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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;
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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
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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.
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8. Withholding Taxes; Section 83(b) Election.
(a) The Participant acknowledges and agrees that the
Company
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