Amended and Restated Employment Agreement between Polaroid Corporation and Judith G. Boynton (Effective April 13, 2000)

Summary

This agreement is between Polaroid Corporation and Judith G. Boynton, outlining the terms of her employment as an executive. It details her compensation, including base salary and annual bonus, and provides protections in the event of a change in control of the company. The agreement defines key terms such as cause for termination and change in control, and sets forth the rights and obligations of both parties. It is effective as of April 13, 2000, and is intended to encourage Ms. Boynton to remain with the company by offering fair and reasonable employment terms.

EX-10.1 2 a2027635zex-10_1.txt EXHIBIT 10.1 EMPLOYMENT AGREEMENT AGREEMENT, by and between Polaroid Corporation, a Delaware corporation, together with its successors and assigns permitted under this Agreement (the "Company"), and Judith G. Boynton (the "Executive") originally entered into March 31, 1998, is hereby amended and restated this 18th day of August 2000 and will be effective April 13, 2000. W I T N E S S E T H: WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying the terms of such employment (this "Agreement") and the Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement; and WHEREAS, the Executive is a skilled and dedicated employee who has important management responsibilities and talents which benefit the Company, the Company believes that its best interests will be served if the Executive is encouraged to remain with the Company. The Company has determined that the Executive's ability to perform the Executive's responsibilities and utilize the Executive's talents for the benefit of the Company, and the Company's ability to retain the Executive as an employee, will be significantly enhanced if the Executive is provided with fair and reasonable protection from the risks of a change in ownership or control of the Company. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive (individually a "Party" and together the "Parties") agree as follows: 1. DEFINITIONS. (a) "ACQUIRING PERSON" shall mean any Person who or which, together with all Affiliates and Associates of such Person, is the Beneficial Owner of twenty percent (20%) or more of the Stock then outstanding, but does not include any Subsidiary of the Company, any employee benefit plan of the Company or any of its Subsidiaries or any Person holding Stock for or pursuant to the terms of any such employee benefit plan. (b) "AFFILIATE" and "ASSOCIATE" when used with reference to any Person, shall have the meaning given to such terms Page 1 of 24 in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (c) "ANNUAL BONUS" shall mean a bonus amount payable under the Company's executive annual bonus plan (currently the Polaroid Incentive Plan for Executives). Unless otherwise specifically provided, this annual bonus shall be calculated assuming the Company target has been achieved and that there are no factors that reduce the ultimate distribution. (d) "BASE SALARY" shall mean the annual rate of base salary (disregarding any reduction in such rate that constitutes Constructive Termination) as provided for in Section 4 below, as increased by the Board from time to time. (e) "BENEFICIAL OWNER" shall be a Person deemed to "beneficially own" any securities: (i) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; or (ii) which such Person or any of such Person's Affiliates or Associates has: (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (written or oral), or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange thereunder; or, (b) the right to vote pursuant to any agreement, arrangement or understanding (written or oral); provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or understanding (written or Page 2 of 24 oral) to vote such security (i) arises solely from a revocable proxy given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Exchange Act and (ii) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or, (c) which are beneficially owned, directly or indirectly, by any Person with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (written or oral), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in Section l(e)(ii)(B) of this Agreement) or disposing of any securities of the Company. (f) "BOARD" shall mean the Board of Directors of the Company. (g) "CAUSE" means either of the following: (i) Executive's willful malfeasance having a material adverse effect on the Company; or, (ii) Executive's conviction of a felony; provided, that any action or refusal by Executive shall not constitute "Cause" if, in good faith, Executive believed such action or refusal to be in, or not opposed to, the best interests of the Company, or 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. (h) "CHANGE IN CONTROL" shall mean: (i) the date on which a change in control of the Company occurs of a nature that would be required to be reported (assuming that the Company's Stock was registered under the Exchange Act) in response to an item (currently item 6(e)) of Schedule 14A of Regulation 14A promulgated under the Exchange Act or an item Page 3 of 24 (currently Item l(a)) of Form 8-K under the Exchange Act; (ii) the date on which there is an Acquiring Person and a change in the composition of the Board of the Company within two (2) years after the Share Acquisition Date such that the individuals who constitute the Board prior to the Share Acquisition Date shall cease for any reason to constitute at least a majority of the Board; (iii) any day on or after the Share Acquisition Date when, directly or indirectly, any of the transactions specified in the following clauses occurs: (A) the Company shall consolidate with, or merge with and into, any other Person; (B) any Person shall merge with and into the Company; or (C) the Company shall sell, lease, exchange or otherwise transfer or dispose of (or one or more of its Subsidiaries shall sell, lease, exchange or otherwise transfer or dispose of), in one or more transactions, the major part of the assets of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons; (iv) the date when a Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any of its Subsidiaries or any Person holding Stock for or pursuant to the terms of any such employee benefit plan) alone or together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of thirty percent (30%) or more of the Stock then outstanding; (v) the date on which the stockholders of the Company approve a merger or consolidation of the Company with any other corporation other than: (A) a merger or consolidation which would result in voting securities of the Company outstanding immediately prior thereto continuing to represent (either by Page 4 of 24 remaining outstanding or by being converted into voting securities of the surviving or parent entity) fifty percent (50%) or more of the combined voting power of the voting securities of the Company or such surviving or parent entity outstanding immediately after such merger or consolidation; or, (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities; or (vi) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets (or any transaction having a similar effect). (i) "CODE" means the Internal Revenue Code of 1986, as amended. (j) "CONFIDENTIAL INFORMATION" means nonpublic information relating to the business plans, marketing plans, customers or employees of the Company other than information the disclosure of which cannot reasonably be expected to adversely affect the business of the Company. (k) "CONSTRUCTIVE TERMINATION" shall occur when the Executive voluntarily terminates her employment with the Company or retires after the occurrence of one or more of the following events: (i) unless effected with the Executive's consent, a reduction in the Executive's Base Salary or the discontinuation of or any reduction in the Executive's participation or membership in any bonus, incentive or other benefit plan in which the Executive was a participant or member, without an economically equivalent replacement; (ii) the reassignment of the Executive without her consent to a location more than thirty (30) miles from her regular workplace; Page 5 of 24 (iii) the reduction in the Executive's job title or level as Executive Vice President Business Development and Chief Financial Officer, with equivalent responsibilities; (iv) a change in the Executive's reporting relationship to anyone other than the Chief Executive Officer; or (v) the provision of significantly less favorable working conditions. (l) "DISABILITY" shall mean the Executive's disability within the meaning of the Polaroid Long Term Disability Plan. (m) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as in effect on the date in question. (n) "PERSON" shall mean an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity. (o) "SEVERANCE PERIOD" shall mean the period of twenty-four (24) months following such termination. (p) "SHARE ACQUISITION DATE" shall mean the first date any Person shall become an Acquiring Person. (q) "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. (r) "SUBSIDIARY" of the Company shall mean any corporation of which the Company owns, directly or indirectly, more than fifty percent (50%) of the Voting Stock. (s) "SUPPLEMENTAL PLANS" shall mean any and all Company non-qualified benefit plans including, but not limited to, any supplemental retirement plan. (t) "TERM OF EMPLOYMENT" shall mean the period specified in Section 2 below. (u) "TERMINATED" shall mean: (i) termination by Polaroid without Cause at any time within the two (2) years following a Change in Control; Page 6 of 24 (ii) Executive's termination due to a Constructive Termination at any time within the two (2) years following a Change in Control; (iii) termination within three (3) months prior to a Change in Control at the request of any individual or entity acquiring ownership and control of Polaroid. If Executive's employment with Polaroid is terminated prior to a Change in Control at the request of Acquiring Person, this Agreement shall become effective upon the subsequent occurrence of a Change in Control involving such Acquiring Person. In such situation the Executive's Termination Date shall be deemed to have occurred immediately following the Change in Control, and therefore Executive shall be entitled to the benefits provided in this Agreement; or (iv) voluntary termination within three (3) months after a Change of Control if the current Chief Executive Officer is no longer in that position. (v) "TRADING DAY" is any day on which the Stock is traded on the New York Stock Exchange. (w) "TERMINATION DATE" shall mean the date of the Executive's termination of employment from the Company. (x) "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. TERM OF EMPLOYMENT. The Company hereby employs the Executive, and the Executive hereby agrees to continue her employment for the longer of (i) three (3) years ending April 13, 2003, or (ii) two (2) years from the departure of the current Chief Executive Officer, subject to earlier termination as provided below. 3. POSITION, DUTIES AND RESPONSIBILITIES. (a) TERM. The Executive shall be employed as Executive Vice President Business Development and Chief Financial Officer of the Company. The Executive, in carrying out her duties under this Agreement, shall report to the Chief Executive Officer. Page 7 of 24 (b) OTHER POSITIONS. Anything herein to the contrary notwithstanding, nothing shall preclude the Executive from: (i) serving, subject to approval of the Board, on the boards of directors of a reasonable number of other corporations or the boards of a reasonable number of trade associations and/or charitable organizations; (ii) engaging in charitable activities and community affairs; and, (iii) managing her personal investments and affairs, provided that such activities do not interfere with the proper performance of her duties and responsibilities in the Company. 4. BASE SALARY. The Executive shall be paid an annualized Base Salary of at least $450,000, payable in accordance with the regular payroll practices of the Company. The Base Salary shall be reviewed periodically by the Board. 5. ANNUAL BONUS. The Executive shall participate in the Company's annual bonus plan using the targets and performance factors set forth in the Company's annual bonus plan, with an annual target award opportunity of at least fifty-five percent (55%) of Base Salary. 6. EMPLOYEE BENEFIT PROGRAMS. During the Term of Employment, the Executive shall be entitled to participate in all employee pension and welfare benefit plans and programs made available to the Company's senior level executives, as such plans or programs may be in effect from time to time, including, without limitation, long term incentive plan(s), pension, savings and other retirement plans or programs, medical, dental, hospitalization, short-term and long-term disability and life insurance. Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall replace the Executive's participation in The Polaroid Extended Severance Plan. 7. SUPPLEMENTAL PENSION. In addition to the Executive's pension benefits set forth in the Company's employee pension plans(including the opening account balance of $350,000 referenced in the Executive's March 31, 1998 agreement), the Company shall: (a) 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 Page 8 of 24 seven (7) years from the Executive's original date of hire; and (b) as of the date of this Agreement, vest all time-constricted retirement benefits under any Company retirement vehicle, including but not limited to pension, retirement savings, elective deferred and all other supplemental executive retirement plans ("SERPS"). 8. REIMBURSEMENT OF BUSINESS AND OTHER EXPENSES. The Executive is authorized to incur reasonable expenses in carrying out her duties and responsibilities under this Agreement and the Company shall promptly reimburse her for all business expenses incurred in connection with carrying out the business of the Company, subject to documentation in accordance with the Company's policy. 9. VACATION. The Executive is entitled to at least four (4) weeks of vacation annually, which will be administered in accordance with the Company's vacation policy. 10. OWNERSHIP GUIDELINES. The Executive is expected to accumulate and hold three (3) times her annual Base Salary in Polaroid Common Stock within five (5) years of her original date of hire. Common Stock acquired through the Company's executive stock ownership plan and other benefit and incentive plans will be counted toward meeting that goal. The Board shall determine a valuation of Company stock from time to time and it shall be applied to all officers. 11. TERMINATION DUE TO DISABILITY OR DEATH. In the event the Executive's employment is terminated due to her Disability or death, she, or her estate or her beneficiaries, as the case may be, shall be entitled to: (a) SALARY. Base Salary through the date of termination; (b) ANNUAL BONUS. Pro-rata portion of the Annual Bonus for the year in which the Executive's Disability or death occurs (Annual Bonus is to be paid as soon as practicable or consistent with the Executive's election under the Elective Deferred Compensation Plan); and, (c) OTHER BENEFITS. Other benefits or entitlements in accordance with applicable plans and programs of the Company. Page 9 of 24 12. TERMINATION BY THE COMPANY FOR CAUSE. In the event the Company terminates the Executive's employment for Cause, she shall be entitled to: (a) SALARY. Base Salary through the date of the termination of her employment for Cause; (b) ANNUAL BONUS. Other benefits or entitlements, if any, in accordance with applicable plans or programs of the Company; however, notwithstanding the foregoing, the Executive shall not be entitled to any bonus (annual or long term) for the year in which her termination occurs. 13. A CONSTRUCTIVE TERMINATION OR A TERMINATION WITHOUT CAUSE. If prior to Change in Control, the Executive's employment is terminated without Cause, other than due to Disability or death, or in the event there is a Constructive Termination, the Executive, upon the execution of a full and complete release, shall be entitled to: (a) SALARY. Base Salary through the date of termination of the Executive's employment; (b) 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 her Separation Date, for the Severance Period; (c) 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 (i.e., Company target) without regard to any other 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; (d) RESTRICTED STOCK AND OPTIONS. Full vesting of all restricted stock, phantom restricted stock, and stock options and phantom stock options (collectively "Options") with the exercise period being the lesser of three (3) years from the Executive's Termination Date or the exercise period stated in the Executive's applicable Option or Supplemental Option Agreements, subject to the terms of the agreements governing such Options; Page 10 of 24 (e) PERFORMANCE SHARES. A distribution of a pro-rata portion of Performance Awards granted to the Executive prior to her 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. (f) INSURANCE. Medical, dental and executive life insurance benefits (collectively "Insurance Benefits") at the same rate as active employees similarly situated 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 Insurance Benefits through another employer (this benefit shall run coterminous with COBRA rights); (g) DISABILITY COVERAGE. Short- and long-term disability coverage that is reasonably comparable to the coverage provided to the Executive on her 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; (h) OUTPLACEMENT COUNSELING. Outplacement services will be provided consistent with the Company's outplacement practices in effect prior to the Change in Control; (i) SUPPLEMENTAL RETIREMENT AND PROFIT SHARING BENEFITS. (i) On the Termination Date, the Executive shall become vested in the benefits provided under the Company's Supplemental Plans. (ii) Within ten (10) business days after the Termination Date, the Company shall pay the Executive a lump sum cash amount equal to the present value of the Executive's accrued benefit under the Supplemental Plans. (j) OTHER BENEFITS. Other benefits or entitlements in accordance with applicable plans and programs of the Company; and, Page 11 of 24 (k) 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. 14. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Notwithstanding anything in this Agreement to the contrary, if the Executive's employment is Terminated, the Executive shall be entitled to the following benefits: (a) SEVERANCE BENEFITS. Within ten (10) business days after the Termination Date, the Company shall pay the Executive a lump sum amount, in cash, equal to: (i) two (2) times the sum of: (A) the Executive's Base Salary; and (B) the Executive's Annual Bonus; and (ii) the Executive's Annual Bonus multiplied by a fraction, the numerator of which shall equal the number of days the Executive was employed by the Company in the calendar year in which the Termination Date occurs and the denominator of which shall equal three hundred sixty five (365). (b) INSURANCE. Until the second (2nd) anniversary of the Termination Date, the Executive shall be entitled to participate in the Company's medical, dental, and executive life insurance benefits, at the highest level provided to the Executive during the period beginning immediately prior to the Change in Control and ending on the Termination Date and at no greater cost than the cost the Executive was paying immediately prior to Change in Control; provided, however, that if the Executive becomes employed by a new employer, the Executive's coverage under the applicable Company plans shall continue, but the Executive's coverage thereunder shall be secondary to (i.e., reduced by) any benefits provided under like plans of such new employer. (c) DISABILITY COVERAGE. Short- and long-term disability coverage that is reasonably comparable to the coverage provided to the Executive on her Termination Date and Page 12 of 24 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; (d) PAYMENT OF ACCRUED BUT UNPAID AMOUNTS. Within ten (10) business days after the Termination Date, the Company shall pay the Executive: (i) Earned, but unpaid compensation, including, without limitation, any unpaid portion of the bonus accrued with respect to the full calendar year ended prior to the Termination Date; and, (ii) all compensation previously deferred by the Executive on a non-qualified basis but not yet paid. (e) RETIREE-MEDICAL BENEFITS. If within two (2) years after Change in Control, the Executive would be at least fifty-five (55) with the Executive's age and service equal to sixty-five (65) and the Executive would have at least five (5) years of service with the Company, the Executive shall be eligible for retiree medical benefits (as such are determined immediately prior to Change in Control). If eligible, the Executive shall commence receiving such retiree medical benefits based on the terms and conditions of the applicable plans in effect immediately prior to the Change in Control. (f) SUPPLEMENTAL RETIREMENT AND PROFIT SHARING BENEFITS. (i) On the Termination Date, the Executive shall become vested in the benefits provided under the Company's Supplemental Plans. (ii) Within ten (10) business days after the Termination Date, the Company shall pay the Executive a lump sum cash amount equal to the present value of the Executive's accrued benefit under the Supplemental Plans. (A) For purposes of computing the Executive's accrued benefit under the Supplemental Plans in addition to the supplemental benefit provided pursuant to Section 7 above; the Company shall credit the Executive with two (2) years of plan participation and service and two (2) Page 13 of 24 years of age for all purposes (including additional accruals and eligibility for early retirement) over the Executive's actual years and fractional years of plan participation and service and age credited to the Executive on the Termination Date; and, (B) The Company shall apply the present value (and any other actuarial adjustment required by this Agreement) using the applicable actuarial assumptions set forth in the Polaroid Pension Plan. In determining the Executive's benefits under this subsection 14(f), the terms of the Supplemental Plans as in effect immediately prior to the Change in Control shall govern, except as expressly modified in this subsection 14(f). This benefit shall be provided pursuant to the Supplemental Retirement Benefit Plan. (g) OUTPLACEMENT COUNSELING. Outplacement services will be provided consistent with the Company's outplacement practices in effect prior to the Change in Control. (h) RESTRICTED STOCK AND OPTIONS. Full vesting of all restricted stock, phantom restricted stock, and stock options and phantom stock options (collectively "Options") with the exercise period being the lesser of three (3) years from the Executive's Termination Date or of the exercise period stated in the Executive's applicable Option or Supplemental Option Agreements, subject to the terms of the agreements governing such Options. (i) PERFORMANCE SHARES. Full payout of Performance Shares issued under the 1993 Stock Incentive Plan, or any successor plan, assuming the Company's objectives were achieved at target. (j) COSTS OF PROCEEDINGS. The Company shall pay all of the Executive's costs and expenses, including attorneys' fees and disbursements, at least monthly, in connection with any legal proceeding (including arbitration), whether or not instituted by the Company or the Executive, relating to the interpretation or enforcement of any provision of this Agreement, except that if the Executive instituted the proceeding and the judge, arbitrator or other individual presiding over the proceeding affirmatively finds that the Executive Page 14 of 24 instituted the proceeding in bad faith, the Executive shall pay her own costs and expenses, including attorneys' fees and disbursements. The Company shall pay pre-judgment interest on any money judgment obtained by the Executive as a result of such a proceeding, calculated at the prime rate of The Chase Manhattan Bank (or its successors), as in effect from time to time, from the date that payment should have been made to the Executive under this Section. 15. 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 three (3) year period following the Termination Date, and throughout the period of any applicable statute of limitations. 16. EFFECT ON EXISTING PLANS. All Change in Control provisions applicable to the Executive and contained in any plan, program, agreement or arrangement maintained as of the date this Agreement is signed (including, but not limited to, any stock option, restricted stock or pension plan) shall remain in effect through the date of a Change in Control, and for such period thereafter as is necessary to carry out such provisions and provide the benefits payable thereunder, and may not be altered in a manner which adversely affects the Executive without the Executive's prior written approval. This means that all awards of options, performance shares or such other awards as may be granted shall upon Change in Control be fully vested consistent with these terms. Notwithstanding the foregoing, no benefits shall be paid to the Executive, however, under the Polaroid Extended Severance Plan or any other severance plan maintained generally for the employees of the Company if the Executive is eligible to receive severance benefits under this Agreement. 17. MITIGATION. Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, and compensation earned from such employment or otherwise shall not reduce the amounts otherwise payable under this Agreement. No amounts payable under this Agreement shall be subject to reduction or offset in respect of any claims Page 15 of 24 which Polaroid (or any other Person or entity) may have against Executive unless specifically referenced herein. 18. GROSS-UP. (a) In the event it shall be determined that any payment, benefit or distribution (or combination thereof) by the Company, or one or more trusts established by the Company for the benefit of its employees, to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, or otherwise) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, hereinafter collectively referred to as the "Excise Tax"), the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 18(c), all determinations required to be made under this Section 18, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized certified public accounting firm as may be designated by the Executive (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for an individual, entity or group effecting the change in ownership or effective control (within the meaning of Section 280G of the Code), the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Page 16 of 24 Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 18, shall be paid by the Company to the Executive within five (5) business days after the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall so indicate to the Executive in writing. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 18(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the Executive's benefit. (c) The Executive shall notify the Company in writing of any written claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid (but the Executive's failure to comply with this notice obligation shall not eliminate her rights under this Section except to the extent of the Company's defense against the imposition of the Excise Tax is actually prejudiced by any such failure). The Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which she gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim as the Company shall reasonably Page 17 of 24 request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; (iii) cooperate with the Company in good faith in order to effectively contest such claim; and, (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 18(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall reasonably determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, further, that if the Executive is required to extend the statute of limitations to enable the Company to contest such claim, the Executive may limit this extension solely to such contested amount. The Company's control of the contest shall be Page 18 of 24 limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the Executive receives an amount advanced by the Company pursuant to Section 18(c), the Executive receives any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 18(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the Executive receives an amount advanced by the Company pursuant to Section 18(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 19. TERMINATION FOR CAUSE. Nothing in this Agreement shall be construed to prevent the Company from terminating the Executive's employment for Cause. If the Executive is terminated for Cause, only Section 12 shall apply. 20. DISPUTES. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Boston, Massachusetts in accordance with the Rules of the American Arbitration Association then in effect. Judgment may be entered on an arbitrator's award relating to this Agreement in any court having jurisdiction. 21. NONCOMPETITION AND CONFIDENTIALITY. (a) NONCOMPETITION. During the period in which the Executive is employed by the Company or any of its Subsidiaries and during any Severance Period, as provided pursuant to Section 13 "A Constructive Termination or a Termination without Cause", above, but in no event for a period of less than twelve (12) months following a termination of her employment, the Executive shall not engage in any activity directly or indirectly with Eastman Kodak Company, or Fuji, whether as a principal, partner, employee, consultant, shareholder (other than as a holder of not in excess of Page 19 of 24 one percent (1%) of the outstanding voting shares of any publicly traded company) or otherwise. (b) 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 she executed at the time she was hired and 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 any of its Subsidiaries or information designated as confidential or proprietary that the Company or any of its Subsidiaries may receive belonging to suppliers, customers or others who do business with the Company or 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 or is in the public domain (other than by reason of Executive's breach of this Section 21(b)). (c) COMPANY PROPERTY. Promptly following the Executive's termination of employment, the Executive shall return to the Company all property of the Company, and all copies thereof in Executive's possession or under her control. (d) NONSOLICITATION OF EMPLOYEES. During the period in which the Executive is employed by the Company or any of its Subsidiaries, and for a period of twenty-four (24) months following the Executive's Termination Date resulting from a termination as provided in Section 13 "A Constructive Termination or a Termination without Cause", the Executive shall not, directly or indirectly, induce any employee of the Company or any of its Subsidiaries to terminate employment with such entity, and shall not, directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ or offer employment to any Person who is employed by the Company or a Subsidiary thereof. (e) NONDISPARAGEMENT. During the period in which the Executive is employed by the Company or any of its Page 20 of 24 Subsidiaries, and for a period of two (2) years following the Executive's Termination Date, the Executive shall not commit any act, or in any way assist others to commit any action, intended to injure the Company, nor shall the Executive engage in any public criticism regarding her employment or the business affairs of the Company, nor to make any negative, detrimental, or derogatory comments concerning the Company or its directors, officers, or individuals known to the Executive to be employees, past and present; the Company and its officers and directors agree to make no criticism regarding the Executive or her employment with the Company. (f) INJUNCTIVE RELIEF WITH RESPECT TO COVENANTS. Executive acknowledges and agrees that the covenants and obligations of the Executive with respect to noncompetition, nonsolicitation, confidentiality and Company property relate to special, unique and extraordinary matters, including her own skills, 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 the Company shall be entitled to an injunction, restraining order or such other equitable relief (without the requirement to post bond) restraining Executive from committing any violation of the covenants and obligations contained in this Section 21. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity. (g) PROVISIONS SURVIVING BEYOND TERMINATION DATE. The obligations of the Executive set forth above shall not extend beyond her Termination Date where such date follows a Change in Control. 22. EFFECT OF AGREEMENT ON OTHER BENEFITS. Except as specifically provided in this Agreement, the existence of this Agreement shall not prohibit or restrict the Executive's entitlement to full participation in the employee benefit and other plans or programs in which senior executives of the Company are eligible to participate. 23. 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 merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of Page 21 of 24 the entity surviving such merger or resulting from such consolidation. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. The provisions of this Agreement shall continue to apply to each subsequent employer hereunder in the event of any subsequent merger, consolidation or transfer of assets of such subsequent employer. 24. REPRESENTATION. The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement and each of the parties represents and warrants that the performance of the obligations of such party under this Agreement will not violate any agreement between that party and any other Person, firm or organization. 25. ENTIRE AGREEMENT. This Agreement, with the plans and grant agreements referenced herein, 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. 26. 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 to be performed by such other Party 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. 27. 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. 28. 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. Page 22 of 24 29. 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 her incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to her beneficiary, estate or other legal representative. Absent any written notice the beneficiary shall be the Executive's estate. 30. 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. 31. 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 to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give such notice of: If to the Company: Polaroid Corporation 784 Memorial Drive Cambridge, MA 02139 Attention: Vice President, Human Resources If to the Executive: Judith G. Boynton 202 Commonwealth Avenue Apartment 4 Boston, MA 02116 32. 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. 33. COUNTERPARTS. This Agreement may be executed in two (2) or more counterparts. 34. 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. Page 23 of 24 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: Chairman and Chief Executive Officer /s/ JUDITH G. BOYNTON - --------------------------------------- Judith G. Boynton Page 24 of 24