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                                                                   EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT



         AGREEMENT, by and between POLAROID CORPORATION, a Delaware corporation,
together with its permitted successors and assigns (the "Company"), and NEAL D.
GOLDMAN (the "Executive") entered effective July 1, 2001.

                              W I T N E S S E T H:
                               -------------------

         WHEREAS, the Executive has important management responsibilities which
benefit the Company and the Company believes that its best interests will be
served if the Executive is encouraged to remain with the Company; and

         WHEREAS, the Company desires to continue the employment of the
Executive and the Executive desires to continue such employment;

         NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Company and the Executive (individually a "Party" and
together the "Parties") agree to enter into the following agreement (this
"Agreement"):

1.       DEFINITIONS.

         (a)      "ANNUAL BONUS" shall mean a bonus amount payable under the
                  Company's executive annual bonus plan (currently the Polaroid
                  Incentive Plan for Executives).

         (b)      "BASE SALARY" shall mean the annualized rate of base pay
                  Executive is entitled to receive as determined by the Board
                  from time to time.

         (c)      "BOARD" shall mean the Board of Directors of the Company.

         (d)      "CAUSE" means:

                  (i)      Executive's willful malfeasance having a material
                           adverse effect on the Company; or,

                  (ii)     Breach of a material policy of the Company; or

                  (iii)    Executive's conviction of a felony;

                  provided, that any action or refusal by Executive shall not
                  constitute "Cause" if Executive shall be entitled, under
                  applicable law or under an applicable Certificate of
                  Incorporation or By-Laws of the Company, as they may be
                  amended or restated from time to time, to be indemnified with
                  respect to such action or refusal.


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         (e)      "CONSTRUCTIVE TERMINATION" shall occur when the Executive
                  voluntarily terminates his employment with the Company or
                  retires after the occurrence of one or more of the following
                  events without the Executive's consent:

                  (i)      a reduction in Base Salary or the elimination of or
                           reduction of any benefit under any bonus, incentive
                           or other employee benefit plan, or the Executive's
                           participation or membership in the same, without an
                           economically equivalent replacement, unless benefit
                           or compensation adjustments apply to all executives
                           receiving such benefit;

                  (ii)     the reassignment of Executive without Executive's
                           consent to a location more than fifty (50) miles from
                           Executive's regular workplace or the provision of
                           significantly less favorable working conditions;

                  (iii)    the reduction in the Executive's job title or level
                           as a Executive Vice President; or

                  (iv)     a significant diminution in duties or
                           responsibilities or the reassignment of Executive to
                           duties which represent a position of lesser
                           responsibility.

         (f)      "SEVERANCE PERIOD" shall mean the period of twenty-four (24)
                  months following such termination.

         (g)      "STOCK" shall mean the outstanding shares of Common Stock of
                  the Company and any other shares of capital stock of the
                  Company into which the Common Stock shall be reclassified or
                  changed.

         (h)      "SUBSIDIARY OR SUBSIDIARIES" of the Company shall mean any
                  corporation of which the Company owns, directly or indirectly,
                  more than fifty percent (50%) of the Voting Stock.

         (i)      "TERMINATION DATE" shall mean the date of the Executive's
                  termination of employment from the Company.

         (j)      "VOTING STOCK" shall mean capital stock of any class or
                  classes having general voting power under ordinary
                  circumstances, in the absence of contingencies, to elect the
                  directors of a corporation.

2.       POSITION, DUTIES AND RESPONSIBILITIES. The Executive shall be employed
         as an executive vice president of the Company; this position and the
         Executive's responsibilities may be changed from time to time by the
         Company as it deems necessary, excluding any change that may
         constitute a Constructive Termination. The Executive shall dedicate
         full time to carrying out Executive's responsibilities and shall act
         in the best interests of the Company at all times. The Executive
         shall comply with the Company's policies and procedures.

3.       BASE SALARY AND EMPLOYEE BENEFIT PROGRAMS. During the term of
         employment, the Executive shall be entitled to receive a Base Salary
         and to participate in all Company plans and programs made available to
         executives at a similar level, as such plans or programs may be in
         effect from time to time, including, without limitation, annual bonus,
         vacation, financial planning, long term incentive plan(s), pension,
         savings and other retirement plans


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         or programs, medical, dental, hospitalization, short-term and
         long-term disability and life insurance.

4.       RETIREMENT PLANS.

         (a)      The Executive is eligible to make 401(K) and voluntary
                  after-tax contributions through the Company's current Polaroid
                  Retirement Savings Plan subject to change by the Company. Any
                  portion of Executive's contribution that cannot be made into
                  the Retirement Savings Plan due to the IRS limits shall be
                  contributed into the Polaroid Elective Deferred Compensation
                  Plan, a supplemental executive retirement plan.

         (b)      Executive is eligible to participate in Polaroid's Pension
                  Plan, which is subject to change by the Company. Amounts
                  contributed in excess of the IRS statutory limits shall be
                  placed in the current supplemental executive retirement plan.

         (c)      As of the date of this Agreement, all time-based retirement
                  benefits shall vest under any Company retirement vehicle,
                  including but not limited to pension, retirement savings,
                  elective deferred and all other supplemental executive
                  retirement plans ("SERPS").

5.       SUPPLEMENTAL PENSION. In addition to the Executive's pension benefits
         set forth in the Polaroid Pension Plan as described above, the Company
         shall provide a retirement crediting rate equal to three (3) years of
         credited benefit accrual for each year of credited benefit accrual
         earned, for a period of up to seven (7) years from the Executive's
         original date of hire.

6.       CHANGE IN CONTROL. The Executive's Change in Control Agreement executed
         effective April 7, 1999 will remain in full force and effect and will
         not be affected by this Agreement.

7.       TERMINATION DUE TO DISABILITY OR DEATH. In the event the Executive's
         employment is terminated due to Executive's disability or death,
         Executive, or Executive's estate or beneficiaries, as the case may be,
         shall be entitled to:

         (a)      ANNUAL BONUS. Pro-rata portion of the Annual Bonus for the
                  year in which the Executive's disability or death occurs; and,

         (b)      OTHER BENEFITS. Other benefits or entitlements in accordance
                  with applicable plans and programs of the Company.

8.       TERMINATION BY THE COMPANY FOR CAUSE. In the event the Company
         terminates the Executive's employment for Cause, the Executive shall be
         entitled to Base Salary through the date of the termination. Executive
         will not be entitled to receive any severance or any other benefits and
         all long-term incentive awards shall be forfeited.

9.       TERMINATION OR CONSTRUCTIVE TERMINATION BY THE COMPANY WITHOUT CAUSE.
         If prior to a Change in Control, the Executive's employment is
         terminated by the Company without


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         Cause or upon a Constructive Termination, upon the execution of a full
         and complete release, the Executive shall be entitled to:

         (a)      SEVERANCE PAYMENT. Base Salary, at the annualized rate in
                  effect on the date of termination of the Executive's
                  employment, in a stream of payments in accordance with the
                  Company's regular payroll schedule beginning on the regular
                  payroll distribution date next succeeding Executive's
                  Termination Date, for the Severance Period;

         (b)      ANNUAL BONUS. Annual Bonus payments for the period from the
                  beginning of the year in which the termination occurs through
                  the end of the Severance Period based on the actual
                  performance of the Company without regard to any other factors
                  (such as personal performance factors) that could reduce the
                  ultimate distribution; any such payment for a period of less
                  than a full year shall be pro-rated by the number of days for
                  which payment is made;

         (c)      INSURANCE. Medical, dental and executive life insurance
                  benefits (collectively "Insurance Benefits") at the same rate
                  as to actively employed officers of the Company for a period
                  equal to twenty-four (24) months following the Executive's
                  Termination Date or until the Executive is eligible to receive
                  such Insurance Benefits through another employer (this benefit
                  shall run coterminous with COBRA rights), whichever occurs
                  first;

         (d)      DISABILITY COVERAGE. Short- and long-term disability coverage
                  that is reasonably comparable to the coverage provided to the
                  Executive on his Termination Date and which can be purchased
                  on the open market shall be for a period equal to the lesser
                  of twenty-four (24) months following the Executive's
                  Termination Date or until the Executive is eligible to receive
                  comparable benefits through another employer;

         (e)      OPTIONS. For all options granted through Executive's
                  Termination Date the Executive shall have an exercise period
                  being the lesser of two (2) years from the Executive's
                  Termination Date or the exercise period stated in the
                  Executive's applicable Option or Supplemental Option Agreement
                  and subject to all other terms of such agreements governing
                  the Options;

         (f)      PERFORMANCE AWARDS. A distribution of a pro-rata portion of
                  Performance Awards (including but not limited to Performance
                  Shares, PARS, and Restricted Stock) as earned through the
                  Executive's Termination Date will be made when distributions
                  from similar awards are made to active employees. The
                  Performance Award distributions, as adjusted for the pro-rata
                  period, shall be based on the Company's actual performance
                  during the performance period for such award. Determination of
                  award distributions shall be on the same basis as applied to
                  senior officers employed by the Company at the time such
                  awards are delivered. Notwithstanding the foregoing, no less
                  than seventy-five percent (75%) of all Restricted Stock Awards
                  granted on the effective date of this Agreement shall vest;

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         (g)      FINANCIAL PLANNING AND OUTPLACEMENT COUNSELING. Financial
                  planning and outplacement services will be available to the
                  Executive. For reimbursement of these expenses Executive will
                  submit the necessary supporting documentation to Human
                  Resources. Specifically, the Company agrees to reimburse the
                  Executive up to a maximum of seventy five thousand dollars
                  ($75,000) for expenses that are related to the Executive's
                  financial planning and/or search for a new position, and/or
                  for expenses related to the Executive's setting himself up to
                  do independent consulting; including, but not limited to,
                  outplacement services, membership in and travel to
                  professional associations, home office equipment, supplies,
                  and financial planning. Such reimbursement shall be made upon
                  the submission by the Executive of periodic expense reports
                  accompanied by receipts for expenditures. The Executive's
                  entitlement to such outplacement services will end on the
                  earlier of one (1) year from the Executive's Termination Date
                  or the date the Company has reimbursed a total of seventy five
                  thousand dollars ($75,000).

         (h)      OTHER BENEFITS. Other benefits or entitlements in accordance
                  with applicable plans and programs of the Company; and,

         (i)      SURVIVOR BENEFITS. Should the Executive 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 the Executive's beneficiary(ies).
                  Any residual family medical and dental benefits which the
                  Executive was receiving on the Executive's date of death shall
                  continue to the family members the Executive had covered in
                  such medical and dental plans on such date.

         Modifications to this Section may be made by the Company or its
         successors; however, any modifications which decrease the benefits or
         restrict the eligibility conditions require twelve (12) months prior
         written notice by the Company.

10.      INDEMNIFICATION; DIRECTOR'S AND OFFICER'S LIABILITY INSURANCE. The
         Executive shall, after the Termination Date, retain all rights to
         indemnification under applicable law or under the Company's Certificate
         of Incorporation or By-Laws, as they may be amended or restated from
         time to time. In addition, the Company shall maintain Director's and
         Officer's liability insurance on behalf of the Executive, at the better
         of the level in effect immediately prior to the Change in Control or
         the Executive's Termination Date, for the two (2) year period following
         the Termination Date, and throughout the period of any applicable
         statute of limitations.

11.      NON-COMPETITION. During employment or any Severance Period pursuant to
         the provisions of paragraph 9, or in no event for a period less than
         twelve (12) months following any other termination of employment, the
         Executive shall not engage in any activity directly or indirectly with
         Eastman Kodak Company or Fuji, whether as a principal, partner,
         executive, consultant, shareholder, director (other than as a holder of
         not in excess of one percent (1%) of the outstanding voting shares of
         any publicly traded company) or otherwise.


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12.      NON-SOLICITATION OF CUSTOMERS. For a period of one (1) year from the
         separation date, the Executive shall not directly or indirectly solicit
         customers of the Company ("Customers") for the sale to the Customers of
         products or services that compete with the Company's businesses. For
         purposes of this paragraph, the Company's businesses shall be limited
         to silver halide film, cameras and instant printing media.
         Notwithstanding the foregoing, however, this paragraph shall not
         preclude the Executive from directly or indirectly soliciting the sale
         to the Customers of products or services that compete with the
         Company's businesses if such products or services are ancillary to
         products or services that do not compete with the Company's businesses.
         For example, if the Executive were to directly or indirectly solicit to
         the Customer the sale of cellular phones and a thermal printer and
         media is offered for sale to the Customer as an accessory product or
         service, such accessory product or service shall not be considered as
         competing with the Company's businesses. The foregoing is intended to
         be illustrative only.

13.      CONFIDENTIALITY. Without the prior written consent of the Company,
         except to the extent required by an order of a court having competent
         jurisdiction or under subpoena from an appropriate government agency,
         the Executive shall comply with the Confidentiality Agreement Executive
         executed when Executive was hired and further shall not disclose any
         trade secrets, customer lists, drawings, designs, information regarding
         product development, marketing plans, sales plans, manufacturing plans,
         management organization information (including data and other
         information relating to members of the Board and management), operating
         policies or manuals, business plans, financial records or other
         financial, commercial, business or technical information relating to
         the Company or information designated as confidential or proprietary
         that the Company may receive belonging to suppliers, customers or
         others who do business with any of its Subsidiaries (collectively,
         "Confidential Information") to any third person unless such
         Confidential Information has been previously disclosed to the public by
         the Company; is in the public domain (other than by reason of
         Executive's breach of this Agreement); or has been disclosed to the
         Executive prior to the date hereof from sources not breaching any
         agreement with the Company.

14.      COMPANY PROPERTY. Promptly following the Executive's termination of
         employment, the Executive shall return to the Company all property of
         the Company including but not limited to computer(s), identification
         badge, and business cards, credit cards, and all copies of Confidential
         Information in the Executive's possession or under Executive's control
         whether on paper or electronic storage media.

15.      MISCELLANEOUS ADJUSTMENTS UPON TERMINATION. Upon termination of the
         Executive's employment, the Company shall have the right to deduct from
         any cash payment due to Executive, all amounts required by applicable
         law to be withheld and in addition, any amounts which Executive may owe
         to the Company as of the Executive's Termination Date, including but
         not limited to items such as company store, corporate credit card
         obligations and Company property issued to Executive and not otherwise
         accounted for or returned.

16.      NON-SOLICITATION OF EMPLOYEES. During employment or any Severance
         Period pursuant to the provisions of paragraph 9, or in no event for a
         period less than twelve (12) months following any other termination of
         employment, the Executive shall not directly or indirectly


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         induce any employee of the Company to terminate employment with the
         Company, and shall not directly or indirectly, either individually or
         as owner, agent, consultant, director, officer, shareholder or
         otherwise, employ or offer employment to any person who is employed by
         the Company.

17.      COMPANY POLICIES. The Executive agrees that Executive shall be bound by
         all written policies established by the Company and by any written
         personnel manual or written policy statement even though such policy
         may be unilaterally amended, terminated or modified at the sole
         discretion of the Company.

18.      DISPUTE RESOLUTION. The Executive agrees that should any dispute arise
         under the terms of this Agreement or in any manner directly or
         indirectly resulting from the Executive's employment with the Company,
         to seek to resolve Executive's dispute by first exhausting any
         applicable internal remedies as provided by written Company policy.

         (a)      If a dispute under the terms of this Agreement should remain,
                  or if any dispute should remain involving a legally-protected
                  right (including but not limited to discrimination) or
                  involving the Executive's termination at the Company's
                  initiative for any reason, subject to equitable relief, if
                  any, sought by the Company in accordance with paragraph 19,
                  the Executive agrees to submit Executive's claim to final and
                  binding arbitration pursuant to the National Rules for the
                  Resolution of Employment Disputes of the American Arbitration
                  Association. Such action will take place in the Commonwealth
                  of Massachusetts. The Executive hereby waives any right
                  Executive might otherwise have had to file suit in a court of
                  law on any dispute arising out of the Executive's employment.
                  This waiver shall not, however, apply to any claim for
                  workers' compensation, or any dispute in connection with a
                  Company benefit plan adopted pursuant to the federal Employee
                  Retirement Income Security Act (ERISA).

         (b)      The Executive's agreement to arbitrate these claims and waive
                  the right to bring such action in court includes a waiver of
                  any rights or claims that the Executive may have under the Age
                  Discrimination in Employment Act of 1967, as amended (29
                  U.S.C. ss.621) or under Massachusetts General Laws, Chapter
                  151B.

         (c)      From the date that the Executive receives this Agreement, the
                  Executive acknowledges that Executive is entitled to
                  twenty-two (22) days to consider it; in signing this Agreement
                  prior to the expiration of this twenty-two (22) day period,
                  the Executive expressly waives the right to the balance of
                  this period for such consideration. Upon signing the
                  Agreement, the Executive has seven (7) days following the
                  signing in which to revoke the Agreement; should Executive so
                  revoke it during the seven (7) day period, then this Agreement
                  shall be null and void.

         (d)      The Executive is advised to consult with an attorney prior to
                  signing this Agreement. Executive acknowledges that Executive
                  has been given a reasonable and adequate amount of time to
                  consult with an attorney.


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19.      EQUITABLE REMEDIES. The Executive acknowledges that the covenants and
         obligations with respect to Non-competition, Non-disclosure and
         Non-solicitation relate to special, unique, and extraordinary matters
         and that a violation of any of the terms of such covenants and
         obligations will cause the Company irreparable injury for which
         adequate remedies are not available at law. Therefore, the Executive
         agrees that if Executive shall breach any of these covenants, the
         Company shall have no further obligation to pay any benefits or
         otherwise make payments hereunder, and the Company shall be entitled to
         an injunction, restraining order, or such other equitable relief
         (without the requirement to post a bond) restraining Executive from
         committing any violation of the covenants and obligations contained in
         this Agreement. The remedies in the preceding sentence are cumulative
         and are in addition to any other rights and remedies the Company may
         have at law or in equity as an arbitrator (or court) shall reasonably
         determine. Executive further agrees that such injunction, restraining
         order, or other equitable relief may be had in any appropriate court of
         the Commonwealth of Massachusetts having jurisdiction over either Party
         to this Agreement or over the subject matter of this Agreement, and
         more particularly, may be enforced by a proceeding in any such court of
         the Commonwealth of Massachusetts.

20.      INTENTION OF THE PARTIES. If any provision of this Agreement is
         determined by an arbitrator (or a court of competent jurisdiction) not
         to be enforceable, the Executive agrees that it is the intention of the
         Parties that such provision should be enforced to the maximum extent
         possible under applicable law and that such arbitrator (or court) shall
         reform such provision to make it enforceable with the intent of the
         Parties.

21.      GENERAL COVENANTS.

         (a)      During employment and the Severance Period or twelve (12)
                  months following a termination of employment, whichever is
                  greater, the Executive agrees on Executive's own behalf and on
                  behalf of Executive's agents and representatives, not to
                  engage in any public criticism regarding Executive's
                  employment with the Company or to make any negative,
                  detrimental, or derogatory comments concerning the Company or
                  its stockholders, directors, officers or employees, past and
                  present.

         (b)      The Executive shall not disclose the terms of this Agreement
                  unless required to do so by law; provided, however, that the
                  terms of this Agreement may be disclosed in confidence to
                  Executive's attorneys and tax or financial consultants. Before
                  disclosing the terms of this Agreement to anyone as permitted
                  under this paragraph, the Executive shall first obtain an
                  agreement from the person receiving the information that he or
                  she will not disclose the terms of the Agreement to any other
                  person. The unauthorized disclosure of the terms of this
                  Agreement by any person shall constitute a violation of this
                  Agreement by the Party who initially disclosed the terms of
                  this Agreement. If and when this Agreement becomes a public
                  document, this paragraph shall become null and void.

22.      ASSIGNMENT. Except as otherwise provided herein, this Agreement shall
         be binding upon, inure to the benefit of and be enforceable by the
         Company and the Executive and their respective heirs, legal
         representatives, successors and assigns. If the Company shall be


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         merged into or consolidated with another entity, the provisions of
         this Agreement shall be binding upon and inure to the benefit of the
         entity surviving such merger or resulting from such consolidation.

23.      ENTIRE AGREEMENT. This Agreement, with the plans and grant agreements
         referenced herein, along with the Change in Control Agreement
         referenced in paragraph 6, contains the entire understanding and
         agreement between the Parties concerning the subject matter hereof and
         supersedes all prior agreements, understandings, discussions,
         negotiations and undertakings, whether written or oral, between the
         Parties with respect thereto.

24.      AMENDMENT OR WAIVER. No provision in this Agreement may be amended
         unless such amendment is agreed to in writing and signed by the
         Executive and an authorized officer of the Company. No waiver by either
         Party of any breach by the other Party of any condition or provision
         contained in this Agreement shall be deemed a waiver of a similar or
         dissimilar condition or provision at the same or any prior or
         subsequent time. Any waiver must be in writing and signed by the
         Executive or an authorized officer of the Company, as the case may be.

25.      SEVERABILITY. In the event that any provision or portion of this
         Agreement shall be determined to be invalid or unenforceable for any
         reason, in whole or in part, the remaining provisions of this Agreement
         shall be unaffected thereby and shall remain in full force and effect
         to the fullest extent permitted by law.

26.      SURVIVORSHIP. The respective rights and obligations of the Parties
         hereunder shall survive any termination of the Executive's employment
         to the extent necessary to the intended preservation of such rights and
         obligations.

27.      BENEFICIARIES/REFERENCES. The Executive shall be entitled to select
         (and change, to the extent permitted under any applicable law) a
         beneficiary or beneficiaries to receive any compensation or benefit
         payable hereunder following the Executive's death by giving the Company
         written notice thereof. In the event of the Executive's death or a
         judicial determination of Executive's incompetence, reference in this
         Agreement to the Executive shall be deemed, where appropriate, to refer
         to Executive's beneficiary, estate or other legal representative.
         Absent any written notice the beneficiary shall be the Executive's
         estate.

28.      GOVERNING LAW. This Agreement shall be governed by, construed, and
         interpreted in accordance with the laws of Massachusetts without
         reference to principles of conflict of laws.

29.      NOTICES. Any notice given to a Party shall be in writing and shall be
         deemed to have been given when delivered personally or sent by
         certified or registered mail, postage prepaid, return receipt
         requested, duly addressed, if to the Company, to the corporate
         headquarters, attention: Vice President, Human Resources, with a copy
         to the General Counsel; and, if to the Executive, at the Executive's
         home address on record with the Company.


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30.      HEADINGS. The headings of the sections contained in this Agreement are
         for convenience only and shall not be deemed to control or affect the
         meaning or construction of any provision of this Agreement.

31.      COUNTERPARTS. This Agreement may be executed in two (2) or more
         counterparts.

32.      WITHHOLDING. The Company may, to the extent required by law, withhold
         applicable federal, state and local income and other taxes from any
         payments due to the Executive hereunder.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.

                                             POLAROID CORPORATION


                                             By: /S/ GARY T. DICAMILLO
                                                 -------------------------------
                                                 Name:   Gary T. DiCamillo
                                                 Title:  Chief Executive Officer


/S/ NEAL D. GOLDMAN
-------------------
Neal D. Goldman








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