<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
