<PAGE>
 
                              EMPLOYMENT AGREEMENT
                              --------------------

                  THIS AGREEMENT is made this 12th day of March, 1996, by and
between THE JPM COMPANY, a Pennsylvania Business Corporation (hereinafter
"Corporation");
                                      -AND-

                  WILLIAM D. BAKER, an individual, residing at 2 Mill
Park Lane, Lewisburg, Pennsylvania 17837 (hereinafter "Employee").

                                    RECITALS
                                    --------

                  Corporation has heretofore employed Employee to render
services on behalf of Corporation. Corporation desires to continue to so employ
Employee on an exclusive basis pursuant to the provisions of this Agreement and
Employee desires to so continue his employment pursuant to the terms hereof.

                  NOW, THEREFORE, in consideration of the mutual promises
contained herein, and intending to be legally bound thereby, the parties hereto
agree as follows:

                  1. Purpose of Agreement. The purpose of this Agreement is to
                     --------------------
define the employment relationship between Corporation 
<PAGE>
 
and Employee. Corporation hereby engages Employee, and Employee hereby accepts
employment, upon the terms and conditions hereinafter set forth.
<PAGE>
 
                  2. Duties. Employee agrees perform services in the capacity of
                     ------
Chief Financial Officer on a full-time basis solely as an employee of
Corporation and, except as otherwise provided in Paragraph 3 of this Agreement,
shall devote his entire working time to the affairs of Corporation.

                  3. Performance. Employee agrees to devote all necessary time
                     -----------
and his best efforts in the performance of his duties for Corporation in
accordance with the highest ethical standards of his occupation and to perform
such other duties as are assigned to him from time to time by the Board of
Directors of Corporation (hereinafter "Board"). The expenditure of reasonable
amounts of time for teaching, or outside business or charitable activities, is
permitted provided such activities do not materially interfere with the services
to be rendered as an employee of Corporation hereunder.

                  4. Entitlement to Compensation. Corporation shall be entitled
                     ---------------------------
to all income earned on behalf of Corporation by Employee in the performance of
his duties for Corporation (except for the salary and discretionary bonuses
referred to in Paragraphs 6(a) and 6(b) respectively). In addition, any fees or
other honoraria received by Employee for services or other business activities
performed by Employee shall belong to Corpo-


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<PAGE>
 
ration; provided, however, Employee shall be permitted to retain all income
received from activities which are not related to the business of Corporation.

                  5. Term. The term of this Agreement shall begin on January 24,
                     ----
1996, and shall continue until terminated as hereinafter provided. 

                  6. Compensation; Fringe Benefits; Working Facilities.
                     -------------------------------------------------

                     a.  Corporation agrees to pay Employee an annual salary
         which shall be paid at such times and in such increments as determined
         by Corporation (but not less frequently than monthly). As of the date
         of this Agreement, Employee's annual salary is ONE HUNDRED THOUSAND and
         00/100 ($100,000.00) DOLLARS. The Board shall review Employee's salary
         from time to time; the annual salary may be adjusted in the future by
         the mutual agreement of the parties without the need to formally amend
         this Agreement.

                     b.  As further compensation, Employee shall be entitled to
         receive any discretionary bonuses authorized and declared by the Board,
         which bonuses shall be in addition to any incentive compensation
         arrangement approved by the Board for its executive employees as


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<PAGE>
 
         such arrangement may be modified from time to time in the future,
         payable at such times and in such amounts as the Board may determine.

                     c.  All compensation paid to Employee shall be subject to
         the customary withholding taxes and other employment taxes as required
         with respect to compensation paid by Corporation to an employee.

                     d.  Corporation agrees to provide Employee with
         hospitalization and major medical insurance, disability income
         insurance and group life insurance during the term of this Agreement.
         The specific coverage provided by each of these insurances shall be as
         determined by Corporation from time to time.

                     e.  Employee shall also be eligible to participate in
         Corporation's other fringe benefit plans, both presently existing and
         those which may in the future be adopted, in accordance with the terms
         and provisions of such plans.

                     f.  Employee shall be provided with an office, books,
         stenographic and technical help, and such other facilities, equipment,
         supplies and services



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<PAGE>
 
         suitable to his position and adequate for the performance of his
         duties.

                  7. Prohibition Against Competition by Employee. Without the
                     -------------------------------------------
prior written consent of the Board, Employee shall not, while employed by
Corporation, directly or indirectly render services which would be competitive
with or adverse to Corporation. In this regard, Employee agrees:

                           a. Not to call on or solicit, on behalf of himself or
         on behalf of any other person or entity, any of the customers of
         Corporation for the purpose of selling or distributing to any of said
         customers any product comparable to or competitive with products sold
         and distributed by Corporation during the period of time Employee was
         employed by Corporation ("Corporation's Products"); nor will Employee
         in any way, directly or indirectly, for himself, or on behalf of any
         other person or entity, solicit, divert or take away any customer of
         Corporation. For purposes of this Paragraph 7, "customer" shall mean
         any person or entity which has purchased any of Corporation's Products,
         or has received a price quotation from Corporation for any 




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<PAGE>
 
         of Corporation's Products, at any time within the preceding three (3)
         year period.

                           b. Not to, on behalf of himself or any other person
         or entity, directly or indirectly, as an employee, agent, independent
         contractor, owner, stockholder, partner, officer, director, or
         otherwise, engage in the business of selling or distributing
         Corporation's Products.

                           c. Not to enter or attempt to enter into an
         employment or agency relationship with any person or entity who, at the
         time of such entry (or attempted entry), is or previously had been an
         officer, director, employee, principal or agent of Corporation.

                           d. Not to induce or attempt to induce any person
         described in subparagraph (c) to leave his or her employment, agency,
         directorship or office with Corporation.

                  8. Restrictive Covenant. For the two (2) year period
                     --------------------
immediately following the termination of Employee's employment with Corporation,
regardless of the reason for such termination, Employee agrees not to engage in
any of the following prohibited competitive conduct:




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                           a. Not to call on or solicit, on behalf of himself,
         or on behalf of any other person or entity, any of the customers of
         Corporation, or any other person or entity, for the purpose of selling
         or distributing to any said customer, person or entity any product
         comparable to or competitive with products sold and distributed by
         Corporation, or about to be, or intended by Corporation to be, so sold
         and distributed, and for which, at the time of Employee's termination
         of employment, any one (1) of the following four (4) circumstances
         exists:

             i.    Corporation is then selling and distributing such product
                   pursuant to a contract with a customer; or
                   
            ii.    A price quotation for such product has been given to
                   a customer, or to a person or other entity not
                   previously a customer, and to which quotation a
                   response has not yet been received; or
                   
           iii.    A price quotation for such product has been requested
                   by a customer, or by a person or other entity not
                   previously a customer, but which quotation has not
                   yet been issued by Corporation; or
                   
            iv.    Information has been received by Corporation that a
                   customer, or a person or other entity not previously
                   a customer, intends to request a price quotation from
                   Corporation regrading such product.



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<PAGE>
 
         For purposes of this Paragraph 8, (i) "customer" shall mean any person
         or entity which has purchased any of Corporation's Products, or has
         received a price quotation from Corporation for any of Corporation's
         Products, at any time within the three (3) year period preceding the
         termination of Employee's employment with Corporation; and (ii)
         "Corporation's Products" shall have the identical meaning as defined in
         Paragraph 7 of this Agreement.

                           b. Not to induce or attempt to induce any officer,
         director, employee, principal or agent of Corporation to leave his or
         her employment, agency, directorship or office with Corporation.

                           It is understood by and between the parties to this
Agreement that the aforesaid covenant set forth in this Paragraph 8 is an
essential element of this Agreement and that, but for the agreement of Employee
to comply with such covenant, Corporation would not have agreed to the terms of
employment set forth in this Agreement. Such covenant by Employee shall be
construed as an agreement independent of any other provision in this Agreement.
The existence of any claim or cause or action of Employee against Corporation,
whether predicated on this Agree-



                                      -8-
<PAGE>
 
ment or otherwise, shall not constitute a defense to the enforcement by
Corporation of such covenant.

                           In addition to all other legal remedies available to
Corporation for enforcement of the covenants of this Paragraph 8, the parties
agree that Corporation shall be entitled to an injunction by any court of
competent jurisdiction to prevent or restrain any breach or threatened breach
thereof.

                           It is further understood and agreed by and between
the parties to this Agreement that, if any portion of the restrictive covenant
set forth in this Paragraph 8 is held to be unreasonable, arbitrary or against
public policy, then such portion of such covenant shall be considered divisible
both as to time and as to the scope of the enumerated prohibited competitive
activities. The parties to this Agreement agree that, if any court of competent
jurisdiction determines the specified time period or the specified prohibited
competitive activities or the definition of Corporation's Products or customers
in such covenant to be unreasonable, arbitrary or against public policy, then a
lesser time period and/or a more restricted definition of the prohibited
competitive activities and/or a less encompassing definition of Corporation's
Products or customers which are determined to be reasonable, nonarbitrary and
not against public 



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<PAGE>
 
policy may be enforced against Employee. The parties to this Agreement agree and
acknowledge that they are familiar with the present and proposed operations of
Corporation and believe that the restrictive covenant set forth in this
Paragraph 8 is reasonable in all respects.

                           It is understood and agreed by the parties that this
restrictive covenant shall survive the termination of this Agreement.

                       9.  Trade Secrets. Employee hereby recognizes,
                           -------------
acknowledges and agrees that Corporation is the owner of proprietary rights in
certain systems, methods, programs, processes, compilations of technical and
nontechnical information, records and other things of value relating to the
development and operation of Corporation's manufacturing business. Employee
agrees that all of the foregoing constitute valuable trade secrets of
Corporation and are disclosed to Employee in strictest confidence throughout the
course of his employment. Employee hereby further agrees as follows:

                           a. Except as required in the course of his employment
         by Corporation, Employee will not duplicate, remove, transfer, disclose
         or utilize, nor allow any other person to duplicate, remove, transfer,
         disclose 

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<PAGE>
 
         or utilize, any property, assets, trade secrets or other things of
         value, including, but not limited to, records, techniques, procedures,
         systems, methods, advertising and promotional materials, lists of past,
         present or prospective customers, and data prepared for, stored in,
         processed by or obtained from an automated information system belonging
         to or in the possession of Corporation which are not intended for and
         have not been the subject of public disclosure. Employee will safeguard
         all trade secrets at all times so that they are not exposed to, or
         taken by, unauthorized persons and agrees to exercise his best efforts
         to assure their safekeeping.

                           b. That all improvements, discoveries, systems,
         techniques, ideas, processes, programs and other things of value,
         whether or not patentable, made or conceived in whole or in part by
         Employee while an employee of Corporation shall be and remain the sole
         and exclusive property of Corporation, and Employee will disclose all
         such things of value to Corporation and will cooperate with Corporation
         to insure that the ownership by Corporation of such things of value is



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<PAGE>
 
         protected. In the event of termination of his employment, all of the
         property and other things of value of Corporation in Employee's
         possession or control, including Employee's personal notes and
         reproductions relating to the business and trade secrets of
         Corporation, shall be immediately delivered to Corporation.

                           c. That the restrictions contained in this Paragraph
         9 shall be effective during the duration of Employee's employment by
         Corporation and at all times thereafter. Employee hereby acknowledges
         and agrees that the breach by Employee of any of the provisions of this
         Agreement will cause Corporation irreparable injury and damage.
         Employee expressly agrees that Corporation shall be entitled, in
         addition to all other remedies available to it, to injunctive and
         equitable relief to prevent a breach or a continuation of an existing
         breach of this Agreement, or any part of it, and to secure its
         enforcement.

                           d. The foregoing Paragraph 9 is intended to supersede
         in its entirety the document entitled "Security of Confidentiality and
         Proprietary Customer Information" heretofore signed by Employee.



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<PAGE>
 
                  10. Vacations and Sick Pay. Employee shall be entitled to
                      ----------------------
periodic vacations, holidays and additional leaves of absence, including absence
from work due to illness. The amount of time which Employee may utilize for such
vacations and additional leaves of absence shall be determined in accordance
with Corporation's policies in effect from time to time.

                  11. Expenses. Employee shall be reimbursed for all reasonable
                      --------
expenses incurred in carrying out his employment duties or in otherwise
promoting the business of Corporation by presenting to the designated officer of
Corporation an itemized expense account report with receipts attached.

                  12. Termination of Agreement.
                      ------------------------

                      a.  This Agreement may be terminated at any time by the
         mutual written consent of Corporation and Employee.

                      b.  This Agreement may be terminated by Employee upon at
         least thirty (30) days written notice to Corporation.

                      c.  This Agreement may be terminated, with or without
         cause, by Corporation upon at least thirty (30) days written notice to
         Employee.



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<PAGE>
 
                      d.  This Agreement shall automatically terminate on the
         death of Employee.

                      e.  This Agreement may be terminated immediately due
         to any conduct of Employee which is specifically identified in
         Corporation's then-current Employee Handbook as being grounds for
         immediate termination.

                13.   Severance Pay.
                      -------------

                      a.  In the event this Agreement is terminated by
         Corporation, and except as otherwise provided in subparagraph (b)
         hereof, Employee shall be entitled to severance pay in an amount equal
         to six (6) months of Employee's salary in effect as of the date of
         termination, which amount shall be payable either in equal monthly
         installments or in a lump sum, as determined by the Board. If paid in
         monthly installments, the payments shall be made on the same day of
         each month as salary payments had been made to Employee. If paid in a
         lump sum, the payment shall be made within thirty (30) days after the
         effective date of termination.

                      b.  In the event of a sale of majority control of
         Corporation, and if such sale is followed by the termination of
         Employee's employment, within six 



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         (6) months of the effective date of such sale, Employee shall be
         entitled to severance pay in an amount equal to six (6) months of
         Employee's salary in effect as of the date of termination, which amount
         shall be payable either in equal monthly installments or in a lump sum,
         as determined by the Board. If paid in monthly installments, the
         payments shall be made on the same day of each month as salary payments
         had been made to Employee. If paid in a lump sum, the payment shall be
         made within thirty (30) days after the effective date of termination.
         Such severance payment shall be in lieu of the severance pay provided
         for in subparagraph (a) hereof.

                14.  Files and Records. All personal and regular files and
                     -----------------
records concerning customers of Corporation, including, with-out limitation,
customers consulted by Employee during the term of this Agreement shall at all
times belong to and remain the property of Corporation.

                15.  Notices and Addresses. Any notices provided for in this
                     ---------------------
Agreement, or permitted to be given, made or accepted by any party to any other,
must be in writing and may be given to the party to be notified or be served by
depositing the same in 



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<PAGE>
 
the United States mail, addressed to the party to be notified, postage prepaid
and registered or certified, with return receipt requested, or by delivering the
same in person to such party. Notice deposited in the mail in the manner herein
above described shall be effective only if and when received by the parties to
be notified. For purposes of notice, the addresses of the parties shall, until
changed as hereinafter provided, be as follows:

If to Corporation:         THE JPM COMPANY
-----------------          Route 15
                           Lewisburg, Pennsylvania 17837


If to Employee:            WILLIAM D. BAKER
--------------             2 Mill Park Lane
                           Lewisburg, Pennsylvania 17837


or to such other addresses as any party may have advised the others in writing.

              16.  Parties Bound. Except as otherwise specifically provided
                   -------------
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors and assigns.



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<PAGE>
 
               17.  Pennsylvania Law to Apply. This Agreement shall be construed
                    -------------------------
under and in accordance with the laws of the Commonwealth of Pennsylvania.

               18.  Legal Construction. In the event any one or more of the
                    ------------------
provisions contained in this Agreement shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision thereof and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.

               19.  Amendment. No amendment, modification or alteration of the
                    ---------
terms hereof shall be binding unless the same be in writing, dated subsequent to
the date hereof and duly executed by the parties hereto.

               20.  Waiver of Default. No waiver by the parties hereto of any
                    -----------------
default or breach of any term, condition or covenant of this Agreement shall be
deemed to be a waiver of any other breach of the same or any other term,
condition or covenant contained herein.




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<PAGE>
 
                  IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have executed this Agreement the date and year first
above-written.

                                         CORPORATION:
                                         -----------

ATTEST:                                  THE JPM COMPANY


  /s/ Dara C. Leeser                     By:  /s/ John H. Mathias
---------------------------------           ----------------------------------
               Secretary                      John H. Mathias, Chairman
                                              and Chief Executive Officer




WITNESS:                                 EMPLOYEE:


  /s/Dara C. Leeser                            /s/ William D. Baker         
---------------------------------           ----------------------------------
[SEAL]                                                              
                                         WILLIAM D. BAKER

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