<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
--------------------------------------------
OR
[ ] 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 0-27738
--------------------------------------------
THE JPM COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1702908
- ------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
155 North 15th Street, Lewisburg,PA 17837
- ------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
Registrants telephone number, including area code 570-524-8225
----------------------
- ------------------------------------------------------------------------
(Former address of principal executive offices) (ZIP Code)
Former name, former address and former fiscal year, 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 X No
------------------ ------------------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
At May 8, 2000, 7,373,166 shares of common stock, $.000067 par value,
were issued and outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
THE JPM COMPANY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited-in thousands, except per share amounts)
Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 40,634 $ 43,638 $ 86,053 $ 84,879
Cost of sales 35,802 35,834 73,872 69,995
----------- ----------- ----------- -----------
Gross profit 4,832 7,804 12,181 14,884
Selling, general and
administrative expenses 3,905 3,867 8,034 7,597
Plant shutdown expenses -- 178 -- 178
----------- ----------- ----------- ----------
Operating profit 927 3,759 4,147 7,109
Other income (expense)
Interest expense (1,503) (1,049) (2,935) (1,975)
Other, net 49 61 10 (92)
----------- ----------- ----------- -----------
(1,454) (988) (2,925) (2,067)
----------- ----------- ----------- -----------
Income (loss) before taxes and
minority interest (527) 2,771 1,222 5,042
Provision for income taxes (94) 1,029 565 1,810
----------- ----------- ----------- -----------
Income (loss) before minority interest (433) 1,742 657 3,232
Minority interest (53) (79) (113) (277)
----------- ----------- ----------- -----------
Net income (loss) $ (486) $ 1,663 $ 544 $ 2,955
=========== =========== =========== ===========
Basic earnings (loss) per share $ (0.07) $ 0.23 $ 0.07 $ 0.41
=========== =========== =========== ===========
Diluted earnings (loss) per share $ (0.07) $ 0.22 $ 0.07 $ 0.39
=========== =========== =========== ===========
Average number of shares
outstanding (Basic) 7,369,000 7,344,000 7,366,000 7,268,000
Average number of shares
outstanding (Diluted) 7,369,000 7,679,000 7,539,000 7,563,000
The accompanying notes are an integral part of these statements.
</TABLE>
Page-2
<PAGE>
<TABLE>
<CAPTION>
THE JPM COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET (in thousands, except per share information)
March 31, September 30,
2000 1999
----------------- -------------------
<S> <C> <C>
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,921 $ 969
Accounts receivable, net 25,008 21,755
Inventories, net 48,135 37,227
Other current assets 9,093 5,802
------------- --------------
Total current assets 84,157 65,753
Property, plant and equipment, net 30,897 31,164
Excess of cost over fair value of net assets acquired, net 24,076 24,773
Other assets 3,149 2,870
------------- --------------
$ 142,279 $ 124,560
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 863 $ 744
Notes payable 2,000 2,000
Accounts payable 20,533 18,375
Accrued expenses 7,285 4,753
Deferred income taxes 3,589 3,589
------------- --------------
Total current liabilities 34,270 29,461
Long-term debt 64,913 53,100
Other long-term liabilities 2,683 2,428
Minority interest 810 698
------------- --------------
102,676 85,687
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 10,000
shares authorized; none issued and outstanding - -
Common Stock, $.000067 par value,
40,000 shares authorized, issued
7,373 at March 31, 2000 and
7,364 at September 30, 1999 - -
Additional paid-in capital 20,390 20,373
Retained earnings 19,454 18,910
Accumulated other comprehensive loss (241) (410)
-------------- -----------
Total shareholders' equity 39,603 38,873
-------------- -----------
$ 142,279 $ 124,560
============== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
Page-3
<PAGE>
<TABLE>
<CAPTION>
THE JPM COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited-in thousands)
Six Months Ended
March 31, March 31,
2000 1999
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 544 $ 2,955
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,209 1,932
Foreign currency translation (gain) loss 377 24
Loss (gain) on sale of property, plant and equipment - (18)
Deferred taxes 209 1,142
Minority interest 112 277
Deferred compensation expense 46 99
Change in assets and liabilities,
net of effects from businesses acquired:
(Increase) decrease in accounts receivable (3,392) (1,298)
(Increase) decrease in inventories (10,948) (7,729)
(Increase) decrease in other assets (3,620) (856)
Increase (decrease) in accounts payable 3,214 7,697
Increase (decrease) in accrued expenses 2,486 161
Increase (decrease) in income taxes payable - 684
--------- ---------
Net cash provided by (used in) operating activities (8,763) 5,070
--------- ---------
Cash flows from investing activities:
Payments for businesses acquired, net of cash
acquired ($465 in 1999) - (5,827)
Capital expenditures (4,488) (5,641)
Proceeds from sale of property, plant and equipment 3,500 28
Deferred compensation plan contributions (46) (100)
--------- ---------
Net cash provided by (used in) investing
activities (1,034) (11,540)
--------- ---------
Cash flows from financing activities:
Net borrowings (repayments) under credit facilities 12,151 5,756
Principal payments on long-term debt (435) (282)
Proceeds from exercise of stock options 17 165
--------- ---------
Net cash provided by (used in) financing activities 11,733 5,639
--------- ---------
Net effect of changes in exchange rates on cash (984) (218)
--------- ---------
Increase (decrease) in cash 952 (1,049)
Cash at beginning of period 969 2,625
--------- ---------
Cash at end of period $ 1,921 $ 1,576
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
Page-4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share data)
Basis of Presentation
The accompanying consolidated financial statements have been prepared by
the Company without audit. In the opinion of management, the financial
statements include all of the adjustments necessary for fair presentation. All
adjustments made were of a normal recurring nature. Interim results are not
necessarily indicative of results for a full year. These financial statements
should be read in conjunction with the audited financial statements of the
Company and the notes thereto for the fiscal year ended September 30, 1999,
included in the Company's Form 10-K dated December 27, 1999.
Inventories
Inventories are valued at the lower of cost or market as determined on the
first-in, first-out basis. Cost includes raw materials, direct labor and
manufacturing overhead. The Company generally provides reserves for inventory
considered to be in excess of 12 months of future demand.
<TABLE>
March 31, September 30,
2000 1999
<S> <C> <C>
------------ ------------
Finished goods $ 11,010 $ 10,392
Work-in-process 5,684 5,134
Raw material and supplies 33,247 23,039
Valuation reserves (1,806) (1,338)
------------ ------------
$ 48,135 $ 37,227
============ ============
</TABLE>
Comprehensive Income
The components of accumulated other comprehensive income are as follows:
<TABLE>
March 31, September 30,
2000 1999
----------- ----------
<S> <C> <C>
Foreign currency translation adjustments $ (241) $(410)
---------- ----------
Accumulated other comprehensive loss $ (241) $ (410)
========== ==========
</TABLE>
The components of comprehensive income of the Company for the three and six
month periods ended March 31, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(in thousands) March 31, March 31, March 31, March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net income (loss) $ (486) $ 1,663 $ 544 $2,955
Other comprehensive income:
Foreign currency translation adjustments (367) (185) 169 (280)
--------- --------- -------- -------
Other comprehensive income (loss) (367) (185) 169 (280)
--------- --------- -------- -------
Comprehensive income (loss) $ (853) $ 1,478 $ 713 $2,675
======== ======== ======= =======
</TABLE>
Page-5
<PAGE>
Earnings Per Share Information
The difference between the basic average number of shares outstanding and
the diluted average number of shares outstanding is due to the treasury stock
method calculation of the impact of unexercised stock options granted under the
Company's stock option plans.
Financing Arrangements
The Company has a $70,000 bank revolving line of credit that expires in
April 2001 and provides for both short and long-term borrowing. The interest
rate on the line is an adjustable rate which varies between the bank's prime
lending rate plus 0% up to 2.25% or, at the Company's election, a LIBOR-based
rate plus 0.875% up to 3.5% measured on a sliding scale tied to the Company's
debt to annualized EBITDA ratio. Borrowings under the line of credit were
$59,819 at March 31, 2000. At December 31, 1999 and March 31, 2000, the Company
requested and received from its banks a waiver for its loan convenant that
measures EBITDA to total debt. At March 31, 2000, the Company also requested and
received from its banks a waiver for its loan covenant that measures fixed
charge coverage. As a result of higher borrowings and the waivers, the interest
rate on borrowings under the line of credit agreement increased by 1.0%
effective January 24, 2000, and will increase by up to an additional 0.5%
effective May 11, 2000, dependent upon the Company's debt to EBITDA ratio. In
addition to increased interest rates, the loan agreement has been amended to
modify certain covenants to reflect the Company's higher debt and lower
annualized EBITDA due to the Company's loss in the quarter ended March 31, 2000.
The loan agreement now includes mandatory principal repayments and line
availability reductions beginning in early fiscal 2001 based on an excess cash
flow calculation.
Recent Accounting Pronouncements
On June 15, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and if it is, the type
of hedge transaction. Management of the Company anticipates that due to its
limited use of derivative instruments, the adoption of SFAS 133 will not have a
significant effect on the Company's results of operations or its financial
position.
Reclassification
Certain prior year balances have been reclassified for comparative
purposes.
Page-6
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table presents, in thousands of dollars and as a percentage
of sales, certain selected consolidated financial data for the quarters ended
March 31, 2000 and 1999.
<TABLE>
March 31, Change March 31,
(in thousands of dollars) 2000 1999 in Dollars 2000 1999
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales............ $ 40,634 $ 43,638 $(3,004) 100.0% 100.0%
Cost of sales........ 35,802 35,834 (32) 88.1 82.1
-------------------------------------------------------
Gross profit......... 4,832 7,804 (2,972) 11.9 17.9
Selling, general and
administrative expenses. 3,905 3,867 38 9.6 8.9
Plant shutdown expense -- 178 (178) -- 0.4
-----------------------------------------------------
Operating profit 927 3,759 (2,832) 2.3 8.6
Interest expense........ (1,503) (1,049) (454) (3.7) (2.4)
Other income (expense).. 49 61 (12) 0.1 0.1
-----------------------------------------------------
Income (loss) before taxes
and minority interest.. (527) 2,771 (3,298) (1.3%) 6.3%
=======================================================
</TABLE>
Results of Operations
Net sales for the three months ended March 31, 2000 decreased by $3,004, or
6.9%, to $40,634 compared to the same period one year earlier. The decrease for
the three month period was primarily the result of decreased sales to the
Company's computer customers and plant capacity imbalances that have prevented
the Company from increasing new business at certain of its manufacturing
facilities. Net sales for the six months ended March 31, 2000 increased by
$1,174 or 1.4%, to $86,053 as compared to the first six months of fiscal 1999.
The increase was attributable to increased sales to customers in the
telecommunications market offset by reduced sales to customers in the computer
market. The amount of the Company's sales to its customers in the computer
market is directly affected by the timing of the introduction of new products by
the customers and the product life cycle of the customers' products.
Gross profit for the three and six months ended March 31, 2000, decreased
$2,972, or 38.1%, and $2,703, or 18.2%, respectively, when compared to the
corresponding periods one year earlier. Gross profit as a percentage of sales
for the three and six month periods decreased from 17.9% to 11.9% and from 17.5%
to 14.2%, respectively, when compared to the same periods a year earlier. The
decrease in gross profit as a percentage of sales was attributable to increased
demand at the Company's higher cost Canadian and United States operations and
available capacity at the Company's lower cost Mexican facilities. As a result
of the capacity imbalance, the Company incurred costs associated with product
transfer, hiring and training new employees, increased overtime and expedited
logistics expenses that had a negative impact on gross profit during the three
and six month periods.
Selling, general and administrative expenses ("SG&A") for the three months
ended March 31, 2000 increased by $38, or 1.0%, compared to the three months
ended March 31, 1999 despite the lower sales volume. SG&A for the six months
ended March 31, 2000 increased by $437, or 5.8%, compared to the same period in
1999. The increase in SG&A is due primarily to increased personnel costs. SG&A
for the three and six month periods ended March 31, 1999 excludes plant shutdown
expense of $178 related to the South Carolina manufacturing facility. SG&A as a
percentage of sales for the three and six month periods increased from 8.9% to
9.6% and from 9.0% to 9.3%, respectively, primarily due to lower absorption of
fixed SG&A costs.
Interest expense for the three and six month periods ended March 31, 2000
increased $454, or 43.3%, to $1,503 and $960, or 48.6%, to $2,935, respectively,
compared to the same fiscal 1999 periods. The increase is attributable to
borrowings related to increases in working capital and higher interest rates in
fiscal 2000.
Page-7
<PAGE>
The effective income tax rate was 46.2% for the six months ended March 31,
2000 compared with 35.9% for the six months ended March 31, 1999 due to the
lower amount of income before income taxes, the effect of non-deductible
expenses, primarily amortization of goodwill, and the effect of net operating
losses in certain locations.
The loss for the three months ending March 31, 2000 amounted to $486 and
net income was $544 for the six months ending March 31, 2000. The net income
decrease during the three and six month periods was primarily due to decreased
sales and margins as dicussed above. This compares to net income of $1,663 for
the three month period and net income of $2955 for the six month period one year
earlier. Diluted earnings per share for the current three and six month periods
decreased to ($0.07) and $0.07, in comparison to $0.22 and $0.39 for the three
and six month periods one year earlier.
Liquidity and Capital Resources
Operating activities during the first six months of fiscal 2000 utilized
cash in the amount of $8,763, primarily attributable to increases in accounts
receivable and inventories, as compared to cash provided in the amount of $5,070
during the same period one year earlier. Working capital at March 31, 2000 was
$49,887, an increase of $13,595 from September 30, 1999. During the first six
months of fiscal 2000, the Company had capital expenditures of $4,488, partially
funded by proceeds from the sale/leaseback of a building in Mexico.
Borrowings under the Company's $70,000 line of credit at March 31, 2000
were $59,819 at an average interest rate of 9.14%. Borrowings under the line
increased by $12,151 during the six months ended March 31, 2000 to fund
increased working capital levels.
At March 31, 2000, the Company requested and received from its banks a
waiver for its loan convenants that measures EBITDA to total debt and fixed
charge coverage. As a result of higher borrowings and the waiver, the interest
rate on borrowings under the line of credit agreement will increase by up to
0.5% effective May 11, 2000 dependent upon the Company's debt to EBITDA ratio.
The loan agreement has been amended to modify certain covenants to reflect lower
annualized EBITDA due to the loss for the quarter ended March 31, 2000 and the
Company's higher debt. The loan agreement now includes mandatory principal
repayments and line availability reductions commencing in early fiscal 2001
based on an excess cash flow calculation. The Company expects to meet the
revised covenants through April 1, 2001.
As the Company's bank line of credit facility matures April 2001, the
Company expects to commence discussions during the next three months to extend
or refinance the existing facility.
The Company believes cash flow from operations and funds available from its
bank line of credit will be sufficient to satisfy its working capital
requirements and capital expenditure needs for at least the next twelve months.
The Company could also be required to pay by September 30, 2000, contingent cash
consideration of up to $4.5 million pursuant to an earnout arrangement included
in the Antrum stock purchase agreement. The Company believes funds available
from its operations and working capital line of credit will be sufficient to
satisfy this obligation, if earned. However, depending upon its rate of growth,
acquisitions and profitability, the Company may require additional equity or
debt financing to meets its working capital requirements or capital expenditure
needs, including the possible need for additional manufacturing capacity.
Year 2000 Issue
The Year 2000 issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. Any of the
Company's computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions in operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
The Company implemented a Year 2000 project to identify, assess and
implement changes to information technology systems and operational systems and
to evaluate the Year 2000 readiness of key suppliers, customers and other
parties.
To date, the Company has not experienced any material Year 2000 compliance
problems and, to the Company's knowledge, none of its significant vendors,
service providers, or customers have suffered material problems related to Year
2000 compliance that the Company believes are likely to materially adversely
affect the Company.
Page-8
The Company incurred Year 2000 project costs of approximately $250 which
were funded through operating cash flow and its bank line of credit. The Company
does not expect to incur any significant additional costs relating to Year 2000
issues.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995.
This report may contain forward-looking statements that involve risks and
uncertainties. Among the important factors which could cause actual results to
differ materially from those in the forward-looking statements are the costs
related to the start-up of new business with new or existing customers, the
impact of competitive products and pricing, product demand, the presence of
competitors with greater financial resources, the availability of additional
sources of financing and commercialization risks, capacity and supply
constraints or difficulties, the results of financing efforts and other factors
detailed in the Company's filings with the Securities and Exchange Commission
including recent filings of Forms 10-K and 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes from the information concerning the
Company's "Market Risk" as previously reported in the Company's Annual Report on
Form 10-K for the year ended September 30, 1999.
Page-9
<PAGE>
PART II - OTHER INFORMATION
Item 1. N/A
Item 2. N/A
Item 3. Default Upon Senior Securities
At March 31, 2000, the Company requested and received from its
banks waivers for its loan convenants that measure EBITDA to total
debt and fixed charge coverage. The discussion in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" is incorporated herein
by reference.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Shareholders held on January
25, 2000, the following proposal was adopted by the vote specified
below:
Election of Directors For Withheld Authority
--------------------- --- ------------------
Bruce M. Eckert 6,333,435 23,800
James P. Mathias 6,326,435 30,800
Item 5. N/A
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Amended and Restated Articles of Incorporation of the Company
Amended and Restated Bylaws of the Company
Specimen Certification of Common Stock of the Company
Financial Data Schedule
Employment Agreement dated March 14, 2000 by and between
Dilip D. Chande and The JPM Company
(b) Reports on Form 8-K
On March 15, 2000, the Company filed a Current Report on Form 8-K
reporting the naming of Jack Fitzgibbons as its President and
Chief Operating Officer.
<PAGE>
SIGNATURES
Pursuant to 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.
THE JPM COMPANY
Registrant
Date: May 15, 2000 By:/s/ John H. Mathias
------------ ----------------------
John H. Mathias
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Date: May 15, 2000 By: /s/ William D. Baker
------------ ------------------------
William D. Baker
Vice President and Chief Financial Officer
(Principal Financial Officer)
<PAGE>
EXHIBIT INDEX
Exhibit numbers are in accordance with the
Exhibit Table in Item 601 of Regulation S-K
Exhibit No. Exhibit
Description
3.1.* Amended and Restated Articles of Incorporation of the Company
3.2.* Amended and Restated Bylaws of the Company
4.1.* Specimen Certification of Common Stock of the Company
27 Financial Data Schedule
99.1 Employment Agreement dated March 14, 2000 by and between Dilip D.
Chande and The JPM Company.
* Filed as part of the Company's Registration Statement filed on Form S-1 on
February 9, 1996 and declared effective April 30, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE JPM COMPANY AND SUBSIDIARIES AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 1,921
<SECURITIES> 0
<RECEIVABLES> 25,008
<ALLOWANCES> 418
<INVENTORY> 48,135
<CURRENT-ASSETS> 84,157
<PP&E> 30,897
<DEPRECIATION> 12,927
<TOTAL-ASSETS> 142,279
<CURRENT-LIABILITIES> 34,270
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 39,603
<TOTAL-LIABILITY-AND-EQUITY> 142,279
<SALES> 86,053
<TOTAL-REVENUES> 86,053
<CGS> 73,872
<TOTAL-COSTS> 73,872
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,935
<INCOME-PRETAX> 1,222
<INCOME-TAX> 565
<INCOME-CONTINUING> 544
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 544
<EPS-BASIC> .07
<EPS-DILUTED> .07
</TABLE>
EMPLOYMENT AGREEMENT
This Employment Agreement is made by and between The JPM Company, a Pennsylvania
corporation (EMPLOYER), and Dilip D. Chande, the undersigned individual
(EMPLOYEE).
RECITALS
EMPLOYER is engaged in the business of manufacturing wire and cable assemblies,
being referred to as the "Business."
The parties wish to provide for an employment arrangement under the terms and
conditions herein set forth.
I. Term of Employment. EMPLOYER hereby employs EMPLOYEE, and EMPLOYEE agrees to
be employed by EMPLOYER, under the terms and conditions set forth. The term of
EMPLOYEE's employment shall begin on the commencement date set forth in Section
XIV, and shall continue until terminated as set forth in Section IX.
II. Compensation. As full payment for all services rendered by EMPLOYEE under
this Agreement, EMPLOYEE agrees to accept, and shall, subject to the terms and
conditions set forth herein, receive compensation, as follows:
A. Direct Compensation. During the term of this Agreement, EMPLOYEE shall,
subject to the terms and conditions set forth herein, receive a base salary in
the amount of $120,000, payable in accordance with EMPLOYER's normal payroll
practice.
B. Fringe Benefits. EMPLOYEE will be entitled to participate in such fringe
benefit plans and financial incentive plans, in accordance with their terms, as
shall be made available from time to time by EMPLOYER in its discretion to its
EMPLOYEEs in EMPLOYEE's position.
C. Compensation Adjustment. The base salary, fringe benefits and any other
compensation are subject to review by EMPLOYER at any time in its discretion, at
which time EMPLOYER, in its sole discretion, may elect to adjust or modify same.
III. Deductions. EMPLOYER is authorized to deduct from the compensation of the
EMPLOYEE such sums as may be required to be deducted or withheld under the
provisions of any law now in effect or hereafter put into effect during the term
of this Agreement, or which are authorized by EMPLOYEE, including, but not
limited to, social security and income tax withholding.
IV. Duties. It is understood and agreed that EMPLOYEE will faithfully and
diligently serve EMPLOYER to the best of EMPLOYEE's ability in the position set
forth in Section 13, and EMPLOYEE further agrees to perform such duties and to
assume such additional responsibilities as may be assigned from time to time by
EMPLOYER. EMPLOYEE will devote full time, attention, loyalty and energies to the
performance of the duties as an EMPLOYEE of EMPLOYER.
V. Leave. EMPLOYEE shall be entitled to time off, with or without pay, in
accordance with the standard practices of EMPLOYER for individuals in EMPLOYEE's
position, which are subject to change. Such absences shall not be deemed to be a
termination of this Agreement.
VI. Proprietary Information. EMPLOYEE understands and acknowledges that in the
course of EMPLOYEE's employment with EMPLOYER, EMPLOYER will incur substantial
expenditures of time and money in providing EMPLOYEE with specialized
instruction and training, and will impart to EMPLOYEE, or EMPLOYEE will have
access to, certain proprietary and confidential information and knowledge
concerning EMPLOYER and its business (collectively called "Proprietary
Information"). As used herein, "Proprietary Information" shall be deemed to
include, without limitation, EMPLOYER's sales and marketing information and
techniques, business plans, financial data, Trade Secrets, pricing lists,
supplier lists and other confidential supplier data, customer lists and other
confidential customer data, and any other information or knowledge concerning
EMPLOYER and its business, whether or not in tangible form, that is of a
proprietary or confidential nature, or has been heretofore or is hereafter
treated as secret by EMPLOYER. As used herein, "Trade Secret(s)" shall mean the
whole or any portion or phase of any technical information, hardware, software,
designs or specifications, drawings, sketches, processes, procedures, formulae,
data, reports, computer programs, charts, improvements and any other technical
information or knowledge relating to the development, design and implementation
of EMPLOYER's projects, products and services.
The parties agree that it is of great importance to the success of EMPLOYER that
Proprietary Information be treated with great care and that improper disclosure
or use be prevented. EMPLOYEE, during the course of employment with EMPLOYER and
after the termination of such employment, shall maintain secrecy with regard to
such information and shall not, directly or indirectly, disclose, use or permit
the disclosure or use of any Proprietary Information received, acquired or
obtained during the course of employment, whether or not EMPLOYEE was the
creator or originator thereof, unless such disclosure or use is consented to in
advance in writing by EMPLOYER.
VII. Non-Competition. During the term of EMPLOYE's employment with the EMPLOYER
and for a period of two (2) years from the voluntary or involuntary termination
of EMPLOYEE's agreement with the EMPLOYER for any reason whatsoever, EMPLOYEE
will not directly or indirectly, own, manage, operate, control, be employed by,
perform services for, consult with, solicit business for, participate in, or be
connected with the ownership, management, operation, or control of any business
which performs the services materially similar to or competitive with those
provided by the EMPLOYER in any location where the EMPLOYER has had an office or
has sold products or provided services to customers during the period EMPLOYEE
is employed by the EMPLOYER.
During the term of EMPLOYEE's employment with the EMPLOYER for a period of two
(2) years from the voluntary or involuntary termination of EMPLOYEE's employment
with the EMPLOYER for any reason whatsoever, EMPLOYEE shall not either on his
own account or for any person, firm, partnership, corporation, or other entity
solicit, interfere with, or endeavor to cause any EMPLOYEE of the EMPLOYER to
leave his or her employment, or induce or attempt to induce, any such EMPLOYEE
to breach his or her employment agreement with the EMPLOYER.
VIII. Remedies. It is recognized that damages in the event of breach of Sections
VI and VII of this Agreement by EMPLOYEE would be difficult, if not impossible,
to ascertain, and it is therefore agreed that in the event of a breach or
threatened breach of Sections VI or VII, EMPLOYER shall be entitled to an
injunction against such breach, without prejudice to any other remedies
available to EMPLOYER.
The provisions set forth in the paragraphs under Section VI and VII are intended
by the parties to be separate and divisible. If any covenant or provision in
this paragraph is found by a court of competent jurisdiction to be unreasonable
in duration, geographical scope or character of restrictions, the covenant or
agreement shall not be rendered unenforceable thereby, but rather the duration,
geographical scope or character of restrictions of such covenant or agreement
shall be deemed reduced or modified with retroactive effect to render such
covenant or agreement reasonable and such covenant shall be enforced as thus
modified. If the court having jurisdiction will not review the covenant or
agreement, then the parties shall mutually agree to a revision having an effect
as close as permitted by law to the provisions declared unenforceable. EMPLOYEE
further agrees that in the event a court having jurisdiction determines, despite
the express intent of the EMPLOYEE, that any portion of the restrictive
covenants in this Section VI and VII are not enforceable, the remaining
provisions shall be valid and enforceable.
IX. Termination. This Agreement shall terminate in the event Section IX becomes
operative:
A. Resignation as full-time EMPLOYEE. EMPLOYEE, at any time, may choose to
resign as a full-time EMPLOYEE.
B. Death or disability. Upon the death or disability of EMPLOYEE, this Agreement
shall terminate. For purpose of this Agreement, the term "disability" shall mean
the determination by Employer that Employee is unable to perform substantially
all of the duties that were being performed for Employer prior to such
determination, and the continuation of such inability for a consecutive period
in excess of three (3) months following such determination (unbroken by return
to work for an aggregate period in excess of thirty (30) days).
C. Involuntary Termination. EMPLOYER may terminate this Agreement without cause.
D. Compensation Payable upon Termination. In the event of termination of this
Agreement by EMPLOYER for any reason set forth hereinabove (in subparagraphs B
or C) other than death of the EMPLOYEE, EMPLOYEE shall be entitled to receive
termination pay equal to six months of the annual salary then in effect, payable
in six monthly installments, PROVIDED, however, that any salary paid during a
period of disability preceding termination shall be credited toward the payments
due hereunder.
E. Termination for Cause. EMPLOYER may terminate this Agreement immediately for
cause, including without limitation, fraud, misrepresentation, theft or
embezzlement of the Company's assets, intentional violations of law or company
policies, or a breach of this Agreement. In the event of termination for cause,
no severance pay shall be due EMPLOYEE.
F. Return of Documents. Upon termination of employment for any reason, all
documents, writings, or any other such material produced or received in the
course of employment shall be returned to EMPLOYER.
X. Corporate Policies. EMPLOYEE shall be subject to EMPLOYER's corporate
policies applicable to EMPLOYEE's generally, as amended from time to time,
except to the extent that any provision of this Agreement is expressly contrary
thereto.
XI. Special Conditions. In addition to the conditions set forth above, the
following special conditions shall apply to EMPLOYEE:
A. Relocation. EMPLOYEE shall receive relocation benefits as provided in
EMPLOYE's benefit plan.
B. Stock Options. EMPLOYEE will receive 20,000 stock options pursuant to the
Employee Stock Option Plan of 1995 and subject to the terms thereof.
C. Signing Bonus. EMPLOYEE shall receive, as additional compensation, a single
payment of $20,000.00 within six weeks of the commencement of employment. In the
event EMPLOYEE resigns his position with EMPLOYER within one year of his
employment date, the signing bonus shall be repaid to EMPLOYER.
D. Deferred Compensation. EMPLOYEE shall be eligible to participate in the
Non-Qualified Deferred Compensation Plan. Company will deposit 7.5% of
EMPLOYEE's annual salary, in quarterly increments, into EMPLOYEE's account under
the terms of the plan. Employee may additionally contribute up to 25% of his
salary to the plan.
E. Life Insurance. EMPLOYEE shall be eligible for participation in EMPLOYER's
life insurance coverage, as then in effect pursuant to EMPLOYER's policies. At
the current time, that coverage provides life insurance in an amount up to 1-1/2
times the EMPLOYEE's annual salary, to a maximum of $100,000.
F. Bonus. EMPLOYEE will be eligible for participation in EMPLOYER's Performance
Sharing Plan, as in effect during the period of EMPLOYEE's employment. As of the
date of employment, EMPLOYEE's eligibility would be for a bonus target of 10%
with a maximum eligibility of 30% his annual salary.
G. Company Vehicle. EMPLOYEE shall be provided with a company car comparable to
a Mercury Sable or equivalent for his business use. All reasonable expenses of
maintenance and operation will be paid by the company. The EMPLOYEE shall be
responsible for fuel charges for personal use of the vehicle
XII. Miscellaneous. The waiver by either party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party. The obligations undertaken by EMPLOYEE shall
not be assigned or delegated except as may be specifically provided herein. The
rights and obligations of the EMPLOYER hereunder shall be binding upon, and
inure to the benefit of, its successors and assigns. The laws of the
Commonwealth of Pennsylvania shall apply and bind the parties in any and all
questions arising hereunder. The provisions of Sections VI and VII shall survive
any termination of this Agreement.
XIII. Final Expression of Agreement. This writing represents the entire
agreements and understandings of the EMPLOYEE and EMPLOYER with respect to
subject matter hereof and supersedes all prior agreements and understandings of
the EMPLOYEE and EMPLOYER in connection therewith; except as otherwise provided
herein, it may not be altered or amended except by mutual agreement evidenced by
a writing signed by both EMPLOYEE and EMPLOYER and specifically identified as an
amendment to this Agreement.
EMPLOYEE EXPRESSLY ACKNOWLEDGES THAT EMPLOYEE HAS BEEN GIVEN THE OPPORTUNITY
PRIOR TO ENTERING THIS AGREEMENT TO CONSULT WITH EMPLOYEE'S OWN COUNSEL
REGARDING EMPLOYEE'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THIS AGREEMENT AND
THAT EMPLOYEE EITHER HAS DONE SO OR HAS ELECTED NOT TO CONSULT WITH SUCH
COUNSEL.
XIV. Specific Data. Full name of EMPLOYEE: Dilip D. Chande Position: Operations
Director - JPM Pantera Commencement Date: May 5, 1999
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed this ___14th______day of ____March______, 2000.
The JPM Company
/s/ Dilip D. Chande By: /s/ Wayne A. Bromfield
- ------------------------------------- ----------------------------------
Name: Wayne A. Bromfiled
Title: Executive Vice President
General Counsel & Secretary
Witness: Attest:
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