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                                                                 Exhibit 10.3(h)

                                             [POLAROID LOGO]
J. Michael Pocock                            Polaroid Corporation
President and                                1265 Main Street, W3-3
Chief Executive Officer                      Waltham, MA  02451
                                             781-386-3216
                                             781-833-3263/FAX
                                             pocockm@polaroid.com


                                   May 6, 2003


Mr. Mark Payne
16127 Stewarts Grove Drive
Spring, Texas  77379

Dear Mark:

      On behalf of Polaroid Corporation (the "Company"), I am pleased to offer
you the position of Vice President, Operations Planning reporting directly to me
with a hire date to be mutually agreed.

      You will receive a base salary of $9,038.00 paid bi-weekly or $235,000.00
annualized. You will be eligible to participate in the Polaroid Incentive Plan
(the "PIP") for 2003 with an opportunity of 40% of your pro rated base salary
for the year if the Company achieves its target and dependent in part on your
achievement of performance goals to be set within 90 days of your hire date. In
accordance with the terms of the PIP in effect for 2003, 90% of your PIP will be
based on corporate performance and 10% will be based on individual performance
goals. Any payment under the 2003 PIP will be made on or before March 15, 2004.
Your participation in future years will be subject to the terms of the PIP in
effect from time to time as it may apply to officers of the Company. You will
also be eligible to participate in the Company's restricted stock purchase
program. You will be given the opportunity to purchase 15,385 shares of
restricted stock (an amount equal to .5% of the shares outstanding as of
February 13, 2003) at the price and subject to the terms and conditions in
effect at the time of your award, which will be made to you within seven (7)
days of your start date.

      You will receive 112 vacation hours in 2003. Beginning in 2004, you will
receive 160 hours annually while you are employed by the Company to be
administered under the Company's vacation policy. Vacation accrued in a calendar
year must be used in that year and may not be carried over into the following
calendar year.

      The Company has identified you as having critical skills necessary for the
Company to achieve its goals over the next fourteen months. Therefore, the
Company is offering you enhanced separation

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benefits should we terminate your employment for any reason other than for
"Cause" prior to July 31, 2004 (see the enclosed Addendum A).

      Also enclosed is an addendum highlighting the Company benefits currently
available to all employees. A more in-depth description can be found in the
Summary Plan Description documents available on the Human Resources Web Site. TO
INITIATE BENEFITS ENROLLMENT, YOU MUST CALL THE FIDELITY BENEFITS CONNECTION AT
1-800-210-4015 WITHIN 30 DAYS OF JOINING POLAROID. In addition, as an officer of
the Company, you will be eligible to receive up to $5,000.00 per year for
documented actual financial planning and tax preparation services and to
participate in our $1,000,000.00 Term Life Insurance Policy, subject to
providing evidence of insurability. Also, you will be eligible to participate in
any long-term incentive plans that may become available to senior executives of
the Company.

      You shall be entitled to reasonable expenses in relocating your home to
the Boston area in accordance with the Company's Relocation Reimbursement policy
and agreement, forms of which are enclosed.

      Maintaining a safe and healthy work environment is an important priority
at the Company. Because it is Company policy not to hire applicants who use
unauthorized controlled substances or illegal drugs, a drug-screening test is
required. PLEASE CALL OUR HEALTH SERVICES DEPARTMENT AT (781)-386-9000 TO
ARRANGE FOR A SCREENING TEST DATE. Enclosed is a Health History questionnaire.
Please complete this form and bring it with you on the arranged date.

      Before you begin employment, you will also be required to produce certain
documents for verification of your eligibility to work in the United States (as
required by the Immigration Reform and Control Act of 1986). Please see the
enclosed list for documents that comply with this request. In addition, you will
also be required to sign and deliver forms related to your employment with the
Company, including the enclosed Proprietary Information and Non-Competition
Agreement prior to the start of your employment.

      By signing this letter, you represent and warrant to the Company that you
are under no contractual commitments inconsistent with your obligations to the
Company.

      Your employment with the Company is "at will" and can be terminated with
or without Cause, and with or without notice, at any time, at your or the
Company's option, except as otherwise provided by law. The terms of this letter,
therefore, do not and are not intended to create an express or implied contract
of employment with the Company. No supervisor, manager, or representative of the
Company other than the Chief Executive or Chief Human Resources Officer has
authority to revise this agreement and any such revision must be in writing and
signed by the Chief Executive or Chief Human Resources Officer and you.

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      Please sign and return a copy of this letter using the enclosed
self-addressed envelope. You can bring the other documents with you to the
Company representative at your "sign-in" session.

      This offer is contingent upon your successful completion of the drug
screening test, your execution of this letter, the Proprietary Information and
Non-Competition Agreement, and verification of your identity and eligibility to
be employed in the United States.


                                        Sincerely,

                                          /s/ Mike
                                        -------------------------

                                        J. Michael Pocock

Enclosures

I have accepted the terms and conditions as outlined in this letter and
addendum.


      /s/ Mark Payne                          5/7/03
-------------------------------------       -------------------
Name                                         Date

LETTER ENCLOSURES:
Addendum A
Benefits Highlights
Direct Deposit Form
Emergency Contact Form
Employment Application
Health History Questionnaire
Proprietary Information and Non-Competition Agreement (3 copies)
INS Form (I-9) List of Valid Documents
Internal Revenue Service Form W-4 (Federal Tax Withholding)
Massachusetts Form W-4 (State Tax Withholding)
Self-Identification Forms
Relocation Forms

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AGREEMENT FOR:            MARK PAYNE                   DATED: MAY 12, 2003

A.    You have been identified by Polaroid Corporation (hereinafter the
      "Company") as having critical skills necessary for the Company to achieve
      its goals over the next fourteen months. Therefore, the Company is
      offering you enhanced separation benefits should the Company terminate
      your employment for any reason other than for "Cause" (as defined below),
      materially diminish your duties and responsibilities, or require you to
      relocate to a principal place of employment more than 50 miles from
      Waltham, Massachusetts.

B.    Should the Company terminate your employment on or before July 31, 2004,
      for any reason other than for Cause, you will receive the enhanced
      separation benefits (hereinafter "Separation Benefits") summarized in
      Section C below. However, both your eligibility for and receipt of the
      Separation Benefits are contingent upon the following terms and
      conditions:

      1.  Your continued satisfactory employment, including your adherence to
          your obligations under the Proprietary Information and Non-Competition
          Agreement, sustained performance and, in particular, your full and
          active support of the business.

      2.  YOUR ABSOLUTE CONFIDENTIALITY CONCERNING THE EXISTENCE AND CONTENT OF
          THIS AGREEMENT, unless disclosure of it is required by law; provided,
          however, that the existence and content of this Agreement may be
          disclosed in confidence to your attorneys, and tax or financial
          consultants who also agree to maintain the existence and content of
          this Agreement in confidence.

      3.  Your execution of a full and complete general release of the Company
          and all affiliates from all claims.

C.    The Separation Benefits are as follows:

      1.  SEVERANCE PAYMENT. A Severance Payment equal to six months of your
          base pay in effect as of your date of termination from the Company
          (the "Termination Date"), payable in a stream of payments in
          accordance with the Company's regular payroll schedule beginning on
          the regular payroll distribution date, or as soon as reasonably
          practicable, following the Termination Date.

      2.  INCENTIVE BONUS. If you are eligible for an incentive bonus as of your
          Termination Date, you will be eligible to receive such bonus on a pro
          rata basis for the period of employment prior to your Termination
          Date. This bonus will be paid only if and when the bonus is paid to
          active employees whose participation criteria are substantially
          similar to yours and will be based exclusively on the actual
          performance of the Company and the achievement of any financial
          performance measurements established by the Company under the bonus
          plan. Any such payment for a period of less than a full year shall be
          prorated over the number of days worked.

      3.  MEDICAL, DENTAL, LIFE INSURANCE. You will be eligible to receive six
          months of medical and dental insurance benefits on the same basis as
          similarly situated active employees at your level in the Company.
          Should you become eligible to receive medical and dental insurance
          coverage from another employer, however, your Company coverage will
          cease. You must promptly notify the Company as soon as your
          eligibility status changes. For medical and dental benefits, when your
          subsidized Company coverage will cease, you may be able to continue
          coverage under COBRA for any remaining COBRA period.

      4.  SURVIVOR BENEFITS. Should you become eligible to receive payments and
          benefits under this Section and die prior to receipt of all such
          payments and benefits, the residual payments shall be made to your
          beneficiary(ies). Any residual family medical and dental benefits
          which you were receiving on your date of death shall continue to the
          family members you had covered in such medical and dental plans on
          such date.

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      YOU WILL NOT BE ENTITLED TO ANY RIGHTS AND CLAIMS UNDER THIS AGREEMENT IF
      YOU (A) VOLUNTARILY LEAVE EMPLOYMENT FOR ANY REASON; (B) ARE TERMINATED
      FOR CAUSE; OR (C) FAIL TO COMPLY WITH THE TERMS OF THIS AGREEMENT. FOR
      PURPOSES OF THIS AGREEMENT, "CAUSE" SHALL MEAN (I) WILLFULLY ENGAGING IN
      DISHONEST CONDUCT OR IN CONDUCT MATERIALLY INJURIOUS TO THE COMPANY OR ITS
      BUSINESS REPUTATION; (II) THE WILLFUL AND CONTINUAL FAILURE BY YOU TO
      SUBSTANTIALLY PERFORM THE DUTIES ASSIGNED TO YOU (OTHER THAN ANY FAILURE
      RESULTING FROM YOUR INCAPACITY DUE TO PHYSICAL INJURY OR MENTAL ILLNESS);
      (III) SERIOUS AND GROSS MISCONDUCT INCLUDING, BUT NOT LIMITED TO, THE
      BREACH OF A MATERIAL CORPORATE OR PERSONNEL POLICY; OR (IV) COMMISSION OF
      AN ACT THAT CONSTITUTES A FELONY UNDER THE LAWS OF THE UNITED STATES OR
      ANY STATE THEREOF.

      Nothing contained in this Agreement alters any of the other terms of your
      employment. This Agreement does not obligate the Company to continue to
      employ you for any specific period of time or in any specific role or
      geographic location. You are an "at will" employee of the Company.
      Accordingly, the Company is free to terminate your employment at any time,
      and you are free to terminate your employment with the Company at any
      time.

      This Agreement, with the other programs and documents referenced herein,
      embodies the entire agreement between you and the Company with respect to
      the subject matter hereof. No amendment or modification of the terms of
      this Agreement shall be effective unless reduced to a written document
      signed by you and by an authorized Officer of the Company.

D.    ARBITRATION: The Company and you agree that any dispute or controversy
      between the parties shall be settled by arbitration in Boston,
      Massachusetts, administered by the American Arbitration Association, with
      any such dispute or controversy being so administered in accordance with
      its Commercial Rules then in effect. Judgment on the award rendered by the
      arbitrator may be entered in any court having jurisdiction thereof.

      (1) Arbitration shall be the sole and exclusive remedy for resolving any
      controversy, claim, or dispute of any kind between you and the Company
      including, but not limited to, any dispute relating to your employment
      with the Company or the termination thereof, claims for breach of contract
      or breach of the covenant of good faith and fair dealing, infliction of
      emotional distress, defamation and any claims of discrimination,
      harassment or other claims under Title VII of the Civil Rights Act of
      1964, Massachusetts General Laws Chapter 151B, the Age Discrimination in
      Employment Act, the Americans With Disabilities Act, the Employee
      Retirement Income Security Act, or any other federal, state or local law
      or regulation now in existence or hereinafter enacted and as amended from
      time to time, concerning in any way the subject of your employment with
      the Company or its termination. The only claims not covered by this
      arbitration provision are claims for benefits under unemployment insurance
      or workers' compensation laws.

      (2) The arbitrator shall have the authority to award any remedy or relief
      that a court of competent jurisdiction could order or grant, including,
      without limitation, the issuance of an injunction. However, either party
      may, without inconsistency with this arbitration provision, apply to any
      court having jurisdiction over such dispute or controversy and seek
      interim provisional, injunctive or other equitable relief until the
      arbitration award is rendered or the controversy is otherwise resolved.

      (3) Except as necessary in court proceedings to enforce this arbitration
      provision or an award rendered hereunder, or to obtain interim relief,
      neither a party nor an arbitrator may disclose the existence, content or
      results of any arbitration hereunder without your prior written consent
      and the prior written consent of the Company.

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      (4) Notwithstanding any choice of law provision included in this
      Agreement, the United States Federal Arbitration Act shall govern the
      interpretation and enforcement of this arbitration provision.

      (5) YOU UNDERSTAND THAT BY SIGNING THIS AGREEMENT, BOTH THE COMPANY AND
      YOU GIVE UP RESPECTIVE RIGHTS TO A JURY TRIAL.

E.    This Agreement replaces all previous agreements relating in whole or in
      part to the same or similar matters which you may have entered into with
      the Company. It may not be modified or terminated, in whole or part,
      except in writing by the Chief Human Resources Officer of the Company.
      Discharge of your undertakings in this Agreement shall be an obligation of
      your executors, administrators or other legal representatives or assigns.

F.    You represent that, except as identified in the space below, you have no
      agreements with or obligations to others in conflict with the foregoing.

THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REFERENCE TO CONFLICT OF LAW
PRINCIPLES.

THIS AGREEMENT SHALL BE EFFECTIVE ONLY UPON THE SIGNATURES OF BOTH THE EMPLOYEE
AND AN AUTHORIZED OFFICER OF THE COMPANY.

The terms of this Agreement shall AUTOMATICALLY EXPIRE on July 31, 2004.

Executed for                               ACKNOWLEDGMENT AND ACCEPTANCE:
POLAROID CORPORATION                       By signing below, I acknowledge the
                                           receipt of this Agreement and
                                           agree to its  terms:


By: /s/ Neal D. Goldman                    By:  /s/ Mark Payne
   -------------------------------------      ----------------------------
    Neal D. Goldman                           Mark Payne
    Executive Vice President,                 Vice President, Operations
    Chief Administrative & Legal Officer      Planning

                                           Date: 5/7/03
                                                --------------------------