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                                                                    Exhibit 10.3

                               NASHUA CORPORATION

                            MANAGEMENT INCENTIVE PLAN

1.     PURPOSE

       The purposes of the Management Incentive Plan ("MIP" or the "Plan") for
       Nashua Corporation (the "Company") are as follows:

       (a)      to attract and retain the best possible management talent;

       (b)      to permit management of the Company to share in its profits;

       (c)      to promote the success of the Company; and

       (d)      to link management rewards closely to individual and Company
                performance.


2.     DEFINITIONS

       (a)      "Code" means the Internal Revenue Code of 1986, as amended.


       (b)      "Committee" means the Leadership and Compensation Committee of
                the Company's Board of Directors.


       (c)      "Company" means Nashua Corporation.


       (d)      "Division Budgeted Performance" means the budgeted financial
                performance of each division of Nashua Corporation as approved
                by the Board of Directors.

       (e)      "MIP" means the Management Incentive Plan of the Company.

       (f)      "Participant" means any employee of the Company or any of its
                subsidiaries who has been designated as a Participant in the
                Plan in accordance with Article 3.

       (g)      "Performance Objectives" means one or more pre-established
                performance objectives.

       (h)      "Plan" means the Management Incentive Plan for Nashua
                Corporation.

       (i)      "Plan Year" means the fiscal year of the Company.

       (j)      "Total Company Budgeted Performance" means the budgeted
                financial performance of all of Nashua Corporation and its
                divisions during the Company's fiscal year as approved by the
                Board of Directors.
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3.     PARTICIPATION

       Participation in the Plan is limited to key managers of the Company who
       have been recommended as Participants by the Officers of the Company and
       approved by the Committee. Participants may include, but are not limited
       to: Corporate Staff and Division Officers of the Company, non-officer
       General Managers and key functional Directors and Managers. The
       recommendation list is reviewed and approved by the Committee at the
       beginning of each Plan Year. Any changes to the list of Participants
       during any Plan Year will be recommended by the Chief Executive Officer
       and approved by the Committee.

4.     ANNUAL BONUS OPPORTUNITY

       Participants may have the opportunity to earn an annual variable bonus.

       (a)      Target Bonus

                The Target Bonus for each Participant is established each Plan
                Year. Bonuses will be capped based on award level at a maximum
                of 190% of target bonus at 150% of annual pre-tax budgeted
                income before Management Incentive Plan expense.

       (b)      Bonus Payout

                (i)   A Participant's annual bonus payout is based on the
                      overall Company's performance and the business unit
                      performance where appropriate.

                (ii)  Bonus payouts will be determined based on the following
                      schedule:

                      -    BONUS AT TARGET. The bonus award of an individual
                           will meet the "target" level ranging from 30% to 50%
                           of base salary, if the Division Budget Performance is
                           achieved for his/her division and/or if Total Company
                           Budget Performance is achieved.

                      -    BONUS BELOW TARGET. In the event of below budget
                           performance, the threshold for a payout is 80% of the
                           Total Company Budget Performance. In the event that
                           corporate performance is 79% or lower than budgeted
                           pretax income before management incentive plan
                           expense, no employee of either the corporate office
                           or of any division will receive an income based
                           bonus. For pretax income before Management Incentive
                           Plan expense performance between 80% and 100%,
                           bonuses will be paid at 50% and 100%, respectively,
                           with interpolation in between.


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                      -    BONUS ABOVE TARGET. In the event of performance
                           above the Total Company Budgeted Performance or above
                           Divisional Budgeted Performance, a higher percentage
                           of incremental pretax income before Management
                           Incentive Plan expense will fund the bonus award pool
                           based on award level. Bonus will not exceed 190% of
                           the bonus at target and maximum bonus is achieved for
                           150% of budgeted pre-tax income.

                (iii) The Committee may, in its sole discretion, make required
                      adjustments to the Plan.

                (iv)  No bonuses for a Plan Year shall be paid to Participant
                      unless the Minimum Thresholds set by the Committee for
                      such Plan Year is met.

       (c)      Bonus Determination in Cases of Leave of Absence

                (i)   If a Participant is on a Company approved leave of absence
                      (including, without limitation, leaves of absence covered
                      by the Family and Medical Leave Act) for less than three
                      months during the Plan Year, then the employee will
                      continue to participate in this Plan for that Plan Year;
                      provided that the Committee may, in its sole discretion,
                      decrease the potential bonus under this Plan on a prorated
                      basis.

                (ii)  If a Participant is on a non-Company approved leave of
                      absence or is on a Company approved leave of absence for
                      more than three months, then the Participant is not
                      eligible to receive awards under this Plan, unless
                      approved by the Committee.

       (d)      Bonus Determination in Cases of Termination

                (i)   Participants whose employment terminated prior to the end
                      of the Plan Year for any reasons other than death,
                      disability, or retirement are not eligible to receive
                      awards under this Plan, unless approved by the Committee.

                (ii)  Participants whose employment terminates after the end of
                      the Plan Year, but before payment of the award, are not
                      eligible to receive the awards under this Plan unless
                      approved by the Committee.

5.     TIMING OF PAYMENT OF BONUSES

       (a)      Current Payment

                Except as provided in Section 5(b), the bonus allocated by the
                Committee for each Participant shall be paid in cash and in full
                as soon as may be conveniently possible after such allocation by
                the Board and certification by the Committee of the Company's
                achievement of the relevant Performance Objectives, but not
                later than two and one-half months from the last day of the Plan
                Year to which such bonus relates.


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6.     PLAN ADMINISTRATION

       (a)      General Administration

                The Committee will administer the Plan, and will interpret the
                provisions of the Plan. The interpretation and application of
                these terms by the Committee shall be binding and conclusive.
                The Committee's authority will include, but is not limited to:

                (i)   Selecting of Participants

                (ii)  Establishing and modifying Performance Objectives.

                (iii) The determination of performance results and bonus awards.

                (iv)  Exceptions to the provisions of the Plan made in good
                      faith and for the benefit of the Company.

       (b)      Adjustments for Extraordinary Events

                If an event occurs during a Plan Year that materially influences
                the performance measures of the Company and is deemed by the
                Committee to be extraordinary and out of the control of
                management, the Committee may, in its sole discretion, increase
                or decrease the Performance Objectives used to determine the
                annual bonus payout. Events warranting such action may include,
                but are not limited to, changes in accounting, tax or regulatory
                rulings and significant changes in economic conditions resulting
                in windfall gains or losses.

       (c)      Amendment, Suspension, or Termination of the Plan

                The Committee may amend, suspend or terminate the Plan, in whole
                or in part, at any time, if, in the sole judgment of the
                Committee, such action is in the best interests of the Company.
                Notwithstanding the above, any such amendment, suspension or
                termination must be prospective in that it may not deprive
                Participants of that which they otherwise would have received
                under the Plan for the Plan Year had the Plan not been amended,
                suspended or terminated. The Company reserves the right to
                amend, modify, or repeal the Plan at any time without prior
                written notice to Participants.

7.     MISCELLANEOUS PROVISIONS

       (a)      Effective Date

                The effective date of the Plan is January 1, 2005.


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       (b)      Titles

                Section and Article titles are provided herein for convenience
                only and are not to serve as a basis for interpretation or
                construction of the Plan.

       (c)      Employment Not Guaranteed

                Nothing contained in the Plan nor any action taken in the
                administration of the Plan shall be construed as a contract of
                employment or as giving a Participant any right to be retained
                in the service of the Company.

       (d)      Validity

                In the event that any provision of the Plan is held to be
                invalid, void or unenforceable, the same shall not effect, in
                any respect whatsoever, the validity of any other provision of
                the Plan.

       (e)      Withholding Tax

                The Company shall withhold from all benefits due under the Plan
                an amount sufficient to satisfy any federal, state and local tax
                withholding requirements.

       (f)      Applicable Law

                The Plan shall be governed in accordance with the laws of the
                State of New Hampshire.


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