<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Nashua Corporation
(Name of Registrant as Specified In Its Charter)
Nashua Corporation
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
NASHUA CORPORATION
44 FRANKLIN STREET
NASHUA, NEW HAMPSHIRE 03060
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 14, 1996
Notice is hereby given that the Annual Meeting of Stockholders of Nashua
Corporation will be held at the Crowne Plaza, 2 Somerset Parkway, Nashua, New
Hampshire, on June 14, 1996 at 10:00 a.m., for the following purposes:
1. To elect a Board of Directors for the ensuing year.
2. To authorize the Board of Directors to mortgage or pledge all or
substantially all of the corporation's assets upon such terms and
conditions as the Board of Directors deems expedient.
3. To approve the 1996 Stock Incentive Plan.
4. To act upon any other business as may properly be brought before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 26, 1996,
as the record date for determining the stockholders having the right to notice
of and to vote at the meeting.
PAUL BUFFUM
Secretary
May 3, 1996
If you are entitled to vote at the meeting,
kindly execute and mail the enclosed proxy.
<PAGE> 3
PROXY STATEMENT
GENERAL
The accompanying proxy is solicited on behalf of the Board of Directors of
Nashua Corporation ("Nashua" or the "Company"), a Delaware corporation, whose
principal executive offices are located at 44 Franklin Street, Nashua, New
Hampshire 03060, for use at the annual meeting of the stockholders of Nashua to
be held on June 14, 1996, and at any adjournment thereof. Each proxy executed
and returned by a stockholder may be revoked by delivering written notice of
such revocation to the Secretary of Nashua or by executing and delivering to the
Secretary a proxy bearing a later date at any time at or before the meeting
except as to any matters upon which, prior to such revocation, a vote shall have
been cast pursuant to the authorization conferred by such proxy. This proxy
statement is being mailed to stockholders on or about May 3, 1996.
VOTING SECURITIES
The only outstanding class of voting securities of Nashua is its common
stock, each share of which entitles the holder thereof to one vote. Only
stockholders of record at the close of business on April 26, 1996, are entitled
to vote at the annual meeting and at any adjournment thereof. As of the close of
business on such date, there were shares of its common stock
outstanding (excluding shares held in Nashua's treasury). The holders
of a majority of the issued and outstanding stock entitled to vote, present in
person or by proxy, constitute a quorum for the transaction of business.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and, except as
described below, will also not be counted as votes cast or shares voting on such
matter. To qualify under Rule 16b-3, which provides an exemption from Section 16
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for
certain employee benefit plans, the approval of the 1996 Stock Incentive Plan
must be approved by the affirmative vote of the holders of a majority of the
shares of Common Stock present or represented and entitled to vote at the
meeting. Therefore, for the purpose of qualifying such plan under Rule 16b-3
only, an abstention will be treated the same as a vote against such proposal.
NOMINEES FOR ELECTION AS DIRECTORS
Pursuant to the bylaws of Nashua, the Board of Directors has fixed at six
the number of directors to be elected at the annual meeting. Nashua's directors
are elected annually by the stockholders and hold office until successors are
elected and qualified or until death, resignation or removal.
Each proxy executed and returned by a stockholder will be voted for the
election of the nominees for directors listed below, unless authority to do so
is withheld. If, however, any nominee becomes unavailable (which is not now
anticipated), the persons named as proxies may, in their discretion, vote for
another nominee.
Under Nashua's bylaws, the affirmative vote of the holders of a majority of
the shares of Nashua's common stock entitled to vote held by stockholders
present at the meeting in person or by proxy is required for the election of
directors. It is believed that, under Delaware law, a vote that is withheld from
a particular nominee will be treated as entitled to vote and present and thus
have the effect of a negative vote.
All of the nominees for directors named below are now directors of Nashua,
except for Mr. Miller.
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<PAGE> 4
The business experience of each nominee for the last five years and the
year he first became a director of Nashua are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE BUSINESS EXPERIENCE
- --------------------------- --- -------- ---------------------------------------------------
<S> <C> <C> <C>
Sheldon A. Buckler(a)(c) 64 1994 Dr. Buckler has been Chairman of the Board of
Commonwealth Energy System since May 1995. He was
Vice Chairman of the Board of Polaroid Corporation
from prior to 1991 until his retirement in 1994. He
is also a Director of ASECO Corporation, PARLEX
Corporation and Spectrum Information Technologies,
Inc.
Gerald G. Garbacz 59 1996 Mr. Garbacz has been President and Chief Executive
Officer of Nashua Corporation since January 2,
1996. From 1994 through 1995, Mr. Garbacz was a
private investor. He was Chairman and Chief
Executive Officer of Baker & Taylor Inc.
(information distribution) from 1992 to 1994 and
Executive Vice President of W.R. Grace & Co. from
prior to 1991 to 1992. He is also a Director of
Handy & Harman Inc.
Charles S. Hoppin(a)(c)(d) 64 1979 Mr. Hoppin has been a partner in the law firm of
Davis Polk & Wardwell since prior to 1991.
John M. Kucharski(a)(b) 60 1988 Mr. Kucharski has been the Chairman, Chief
Executive Officer and President of EG&G, Inc.
(technical and scientific products and services)
since prior to 1991. He is also a Director of New
England Electric System, Eagle Industry Co., Ltd.
and State Street Boston Corporation.
David C. Miller, Jr. 53 -- Mr. Miller has been President and Chief Executive
Officer of ParEx, Inc. (privately held investment
company) since December 1994. From 1994 through
1995, Mr. Miller served as President of Kennedy
International Consulting, Inc. and from January
1991 through December 1993 he served as Executive
Vice President of The Investigative Group Inc.
During this period, Mr. Miller also provided
international business consulting services to U.S.
corporations. He is also a Director of Bedford
Stuyvesant Development and Services Corporation and
Georgetown University's Institute for the Study of
Diplomacy.
James F. Orr III(b)(d) 53 1989 Mr. Orr has been the Chairman, Chief Executive
Officer and President of UNUM Corporation
(insurance) since prior to 1991.
</TABLE>
- ---------------
(a) Member of the Audit Committee of Nashua's Board of Directors.
(b) Member of the Executive Salary Committee of Nashua's Board of Directors.
(c) Member of the Nominating Committee of Nashua's Board of Directors.
(d) Member of the Pension Plan Review Committee of Nashua's Board of Directors.
BOARD OF DIRECTORS COMMITTEES
Included among the committees of the Board of Directors are standing Audit,
Executive Salary and Nominating Committees.
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<PAGE> 5
AUDIT COMMITTEE
The Audit Committee approves the appointment of the independent accountants
of the Company, reviews with those accountants the annual audits of the
Company's consolidated financial statements and performs such other functions
relating to the auditing of the Company as the Committee or the Board may from
time to time determine to be appropriate. The Audit Committee held three
meetings in 1995.
EXECUTIVE SALARY COMMITTEE
The Executive Salary Committee reviews executive compensation, sets the
Chief Executive Officer's base salary and administers the Management Incentive
Compensation Program, the Supplemental Compensation Plan and the Company's stock
option and incentive plans. The Executive Salary Committee held three meetings
in 1995.
NOMINATING COMMITTEE
The Nominating Committee makes recommendations to the Board of Directors on
the size and composition of the Board, policies involving terms and retirement
of directors, candidates for election to the Board and certain other matters.
The Nominating Committee will consider potential nominees for election to the
Board of Directors recommended by any stockholder provided such recommendation
is submitted in writing to the Secretary on or before January 3, 1997 for the
1997 annual meeting. The Nominating Committee held two meetings in 1995.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1995 the Board of Directors held six regular meetings and nine
special meetings. Each of the directors attended at least 75% of the aggregate
of (1) the total number of meetings of the Board of Directors held while he was
a director and (2) the total number of meetings held by all committees of the
Board on which he served.
COMPENSATION OF DIRECTORS
Directors of Nashua, except employees and officers of the Company, receive
a $15,000 annual cash retainer and $750 plus expenses for each Board meeting and
Board committee meeting attended and are each year awarded options to purchase
1,000 shares of common stock having an exercise price equal to the fair market
value for such shares on the date of award under the provisions of Nashua's 1993
Stock Incentive Plan. Under the 1996 Stock Incentive Plan, it is proposed that
Nashua's non-employee Directors receive shares of Nashua's common stock each
year in the amount of and in lieu of the annual cash retainer. Compensation for
all Board and Committee meetings attended will be, effective June 14, 1996,
$1,000 plus expenses.
Mr. Joseph A. Baute, as the non-employee Chairman of Nashua for the period
April 28, 1995 through January 2, 1996 was paid approximately $75,000 plus
expenses with the understanding that he would purchase $25,000 of Nashua stock
on the open market. The Company reimbursed Mr. Baute for brokerage commissions
on such stock purchase. This compensation was in lieu of all other compensation
including non-employee director stock options and compensation for attending
Board and Board Committee meetings.
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<PAGE> 6
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Mr. Richard E. Carter, a Director of Nashua, made a late filing on June 28,
1995 of a Form 4 with respect to certain non-exempt transactions in shares of
Nashua common stock during May 1995. The due date of this Form 4 was June 10,
1995. The reported transactions were sales of Nashua stock.
Mr. Robin J.T. Clabburn, a Vice President of Nashua, made a late filing on
December 11, 1995 of a Form 4 with respect to a certain non-exempt transaction
in shares of Nashua common stock during October 1995. The due date of this Form
4 was November 10, 1995. The reported transaction was a purchase of Nashua
stock.
COMPENSATION OF EXECUTIVE OFFICERS
<TABLE>
The following table sets forth the annual and long-term compensation paid
to persons who served as Nashua's Chief Executive Officer during 1995 and
Nashua's six other highest paid executive officers in 1995:
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION ----------------------------
------------------------------------- SHARES
FISCAL OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS/SARS COMPENSATION(1)
- ------------------------------ ------- -------- ------- ------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph A. Baute............... 1995 $124,625(2) $ 0 -- -- -- --
Chairman and Former
President and Chief
Executive Officer
Francis J. Lunger............. 1995 $276,694(3) $ 0 -- -- 28,000 $7,229
Former President and Chief 1994 $212,308 $ 0 $ 214,053(7) -- 23,000 $4,211
Executive Officer
William E. Mitchell........... 1995 $286,578(4) $ 0 $ 248,344(7) -- 15,000 $9,027
Former President and Chief 1994 $400,000 $ 0 $ 33,599(8) -- 15,000 $5,033
Executive Officer 1993 $127,692 $ 0 $ 1,942(9) -- 45,000 $3,528
Robin J. T. Clabburn.......... 1995 $217,607(5)(6) $ 0 $ 277(10) $334,375(12) 20,000 --
Vice President and
Chief Technical Officer
Robert A. Geiger.............. 1995 $171,655(6) $ 0 -- -- 13,500 $4,708
Vice President
Tape Products Division
John J. Ireland............... 1995 $168,997(6) $ 0 $ 97,304(7) -- 13,500 $9,447
Vice President
Specialty Coated Products
David A. Peterson............. 1995 $148,874(6) $83,567 -- -- 11,500 $5,443
Vice President
Nashua Precision
Technologies
Daniel M. Junius.............. 1995 $146,374(6) $ 0 $ 561(11) $334,375(12) 11,500 $5,653
Vice President-Finance,
Chief Financial Officer
and Treasurer
Bruce T. Wright............... 1995 $134,240(6) $ 0 -- $334,375(12) 14,000 $5,440
Vice President
Human Resources
</TABLE>
- ---------------
(1) Includes amounts set aside under the Company's Supplemental Compensation
Plan, Company contributions to the Employees' Savings Plan, life insurance
income and premiums, financial consulting
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<PAGE> 7
services, imputed auto income and imputed income on an interest free loan.
In 1995, these amounts were:
(i) as to the Employees' Savings Plan -- Mr. Lunger, $2,229; Mr.
Mitchell, $2,226; Mr. Geiger, $2,600; Mr. Ireland, $2,229; Mr.
Peterson, $2,228; Mr. Junius, $2,600; and Mr. Wright, $2,229;
(ii) as to life insurance income -- Mr. Geiger, $2,108; Mr. Ireland,
$560; Mr. Peterson, $2,057; Mr. Junius, $553; and Mr. Wright,
$711;
(iii) as to financial consulting services -- Mr. Lunger, $5,000; Mr.
Mitchell, $5,000; Mr. Ireland, $6,000; Mr. Junius, $2,500; and Mr.
Wright, $2,500;
(iv) as to imputed auto income -- Mr. Mitchell, $1,801 and Mr. Peterson,
$1,158; and
(v) as to imputed income on an interest free loan -- Mr. Ireland, $658.
(2) Mr. Baute has served as Chairman since April 28, 1995. He has also served
as President and Chief Executive Officer from November 10, 1995 until
January 2, 1996 when Mr. Garbacz became President and Chief Executive
Officer.
(3) Mr. Lunger left the Company in November 1995.
(4) Mr. Mitchell left the Company in September 1995.
(5) Mr. Clabburn received an additional $31,674 for consulting services
performed in 1995 prior to becoming an employee of Nashua.
(6) Messrs. Clabburn, Geiger, Ireland, Peterson, Junius and Wright each first
became executive officers in 1995.
(7) Includes moving expense reimbursement and tax equalization payments.
(8) Includes tax equalization payments on moving expense reimbursement,
executive life insurance premiums and California state disability insurance
payments.
(9) Includes tax equalization payments for executive life insurance and
California state disability insurance.
(10) Tax equalization payments.
(11) Includes tax equalization payments on executive medical reimbursement
income and executive life insurance premiums.
(12) Includes 25,000 shares of Restricted Stock (granted when the price of
Nashua shares was $13.375), 8,333 shares of which will vest when the
average closing price over a 30 trading day period of Nashua shares ("the
average closing price") reaches $20.00; 8,333 shares of which will vest
when the average closing price of Nashua shares reaches $25.00; and 8,334
shares of which will vest when the average closing price of Nashua shares
reaches $30.00. However, any shares which have not vested upon the earlier
of (i) by December 15, 2000 or (ii) termination of employment, will be
forfeited. Dividends, if any, will accumulate on such Restricted Stock and
be paid to the recipient when and if the underlying shares vest.
STOCK OPTIONS/STOCK APPRECIATION RIGHTS
The following table sets forth certain information as to options/SARs
granted during fiscal 1995 to the individuals listed in the Summary Compensation
Table. In accordance with SEC rules, also shown are the hypothetical gains or
"option spreads", on a pre-tax basis, that would exist for the respective
options/SARs. These gains are based on assumed rates of annual compound stock
price appreciation of 5% and 10% from the date the options/SARs were granted
over the full option term. To put this data into perspective, the resulting
Nashua stock prices for the grants expiring on February 24, 2005 would be $32.17
at a 5% rate of appreciation
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<PAGE> 8
and $51.23 at a 10% rate of appreciation, for the grants expiring on September
1, 2005, $29.12 at 5% and $46.38 at 10%, and for the grant expiring on November
4, 2005, $20.77 at 5% and $33.07 at 10%.
<TABLE>
OPTION/SAR GRANTS IN FISCAL 1995
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
% OF TOTAL APPRECIATION
OPTIONS/ EXERCISE OR FOR OPTION/SAR TERM
OPTIONS/SARS SARS GRANTED TO BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(#) EMPLOYEES IN 1995 ($/SHARE) DATE 0% 5% 10%
- ------------------------------------ ----------------- ----------- ---------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph A. Baute......... 0 -- -- -- -- -- --
Francis J. Lunger....... 8,000 2.7% $ 19.75 (1) -- -- --
20,000 6.9% $ 17.88 (1) -- -- --
William E. Mitchell..... 15,000 5.1% $ 19.75 (2) -- -- --
Robin J. T. Clabburn.... 20,000(3) 6.9% $ 12.75 11/4/2005 $0 $160,368 $406,404
Robert A. Geiger........ 3,500(4) 1.2% $ 19.75 2/24/2005 $0 $ 43,472 $110,167
10,000(5) 3.4% $ 17.88 9/1/2005 $0 $112,446 $284,961
John J. Ireland......... 3,500(4) 1.2% $ 19.75 2/24/2005 $0 $ 43,472 $110,167
10,000(5) 3.4% $ 17.88 9/1/2005 $0 $112,446 $284,961
David A. Peterson....... 1,500(4) 0.5% $ 19.75 2/24/2005 $0 $ 18,631 $ 47,215
10,000(5) 3.4% $ 17.88 9/1/2005 $0 $112,446 $284,961
Daniel M. Junius........ 1,500(4) 0.5% $ 19.75 2/24/2005 $0 $ 18,631 $ 47,215
10,000(5) 3.4% $ 17.88 9/1/2005 $0 $112,446 $284,961
Bruce T. Wright......... 4,000(4) 1.4% $ 19.75 2/24/2005 $0 $ 49,683 $125,906
10,000(5) 3.4% $ 17.88 9/1/2005 $0 $112,446 $284,961
<FN>
- ---------------
(1) These options expired on November 10, 1995 due to the termination of Mr.
Lunger's employment on that date.
(2) These options expired on September 8, 1995 due to the termination of Mr.
Mitchell's employment on that date.
(3) These options will become exercisable on November 3, 1996.
(4) 50% of these options became exercisable on February 23, 1996; 50% will
become exercisable on February 23, 1997.
(5) 50% of these options will become exercisable on August 31, 1996 and 50% on
August 31, 1997.
</TABLE>
7
<PAGE> 9
<TABLE>
The following table sets forth information as to options/SARs exercised in
1995 and unexercised options/SARs held at the end of fiscal 1995, by the
individuals listed in the Summary Compensation Table:
OPTION EXERCISES IN FISCAL YEAR 1995 AND
VALUE OF OPTIONS/SARS AT END OF FISCAL 1995
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS/SARS HELD AT IN-THE-MONEY, OPTIONS/SARS
FISCAL YEAR END AT FISCAL YEAR END(1)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph A. Baute...... 0 $0 2,000 0 $0 $ 0
Francis J. Lunger.... 0 $0 23,000 0 $0 $ 0
William E.
Mitchell........... 0 $0 30,000 0 $0 $ 0
Robin J. T.
Clabburn........... 0 $0 0 20,000 $0 $17,600
Robert A. Geiger..... 0 $0 12,350 14,750 $0 $ 0
John J. Ireland...... 0 $0 2,500 16,000 $0 $ 0
David A. Peterson.... 0 $0 3,750 12,250 $0 $ 0
Daniel M. Junius..... 0 $0 12,250 12,250 $0 $ 0
Bruce T. Wright...... 0 $0 500 14,500 $0 $ 0
<FN>
- ---------------
(1) Represents the difference between the closing price on the New York Stock
Exchange of Nashua's common stock on December 29, 1995 ($13.63) and the
exercise price of the options/SARs.
</TABLE>
PENSION PLAN
<TABLE>
The following table shows estimated annual benefits payable upon retirement
under the Nashua Corporation Retirement Plan for Salaried Employees, which
includes the individuals listed in the Summary Compensation table:
ESTIMATED PENSION BENEFITS
<CAPTION>
AVERAGE ANNUAL YEARS OF SERVICE
COMPENSATION FROM ---------------------------------------------------------------------------------------------------------
JANUARY 1, 1990 25 OR
TO RETIREMENT 5 YEARS 10 YEARS 15 YEARS 20 YEARS MORE YEARS
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
$ 125,000 $ 13,750 $ 27,500 $ 41,250 $ 55,000 $ 68,750
250,000 27,500 55,000 82,500 110,000 137,500
375,000 41,250 82,500 123,750 165,000 206,250
500,000 55,000 110,000 165,000 220,000 275,000
625,000 68,750 137,500 206,250 275,000 343,750
750,000 82,500 165,000 247,500 330,000 412,500
875,000 96,250 192,500 288,750 385,000 481,250
1,000,000 110,000 220,000 330,000 440,000 550,000
</TABLE>
Compensation covered by this plan generally refers to total annual cash
compensation, including salary and bonus, but excluding certain items such as
the value of stock option awards and employer allocations to the Supplemental
Compensation Plan and Employees' Savings Plan. As of December 31, 1995, the
individuals named in the Summary Compensation Table had the following years of
service credited under the plan: Messrs. Baute, Lunger, Mitchell and Clabburn
are not eligible; Mr. Geiger, 8 years; Mr. Ireland, 1.5 years; Mr. Peterson, 4.5
years; Mr. Junius, 11 years; and Mr. Wright, 1 year.
The estimated annual benefits shown above are subject to an offset for 50%
of a participant's primary Social Security benefit. Benefits as shown above,
minus the 50% offset for Social Security benefit, are
8
<PAGE> 10
available for participants whose pensions start after reaching age 65.
Participants who have five or more years of service are eligible to receive
pensions after reaching age 60 and participants who have ten or more years of
service are eligible to receive pensions after reaching age 55, but payments are
reduced 4.2% per year for each year that they start receiving benefits earlier
than at age 65. Payments are further reduced for participants whose credited
service began before age 40 and terminate employment with Nashua prior to
reaching age 55.
The Employee Retirement Income Security Act of 1974 places limitations on
pensions which may be paid under plans qualified under the Internal Revenue
Code. Amounts exceeding such limitations may be paid outside of qualified plans.
Nashua has a Supplemental Unfunded Excess Retirement Benefit Plan providing for
such amounts for its employees including Messrs. Geiger, Ireland, Peterson,
Junius and Wright.
CERTAIN TRANSACTIONS AND INDEBTEDNESS
In conjunction with Mr. Mitchell's relocation from California to New
England, the Company granted to Mr. Mitchell an interest-free residential bridge
loan in the amount of $500,000 pending the sale of Mr. Mitchell's California
home. Mr. Mitchell has repaid the loan. The Company also guaranteed repayment of
a home mortgage loan acquired by Mr. Mitchell in the sum of $1.1 million. The
guaranty has expired.
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with Messrs. Clabburn,
Geiger, Ireland, Junius and Wright in order to ensure their continued service to
Nashua in the event of an attempt by a person or group of persons to gain
control of Nashua. Such severance agreements provide that upon termination of
employment under certain circumstances within three years of a "change in
control" as defined in these agreements, the employee would receive severance
pay equal to three times the sum of his annual salary and bonus for Messrs.
Junius and Wright and one times the sum of his annual salary and bonus for Mr.
Clabburn, Mr. Geiger and Mr. Ireland. In addition, if after one year following
the "change in control" Messrs. Junius or Wright elect to terminate employment,
he would receive the above described severance pay; Mr. Clabburn may make such
an election immediately following the change in control and receive his
severance pay. Additional payments are required with respect to Messrs. Junius
and Wright in amounts such that after the payment of all taxes, the executive
will be in the same after tax position as if no excise tax under Section 4999 of
the Internal Revenue Code had been imposed. In addition, the agreements provide
for the continuation for specified periods of certain other benefits.
EXECUTIVE SALARY COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1995, the Executive Salary Committee was composed of the
non-employee directors listed below. The Committee administers the Management
Incentive Compensation Program, the Company's stock option and stock incentive
plans and the Company's Supplemental Compensation Plan. Each year the Committee
reviews the Chief Executive Officer's performance against objectives and sets
the Chief Executive Officer's base salary. The Committee also reviews the
performance and the salary levels of the other executives listed in the
compensation table and makes decisions regarding the above plans and programs.
The Committee's compensation policies which were applicable during 1995 to
Messrs. Mitchell and Lunger who both served as Chief Executive Officer during
1995 and the Vice Presidents listed on the compensation table are set forth
below:
Base salaries should be at competitive levels so as to attract and
retain well qualified executives. Executive base salaries for 1995 for
persons serving as Chief Executive Officer were generally below the median
base salary for chief executive officers based on survey data of 25
companies representing a cross section of general industry chosen by a
national executive compensation consulting firm. The aggregate
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<PAGE> 11
amount of base salaries for the six Vice Presidents listed on the
Compensation Table was slightly below the aggregate amount of median base
salaries for similar positions in such survey group. None of the companies
listed in the photofinishing peer group with respect to the Company's
performance graph were included in the survey. Messrs. Lunger's and
Mitchell's base salaries while they were Chief Executive Officers were 31%
below the median base salary of chief executive officers in such survey
group.
Incentive compensation paid in cash should be awarded to support
company objectives based on company and division performance during the
preceding year. The Company's Management Incentive Compensation Program
provides that cash awards may be granted each year by the Committee based
on corporate and division performance. For the individuals who served as
Chief Executive Officer, Chief Technical Officer, Chief Financial Officer
and Vice President -- Human Resources, award targets for 1995 were based on
the Company's earnings per share. For the Vice Presidents in charge of Tape
Products, Specialty Coated Products and Nashua Precision Technologies, the
award target was based on unit operating income as well as the Company's
earnings per share. Incentive compensation cash payments were authorized by
the Committee to only one officer listed on the compensation table (Mr.
Peterson) with respect to 1995 since the predetermined target for his unit
had been exceeded.
Long-term equity-based compensation should be awarded to provide
incentive to executives to create value for stockholders and give the
executives a substantive ownership interest in the Company's success. With
respect to 1995, the Committee's policy was that stock option grants be
made in greater numbers than preceding years in order to attract and retain
executives during a period when the Company was undergoing operating and
financial difficulties. In addition, the Company began awarding performance
based restricted stock to key executives. Restricted stock awards were made
in 1995 to four key Vice Presidents of the Company and one other key
employee to align the key executives' interests with those of stockholders.
These awards will become unrestricted when the average price per share of
the Company's stock over a thirty trading day period reaches certain
levels, namely $20.00, $25.00 and $30.00 per share. The Committee does not
consider the amount of Company stock or the amount and terms of stock
options already held by any executive in making its determinations.
The Committee's compensation policy applicable to Mr. Baute, who served as
a non-employee Chairman during 1995 and as President and Chief Executive Officer
from November 10, 1995 to January 2, 1996, was to adjust survey compensation for
chairmen and chief executive officers based on his availability.
The Committee has not yet had occasion to adopt any policy on the tax law
disallowing deductions on compensation in excess of $1 million for certain
executives of public companies. The Company believes that options and
performance based restricted stock awards granted under its stock incentive
plans are exempt from the limitation and that other compensation expected to be
paid during 1996 will be below the compensation limitation.
Executive Salary Committee
James F. Orr III, Chairman
Richard E. Carter
John M. Kucharski
10
<PAGE> 12
PERFORMANCE GRAPHS
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's common stock against
the cumulative total return of the S&P-500 Index and a composite peer group for
the five years commencing December 31, 1990 and ending December 31, 1995. The
Company selected a peer group because, offering a diverse mix of products and
services, it did not believe that published industry or line-of-business indices
provided an adequate measure for comparison of the Company as a whole.
The Company's products and services include facsimile and thermal papers,
pressure sensitive labels, specialty papers and tapes, copier and laser printer
supplies, photofinishing services, and substrates for computer disks and OPC
drums. In constructing a composite peer group, the Company selected published
indices to represent various products and, because no published photofinishing
index was available, has selected a peer group for that segment. The indices
are: for facsimile and thermal papers, pressure sensitive labels, specialty
papers and tapes -- the S&P Paper and Forest Products Index; for substrates for
computer disks and OPC drums -- the S&P Computer Systems Index; and for copier
and laser printer supplies -- the S&P Office Equipment & Supplies Index. As peer
companies in the photofinishing segment the Company selected Eastman Kodak
Company and Seattle Filmworks, Inc. and weighted them by market capitalization.
The Company then weighted the three indices and photofinishing peer group in
proportion to the 1995 revenues of Nashua's products and services represented by
the respective indices and peer group.
<TABLE>
<CAPTION>
Measurement Period Nashua S&P 500 Composite
(Fiscal Year Covered) Corporation Index Peer Group
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 69.00 130.00 132.00
1992 87.00 140.00 138.00
1993 87.00 155.00 168.00
1994 67.00 157.00 180.00
1995 46.00 215.00 243.00
</TABLE>
11
<PAGE> 13
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
The following table shows the number of shares and percentage of Nashua's
common stock deemed to be beneficially owned by each director and nominee for
director, each executive officer named in the Summary Compensation Table above
and by all directors and officers of Nashua as a group, as of April 26, 1996:
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF SHARES
NAME BENEFICIAL OWNERSHIP(A) OUTSTANDING
- ------------------------------------------------- ----------------------- -----------------
<S> <C> <C>
Joseph A. Baute.................................. 5,640(b) *
Sheldon A. Buckler............................... 4,000(b) *
Richard E. Carter................................ 51,341(b) *
Robin J. T. Clabburn............................. 28,814(c) *
Thomas W. Eagar.................................. 4,300(b) *
Gerald G. Garbacz................................ 127,500(d) 1.9
Robert A. Geiger................................. 15,923(e)(l) *
Charles S. Hoppin................................ 5,000(b) *
John J. Ireland.................................. 7,393(f)(l) *
Daniel M. Junius................................. 41,065(c)(g)(l) *
John M. Kucharski................................ 5,500(b) *
Francis J. Lunger................................ 23,000(h) *
David C. Miller, Jr.............................. 0 --
William E. Mitchell.............................. 100 *
James F. Orr III................................. 7,000(b) *
David A. Peterson................................ 5,897(i)(l) *
Bruce T. Wright.................................. 28,306(c)(j) *
Directors and Officers as a group (21 persons)... 411,711(k)(l)(m) 6.2
</TABLE>
- ---------------
* Less than 1%
(a) Information as to the interests of the respective nominees has been
furnished in part by them. The inclusion of information concerning shares
held by or for their spouses or children or by corporations in which they
have an interest does not constitute an admission by such nominees of
beneficial ownership thereof. Unless otherwise indicated, all persons have
sole voting and dispositive power as to all shares they are shown as
owning.
(b) Includes shares each non-employee Director has a right to acquire through
the exercise of stock options prior to July 31, 1996 -- Mr. Baute, 2000
shares; Mr. Buckler, 1,000 shares; Mr. Carter, 3,000 shares; Mr. Eagar,
3,000 shares; Mr. Hoppin, 3,000 shares; Mr. Kucharski, 3,000 shares; and
Mr. Orr, 3,000 shares.
(c) Includes 25,000 shares of Restricted Stock, 8,333 shares of which will vest
when the average closing price over a 30 trading day period of Nashua
shares (the "average closing price") reaches $20.00; 8,333 shares of which
will vest when the average closing price of Nashua shares reaches $25.00;
and 8,334 shares of which will vest when the average closing price of
Nashua shares reaches $30.00. However, any shares which have not vested by
December 15, 2000 or his termination of employment will be forfeited.
(d) Includes 120,000 shares of Restricted Stock, 40,000 shares of which will
vest when the average closing price of Nashua shares reaches $20.00; 40,000
shares of which will vest when the average closing price of Nashua shares
reaches $25.00; and 40,000 shares of which will vest when the average
closing price of Nashua shares reaches $30.00. However, any shares which
have not vested by December 18, 2000 or his termination of employment will
be forfeited.
12
<PAGE> 14
(e) Includes 15,350 shares Mr. Geiger has a right to acquire through the
exercise of stock options prior to July 31, 1996.
(f) Includes 6,750 shares Mr. Ireland has a right to acquire through the
exercise of stock options prior to July 31, 1996.
(g) Includes 12,250 shares Mr. Junius has a right to acquire through the
exercise of stock options prior to July 31, 1996.
(h) Shares Mr. Lunger has a right to acquire through the exercise of stock
options prior to May 10, 1996.
(i) Includes 5,250 shares Mr. Peterson has a right to acquire through the
exercise of stock options prior to July 31, 1996.
(j) Includes 2,500 shares Mr. Wright has a right to acquire through the
exercise of stock options prior to July 31, 1996.
(k) Includes 94,534 shares which the directors and officers of Nashua have the
right to acquire through exercises of stock options prior to July 31, 1996.
(l) Includes shares held in trust under the Employee's Savings Plan under which
the participating employee has voting power as to the shares in his
account. As of December 31, 1995, 573 shares are held in trust for Mr.
Geiger's account, 643 shares are held in trust for Mr. Ireland's account,
647 shares are held in trust for Mr. Peterson's account, 3,578 shares are
held in trust for Mr. Junius' account, and 10,035 shares are held in trust
for the accounts of all directors and officers as a group. No director
other than Mr. Garbacz participates in the Plan.
(m) Includes 225,000 shares of Restricted Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the number of shares and percentage of Nashua's
common stock beneficially owned by all persons known to Nashua to be the
beneficial owners of more than 5% of its common stock, as of April 26, 1996:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON STOCK
NAME OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING
- ----------------------------------------------------------- ----------------- ------------
<S> <C> <C>
GAMCO Investors, Inc./Gabelli Funds, Inc./Gabelli
Performance
Partnership L.P./Gabelli International Limited/
Gabelli International II Limited(a)...................... 633,400(b) 9.6%
One Corporate Center, Rye, NY 10580
GeoCapital Corporation(c).................................. 454,700(d) 6.9%
767 Fifth Avenue, New York, NY 10153
Gouws Capital Management, Inc.(e).......................... 396,065(f) 6.0%
511 Congress Street, Portland, ME 04101
The TCW Group, Inc./Robert Day(g).......................... 393,800(h) 6.0%
865 South Figueroa Street, Los Angeles, CA 90017
President and Fellows of Harvard College/Harvard........... 357,900(j) 5.4%
Yenching Institute(i)
600 Atlantic Avenue, Boston, MA 02210
</TABLE>
13
<PAGE> 15
- ---------------
(a) Information is based on a joint Schedule 13D (Amendment No. 6) dated July
26, 1995, furnished by such beneficial owners, which are affiliated with one
another.
(b) GAMCO Investors, Inc. owns 310,400 shares, for which it has sole dispositive
power. It has sole voting power with respect to 260,000 of these shares.
Gabelli Funds, Inc. owns 292,000 shares for which it has sole dispositive
power and sole voting power. Gabelli Performance Partnership L.P. owns
15,000 shares for which it has sole dispositive power and sole voting power.
Gabelli International Limited owns 9,000 shares for which it has sole voting
and sole dispositive power. Gabelli International II Limited owns 7,000
shares for which it has sole voting and sole dispositive power.
(c) Information is based on Schedule 13G, dated February 15, 1996, furnished by
such beneficial owner.
(d) Sole dispositive power.
(e) Information is based on Schedule 13G, dated February 13, 1996, furnished by
such beneficial owner.
(f) Sole voting power as to 53,160 shares and sole dispositive power as to
396,065 shares.
(g) Information is based on Schedule 13G, dated February 12, 1996, furnished by
such beneficial owner.
(h) Sole voting and sole dispositive power.
(i) Information is based on Amendment No. 2 to Schedule 13G dated February 13,
1996, furnished by such beneficial owners, which are affiliated with one
another.
(j) President and Fellows of Harvard College owns 351,300 shares, for which it
has sole voting and sole dispositive power. Harvard Yenching Institute owns
6,600 shares, for which it has sole voting and sole dispositive power.
STOCKHOLDER APPROVAL TO GRANT SECURITY
INTERESTS IN ALL OR SUBSTANTIALLY ALL ASSETS
Nashua has restructured (the "Restructuring") its financing arrangements
with financial institutions which have provided loans and other forms of
financing to Nashua (collectively, the "Lenders"). As part of the Restructuring,
Nashua granted to the Lenders security interests in its accounts receivable and
inventory and caused certain of its subsidiaries to grant to the Lenders
security interests in their assets and agreed to use its best efforts to obtain
the approval by its stockholders necessary to allow Nashua to pledge all of its
assets to secure the amounts due to the Lenders as a result of the
Restructuring.
Nashua's Certificate of Incorporation requires that the affirmative vote of
the holders of at least two-thirds of each class of stock issued, outstanding
and having voting power is required to authorize the mortgage or pledge of all
of Nashua's property and assets. The granting to the Lenders of security
interests as part of the Restructuring did not constitute the mortgage or pledge
of all of Nashua's property and assets and did not require approval of the
stockholders of Nashua. However, in order to pledge all of its assets to secure
the amounts due to the Lenders under the Restructuring, the approval of at least
two-thirds of the Common Stock of Nashua is required.
THE FINANCING ARRANGEMENTS
On September 13, 1991, Nashua issued a $20,000,000, 9.17% Senior Note (the
"Original Senior Note") due March 20, 2001 to The Prudential Insurance Company
of America ("Prudential"). The outstanding principal balance on the Original
Senior Note on the effective date of the Restructuring (April 5, 1996) was
$15,000,000. On January 5, 1995, Nashua entered into a Credit Agreement with
several banks and other financial institutions (collectively, the "Banks") and
Chemical Bank as the agent for the Banks (the "Original
14
<PAGE> 16
Credit Agreement"). The Original Credit Agreement was a $75 million revolving
credit facility. At the time of the Restructuring, borrowings of $53 million
were outstanding under the Original Credit Agreement.
The Original Senior Note and Original Credit Agreement each required the
maintenance of certain restrictive financial covenants related to interest and
fixed charge coverage, tangible net worth, leverage and additional debt. From
September 29, 1995 until the time of the Restructuring, the Company was not in
compliance with the interest and fixed charge coverage portions of their
agreements with the Lenders. The Lenders provided Nashua with a forbearance
during which time the parties negotiated amendments to the lending agreements in
order to allow Nashua to remain in compliance with the respective lending
agreements.
As part of the Restructuring, Nashua entered into an Amended and Restated
Credit Agreement with the Banks and Chemical Bank, as agent for the Banks (the
"Amended and Restated Credit Agreement"), and entered into an Amended and
Restated Note Agreement with Prudential (the "Amended and Restated Note
Agreement"), each dated as of April 5, 1996 (collectively the "Amended and
Restated Agreements"). As part of the Restructuring, Nashua, the Banks and
Prudential also entered into a Collateral Agency and Intercreditor Agreement
(the "Intercreditor Agreement") to provide for the allocation of payments under
the Amended and Restated Agreements. On April 4, 1996, the day immediately
preceding the execution of the Amended and Restated Agreements, the high and low
sale prices for a share of Nashua's Common Stock on the New York Stock Exchange
were each $13.625.
AMENDED AND RESTATED NOTE AGREEMENT
The interest rate under the Amended and Restated Note Agreement is 11.85%.
The Amended and Restated Note Agreement also provides for the payment of a
Yield-Maintenance Amount calculated from the original maturity date of March 20,
2001, using the coupon rate of 9.67% and a reinvestment yield of 50 basis points
over U.S. Treasury Securities and computed as if prepayments were applied to
scheduled principal prepayments required under the Original Note Agreement on a
pro rata basis.
A portion of the amounts due under the Amended and Restated Note Agreement
are to be amortized in four equal, quarterly installments commencing January 2,
1997. The amount to be amortized shall equal 50% of the amount outstanding under
the Amended and Restated Note Agreement on October 1, 1996. All remaining
amounts shall be due and payable on December 31, 1997.
15
<PAGE> 17
AMENDED AND RESTATED CREDIT AGREEMENT
The Amended and Restated Credit Agreement provides for a new credit
facility in the aggregate amount of $66 million (the "Credit Facility"). The
Credit Facility is structured as a $48 million term loan (the "Term Loan") and
an $18 million revolving credit facility (the "Revolving Credit Facility"). The
amount available under the Revolving Credit Facility may not exceed an amount,
calculated on a monthly basis, equal to the sum of (i) 50% of the aggregate
eligible finished goods inventory, (ii) 40% of the aggregate eligible raw
materials inventory, (iii) 35% of aggregate eligible work-in-process inventory,
and (iv) 75% of the aggregate eligible accounts receivable minus (x) $10
million, so long as the principal amount of the Term Loan outstanding is equal
to, or greater than, $10 million, or, if the principal amount of the Term Loan
outstanding is less than $10 million, such lesser amount. Of the aggregate
amount available under the Revolving Credit Facility, $5 million is available
exclusively for letters of credit issued for insurance coverage purposes only.
However, there is a $250,000 sublimit for letters of credit issued for purposes
other than insurance coverage. Of the $5 million reserved for letters of credit,
approximately $3 million thereof has been designated to replace existing letters
of credit. The Revolving Credit Facility matures on December 31, 1997, and all
letters of credit must expire on or before such date.
A portion of the amounts due under the Term Loan are to be amortized in
four equal, quarterly installments commencing January 2, 1997. The amount to be
amortized shall equal 50% of the amount outstanding under the Term Loan on
October 1, 1996. All remaining amounts shall be due and payable on December 31,
1997.
MANDATORY PREPAYMENTS
Each of the Amended and Restated Agreements requires the mandatory
prepayment of certain amounts outstanding thereunder upon the occurrence of
certain events (the "Mandatory Prepayments"). The Mandatory Prepayments are to
be paid to Chemical Bank as the collateral agent under the Intercreditor
Agreement (the "Collateral Agent") who must allocate the Mandatory Prepayments
between the Banks and Prudential in accordance with the Intercreditor Agreement.
Subject to certain exceptions, Mandatory Prepayments consist of (i) all net cash
proceeds from the issuance or sale by the Company or any of its subsidiaries of
debt securities or instruments or from the incurrence of certain indebtedness of
the Company or any of its subsidiaries; (ii) all net cash proceeds (or, provided
no event of default has occurred and is continuing, 75% after $50 million of
Mandatory Prepayments of principal, less the Holdback Amount (as defined below),
have been paid (the "75% Prepayment Clause")) from the issuance or sale of the
common equity securities of the Company or any of its subsidiaries (other than
the equity securities of Cerion Technologies, Inc. ("Cerion"), except to the
extent that proceeds from the sale of Cerion securities are received by Nashua
and not Cerion, and other than the issuance of equity securities to senior
employees of Nashua in an aggregate amount not in excess of $1 million in
connection with management incentive programs); (iii) subject to the 75%
Prepayment Clause, all payments of principal received by Nashua or any of its
subsidiaries on the $10 million promissory note dated March 1, 1996 issued by
Cerion and payable to Nashua; (iv) subject to the 75% Prepayment Clause, all of
the net cash proceeds received by Nashua or any of its subsidiaries from the
sale or other disposition of assets which is in excess of $500,000, on an
individual asset basis or $1 million on a cumulative asset basis; and (v)
subject to the 75% Prepayment Clause, within 45 days after the end of fiscal
year 1996, all of Nashua's excess cash flow for such fiscal year.
Notwithstanding the foregoing, at any time before the Revolving Credit Facility
has been permanently reduced to an amount less than or equal to $10 million with
respect to any Mandatory Prepayments relating to any asset sale or equity
issuance or sale described in clauses (ii), (iii) or (iv) above, with net cash
proceeds in excess of $15 million, Nashua is entitled to retain an amount (the
"Holdback Amount") equal to the excess, if any, of (i) $3 million
16
<PAGE> 18
over (ii) the amount outstanding under the Revolving Credit Facility on the date
of such Mandatory Prepayment in excess of $5 million.
FINANCIAL COVENANTS
Under the Amended and Restated Agreements, Nashua must comply with a number
of covenants, including the following financial covenants:
EBITDA
EBITDA* measured on a cumulative basis, for any test period set forth
below, may not, as at the last day of such test period, be less than the number
set forth below opposite such test period:
<TABLE>
<CAPTION>
QUARTER AMOUNT
------------------------------------------------------------------------ -----------
<S> <C>
January 1, 1996 -- March 31, 1996....................................... $ 1,640,000
January 1, 1996 -- June 30, 1996........................................ $ 7,800,000
January 1, 1996 -- September 30, 1996................................... $19,150,000
January 1, 1996 -- December 31, 1996.................................... $27,300,000
</TABLE>
Ratio of EBITDA to Fixed Charges
The ratio of EBITDA to fixed charges measured on a cumulative basis for any
test period set forth below, may not, as at the last day of such test period, be
less than the ratio set forth below opposite such test period:
<TABLE>
<CAPTION>
QUARTER RATIO
----------------------------------------------------------------------------- ------
<S> <C>
January 1, 1996 -- March 31, 1996............................................ .67:1
January 1, 1996 -- June 30, 1996............................................. 1.59:1
January 1, 1996 -- September 30, 1996........................................ 2.60:1
January 1, 1996 -- December 31, 1996......................................... 2.78:1
</TABLE>
- ---------------
* EBITDA means for any period, the consolidated net income for such period
adjusted to exclude the following items of income or expense to the extent that
such items are included in the calculation of such consolidated net income: (a)
consolidated interest expense, (b) any non-cash expenses and charges, (c) total
income tax expense, (d) depreciation expense, (e) the expense associated with
amortization of intangible and other assets, (f) non-cash provisions for
reserves for discontinued operations or restructuring of operations, (g) any
extraordinary, unusual or non-recurring gains or credits, (h) any gain or loss
associated with the sale of assets; (i) any income or loss accounted for by the
equity method of accounting (except in the case of income to the extent of the
amount of cash dividends or cash distributions paid to Nashua or any subsidiary
by the entity accounted for by the equity method of accounting), and (j)
expenses incurred in connection with Nashua's restructuring on or prior to the
date of the Amended and Restated Agreements.
17
<PAGE> 19
Consolidated Tangible Net Worth
Consolidated Tangible Net Worth may not at any time during any quarter set
forth below be less than the number opposite such quarter:
<TABLE>
<CAPTION>
QUARTER AMOUNT
-------------------------------------------------------- -----------
<S> <C>
Fourth Quarter 1995..................................... $39,100,000
First Quarter 1996...................................... $36,500,000
Second Quarter 1996..................................... $37,100,000
Third Quarter 1996...................................... $40,800,000
Fourth Quarter 1996 and thereafter...................... $42,700,000
</TABLE>
Capital Expenditures
Capital Expenditures of Nashua and its subsidiaries may not for each fiscal
year set forth below exceed the amount set forth opposite such fiscal year.
<TABLE>
<CAPTION>
FISCAL
YEAR
--------------------------------------------------------
<S> <C>
1995.................................................... $17,200,000
1996.................................................... $17,000,000
1997.................................................... $17,000,000
</TABLE>
ADDITIONAL COLLATERAL; PLEDGE AUTHORIZATION
In addition to the collateral currently pledged under the Amended and
Restated Agreements, if the stockholders of the Company approve this item,
Nashua is required to, within ten business days of the Annual Meeting, pledge
all of its assets to secure the amounts due under the Amended and Restated
Agreements.
Not only is Nashua required by the Amended and Restated Agreements to use
its best efforts to obtain stockholder approval to allow it to pledge all of its
assets to secure the amounts due under the Amended and Restated Agreements, the
Board of Directors believes that it is in Nashua's best interests to have the
flexibility to pledge all or substantially all of its assets to its current
Lenders and to any lenders that refinance or increase the amounts financed under
the Amended and Restated Agreements or any replacements, extensions or
modifications thereof (the "Pledge Authorization"). Having this flexibility may
enable Nashua to obtain financing on more favorable terms (including terms
relating to pricing, availability and covenants) than otherwise would be
available. Notwithstanding the foregoing, in the event that this proposal is
approved by the stockholders, and Nashua defaults under either of the Amended
and Restated Agreements, one or more of the Lenders would be entitled to
foreclose against not only the assets currently pledged under the Amended and
Restated Agreements, but all of Nashua's assets, and Nashua's stockholders would
not be entitled to a further vote thereon with respect to the pledge of all, or
substantially all, of the assets of Nashua for purposes of securing the amounts
due under the Amended and Restated Agreements and any refinancing arrangements,
including increasing the amounts financed, thereof.
To comply with its obligations under the Amended and Restated Agreements
and to provide Nashua with the flexibility to mortgage or pledge all or
substantially all of its assets in accordance with the Pledge Authorization, the
Board of Directors recommends that the stockholders approve the Pledge
Authorization.
REQUIRED VOTE
The affirmative vote of the holders of two-thirds of the outstanding shares
of Common Stock is required for the approval of this proposal.
The Board of Directors recommends that you vote FOR the proposal to
authorize the Board of Directors to pledge or mortgage all or substantially all
of Nashua's assets as described herein.
18
<PAGE> 20
APPROVAL OF THE 1996 STOCK INCENTIVE PLAN
The Board of Directors has adopted, subject to stockholder approval, a new
1996 Stock Incentive Plan (the "1996 Plan"). Presently, 92,620 shares are
reserved for future awards under Nashua's 1987 Stock Option Plan and 1993 Stock
Incentive Plan (together referred to as the "Existing Plans"). In addition,
482,690 shares are reserved for past awards under Existing Plans; however,
174,690 of these are at strike prices in excess of $20.00 per share. Under the
Existing Plans, Nashua does not reset stock option exercise prices, but options
lapse in accordance with their terms because of employee terminations and may be
replaced with new awards. If the 1996 Plan is approved by shareholders, the
Company will not grant any more awards under Existing Plans.
The full text of the 1996 Plan is set forth in Appendix A hereto. Some of
its more important features are summarized as follows:
Purpose. The purpose of the Plan is to attract and retain key personnel
for positions of substantial responsibility and to provide additional incentive
to certain officers, key employees and directors of Nashua or any Affiliated
Corporation, as defined therein, to promote the success of the Company.
Administration. The 1996 Plan is administered by the Executive Salary
Committee (the "Committee") of the Board of Directors of Nashua, the members of
which are "disinterested persons" within the meaning of Rule 16b-3 of the
Securities Exchange Act of 1934. Subject to the provisions of the 1996 Plan, the
Committee has discretion to determine when awards are made, which employees are
granted awards, the number of shares subject to each award and all other
relevant terms of the awards. The Committee also has broad discretion to
construe and interpret the 1996 Plan and adopt rules and regulations thereunder.
Eligibility. Awards may be granted under the 1996 Plan to officers and key
employees of Nashua or one of its subsidiaries, who are in positions in which
their decisions, actions and counsel significantly impact upon the profitability
of Nashua. Commencing on the date of the 1996 Annual Meeting of Stockholders
(the "Effective Date"), members of the Board of Directors of Nashua who are not
employees of Nashua or one of its subsidiaries shall receive a fixed number
(1,000) of options each year. In addition, in lieu of receiving the annual cash
retainer (presently $15,000 per annum), Directors each year, commencing on the
Effective Date, will receive grants of stock having a fair market value on date
of grant equal to their then annual cash retainer. Non-employee Directors who
perform additional duties such as Chairman or Lead Director may be paid
additional compensation in cash or stock at such Director's option. The
Committee expects that approximately 70 key employees of the Company will be
eligible for grants based upon their level of responsibility and performance. In
no event shall the aggregate number of shares which may be issued under the Plan
to any one individual exceed 150,000.
Shares Subject to the 1996 Plan. The shares to be issued under the 1996
Plan are shares of Nashua's common stock ($1.00 par value), which may be newly
issued shares or shares held in the treasury or acquired in the open market. No
more than 660,000 shares will be issued under the 1996 Plan. The foregoing limit
is subject to adjustment for stock dividends, stock splits or other changes in
Nashua's capitalization.
Stock Options. The Committee in its discretion may issue stock options
which qualify as incentive stock options under the Internal Revenue Code or
non-statutory stock options. The Committee will determine the time or times when
each stock option becomes exercisable, the period within which it remains
exercisable and the price per share at which it is exercisable, provided that no
incentive stock option shall be exercised more than 10 years after it is granted
and no other option shall be exercised more than 10 years and one day after it
is granted, and further provided that the exercise price shall not be less than
the fair market value of Nashua's common stock on the date of grant. Options
granted to Directors who are not employees of Nashua shall become exercisable on
the day before the annual stockholders meeting following the date of grant
provided the
19
<PAGE> 21
recipient is then a Director. The reported closing price of Nashua's common
stock on the New York Stock Exchange on April 26, 1996 was $ per share.
The exercise price of stock option grants under the Plan may not be reset
except to reflect changes in the corporate structure or shares of the Company
pursuant to the Plan. Options that lapse in accordance with the Plan because of
employee terminations and other reasons may be replaced with new awards.
Payment for shares purchased upon exercise of any option must be made in
full in cash when the option is exercised, or to the extent permitted by the
Committee, by delivery of shares of Nashua's common stock. No option shall be
transferable except by will or the laws of descent and distribution and, during
the optionee's lifetime, the option may be exercised only by the optionee. If an
optionee ceases to be an employee of the Company or any subsidiary other than by
reason of death, retirement or disability, absent a determination by the
Committee to the contrary, any options which were exercisable by the optionee on
the date of termination of employment may be exercised any time before their
expiration date or within six months after the date of termination, whichever is
earlier, but only to the extent that the options were exercisable when
employment ceased. In the case of death or disability of the employee, options
exercisable at termination of employment may be exercised at any time before
their expiration date or within one year after the date of termination,
whichever is earlier. If an optionee's employment terminates because of
retirement, any options which were exercisable by the optionee on the date of
termination of employment may be exercised any time before their expiration date
or within three years after the date of termination, whichever is earlier, but
only to the extent that the options were exercisable when employment ceased
absent a determination by the Committee to the contrary. Notwithstanding the
foregoing, if the holder of an Incentive Stock Option exercises it more than (i)
one year after the date of termination due to disability or (ii) three months
after the date of termination due to any other reason, except death, such Option
shall be treated as a Non-Statutory Stock Option. With respect to grants to
Directors who are not employed by Nashua, options remain exercisable until 10
years and one day from date of grant.
Notwithstanding any other provision of the Plan, the aggregate fair market
value of the shares with respect to which incentive stock options are
exercisable for the first time by an employee in any calendar year (under the
Plan and all other stock option plans of Nashua or its parent or subsidiaries)
shall not exceed $100,000.
Performance Based Restricted Stock. The Committee has authority to grant
Performance Based Restricted Stock to key employees. Such shares of Nashua
common stock shall vest at such times as determined by the Committee only upon
meeting performance criteria established by the Committee. Recent grants of
Performance Based Restricted Stock under the 1993 Stock Incentive Plan have
provided that vesting shall be as follows: 1/3 upon the average closing price of
Nashua stock increasing 50% over the price on grant date; 1/3 upon the average
closing price of Nashua stock increasing 90% over the price on grant date, and
the final 1/3 upon the average closing price of Nashua stock increasing 130%
over the price on grant date. These recent grants have provided that shares
which have not vested within five years of grant revert to the Plan.
The Committee shall have sole and complete authority to determine the
employees to whom shares of Performance Based Restricted Stock shall be granted,
the number of shares of Performance Based Restricted Stock to be granted to each
employee, and the other terms and conditions of such awards.
Shares of Performance Based Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered during the restricted period.
Certificates issued in respect of shares of Performance Based Restricted Stock
shall be registered in the name of the employee and deposited by such employee,
together with a stock power endorsed in blank, with the Company. At the
expiration of the restricted period, the Company shall deliver such certificates
to the employee or the employee's legal representative.
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Unless otherwise determined by the Committee, if any Employee's employment
terminates for any reason, the Performance Based Restricted Stock which is
unvested or subject to restriction shall thereupon be forfeited.
Awards of Performance Based Restricted Stock may not exceed 150,000 shares
under the Plan.
Amendments. Nashua's Board of Directors may terminate or amend the 1996
Plan at any time, except in the case of Section 10 thereof (Non-Employee
Director Options and Stock Awards), which may not be amended more frequently
than once each six months, unless required by law, provided that no such action
shall adversely affect or impair any outstanding option or award without the
consent of its holder, and that approval of the stockholders of Nashua must be
obtained within one year after any amendment that: (i) increases the maximum
number of shares that may be issued under the 1996 Plan, (ii) changes the class
of persons eligible to participate in the 1996 Plan or (iii) materially
increases the benefits accruing to executive officers or directors of Nashua
under this Plan.
Federal Income Tax Consequences. The grant of a stock option does not
produce ordinary income to the recipient or a deduction to the Company. The tax
consequences associated with exercise of a stock option granted under the Plan,
and with the subsequent disposition of Common Stock acquired under such an
option, will depend in part on whether the option is an incentive stock option
or a non-statutory stock option.
Incentive Stock Options. Generally, a participant will not recognize
ordinary taxable income at the time of exercise of an incentive stock option and
no deduction will be available to the participant's employer, provided the
option is exercised while the participant is an employee or within three months
following termination of employment (longer, in the case of termination of
employment by reason of disability or death). If an incentive stock option
granted under the Plan is exercised after these periods, the exercise will be
treated for tax purposes as the exercise of a non-statutory stock option. Also,
incentive stock options granted under the Plan will be treated as non-statutory
stock options to the extent they (together with any other incentive stock
options granted after 1986 under other plans of the Company and its
subsidiaries) first become exercisable in any calendar year for shares having a
fair market value, determined as of the date of grant, in excess of $100,000.
If shares acquired upon exercise of an incentive stock option are sold or
exchanged more than one year after the date of exercise and more than two years
from the date of grant of the option, income from the disposition of the shares
will be characterized a long-term capital gain or loss. If shares acquired upon
exercise of an incentive stock option are disposed of prior to the expiration of
these one-year or two-year holding periods (a "disqualifying disposition"), the
participant will recognize ordinary income at time of disposition, and the
employer will be eligible to claim a deduction, in an amount equal to the excess
of the fair market value of the shares at date of exercise over the exercise
price. Any additional gain from a disqualifying disposition will be treated as
long-term or short-term capital gain depending on the holding period of the
shares. For shares which are sold or exchanged (other than in certain related
party transactions) for an amount less than their fair market value at date of
exercise, the ordinary income recognized in connection with the disqualifying
disposition will be limited to the amount of gain recognized. Shares sold at
less than the exercise price will generate either a long-term or short-term
capital loss depending on the holding period.
Although the exercise of an incentive stock option as described above will
not produce ordinary taxable income to the participant, the exercise will
produce an increase in the participant's alternative minimum taxable income and
may result in an alternative minimum tax liability.
Non-Statutory Stock Options. Upon the exercise of a non-statutory stock
option, the participant will recognize ordinary taxable income equal to the
excess of the fair market value of the shares at the time of exercise over the
exercise price. The employer will be able to claim a deduction in an equivalent
amount
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provided it satisfies federal employment tax withholding requirements. Gain or
loss upon a subsequent sale or exchange of the shares will generate either a
capital gain or loss, which will be characterized as either long-term or
short-term depending on the holding period for the shares.
In General. Special rules will apply in determining the tax basis of the
shares received upon exercise where employee held shares are utilized in the
exercise of a stock option.
Performance Based Restricted Stock. A participant who receives shares of
Performance Based Restricted Stock will recognize ordinary income and the
employer will be entitled to claim a correlative deduction (subject to
satisfaction of federal withholding tax requirements) upon the earlier of the
date when the shares become transferable to the employee or the date when the
substantial risk of forfeiture associated with the shares lapses. The amount of
ordinary income recognized by the employee, and of the correlative deduction,
will be equal to the fair market value of the shares at the time the income is
recognized, determined without regard to any restrictions other than
restrictions which by their terms will never lapse. Generally, any dividends
paid with respect to shares that are nontransferable and subject to a
substantial risk of forfeiture will be deductible to the employer at the same
time they are includible in the participant's income as compensation.
In lieu of the treatment described above, a participant may elect immediate
recognition of income under Section 83(b) of the Internal Revenue Code of 1986,
as amended. In such event, the participant will recognize as income the fair
market value of the restricted stock at the time of the award (determined
without regard to any restrictions other than restrictions which by their terms
will never lapse), and the employer will be entitled to a corresponding
deduction (subject to satisfaction of the federal withholding tax requirements).
Dividends paid with respect to shares as to which a proper Section 83(b)
election has been made will not be deductible to the employer.
Payment of Withholding Taxes. The Company may withhold, or require a
participant to remit to the Company, an amount sufficient to satisfy any
federal, state or local withholding tax requirements associated with awards
under the Plan. The Committee may permit a participant to satisfy such tax
withholding requirements by delivery to the Company of shares of Common Stock
owned by the participant, including shares retained from the award creating the
tax obligation.
Expiration. No awards will be granted under the 1996 Plan after June 14,
2006.
If the 1996 Plan is approved by the stockholders, the non-employee
Directors will receive 1996 annual compensation in shares of Nashua stock, the
fixed number of options for non-employee Directors will be granted during 1996
and the Committee may make awards to other participants during 1996. Other than
with respect to automatic grants to non-employee Directors, all awards granted
under the 1996 Plan are discretionary, and, therefore, Nashua cannot determine
the benefits to be received by any particular individual or particular group of
individuals.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of the
Common Stock entitled to vote held by stockholders present at the meeting in
person or by proxy is required for approval of the 1996 Plan.
The Board of Directors recommends that you vote FOR the proposal to approve
the 1996 Plan. Members of the Board of Directors are entitled to receive option
grants under the 1996 Plan and, therefore, have a direct interest in the
approval of the 1996 Plan.
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INDEPENDENT ACCOUNTANTS
Price Waterhouse, Nashua's independent accountants for the year 1995, are
also Nashua's independent accountants for the year 1996. Representatives of
Price Waterhouse are expected to be present at the stockholders' meeting with
the opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder proposal which is to be included in the proxy materials for
the 1997 annual meeting must be received by Nashua on or before January 3, 1997.
Such proposals should be directed to Nashua Corporation, 44 Franklin Street,
P.O. Box 2002, Nashua, New Hampshire 03061-2002, Attention: Suzanne L. Ansara,
Assistant Secretary.
MISCELLANEOUS
The Board of Directors does not presently know of any other matters to be
presented to the annual meeting. If any other matters are brought before the
annual meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of proxy to vote the proxies on such matters in
accordance with their best judgment, pursuant to the discretionary authority
granted by the proxy.
The cost of solicitation of proxies will be borne by Nashua. In addition to
the use of the mails, proxies may be solicited by officers and regular employees
of Nashua, without extra compensation, by telephone or by other means of
communication. Nashua will reimburse banks, brokers or other similar agents or
fiduciaries for forwarding proxy material to beneficial owners of common stock.
Nashua has also retained Morrow & Co., Inc. to aid in the solicitation of
proxies by personal interview, or by telephone or by other means of
communication. Nashua anticipates that the cost of such service will not exceed
$15,000.
All documents filed by Nashua with the Securities and Exchange Commission
from the date of this Proxy Statement through the date of the 1996 Annual
Meeting of Stockholders pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act will be deemed to be incorporated herein by reference.
Nashua's annual report containing audited financial statements for the
fiscal year ended December 31, 1995 which was filed with the Securities and
Exchange Commission on April 1, 1996, as amended (the "1995 10-K"), is referred
to and incorporated herein by reference. Nashua will provide free of charge to
any stockholder from whom a proxy is solicited pursuant to this proxy statement,
upon written request from such stockholder, a copy of the 1995 10-K. Requests
for such report should be directed to Nashua Corporation, 44 Franklin Street,
P.O. Box 2002, Nashua, New Hampshire 03061-2002, Attention: Suzanne L. Ansara,
Assistant Secretary.
PAUL BUFFUM
Secretary
Nashua, New Hampshire
May 3, 1996
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APPENDIX A
NASHUA CORPORATION
1996 STOCK INCENTIVE PLAN
1. NAME OF PLAN
The Plan shall be known as the 1996 Nashua Corporation Stock Incentive Plan
(the "Plan").
2. PURPOSE OF THE PLAN
The purpose of the Plan is to attract and retain key personnel for
positions of substantial responsibility and to provide additional incentive to
certain officers, key employees and directors of Nashua Corporation or any
Affiliated Corporation to promote the success of the Company.
3. DEFINITIONS
As used herein, the following definitions shall apply:
(a) "AFFILIATED CORPORATIONS" shall include members of the controlled group
of corporations within the meaning of Section 424(e) and 424(f) of the Code.
(b) "AWARD" means a grant or award under Section 7, 8 or 10 of the Plan.
(c) "COMPANY" and "CORPORATION" means Nashua Corporation.
(d) "BOARD" means the Board of Directors of the Company.
(e) "COMMON STOCK" means common stock, par value $1.00 per share, of the
Company.
(f) "CODE" means the Internal Revenue Code of 1986, as amended.
(g) "COMMITTEE" means the Executive Salary Committee of the Board, as
described in Section 5(a) hereof.
(h) "CONTINUOUS EMPLOYMENT" or "CONTINUOUS STATUS AS AN EMPLOYEE" means the
absence of any interruption or termination of employment with the Company or
with an Affiliated Corporation.
(i) "EFFECTIVE DATE" means the date specified in Section 11 hereof.
(j) "EMPLOYEE" means any person employed by the Company or an Affiliated
Corporation.
(k) "FAIR MARKET VALUE" means the closing price listed on the New York
Stock Exchange on the date an Option is granted.
(l) "INCENTIVE STOCK OPTION" means a stock option grant that is intended to
meet the requirements of Section 422 of the Code.
(m) "NON-STATUTORY STOCK OPTION" means a stock option grant that is not
intended to be an Incentive Stock Option.
(n) "OPTION" means an Incentive Stock Option or a Non-Statutory Stock
Option granted pursuant to this Plan.
(o) "OPTIONED STOCK" means the Common Stock purchasable by an Employee or
Director of the Corporation pursuant to an Option.
(p) "OPTIONEE" means an Employee or Director of the Corporation who
receives an Option.
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(q) "PERFORMANCE BASED RESTRICTED STOCK" means shares of Common Stock
contingently granted to an Employee under Section 8 of the Plan.
(r) "PLAN" means the 1996 Nashua Corporation Stock Incentive Plan.
(s) "SHARE" means one share of the Common Stock.
(t) "SUBSIDIARY" means a subsidiary of the Company as defined under Section
424(f) of the Code.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 11(h), the aggregate number of
shares of Common Stock which may be issued pursuant to awards made under the
Plan shall not exceed 660,000 shares. Any Shares subject to an Option which for
any reason expires or is terminated unexercised as to such Shares and any Shares
reacquired by the Company pursuant to forfeiture or a repurchase right hereunder
may again be the subject of an Award under the Plan. The Shares subject to
Awards under this Plan may, in whole or in part, be either authorized but
unissued Shares or issued Shares reacquired by the Company.
5. ADMINISTRATION OF THE PLAN
(a) Composition of Committee. The Plan shall be administered by the
Executive Salary Committee of the Board of Directors of the Company. Employees
who are designated by the Committee shall be eligible to receive Awards under
the Plan. All persons designated as members of the Committee shall be
"disinterested persons" within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934.
(b) Powers of the Committee. The Committee is authorized (but only to the
extent not contrary to the express provisions of the Plan or to resolutions
adopted by the Board) (i) to interpret the Plan, (ii) to prescribe, amend and
rescind rules and regulations relating to the Plan, (iii) to determine the
Employees to whom Awards shall be granted under the Plan, the amount and terms
of such Awards and the time when Awards will be granted, and (iv) to make other
determinations necessary or advisable for the administration of the Plan, and
shall have and may exercise such other power and authority as may be delegated
to it by the Board from time to time. A majority of the entire Committee shall
constitute a quorum and the action of a majority of the members present at any
meeting at which a quorum is present shall be deemed the action of the
Committee.
Officers of the Company are hereby authorized to assist the Committee in
the administration of the Plan and to execute instruments evidencing Awards on
behalf of the Company and to cause them to be delivered to the Employees.
(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on all persons
affected thereby.
6. ELIGIBILITY
Awards may be granted by the Committee only to those officers and key
Employees of the Company and of any Affiliated Corporation who are in positions
in which their decisions, actions and counsel significantly impact upon the
profitability of the Company. Directors who are not otherwise Employees of the
Company or an Affiliated Corporation shall be eligible to receive Awards only
under Section 10 hereof, and not under other Sections. An Employee who has been
granted an Award may, if otherwise eligible, be granted an additional Award or
Awards. In no event, however, shall the aggregate number of Shares which may be
issued under the Plan to any one individual exceed 150,000, during the term of
the Plan subject to adjustment as provided in Section 11(h). For the purpose of
calculating such maximum number, an option shall continue to be treated as
outstanding notwithstanding its cancellation or expiration.
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7. STOCK OPTIONS
(a) Grant. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine each Employee to whom an Option shall
be granted, the number of shares to be covered by each Option, the option price
and the conditions and limitations applicable to the exercise of the Option. The
Committee shall have the authority to grant Incentive Stock Options or to grant
Non-Statutory Stock Options, or to grant both types of Options. The terms and
conditions of Awards of Incentive Stock Options shall be subject to and comply
with such rules as may be prescribed by Section 422 of the Code, as from time to
time amended, and any regulations implementing Section 422.
(b) Option Price. The price per Share at which each Option granted under
the Plan may be exercised shall not, as to any particular Option, be less than
100% of the Fair Market Value of a Share at the time the Option is granted.
The exercise price at which Options are granted under the Plan may not be
reset except for adjustments as provided in Section 11(h). Options that lapse
because of employee terminations or other reasons may be replaced with new
Awards.
(c) Restrictions on Incentive Stock Options. Incentive Stock Options
granted under this Plan shall be designated specifically as such and, for so
long as the Code shall so require, shall be subject to the additional
restriction that the aggregate Fair Market Value of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by a
participant during any calendar year shall not exceed $100,000. If an Incentive
Stock Option which exceeds the $100,000 limitation of this Section 7(c) is
granted, the portion of such Incentive Stock Option which is exercisable for
shares in excess of the $100,000 limitation shall be treated as a Non-Statutory
Stock Option pursuant to Section 422(d) of the Code. In the event that such
Participant is eligible to participate in any other stock incentive plans of the
Company, its parent, if any, or a subsidiary which are also intended to comply
with the provisions of Section 422 of the Code, such annual limitation shall
apply to the aggregate number of shares for which options may be granted under
all such plans.
(d) Exercise of Option. An Option shall be exercisable at such times and
under such conditions as shall be permissible under the terms of the Plan and of
the Option granted to an Optionee; however, in no event may any Option granted
hereunder be exercisable after expiration of 10 years and one day from the date
of such grant. The Committee shall have the power to permit in its discretion,
the acceleration of the exercise of an Option, or any portion thereof, under
such circumstances and upon such terms as it deems appropriate. An Option may
not be exercised for a fractional Share.
An Option may be exercised, subject to the provisions hereof relative to
its termination and limitations on its exercise, from time to time only by (i)
written notice of intent to exercise the Option with respect to a specified
number of Shares, and (ii) payment to the Company (contemporaneously with
delivery of each such notice), either in cash or, if permitted by the Committee,
by the surrender and delivery to the Company of Shares with a fair market value
(based on the New York Stock Exchange closing price on the date of payment)
equal to or less than the total Option price plus cash for any difference of the
amount of the Option price of the number of Shares with respect to which the
Option is then being exercised plus any state and federal withholding tax
required, as provided under Section 11(a) or by any other means (including
without limitation, by delivery of a promissory note of the Optionee payable on
such terms as are specified by the Committee) which the Committee determines are
consistent with the purpose of the Plan and with applicable laws and regulations
(including without limitation, the provisions of Regulation T promulgated by the
Federal Reserve Board). Each such notice and payment shall be delivered, or
mailed by prepaid registered or certified mail, addressed to the Secretary of
the Company at the Company's executive offices.
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(e) Termination of Employment. Each Option shall terminate and may no
longer be exercised if the Optionee ceases to perform services for the Company
or an Affiliated Corporation in accordance with the following:
(i) If an Optionee ceases to be an employee of the Company or any
Subsidiary other than by reason of death, retirement or disability, absent
a determination by the Committee to the contrary, any Options which were
exercisable by the Optionee on the date of termination of employment may be
exercised any time before their expiration date or within six months after
the date of termination, whichever is earlier, but only to the extent that
the Options were exercisable when employment ceased. In the event an
Optionee fails to exercise an Incentive Stock Option within three months
after the date of termination, such Option will be treated as a
Non-Statutory Stock Option pursuant to Section 422 of the Code.
(ii) In the case of death or disability of the Optionee, Options which
were exercisable by the Optionee on the date of employment termination may
be exercised at any time before their expiration date or within one year
after the date of termination, whichever is earlier.
(iii) If an Optionee's employment terminates because of retirement,
any options which were exercisable by the Optionee on the date of
termination of employment may be exercised any time before their expiration
date or within three years after the date of termination, whichever is
earlier, but only to the extent that the Options were exercisable when
employment ceased absent a determination by the Committee to the contrary
at the time any such Options were granted or prior to their expiration
date, as provided hereunder. Notwithstanding the foregoing, in the event an
Optionee fails to exercise an Incentive Stock Option within three months
after the date of his or her retirement, such Option will be treated as a
Non-Statutory Stock Option.
8. PERFORMANCE BASED RESTRICTED STOCK
(a) All shares of Performance Based Restricted Stock granted hereunder
(including any shares received in respect of the Performance Based Restricted
Stock as a result of stock dividends, stock splits or any other forms of
recapitalization) shall be subject to the following restrictions:
(1) No shares of Performance Based Restricted Stock or any interest
therein shall be transferred or disposed of either voluntarily or
involuntarily, directly or indirectly, by sale, gift, pledge or
otherwise, unless such shares of Performance Based Restricted Stock
shall have then been released from such restrictions on transfer,
and any attempted transfer or disposition of shares of Performance
Based Restricted Stock while they are restricted shall be null and
void and of no effect.
(2) The restrictions imposed under Paragraph (a)(1) above upon shares of
Performance Based Restricted Stock shall terminate within times
determined by the Committee only upon the attainment of performance
conditions such as earnings, share price or other targets set by the
Committee at time of grant.
(b) If such performance conditions are not met by dates set by the
Committee at time of award, all of the Performance Based Restricted Stock
subject to restrictions under said grant at such dates, together with
accumulated dividends thereon, shall be forfeited and revert to the Company.
(c) Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees to whom Shares of Performance
Based Restricted Stock shall be granted, the number of Shares of Performance
Based Restricted Stock to be granted to each Employee, and the other terms and
conditions of such Awards.
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(d) Shares of Performance Based Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as herein provided, during
the restricted period. Certificates issued in respect of shares of Performance
Based Restricted Stock shall be registered in the name of the Employee and
deposited by such Employee, together with a stock power endorsed in blank, with
the Company. At the expiration of the restricted period, the Company shall
deliver such certificates to the Employee or the Employee's legal
representative.
(e) Unless otherwise determined by the Committee at or after grant, if an
Employee's employment terminates for any reason, the Performance Based
Restricted Stock which is unvested or subject to restriction shall thereupon be
forfeited.
(f) Awards of Performance Based Restricted Stock may not exceed an
aggregate of 150,000 shares under this Plan.
9. CHANGE IN CONTROL
The Committee may provide that certain or all Options granted under Section
7 of the Plan shall become exercisable in full and that any time limitation (but
not performance condition) applicable to any Performance Based Restricted Stock
shall lapse, in the event of a Change in Control of the Corporation (as
hereinafter defined). Options granted under Section 10 shall become exercisable
in full for the aggregate number of shares covered thereby in the event of a
Change in Control of the Corporation.
For purposes of this Plan, a "Change in Control of the Corporation" means
any of the following events:
(i) The acquisition, other than from the Corporation, by any person
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Corporation (the "Outstanding Corporation Common Stock") or
(ii) the combined voting power of the then outstanding voting securities of
the Corporation entitled to vote generally in the election of directors
(the "Corporation Voting Securities"), provided, however, that any
acquisition by (i) the Corporation or any of its subsidiaries, or any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any of its subsidiaries or (ii) 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 Corporation Common Stock and Corporation Voting
Securities immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such acquisition, of
the Outstanding Corporation Common Stock and Corporation Voting Securities,
as the case may be, shall not constitute a Change in Control of the
Corporation; or
(ii) Individuals who, as of June 14, 1996, 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 June 14, 1996 whose election or nomination for election by the
Corporation'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 Corporation (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or
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(iii) Approval by the shareholders of the Corporation 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
Corporation Common Stock and Corporation 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 such Business Combination in substantially the
same proportion as their ownership immediately prior to such Business
Combination of the Outstanding Corporation Common Stock and Corporation
Voting Securities, as the case may be; or
(iv) (A) a complete liquidation or dissolution of the Corporation or a
(B) sale or other disposition of all or substantially all of the assets of
the Corporation 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 Corporation Common
Stock and Corporation Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Corporation Common Stock and Corporation Voting Securities, as
the case may be, immediately prior to such sale or disposition.
10. NON-EMPLOYEE DIRECTOR OPTIONS AND STOCK AWARDS
Notwithstanding any of the other provisions of the Plan to the contrary,
the provisions of this Section 10 shall only apply to a non-employee member of
the Board. The other provisions of the Plan shall apply to grants of Options
under this Section 10 to the extent not inconsistent with the provisions of this
Section.
(a) Each non-employee member of the Board shall receive Non-Statutory Stock
Options in accordance with the provisions of this Section 10.
(i) Recipients of Options under this Section 10 shall enter into a
stock option agreement with the Corporation, which agreement shall set
forth, among other things, the exercise price of the Option, the term of
the Option and provisions regarding exercisability of the Option granted
thereunder. The Options shall be exercisable only by the Recipient or the
Recipient's estate.
(ii) On the Effective Date and the date after each succeeding annual
stockholders meeting of the Corporation each non-employee member of the
Board shall be granted a Non-Statutory Stock Option to purchase 1,000
shares of Common Stock subject to adjustment as provided in Section 11(h).
The Option Price per share of Common Stock purchasable under such Options
shall be equal to the Fair Market Value of the Common Stock on the date of
grant subject to adjustment as provided in Section 11(h). Such Option shall
remain exercisable by the Optionee or the Optionee's estate until the
earliest of 10 years and one day from the date of grant, or one year after
the last day of any directorship with the Corporation. Such Options shall
become exercisable on the day before the annual stockholders meeting
following the date of grant, providing the Recipient is then a Director, by
payment in full in cash or in shares of Common Stock having a fair market
value (based on the New York Stock Exchange closing price on the date of
payment) equal to the Option Price or in a combination of cash and such
shares.
A-6
<PAGE> 31
(b) Each non-employee member of the Board shall receive Shares in lieu of
annual cash compensation as follows:
On the Effective Date and the date after each succeeding annual
stockholders meeting of the Corporation each non-employee member of the
Board shall be granted a number of (unrestricted) Shares determined by
dividing the amount of the annual cash retainer authorized for Directors
(currently $15,000) by the closing price listed on the New York Stock
Exchange on such date without taking into account fractional shares.
Non-employee members of the Board who become members of the Board
between annual stockholders meetings shall be granted a number of
(unrestricted) Shares determined by dividing the amount of annual cash
retainer (as prorated for periods less than one year) by the closing price
listed on the New York Stock Exchange on such date without taking into
account fractional shares.
Additional annual cash compensation payable to a non-employee member
of the Board elected by the Board to additional offices such as Chairman or
Lead Director may be paid in cash on the date of his or her election or
reelection (the "Payment Date") to such office, or any such member of the
Board may elect (a "Share Election") to be granted a number of
(unrestricted) Shares determined by dividing the amount of such additional
annual cash compensation by the closing price listed on the New York Stock
Exchange on such date without taking into account fractional shares. To
receive shares in lieu of additional annual compensation, a non-employee
member of the Board must make a Share Election at least six months prior to
the Payment Date. Any reversal of a Share Election (the "Share Election
Reversal") will not be effective until a period of at least 6 months from
the date of such Share Election Reversal.
11. GENERAL PROVISIONS
(a) Withholding. The Employer's obligation to deliver Shares upon exercise
of an Option shall be subject to the Optionee's satisfaction of all applicable
federal, state, and local income and employment tax withholding obligations. The
Employer shall have the right to deduct from all amounts paid to an Employee in
cash (whether under this plan or otherwise) any taxes required by law to be
withheld in respect of Awards under this Plan. The Committee may, at or after
grant, permit a participant to satisfy such tax withholding requirements by
delivery to the Company of shares of Common Stock owned by the participant,
including Shares retained from the Award creating the tax obligation having a
value equal to the amount required to be withheld. The value of Shares to be
withheld or delivered shall be based on the Company's determination of the fair
market value of a Share on the date the amount of tax to be withheld is to be
determined.
(b) Nontransferability. No Award shall be assignable or transferable, and
no right or interest of any participant shall be subject to any lien, obligation
or liability of the participant, except by will, the laws of descent and
distribution, or pursuant to a qualified domestic relations order as defined by
Section 414 of the Code, and each Option shall be exercisable during the
Optionee's lifetime only by the Optionee.
(c) No Right to Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
participant the right to be retained in the employ of the Company. Further, the
Company expressly reserves the right at any time to dismiss a participant
without any liability under the Plan, except as provided herein or in any
agreement entered into with respect to an Award.
(d) No Rights as Stockholder. Subject to the provisions of the applicable
Award, no Optionee shall have any rights as a stockholder with respect to any
shares of Common Stock to be distributed under the Plan until he or she has
become the holder thereof. Notwithstanding the foregoing, in connection with
each grant of Performance Based Restricted Stock hereunder, the applicable Award
shall specify if and to what extent the
A-7
<PAGE> 32
Optionee shall not be entitled to the rights of a stockholder in respect of such
Performance Based Restricted Stock.
(e) Construction of the Plan. The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely in accordance with the
laws of New Hampshire.
(f) Effective Date. Subject to the approval of the stockholders of the
Company within one year thereof, the Plan shall be effective on June 14, 1996.
Although Options and Awards may be granted prior to such stockholder approval,
no Option or Award may be exercised until such approval is obtained. No Options
or Awards may be granted under the Plan after June 13, 2006.
(g) Amendment, Modification and Termination of the Plan. The Board of
Directors at any time may terminate, and at any time from time to time, and in
any respect, may amend or modify, the Plan provided:
(a) that no such termination or amendment shall adversely affect or
impair any then outstanding Option or Award without the consent of
the holder of such Option or Award;
(b) no such amendment shall be made to Section 10 more frequently than
once in any six-month period, unless an amendment is required in
order to comport with the requirements of the Code or Rule 16(b)-3
of the Exchange Act; and
(c) that any such amendment which:
(i) increases the maximum number of Shares subject to this Plan;
(ii) changes the class of persons eligible to participate in this
Plan; or
(iii) materially increases the benefits accruing to executive
officers and directors of the Company under this Plan
shall be subject to approval by the shareholders of the Company
within one year from the effective date of such amendment and
shall be null and void if such approval is not obtained.
(h) Adjustments and Assumptions. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, distribution of assets, or any other change in the corporate
structure or shares of the Company, the Committee shall make such appropriate
adjustments in the number and kind of shares authorized by the Plan, in the
number and kind of shares covered by the Awards granted, and in the purchase
price of outstanding Options. In the event of any merger, consolidation or other
reorganization in which the Company is not the surviving or continuing
corporation, all Awards granted hereunder and outstanding on the date of such
event shall be assumed by the surviving or continuing corporation with
appropriate adjustment as to the number and kind of Shares and purchase price of
the Shares.
(i) Provision for Foreign Participants. The Committee may, without
amending the Plan, modify awards or options granted to participants who are
foreign nationals or employed outside the United States to recognize differences
in laws, rules, regulations or customs of such foreign jurisdictions with
respect to tax, securities, currency, employee benefit or other matters.
(j) Impact on Other Benefits. The value of any Award (either on its grant
date, vesting date or exercise date) shall not be includable as compensation or
earnings for purposes of any other benefit plan of the Company.
A-8
<PAGE> 33
DETACH HERE NSH 1
P
R
O
X
Y
NASHUA CORPORATION
PROXY for Annual Meeting of Stockholders - June 14, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) DANIEL M. JUNIUS, BRUCE T. WRIGHT and
PAUL BUFFUM and each of them attorneys or attorney of the undersigned (with
full power of substitution in them and in each of them), for and in the name(s)
of the undersigned to vote and act at the annual meeting of the stockholders of
Nashua Corporation, to be held at the Crowne Plaza, 2 Somerset Parkway, Nashua,
New Hampshire, on June 14, 1996 at 10:00 A.M., or any adjournment thereof, upon
or in respect of all shares of stock of Nashua Corporation upon or in respect
of which the undersigned would be entitled to vote or act, and with all the
powers the undersigned would possess, if personally present, upon all matters
which may properly come before said meeting, as described in the Proxy
Statement and Notice dated May 3, 1996, receipt of which is hereby
acknowledged.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3 AS MORE
SPECIFICALLY SET FORTH IN THE PROXY STATEMENT; IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES NAMED IN
PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 34
DETACH HERE NSH 1
Please mark
/ X / votes as in
this example.
NOTE: Signature should be exactly as name appears on imprint. If stock is
registered in the names of two or more persons as joint owners, trustees or
otherwise, the proxy should be personally signed by each of them or accompanied
by proof of authority of less than all to act. In the case of executors,
administrators, trustees, guardians and attorneys, unless the stock is
registered in their names, proof of authority should accompany this proxy.
<TABLE>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
1. Election of Directors 2. Give the Board of Directors / / / / / /
authority to mortgage or
NOMINEES: Sheldon A. Buckler, pledge all or substantially all
Gerald G. Garbacz, of the Corporation's assets.
Charles S. Hoppin,
John M. Kucharski, 3. Approve the 1996 Stock / / / / / /
David C. Miller, Jr. Incentive Plan.
James F. Orr III
MARK HERE
FOR WITHHELD FOR ADDRESS / /
/ / / / CHANGE AND
NOTE AT LEFT
/ /
-------------------------------------- PLEASE FILL IN DATE, SIGN AND MAIL THIS PROXY IN
For all nominees except as noted above THE ENCLOSED POST-PAID RETURN ENVELOPE
Signature Date Signature Date
----------------------- ------- ------------------------- --------
</TABLE>
