EMPLOYMENT AGREEMENT
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
 
 
 Exhibit 10.1
 
                              EMPLOYMENT AGREEMENT
 
     THIS EMPLOYMENT AGREEMENT (the "Agreement"), made as of this 12th day of
March, 2006, is entered into by Nashua Corporation, a Massachusetts corporation
with its principal place of business at 11 Trafalgar Square, Suite 201, Nashua,
New Hampshire 03063 (the "Company"), and Thomas Brooker, residing at 1156 S.
Grove Avenue, Oak Park, Illinois 60304 (the "Executive").
 
     The Company desires to employ the Executive, and the Executive desires to
be employed by the Company. In consideration of the mutual covenants and
promises contained in this Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the parties to
this Agreement, the parties agree as follows:
 
     1.   Employment At-Will. The Company hereby agrees to employ the Executive,
and the Executive hereby accepts employment with the Company, upon the terms set
forth in this Agreement, commencing on May 4, 2006 (the "Commencement Date").
Subject to the provisions set forth herein and in the change of control and
severance agreement, of even date herewith, attached hereto as Exhibit A (the
"Change of Control Agreement"), the Executive's employment with the Company
shall be at-will meaning that either party may terminate the employment
relationship at any time, for any reason, with or without cause or notice
subject to the provisions set forth herein.
 
     2.   Title; Capacity. The Executive shall serve on a full-time basis as
President and Chief Executive Officer. The Executive shall be based in the
Company's office in Chicago, Illinois. The Executive shall be subject to the
supervision of, and shall have such authority as is delegated to the Executive
by, the Board of Directors (the "Board") or such officer of the Company as may
be designated by the Board.
 
     The Executive hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and such other duties and
responsibilities as the Board or its designee shall from time to time reasonably
assign to the Executive. The Executive agrees to devote his entire business
time, attention and energies to the business and interests of the Company and
shall not engage in any other business activities without the prior (written)
approval of the Board. The Executive agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any changes
therein which may be adopted from time to time by the Company.
 
     3.   Compensation and Benefits.
 
 
          3.1  Salary. The Company shall pay the Executive, in periodic
installments in accordance with the Company's customary payroll practices, an
annualized base salary of $350,000, for the period commencing on the
Commencement Date. Effective January 1, 2007, and provided Executive remains
employed by the Company, the Executive's annualized base salary shall be
increased to $400,000. Such salary shall be subject to adjustment thereafter as
determined by the Board.
 
<PAGE>
 
          3.2  Annual Bonus. The Executive shall be eligible to receive an
annual cash bonus, payable as a percentage of the Executive's base salary, based
upon the achievement of certain plan goals established by the Board. The Board
in its sole discretion will determine the bonus award, if any, as follows:
 
             Budgeted Profits              Bonus
             ----------------              -----
                  <90%                        0%
                   90%                       25%
                  100%                       50%
                  110%                       75%
                  120%                      100%
                  125%                      150%
              130% or more                  200%
 
          The Board shall set the performance criteria by January 31 of each
calendar year. For 2006, the Executive shall be entitled to receive a minimum
bonus of 25% of the Executive's annual base salary for the year and the bonus
payment for 2006 shall be payable 66 2/3% in cash and 33 1/3% in shares of
restricted stock (valued on the date the bonus is paid) that vest annually in
three equal installments on the first, second and third anniversary of the date
the bonus is paid; provided, however that if the Company does not have available
under its stock incentive plans sufficient shares to pay the portion of the 2006
bonus payable in shares of restricted stock or if the Board determines in good
faith that it is not advisable or in the best interests of the Company to pay
such portion of the 2006 bonus in shares of restricted stock, the Company may
pay all or part, at the Board's discretion, of such portion of the 2006 bonus in
cash. Bonus payments, if any, will be paid less applicable taxes and
withholdings. Bonus payments will be paid within 2 1/2 months after the end of
the year in which they are earned. If the Executive resigns or is terminated for
Cause (as defined in the Change of Control Agreement) prior to the time that any
bonus award is earned or paid, the Executive shall not be entitled to such bonus
award.
 
          3.3  Fringe Benefits. The Executive shall be entitled to participate
in all bonus and benefit programs that the Company establishes and makes
available to its employees, if any, to the extent that Executive's position,
tenure, salary, age, health and other qualifications make him eligible to
participate. The Executive shall be entitled to four weeks paid vacation per
year, to be taken at such times as may be approved by the Board. Vacation time
may not be carried over from year to year.
 
          3.4  Reimbursement of Expenses. The Company shall reimburse the
Executive for all reasonable travel, entertainment and other expenses incurred
or paid by the Executive in connection with, or related to, the performance of
his duties, responsibilities or services under this Agreement, in accordance
with policies and procedures, and subject to limitations, adopted by the Company
from time to time. The Company shall also reimburse the Executive for all
reasonable attorneys fees up to $10,000 incurred in the negotiation of this
Agreement.
 
          3.5  Withholding. All salary, bonus and other compensation payable to
the Executive shall be subject to applicable withholding taxes.
 
<PAGE>
 
          3.6  Restricted Stock. Subject to approval of the Board and the
Executive's execution of the applicable Company restricted stock agreements, the
Executive shall be granted 40,000 shares of common stock, par value $1.00 per
share, of the Company (the "Common Stock"), subject to the terms and conditions
of the Company's 2004 Value Creation Incentive Plan, or if granted pursuant to a
different stock incentive plan of the Company, such grant of Common Stock shall
be on substantially similar terms and conditions as the Company's 2004 Value
Creation Incentive Plan. The common stock shall vest as to (i) 33% if the
average of the last reported sales price per share of the Common Stock on the
Nasdaq National 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 Commencement 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. The common stock shall vest upon the terms and conditions set forth in
the 2004 Value Creation Incentive Plan.
 
          3.7  Change of Control Agreement. The Executive shall, upon execution
of this Agreement, execute the Change of Control Agreement.
 
     4.   Effect of Termination. In the event the Executive's employment with
the Company is terminated by the Company for any reason other than Cause (as
defined in the Change of Control Agreement) prior to the second anniversary of
the Commencement Date (the "Date of Termination"), and provided the Executive
enters into a binding release of claims in favor of the Company, the Company
shall continue to pay to the Executive his salary in effect on the date of
termination until the second anniversary of the Commencement Date; provided
however, that any salary continuation received by the Executive pursuant to this
Section 4 shall be reduced on a dollar-for-dollar basis for any severance paid
pursuant to the Change of Control Agreement. The Executive shall be entitled to
receive payments pursuant to this Section 4 as follows: (i) if there are less
than six months until the second anniversary of the Commencement Date, payments
shall be made on the first business day that is six months and one day following
the Date of Termination and (ii) if there are more than six months until the
second anniversary of the Commencement Date, payments shall be made on the first
business day that is six months and one day following the Date of Termination
and thereafter the Executive shall receive salary continuation pursuant to this
Section 4 in accordance with the Company's customary payroll practices.
 
     5.   Non-Competition and Non-Solicitation. The Executive shall, upon
execution of this Agreement, execute a non-competition and non-solicitation
agreement in the form attached hereto as Exhibit B.
 
 
     6.   Proprietary Information and Developments. The Executive shall, upon
execution of this Agreement, execute a proprietary and confidential information
and developments agreement in the form attached hereto as Exhibit C.
 
<PAGE>
 
     7.   Other Agreements. The Executive represents that his performance of all
the terms of this Agreement and the performance of his duties as an employee of
the Company do not and will not breach any agreement with any prior employer or
other party to which the Executive is a party (including without limitation any
nondisclosure or non-competition agreement). Any agreement to which the
Executive is a party relating to nondisclosure, non-competition or
non-solicitation of employees or customers is listed on Schedule A attached
hereto.
 
     8.   Miscellaneous.
 
          8.1  Notices. Any notices delivered under this Agreement shall be
deemed duly delivered four business days after it is sent by registered or
certified mail, return receipt requested, postage prepaid, or one business day
after it is sent for next-business day delivery via a reputable nationwide
overnight courier service, in each case to the address of the recipient set
forth in the introductory paragraph hereto. Either party may change the address
to which notices are to be delivered by giving notice of such change to the
other party in the manner set forth in this Section 8.1.
 
          8.2  Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
 
          8.3  Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
 
          8.4  Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.
 
          8.5  Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts (without
reference to the conflicts of laws provisions thereof). Any action, suit or
other legal proceeding arising under or relating to any provision of this
Agreement shall be commenced only in a court of the Commonwealth of
Massachusetts (or, if appropriate, a federal court located within Massachusetts
or the Northern District of Illinois), and the Company and the Executive each
consents to the jurisdiction of such a court.
 
          8.6  Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which, or into which, the Company may be
merged or which may succeed to the Company's assets or business, provided,
however, that the obligations of the Executive are personal and shall not be
assigned by him.
 
          8.7  Waivers. No delay or omission by the Company or the Executive in
exercising any right under this Agreement shall operate as a waiver of that or
any other right. A waiver or consent given by the Company or the Executive on
any one occasion shall be effective only in that instance and shall not be
construed as a bar or waiver of any right on any other occasion.
<PAGE>
 
          8.8  Captions. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
 
          8.9  Severability. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
 
     THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
 
<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
 
                                        NASHUA CORPORATION
 
 
                                        By: /s/ Andrew B. Albert
                                           --------------------------------
                                        Name: Andrew B. Albert
                                        Title: CEO
 
 
                                        EXECUTIVE
 
                                        /s/ Thomas Brooker
                                        ----------------------------------
                                        Thomas Brooker
 

 

 

 

 
 
Exhibit 10.2
 
                    CHANGE OF CONTROL AND SEVERANCE AGREEMENT
                    -----------------------------------------
 
     This AGREEMENT by and between Nashua Corporation, a Massachusetts
corporation (the "Company") and Thomas Brooker (the "Executive"), dated as of
the 12th day of March, 2006.
 
                                    RECITALS:
 
     WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company or other reasons of uncertainty;
 
     WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and business concerns and
to encourage the Executive's full attention and dedication to the Company;
 
     WHEREAS, the Board has implemented a 2004 Value Creation Incentive Plan to
provide the Executive and other members of management of the Company with
additional equity incentives;
 
     WHEREAS, the Company and the Executive are parties to an Employment
Agreement, of even date herewith (the "Employment Agreement"); and
 
     WHEREAS, in order to accomplish these objectives, the Board believes it is
in the best interests of the Company to enter into this Agreement.
 
     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
 
1.   CERTAIN DEFINITIONS.
 
     (a)  The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section 1(b)) on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if the
Executive's employment with the Company is terminated or the Executive ceases to
be an officer of the Company prior to the date on which a Change of Control
occurs, and it is reasonably demonstrated that such termination of employment
(1) was at the request of a third party who has taken steps reasonably
calculated to effect the Change of Control or (2) otherwise arose in connection
with or anticipation of the Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior to the date
of such termination of employment.
 
     (b)  The "Change of Control Period" is the period commencing on the date
hereof and
 
<PAGE>
 
ending on the third anniversary of such date; provided, however, that commencing
on such third anniversary, and on each annual anniversary of such date (such
date and each annual anniversary thereof is hereinafter referred to as the
"Renewal Date"), the Change of Control Period shall be automatically extended so
as to terminate one year from such Renewal Date, unless at least 60 days prior
to the Renewal Date the Company shall give notice to the Executive that the
Change of Control Period shall not be so extended.
 
2.   CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control"
shall mean:
 
     (a)  The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of l934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
(a "Person") of 50% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Company Voting
Securities"), provided, however, that any acquisition by (x) the Company or any
of its subsidiaries, or any employee benefit plan (or related trust) sponsored
or maintained by the Company or any of its subsidiaries, or (y) any corporation
with respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, or (z) Gabelli Funds, LLC,
GAMCO Investors, Inc., Gabelli Advisers, Inc., MJG Associates, Inc., Gabelli
Group Capital Partners, Inc., Gabelli Asset Management Inc., Marc J. Gabelli
and/or Mario J. Gabelli and/or any affiliate of any of the foregoing, in the
case of each of such clauses (x), (y) and (z), shall not constitute a Change of
Control; or
 
     (b)  Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to the date
hereof whose election or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
 
     (c)  Consummation by the Company of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company
 
 
                                      -2-
<PAGE>
 
Common Stock and Company Voting Securities immediately prior to such Business
Combination do not, following such Business Combination, beneficially own,
directly or indirectly, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from Business Combination in
substantially the same proportion as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and Company Voting
Securities, as the case may be; or
 
     (d)  (i) a complete liquidation or dissolution of the Company or of (ii)
sale or other disposition of all or substantially all of the assets of the
Company other than to a corporation with respect to which, following such sale
or disposition, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities immediately prior
to such sale or disposition in substantially the same proportion as their
ownership of the Outstanding Company Common Stock and Company Voting Securities,
as the case may be, immediately prior to such sale or disposition.
 
3.   EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive in
its employ, and the Executive hereby agrees to remain in the employ of the
Company, for the period commencing on the Effective Date and ending on the first
anniversary of such date (the "Employment Period").
 
4.   TERMS OF EMPLOYMENT.
 
     (a)  Position and Duties.
 
 
               (i)  During the Employment Period, (A) the Executive's position
          (including status, offices, titles and reporting requirements),
          authority, duties and responsibilities shall be at least commensurate
          in all material respects with those held, exercised and assigned at
          any time during the 90-day period immediately preceding the Effective
          Date and (B) the Executive's services shall be performed at the
          location where the Executive was employed immediately preceding the
          Effective Date or any office or location less than 35 miles from such
          location.
 
               (ii) During the Employment Period, the Executive agrees to devote
          his reasonable full time and attention during normal business hours to
          the business and affairs of the Company and, to the extent necessary
          to discharge the responsibilities assigned to the Executive hereunder,
          to use the Executive's best efforts to perform faithfully and
          efficiently such responsibilities. During the Employment Period it
          shall not be a violation of this Agreement for the Executive to (A)
          serve on civic or charitable boards or committees, (B) serve on
          corporate boards or committees other than the Company's to the extent
          approved by the Company's Board, (C) deliver lectures, fulfill
 
 
                                      -3-
<PAGE>
 
          speaking engagements or teach at educational institutions and (D)
          manage personal investments, so long as such activities do not
          interfere with the performance of the Executive's responsibilities as
          an employee of the Company in accordance with this Agreement. It is
          expressly understood and agreed that to the extent that any such
          activities have been conducted by the Executive prior to the Effective
          Date, the continued conduct of such activities (or the conduct of
          activities similar in nature and scope thereto) subsequent to the
          Effective Date shall not thereafter be deemed to interfere with the
          performance of the Executive's responsibilities to the Company.
 
     (b)  Compensation.
 
               (i)  Base Salary. During the Employment Period, the Executive
          shall receive an annual base salary ("Annual Base Salary"), which
          shall be paid at a monthly rate, at least equal to twelve times the
          current monthly base salary being paid to the Executive by the Company
          and its affiliated companies as of the date of this Agreement. During
          the Employment Period, the Annual Base Salary shall be reviewed at
          least annually and may be increased at any time and from time to time
          in the sole discretion of the Board. Any increase in Annual Base
          Salary shall not serve to limit or reduce any other obligation to the
          Executive under this Agreement. Annual Base Salary shall not be
          reduced after any such increase and the term Annual Base Salary as
          utilized in this Agreement shall refer to Annual Base Salary as so
          increased. As used in this Agreement, the term "affiliated companies"
          includes any company controlled by, controlling or under common
          control with the Company.
 
               (ii) Annual Bonus. In addition to Annual Base Salary, the
          Executive may be awarded, for each fiscal year beginning or ending
          during the Employment Period, an annual bonus (the "Annual Bonus") in
          cash as determined by the Board of Directors, in its sole discretion.
 
               (iii) Incentive, Savings and Retirement Plans. In addition to
          Annual Base Salary and Annual Bonus payable as hereinabove provided,
          the Executive shall be entitled to participate during the Employment
          Period in all incentive, savings and retirement plans, practices,
          policies and programs applicable generally to other peer executives of
          the Company and its affiliated companies.
 
               (iv) Welfare Benefit Plans. During the Employment Period, the
          Executive and/or the Executive's family, as the case may be, shall be
          eligible for participation in and shall receive all benefits under
          welfare benefit plans, practices, policies and programs provided by
          the Company and its affiliated companies (including, without
          limitation, medical, prescription, dental, disability, salary
          continuance, employee life, group life, accidental death and travel
          accident insurance plans and programs) to the extent generally
          applicable to other peer executives of the Company and its affiliated
          companies.
 
               (v)  Expenses. During the Employment Period, the Executive shall
          be entitled to receive reimbursement for all reasonable documented
          expenses incurred by the
 
 
                                      -4-
<PAGE>
 
          Executive in accordance with the policies, practices and procedures of
          the Company and its affiliated companies.
 
               (vi) Fringe Benefits. During the Employment Period, the Executive
          shall be entitled to fringe benefits in accordance with the plans,
          practices, programs and policies of the Company and its affiliated
          companies in effect.
 
               (vii) Vacation. During the Employment Period, the Executive shall
          be entitled to paid vacation in accordance with the plans, policies,
          programs and practices of the Company and its affiliated companies as
          in effect.
 
5.   TERMINATION OF EMPLOYMENT.
 
     (a)  Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 15(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" means the absence of the Executive from the Executive's duties with
the Company on a full-time basis for 120 consecutive business days as a result
of incapacity due to mental or physical illness determined by a physician
selected by the Company or its insurers and acceptable to the Executive or
Executive's legal representative (such agreement as to acceptability not to be
withheld unreasonably).
 
     (b)  Cause. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause" means (i)
the Executive's continued documented failure to perform his reasonably assigned
duties (other than any such failure resulting from incapacity due to physical or
mental illness or any failure after the Executive gives notice of termination
for Good Reason), which failure is not cured within 60 days after written notice
for substantial performance is received by the Executive from the Board which
identifies the manner in which the Board believes the Executive has not
substantially performed the Executive's duties, (ii) the Executive being
convicted of a felony, or (iii) the Executive's engagement in illegal conduct or
gross misconduct injurious to the Company.
 
     (c)  Good Reason. The Executive's employment may be terminated during the
Employment Period by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" means:
 
          (i)  the assignment to the Executive of any duties inconsistent in any
     material respect with the Executive's position (including offices, titles
     and reporting requirements), authority or responsibilities as contemplated
     by Section 4(a) of this
 
                                      -5-
<PAGE>
 
     Agreement, or any other action by the Company which results in a material
     diminution in such position, authority or responsibilities;
 
          (ii) a reduction in the Executive's Annual Base Salary as in effect on
     the date of this Agreement or as the same was or may be increased
     thereafter from time to time;
 
          (iii) the Company's requiring the Executive to be based at any office
     or location other than that described in Section 4(a)(i)(B) hereof;
 
          (iv) any purported termination by the Company of the Executive's
     employment otherwise than as expressly permitted by this Agreement; or
 
          (v)  any failure by the Company to comply with and satisfy Section
     14(c) of this Agreement.
 
     (d)  Notice of Termination. Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 15(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen days after the
giving of such notice).
 
     (e)  Date of Termination. "Date of Termination" means the date of receipt
of the Notice of Termination or any later date specified therein, as the case
may be; provided, however, that (i) if the Executive's employment is terminated
by the Company other than for Cause or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of such termination and
(ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.
 
6.   OBLIGATIONS OF THE COMPANY UPON TERMINATION.
 
     (a)  Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than the following obligations: (i) payment of the Executive's
Annual Base Salary through the Date of Termination to the extent not theretofore
paid, (ii) payment of any compensation previously deferred by the Executive
(together with any accrued interest thereon) and not yet paid by the Company and
any accrued vacation pay not yet paid by the Company (the amounts described in
paragraphs (i) and (ii) are hereafter referred to as "Accrued Obligations"). All
Accrued Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination. In
addition to the Accrued Obligations, in the event (A) the Board
 
 
                                      -6-
<PAGE>
 
subsequently approves the payment of an annual bonus to members of management
for the fiscal year in which the Date of Termination occurred and (B) the
Executive was employed at least one quarter of such fiscal year, then the
Executive's estate or beneficiary shall be entitled to receive an additional
payment equal to the bonus that such Executive would have received for such
fiscal year (as determined by the Board) multiplied by a fraction, the numerator
of which is the number of days in such fiscal year for which the Executive was
actually employed and the denominator is 365 days.
 
     (b)  Disability. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for Accrued
Obligations. All Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. In addition to the
Accrued Obligations, in the event (A) the Board subsequently approves the
payment of an annual bonus to members of management for the fiscal year in which
the Date of Termination occurred and (B) the Executive was employed at least one
quarter of such fiscal year, then the Executive shall be entitled to receive an
additional payment equal to the bonus that such Executive would have received
for such fiscal year (as determined by the Board) multiplied by a fraction, the
numerator of which is the number of days in such fiscal year for which the
Executive was actually employed and the denominator is 365 days.
 
     (c)  Cause; Other than for Good Reason. If the Executive's employment shall
be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive Annual Base Salary through the Date of Termination plus
the amount of any compensation previously deferred by the Executive, in each
case to the extent theretofore unpaid. If the Executive terminates employment
during the Employment Period other than for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for Accrued
Obligations. In such case, all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
 
     (d)  Good Reason; Other Than for Cause or Disability. If, during the
Employment Period, the Company shall terminate the Executive's employment other
than for Cause or Disability, or the Executive shall terminate employment during
the Employment Period for Good Reason, the Company shall pay to the Executive in
a lump sum in cash within 60 days after the Date of Termination, and subject to
receiving an executed irrevocable Release as described in Section 11, the
aggregate of the following amounts:
 
     A.   all Accrued Obligations; and
 
     B.   the product of (x) 2 and (y) the sum of (i) Annual Base Salary and
          (ii) the Annual Bonus paid or payable (including any bonus or portion
          thereof that has been earned but deferred) for the most recently
          completed fiscal year.
 
     Notwithstanding the foregoing, in the event that the Employee is a
"specified employee" within the meaning of Section 409A of the Internal Revenue
Code of 1986, as amended, and any
 
 
                                      -7-
<PAGE>
 
guidance issued thereunder ("Section 409A") as of the Date of Termination, and
the payments to be made under this Section 6(d) are considered "nonqualified
deferred compensation" within the meaning of Section 409A, then the payments to
be made under this Section 6(d) shall be made on the first business day that is
six months and one day following the Date of Termination.
 
     In addition, for the remainder of the Employment Period (if the termination
took place during the Employment Period under this Section 6), the Company shall
continue benefits to the Executive and/or the Executive's family at least equal
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this Agreement
if the Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company and its
affiliated companies applicable generally to other peer executives and their
families during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families. For purposes of determining eligibility
of the Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have remained
employed until the end of the Employment Period and to have retired on the last
day of such period.
 
     Notwithstanding the foregoing, if a Change of Control or other event shall
have occurred before the Date of Termination that would result in the Executive
becoming entitled to receive payments under this Agreement or any other
arrangement that would be "parachute payments", as defined in Section 280G of
the Internal Revenue Code of 1986, as amended from time to time (the "Code"),
the Company shall not be obligated to make such payments to the Executive to the
extent necessary to eliminate any "excess parachute payments" as defined in said
Section 280G; provided, however, that if the Executive would be better off by at
least $25,000 on an after-tax basis by receiving the full amount of the
parachute payments as opposed to the cut back amount (notwithstanding a 20%
excise tax) the Executive shall receive the full amount of the parachute
payments.
 
7. SEVERANCE BENEFITS. Notwithstanding anything contained in this Agreement to
the contrary, if, before or after the Employment Period, the Executive's
employment is terminated by the Company for reason other than misconduct, the
Company shall pay to the Executive salary and continue medical and dental
benefits for a period of one year following such termination (the "Date of
Termination"); provided, however, that the Executive shall not be entitled to
such salary and benefits continuation under this Agreement for any portion of
such one year period (or the entire one year period, if applicable) during which
the Executive receives salary continuation and benefits pursuant to any other
agreement or arrangement with the Company. The Executive shall be entitled to
receive payments pursuant to this Section 7 on the first business day that is
six months and one day following the Date of Termination and thereafter the
Executive shall receive salary continuation pursuant to this Section 7 in
accordance with the Company's customary payroll practices.
 
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs,
 
 
                                      -8-
<PAGE>
 
policies or practices, provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any other
agreements with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program except as
explicitly modified by this Agreement.
 
9. FULL SETTLEMENT. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The Company agrees to pay, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (but only in the event the Executive
is successful on the merits of such contest) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof, plus in each case
interest at the applicable Federal rate provided for in Section 7872(f)(2) of
the Internal Revenue Code of l986, as amended (the "Code").
 
10. OTHER AGREEMENTS. The parties agree that this Agreement supersedes and
replaces any and all other agreements, policies, understandings or letters
(including but not limited to employment agreements, severance agreements and
job abolishment policies) between the parties related to the subject matter
hereof.
 
11. RELEASE. Prior to receipt of the payment described in Sections 6(d) or 7,
the Executive shall execute and deliver a Release to the Company as follows:
 
     The Executive hereby fully, forever, irrevocably and unconditionally
     releases, remises and discharges the Company, its officers, directors,
     stockholders, corporate affiliates, agents and employees from any and all
     claims, charges, complaints, demands, actions, causes of action, suits,
     rights, debts, sums of money, costs, accounts, reckonings, covenants,
     contracts, agreements, promises, doings, omissions, damages, executions,
     obligations, liabilities and expenses (including attorneys' fees and
     costs), of every kind and nature which he ever had or now has against the
     Company, its officers, directors, stockholders, corporate affiliates,
     agents and employees, including, but not limited to, all claims arising out
     of his employment, all employment discrimination claims under Title VII of
     the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq., the Age
     Discrimination in Employment Act, 29 U.S.C., 621 et seq., the Americans
     With Disabilities Act, 42 U.S.C., 12101 et seq., the New Hampshire Law
     Against Discrimination, N.H. Rev. Stat. Ann. 354-A:1 et seq. and similar
     state antidiscrimination laws, damages arising out of all employment
     discrimination claims, wrongful discharge claims or other common law claims
     and damages, provided, however, that nothing herein shall release the
     Company from Executive's Stock Option Agreements or Restricted Stock
     Agreements.
 
 
                                      -9-
<PAGE>
 
     The Release shall also contain, at a minimum, the following language:
 
          The Executive acknowledges that he has been given twenty-one (21) days
          to consider the terms of this Release and that the Company advised him
          to consult with an attorney of his own choosing prior to signing this
          Release. The Executive may revoke this Release for a period of seven
          (7) days after the execution of the Release and the Release shall not
          be effective or enforceable until the expiration of this seven (7) day
          revocation period.
 
     At the same time, the Company shall execute and deliver a Release to the
Executive as follows:
 
          The Company hereby fully, forever, irrevocably and unconditionally
          releases, remises and discharges the Executive from any and all claims
          which it ever had or now has against the Executive, other than for
          intentional harmful acts.
 
12. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 12 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
 
13. ARBITRATION. Any controversy or claim arising out of this Agreement shall be
settled by binding arbitration in accordance with the commercial rules, policies
and procedures of the American Arbitration Association. Judgment upon any award
rendered by the arbitrator may be entered in any court of law having
jurisdiction thereof. Arbitration shall take place in Nashua, New Hampshire at a
mutually convenient location.
 
14.  SUCCESSORS.
 
     (a)  This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
 
     (b)  This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
 
     (c)  The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the
 
 
                                      -10-
<PAGE>
 
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law or otherwise.
 
15.  MISCELLANEOUS.
 
     (a)  This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without reference to principles
of conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
 
     (b)  All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
 
          If to the Executive:
          -------------------
 
               Thomas Brooker
               1156 S. Grove Avenue
               Oak Park, Illinois 60304
 
          If to the Company:
          -----------------
 
               Nashua Corporation
               11 Trafalgar Square
               Nashua, New Hampshire 03063
               Attention: President
 
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
 
     (c)  The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
 
     (d)  The Company may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
 
     (e)  The Executive's failure to insist upon strict compliance with any
provision hereof or the failure to assert any right the Executive may have
hereunder, including, without limitation, the right to terminate employment for
Good Reason pursuant to Section 5(c)(i)-(v), shall not be deemed to be a waiver
of such provision or right or any other provision or right thereof.
 
 
                                      -11-
<PAGE>
 
     (f)  This Agreement contains the entire understanding of the Company and
the Executive with respect to the subject matter hereof. The Executive and the
Company acknowledge that the employment of the Executive by the Company is "at
will" and, prior to the Effective Date, both the Executive's employment and this
Agreement may be terminated by either the Company or the Executive at any time.
In the event that this Agreement is terminated by the Company prior to the
Effective Date and the Executive remains employed by the Company, the Executive
would be entitled to the same severance benefits as set forth in Section 7 of
this Agreement.
 
 
                                      -12-
<PAGE>
 
 
     IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
 
 
 
NASHUA CORPORATION                           EXECUTIVE
 
 
By  /s/ Andrew B. Albert                     /s/ Thomas Brooker
  -----------------------                    -----------------------
Name:  Andrew B. Albert                      Name: Thomas Brooker
Title: CEO
 
 
                                      -13-