Exhibit 10.7  


               AMENDMENT NO. 2 AND WAIVER TO CREDIT AGREEMENT


          AMENDMENT AND WAIVER dated as of December 31, 1995 to the
$130,022,336 Amended and Restated Credit Agreement dated as of November 29,
1994, as heretofore amended (the "Credit Agreement") among POLAROID
CORPORATION (the "Company"), MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent (the "Agent"), ABN AMRO Bank N.V., as Co-Agent and the BANKS party
thereto (the "Banks").

          WHEREAS, in the fourth quarter of 1995 and the first quarter of
1996 the Company is taking special charges related to severance and early
retirement programs and the write-off of certain assembly equipment, fixed
assets and inventory; and

          WHEREAS, the parties hereto desire to amend the Credit Agreement
(i) to mitigate the effects of such special charges under the covenants
relating to the Company's Interest Coverage Ratio, Leverage Ratio and
Minimum Consolidated Adjusted Net Worth and (ii) to eliminate certain
adjustments for the effects of the Company's adoption of Statement of
Financial Accounting Standards No. 106;

          NOW, THEREFORE, the parties hereto agree as follows:

          SECTION 1.  Definitions, References.  Unless otherwise
specifically defined herein, each term used herein which is defined in the
Credit Agreement has the meaning assigned to such term in the Credit
Agreement.  Each reference to "hereof," "hereunder," "herein," and "hereby"
and each other similar reference and each reference to "this Agreement" and
each other similar reference contained in the Credit Agreement shall, after
this Amendment and Waiver becomes effective, refer to the Credit Agreement
as amended hereby.


<PAGE>


          SECTION 2.  Amendment of Definitions.  The definitions in Section
1.01 of the Credit Agreement are amended as follows:

          (a)  The definition of "Adjusted Consolidated Net Income" is
     deleted.

          (b)  The following new definition is added immediately after the
     definition of "Federal Funds Rate":

                    "First Quarter 1996 Charge" means the after-tax amount
          (not exceeding $70,000,000) of the provision made by the Company
          during the first Fiscal Quarter of 1996 for the cost of severance
          and early retirement programs.

          (c)  The definition of "Consolidated Adjusted Net Worth" is
     amended to read as follows:

                    "Consolidated Adjusted Net Worth" means, at any date,
          the sum of (i) Consolidated Stockholders' Equity as of such date,
          plus (ii) the First Quarter 1996 Charge, minus (iii) all write-
          ups (other than write-ups resulting from foreign currency
          translations) after December 31, 1995 in the book value of any
          asset owned by the Company or a Consolidated Subsidiary, minus
          (iv) the carrying value of all Investments in Unconsolidated
          Joint Ventures carried as assets on the Company's consolidated
          balance sheet as of such date, to the extent that the carrying
          value of such Investments as of such date exceeds $25,000,000,
          minus (v) an amount equal to the cumulative net increase (or plus
          an amount equal to the cumulative net decrease) in Consolidated
          Net Income after December 31, 1995 attributable to the tax effect
          of foreign currency translations.

          (d)  The definition of "Consolidated EBIT" is amended to read as
     follows:

                    "Consolidated EBIT" means, for any period, the sum of
          (i) Consolidated Net Income for such period (excluding any
          extraordinary item of gain or loss and any gain or loss
          attributable to the tax impact of foreign currency translations),
          plus (ii) to the extent deducted in determining Consolidated Net
          Income for such period, interest expense and federal, state and
          foreign income taxes, plus (iii) if such period includes the
          first Fiscal Quarter of 1995, the amount (not exceeding
          $77,000,000) of the pre-tax provision made by the Company during
          the first Fiscal Quarter of 1995 for the cost of an early
          retirement and severance program, plus (iv) if such period
          includes the fourth Fiscal Quarter of 1995, the amount (not
          exceeding $170,000,000) of the pre-tax provision made by the
          Company during the fourth Fiscal Quarter of 1995 for the cost of
          severance and early retirement programs and the write-off of
          certain assembly equipment, fixed assets and inventory, plus (v)
          if such period includes the first Fiscal Quarter of 1996, the
          amount (not exceeding $100,000,000) of the pre-tax provision made
          by the Company during the first Fiscal Quarter of 1996 for the
          cost of severance and early retirement programs.


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<PAGE>

          SECTION 3.  Interest Coverage Ratio.  Section 5.07 of the Credit
Agreement is amended to read as follows:

          SECTION 5.07.  Interest Coverage Ratio.  At the end of each
     Fiscal Quarter, the ratio of (i) Consolidated EBIT to (ii)
     Consolidated Interest Expense, in each case for the four consecutive
     Fiscal Quarters then ended, will not be less than:

          (w) at the end of the fourth Fiscal Quarter of 1995 and at the
     end of the first Fiscal Quarter of 1996, 1.80 to 1;

          (x) at the end of the second Fiscal Quarter of 1996, 2.00 to 1;

          (y) at the end of the third Fiscal Quarter of 1996, 2.50 to 1;
     and

          (z) at the end of the fourth Fiscal Quarter of 1996 and each
     Fiscal Quarter thereafter, 3.00 to 1.

          SECTION 4.  Minimum Consolidated Adjusted Net Worth.  Section
5.09 of the Credit Agreement is amended to read as follows:

          SECTION 5.09.  Minimum Consolidated Adjusted Net Worth.  (a)  At
     no time will Consolidated Adjusted Net Worth be less than Minimum
     Consolidated Adjusted Net Worth.  "Minimum Consolidated Adjusted Net
     Worth" means $650,000,000 as such amount is adjusted from time to time
     pursuant to subsection (b) of this Section.

          (b)  Minimum Consolidated Adjusted Net Worth shall be adjusted
     from time to time as follows:

                    (i)  at the end of each Fiscal Quarter ending after
          December 31, 1995, permanently increased (but not decreased) by
          the amount (if any) necessary so that cumulative increases
          pursuant to this clause (i) equal 50% of Consolidated Net Income
          (adjusted by adding back the First Quarter 1996 Charge) for the
          period beginning on January 1, 1996 and ending at the end of such
          Fiscal Quarter; and

                    (ii) permanently increased, on the date of any issuance
          of Additional Equity after December 31, 1995, by an amount equal
          to 50% of any increase in Consolidated Adjusted Net Worth
          attributable to such issuance of Additional Equity.


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<PAGE>

          SECTION 5.  Waiver.  The undersigned Banks waive any Default or
Event of Default arising from any failure by the Company to comply with the
provisions of Sections 5.07, 5.09 and 5.01(e) of the Credit Agreement, to
the extent (and only to the extent) that such failure would have been
avoided if this Amendment and Waiver had become effective prior to December
31, 1995.

          SECTION 6.  Governing Law.  This Amendment and Waiver shall be
governed by and construed in accordance with the laws of the State of New
York.

          SECTION 7. Counterparts; Effectiveness.  This Amendment and
Waiver may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.  This Amendment and Waiver shall become
effective when the Agent shall have received

          (i) from each of the Company and the Required Banks either a
     counterpart hereof signed by such party or telegraphic, telex,
     facsimile or other written confirmation that such party has signed a
     counterpart hereof, and

          (ii) from the Company for the account of each Bank a
     participation fee in the amount equal to .05% of the aggregate
     principal amount of such Bank's Loans outstanding under the Credit
     Agreement.

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment
and Waiver to be duly executed by their respective authorized officers as
of the day and year first above written.


                         POLAROID CORPORATION


                         By  /s/ Graham M. Brown
                            -----------------------------------
                            Title: Vice President & Treasurer



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<PAGE>


                         MORGAN GUARANTY TRUST COMPANY
                           OF NEW YORK

                         By  /s/ Deborah A. Brodheim
                            -----------------------------------
                            Title: Vice President


                         ABN AMRO BANK N.V.

                         By  /s/ R.E. James Hunter
                            -----------------------------------
                            Title: Group Vice President &
                                   Director

                         By  /s/ Carol A. Levine
                            -----------------------------------
                            Title: Senior Vice President &
                                   Managing Director


                         CREDIT LYONNAIS NEW YORK BRANCH

                         By  /s/ Jacques Yves Mulliez
                            -----------------------------------
                            Title: Senior Vice President


                         CREDIT SUISSE

                         By  /s/ Anne Schultheiss-Jensen
                            -----------------------------------
                            Title: Associate


                         By  /s/ Kristina Catlin
                            -----------------------------------
                            Title: Associate


                         PNC BANK, NATIONAL ASSOCIATION

                         By  /s/ Kwan L. Grays
                            -----------------------------------
                            Title: Assistant Vice President


                         THE TORONTO DOMINION BANK

                         By  /s/ Kimberly Burleson
                            -----------------------------------
                            Title: Manager - Credit Administration


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<PAGE>

                         WACHOVIA BANK OF NORTH
                           CAROLINA, N.A.

                         By  /s/ Robert G. Brookby
                            -----------------------------------
                            Title: Executive Vice President


                         DEUTSCHE BANK AG, NEW YORK BRANCH

                         By  /s/ Iain Stewart
                            -----------------------------------
                            Title: Assistant Vice President

                         By  /s/ Stephan A. Wiedemann
                            -----------------------------------
                            Title: Vice President


                         DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH

                         By  /s/ Iain Stewart
                            -----------------------------------
                            Title: Assistant Vice President

                         By  /s/ Stephan A. Wiedemann
                            -----------------------------------
                            Title: Vice President


                         FLEET BANK OF MASSACHUSETTS, N.A.

                         By  /s/ Roger C. Boucher
                            -----------------------------------
                            Title: Vice President











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