 2015 , totaling $0.9 million . On April 1, 2016 , the Company paid a dividend on the Series A Preferred Stock of $20.00 per share to holders of record on February 15, 2016 , totaling $0.9 million .

14


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


11.
Business Segments, Geographic and Customer Information
The Company identifies its segments using the “management approach,” which designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company’s reportable segments. The Company has four reportable segments: seating, finishing, acoustics and components.
Net sales information relating to the Company’s reportable segments is as follows:
 
Three Months Ended
 
April 1, 2016
 
March 27, 2015
Net sales
 
 
 
Seating
$
51,950

 
$
50,960

Finishing
50,276

 
42,850

Acoustics
61,911

 
50,921

Components
26,837

 
31,105

 
$
190,974

 
$
175,836

The Company uses “Adjusted EBITDA” as the primary measure of profit or loss for the purposes of assessing the operating performance of its segments. The Company defines EBITDA as net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA, excluding the impact of non-cash or non-operational losses or gains, including long-lived asset impairment charges, integration and other operational restructuring charges, transactional legal fees, other professional fees and special employee bonuses, purchase accounting adjustments, sponsor fees and expenses, and non-cash share based compensation expense.
Management believes that Adjusted EBITDA provides a clear picture of the Company’s operating results by eliminating expenses and income that are not reflective of the underlying business performance. Certain corporate-level administrative expenses such as payroll and benefits, incentive compensation, travel, marketing, accounting, auditing and legal fees and certain other expenses are kept within its corporate results and not allocated to its business segments. Adjusted EBITDA is used to facilitate a comparison of the Company’s operating performance on a consistent basis from period to period and to analyze the factors and trends affecting its segments. The Company’s internal plans, budgets and forecasts use Adjusted EBITDA as a key metric. In addition, this measure is used to evaluate its operating performance and segment operating performance and to determine the level of incentive compensation paid to its employees.
As the Company uses Adjusted EBITDA as its primary measure of segment performance, generally accepted accounting principles in the United States of America (“GAAP”) on segment reporting require the Company to include this measure in its discussion of segment operating results. The Company must also reconcile Adjusted EBITDA to operating results presented on a GAAP basis.

15


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


Adjusted EBITDA information relating to the Company’s reportable segments is presented below followed by a reconciliation of total segment Adjusted EBITDA to consolidated income before taxes:
 
Three Months Ended
 
April 1, 2016
 
March 27, 2015
Segment Adjusted EBITDA
 
 
 
Seating
$
6,629

 
$
7,960

Finishing
5,229

 
6,311

Acoustics
6,615

 
4,854

Components
4,613

 
5,173

Total segment Adjusted EBITDA
$
23,086

 
$
24,298

Interest expense
(422
)
 
(410
)
Depreciation and amortization of intangible assets
(10,205
)
 
(10,354
)
Loss on disposal of property, plant and equipment - net
(703
)
 
(26
)
Restructuring
(2,717
)
 
(1,704
)
Integration and other restructuring costs
(1,589
)
 
(462
)
Total segment income before income taxes
7,450

 
11,342

Corporate general and administrative expenses
(4,747
)
 
(3,591
)
Corporate interest expense
(7,602
)
 
(7,096
)
Corporate depreciation
(92
)
 
(57
)
Corporate transaction-related expenses

 
(176
)
Corporate share based compensation
(576
)
 
(2,063
)
Consolidated loss before income taxes
$
(5,567
)
 
$
(1,641
)
    
Assets held by reportable segments are as follows:
 
 
 
April 1, 2016
 
December 31, 2015
Assets
 
 
 
Seating
$
122,776

 
$
119,019

Finishing
254,820

 
248,210

Acoustics
208,500

 
206,117

Components
125,929

 
124,480

Total segments
712,025

 
697,826

Corporate and eliminations
(2,483
)
 
(734
)
Consolidated
$
709,542

 
$
697,092

12.
Fair Value Measurements
Fair value of financial instruments
Current accounting guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. It also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with the guidance, fair value measurements are classified under the following hierarchy:

16


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)



Level 1 — Quoted prices for identical instruments in active markets.
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.
Level 3 — Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.
Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.
The carrying amounts within the accompanying condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. The Company assessed the amounts recorded under revolving loans, if any, and long-term debt and determined that the fair value of total debt was approximately $397.5 million as of April 1, 2016 . As of December 31, 2015 , the fair value of total debt was approximately $403.3 million . The Company considers the inputs related to these estimations to be Level 2 fair value measurements as they are primarily based on quoted prices for the Company’s Senior Secured Credit Facility.
The valuation of the Company’s derivative financial instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual term of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy.
13.
Commitments and Contingencies
The Company is a party to various legal proceedings that have arisen in the normal course of its business. These legal proceedings typically include product liability, labor, and employment claims. The Company has recorded reserves for loss contingencies based on the specific circumstances of each case. Such reserves are recorded when it is probable that a loss has been incurred as of the balance sheet date, can be reasonably estimated and is not covered by insurance. In the opinion of management, the resolution of these contingencies will not have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.
At April 1, 2016 and December 31, 2015 , the Company held reserves of $1.0 million for environmental matters at one location. The ultimate cost of any remediation required will depend on the results of future investigation. Based upon available information, the Company believes that it has obtained and is in substantial compliance with those material environmental permits and approvals necessary to conduct its business. Based on the facts presently known, the Company does not expect environmental costs to have a material adverse effect on its financial condition, results of operations or cash flows.

17




ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
Unless otherwise indicated, references to “Jason Industries,” the “Company,” “we,” “our” and “us” in this Quarterly Report on Form 10-Q refer to Jason Industries, Inc. and its consolidated subsidiaries.
This report contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Specifically, forward-looking statements may include statements relating to:
the Company’s future financial performance;
changes in the market for the Company’s products;
the Company’s 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 report 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 the Company’s views as of any subsequent date, and the Company does 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.
As a result of a number of known and unknown risks and uncertainties, the Company’s 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 level of demand for the Company’s products;
competition in the Company’s markets;
the Company’s ability to grow and manage growth profitably;
the Company’s ability to access additional capital;
changes in applicable laws or regulations;
the Company’s ability to attract and retain qualified personnel;
the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and
other risks and uncertainties indicated in this report, as well as those disclosed in the Company’s other filings with the Securities and Exchange Commission, including those discussed under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 .
Introductory Note     
The following discussion and analysis of financial condition and results of operations of the Company should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2015 , and related notes thereto, along with the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2015 Annual Report on Form 10-K.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains certain financial measures, in particular the presentation of EBITDA and Adjusted EBITDA, which are not presented in accordance with GAAP. These non-GAAP financial measures are being presented because they provide readers of this MD&A with additional insight into the Company’s operational performance relative to comparable prior periods presented and relative to its peer group. EBITDA and Adjusted EBITDA are key measures used by the Company to evaluate its performance. The Company does not intend for these non-GAAP financial measures to be a substitute for any GAAP financial information. Readers of this MD&A should use these non-GAAP financial measures only in conjunction with the comparable GAAP financial measures. Reconciliations of EBITDA and Adjusted EBITDA to net income, the most comparable GAAP measure, are provided in this MD&A.

18




Fiscal Year
The Company’s fiscal year ends on December 31 . Throughout the year, the Company reports its results using a fiscal calendar whereby each three month quarterly reporting period is approximately thirteen weeks in length and ends on a Friday. The exceptions are the first quarter, which begins on January 1 , and the fourth quarter, which ends on December 31 . For 2016 , the Company’s fiscal quarters are comprised of the three months ended April 1, July 1, September 30 , and December 31. In 2015 , the Company’s fiscal quarters were comprised of the three months ending March 27,   June 26,   September 25, and December 31 . Throughout this MD&A, we refer to the period from January 1, 2016 through April 1, 2016 as the “ first quarter of 2016 ” or the “ first quarter ended April 1, 2016 ”. Similarly, we refer to the period from January 1, 2015 through March 27, 2015 as the “ first quarter of 2015 ” or the “ first quarter ended March 27, 2015 ”.
Overview
Jason Industries is a global industrial manufacturing company with significant market share positions in each of its four segments: seating, finishing, acoustics and components. Jason Incorporated was founded in 1985 and today the Company provides critical components and manufacturing solutions to customers across a wide range of end markets, industries and geographies through its global network of 35 manufacturing facilities and 17 sales offices, warehouses and joint venture facilities throughout the United States and 14 foreign countries.
The Company focuses on markets with sustainable growth characteristics and where it is, or has the opportunity to become, the industry leader. The Company’s seating segment supplies seating solutions to equipment manufacturers in the motorcycle, lawn and turf care, industrial, agricultural, construction and power sports end markets. The finishing segment focuses on the production of industrial brushes, buffing wheels, buffing compounds, and abrasives that are used in a broad range of industrial and infrastructure applications. The acoustics segment manufactures engineered non-woven, fiber-based acoustical products for the automotive industry. The components segment is a diversified manufacturer of stamped, formed, expanded and perforated metal components and subassemblies for rail and filtration applications, outdoor power equipment, small gas engines and smart utility meters.
On May 29, 2015, the Company acquired all of the outstanding shares of DRONCO. DRONCO is a leading European manufacturer of bonded abrasives. These abrasives are being manufactured and distributed by the finishing segment. The Company paid cash consideration of $34.4 million , net of cash acquired, and, pursuant to the transaction, assumed certain liabilities. The DRONCO acquisition expanded the finishing segment’s product portfolio and advances its entry to adjacent abrasives markets.
During the three months ended April 1, 2016 and March 27, 2015 , approximately 28% and 25%, respectively, of the Company’s sales were derived from customers outside the United States. As a diversified, global business, the Company’s operations are affected by worldwide, regional and industry-specific economic and political factors. The Company’s geographic and industry diversity, as well as the wide range of its products, help mitigate the impact of industry or economic fluctuations. Given the broad range of products manufactured and industries and geographies served, management primarily uses general economic trends to predict the overall outlook for the Company. The Company’s individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and the outlook for the future.


19




Consolidated Results of Operations
The following table sets forth our consolidated results of operations (in thousands) (unaudited):  
 
Three Months Ended
 
April 1, 2016
 
March 27, 2015
Net sales
$
190,974

 
$
175,836

Cost of goods sold
153,083

 
136,889

Gross profit
37,891

 
38,947

Selling and administrative expenses
32,301

 
31,493

Loss on disposals of property, plant and equipment - net
703

 
26

Restructuring
2,717

 
1,704

Transaction-related expenses

 
176

Operating income
2,170

 
5,548

Interest expense
(8,024
)
 
(7,506
)
Equity income
169

 
282

Other income - net
118

 
35

Loss before income taxes
(5,567
)
 
(1,641
)
Tax benefit
(2,551
)
 
(747
)
Net loss
$
(3,016
)
 
$
(894
)
Less net loss attributable to noncontrolling interests
(510
)
 
(151
)
Net loss attributable to Jason Industries
$
(2,506
)
 
$
(743
)
Accretion of preferred stock dividends
900

 
900

Net loss available to common shareholders of Jason Industries
$
(3,406
)
 
$
(1,643
)
Other financial data: (1)

Three Months Ended
 
Increase/(Decrease)
(in thousands, except percentages)
April 1, 2016
 
March 27, 2015
 
$
 
%
Consolidated
 
 
 
 
 
 
 
Net sales
$
190,974

 
$
175,836

 
$
15,138

 
8.6 %

Adjusted EBITDA
18,339

 
21,003

 
(2,664
)
 
(12.7
)
Adjusted EBITDA % of net sales
9.6
%
 
11.9
%
 
(230) bps

(1)
Adjusted EBITDA and Adjusted EBITDA as a % of net sales are financial measures that are not presented in accordance with GAAP. See “Key Measures the Company Uses to Evaluate Its Performance” below for a reconciliation of Adjusted EBITDA to net loss.

The Three Months Ended April 1, 2016 Compared with the Three Months Ended March 27, 2015
Net sales . Net sales were $191.0 million for the three months ended April 1, 2016 , an increase of $15.1 million , or 8.6% , compared with $175.8 million for the three months ended March 27, 2015 , reflecting increased net sales in the acoustics segment of $11.0 million , the finishing segment of $7.4 million , and the seating segment of $1.0 million , partially offset by a decrease in the components segment of $4.3 million . See further discussion of segment results below.
On May 29, 2015, the Company acquired DRONCO. DRONCO’s results of operations are included within the finishing segment and the Company’s consolidated results of operations since the date of acquisition. Net sales from DRONCO were $9.5 million during the three months ended April 1, 2016 . See Note 2 to the condensed consolidated financial statements for further discussion of the DRONCO acquisition.
Changes in foreign currency exchange rates compared with the U.S. dollar had a net negative impact of $1.6 million on consolidated net sales during the three months ended April 1, 2016 compared with 2015 , negatively impacting the finishing, acoustics, and seating segments’ net sales by $1.3 million , $0.2 million , and $0.1 million , respectively. This was due principally to strengthening of the U.S. dollar against the Euro; average exchange rates during the three months ended April 1, 2016 were 2.1% lower compared to the first quarter of 2015 .

20




Cost of goods sold . Cost of goods sold was $153.1 million for the three months ended April 1, 2016 , compared with $136.9 million for the three months ended March 27, 2015 . The increase in cost of goods sold is due to increased net sales in the acoustics, finishing, and seating segments and increased labor costs on lower productivity in the acoustics segment, partially offset by favorable raw material costs in the acoustics and components segments and a $1.2 million favorable impact related to foreign currency exchange rates.
Gross profit . For the reasons described above, gross profit was $37.9 million for the three months ended April 1, 2016 , compared with $38.9 million for the three months ended March 27, 2015 .
Selling and administrative expenses . Selling and administrative expenses were $32.3 million for the three months ended April 1, 2016 , compared with $31.5 million for the three months ended March 27, 2015 . The increase of $0.8 million is primarily due to selling and administrative expenses related to the DRONCO acquisition and increased corporate expenses, partially offset by reduced selling and administrative expenses resulting from the Company’s global cost reduction and restructuring program announced on March 1, 2016. In addition, share-based compensation expense for the three months ended April 1, 2016 decreased $1.5 million compared with the three months ended March 27, 2015 following the resignation of our Chief Executive Officer in the fourth quarter of 2015. See further discussion of corporate expenses and segment results below.
Loss on disposals of fixed assets—net . Loss on disposals of fixed assets for the three months ended April 1, 2016 was $0.7 million , compared with an immaterial loss in the prior year period. Changes in the level of fixed asset disposals are dependent upon a number of factors, including changes in the level of asset sales, operational restructuring activities, and capital expenditure levels. The loss on disposals of fixed assets for the three months ended April 1, 2016 relates to a loss of $0.6 million on a seating segment facility held for sale.
Restructuring . Restructuring costs were $2.7 million for the three months ended April 1, 2016 compared with $1.7 million for the three months ended March 27, 2015 . During 2016, such costs related to severance actions in all segments resulting from the global cost reduction and restructuring program announced on March 1, 2016, and costs related to the closure of the components segment’s facility in Buffalo Grove, Illinois. During 2015, such costs related to the final closure of the acoustics segment’s Norwalk, Ohio facility, closure of the finishing segment’s Brooklyn Heights, Ohio office, closure of the components segment’s facility in China, and wind down of the finishing segment’s machine business in Sweden.
Transaction-related expenses . Transaction-related expenses of $0.2 million in 2015 related primarily to professional service fees associated with the acquisition of DRONCO in 2015.
Interest expense . Interest expense was $8.0 million for the three months ended April 1, 2016 , compared with $7.5 million for the three months ended March 27, 2015 . The increase in interest expense of $0.5 million primarily relates to the increased number of days in the first fiscal quarter compared with the first fiscal quarter of 2015 and due to increased indebtedness following the DRONCO acquisition in 2015. See “Senior Secured Credit Facilities” in the Liquidity and Capital Resources section of this MD&A for further discussion.
Equity income . Equity income was $0.2 million for the three months ended April 1, 2016 , compared with $0.3 million for the three months ended March 27, 2015 .
Other income (expense)—net . Other income was immaterial for the three months ended April 1, 2016 and the three months ended March 27, 2015 .
Loss before income taxes . For the reasons described above, loss before income taxes was $5.6 million for the three months ended April 1, 2016 , compared with $1.6 million for the three months ended March 27, 2015 .
Tax benefit . The tax benefit was $2.6 million for the three months ended April 1, 2016 , compared with $0.7 million for the three months ended March 27, 2015 . The effective tax rate for the three months ended April 1, 2016 was 45.8% , compared with 45.5% for the three months ended March 27, 2015 .
The Company’s tax benefit is impacted by a number of factors, including, among others, the amount of taxable income or losses at the U.S. federal statutory rate, the amount of taxable earnings derived in foreign jurisdictions with tax rates that are lower than the U.S. federal statutory rate, permanent items, state tax rates, the ability to utilize foreign net operating loss carry forwards and adjustments to valuation allowances. The effective tax rate for the three months ended April 1, 2016 was impacted by pre-tax losses in foreign jurisdictions for which no tax benefit was recognized, and the vesting of restricted stock units for which no tax benefit will be realized.
Net loss . For the reasons described above, net loss was $3.0 million for the three months ended April 1, 2016 , compared with net loss of $0.9 million for the three months ended March 27, 2015 .
Net loss attributable to noncontrolling interests . Net loss attributable to noncontrolling interests was $0.5 million for the three months ended April 1, 2016 , compared with $0.2 million for the three months ended March 27, 2015 .

21




Adjusted EBITDA . Adjusted EBITDA was $18.3 million , or 9.6% of net sales, for the three months ended April 1, 2016 , a decrease of $2.7 million , or 12.7% , compared with $21.0 million , or 11.9% of net sales, for the three months ended March 27, 2015 , reflecting decreased Adjusted EBITDA in the seating segment of $1.3 million , the finishing segment of $1.1 million , the components segment of $0.6 million , and corporate of $1.5 million partially offset by increased Adjusted EBITDA in the acoustics segment of $1.8 million ..
Changes in foreign currency exchange rates compared with the U.S. dollar had a negative impact of $0.1 million on consolidated Adjusted EBITDA during the three months ended April 1, 2016 compared with the three months ended March 27, 2015 , negatively impacting the finishing segment’s Adjusted EBITDA by $0.1 million .
Key Measures the Company Uses to Evaluate Its Performance
EBITDA and Adjusted EBITDA . The Company defines EBITDA as net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA, excluding the impact of operational restructuring charges and non-cash or non-operational losses or gains, including goodwill and long-lived asset impairment charges, gains or losses on disposal of property, plant and equipment, integration and other operational restructuring charges, transactional legal fees, other professional fees and special employee bonuses, purchase accounting adjustments, and non-cash share based compensation expense.
Management believes that Adjusted EBITDA provides a more clear picture of the Company’s operating results by eliminating expenses and income that are not reflective of the underlying business performance. The Company uses this metric to facilitate a comparison of operating performance on a consistent basis from period to period and to analyze the factors and trends affecting its segments. The Company’s internal plans, budgets and forecasts use Adjusted EBITDA as a key metric and the Company uses this measure to evaluate its operating performance and segment operating performance and to determine the level of incentive compensation paid to its employees.
The Senior Secured Credit Facilities (defined in Note 6 and below) definition of EBITDA excludes income of partially owned affiliates, unless such earnings have been received in cash.
Set forth below is a reconciliation of Adjusted EBITDA to net loss (in thousands) (unaudited):
 
Three Months Ended
 
April 1, 2016
 
March 27, 2015
Net loss
$
(3,016
)
 
$
(894
)
Tax benefit
(2,551
)
 
(747
)
Interest expense
8,024

 
7,506

Depreciation and amortization
10,297

 
10,411

EBITDA
12,754

 
16,276

Adjustments:
 
 
 
Restructuring(1)
2,717

 
1,704

Transaction-related expenses(2)

 
176

Integration and other restructuring costs(3)
1,589

 
758

Share based compensation(4)
576

 
2,063

Loss on disposals of fixed assets - net(5)
703

 
26

Total adjustments
5,585

 
4,727

Adjusted EBITDA
$
18,339

 
$
21,003

(1)
Restructuring includes costs associated with exit or disposal activities as defined by GAAP related to facility consolidation, including one-time employee termination benefits, costs to close facilities and relocate employees, and costs to terminate contracts other than capital leases. See Note 3 , “ Restructuring Costs ” of the accompanying condensed consolidated financial statements for further information.
(2)
Transaction-related expenses primarily consist of professional service fees related to the DRONCO acquisition and the Company’s acquisition and divestiture activities.
(3)
Integration and other restructuring costs primarily includes equipment move costs and incremental facility preparation and related costs incurred in connection with the start-up of new acoustics segment facilities in Warrensburg, Missouri and Richmond, Indiana. Such costs are not included in restructuring for GAAP purposes.
(4)
Represents non-cash share based compensation expense for awards under the Company’s 2014 Omnibus Incentive Plan.

22




(5)
Loss (gain) on disposals of fixed assets for the three months ended April 1, 2016 includes a loss of $0.6 million on a seating segment facility held for sale.
    
Adjusted EBITDA percentage of net sales . Adjusted EBITDA as a percentage of net sales is an important metric that the Company uses to evaluate its operational effectiveness and business segments. Each of the Company’s segments has a target Adjusted EBITDA percentage level that it is expected to achieve over the next three years which is based on peer group studies and its goals of becoming best in class in profitability and increasing shareholder value.
Segment Financial Data
The table, below presents the Company’s net sales, Adjusted EBITDA and Adjusted EBITDA as a percentage of net sales for each of its reportable segments for the three months ended April 1, 2016 and March 27, 2015 . The Company uses Adjusted EBITDA as the primary measure of profit or loss for purposes of assessing the operating performance of its segments. See “Key Measures the Company Uses to Evaluate Its Performance” above for a reconciliation of Adjusted EBITDA to Net Loss which is the nearest GAAP measure.
(in thousands, except percentages)
Three Months Ended
 
Increase/ (Decrease)

April 1, 2016
 
March 27, 2015
 
$
 
%
Seating
 
 
 
 
 
 
 
Net sales
$
51,950

 
$
50,960

 
$
990

 
1.9 %

Adjusted EBITDA
6,629

 
7,960

 
(1,331
)
 
(16.7
)
Adjusted EBITDA % of net sales
12.8
%
 
15.6
%
 
(280) bps
Finishing
 
 
 
 
 
 
 
Net sales
$
50,276

 
$
42,850

 
$
7,426

 
17.3 %

Adjusted EBITDA
5,229

 
6,311

 
(1,082
)
 
(17.1
)
Adjusted EBITDA % of net sales
10.4
%
 
14.7
%
 
(430) bps
Acoustics
 
 
 
 
 
 
 
Net sales
$
61,911

 
$
50,921

 
$
10,990

 
21.6 %

Adjusted EBITDA
6,615

 
4,854

 
1,761

 
36.3

Adjusted EBITDA % of net sales
10.7
%
 
9.5
%
 
120 bps
Components
 
 
 
 
 
 
 
Net sales
$
26,837

 
$
31,105

 
$
(4,268
)
 
(13.7) %

Adjusted EBITDA
4,613

 
5,173

 
(560
)
 
(10.8
)
Adjusted EBITDA % of net sales
17.2
%
 
16.6
%
 
60 bps
Corporate
 
 
 
 
 
 
 
Adjusted EBITDA
$
(4,747
)
 
$
(3,295
)
 
$
(1,452
)
 
44.1 %

Consolidated
 
 
 
 
 
 
 
Net sales
$
190,974

 
$
175,836

 
$
15,138

 
8.6 %

Adjusted EBITDA
18,339

 
21,003

 
(2,664
)
 
(12.7
)
Adjusted EBITDA % of net sales
9.6
%
 
11.9
%
 
(230) bps

Seating Segment    
 
Three Months Ended
 
Increase/ (Decrease)
(in thousands, except percentages)
April 1, 2016
 
March 27, 2015
 
$
 
%
Net sales
$
51,950

 
$
50,960

 
$
990

 
1.9
  %
Adjusted EBITDA
6,629

 
7,960

 
(1,331
)
 
(16.7
)
Adjusted EBITDA % of net sales
12.8
%
 
15.6
%
 
(280) bps
Net sales in the seating segment for the three months ended April 1, 2016 were $52.0 million , an increase of $1.0 million or 1.9% , compared with $51.0 million for the three months ended March 27, 2015 . On a constant currency basis (net negative currency impact of $0.1 million for the three months ended April 1, 2016 ), revenues increased by $1.1 million for the three months ended April 1, 2016 . The increase in net sales for the three months ended April 1, 2016 was primarily due to

23




increases in volume in the power sports, construction and agriculture, and turf care product markets, partially offset by lower pricing and decreases in heavyweight motorcycle parts and accessories volumes.
Adjusted EBITDA for the three months ended April 1, 2016 decreased $1.3 million to $6.6 million ( 12.8% of net sales) from $8.0 million ( 15.6% of net sales) for the three months ended March 27, 2015 . Changes in foreign currency exchange rates did not significantly impact Adjusted EBITDA. The decrease in Adjusted EBITDA was primarily due to lower pricing and operational inefficiencies resulting in higher material usage and lower labor productivity, partially offset by an increase in net sales and lower selling and administrative expenses.
Finishing Segment

Three Months Ended
 
Increase/ (Decrease)
(in thousands, except percentages)
April 1, 2016
 
March 27, 2015
 
$
 
%
Net sales
$
50,276

 
$
42,850

 
$
7,426

 
17.3
  %
Adjusted EBITDA
5,229

 
6,311

 
(1,082
)
 
(17.1
)
Adjusted EBITDA % of net sales
10.4
%
 
14.7
%
 
(430) bps
Net sales in the finishing segment for the three months ended April 1, 2016 were $50.3 million , an increase of $7.4 million , or 17.3% , compared with $42.9 million for the three months ended March 27, 2015 . On a constant currency basis (net negative currency impact of $1.3 million for the three months ended April 1, 2016 ), revenues increased by $8.7 million for the three months ended April 1, 2016 . The increase in net sales resulted from the acquisition of DRONCO, which had net sales of $9.5 million during the three months ended April 1, 2016 , partially offset by lower volumes of industrial brush products globally.
Adjusted EBITDA decreased $1.1 million , or 17.1% , for the three months ended April 1, 2016 to $5.2 million ( 10.4% of net sales) compared with $6.3 million ( 14.7% of net sales) for the three months ended March 27, 2015 . On a constant currency basis (net negative currency impact of $0.1 million for the three months ended April 1, 2016 ), Adjusted EBITDA decreased by $1.0 million for the three months ended April 1, 2016 . The decrease in Adjusted EBITDA as a percentage of net sales for the three months ended April 1, 2016 primarily resulted from unfavorable product mix compared with 2015 and lower Adjusted EBITDA margins related to DRONCO.
Acoustics Segment    
 
Three Months Ended
 
Increase/ (Decrease)
(in thousands, except percentages)
April 1, 2016
 
March 27, 2015
 
$
 
%
Net sales
$
61,911

 
$
50,921

 
$
10,990

 
21.6
 %
Adjusted EBITDA
6,615

 
4,854

 
1,761

 
36.3

Adjusted EBITDA % of net sales
10.7
%
 
9.5
%
 
120 bps
Net sales in the acoustics segment for the three months ended April 1, 2016 were $61.9 million , an increase of $11.0 million , or 21.6% , compared with $50.9 million for the three months ended March 27, 2015 . On a constant currency basis (net negative currency impact of $0.2 million for the three months ended April 1, 2016 ), revenues increased by $11.2 million for the three months ended April 1, 2016 . The increase in net sales in the three months ended April 1, 2016 was due to higher volumes resulting from new platform awards with higher content per vehicle in North America, partially offset by lower pricing on existing platforms.
Adjusted EBITDA was $6.6 million ( 10.7% of net sales) in the three months ended April 1, 2016 compared with $4.9 million ( 9.5% of net sales) in the three months ended March 27, 2015 . Changes in foreign currency exchange rates did not significantly impact Adjusted EBITDA. The increases in Adjusted EBITDA and Adjusted EBITDA as a percentage of net sales for the quarter were primarily due to higher volumes with increased pricing on new platforms, lower material costs and reduced selling and administrative costs, partially offset by increased labor costs on lower productivity.
Components Segment
 
Three Months Ended
 
Increase/ (Decrease)
(in thousands, except percentages)
April 1, 2016
 
March 27, 2015
 
$
 
%
Net sales
$
26,837

 
$
31,105

 
$
(4,268
)
 
(13.7
) %
Adjusted EBITDA
4,613

 
5,173

 
(560
)
 
(10.8
)
Adjusted EBITDA % of net sales
17.2
%
 
16.6
%
 
60 bps

24




Net sales in the components segment for the three months ended April 1, 2016 were $26.8 million , compared with $31.1 million for the three months ended March 27, 2015 . The decrease of $4.3 million during the three months ended April 1, 2016 as compared with the first quarter of 2015 was primarily due to lower volumes of general industrial, perforated, and expanded metal products and smart utility meter components, and lower pricing of metal products. This decrease was partially offset by increased sales volumes of rail car metal components.
Adjusted EBITDA decreased to $4.6 million ( 17.2% of net sales) for the three months ended April 1, 2016 compared with $5.2 million ( 16.6% of net sales) in the first quarter of 2015 . The decrease in Adjusted EBITDA of $0.6 million was primarily due to lower volumes, and Adjusted EBITDA as a percentage of net sales increased primarily due to lower raw material pricing and lower selling and administrative expenses compared with the prior year period.
Corporate
 
Three Months Ended
 
Increase/ (Decrease)
(in thousands, except percentages)
April 1, 2016
 
March 27, 2015
 
$
 
%
Adjusted EBITDA
$
(4,747
)
 
$
(3,295
)
 
$
(1,452
)
 
44.1
%
Corporate expense is principally comprised of the costs of corporate functions, including the compensation and benefits of the Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer, as well as personnel responsible for treasury, finance, insurance, in-house legal, information technology, corporate development, human resources, tax planning and the administration of employee benefits. Corporate expense also includes third party legal, audit, tax and other professional fees and expenses, board of director compensation and expenses, and the operating costs of the corporate office.
The increase of $1.5 million in expense in the three months ended April 1, 2016 compared with the prior year primarily resulted from increased third-party professional fees associated with investments in manufacturing and supply chain improvement initiatives and training, increased compensation expense, and executive relocation expenses.

Liquidity and Capital Resources
Background
The Company’s primary sources of liquidity are cash generated from its operations, available cash and borrowings under its U.S. and foreign credit facilities. As of April 1, 2016 , the Company had $37.4 million of available cash, $35.6 million of additional borrowings available under the revolving credit facility portion of its U.S. credit agreement, and $10.7 million available under revolving loan facilities that the Company maintains outside the U.S. As of April 1, 2016 , available borrowings under its U.S. revolving credit facility were reduced by outstanding letters of credit of $4.4 million . Included in the Company’s consolidated cash balance of $37.4 million at April 1, 2016 , is cash of $19.5 million held at the Company’s non-U.S. operations. These funds, with some restrictions and tax implications, are available for repatriation as deemed necessary by the Company. The Company’s U.S. credit agreement and foreign revolving loan facilities are available for working capital requirements, capital expenditures and other general corporate purposes. We believe our existing cash on hand, expected future cash flows from operating activities, and additional borrowings available under our U.S. and foreign credit facilities provide sufficient resources to fund ongoing operating requirements as well as future capital expenditures, debt service requirements, and investments in future growth to create value for our shareholders.
Indebtedness
As of April 1, 2016 , the Company’s total outstanding indebtedness of $433.6 million was comprised of aggregate term loans outstanding under its Senior Secured Credit Facilities of 400.9 million (net of a $5.8 million debt discount and deferred financing costs of $8.7 million ), various foreign bank term loans and revolving loan facilities of $31.1 million and capital lease obligations of $1.6 million . No amounts were outstanding under the revolving credit facility portion of the Senior Secured Credit Facilities as of April 1, 2016 . As of December 31, 2015 the Company’s total outstanding indebtedness of $432.3 million was comprised of term loans outstanding under its U.S. credit agreement of $401.0 million (net of a $6.0 million debt discount and deferred financing costs of $9.1 million ), various foreign bank term loans and revolving loan facilities of $29.7 million and capital lease obligations of $1.6 million . No borrowings were outstanding under the U.S. revolving loan facility at December 31, 2015 .
The Company maintains various bank term loan and revolving loan facilities outside the U.S. for local operating and investing needs. Borrowings under these facilities totaled $31.1 million as of April 1, 2016 , including borrowings of $29.1 million incurred by the Company’s subsidiaries in Germany, and borrowings totaled $29.7 million as of December 31, 2015 , including borrowings of $27.6 million incurred by the Company’s subsidiaries in Germany.

25




In connection with the acquisition of DRONCO, the Company assumed $11.0 million of debt comprised of term loan borrowings totaling $8.5 million and revolving line of credit borrowings totaling $2.5 million. Borrowings bear interest at fixed and variable rates ranging from 2.3% to 4.6% and are subject to repayment in varying amounts through 2030. During the third quarter of 2015, the Company entered into a new $13.5 million term loan in Germany. Borrowings bear interest at a fixed rate of 2.25% and are subject to repayment in equal quarterly payments of approximately $0.4 million beginning September 30, 2017 through June 30, 2025. Certain of the Company’s foreign borrowings contain financial covenants requiring maintenance of a minimum equity ratio and maximum leverage ratio, among others. The Company was in compliance with these covenants as of April 1, 2016 .
Senior Secured Credit Facilities
General . On June 30, 2014, Jason Incorporated, as the borrower, entered into (i) the First Lien Credit Agreement, dated as of June 30, 2014, with Jason Partners Holdings Inc., Jason Holdings, Inc. I, a wholly-owned subsidiary of Jason Partners Holdings Inc. (“Intermediate Holdings”), Deutsche Bank AG New York Branch, as administrative agent (the “First Lien Administrative Agent”), the subsidiary guarantors party thereto and the several banks and other financial institutions or entities from time to time party thereto (the “New First Lien Credit Agreement”) and (ii) the Second Lien Credit Agreement, dated as of June 30, 2014, with Jason Partners Holdings Inc., Intermediate Holdings, Deutsche Bank AG New York Branch, as administrative agent (the “Second Lien Administrative Agent”), the subsidiary guarantors party thereto and the several banks and other financial institutions or entities from time to time party thereto (the “New Second Lien Credit Agreement” and, together with the First Lien Credit Agreement, the “New Credit Agreements”).
The New First Lien Credit Agreement provides for (i) term loans in the principal amount of $310.0 million (the “First Lien Term Facility” and the loans thereunder the “First Lien Term Loans”), of which $305.4 million is outstanding as of April 1, 2016 , and (ii) a revolving loan of up to $40.0 million (including revolving loans, a $10.0 million swingline loan sublimit and a $12.5 million letter of credit sublimit) (the “Revolving Credit Facility”), in each case under the new first lien senior secured loan facilities (the “First Lien Credit Facilities”). The New Second Lien Credit Agreement provides for term loans in an aggregate principal amount of $110.0 million under the new second lien senior secured term loan facility (the “Second Lien Term Facility” and the loans thereunder the “Second Lien Term Loans” and, the Second Lien Term Facility together with the First Lien Credit Facilities, the “Senior Secured Credit Facilities”). On June 30, 2014, the full amount of the First Lien Term Loans and Second Lien Term Loans were drawn, and no revolving loans were drawn.
The First Lien Term Loans mature in 2021 and the Revolving Credit Facility matures in 2019. The Second Lien Term Loans mature in 2022. The principal amount of the First Lien Term Loans amortizes in quarterly installments equal to 0.25% of the original principal amount of the First Lien Term Loans, with the balance payable at maturity. Neither the Revolving Credit Facility nor the Second Lien Term Loans amortize, however each is repayable in full at maturity.
Security Interests . In connection with the Senior Secured Credit Facilities, Jason Partners Holdings Inc., Intermediate Holdings, Jason Incorporated and certain of Jason Incorporated’s subsidiaries (the “Subsidiary Guarantors”), entered into a (i) First Lien Security Agreement (the “First Lien Security Agreement”), dated as of June 30, 2014, in favor of the First Lien Administrative Agent and (ii) a Second Lien Security Agreement (the “Second Lien Security Agreement”, together with the First Lien Security Agreement, the “Security Agreements”), dated as of June 30, 2014, in favor of the Second Lien Administrative Agent. Pursuant to the Security Agreements, amounts borrowed under the Senior Secured Credit Facilities and any swap agreements and cash management arrangements provided by any lender party to the Senior Secured Credit Facilities or any of its affiliates are secured (i) with respect to the First Lien Credit Facilities, on a first priority basis and (ii) with respect to the Second Lien Term Facility, on a second priority basis, by a perfected security interest in substantially all of Jason Incorporated’s, Jason Partners Holdings Inc.’s, Intermediate Holdings’ and each Subsidiary Guarantor’s tangible and intangible assets (subject to certain exceptions), including U.S. registered intellectual property and all of the capital stock of each of Jason Incorporated’s direct and indirect wholly-owned material Restricted Subsidiaries (as defined in the New Credit Agreements) (limited, in the case of foreign subsidiaries, to 65% of the capital stock of first tier foreign subsidiaries). In addition, pursuant to the New Credit Agreements, Jason Partners Holdings Inc., Intermediate Holdings and the Subsidiary Guarantors guaranteed amounts borrowed under the Senior Secured Credit Facilities.
Interest Rate and Fees . At our election, the interest rate per annum applicable to the loans under the Senior Secured Credit Facilities is based on a fluctuating rate of interest determined by reference to either (i) a base rate determined by reference to the higher of (a) the “prime rate” of Deutsche Bank AG New York Branch, (b) the federal funds effective rate plus 0.50% and (c) the Eurocurrency rate applicable for an interest period of one month plus 1.00%, plus an applicable margin equal to (x) 3.50% in the case of the First Lien Term Loans, (y) 2.25% in the case of the Revolving Credit Facility or (z) 7.00% in the case of the Second Lien Term Loans or (ii) a Eurocurrency rate determined by reference to LIBOR, adjusted for statutory reserve requirements, plus an applicable margin equal to (x) 4.50% in the case of the First Lien Term Loans, (y) 3.25% in the case of the Revolving Credit Facility or (z) 8.00% in the case of the Second Lien Term Loans. Borrowings under the First Lien Term Facility and Second Lien Term Facility will be subject to a floor of 1.00% in the case of Eurocurrency loans. The

26




applicable margin for loans under the Revolving Credit Facility may be subject to adjustment based upon Jason Incorporated’s consolidated first lien net leverage ratio.
Interest Rate Hedge Contracts. To manage exposure to fluctuations in interest rates, the Company entered into forward starting interest rate swap agreements (“Swaps”) in 2015 with notional values totaling $210 million at April 1, 2016 and December 31, 2015 . The Swaps have been designated by the Company as cash flow hedges, and effectively fix the variable portion of interest rates on variable rate term loan borrowings at a rate of approximately 2.08% prior to financing spreads and related fees. The Swaps have a forward start date of December 30, 2016 and have an expiration date of June 30, 2020. The fair values of the Swaps totaled $3.7 million at April 1, 2016 and $0.3 million at December 31, 2015 , respectively. These amounts were recorded in other current liabilities at April 1, 2016 and other long-term liabilities at December 31, 2016 in the consolidated balance sheets. In 2015 there was no interest expense recognized. The Company will begin recognizing interest expense related to the interest rate hedge contracts in 2017.
Mandatory Prepayment . Subject to certain exceptions, the Senior Secured Credit Facilities are subject to mandatory prepayments in amounts equal to: (1) a percentage of the net cash proceeds from any non-ordinary course sale or other disposition of assets (including as a result of casualty or condemnation) by Jason Incorporated or any of its Restricted Subsidiaries in excess of a certain amount and subject to customary reinvestment provisions and certain other exceptions; (2) 100% of the net cash proceeds from the issuance or incurrence of debt by Jason Incorporated or any of its Restricted Subsidiaries (other than indebtedness permitted by the Senior Secured Credit Facilities); and (3) 75% (with step-downs to 50%, 25% and 0% based upon achievement of specified consolidated first lien net leverage ratios under the First Lien Credit Facilities and specified consolidated total net leverage ratios under the Second Lien Term Facility) of annual excess cash flow of Jason Incorporated and its Restricted Subsidiaries. With respect to the Second Lien Term Facility, (i) any prepayments made prior to the one year anniversary of the Closing Date would have been subject to a 3.00% prepayment premium, (ii) any prepayments made on or after the first anniversary of the Closing Date, but prior to the second anniversary of the Closing Date, will be subject to a 2.00% prepayment premium and (iii) any prepayments made on or after the second anniversary of the Closing Date, but prior to the third anniversary of the Closing Date, will be subject to a 1.00% prepayment premium. Other than the prepayment premiums and penalties described above and the payment of customary “breakage” costs, Jason Incorporated may voluntarily prepay outstanding loans at any time.
Covenants . The Senior Secured Credit Facilities contain a number of customary affirmative and negative covenants that, among other things, will limit or restrict the ability of Jason Incorporated and its Restricted Subsidiaries to: incur additional indebtedness (including guarantee obligations); incur liens; engage in mergers, consolidations, liquidations and dissolutions; sell assets; pay dividends and make other payments in respect of capital stock; make acquisitions, investments, loans and advances; pay and modify the terms of certain indebtedness; engage in certain transactions with affiliates; enter into negative pledge clauses and clauses restricting subsidiary distributions; and change its line of business, in each case, subject to certain limited exceptions.
In addition, under the Revolving Credit Facility, if the aggregate outstanding amount of all revolving loans, swingline loans and certain letter of credit obligations exceed 25 percent of the revolving credit commitments at the end of any fiscal quarter, Jason Incorporated and its Restricted Subsidiaries will be required to not exceed a consolidated first lien net leverage ratio, initially specified at 5.50 to 1.00, with periodic decreases beginning on July 1, 2016 to 5.25 to 1.00 and decreasing to 4.50 to 1.00 on December 31, 2017 and thereafter. If such outstanding amounts do not exceed 25 percent of the revolving credit commitments at the end of any fiscal quarter, no financial covenants are applicable. As of April 1, 2016 the consolidated first lien net leverage ratio was 5.28 to 1.00 on a pro forma trailing twelve-month basis, which excludes acquisition synergies as allowed under the New Credit Agreements. The aggregate outstanding amount of all revolving loans, swingline loans and certain letters of credit was less than 25 percent of revolving credit commitments at April 1, 2016 . If the Company is unable to maintain its first lien net leverage ratio below 5.25 as of July 1, 2016 or 5.00 as of December 31, 2016 and if it utilizes more than 25% of the revolving credit commitments it would be in default of its senior secured credit facilities and subject to the conditions described under “Events of Default” below.  The Company believes that it has adequate liquidity, will generate adequate cash from operations and does not currently foresee a need to borrow under its revolving credit agreement. As of April 1, 2016 , the Company was in compliance with the financial covenants contained in its credit agreements.
Events of Default . The Senior Secured Credit Facilities contain customary events of default, including nonpayment of principal, interest, fees or other amounts; material inaccuracy of a representation or warranty when made; violation of a covenant; cross-default to material indebtedness; bankruptcy events; inability to pay debts or attachment; material unsatisfied judgments; actual or asserted invalidity of any security document; and a change of control. Failure to comply with these provisions of the Senior Secured Credit Facilities (subject to certain grace periods) could, absent a waiver or an amendment from the lenders under such agreement, restrict the availability of the Revolving Credit Facility and permit the acceleration of all outstanding borrowings under the New Credit Agreements.


27




Series A Preferred Stock
Holders of the 45,000 shares of Series A Preferred Stock are entitled to receive, when, as and if declared by the Company’s board of directors, cumulative dividends at the rate of 8.0% per annum (the dividend rate) on the $1,000 liquidation preference per share of the Series A Preferred Stock, payable quarterly in arrears on each dividend payment date. Dividends shall be paid in cash or, at the Company’s option, in additional shares of Series A Preferred Stock or a combination thereof, and are payable on January 1, April 1, July 1, and October 1 of each year, commencing on the first such date after the date of the first issuance of the Series A Preferred Stock. For the three months ended April 1, 2016 , the Company paid a total of $1.8 million of dividends, with a dividend of $20.00 per share on January 1, 2016 and April 1, 2016 to holders of record on November 15, 2015 and February 15, 2016 , respectively.
Seasonality and Working Capital
The Company uses net operating working capital (“NOWC”) as a percentage of the previous twelve months of net sales as a key indicator of working capital management. The Company defines this metric as the sum of trade accounts receivable and inventories less trade accounts payable as a percentage of net sales. NOWC as a percentage of rolling twelve month net sales was 15.3% as of April 1, 2016 and 14.5% as of December 31, 2015 . Excluding NOWC of $7.5 million associated with DRONCO, which was acquired on May 29, 2015, NOWC as a percentage of rolling twelve month sales, excluding sales attributable to DRONCO, was 14.9% as of April 1, 2016 . Excluding NOWC of $6.7 million associated with DRONCO, NOWC as a percentage of rolling twelve month sales, excluding sales attributable to DRONCO, was 14.0% as of December 31, 2015 . Set forth below is a table summarizing NOWC as of April 1, 2016 and December 31, 2015 .
(in thousands)
April 1, 2016
 
December 31, 2015
Accounts receivable—net
$
98,052

 
$
79,088

Inventories
79,220

 
80,432

Accounts payable
(66,914
)
 
(56,838
)
NOWC
$
110,358

 
$
102,682

    
In overall dollar terms, the Company’s NOWC is generally lower at the end of the calendar year due to reduced sales activity around the holiday season. NOWC generally peaks at the end of the first quarter as the Company experiences high seasonal demand from certain customers, particularly those serving the motor sports, lawn and garden equipment and small engine markets to fill the supply chain for the spring season. There are, however, variations in the seasonal demands from year to year depending on weather, customer inventory levels, and model year changes. The Company historically generates approximately 52-55% of its annual net sales in the first half of the year.
Short-Term and Long-Term Liquidity Requirements
The Company’s ability to make principal and interest payments on borrowings under its U.S. and foreign credit facilities and its ability to fund planned capital expenditures will depend on its ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. Based on its current level of operations, the Company believes that its existing cash balances and expected cash flows from operations will be sufficient to meet its operating requirements for at least the next 12 months. However, the Company may require borrowings under its credit facilities and alternative forms of financings or investments to achieve its longer-term strategic plans.
Capital expenditures during the three months ended April 1, 2016 were $6.4 million , or 3.4% of net sales. Capital expenditures for 2016 are expected to be approximately 3.5% of net sales, but could vary from that depending on business performance, growth opportunities, and the amount of assets we lease instead of purchase. The Company finances its annual capital requirements with funds generated from operations.  


28




Warrant Repurchase
In February 2015, our Board of Directors authorized the purchase of up to $5 million of our outstanding warrants. Management is authorized to effect purchases from time to time in the open market or through privately negotiated transactions. There is no expiration date to this authority. No warrants were repurchased during the three months ended April 1, 2016 .

Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 1, 2016 and the Three Months Ended March 27, 2015
 
Three Months Ended
(in thousands)
April 1, 2016
 
March 27, 2015
Cash flows provided by operating activities
$
10,269

 
$
3,212

Cash flows used in investing activities
(6,389
)
 
(7,636
)
Cash flows used in financing activities
(2,366
)
 
(1,284
)
Effect of exchange rate changes on cash and cash equivalents
(76
)
 
(1,643
)
Net increase (decrease) in cash and cash equivalents
1,438

 
(7,351
)
Cash and cash equivalents at beginning of period
35,944

 
62,279

Cash and cash equivalents at end of period
$
37,382

 
$
54,928

Depreciation and amortization
$
10,297

 
$
10,411

Capital expenditures
6,449

 
7,235


Cash Flows Provided by Operating Activities
For the three months ended April 1, 2016 , cash flows provided by operating activities were $10.3 million compared to $3.2 million for the three months ended March 27, 2015 . The cash flows provided by operating activities were primarily the result of the net loss of $3.0 million adjusted for non-cash items of $7.2 million related to depreciation, $3.1 million related to amortization of intangible assets, $0.8 million related to amortization of deferred financing costs and debt discounts, $0.7 million related to loss on disposals of property, plant, and equipment - net, $0.6 million of non-cash stock compensation partially offset by a decrease in deferred taxes of $1.9 million . Changes in net operating working capital increased operating cash flow by $11.2 million during the three months ended April 1, 2016 .
Cash Flows Used in Investing Activities
Cash flows used in investing activities were $6.4 million for the three months ended April 1, 2016 compared to $7.6 million for the three months ended March 27, 2015 . The decrease in cash flows used in investing activities was primarily the result of decreased capital expenditures on the acquisition of property, plant, and equipment driven by a lower level of project activity during the three months ended April 1, 2016.     
Cash Flows Used in Financing Activities
Cash flows used in financing activities were $2.4 million for the three months ended April 1, 2016 compared to $1.3 million for the three months ended March 27, 2015 . The increase in cash flows used in financing activities was driven by $0.8 million of higher payments for the First Lien term loan as well as $0.9 million of higher payments for preferred stock dividends, and was primarily the result of the cutoff of the fiscal quarter-end year-over-year.
Depreciation and Amortization
Depreciation and amortization totaled $10.3 million for the three months ended April 1, 2016 , compared with $10.4 million for the three months ended March 27, 2015 . Depreciation and amortization for the three months ended April 1, 2016 is slightly lower than incurred by the Company in the prior period as a result lower amortization due to the impairment of certain intangible assets during the fourth quarter of 2015, partially offset by higher depreciation due to capital expenditures and the acquisition of DRONCO.


29




Capital Expenditures
Capital expenditures totaled $6.4 million for the three months ended April 1, 2016 , compared with $7.2 million for the three months ended March 27, 2015 .
Contractual Obligations
There are no material changes to the disclosures regarding contractual obligations made in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2015 . See Note 6 to these condensed consolidated financial statements for additional details on the terms of these debt arrangements.
Off-Balance Sheet Arrangements
There are no material changes to the disclosures regarding off-balance sheet arrangements made in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2015 .
Critical Accounting Policies and Estimates
The condensed consolidated financial statements have been prepared in accordance with GAAP which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K filed with the SEC on March 8, 2016 for the year ended December 31, 2015 for information with respect to our critical accounting policies, which we believe could have the most significant effect on our reported results and require subjective or complex judgments by management. Except for the items reported above, management believes that as of April 1, 2016 and during the period from January 1, 2016 through April 1, 2016 , there has been no material change to this information.
New Accounting Pronouncements
See Note 1, “Description of Business and Basis of Presentation” under the heading “Recently issued accounting standards” of the accompanying condensed consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in foreign currency exchange rates and interest rates and, to a lesser extent, commodities. To reduce such risks, the Company selectively uses financial instruments and other proactive management techniques. All hedging transactions are authorized and executed pursuant to clearly defined policies and procedures, which strictly prohibit the use of financial instruments for trading or speculative purposes.
Currency Risk: The Company has manufacturing, sales and distribution operations around the world; therefore, exchange rates impact the U.S. Dollar (“USD”) value of our reported earnings, our investments in our foreign subsidiaries and the intercompany transactions with these subsidiaries. Approximately $54 million , or 28% , of our sales originated in a currency other than the U.S. dollar during the first three months of 2016. As a result, fluctuations in the value of foreign currencies against the USD, particularly the Euro, may have a material impact on our reported results. Revenues and expenses denominated in foreign currencies are translated into USD using average exchange rates in effect during the period. Consequently, as the value of the USD changes relative to the currencies of our major markets, our reported results vary. For the three months ended April 1, 2016 , sales denominated in Euros approximated $34 million . Therefore, with a 10% increase or decrease in the value of the Euro in relation to the USD, our translated net sales (assuming all other factors are unchanged) would increase or decrease by $3.4 million , respectively, and our net (loss) income would increase or decrease by approximately $0.1 million, respectively. The net assets and liabilities of our non-U.S. subsidiaries, which totaled approximately $56 million as of April 1, 2016 , are translated into USD at the exchange rates in effect at the end of the period. The resulting translation adjustments are recorded in shareholders’ equity as cumulative translation adjustments. The cumulative translation adjustments recorded in accumulated other comprehensive income at April 1, 2016 resulted in a decrease to shareholders’ equity of $17.5 million . Transactional foreign currency exchange exposure results primarily from the purchase of products, services or equipment from affiliates or third party suppliers where the purchase value is significant, denominated in another currency and to be settled over an extended period, and from the repayment of intercompany loans between subsidiaries using different currencies. The Company periodically identifies areas where it does not have naturally offsetting currency positions and then may purchase hedging instruments to protect against potential currency exposures. As of April 1, 2016 , the Company did not have any significant foreign currency hedging instruments in place nor did it have any significant sales or purchase commitments in currencies outside of the functional currencies of the operations responsible for satisfying such commitments. All long-term debt is held in the functional currencies of the operations that are responsible for the repayment of such obligations. As of April 1, 2016 , long-term debt denominated in currencies other than the USD totaled approximately $29.8 million .

30




Interest Rate Risk: The Company utilizes a combination of short-term and long-term debt to finance our operations and is exposed to interest rate risk on our outstanding floating rate debt instruments that bear interest at rates that fluctuate with changes in certain short-term prevailing interest rates. Borrowings under U.S. credit facilities bear interest at rates tied to either the “prime rate” of Deutsche Bank AG New York Branch, the federal funds effective rate, the Eurocurrency rate, or a Eurocurrency rate determined by reference to LIBOR, subject to an established floor. Applicable interest rates have been substantially lower than the designated floor in our Senior Secured Credit Facilities; therefore, interest rates have not been subject to change. Assuming that the rates remain below the floor, a 25 basis point increase or decrease in the applicable interest rates on our variable rate debt, excluding debt outstanding under the U.S. credit agreement, would result in an immaterial change in interest expense on an annual basis.
As of April 1, 2016 , the Company has entered into various interest rate swaps in order to mitigate a portion of the variable rate interest exposure. The Company is counterparty to certain interest rate swaps with a total notional amount of $210.0 million million entered into in November 2015 in order to mitigate a portion of the variable interest rate exposure. These swaps are scheduled to mature in June 2020. Under the terms of the agreement, the Company swapped one month LIBOR rates for a fixed interest rate, resulting in the payment of a fixed LIBOR rate of 2.08% on a notional amount of $210.0 million .
Commodity risk: The Company sources a wide variety of materials and components from a network of global suppliers. While such materials are generally available from numerous suppliers, commodity raw materials, such as steel, aluminum, copper, fiber, foam chemicals, plastic resin, vinyl and cotton sheeting are subject to price fluctuations, which could have a negative impact on our results. The Company strives to pass along such commodity price increases to customers to avoid profit margin erosion and utilizes value analysis and value engineering (“VAVE”) initiatives to further mitigate the impact of commodity raw material price fluctuations as improved efficiencies across all locations are achieved. As of April 1, 2016 , the Company did not have any commodity hedging instruments in place.

ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of April 1, 2016 . Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

31




PART II — OTHER INFORMATION

ITEM 1A. RISK FACTORS
There are no material changes to the disclosures regarding risk factors made in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 .

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table contains detail related to the repurchase of common stock based on the date of trade during the quarter ended April 1, 2016 :
2016 Fiscal Month
 
Total Number of Shares Purchased (a)
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Plans or Programs
 Announced (b)
 
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to February 5
 
8,545
 
$3.37
 
 
N/A
February 6 - March 4
 
 
 
 
N/A
March 5 - April 1
 
 
 
 
N/A
Total
 
8,545
 
$3.37
 
 
 
(a) Represents shares of common stock that employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock unit awards. The 2014 Omnibus Incentive Plan and the award agreements permit participants to satisfy all or a portion of the statutory federal, state and local withholding tax obligations arising in connection with plan awards by electing to (a) have the Company reduce the number of shares otherwise deliverable or (b) deliver shares already owned, in each case having a value equal to the amount to be withheld. During the three months ended April 1, 2016 , the Company withheld 8,545 shares that employees presented to the Company to satisfy withholding taxes in connection with the vesting of restricted stock unit awards.
(b) The Company is not currently participating in a share repurchase program. In February 2015, the Board of Directors authorized the purchase of up to $5 million of outstanding warrants. Management is authorized to effect purchases from time to time in the open market or through privately negotiated transactions. There is no expiration date to this authority. No warrants were repurchased during the three months ended April 1, 2016 .

ITEM 6. EXHIBITS
Reference is made to the separate exhibit index following the signature page herein.

32




SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
JASON INDUSTRIES, INC.
 
 
Dated: May 9, 2016
/s/ Jeffry N. Quinn
 
Jeffry N. Quinn
Chief Executive Officer
(Principal Executive Officer)  
 
Dated: May 9, 2016
/s/ Sarah C. Sutton
 
 
Sarah C. Sutton
Chief Financial Officer
(Principal Financial Officer)
 
 


33




EXHIBIT INDEX
Exhibit Number
 
Description
10.1
 
Form of Restricted Stock Unit Agreement pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan (Time-Vesting).
 
 
 
10.2
 
Form of Restricted Stock Unit Agreement pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan (Cliff-Vesting).
 
 
 
10.3
 
Employment Agreement between the Company and Brian Kobylinski, dated as of April 8, 2016.
 
 
 
31.1
 
Certification of the Principal Executive Officer required by Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
 
 
 
31.2
 
Certification of the Principal Financial Officer required by Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
 
 
 
32.1
 
Certification of the Principal Executive Officer required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
 
 
 
32.2
 
Certification of the Principal Financial Officer required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
 
 
 
101.INS
 
XBRL Instance Document
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document
 
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
 
 
 
101.LAB
 
XBRL Taxonomy Extension Labels Linkbase Document
 
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document


34

Exhibit 10.1

RESTRICTED STOCK UNIT AGREEMENT
PURSUANT TO THE
JASON INDUSTRIES, INC. 2014 OMNIBUS INCENTIVE PLAN
(Time-Vesting)
* * * * *

Participant: __________________________                         

Grant Date: __________________________                     

Number of Time-Vesting Restricted Stock Units Granted: __________________

* * * * *

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “ Agreement ”), dated as of the Grant Date specified above, is entered into by and between Jason Industries, Inc. (f/k/a/ Quinpario Acquisition Corp.), a corporation organized in the State of Delaware (the “ Company ”), and the Participant specified above, pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan, as in effect and as amended from time to time (the “ Plan ”), which is administered by the Committee; and

WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant the Restricted Stock Units (“ RSUs ”) provided herein to the Participant.

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation By Reference; Plan Document Receipt . This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

2. Grant of Restricted Stock Unit Award . The Company hereby grants to the Participant, as of the Grant Date specified above, the number of Time-Vesting RSUs specified above. Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of the shares of Common Stock underlying the RSUs, except as otherwise specifically provided for in the Plan or this Agreement.

3. Vesting .

(a) Time-Vesting . The Time-Vesting RSUs shall vest in three equal installments with the first vesting date being the first anniversary of the Grant Date, the second vesting date being the second anniversary of the Grant Date and the third vesting date being the third anniversary of the Grant Date, provided



that the Participant has not incurred a Termination of Employment prior to the applicable vesting date. There shall be no proportionate or partial vesting in the periods prior to each vesting date and all vesting shall occur only on the appropriate vesting date, subject to the Participant’s continued employment with the Company or any of its Subsidiaries on each applicable vesting date. The foregoing provisions of this Section 3(a) are subject to the provisions of Sections 3(b) through 3(g) hereof.

(b) Committee Discretion to Accelerate Vesting . Notwithstanding any other provision herein to the contrary, the Committee may, in its sole discretion, provide for accelerated vesting of the RSUs at any time and for any reason.

(c) Involuntary Termination Without Cause; Voluntary Resignation For Good Reason . Subject to Section 3(e) hereof, if the Participant incurs a Termination of Employment by the Company without Cause or there is a voluntary Termination of Employment by the Participant with Good Reason, then a portion of the RSUs that would have become vested on the next anniversary of the Grant Date immediately following the date of such Termination of Employment had the Participant’s Termination not occurred shall become vested as of the date of such Termination. For purposes of this Agreement, “ Good Reason ” means, with respect to a Participant’s Termination of Employment: (A) in the case where there is an employment agreement or similar agreement in effect between the Company or an Affiliate and the Participant on the Grant Date that defines “good reason” (or words or a concept of like import, such as “Constructive Termination”), a termination due to good reason (or words or a concept of like import), as defined in such agreement; or (B) in any other case, the occurrence of any of the following events, without the Participant’s advance written consent: (I) any reduction in the Participant’s base salary; (II) any reduction in the Participant’s percentage of base salary available as incentive compensation or bonus opportunity, unless such reduction occurs in connection with a corresponding increase in base salary; (III) a good faith determination by the Participant that there has been a material adverse change in the Participant’s working conditions or status with the Company or an Affiliate, including but not limited to (x) a significant negative change in the nature or scope of the Participant’s authority, powers, functions, duties or responsibilities, or (y) a significant reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements, or (z) a significant reduction in the authority, duties or responsibilities of the supervisor to whom the Participant is required to report; or (iv) the relocation of the Participant’s principal place of employment to a location more than fifty (50) miles from the Participant’s then-current principal place of employment with the Company or an Affiliate. Notwithstanding the foregoing, a Participant’s termination shall not be considered to have occurred for “Good Reason” pursuant to clause (B) above, unless (i) within ninety (90) days following the occurrence of one of the events listed above the Participant provides written notice to the Company setting forth the specific event constituting Good Reason, (ii) the Company fails to remedy the event constituting Good Reason within thirty (30) days following its receipt of the Participant’s notice, and (iii) the Participant actually terminates his or her employment with the Company and its Affiliates within thirty (30) days following the end of the Company’s remedy period.

(d) Termination by Death or Disability . If the Participant’s Termination of Employment is due to the Participant’s death or Disability, then the RSUs shall become fully vested as of the date of such Termination.

(e) Termination in Connection with a Change in Control . In the event of the Participant’s Termination of Employment (i) by the Company without Cause, or (ii) by voluntary resignation by the Participant with Good Reason, in each case, during the period beginning ninety (90) days prior to the date of consummation of a Change in Control and ending two years following the date of consummation of a Change in Control, then any unvested RSUs that would have been forfeited on the date of the Participant’s Termination shall become fully vested as of the date of such Termination.

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(f) Voluntary Resignation . If the Participant’s Termination of Employment is voluntary other than with Good Reason, then all RSUs that are held by such Participant that are unvested shall terminate and expire as of the date of such Participant’s Termination.

(g) Termination for Cause . If the Participant’s Termination (i) is for Cause or (ii) is a voluntary Termination (as provided in Section 3(f)) after the occurrence of an event that is then grounds for a Termination for Cause, then all RSUs, whether vested or not vested, that are held by such Participant shall thereupon be forfeited and cancelled for no value without any consideration as of the date of such Termination.

(h) Termination of Unvested RSUs; Forfeiture . Any portion of the RSUs that does not become vested in accordance with the provisions of this Section 3 shall be automatically forfeited and cancelled for no value without any consideration being paid therefor and otherwise without any further action of the Company whatsoever. For the avoidance of doubt, any portion of the RSUs that does not become vested on or prior to the third anniversary of the Grant Date, shall be automatically forfeited and cancelled as of such date for no value without any consideration being paid therefor and otherwise without any further action of the Company whatsoever.

4. Delivery of Shares . Within thirty (30) days following the date of vesting of RSUs, the Company shall issue to the Participant the number of shares of Common Stock, free and clear of all restrictions (other than as may apply under Section 9) that correspond to the number of RSUs that have become so vested on the applicable vesting date.

5. Dividends; Rights as Stockholder . Cash dividends on shares of Common Stock issuable hereunder shall be credited to a dividend book entry account on behalf of the Participant with respect to each RSU granted to the Participant, provided that such cash dividends shall not be deemed to be reinvested in shares of Common Stock and shall be held uninvested and without interest and paid in cash at the same time that the shares of Common Stock underlying the RSUs are delivered to the Participant in accordance with the provisions hereof. Stock dividends on shares of Common Stock shall be credited to a dividend book entry account on behalf of the Participant with respect to each RSU granted to the Participant, provided that such stock dividends shall be paid in shares of Common Stock at the same time that the shares of Common Stock underlying the RSUs are delivered to the Participant in accordance with the provisions hereof. For the sake of clarity, in the event any portion of the unvested RSUs is forfeited and cancelled in accordance with this agreement or the Plan, any accrued dividends on shares of Common Stock underlying such forfeited RSUs shall be automatically forfeited for no value without any consideration being paid therefor and otherwise without any further action of the Company whatsoever. Except as otherwise provided herein, the Participant shall have no rights as a stockholder with respect to any shares of Common Stock covered by any RSU unless and until the Participant has become the holder of record of such shares.

6. Non-Transferability . No portion of the RSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the RSUs as provided herein, unless and until payment is made in respect of vested RSUs in accordance with the provisions hereof and the Participant has become the holder of record of the vested shares of Common Stock issuable hereunder.

7. Governing Law . All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the choice of law principles thereof.


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8. Withholding of Tax . The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the RSUs and, if the Participant fails to do so, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued pursuant to this Agreement. The foregoing provisions of this Section 8 to the contrary notwithstanding, the Participant may direct the Company to satisfy any such required withholding obligation with regard to the Participant by reducing the amount of cash or shares of Common Stock, having an aggregate Fair Market Value equal to the statutory minimum withholding obligation, otherwise deliverable to the Participant pursuant to Section 4.

9. Legend . The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Common Stock issued pursuant to this Agreement, consistent with issuances to holders of shares of Common Stock other than pursuant to this Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares of Common Stock acquired pursuant to this Agreement in the possession of the Participant in order to carry out the provisions of this Section 9.

10. Securities Representations . This Agreement is being entered into by the Company in reliance upon the following express representations and warranties of the Participant. The Participant hereby acknowledges, represents and warrants that:

(a) The Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under the Securities Act and in this connection the Company is relying in part on the Participant’s representations set forth in this Section 10.

(b) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the shares of Common Stock issuable hereunder must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such shares of Common Stock and the Company is under no obligation to register such shares of Common Stock (or to file a “re-offer prospectus”).

(c) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the Participant understands that (i) the exemption from registration under Rule 144 will not be available unless (A) a public trading market then exists for the Common Stock of the Company, (B) adequate information concerning the Company is then available to the public, and (C) other terms and conditions of Rule 144 or any exemption therefrom are complied with, and (ii) any sale of the shares of Common Stock issuable hereunder may be made only in limited amounts in accordance with the terms and conditions of Rule 144 or any exemption therefrom.

11. Entire Agreement; Amendment . This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time to the extent permitted, without the Participant’s consent thereto, under the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Participant. The Company shall give written notice to the Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.

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12. Notices . Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel of the Company. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on the payroll files with the Company.

13. No Right to Employment . Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or its Affiliates to terminate the Participant’s employment or service at any time, for any reason and with or without Cause.

14. Transfer of Personal Data . The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the RSUs awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Participant.

15. Compliance with Laws . The grant of RSUs and the issuance of shares of Common Stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue the RSUs or any shares of Common Stock pursuant to this Agreement if any such issuance would violate any such requirements; provided, in such event as the Company is prohibited from issuing shares of Common Stock, the Company shall pay to the Participant (unless otherwise prohibited by law), within thirty (30) days following the date of vesting of RSUs, cash in an amount equal to the aggregate Fair Market Value of shares of Common Stock represented by such vested RSUs. As a condition to the settlement of the RSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.

16. Binding Agreement; Assignment . This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns and the Participant and the Participant’s heirs, executors, administrators, legal representatives and permitted assigns. The Participant shall not assign (except in accordance with Section 6 hereof) any part of this Agreement without the prior express written consent of the Company.

17. Headings . The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

18. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.

19. Further Assurances . Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.


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20. Severability . The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

21. Acquired Rights . The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time in accordance with the terms thereof as in effect on the Grant Date and not inconsistent with the provisions of Section 11 hereof; (b) the Award of RSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the RSUs awarded hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation

* * * * *
    

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

JASON INDUSTRIES, INC.



By: ______________________________                     
Name: __________________
Title: ___________________



PARTICIPANT



______________________________
Name: __________________

7
Exhibit 10.2

RESTRICTED STOCK UNIT AGREEMENT
PURSUANT TO THE
JASON INDUSTRIES, INC. 2014 OMNIBUS INCENTIVE PLAN
(Matching)
* * * * *

Participant: __________________________                         

Grant Date: __________________________     

Number of Restricted Stock Units Granted: __________________

* * * * *

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “ Agreement ”), dated as of the Grant Date specified above, is entered into by and between Jason Industries, Inc. (f/k/a/ Quinpario Acquisition Corp.), a corporation organized in the State of Delaware (the “ Company ”), and the Participant specified above, pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan, as in effect and as amended from time to time (the “ Plan ”), which is administered by the Committee;

WHEREAS , the Company has entered into an Employment Agreement with the Participant, dated effective as of     __________________________ (the “ Employment Agreement ”), pursuant to which, if the Participant purchases shares of Common Stock (the “ Purchased Shares ”) during a limited period specified in the Employment Agreement, then the Company will grant a restricted stock unit award, within thirty (30) days following the date of such purchase, for a number of shares having a grant date value (measured as of the date of purchase of the Purchased Shares) equal to the fair market value of the Purchased Shares (subject to a limit specified in the Employment Agreement);

WHEREAS , the Participant has purchased Purchased Shares; and

WHEREAS, in accordance with the terms of the Employment Agreement, the Company desires to grant the Restricted Stock Units (“ RSUs ”) provided herein to the Participant.

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation By Reference; Plan Document Receipt . This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

2. Grant of Restricted Stock Unit Award . The Company hereby grants to the Participant, as of the Grant Date specified above, the number of RSUs specified above. Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of



the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of the shares of Common Stock underlying the RSUs, except as otherwise specifically provided for in the Plan or this Agreement.

3. Vesting .

(a) In General . The RSUs that have not previously been forfeited pursuant to Section 3(b) hereof shall vest in full on the third anniversary of the Grant Date, provided that the Participant has not incurred a Termination of Employment prior to such anniversary. There shall be no proportionate or partial vesting in the period prior to the third anniversary of the Grant Date. The foregoing provisions of this Section 3(a) are subject to the provisions of Sections 3(b), 3(c) and 3(d) hereof.

(b) Forfeiture Upon Sale of Purchased Shares . If the Participant Transfers any shares of Common Stock held by the Participant prior to the date on which the RSUs are fully vested, a proportionate number of RSUs corresponding to the portion of the Purchased Shares represented by the Transferred shares of Common Stock (if any) shall be automatically forfeited and cancelled for no value without any consideration being paid therefor and otherwise without any further action of the Company whatsoever. The Participant shall inform the Company in advance of any contemplated Transfer of any shares of Common Stock, and the Company shall determine, in its sole discretion, whether such shares represent Purchased Shares and, if so, the number of RSUs to be forfeited in connection with such Transfer.

(c) Certain Terminations of Employment . In the event of the Participant’s Termination of Employment pursuant to Section 4(a) (“Qualifying Termination”) or Section 4(b) (“Qualifying Termination in Connection with a Change in Control”) of the Employment Agreement, the RSUs shall be treated as described in the applicable provisions of the Employment Agreement. If the Employment Agreement has been terminated by the consent of the parties prior to such Termination of Employment, such provisions shall be applied as if the Employment Agreement were still in effect except to the extent the parties have otherwise agreed. Upon any other Termination of Employment other than due to the Participant’s death or Disability, any RSUs that have not previously been vested or forfeited shall be automatically forfeited and cancelled for no value without any consideration being paid therefor and otherwise without any further action of the Company whatsoever. If the Participant’s Termination of Employment is due to the Participant’s death or Disability, then the RSUs shall become fully vested as of the date of such Termination.

(d) Termination of Unvested RSUs; Other Forfeiture . Any portion of the RSUs that does not become vested in accordance with the provisions of this Section 3 shall be automatically forfeited and cancelled for no value without any consideration being paid therefor and otherwise without any further action of the Company whatsoever. For the avoidance of doubt, any portion of the RSUs that does not become vested on or prior to the third anniversary of the Grant Date shall be automatically forfeited and cancelled as of such date for no value without any consideration being paid therefor and otherwise without any further action of the Company whatsoever.

4. Delivery of Shares . Within thirty (30) days following the date of vesting of RSUs, the Company shall issue to the Participant the number of shares of Common Stock, free and clear of all restrictions (other than as may apply under Section 9) that correspond to the number of RSUs that have become so vested on the applicable vesting date.

5. Dividends; Rights as Stockholder . Cash dividends on shares of Common Stock issuable hereunder shall be credited to a dividend book entry account on behalf of the Participant with respect to each RSU granted to the Participant, provided that such cash dividends shall not be deemed to be reinvested

2


in shares of Common Stock and shall be held uninvested and without interest and paid in cash at the same time that the shares of Common Stock underlying the RSUs are delivered to the Participant in accordance with the provisions hereof. Stock dividends on shares of Common Stock shall be credited to a dividend book entry account on behalf of the Participant with respect to each RSU granted to the Participant, provided that such stock dividends shall be paid in shares of Common Stock at the same time that the shares of Common Stock underlying the RSUs are delivered to the Participant in accordance with the provisions hereof. For the sake of clarity, in the event any portion of the unvested RSUs is forfeited and cancelled in accordance with this agreement or the Plan, any accrued dividends on shares of Common Stock underlying such forfeited RSUs shall be automatically forfeited for no value without any consideration being paid therefor and otherwise without any further action of the Company whatsoever. Except as otherwise provided herein, the Participant shall have no rights as a stockholder with respect to any shares of Common Stock covered by any RSU unless and until the Participant has become the holder of record of such shares.

6. Non-Transferability . No portion of the RSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the RSUs as provided herein, unless and until payment is made in respect of vested RSUs in accordance with the provisions hereof and the Participant has become the holder of record of the vested shares of Common Stock issuable hereunder.

7. Governing Law . All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the choice of law principles thereof.

8. Withholding of Tax . The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the RSUs and, if the Participant fails to do so, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued pursuant to this Agreement. The foregoing provisions of this Section 8 to the contrary notwithstanding, the Participant may direct the Company to satisfy any such required withholding obligation with regard to the Participant by reducing the amount of cash or shares of Common Stock, having an aggregate Fair Market Value equal to the statutory minimum withholding obligation, otherwise deliverable to the Participant pursuant to Section 4.

9. Legend . The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Common Stock issued pursuant to this Agreement, consistent with issuances to holders of shares of Common Stock other than pursuant to this Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares of Common Stock acquired pursuant to this Agreement in the possession of the Participant in order to carry out the provisions of this Section 9.

10. Securities Representations . This Agreement is being entered into by the Company in reliance upon the following express representations and warranties of the Participant. The Participant hereby acknowledges, represents and warrants that:

(a) The Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under the Securities Act and in this connection the Company is relying in part on the Participant’s representations set forth in this Section 10.

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(b) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the shares of Common Stock issuable hereunder must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such shares of Common Stock and the Company is under no obligation to register such shares of Common Stock (or to file a “re-offer prospectus”).

(c) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the Participant understands that (i) the exemption from registration under Rule 144 will not be available unless (A) a public trading market then exists for the Common Stock of the Company, (B) adequate information concerning the Company is then available to the public, and (C) other terms and conditions of Rule 144 or any exemption therefrom are complied with, and (ii) any sale of the shares of Common Stock issuable hereunder may be made only in limited amounts in accordance with the terms and conditions of Rule 144 or any exemption therefrom.

11. Entire Agreement; Amendment . This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time to the extent permitted, without the Participant’s consent thereto, under the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Participant. The Company shall give written notice to the Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.

12. Notices . Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel of the Company. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on the payroll files with the Company.

13. No Right to Employment . Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or its Affiliates to terminate the Participant’s employment or service at any time, for any reason and with or without Cause.

14. Transfer of Personal Data . The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the RSUs awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Participant.

15. Compliance with Laws . The grant of RSUs and the issuance of shares of Common Stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue the RSUs or any shares of Common Stock pursuant to this Agreement if any such issuance would violate any such requirements; provided, in such event as the Company is prohibited from issuing shares of Common Stock, the Company shall pay to the Participant (unless otherwise prohibited

4


by law), within thirty (30) days following the date of vesting of RSUs, cash in an amount equal to the aggregate Fair Market Value of shares of Common Stock represented by such vested RSUs. As a condition to the settlement of the RSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.

16. Binding Agreement; Assignment . This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns and the Participant and the Participant’s heirs, executors, administrators, legal representatives and permitted assigns. The Participant shall not assign (except in accordance with Section 6 hereof) any part of this Agreement without the prior express written consent of the Company.

17. Headings . The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

18. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.

19. Further Assurances . Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.

20. Severability . The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

21. Acquired Rights . The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time in accordance with the terms thereof as in effect on the Grant Date and not inconsistent with the provisions of Section 11 hereof; (b) the Award of RSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the RSUs awarded hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.

* * * * *

    

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

JASON INDUSTRIES, INC.



By: ______________________________                     
Name: __________________
Title: ___________________



PARTICIPANT



______________________________
Name: __________________


6
Exhibit 10.3



EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “ Agreement ”), effective as of April 8, 2016 is entered into by and between Jason Industries, Inc., a Delaware corporation (the “ Company ”) and Brian Kobylinski (“ Executive ”).

WHEREAS, Company has agreed to hire Executive with certain conditions; and WHEREAS, in furtherance of the foregoing, Company and the Executive wish to enter into this Agreement in order to set forth the terms of Executive’s employment with the Company during the Employment Period (as herein defined).

NOW THEREFORE, in consideration of the promises and mutual covenants set forth herein, and other consideration, the receipt and sufficiency of which is hereby acknowledged, the Executive and the Company, intending to be legally bound, agree as follows:

1. Employment . The Company agrees to employ Executive, and Executive hereby desires to be employed by the Company to serve as President & Chief Operating Officer, upon the terms and conditions as set forth in this Agreement on an at-will basis, for the period beginning on April 25, 2016 (the “ Effective Date ”) unless and until his employment is terminated pursuant to Section 4 hereof (such period, the “ Employment Period ”). Executive acknowledges that either he or the Company may terminate his employment at any time for any reason.

2.
Position and Duties .

(a) Title and Duties . During the Employment Period, Executive shall serve as the President & Chief Operating Officer of the Company. As such, he shall have the normal duties, responsibilities and authority of such position, subject to the power of the Company’s Chief Executive Officer and its Board of Directors, to expand or limit such duties, responsibilities and authority within the confines of the ordinary duties, responsibilities and authority of a President & Chief Operating Officer. At such time as Executive’s employment with the Company terminates, he will be deemed to have resigned from any positions with the Company Group (defined below) or any other affiliated entity, including any officer or director position.

(b) Reporting; Business Time . Executive shall report to the Company’s Chief Executive Officer, and Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company and its respective direct or indirect subsidiaries whether currently existing or hereafter acquired or formed (collectively, the “ Company Group ”). Executive shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner. Executive shall not serve as a director (or in any similar type position) for any company or other entity (other than a member of the Company Group) without the prior written approval of the Chief Executive Officer and the Board of Directors of the Company (the “ Board ”).

3.
Base Salary, Incentive Compensation, Benefits and Expenses .

(a) Base Salary . Executive’s base salary shall be $625,000 per annum, subject to increase (but not decrease without the written consent of Executive) from time to time by the Board (or a committee thereof) in its sole discretion (such amount, as adjusted, the “ Base Salary ”), which salary shall be payable in regular installments in accordance with the Company’s general payroll practices and shall be subject



to customary withholding.

(b) Bonus . During the Employment Period, Executive will participate in the Company’s annual bonus plan applicable to senior executives and thereunder be eligible to receive an annual cash bonus (the “ Bonus ”) in the amount of 75% of the Base Salary upon achievement of target-level performance (the “ Target Bonus ”), to a maximum of 150% of the Target Bonus. The actual amount of any Bonus shall be determined pursuant to the annual bonus plan, which shall be determined by the Board. All Bonuses shall be paid in the calendar year following the calendar year to which they relate at the same time bonuses are paid to other senior executives of the Company, and the Company shall use commercially reasonable efforts to make payment of any such Bonus by March 15 of the calendar year following the calendar year to which such Bonus relates. For the avoidance of doubt, Executive will be eligible for a full annual bonus with regard to the 2016 calendar year, as if Executive had been employed as of January 1, 2016. To the extent any terms of the applicable bonus plan conflict with the terms of this Agreement, the bonus plan’s terms shall control. In addition, the Company may amend, restate or terminate its bonus plan in its sole discretion from time to time and Executive’s receipt of any bonus is subject to meeting eligibility requirements.

(c) Benefits . During the Employment Period, Executive (i) shall be eligible to participate in all of the Company’s standard employee benefit programs for which executive employees of the Company are generally eligible, including life and health insurance benefits, dental, group accident (collectively, the “ Benefits ”) as well as 401(k) and flex plans, after meeting all requirements for participation (including any requirements regarding length of employment), and (ii) shall be eligible for four weeks paid vacation annually (“Vacation”) (which vacation benefits shall accrue and shall otherwise be in accordance with the Company’s policy for employee vacation time). In addition, from the Effective Date until Executive and his dependents are eligible for health and dental insurance benefits under the Company’s plans, the Company will reimburse Executive for the amount of premiums that he pays for continuation coverage for Executive and his dependents under Executive’s prior employer plans.

(d) Expenses . The Company shall reimburse Executive for all reasonable expenses (“ Expenses ”) incurred by him in the course of performing his duties under this Agreement which are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements with respect to reporting and documentation of such expenses. If any expense reimbursement to Executive under this Agreement, including this paragraph and paragraph 21 hereof, is determined to be “deferred compensation” within the meaning of Internal Revenue Code (the “ Code ”) Section 409A, then the reimbursement shall be made to Executive as soon as practicable after submission for the reimbursement, but no later than December 31 of the year following the year during which such expense was incurred. Further, expenses eligible for reimbursement, including those hereunder and pursuant to paragraph 21 hereof, shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

(e) Equity Grants . As soon as practicable after the Effective Date, the Company shall grant Executive restricted stock units having a grant date value of $750,000, with thirty percent (30%) of such units subject to time-based vesting (with 1/3 of such award vesting on each anniversary of the first three (3) anniversaries of the Effective Date) and seventy percent (70%) of such units vesting at the end of 2018, based on the level of achievement of the performance goals as apply to performance restricted stock unit awards granted to other executive officers in 2016. Thereafter, Executive shall be eligible for annual equity awards in the sole discretion of the Compensation Committee of the Company’s Board of Directors.


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(f) Matching Equity Grants. If during the first twelve months of Executive’s employment with the Company, Executive purchases shares of the Company’s common stock (the “ Purchased Shares ”), then the Company will grant a restricted stock unit award, within thirty
(30) days following the date of such purchase, for a number of shares having a grant date value (but measured as of the date of purchase of the Purchased Shares) equal to the fair market value of the Purchased Shares; provided that in no event will the Company grant restricted stock units pursuant to this paragraph having a grant date value (measured as of the date of each purchase of common stock) in excess of $600,000. Each grant of restricted stock units made hereunder will vest on the third anniversary of the grant date, subject to Executive’s continued employment until such vesting date and Executive’s retention of the Purchased Shares through such vesting date.

4.
Termination of Employment .

(a)     Qualifying Termination . Except as applies under paragraph 4(b) , if Executive’s employment by the Company is terminated without Cause or by Executive pursuant to a Constructive Termination, then (i) the Employment Period shall be deemed to have ended as of the date of the termination of employment (the “ Termination Date ”), and (ii) Executive shall be entitled to receive: (A) all earned and accrued Base Salary through the Termination Date, any then accrued and unpaid Bonus for any fiscal year of the Company which ended prior to the Termination Date, all earned but unused Vacation as of the Termination Date and, subject to the timely submission of required documentation, all unpaid, reimbursable Expenses as of the Termination Date (the “ Accrued Obligations ”), and subject to Executive’s continued compliance with paragraphs 6 , 7 , 8 , 9 , and 10 hereof; (B) an amount equal to the sum of the Executive’s Base Salary and the Target Bonus, each as in effect on the Termination Date, payable in equal monthly installments, in accordance with the Company’s normal payroll practices in effect on the Termination Date, for the twelve (12) month period following the Termination Date; (C) immediate vesting of the next tranche of time-based restricted stock units (that would have vested had Executive continued in employment) and immediate vesting of a pro-rata portion of the time-based restricted units described in paragraph 3(f) above based upon the actual number of months Executive has been employed by the Company divided by thirty-six; and (D) if the Executive and/or his dependents elect continuation coverage under COBRA, payment by the Company of the COBRA premiums for the Executive and/or his dependents in the same amount paid by the Company prior to the Termination Date during the period beginning on the Termination Date and ending on the first to occur of (x) the date twelve (12) months after the Termination Date and (y) the first day Executive becomes eligible for similar benefits under another employer’s plans, subject, in each case, to withholding and other appropriate deductions.

For clarity, any restricted stock units subject to performance conditions (including those described in paragraph 3(e) ) and the time-based restricted stock units described in paragraph 3(f) (except for the pro-rata portion described in paragraph 4(a)(C) above) shall be forfeited immediately upon the Termination Date.

(b)     Qualifying Termination in Connection with a Change in Control . If the Termination Date occurs on or in the twelve (12) months following a Change in Control (as herein defined) due to Executive’s termination of employment by the Company without Cause or by Executive pursuant to a Constructive Termination (“Change in Control Termination”), then, in lieu of the payments and benefits set out in the preceding provisions of paragraph 4(a) , (i) the Employment Period shall be deemed to have ended as of the Termination Date and (ii) Executive shall be entitled to receive (A) the Accrued Obligations, and subject to Executive’s continued compliance with paragraphs 6 , 7 , 8 , 9 , and 10 hereof, (B) an amount equal to the sum of the Executive’s Base Salary and the Target Bonus, each as in effect on the Termination Date, payable in equal monthly installments, in accordance with the Company’s

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normal payroll practices in effect on the Termination Date, for the twelve (12) month period following the Termination Date, (C) immediate vesting of all performance- and time-based restricted stock units, and (D) if the Executive and/or his dependents elect continuation coverage under COBRA, payment by the Company of the COBRA premiums for the Executive and/or his dependents in the same amount paid by the Company prior to the Termination Date during the period beginning on the Termination Date and ending on the first to occur of (x) the date twelve (12) months after the Termination Date and (y) the first day Executive becomes eligible for similar benefits under another employer’s plans, subject, in each case, to withholding and other appropriate deductions. For purposes of this paragraph 4(b) Change in Control ” shall have the meaning set forth in the Company’s 2014 Omnibus Incentive Plan.

(c)     Termination Due to Death or Disability . If Executive’s employment by the Company is terminated by reason of the death or long-term disability of Executive, then (i) the Employment Period shall be deemed to have ended as of the date Executive ceases to be employed by the Company, and (ii) Executive shall be entitled to receive (A) the Accrued Obligations, and (B) an amount (the “ Pro-Rata Amount ”) equal to the product of (x) the percentage of the days in the applicable calendar year that Executive is employed by the Company and (y) the annual Bonus Executive would have received, based on performance goals, if Executive’s employment had not terminated, payable in accordance with paragraph 3(c) hereof, subject, in each case, to withholding and other appropriate deductions. For purposes of this paragraph 4(c) , Executive will be deemed to have a “long-term disability” if, for physical or mental reasons, Executive is unable to perform the essential functions of Executive’s duties under this Agreement for ninety (90) consecutive days, or one hundred twenty (120) days during any twelve (12) month period, as determined in accordance with this paragraph 4(c) . The disability of Executive will be determined by a medical doctor selected by written agreement of the Company and Executive upon the request of either party by notice to the other. If the Company and Executive cannot agree on the selection of a medical doctor, each of them will select a medical doctor and the two medical doctors will select a third medical doctor who will determine whether Executive has a disability. The determination of the medical doctor selected under this paragraph 4(c) will be binding on both parties. Executive must submit to a reasonable number of examinations by the medical doctor making the determination of disability under this paragraph 4(c) and Executive hereby authorizes the disclosure and release to the Company of such determination and all supporting medical records. If Executive is not legally competent, Executive’s legal guardian or duly authorized attorney-in-fact will act in Executive’s stead, under this paragraph 4(c) , for the purposes of submitting Executive to the examinations, and providing the authorization of disclosure, required under this paragraph 4(c) .

(d)     Termination for Cause or Voluntarily By Executive . If Executive’s employment by the Company is terminated by the Company for Cause or due to Executive’s voluntary resignation other than by Constructive Termination, then (i) the Employment Period shall be deemed to have ended as of the date Executive ceases to be employed by the Company and (ii) Executive shall be entitled to receive the Accrued Obligations. Executive shall provide fifteen (15) days’ notice of the date he intends to resign.

(e)     No Obligations . Except as expressly provided in paragraphs 4(a) , 4(b) and 4(c) above, or as required by law, upon the date Executive ceases to be employed by the Company (i) all of Executive’s rights to Base Salary, Bonus, Benefits and equity awards hereunder (if any) shall cease (except as otherwise expressly provided in any equity award agreement) and (ii) no other severance compensation or retirement benefits shall be payable by the Company Group to Executive.

(f)     Definition of Cause . For purposes of this Agreement, “ Cause ” shall mean (i) Executive’s conviction by a court (or plea of guilty or no contest) of a felony, or any crime involving theft, dishonesty or moral turpitude; (ii) act(s) or omission(s) by Executive which are willful and deliberate act(s) or omission(s) which harm or injure the business, operations, financial condition,

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properties, assets, value or reputation of the Company Group in any material respect; (iii) Executive’s willful misconduct which results in material harm to the Company Group or which has a material adverse effect on the business, operations, properties, assets, value or business relationships of the Company Group; (iv) Executive’s willful disregard of the lawful and reasonable directives of the Board or Executive’s willful failure to observe written policies or written standards approved by the Company, Company Group, or their Boards of Directors, including written policies or written standards regarding employment practices (including nondiscrimination and sexual harassment policies; (v) the use of illegal drugs or repetitive abuse of other drugs; (vi) repetitive excessive consumption of alcohol, which results in material harm to the Company Group or its subsidiaries; or (vii) Executive’s gross negligence or willful misconduct with respect to any member of the Company Group which results in material harm to the Company Group and/or which has a material adverse effect on the business, operations, properties, assets, value or business relationships of any member of the Company Group; or (viii) a material breach by Executive of any material covenant or agreement between Executive and any member of the Company Group, including paragraphs 6 , 7 , 8 , 9 , and 10 hereof; provided that if the breach is not a breach of paragraphs 6 , 7 , 8 , 9 , and 10 hereof or any other restrictive covenant and is capable of remedy, Executive shall have ten (10) days from notification of the breach by the Company in which to remedy such breach. For avoidance of doubt a breach of paragraphs 6 , 7 , 8 , 9 , and 10 or any other restrictive covenant shall not be subject to remedy and any such breach shall be considered “Cause” for termination.

(g)     Definition of Constructive Termination . For purposes of this Agreement, “ Constructive Termination ” shall mean a voluntary termination of employment by Executive for any of the following reasons, without the express written consent of Executive, unless such events are corrected in all material respects by the Company within thirty (30) days following written notification by Executive to the Board: (i) the material reduction or diminution by the Board of the duties, responsibilities, authority or reporting relationship of Executive; (ii) a reduction of Executive’s Base Salary without his written consent; (iii) a relocation of Executive’s principal office by more than fifty (50) miles from his principal office on the Effective Date; (iv) any failure of the Company to assign, or any successor to assume, the Company’s obligations under this Agreement at or following the occurrence of a Change in Control; or (v) a material breach of this Agreement by the Company. Executive shall provide the Board with a written notice that an event has occurred and will serve as cause for Constructive Termination within thirty (30) days after the date Executive had knowledge of the first occurrence of such circumstances, and actually terminate employment within ten (10) days following the expiration of the Company’s cure period as set forth above (in which cure does not occur). Otherwise, any claim of such circumstances as “Constructive Termination” shall be deemed irrevocably waived by Executive.

(h)     General Release . Notwithstanding anything herein contained to the contrary, (i) Executive shall not be entitled to receive any payments, Benefits or other compensation under this paragraph 4 (beyond the Accrued Obligations) unless and until Executive has executed and delivered to the Company a general release substantially in the form attached hereto as Exhibit A (a “ General Release ”) (with such changes thereto as may be required due to (A) changes in the law or if Executive’s termination of employment is part of a reduction in force requiring a longer (45-day) opportunity to consider the Release or (B) to comply with Older Workers Benefit Protection Act (“OWBPA”) or state law requirements) within sixty (60) days of the Termination Date, and the time for revocation of such release has elapsed and (ii) to the extent that the payment of any amount constitutes “nonqualified deferred compensation” for purposes of Code Section 409A, any such payment scheduled to occur during the first sixty (60) days following the termination of employment shall not be paid until the first regularly scheduled pay period following the sixtieth (60 th ) day following such termination and shall include payment of any amount that was otherwise scheduled to be paid prior thereto.


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(i)     Separation From Service . For purposes of this Agreement, termination of employment means a “separation from service” under Code Section 409A and Treasury Regulation Section 1.409A-1(h). For this purpose, whether a termination of employment has occurred is determined based on whether the Company and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to less than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period.

(j)     Payroll Practices . All payments, benefits or other compensation under this paragraph 4 shall be paid in accordance with normal payroll practices as in effect on the Termination Date, except as provided in subparagraph (h) hereof, and subject to required payroll withholdings over the course of the period provided for within the applicable subsection above.

(k)     No Mitigation . Executive shall be under no obligation to seek other employment after his termination of employment with the Company and the obligations of the Company to Executive which arise upon the termination of his employment pursuant to this paragraph 4 shall not be subject to mitigation or offset by any compensation, income or benefits earned by, or provided to, Executive during the applicable severance payment period other than as provided in the case of Benefits if Executive accepts other employment during such period.

5. Golden Parachute Tax . In the event that any payments, entitlements or benefits (whether made or provided pursuant to this Agreement or otherwise) provided to Executive constitute “parachute payments” within the meaning of Section 280G of Code, may be subject to an excise tax imposed pursuant to Section 4999 of the Code, then, Executive shall be entitled to the greater of, as determined on an after-tax basis (taking into account any such excise tax), (i) such parachute payments or (ii) the greatest reduced amount of such parachute payments as would result in no amount of such parachute payments being subject to such excise tax. Any such payment reduction contemplated by the preceding sentence shall be implemented as follows: first , by reducing any payments to be made to Executive under paragraph 4(a)(ii)(B) or 4(b)(ii)(B) hereof, as applicable; second , by reducing any other cash payments to be made to Executive but only if the value of such cash payments is not greater than the parachute value of such payments; third , by cancelling the acceleration of vesting of any outstanding equity-based compensation awards that are subject to performance vesting, the performance goals for which were met as of Executive’s date of termination or if later the date of the occurrence of the change in control; fourth , by cancelling the acceleration of vesting of any restricted stock or restricted stock unit awards; fifth , by eliminating the Company’s payment of the cost of any post- termination continuation of medical and dental benefits for Executive and his eligible dependents and sixth , by cancelling the acceleration of vesting of any stock options or stock appreciation rights. In the case of the reductions to be made pursuant to each of the above-mentioned clauses, the payment and/or benefit amounts to be reduced and the acceleration of vesting to be cancelled shall be reduced or cancelled in the inverse order of their originally scheduled dates of payment or vesting, as applicable, and shall be so reduced (x) only to the extent that the payment and/or benefit otherwise to be paid or the vesting of the award that otherwise would be accelerated, would be treated as a “parachute payment” within the meaning of Section 280G(b)(2)(A) of the Code, and (y) only to the extent necessary to achieve the required reduction hereunder. The determination of such after-tax amount under clauses (i) and (ii), above, shall be made by a nationally recognized certified public accounting firm that is selected by the Company and for purposes of present valuing any such payments under Treasury Regulation 1.280G-1 Q&A 32, the discount rate to be used shall be the applicable Federal rate as in effect on the Effective Date.


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6. Confidential Information . Executive acknowledges that the information, observations and data obtained by him while employed by any member of the Company Group concerning the business or affairs of the Company Group or provided to the Company Group by its customers and suppliers, that is not known generally to the public (“ Confidential Information ”), are the property of the Company Group. Therefore, Executive agrees that during his employment and for a period of two (2) years thereafter he shall not disclose to any unauthorized person or use for his own purposes any Confidential Information without the prior written consent of the Board other than in a good faith effort to promote the interests of the Company Group, unless and to the extent that the aforementioned matters become generally known to and available for use by the public other than as a result of Executive’s acts or omissions. With respect to any Confidential Information constituting a trade secret under applicable law, Executive agrees not to use or disclose such information for so long as the item continues to constitute a trade secret ( i.e. , the two (2) year restriction shall not apply to such information). Upon request of the Company, Executive shall deliver to the Company at or within five (5) days following the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) relating to the Confidential Information, Work Product (as defined below) or the business of any member of the Company Group which he may then possess or have under his control.; provided, however, with respect to any data or information stored in an electronic device or computer, Executive shall be deemed to be in compliance with this paragraph if he certifies in writing to the Company that he has deleted such data or information from such device or computer. Notwithstanding the foregoing, nothing in this paragraph 6 shall be construed to in any way limit the rights of the Company to protect confidential or proprietary information which constitute trade secrets under applicable trade secret laws.

7. Inventions and Patents . Executive acknowledges that all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable) which relate to the Company Group’s actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by Executive while employed by the Company Group (“ Work Product ”) belong to the applicable member of the Company Group. Executive will promptly disclose such Work Product to the Company and perform all actions requested by the Company (whether during or after employment) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments).

8.
Non-Solicitation; Non-Competition .

(a) In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges that in the course of his employment with the Company Group, he has and will continue to become familiar with the Company Group’s trade secrets and with other Confidential Information concerning the Company Group and that his services shall be of special, unique and extraordinary value to the Company Group. Therefore, Executive agrees that while an employee of the Company Group, Executive will not directly or indirectly compete against any member of the Company Group or directly or indirectly divert or attempt to divert any business from any member of the Company Group anywhere such company is doing business.

(b) Executive agrees that for the twelve (12) months following the termination of his employment, Executive will not, directly or indirectly, solicit for the purpose of providing, or otherwise provide, any products or services competitive with the products or services offered by (or planned to be offered by, assuming Executive was aware of those plans while employed by Company) the Company Group to any customer of the Company Group with whom/which Executive had contact on behalf of

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the Company Group during the twenty-four (24) months preceding the end of Executive’s employment with the Company.

(c) Executive agrees that for the twelve (12) months following the termination of his employment, Executive will not, directly or indirectly, solicit for the purpose of providing, or otherwise provide, any products or services competitive with the products or services offered by (or planned to be offered by, assuming Executive was aware of those plans while employed by Company) the Company Group to any customer of the Company Group about whom/which Executive acquired non-public information during the twenty-four (24) months preceding the end of Executive’s employment with the Company.

(d) Executive agrees that for the twelve (12) months following the termination of his employment, Executive will not request or advise any customer, supplier, licensee, licensor, landlord or other business relation of the Company Group with whom/which Executive had contact on behalf of the Company Group during the twenty-four (24) months preceding the termination of Executive’s employment with the Company to withdraw, curtail or cancel its business dealings with such member of the Company Group.

(e) Executive agrees that for the twelve (12) months following the termination of his employment, Executive will not directly or indirectly recruit or solicit any employee of the Company Group for employment or encourage any employee of the Company Group to leave such member of the Company Group’s employ . An employee shall be deemed covered by this clause (e) while employed by the Company Group and for a period of twelve (12) months thereafter.

(f) In addition, Executive agrees that for the twelve (12) months following the termination of his employment, Executive will not provide, in any capacity, Restricted Services to any business located in the United States or Germany which provides services or products competitive with those sold or provided by any member of the Company Group during the twenty-four (24) months preceding the end of Executive’s employment with the Company. The term “Restricted Services” shall mean services similar to those which Executive provided any member of the Company Group during the twenty-four (24) months preceding Executive’s termination of employment, for whatever reason, and which would involve use or disclosure of the Company’s Confidential Information.

(g)     In the event of the breach by Executive of any of the provisions of this paragraph 8, the Company shall be entitled, in addition to all other available rights and remedies, to withhold any or all of the amounts agreed to be paid to Executive hereunder and the Company shall also be entitled to terminate his employment status hereunder and the provision of any benefits and compensation conditioned upon such status.

9.
Non-Solicitation; Non-Competition for a Change In Control Termination.

(a) In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges that in the event of a Change in Control Termination his knowledge of the Company Group’s trade secrets and other Confidential Information concerning the Company Group and his services shall be of additional special, unique and extraordinary value to the Company Group. Therefore, Executive agrees that following a Change in Control Termination he shall be subject to the restrictions identified in paragraph 8 above.

(b) In the event of the breach by Executive of any of the provisions of this paragraph 9, the Company shall be entitled, in addition to all other available rights and remedies, to withhold any or

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all of the amounts agreed to be paid to Executive hereunder and the Company shall also be entitled to terminate his employment status hereunder and the provision of any benefits and compensation conditioned upon such status.

10. Non-Disparagement . During the Employment Period and for the two year period following the Termination Date, Executive agrees not to make public statements or communications that disparage the Company Group or their businesses, services, products or their affiliates or their current, former or future directors or executive officers (in their capacity as such), or with respect to any current or former director or executive officer or shareholder of the Company Group or its affiliates (in their capacity as such) and the Company will use its best efforts to have the directors and officers of each member of the Company Group and its affiliates not make public statements or communications that disparage the Executive. The foregoing shall not be violated by truthful statements made in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

11. Remedies . In addition and supplementary to other rights and remedies existing in its favor, the Company may apply to the court of law or equity of competent jurisdiction, without posting any bond, for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof, including paragraphs 6, 7, 8, 9, and 10 hereof. In the event of a violation by Executive of paragraphs 6, 7, 8, 9, and 10 hereof, any severance being paid to Executive pursuant to this Agreement or otherwise shall immediately cease.

12. Choice of Law . All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Wisconsin, without giving effect to any choice of law or conflict of law rules or provisions that could cause the applications of the laws of any jurisdiction other than the State of Wisconsin. Each of the parties agrees that any dispute between the parties shall be resolved only in the courts of the State of Wisconsin or the United States District Court for the Eastern District of Wisconsin and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, each of the parties hereto irrevocably and unconditionally (a) submits in any proceeding relating to this Agreement or Executive’s employment by any member of the Company Group, or for the recognition and enforcement of any judgment in respect thereof (a “ Proceeding ”), to the exclusive jurisdiction of the courts of the State of Wisconsin, the court of the United States of America for the Eastern District of Wisconsin, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such Proceeding shall be heard and determined in such Wisconsin State court or, to the extent permitted by law, in such federal court, (b) consents that any such Proceeding may and shall be brought in such courts and waives any objection that Executive or the Company may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same, (c) WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR EXECUTIVE’S EMPLOYMENT BY THE COMPANY OR ANY MEMBER OF THE COMPANY GROUP, OR EXECUTIVE’S OR THE COMPANY GROUP’S PERFORMANCE UNDER, OR THE ENFORCEMENT OF, THIS AGREEMENT, (d) agrees that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at Executive’s or the Company’s address as provided in paragraph 20 hereof, and (e) agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the laws of the State of Wisconsin. Each party shall be responsible for its own legal fees incurred in connection with any dispute hereunder;

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provided that the Company shall reimburse Executive for the costs (including reasonable attorneys’ fees) incurred in connection with any such dispute if Executive prevails as a result of a final, non-appealable determination on the substantive claims that are involved in such dispute ; provided, however, that the Company shall have no obligations under this paragraph 12 if the Executive has breached, or is in breach of, paragraphs 6, 7, 8, 9, or 10 hereof.

13. Representation by Executive . Executive represents and warrants to the Company that he is not a party to any agreement containing a noncompetition provision or other restriction with respect to (i) the nature of any services or business which he is obligated or likely obligated to perform or conduct for the Company (or any other member of the Company Group) under this Agreement, or (ii) the disclosure or use of any information which directly or indirectly relates to the nature of the business of any member of the Company Group or the services to be rendered or likely to be rendered by Executive under this Agreement.

14. Complete Agreement . This Agreement shall embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof or thereof in any way.

15. Successor and Assigns . This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company and their respective successors, heirs and assigns. Executive hereby consents to the assignment of this Agreement to any of Company’s successors, assigns, or purchasers of its assets.

16. Amendment . This Agreement may be amended, and any provision hereof may be waived, at any time by written agreement between the Company (with the approval of the Board) and Executive.

17. Counterparts . This Agreement may be executed in one or more counterparts, all of which together shall constitute but one agreement.

18. No Waiver . No failure or delay on the part of the Company or Executive in enforcing or exercising any right or remedy hereunder shall operate as a waiver thereof.

19. Severability and Legal Construction . If any provision or clause of this Agreement, or portion thereof shall be held by any court or other tribunal of competent jurisdiction to be illegal, invalid, void, or unenforceable in such jurisdiction, all other provisions of this Agreement, other than those as to which it has been held invalid, illegal, void or unenforceable, shall nevertheless remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination that any provision, or the application of any such provision, is illegal, invalid, void, or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible. In the event the parties are unable to reach an agreement, any court or other tribunal shall have the authority to modify the Agreement so as to make it enforceable. Nothing in this Agreement is intended to nor shall be interpreted to impermissibly burden Executive’s ability to practice law, and the post-employment restrictions imposed on Executive under this Agreement are expressly limited in effect to the extent permissible under and consistent with Wisconsin Supreme Court Rule 20:5.6.

20. Notices . For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of

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delivery, if delivered by hand, (b) on the date of transmission, if delivered by confirmed facsimile or electronic mail, (c) on the first business day following the date of deposit, if delivered by guaranteed overnight delivery service, or (d) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

(a) If such notice is to the Company, to:

Jason Industries, Inc.
411 East Wisconsin Avenue, Suite 2100
Milwaukee, WI 53202
Attention: Chief Executive Officer

or at such other address as the Company, by notice to Executive, shall designate in writing from time to time.
(b) If such notice is to Executive, at Executive’s address as shown on the Company’s records, or at such other address as Executive, by notice to the Company, shall designate in writing from time to time.

21.
Section 409A . Notwithstanding any provision of this Agreement to the contrary:

(a) If and to the extent any payment or benefits under this Agreement are otherwise subject to the requirements of Code Section 409A, the intent of the parties is that such payment and benefits shall comply with Code Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted, and such payment and benefits shall be paid or provided under such other conditions determined by the Company that cause such payment and benefits, to be in compliance therewith. To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the parties hereto of the applicable provision without violating the provisions of Code Section 409A. The Company makes no representation that any or all of the payments or benefits provided under this Agreement will be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to any such payments or benefits. In no event whatsoever shall the Company Group be liable for any additional tax, interest or penalty that may be imposed on Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

(b) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following Executive’s termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

(c) Each severance payment payable to Executive under this Agreement shall be treated as a separate and distinct “payment” for purposes of Code Section 409A. Accordingly, any such payments that would otherwise be payable (i) within 2-1/2 months after the end of the Company’s taxable year containing Executive’s employment termination date, or (ii) within 2-½ months after Executive’s taxable year containing Executive’s employment termination date, whichever occurs later (the “Short Term Deferral Period”), are exempt from Code Section 409A. Furthermore, any such payments paid after the Short Term Deferral Period are exempt from Code Section 409A as severance pay due to an involuntary separation from service to the extent that the sum of those payments is equal to or less than the maximum amount described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) (the “Involuntary Separation

11


Amount”) because such payments are payable only upon Executive’s “involuntary” separation from service for purposes of Code Section 409A. Accordingly, the sum of (A) such payments that are paid within the Short Term Deferral Period and (B) such payments paid after the Short Term Deferral Period that do not exceed the Involuntary Separation Amount are exempt from Code Section 409A and, therefore, notwithstanding any provision of the Plan to the contrary, if Executive is a “specified employee” (as defined in Code Section 409A), only those payments that are not otherwise exempt from Code Section 409A under clause (A) and (B) above and that would otherwise have been payable in the first six (6) months following Executive’s termination of employment will not be paid to Executive until the date that is six months after the date of Executive’s termination of employment (or, if earlier, Executive’s date of death). Any such deferred payments will be paid in a lump sum on the first day after such six month delay; provided that no such actions shall reduce the amount of any payments otherwise payable to Executive under this Agreement. Thereafter, the remainder of any such payments shall be payable in accordance with Section 4(a) and 4(b), as applicable.

(d) All expenses or other reimbursements to Executive under this Agreement, if any, shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by Executive (provided that if any such reimbursements constitute taxable income to the Executive, such reimbursements shall be paid no later than March 15th of the calendar year following the calendar year in which the expenses to be reimbursed were incurred), and no such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year.

(e) Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

(f) In no event shall any payment under this Agreement that constitutes “deferred compensation” for purposes of Code Section 409A be offset by any other payment pursuant to this Agreement or otherwise.

(g) To the extent required under Code Section 409A, (i) any reference herein to the term “Agreement” shall mean this Agreement and any other plan, agreement, method, program, or other arrangement, with which this Agreement is required to be aggregated under Code Section 409A, and (ii) any reference herein to the term “Company” and “Company Group” shall mean the Company, the Company Group, and all persons with whom the Company and the Company Group would be considered a single employer under Code Section 414(b) or 414(c).

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


12


IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first written above.

JASON INDUSTRIES, INC.



/s/ Jeffry Quinn            
Name: Jeffry Quinn
Title: Chief Executive Officer



EXECUTIVE



/s/ Brian Kobylinski            
Brian Kobylinski





13


Exhibit A

GENERAL RELEASE

Release of Claims by Executive . I, Brian Kobylinski (“ Executive ”), in consideration of and subject to the performance by Jason Industries, Inc. (the “ Company ”) of its material obligations under the Employment Agreement, dated as of, 2016 (the “ Agreement ”), do hereby release and forever discharge as of the date hereof the Company and any present and former directors, officers, agents, representatives, employees, subsidiaries, successors and assigns of the Company and its direct or indirect owners (collectively, the “ Released Parties ”) to the extent provided below. The Released Parties are intended third-party beneficiaries of this General Release, and this General Release may be enforced by each of them in accordance with the terms hereof in respect of the rights granted to such Released Parties hereunder. Terms used herein but not otherwise defined shall have the meanings given to them in the Agreement.

1. I understand that any payments or benefits paid or granted to me under paragraph 4 of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled. I understand and agree that I will not receive the payments and benefits specified in paragraph 4 of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter or breach this General Release.

2. Except as provided in paragraph 3 below and except for the provisions of the Agreement which expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross claims, counter-claims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date that this General Release becomes effective and enforceable) and whether known or unknown, suspected, or claimed against the Company and/or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, ever had, now have, or hereafter may have, by reason of any matter, cause, or thing whatsoever, from the beginning of my initial dealings with the Company to the date of this General Release, and particularly, but without limitation of the foregoing general terms, any claims arising from or relating in any way to my employment relationship with Company, the terms and conditions of that employment relationship, and the termination of that employment relationship (including, but not limited to, any allegation, claim or violation, arising under: Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Civil Rights Act of 1866, as amended, the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Executive Order Programs; the Fair Labor Standards Act; or their state or local counterparts; or under any other federal, state or local civil or human rights law, or
under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses, including attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “ Claims ”). I understand and intend that this General Release constitutes a general release of all claims and that no reference herein to a specific form of claim, statute or type of relief is intended to limit the scope of this General Release. Notwithstanding anything contained in this General Release to the contrary, Claims shall not include (a) any claims I may have

Exhibit A Page 1


against the Released Parties for a failure to comply with, or a breach of, any provision of the Agreement, (b) any rights I may have to indemnification (i) as an officer, director or employee under the Articles of Incorporation or By-Laws of any of the Released Parties or (ii) pursuant to any insurance policies or contracts of any of the Released Parties, (c) any claims I may have against the Released Parties for vested benefits as of the date of the termination of my employment under any agreement, plan or program of any of the Released Parties, or (d) any right to continuation coverage under COBRA.

3. I agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in Employment Act of 1967 which arise after the date I execute this General Release. I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967).

4. In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state or local statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied. I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement. I further agree that in the event that I should bring a Claim seeking damages against the Company, or in the event that I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims to the maximum extent permitted by law. I further agree that I am not aware of any pending claim, or of any facts that could give rise to a claim, of the type described in paragraph 2 as of the execution of this General Release.

5. I agree that I will forfeit all amounts payable by the Company pursuant to the Agreement if I challenge the validity of this General Release. However, I understand that nothing in this Agreement prohibits or limits my right to challenge the validity of this Agreement under the Older Worker’s Benefit Protection Act (“OWBPA”).

6. I agree to reasonably cooperate with the Company in any internal investigation or administrative, regulatory, or judicial proceeding. I understand and agree that my cooperation may include, but not be limited to, making myself available to the Company upon reasonable
notice for interviews and factual investigations; appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process; volunteering to the Company pertinent information; and turning over to the Company all relevant documents which are in or may come into my possession all at times and on schedules that are reasonably consistent with my other permitted activities and commitments. I understand that in the event the Company asks for my cooperation in accordance with this provision, the Company will reimburse me for reasonable travel expenses, including transportation, lodging and meals, upon my submission of receipts, for any reasonable legal fees.

7. I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.

8. I agree that this General Release and the Agreement are confidential and agree not to disclose any information regarding the terms of this General Release or the Agreement, except to my immediate family and any tax, legal or other counsel that I have consulted regarding the meaning or effect hereof

Exhibit A Page 2


or as required by law, and I will instruct each of the foregoing not to disclose the same to anyone.

9. Any non-disclosure provision in this General Release does not prohibit or restrict me (or my attorney) from responding to any inquiry about this General Release or its underlying facts and circumstances by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), or any other self-regulatory organization or governmental entity.

10. Whenever possible, each provision of this General Release shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. This General Release constitutes the complete and entire agreement and understanding among the parties, and supersedes any and all prior or contemporaneous agreements, commitments, understandings or arrangements, whether written or oral, between or among any of the parties, in each case concerning the subject matter hereof.

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

1.
I HAVE READ IT CAREFULLY;

2.
I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED, THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990, AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

3.
I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

4.
I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

5.
I HAVE HAD AT LEAST [21][45] DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE TO CONSIDER IT AND THE CHANGES MADE SINCE MY FIRST RECEIPT OF THIS RELEASE ARE NOT MATERIAL OR WERE MADE AT MY REQUEST AND WILL NOT RESTART THE REQUIRED [21][45]-DAY PERIOD;

6.
I UNDERSTAND THAT I HAVE SEVEN (7) DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

7.
I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

8.
I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE

Exhibit A Page 3


OF THE COMPANY AND BY ME.


SIGNED:                               DATE:                              


Exhibit A Page 4


Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jeffry N. Quinn, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Jason Industries, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 9, 2016
 
/s/ Jeffry N. Quinn
 
 
Jeffry N. Quinn
Chief Executive Officer
(Principal Executive Officer)
 







Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Sarah C. Sutton, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Jason Industries, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 9, 2016
 
/s/ Sarah C. Sutton
 
 
Sarah C. Sutton
Chief Financial Officer
(Principal Financial and Accounting Officer)
 






Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Jason Industries, Inc. (the “Company”) on Form 10-Q, for the period ended April 1, 2016, as filed with the Securities and Exchange Commission (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 9, 2016
 
/s/ Jeffry N. Quinn
 
 
Jeffry N. Quinn
Chief Executive Officer
(Principal Executive Officer)
 

This certification accompanies this report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purpose of Section 18 of the Securities Exchange Act of 1934, as amended.





Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Jason Industries, Inc. (the “Company”) on Form 10-Q, for the period ended April 1 2016, as filed with the Securities and Exchange Commission (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of her knowledge:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 9, 2016
 
/s/ Sarah C. Sutton
 
 
Sarah C. Sutton
Chief Financial Officer
(Principal Financial and Accounting Officer)
 

This certification accompanies this report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purpose of Section 18 of the Securities Exchange Act of 1934, as amended.