<PAGE>

                                                                    EXHIBIT 10.5

                               NASHUA CORPORATION

                           Restricted Stock Agreement
                                  Granted Under
                       2004 Value Creation Incentive Plan

      This Restricted Stock Agreement (this "Agreement") is made this 1st day of
September 2006 (the "Grant Date"), between NASHUA CORPORATION, a Massachusetts
corporation (the "Company"), and WILLIAM TODD MCKEOWN (the "Participant").

      For valuable consideration, receipt of which is acknowledged, the parties
hereto agree as follows:

      1. Grant and Issuance of Shares.

      The Company shall issue to the Participant, and the Participant shall
acquire and accept from the Company, subject to the terms and conditions set
forth in this Agreement and in the Company's 2004 Value Creation Incentive Plan
(the "Plan"), 15,000 shares (the "Shares") of common stock, par value $1.00 per
share, of the Company ("Common Stock"). The Company shall issue to the
Participant one or more certificates in the name of the Participant for that
number of Shares issued to the Participant. The Participant agrees that the
Shares shall be subject to (without limitation) the forfeiture provisions set
forth in Section 2 of this Agreement and the restrictions on transfer set forth
in Section 4 of this Agreement. The Participant agrees to the provisions set
forth herein and acknowledges that each such provision is a material condition
to the Company's agreement to grant the Shares to the Participant.

      2. Forfeiture of Unvested Shares.

            (a) Notwithstanding any other provision of this Agreement, upon the
earlier of (i) the termination of the Participant's employment with the Company
for any reason or no reason, with or without cause, or upon death or disability,
and (ii) the third anniversary of the Grant Date, all Unvested Shares (as
defined below) shall, without further action of any kind by the Company, be
forfeited to the Company as of the date of such termination of employment.

      "Unvested Shares" at any time means the total number of Shares multiplied
by the Applicable Percentage at such time. The "Applicable Percentage" shall, at
any time, be 100% less the following applicable percentage, if any:

      (i) 33% if the average of the last reported sales price per share of the
Common Stock on the NASDAQ Global Market (or other national securities exchange
or nationally recognized trading system) for a 40 consecutive trading day period
ending on the third anniversary of the Grant Date (the "40-Day Average Closing
Price") is equal to or greater than $13.00 and less than $14.00;

      (ii) 66% if the 40-Day Average Closing Price is equal to or greater than
$14.00 and less than $15.00; and

      (iii) 100% if the 40-Day Average Closing Price is equal to or greater than
$15.00;
<PAGE>

provided, however, that in the event the Participant's employment with the
Company is terminated by the Company without "Cause" during the one-year period
beginning on the second anniversary of the Grant Date and ending on the third
anniversary of the Grant Date, then in the event one of the 40-Day Average
Closing Price targets is thereafter met as of the third anniversary of the Grant
Date, the Participant's Shares shall vest as to a percentage of such Shares
equal to the number of days during such one-year period that the Participant was
employed by the Company divided by 365, provided that in no such event shall the
number of Shares to so vest exceed the number that would have otherwise vested
had the Participant been employed as of such third anniversary of the Grant
Date.

            (b) For purposes of this Agreement, employment with the Company
shall include employment with a parent or subsidiary of the Company.

            (c) For the purposes hereof, "Cause" shall mean (i) the
Participant's continued failure to perform his reasonably assigned duties (other
than any such failure resulting from incapacity due to physical or mental
illness), which failure is not cured within 60 days after written notice for
substantial performance is received by the Participant from the Board which
identifies the manner in which the Board believes the Participant has not
substantially performed the Participant's duties, (ii) the Participant being
convicted of a felony, or (iii) the Participant's engagement in illegal conduct
or gross misconduct injurious to the Company.

      3. Forfeiture Procedures.

            (a) In the event any Shares are forfeited by the Participant
pursuant to Section 2(a) above, the Participant (or the Participant's estate)
shall, pursuant to the provisions of the Joint Escrow Instructions referred to
in Section 5 below, tender to the Company at its principal offices the
certificate or certificates representing the Shares so forfeited, duly endorsed
in blank or with duly endorsed stock powers attached thereto, all in form
suitable for the transfer of such Shares to the Company.

            (b) After the time at which any Shares are required to be delivered
to the Company for transfer to the Company pursuant to Section 3(a) above, the
Company shall not pay any dividend to the Participant on account of such Shares
or permit the Participant to exercise any of the privileges or rights of a
stockholder with respect to such Shares, but shall, in so far as permitted by
law, treat the Company as the owner of such Shares.

      4. Restrictions on Transfer. The Participant shall not sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively "transfer") any Shares, or any interest therein, that
are subject to the forfeiture provisions under Sections 2 and 3 above, except
that the Participant may transfer such Shares (i) to or for the benefit of any
spouse, children, parents, uncles, aunts, siblings, grandchildren and any other
relatives approved by the Board of Directors (collectively, "Approved
Relatives") or to a trust established solely for the benefit of the Participant
and/or Approved Relatives, provided that such Shares shall remain subject to
this Agreement (including without limitation the restrictions on transfer set
forth in this Section 4 and the forfeiture provisions set forth in Sections 2
and 3 above) and such permitted transferee shall, as a condition to such
transfer, deliver to the Company a written instrument confirming that such
transferee shall be bound by all of the terms and conditions of

                                      -2-
<PAGE>

this Agreement or (ii) as part of the sale of all or substantially all of the
shares of capital stock of the Company (including pursuant to a merger or
consolidation), provided that, in accordance with the Plan, the securities or
other property received by the Participant in connection with such transaction
shall remain subject to this Agreement.

      5. Escrow.

      The Participant shall, upon the execution of this Agreement, execute Joint
Escrow Instructions in the form attached to this Agreement as Exhibit A. The
Joint Escrow Instructions shall be delivered to the Secretary/Clerk of the
Company, as escrow agent thereunder. The Participant shall deliver to such
escrow agent a stock assignment duly endorsed in blank, in the form attached to
this Agreement as Exhibit B, and hereby instructs the Company to deliver to such
escrow agent, on behalf of the Participant, the certificate(s) evidencing the
Shares issued hereunder. Such materials shall be held by such escrow agent
pursuant to the terms of such Joint Escrow Instructions.

      6. Restrictive Legends.

      All certificates representing Shares shall have affixed thereto legends in
substantially the following form, in addition to any other legends that may be
required under federal or state securities laws:

            "The shares of stock represented by this certificate are subject to
            restrictions on transfer and an option to purchase set forth in a
            certain Restricted Stock Agreement between the corporation and the
            registered owner of these shares (or owner's predecessor in
            interest), and such Agreement is available for inspection without
            charge at the office of the Clerk/Secretary of the corporation."

      7. Provisions of the Plan.

            (a) This Agreement is subject to the provisions of the Plan, a copy
of which is furnished to the Participant with this Agreement.

            (b) As provided in the Plan, upon the occurrence of a Reorganization
Event (as defined in the Plan), the repurchase and other rights of the Company
hereunder shall inure to the benefit of the Company's successor and shall apply
to the cash, securities or other property which the Shares were converted into
or exchanged for pursuant to such Reorganization Event in the same manner and to
the same extent as they applied to the Shares under this Agreement. If, in
connection with a Reorganization Event, a portion of the cash, securities and/or
other property received upon the conversion or exchange of the Shares is to be
placed into escrow to secure indemnification or similar obligations, the mix
between the vested and unvested portion of such cash, securities and/or other
property that is placed into escrow shall be the same as the mix between the
vested and unvested portion of such cash, securities and/or other property that
is not subject to escrow.

                                      -3-
<PAGE>

      8. Withholding Taxes; Section 83(b) Election.

            (a) The Participant acknowledges and agrees that the Company has the
right to deduct from payments of any kind otherwise due to the Participant any
federal, state or local taxes of any kind required by law to be withheld with
respect to the issuance of the Shares to the Participant or the lapse of the
forfeiture provisions provided for herein.

            (b) The Participant has reviewed with the Participant's own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Participant
is relying solely on such advisors and not on any statements or representations
of the Company or any of its agents. The Participant understands that the
Participant (and not the Company) shall be responsible for the Participant's own
tax liability that may arise as a result of this investment or the transactions
contemplated by this Agreement. The Participant understands that the Participant
may elect to be taxed at the time the Shares are acquired rather than when and
as the forfeiture provisions provided for herein expire by filing an election
under Section 83(b) of the Code with the I.R.S. within 30 days from the date of
purchase.

            THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO
MAKE THIS FILING ON THE PARTICIPANT'S BEHALF.

      9. Miscellaneous.

            (a) No Rights to Employment. The Participant acknowledges and agrees
that the vesting of the Shares under this Agreement is earned only by continuing
service as an employee at the will of the Company (not through the act of being
hired or being issued Shares hereunder). The Participant further acknowledges
and agrees that the transactions contemplated hereunder and the vesting schedule
set forth herein do not constitute an express or implied promise of continued
engagement as an employee or consultant for the vesting period, for any period,
or at all.

            (b) Assignment. The Company shall have the right to assign this
Agreement, or any portions thereof, including its rights with respect to the
forfeiture of Shares pursuant to Sections 2 and 3 above, to any person or
persons.

            (c) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, and each other provision of this
Agreement shall be severable and enforceable to the extent permitted by law.

            (d) Waiver. Any provision for the benefit of the Company contained
in this Agreement may be waived, either generally or in any particular instance,
by the Board of Directors of the Company.

                                      -4-
<PAGE>

            (e) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Company and the Participant and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 4 of this
Agreement.

            (f) Notice. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or five days after
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party hereto at the address shown
beneath his or its respective signature to this Agreement, or at such other
address or addresses as either party shall designate to the other in accordance
with this Section 9(f).

            (g) Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.

            (h) Entire Agreement. This Agreement and the Plan constitute the
entire agreement between the parties, and supersedes all prior agreements and
understandings, relating to the subject matter of this Agreement.

            (i) Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Participant.

            (j) Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the internal laws of the Commonwealth of
Massachusetts without regard to any applicable conflicts of laws.

            (k) Participant's Acknowledgments. The Participant acknowledges that
he or she: (i) has read this Agreement; (ii) understands the terms and
consequences of this Agreement; and (iii) is fully aware of the legal and
binding effect of this Agreement.

                  [Remainder of Page Intentionally Left Blank]

                                      -5-
<PAGE>

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

                                   NASHUA CORPORATION

                                   By: /s/ John L. Patenaude
                                       ------------------------------
                                   Name:  John L. Patenaude
                                   Title: Vice President-Finance, Chief
                                          Financial Officer and Treasurer

                                   Address: 11 Trafalgar Square, Second Floor
                                            Nashua, NH 03063

                                   PARTICIPANT

                                   /s/ William Todd McKeown
                                   ----------------------------------
                                   William Todd McKeown
                                   Address: 2408 Comstock Court
                                            Naperville, IL  60564

                                      -6-
<PAGE>

                                                                       Exhibit A

                               NASHUA CORPORATION
                        11 TRAFALGAR SQUARE, SECOND FLOOR
                                NASHUA, NH 03063

                            Joint Escrow Instructions

                              _______________, 2006

Clerk/Secretary
Nashua Corporation
11 Trafalgar Square, Second Floor
Nashua, NH 03063

Dear ____________:

      As Escrow Agent for Nashua Corporation, a Massachusetts corporation, and
its successors in interest under the Restricted Stock Agreement (the
"Agreement") of even date herewith, to which a copy of these Joint Escrow
Instructions is attached (the "Company"), and the undersigned person ("Holder"),
you are hereby authorized and directed to hold the documents delivered to you
pursuant to the terms of the Agreement in accordance with the following
instructions:

      1. Appointment. Holder irrevocably authorizes the Company to deposit with
you any certificates evidencing Shares (as defined in the Agreement) to be held
by you hereunder and any additions and substitutions to said Shares. For
purposes of these Joint Escrow Instructions, "Shares" shall be deemed to include
any additional or substitute property. Holder does hereby irrevocably constitute
and appoint you as his attorney-in-fact and agent for the term of this escrow to
execute with respect to such Shares all documents necessary or appropriate to
make such Shares negotiable and to complete any transaction herein contemplated.
Subject to the provisions of this paragraph 1 and the terms of the Agreement,
Holder shall exercise all rights and privileges of a stockholder of the Company
while the Shares are held by you.

      2. Forfeiture.

            (a) Upon any forfeiture of the Shares pursuant to the Agreement, the
Company shall give to Holder and you a written notice specifying (i) the event
of forfeiture, as determined pursuant to the Agreement, (ii) the time for the
closing hereunder (the "Closing"), and (iii) the number of Shares being
forfeited pursuant to the terms of the Agreement. Holder and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.

            (b) At the Closing, you are directed (i) to date the stock
assignment form or forms necessary for the transfer of the Shares, (ii) to fill
in on such form or forms the number of

<PAGE>

Joint Escrow Instructions
_______________, 2006
Page 2 of 4

Shares being transferred, and (iii) to deliver same, together with the
certificate or certificates evidencing the Shares to be transferred, to the
Company.

      3. Withdrawal. The Holder shall have the right to withdraw from this
escrow any Shares as to which the forfeiture provisions of Sections 2 and 3 of
the Agreement have terminated or expired.

      4. Duties of Escrow Agent.

            (a) Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.

            (b) You shall be obligated only for the performance of such duties
as are specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by you
to be genuine and to have been signed or presented by the proper party or
parties. You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact of Holder while acting in good
faith and in the exercise of your own good judgment, and any act done or omitted
by you pursuant to the advice of your own attorneys shall be conclusive evidence
of such good faith.

            (c) You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or Company,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person,
firm or Company by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.

            (d) You shall not be liable in any respect on account of the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.

            (e) You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder and may rely upon the advice of such counsel.

            (f) Your rights and responsibilities as Escrow Agent hereunder shall
terminate if (i) you cease to be Secretary of the Company or (ii) you resign by
written notice to each party. In the event of a termination under clause (i),
your successor as Clerk/Secretary shall become Escrow Agent hereunder; in the
event of a termination under clause (ii), the Company shall appoint a successor
Escrow Agent hereunder.

<PAGE>

Joint Escrow Instructions
_______________, 2006
Page 3 of 4

            (g) If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

            (h) It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such dispute shall have been settled either by mutual written agreement of
the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

            (i) These Joint Escrow Instructions set forth your sole duties with
respect to any and all matters pertinent hereto and no implied duties or
obligations shall be read into these Joint Escrow Instructions against you.

            (j) The Company shall indemnify you and hold you harmless against
any and all damages, losses, liabilities, costs, and expenses, including
attorneys' fees and disbursements, for anything done or omitted to be done by
you as Escrow Agent in connection with this Agreement or the performance of your
duties hereunder, except such as shall result from your gross negligence or
willful misconduct.

      5. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days' advance written notice to each of the other parties
hereto.

            COMPANY:       Notices to the Company shall be sent to the
                           address set forth in the salutation hereto, Attn:
                           President

            HOLDER:        Notices to Holder shall be sent to the address
                           set forth below Holder's signature below.

            ESCROW AGENT:  Notices to the Escrow Agent shall be sent to the
                           address set forth in the salutation hereto.

      6. Miscellaneous.

            (a) By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions, and you do not
become a party to the Agreement.

<PAGE>

Joint Escrow Instructions
_______________, 2006
Page 4 of 4

      (b) This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.

                                    Very truly yours,

                                    NASHUA CORPORATION

                                    By:________________________________
                                    Name:
                                    Title:

                                    HOLDER:

                                    ___________________________________
                                               (Signature)

                                    ___________________________________
                                               Print Name

                                    Address:

                                    Date Signed:______________________

ESCROW AGENT:
_____________________________

<PAGE>

                                                                       Exhibit B

                  (STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto Nashua Corporation
____________ (_________) shares of Common Stock, par value $1.00 per share, of
Nashua Corporation (the "Corporation") standing in my name on the books of the
Corporation represented by Certificate(s) Number
________________________________ herewith, and do hereby irrevocably constitute
and appoint Nashua Corporation attorney to transfer the said stock on the books
of the Corporation with full power of substitution in the premises.

Dated:______________________                  _________________________________

Dated:______________________                  IN PRESENCE OF:

                                              _________________________________