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                                                                   EXHIBIT 10.16





                                     NASHUA

                            MANAGEMENT INCENTIVE PLAN

                                  PLAN DOCUMENT









                                                                      MARCH 1999



                                                                   
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MANAGEMENT INCENTIVE PLAN                                          PLAN DOCUMENT


PURPOSE

The purpose of Nashua Corporation's Management Incentive Plan ("Plan") is:

1. To link senior management cash compensation to the financial performance of
   the organization.

2. To motivate and reinforce the following behaviors among senior managers:

   * Effective goal-setting tied to key strategic priorities, 
   * Accountability for goal achievement.

3. To provide a means for making awards that qualify for the performance-based 
   compensation exception described at Section 162(m) of the Internal Revenue
   Code (the "Code").


PLAN OPERATION

The Management Incentive Plan provides cash incentive payments based upon
achievement of corporate and/or divisional financial performance goals and
achievement of personal goals by Plan Participants, as described below.

1. Salary Administration

   For positions covered by the Management Incentive Plan, salary levels are
   established such that, when combined with target incentive opportunities
   (expressed as a percent of base salary), target total cash compensation is
   both competitive with comparable companies and equitable within the
   internal organization.

   The following definitions apply:

   BASE SALARY                       The annualized regular cash compensation of
                                     a Participant, excluding incentive 
                                     payments, company contributions to employee
                                     benefit plans, relocation, or other 
                                     compensation not designated as salary. The 
                                     base salary is the basis for regular 
                                     paychecks.



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MANAGEMENT INCENTIVE PLAN                                          PLAN DOCUMENT

1. Salary Administration (continued)

   TARGET INCENTIVE                  That amount (described as a percentage of a
                                     Participant's base salary) that will be 
                                     paid as an incentive if the target 
                                     financial performance goals and personal 
                                     goals are fully (100%) achieved.

   TARGET TOTAL CASH COMPENSATION    The assigned compensation level for each 
                                     Participant, based on market data and 
                                     internal equity considerations. Comprised 
                                     of base salary and target incentive amount.

   Target Incentive opportunities range from 10% to 50% of base salary for
   Participants depending, in part, upon the management level and unit size of 
   the participants.


2. Weighting of Goals

   Each year specific weighting among corporate and division financial
objectives and strategic and personal objectives will be established based on
the business objectives for the year.

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MANAGEMENT INCENTIVE PLAN                                          PLAN DOCUMENT


3. Financial Performance Goals

   Prior to the beginning of the Plan Year, financial performance goals are
   developed by Senior Management and reviewed by the Compensation and
   Leadership Committee of the Board of Directors. Financial performance may
   be defined using any of the standard financial metrics (e.g., Sales,
   Income, Cash Flow), and will be determined each year. Two levels of
   financial performance are defined each year, as follows:

   TARGET      The budgeted financial goal which represents a realistically
               attainable level of corporate or divisional financial performance
               for the year.

   THRESHOLD   A level of achievement against the budgeted financial goal, set
               below target and representing the minimum level of performance
               which is required in order to pay the financial-based portion of
               an employee's incentive.


4. Personal Goals

   Each Plan participant is assigned a limited number (i.e., 2 - 3) of
   objective pre-established Personal Goals which are typically based upon the
   strategic plans for the business. These personal goals are compensable
   under the Plan.

   As with financial performance goals, a threshold level of personal goal
   achievement is established each year, below which no payout for each
   personal objective will be made. For example, if the threshold for a
   manager's personal objective achievement is 80%, the manager will receive
   no payout related to that goal if she achieves only 50% of that objective.

5. Plan Funding

   The budgeted incentive pool equals the sum of the Target Incentives of all
   eligible Participants company-wide. The pool is funded each year depending
   upon the financial and personal goal performance of the Plan participants,
   and upon the threshold levels set for that year.



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MANAGEMENT INCENTIVE PLAN                                          PLAN DOCUMENT


6. Distributions to Participants

   The component of incentive payment tied to financial goals is paid out in
   direct relationship to the financial performance if the business unit
   achieves its threshold. Payout for above-target financial performance is
   not capped.

   The personal goals payout component is paid in relation to the proportion
   of personal goal achievement if the Participant's actual results for the
   plan year meet the personal goal threshold. The payout for the personal
   goals component of the incentive is capped at 100%.




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MANAGEMENT INCENTIVE PLAN                                          PLAN DOCUMENT


7. Timing

   Payments from the Plan will be made as soon as practicable after the end of
   the Plan Year, but no later than April 1 of the following year. Incentive
   payments are made in a single lump-sum payment and are subject to applicable 
   withholding and other taxes as prescribed by local law.


PARTICIPATION

Plan Participants are senior managers and other key employees whose
responsibilities and accomplishments can be directly tied to significant
short-term business goals.

In order to be eligible for an incentive payment, a participant must have been
employed in a Plan-eligible position(s) for at least six consecutive months of
the Plan Year. For a participant who serves in a Plan-eligible position(s) for
less than a full year, the incentive payment may be pro-rated based on the
number of months, including partial months, the individual was a participant
during the Plan Year.

In all cases, the Incentive Compensation Committee (the CEO, the Chief Financial
Officer, and the Vice President of Human Resources) reserves the authority to
exercise its discretion in determining incentive payments. However, the
following guidelines have been provided as a starting point for making decisions
regarding incentive eligibility in cases of new hires, employment terminations,
periods of disability or leave, and transfers into, out of, and between
Plan-eligible positions during the Plan Year.


1. New Hires and Transfers into Eligible Positions when Employee Serves at Least
   Six Consecutive Months in the Position

   A non-participant hired, transferred, promoted, or re-assigned into an
   eligible position during the Plan Year will be considered for an Incentive
   Payment on a pro-rated basis, provided that the employee is employed for at
   least six consecutive months of the Plan Year.


2. New Hires into Eligible Positions when Employee Serves Less Than Six 
   Consecutive Months in the Position

   When offers are made to candidates for Plan-eligible positions, and the
   employee will serve in the position for less than six consecutive months in
   the current Plan Year, the offer may include a guaranteed cash compensation


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MANAGEMENT INCENTIVE PLAN                                          PLAN DOCUMENT


   amount in addition to the base salary, to compensate for the missed
   opportunity in the first (partial) year. This amount should be no more than
   the target incentive for which the employee would have been eligible in that 
   year, pro-rated by the number of months employed; and is to be paid at the 
   same time incentives are paid in the following year. The employee will be 
   integrated into the Plan in the full Plan Year following his/her hire date.


3. Transfers into Ineligible Positions

   An employee transferred from an eligible position into a non-eligible
   position may be considered for a pro-rated incentive payment, provided that
   the employee has served at least six months in an eligible position(s) during
   the Plan Year. Any incentive payment will be based on the base salary while 
   the employee was a Plan participant.

   In these cases, an adjustment to base salary may be required in order to
   achieve the appropriate salary level for the new (non-Plan) position. (For
   example, the base salary may be increased to reach a reasonable
   market-based pay rate if there is no longer the possibility of an incentive
   payment.) When the adjustment required is a positive one, it may be made
   retroactively in cases where the transfer occurs before the employee
   reaches the six-month minimum service required for an incentive payment.


4. Transfers from One Plan-Eligible Position to Another

   In the event that a participant transfers from one incentive eligible
   position to another before the completion of the Plan Year, an assessment
   will be made to determine the relative impact of goal achievement in each
   position on the final incentive payment. Typically, the participant will be
   paid a pro-rated share of the incentive payment amount for each position.
   However, the Incentive Compensation Committee has discretion to determine
   otherwise if the duration of service in either of the Plan-eligible positions
   is considered too short a period in which to achieve results against the 
   stated goals. In either event, the participant's incentive payment will 
   reflect the full twelve months of participation.

   In the case of a current Participant moving from one Target Incentive level
   to another, an adjustment to base salary may be required in order to achieve 
   the appropriate Target Total Cash Compensation level.


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MANAGEMENT INCENTIVE PLAN                                          PLAN DOCUMENT


5. Terminations

   All Incentive Payments under the Plan will be forfeited for participants
   whose employment is terminated for any reason other than normal or early
   retirement under the provisions of the Company's retirement plan, death or
   disability during the Plan Year, unless determined otherwise by the Incentive
   Compensation Committee.

   If a Plan participant is employed on the last day of the Plan Year, but
   terminates employment prior to the date of the incentive payment, the
   Incentive Compensation Committee shall retain discretion over whether a
   payment is made to that participant.


6. Disability, Leaves of Absence, and Sabbaticals

   Even if an employee meets the requirement of six or more consecutive months
   in a Plan-eligible position, the employee must have rendered services for a
   minimum of three consecutive months in any Plan Year when attendance is
   interrupted by a period of disability, a leave of absence, or a sabbatical in
   order for any incentive to be paid (including that amount based on corporate 
   and division/geography results).

   If the employee meets the requirement of three consecutive months of
   rendering services, the incentive payment would typically be pro-rated based 
   on the number of months in the Plan Year that the employee was present and 
   fully performing the job. Assessment of performance against personal goals 
   will be based on the amount of time the employee was actually rendering 
   services.


7. Pro-rating

   For a participant who serves in a Plan-eligible position(s) for less than a
   full year, the pro rata share of the incentive payment shall equal the
   number of months, including partial months, the individual was rendering
   services in a Plan-eligible position during the Plan Year divided by twelve, 
   times the Incentive Payment amount (based on results achieved).


EFFECT ON TAXES

Payments made under this Plan will be included in total wages in the year paid,
and are thus considered taxable income in that year.


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MANAGEMENT INCENTIVE PLAN                                          PLAN DOCUMENT


EFFECT ON BENEFITS

Regular Management Incentive Plan payments are included in covered wages for
purposes of the 401(k) and pension plans.

TERMS AND CONDITIONS

1. The Plan shall be approved by the Board of Directors and administered by
   the Incentive Compensation Committee (the "Committee"). The Committee shall
   have authority, consistent with the Plan, to establish Plan periods during
   which awards may be established and earned under the Plan, to determine the
   size and terms of the awards to be made to each Plan Participant, to
   determine the time when awards will be made, to prescribe the form of
   payment for awards under the Plan, to adopt, amend and rescind rules and
   regulations for the administration of the Plan and for its own acts and
   proceedings, and to decide all questions and settle all controversies and
   disputes which may arise in connection with the Plan. All decisions,
   determinations and interpretations of the Committee shall be binding upon
   all parties concerned.

   The terms of an award, once fixed, shall preclude future Committee
   discretion with respect to the amount or timing of payments of the award,
   except that (i) no payment of an award shall be made unless and until the
   Committee certifies in writing that the performance goals specified in the
   award have been satisfied; (ii) the Committee may retain the discretion to
   reduce payments; (iii) the Committee may permit the deferral of payments that
   have been earned under an award provided such deferral is consistent with 
   Section 162 of the Code and (iv) the Committee may retain such other 
   discretion as is consistent with the qualification of the award under Section
   162(m).

2. Corporate Performance results are determined at the end of the fiscal year
   when audited data is available. Adjustments may be made in order to minimize 
   the potential distortion of performance measurements resulting from major 
   unplanned/uncontrollable events, such as a major unbudgeted acquisition, 
   non-operating gains or losses or extraordinary operating items, or other 
   events or conditions during the year affecting financial performance, so long
   as such adjustments are made without the involvement of the CEO, and are in 
   conformity with Section 162(m) of the Internal Revenue Code. Such adjustments
   may be made when it is judged that the Corporation would have been unable to 
   anticipate said event(s) during the corporate goal setting process.

3. The Management Incentive Plan does not, directly or indirectly, create in
   any employee or class of employees any right with respect to continuation


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MANAGEMENT INCENTIVE PLAN                                          PLAN DOCUMENT


   of employment by the Company, and it shall not be deemed to interfere in any
   way with the Company's right to terminate, or otherwise modify, an employee's
   employment at any time. No employee shall have a right to be selected as a
   Participant for any year nor, having been selected a Participant in the Plan
   for one year, to be a Participant in any other year. Neither the Plan nor any
   award thereunder shall be an element of damages in any claim based upon
   discharge in violation of a contract unless the contract in question shall be
   in writing and shall make specific reference to this section and this
   sentence, overriding the same; nor shall this Plan or any rights thereto be
   regarded as an element of damages for wrongful discharge in any other context
   except to the extent that rights shall have accrued hereunder as of the date
   of discharge.

4. The provisions of the Plan and the grant of any incentive payment shall
   inure to the benefit of all successors of each Participant, including without
   limitation such Participant's estate and the executors, administrators or 
   trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy
   or representative of creditors of such Participant.

5. The Plan may be amended or terminated at any time, and shall continue in
   effect until so terminated; provided however that no amendment or termination
   of the Plan shall adversely affect any right of any Plan Participant with 
   respect to any incentive payment theretofore made without such Plan 
   Participant's written consent.

6. The Plan shall be effective with respect to the Plan Year beginning January  
   1, 1998.

7. This Plan and all determinations made and actions taken hereunder shall be 
   construed in accordance with the laws of the State of New Hampshire.


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