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                                                              EXHIBIT 10.3(c)

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made this 31st day of July, 2002, between OEP
Imaging Operating Corporation, a Delaware corporation ("Company"), and William
L. Flaherty (the "Executive").

                                   BACKGROUND.

Pursuant to the terms of the Second Amended and Restated Asset Purchase
Agreement dated as of July 3, 2002 among the Company and Polaroid Corporation
and the Polaroid Subsidiaries identified therein (the "Asset Purchase
Agreement"), the Company will, upon closing under the terms of the Asset
Purchase Agreement, acquire those assets of Polaroid Corporation specified in
that Asset Purchase Agreement. Immediately following that closing, the Company
will change its name to Polaroid Corporation and will begin the operation of its
business using, among others, the assets so acquired. Because of the Executive's
expertise in the business operated by the current Polaroid Corporation, the
Company desires to employ the Executive, and the Executive desires to accept the
Company's offer of employment, on the terms and conditions specified herein.

                                    AGREEMENT

In consideration of the mutual covenants and representations contained herein,
the parties hereto agree as follows:

     1.   TERM.

Company will employ the Executive, and the Executive will serve Company, under
the terms of this Agreement for a term of three (3) years (the "Term")
commencing on the later of the date of this Agreement or the date of the Closing
under the Asset Purchase Agreement (the "Effective Date") and ending on the
third anniversary of the Effective Date. Upon the expiration of that term, and
subject to such other agreements as the Company and the Executive may then enter
into, the Executive will become an "at will" employee of the Company.
Notwithstanding the foregoing, the Executive's employment hereunder may be
earlier terminated, as provided in Section 5 hereof. The term "Employment
Period" as used herein means the period of time between the Effective Date and
the earlier of the termination of the Executive's employment hereunder or the
expiration of the Term.

     2.   EMPLOYMENT.

          (a)  POSITION AND REPORTING. Company hereby employs the Executive for
the Employment Period as its Executive Vice-President and Chief Financial
Officer on the terms and conditions set forth in this Agreement.

          (b)  AUTHORITY AND DUTIES. The Executive shall exercise such
authority, perform such executive duties and functions and discharge such
responsibilities as are (i)

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reasonably associated with the Executive's position, (ii) commensurate with the
authority vested in the Executive's position pursuant to this Agreement and
(iii) consistent with the By-Laws of the Company. Without limiting the
generality of the foregoing, the Executive shall be responsible for the
Company's Controllership, Tax, Treasury and Information Technology Functions,
and shall report directly and be responsible to the Chief Executive Officer of
Company. During the Employment Period, the Executive shall devote his full
business time, skill and efforts to the business of Company. Notwithstanding the
foregoing, the Executive may (i) make and manage passive personal business
investments of his choice (in the case of publicly-held corporations, not to
exceed one percent (1%) of the outstanding voting stock) and serve in any
capacity with any civic, educational or charitable organization, or any trade
association, without seeking or obtaining approval by the Board of Directors of
the Company (the "Board"), provided such activities and service do not
materially interfere or conflict with the performance of his duties hereunder
and (ii) with the approval of the Board, which shall not unreasonably be
withheld, serve on the boards of directors of other corporations.

     3.   COMPENSATION AND BENEFITS.

          (a)  SALARY. During the Employment Period, Company shall pay to the
Executive, as compensation for the performance of his duties and obligations
under this Agreement, a base salary at the rate of $390,000 per annum, payable
in arrears not less frequently than monthly in accordance with the normal
payroll practices of Company. Such base salary shall be subject to review each
year for possible increase by the Board, but shall in no event be decreased from
its then-existing level during the Employment Period.

          (b)  ANNUAL BONUS. During the Employment Period, the Executive shall
have the opportunity to earn an annual bonus of 55% of the Executive's base
salary, as determined in accordance with Section 3(a), contingent upon the
achievement of certain corporate and/or individual performance goals established
by the Board of Directors of Company in its discretion. The bonus actually
payable may be more or less than 55% of base salary depending on the terms of
the bonus plan adopted by the Board and the extent to which that plan provides
for payment when the goals established thereunder have been partially satisfied
or exceeded. The performance goals for the remainder of 2002 shall be
communicated to the Executive as soon as reasonably practicable after the
commencement of Executive's service hereunder, and within the first 90 days of
the each calendar year thereafter, beginning with 2003. The bonus payable for
any year (or in the case of 2002 partial year) shall be paid within the first 75
days of the following calendar year.

          (c)  OTHER BENEFITS. During the Employment Period, the Executive shall
be entitled to participate in all of the employee benefit plans, programs and
arrangements in effect during the Employment Period that are generally available
to senior executives of Company, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans, programs and
arrangements. In addition, during the Employment Period, the Executive shall be
entitled to fringe benefits and perquisites comparable to those of other senior
executives of Company, including, but not limited to, annual paid vacation.

          (d)  BUSINESS EXPENSES. During the Employment Period, Company shall
reimburse the Executive for all documented reasonable business expenses incurred
by the

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Executive in the performance of his duties under this Agreement, in accordance
with Company's policies.

     4.   INDEMNIFICATION.

During the Employment Period and thereafter, Company shall (i) indemnify the
Executive to the fullest extent permitted by, and subject to the limitations of,
the Delaware General Corporation Law against, and (ii) maintain commercially
reasonable levels of officers' and directors' liability insurance, for the
benefit of the directors and officers of Company, which insurance shall cover
the Executive, with respect to, all costs, charges and expenses, including
attorneys' fees, whatsoever incurred or sustained by the Executive in connection
with any action, suit or proceeding (other than any action, suit or proceeding
brought by or in the name of Company against the Executive) to which he may be
made a party by reason of being or having been a director, officer or employee
of Company or his serving or having served any other enterprise as a director,
officer or employee at the request of Company.

     5.   TERMINATION OF EMPLOYMENT.

     (a)  TERMINATION FOR CAUSE. Company may terminate the Executive's
employment hereunder for cause. For purposes of this Agreement and subject to
the Executive's opportunity to cure as provided in Section 5(c) hereof, Company
shall have "cause" to terminate the Executive's employment hereunder if such
termination shall be the result of:

          (i)     willful fraud or dishonesty in connection with the Executive's
     performance hereunder that results in material harm to Company;

          (ii)    the failure by the Executive to substantially perform his
     duties hereunder that results in material harm to Company; or

          (iii)   the conviction for, or plea of NOLO CONTENDERE to, a charge of
     commission of a felony involving moral turpitude or that can reasonably be
     expected to cause material harm to the Company or its reputation or to
     materially impair the Executive's ability to perform his duties hereunder.

     (b)  TERMINATION FOR GOOD REASON. The Executive shall have the right at any
time during the Term to terminate his employment with Company for any "good
reason." For purposes of this Agreement and subject to Company's opportunity to
cure as provided in Section 5(c) hereof, the Executive shall have "good reason"
to terminate his employment hereunder if such termination shall be the result
of:

          (i)     a material diminution during the Employment Period in the
     Executive's duties or responsibilities, any adverse change in the
     Executive's reporting responsibilities (other than an interim change during
     a period in which the Chief Executive Officer is unavailable), as set forth
     in Section 2 hereof, provided that the assignment of the Company's Instant
     Printing function to another senior executive officer shall not constitute
     such a material diminution. Notwithstanding the foregoing, the
     reassignment of any other responsibilities under Section 2 shall give
     rise to "good reason" under Section 5(b).

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          (ii)    a reduction by Company of the compensation and benefits
     provisions set forth in Section 3 hereof, provided that a reduction in the
     benefits described in Section 3(c) generally applicable to senior
     executives of the Company shall not constitute good reason hereunder; or

          (iii)   a material breach by Company of any other term of this
     Agreement.

     (c)  NOTICE AND OPPORTUNITY TO CURE. Notwithstanding the foregoing, it
shall be a condition precedent to Company's right to terminate the Executive's
employment for "cause", and the Executive's right to terminate his employment
for "good reason," that (1) the party seeking the termination shall first have
given the other party written notice stating with specificity the reason for the
termination ("breach"); (2) if the Executive is terminated for "cause," Company
provides the Executive an opportunity to appear before the Board to answer such
grounds for termination; and (3) if such breach is susceptible of cure or
remedy, (it being understood that the only definition of "cause" that is subject
to cure or remedy is that contained in Section 5(a)(ii)), a period of 30 days
from and after the giving of such notice shall have elapsed without the
breaching party having effectively cured or remedied such breach during such
30-day period, unless such breach cannot be cured or remedied within 30 days, in
which case the period for remedy or cure shall be extended for a reasonable time
(not to exceed an additional 30 days), provided the breaching party has made and
continues to make a diligent effort to effect such remedy or cure.

     (d)  TERMINATION UPON DEATH OR PERMANENT AND TOTAL DISABILITY. The
Employment Period shall be terminated by the death of the Executive. The
Employment Period may be terminated by Company if (1) the Executive shall become
eligible for long term disability benefits as such term is defined in Company's
long term disability insurance program, policy or contract as in effect from
time to time for the benefit of employees of Company or (2) by reason of a
physical or mental impairment, the Executive is unable to substantially perform
his duties hereunder for a period of six consecutive months (either (1) or (2),
a "Disability"). If the Employment Period is terminated by reason of a
Disability of the Executive, Company shall give 30 days' advance written notice
to that effect to the Executive. If the existence of a Disability hereunder is
in dispute, it shall be resolved by two physicians, one appointed by the
Executive and one appointed by Company. If the two physicians so selected cannot
agree as to whether or not the Executive has a Disability, the two physicians so
selected shall designate a third physician and a majority of the three
physicians so selected shall determine whether or not the Executive has a
Disability.

     6.   CONSEQUENCES OF TERMINATION.

     (a)  TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the event of
termination of the Executive's employment hereunder by Company without "cause"
(other than upon death, Disability or the expiration of the Term of this
Agreement) or by the Executive for "good reason" (each as defined in Section 5
hereof), the Executive shall be entitled to the following severance pay and
benefits:

          (i)     SEVERANCE PAY - severance payments in the form of
     continuation of the Executive's base salary as in effect immediately prior
     to such termination over a period of 18 months (the "Severance Period").
     The Company's obligation to pay severance

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     payments hereunder shall not be reduced or offset by any compensation the
     Executive may obtain from subsequent employment.

          (ii)    BENEFITS CONTINUATION - continuation for the Severance Period
     of coverage under the group medical care, disability and life insurance
     benefit plans or arrangements in which the Executive is participating at
     the time of termination on the terms and conditions then prevailing or as
     generally applicable thereafter to senior executives of the Company;
     PROVIDED, HOWEVER, that Company's obligation to provide such coverages
     shall be terminated if the Executive obtains comparable substitute coverage
     from another employer at any time during the Severance Period. The
     Executive shall be entitled, at the expiration of the Severance Period, to
     elect continued medical coverage in accordance with section 4980B of the
     Internal Revenue Code of 1986, as amended (or any successor provision
     thereto);

          (iii)   BONUS PAYMENT - a pro rata portion of the Annual Bonus that
     would otherwise have been paid to the Executive for the year of his
     termination, based upon the degree to which the performance targets under
     Section 3(b) were satisfied for that year. The pro rata portion will be
     determined by multiplying the otherwise payable annual bonus by a fraction,
     the numerator of which is the number of days during the relevant year
     preceding the Executive's termination of employment and the denominator of
     which is 365. The pro rata bonus, if any, so payable, will be paid when
     that bonus would otherwise have been paid had the Executive remained
     employed; and

          (iv)    OUTPLACEMENT - the Company will provide outplacement services
     to the Executive, such services to be provided by a mutually agreeable
     outplacement services provider expert in the field of executive
     outplacement, to a maximum of $35,000.

     (b)  OTHER TERMINATIONS. In the event of termination of the Executive's
employment hereunder for any reason other than those specified in Section 6(a)
hereof, the Executive shall not be entitled to any bonus, severance pay or
benefits contemplated by the foregoing, except as may otherwise be provided
under any applicable benefit plans or award agreements relating to the
Executive.

     (c)  ACCRUED RIGHTS. Notwithstanding the foregoing provisions of this
Section 6, in the event of termination of the Executive's employment hereunder
for any reason, the Executive shall be entitled to payment of any unpaid portion
of his base salary through the effective date of termination, and payment of any
accrued and vested but unpaid rights solely in accordance with the terms of any
incentive bonus or employee benefit plan or program of Company.

     (d)  SURVIVAL. The Company's obligation to pay amounts under this Section 6
on account of a termination of the Executive's employment before the end of the
Term shall survive the termination of this Agreement.

     7.   CONFIDENTIALITY.

The Executive agrees that he will not at any time during the Term hereof or at
any time thereafter for any reason, in any fashion, form or manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation or other business entity, in any

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manner whatsoever, any confidential information or trade secrets concerning the
business of Company, including, without limiting the generality of the
foregoing, the techniques, methods or systems of its operation or management,
any information regarding its financial matters, or any other material
information concerning the business of Company, its manner of operation, its
plan or other material data. The provisions of this Section 7 shall not apply to
(i) information that is public knowledge other than as a result of disclosure by
the Executive in breach of this Section 7; (ii) information disseminated by
Company to third parties in the ordinary course of business; (iii) information
lawfully received by the Executive from a third party who, after such inquiry by
the Executive as is reasonable under the circumstances, is not known by the
Executive to be bound by a confidential relationship to Company, or (iv)
information disclosed under a requirement of law or as directed by applicable
legal authority having jurisdiction over the Executive.

     8.   INVENTIONS.

The Executive is hereby retained in a capacity such that the Executive's
responsibilities include the making of technical and managerial contributions of
value to Company. The Executive hereby assigns to Company all right, title and
interest in such contributions and inventions made or conceived by the Executive
alone or jointly with others during the Employment Period that relate to the
business of Company. This assignment shall include (a) the right to file and
prosecute patent applications on such inventions in any and all countries, (b)
the patent applications filed and patents issuing thereon, and (c) the right to
obtain copyright, trademark or trade name protection for any such work product.
The Executive shall promptly and fully disclose all such contributions and
inventions to Company and assist Company in obtaining and protecting the rights
therein (including patents thereon) in any and all countries; PROVIDED, HOWEVER,
that said contributions and inventions will be the property of Company, whether
or not patented or registered for copyright, trademark or trade name protection,
as the case may be. The Executive hereby agrees to execute any documentation
requested by Company to be so executed if such request is made in order to carry
out the purpose and terms of this paragraph. Inventions conceived by the
Executive that are not related to the business of Company will remain the
property of the Executive.

     9.   NON-COMPETITION.

The Executive agrees that he shall not during the Employment Period and for one
year thereafter, or, if applicable, the Severance Period, without the approval
of the Board, directly or indirectly, alone or as partner, joint venturer,
officer, director, employee, consultant, agent, independent contractor or
stockholder (other than as provided below) of any company or business, engage in
any "Competitive Business" within the United States. For purposes of the
foregoing, the term "Competitive Business" shall mean any of Eastman Kodak
Company, Fuji Photo Film Co., Ltd., Agfa-Gevaert Group, or any of their
subsidiaries, joint venturers or direct business partners. Notwithstanding the
foregoing, the Executive shall not be prohibited during the non-competition
period applicable above from acting as a passive investor where he owns not more
than one percent (1%) of the issued and outstanding capital stock of any
publicly-held company. During the period that the above non-competition
restriction applies, the Executive shall not, without the written consent of
Company, solicit or encourage any employee of Company or any current or future
subsidiary or affiliate thereof to terminate his or her employment.

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     10.  BREACH OF RESTRICTIVE COVENANTS.

The parties agree that a breach or violation of Section 7, 8 or 9 hereof will
result in immediate and irreparable injury and harm to the innocent party, which
party shall have, in addition to any and all remedies of law and other
consequences under this Agreement, the right to an injunction, specific
performance or other equitable relief to prevent the violation of the obligation
hereunder.

     11.  NOTICES.

For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:

     (a)  If to Company, to:           Charles F. Auster
                                       Partner,
                                       One Equity Partners, Inc.
                                       320 Park Avenue, 18th Floor
                                       New York, NY 10022

     (b)  If to the Executive, to:     William L. Flaherty
                                       11 Coburn Road
                                       Weston, MA 02493

or to such other address as a party hereto shall designate to the other party by
like notice, provided that notice of a change of address shall be effective only
upon receipt thereof.

     12.  ARBITRATION: LEGAL FEES.

          (a)  Except as provided in Section 10 hereof, any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in Boston, MA., in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Company shall reimburse the
Executive for all reasonable legal fees and costs and other fees and expenses
that the Executive may incur in respect of any dispute or controversy arising
against Company under or in connection with this Agreement; PROVIDED, HOWEVER,
that Company shall not reimburse any such fees, costs and expenses if the fact
finder determines that an action

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brought by the Executive was substantially without merit or the Executive is
otherwise unsuccessful in such an action.

          (b)  The Company and Executive agree that they will attempt, and they
intend that they will and the arbitrator should use their best efforts in that
attempt, to conclude the arbitration proceeding and have a final decision from
the arbitrator within 120 days from the date of selection of the arbitrator;
PROVIDED, HOWEVER, that the arbitrator shall be entitled to extend such l20-day
period for a total of two 120-day periods. The arbitrator shall immediately
deliver a written award with respect to the dispute to each of the parties, who
shall promptly act in accordance therewith.

Unless the Company has also instituted an action to obtain specific performance
or similar equitable relief under Section 10 above, in an arbitration involving
the existence of either "Cause" as defined in Section 5(a)(ii) or "good reason"
under Section 5(b), the benefits to which the Executive is otherwise entitled
under Section 6(a) shall continue so long as Executive and his counsel are in
reasonable compliance with (b) above, subject to the Executive's obligation to
repay any Severance Pay, Bonus or Outplacement payments received upon a
determination by the arbitrator that the Company has "Cause" for the Executive's
termination or that the Executive did not have "good reason" for his
termination.

     13.  WAIVER OF BREACH.

Any waiver of any breach of the Agreement shall not be construed to be a
continuing waiver or consent to any subsequent breach on the part of either the
Executive or of Company.

     14.  NON-ASSIGNMENT: SUCCESSORS.

Neither party hereto may assign his or its rights or delegate his or its duties
under this Agreement without the prior written consent of the other party;
PROVIDED, HOWEVER, that (i) this Agreement shall inure to the benefit of and be
binding upon the successors and assigns of Company upon any sale of all or
substantially all of the assets of Company, or upon any merger, consolidation or
reorganization of Company with or into any other corporation, all as though such
successors and assigns of Company and their respective successors and assigns
were Company; and (ii) this Agreement shall inure to the benefit of and be
binding upon the heirs, assigns or designees of the Executive to the extent of
any payments due to the Executive hereunder. As used in this Agreement, the term
"Company" shall be deemed to refer to any such successor or assign or Company
referred to in the preceding sentence.

     15.  WITHHOLDING OF TAXES.

All payments required to be made by Company to the Executive under this
Agreement shall be subject to the withholding of such amounts, if any, relating
to tax, and other payroll deductions as Company may reasonably determine it
should withhold pursuant to any applicable law or regulation.

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     16.  SEVERABILITY.

To the extent any provision of this Agreement or portion thereof shall be
invalid or unenforceable, it shall be considered deleted therefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.

     17.  COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same instrument.

     18.  GOVERNING LAW.

This Agreement shall be construed, interpreted and enforced in accordance with
the laws of the Commonwealth of Massachusetts, without regard to the conflict of
laws principles thereof.

     19.  ENTIRE AGREEMENT.

This Agreement constitutes the entire agreement by Company and the Executive
with respect to the subject matter hereof and supersedes any and all prior
agreements or understandings between the Executive and Company with respect to
the subject matter hereof, whether written or oral. This Agreement may be
amended or modified only by a written instrument executed by the party against
whom any such amendment or modification is to be enforced.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of July 31,
2002.

                                            OEP Imaging Operating Corporation

                                             By:    /s/ Charles F. Auster
                                                --------------------------------
                                                Charles F. Auster
                                                Title:

                                                   /s/ William L. Flaherty
                                             -----------------------------------
                                             William L. Flaherty

                                        9<PAGE>

                                                               Exhibit 10.3(d)

                                                               [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

                                       April 25, 2003

Mr. Robert B. Gregerson
Seven Balsam Court
Bedford, New Hampshire  03110

Dear Bob:

On behalf of Polaroid Corporation (the "Company"), I am pleased to offer you the
position of Vice President, General Manager, Americas reporting directly to me
with a hire date to be mutually agreed, but no later than May 27, 2003.

You will receive a base salary of $12,692.00 paid bi-weekly or $330,000.00
annualized, subject to annual review. You will be eligible to participate in the
Polaroid Incentive Plan (the "PIP") for 2003 with an opportunity of 50% 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, ninety percent (90%) of your PIP will be based on corporate performance
and ten percent (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 30,769 shares of restricted stock (an amount
equal to 1% 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. Sample agreements
governing the restricted stock purchase program are enclosed for your
information.

You will be entitled to reimbursement for documented actual and reasonable legal
expenses of up to $2,000.00 incurred by you in connection with the negotiation
of the terms of this offer letter. You will also be reimbursed for all
documented reasonable business expenses incurred during your employment in
accordance with the Company's related policies.

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

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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 twenty-four months. Therefore, the
Company is offering you enhanced separation benefits should we terminate your
employment for any reason other than for "Cause" prior to May 27, 2005 (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.

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 Officer of the Company has authority to
revise this agreement and any such

<PAGE>

revision must be in writing and signed by the Chief Executive Officer and you in
order for it to be effective.

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/ J. Michael Pocock
                                             -----------------------------
                                             J. Michael Pocock

Enclosures

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

/s/ Robert B. Gregerson                     5/1/03
-------------------------------------       -------------------
Name                                        Date

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                                                                    Addendum A

AGREEMENT FOR:    ROBERT  B. GREGERSON               DATED:  MAY 27, 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 twenty-six 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).

B.   Should the Company terminate your employment on or before July 31, 2005,
     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 twelve 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. Polaroid will also reimburse you for documented
         actual outplacement services of a mutually agreeable outplacement
         services provider, to a maximum of $15,000.00.

     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.

<PAGE>

     3.  MEDICAL, DENTAL, LIFE INSURANCE. You will be eligible to receive twelve
         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.

     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

<PAGE>

     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.

     (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.

<PAGE>

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, 2005.

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/ ROBERT B. GREGERSON
    ----------------------------               --------------------------------
    Neal D. Goldman                            Robert B. Gregerson
    Executive Vice President,                  Vice President, General Manager,
    Chief Administrative & Legal Officer       Americas

                                           Date: 5/1/03
                                                 ------------------------------

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