NASHUA CORPORATION
 MANAGEMENT INCENTIVE PLAN
 1.
    
    PurposeThe 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)
    
    IPO means individual management performance objectives which are specific
performance objectives for Participants approved as follows:
 Approved By
    
    ParticipantCompensation Committee
    
    President and CEOPresident and CEO
    
    Chief Financial Officer and other
   Corporate Vice PresidentsPresident and CEO, and

Manager who directly or

indirectly supervises the Participant
    
    All other executives
 Up to 20% of the Participants management incentive payment may be based upon
successful achievement of the Individual Performance Objectives.(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.




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MANAGEMENT INCENTIVE PLAN
 (g)
    
    Performance Objectives means one or more pre-established performance
objectives, including PTPB and IPO.(h)
    
    Plan means the Management Incentive Plan for Nashua Corporation.(i)
    
    Plan Year means the fiscal year of the Company.(j)
    
    PTPB means pre-tax, pre-bonus profit from the Company for the Companys
fiscal year as calculated according to generally accepted accounting practices (GAAP).(k)
    
    TPO means targeted performance objectives which are specifically targeted
to financial targets for areas of the Participants influence such as product line sales,
gross margins or net margins and/or specific cost categories or costs related to certain
cost centers. Up to 30% of a Participants management incentive payment may be based on
the successful achievement of the targeted objectives.(l)
    
    Total Company Operating Performance means the financial performance of
all of Nashua Corporation and its divisions during the Companys fiscal year.
 3.
    
    ParticipationParticipation 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 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 subject to approval by the Committee.
 4.
    
    Annual Bonus OpportunityParticipants may have the opportunity to earn an annual variable bonus.
 (a)
    
    Target BonusThe Target Bonus for each Participant is established each Plan Year. Bonuses will be
capped based on award level at a maximum of 200% of salary at 130% of annual pre-tax
budget.
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MANAGEMENT INCENTIVE PLAN
 (b)
    
    Bonus Payout
 (i)
    
    A Participants annual bonus payout is based on the overall
Companys performance and pre-established Performance Objectives.(ii)
    
    Within the first 90 days of the beginning of each Plan Year,
Performance Objectives for Participants will be established. Specific
Performance Objectives will vary based on the specific business strategy of the
Company and the business unit, and may include such measures as: PTPB, IPO and
TPO.(iii)
    
    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 10% to 60% of base salary, if the Companys
budgeted pre-tax, pre-bonus income is achieved.
    
    Bonus below target. In the event of below budget performance, the
threshold for a payout is 80% of budgeted consolidated pre-tax, pre-bonus
income. In the event that corporate performance is 79% or lower than
budgeted pre-tax, pre-bonus income, no employee will receive a bonus. For
pre-tax income performance between 80% and 100%, bonuses will be paid at
50% and 100%, respectively, with interpolation in between.
    
    Bonus above target. In the event of above budgeted performance, a
higher percentage of incremental pre-tax, pre-bonus income will fund the
bonus award pool based on award level. Bonus will not exceed 200% of
salary and maximum bonus is achieved for 130% of budgeted pre-tax,
pre-bonus income.
 (iv)
    
    Bonus payouts will be determined based on the formula used to
measure the Companys results for each Participant, and calculated in accordance
with the Performance Objectives approved by the Committee.(v)
    
    The Committee may, in its sole discretion, make required
adjustments to the Plan.(vi)
    
    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.
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MANAGEMENT INCENTIVE PLAN
 (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 BonusesCurrent PaymentExcept 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.6.
    
    Plan Administration
 (a)
    
    General AdministrationThe 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, and weighting
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.
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MANAGEMENT INCENTIVE PLAN
 (b)
    
    Adjustments for Extraordinary EventsIf 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 PlanThe 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 DateThe effective date of the Plan is January 1, 2007.(b)
    
    TitlesSection 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 GuaranteedNothing 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)
    
    ValidityIn 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.
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MANAGEMENT INCENTIVE PLAN
 (e)
    
    Withholding TaxThe 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 LawThe Plan shall be governed in accordance with the laws of the State of New Hampshire.
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