<PAGE>
                                                                   EXHIBIT 10.58

      This Agreement (the "Agreement") is entered into and is effective as of
the 4th day of August, 2002, by and between Steven J. Lee ("Executive"),
PolyMedica Corporation, a Massachusetts Corporation (the "Company") and the
Board of Directors of the Company (the "Board of Directors").

BACKGROUND

      The Company, through its Board of Directors, and the Executive have come
to the conclusion that the Company is at a stage in its development where it is
now appropriate for the Executive to retire and for the Company to identify
another person to lead the Company as it continues to grow. This important
business decision, however, is taking place at a time when the Company is the
subject of government investigations and civil litigation, as noted in Section
4.1 of this Agreement. It is of great importance to both the Board of Directors
and the Executive that the retirement of the Executive not be interpreted by
others as being due to a finding of impropriety as to the Executive. Such an
interpretation would be inaccurate. Nor is the Company determined to attempt to
resolve some or all of the proceedings in which it is currently involved by
offering to provide information to third parties concerning the Executive. The
existence of the proceedings was not the primary basis for the decision by the
Board to accept the Executive's resignation. The primary basis for their
decision was the mutual recognition by both the Executive and the Company that
the Executive decided to resign and the Company required a new CEO.

RECITALS

      WHEREAS Executive and the Company previously entered into an Executive
Retention Agreement dated as of September 1, 2000 and an Amended Executive
Employment Agreement dated April 1, 2001, as amended on June 8, 2001, September
25, 2001 and May 13, 2002 (collectively, all of the foregoing agreements shall
be referred to as the "Previous Agreements");

      WHEREAS Executive and the Company now desire for this Agreement to
immediately supersede all Previous Agreements; and

      WHEREAS Executive and the Company acknowledge that this Agreement is
desirable and would not otherwise be entered into unless the Agreement
supersedes the Previous Agreements;

      WHEREAS Executive and the Company desire for this Agreement to resolve
amicably and on mutually satisfactory terms any and all issues relating to the
Executive's resignation from employment with the Company;

      WHEREAS Executive desires to resign his position as Chief Executive
Officer on the date hereof and as Chairman and a member of the Board of
Directors on January 1, 2003 and the Company recognizes Executive's valuable
service to the Company;

      NOW THEREFORE, in consideration of the mutual promises and forbearances
set forth in this Agreement, and other good and valuable consideration which
Executive and the Company hereby acknowledge, Executive and the Company agree as
follows:
<PAGE>
TERMS AND CONDITIONS

      1. BACKGROUND AND RECITALS. The foregoing Background and Recitals are
incorporated into and made a part of the Terms and Conditions of the Agreement.

      2. RESIGNATION OF EMPLOYMENT. Executive resigns his employment as Chief
Executive Officer of the Company effective as of the date of this Agreement.
Executive shall, however, remain as Chairman, and as a member, of the Company's
Board of Directors through January 1, 2003. The Company agrees to nominate
Executive as a Director in the Company's proxy statement for its annual meeting
of the shareholders that is scheduled for September 12, 2002, and the Executive
agrees to execute and deliver the Resignation attached hereto as Exhibit A.

      3. BENEFITS.

            3.1 OFFICER TERMINATION PAY.

                  (a) The Company shall continue to pay the Executive every
other week at his current annual Base Salary of $610,000 for the 24 month period
from August 2002 to and including July 2004.

                  (b) The Company shall within five business days of the date of
this Agreement pay to the Executive the amount due to him for his 40 days of
unused accrued vacation time.

                  (c) If the Board of Directors of the Company determines to pay
cash bonuses to one or more of the individuals having the positions Chief
Executive Officer (to be determined after Executive's resignation pursuant to
this Agreement), President (currently Arthur A. Siciliano), Executive Vice
President (currently Eric G. Walters), Senior Vice President and General Counsel
(currently John K.P. Stone, III), Chief Financial Officer (currently Stephen
Farrell) and President of Liberty Medical Supply, Inc. (currently W. Keith
Trowbridge) (the individuals holding such offices being hereinafter referred to
as the "Senior Executives") with respect to the fiscal year of the Company
ending March 31, 2003 in accordance with its policies for payment of such
bonuses, then the Company shall pay the Executive 33.33% of the amount to which
he would have been entitled if he had been employed for the full fiscal year.
The Executive and the Company acknowledge and agree that the full amount of the
Executive target cash bonus for such fiscal year as established by the Board of
Directors in June 2002 was $488,000.

            3.2 STOCK OPTION BASED COMPENSATION. All outstanding unvested or
unexercisable stock options that Executive owns (that have not vested as of
December 31, 2002) shall be vested and fully exercisable, notwithstanding the
terms of any agreements governing such stock options to the contrary, as of
December 31, 2002.

            3.3 HEALTH INSURANCE. For a period of 18 months after the date of
this Agreement, or until the Executive becomes employed on a full-time basis,
whichever occurs first, the Company shall offer Executive continued health and
dental insurance as required under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), or other law, and shall reimburse
Executive for the full cost of that coverage.

            3.4 COMPUTERS. Executive shall be entitled to permanent ownership of
the Dell Inspiron 4100 laptop computer he currently uses and the personal
desktop computer he currently uses in his office.
<PAGE>
            3.5 LIFE INSURANCE. For a period of 24 months after the date hereof
or until the Executive becomes employed on a full-time basis, whichever first
occurs, the Company shall continue in full force and effect, at its expense,
life insurance on the life of the Executive with an Executive-directed
beneficiary in the amount of $915,000.

            3.6 SECRETARIAL ASSISTANCE. For a period of 18 months after the date
hereof or until the Executive becomes employed on a full-time basis, whichever
occurs first, the Company shall reimburse the Executive for reasonable expenses
incurred by Executive for up to 10 hours of secretarial assistance per week. The
Company shall make such reimbursement payments within 30 days of receipt of the
applicable invoice.

            3.7 AUTOMOBILE ALLOWANCE. Until the current lease term expires or
until the Executive becomes employed on a full-time basis, whichever first
occurs, the Company shall continue to pay the lease payments and all related
expenses for the Executive's automobile. The Company shall make such
reimbursement payments within 30 days of receipt of the applicable invoice.

            3.8 401(K) ROLLOVER. Executive shall be entitled to immediately
roll-over any and all existing 401(k) retirement account(s) and 401(k) Shadow
Plans/Social Security Equalizing Credit Plans, including discretionary amounts
contributed by the Company, pursuant to the applicable benefit plan provisions.

      4. INDEMNIFICATION AND NO ADVERSE ACTION.

            4.1 The Company acknowledges Executive's rights as an Indemnitee
under the Articles of Organization (the "Articles") of the Company a copy of
which is attached hereto as Exhibit B. Without limitation of the foregoing, the
Company acknowledges that it has received proper notice, in accordance with
Section 3 of Article 6F of the Articles, of Executive's claim that he has a
right to be indemnified with respect to the following matters:

      -     In re: PolyMedica Corp. Sec. Litig., Civ. A. No. 00-12426 REK,
            United States District Court, District of Massachusetts

      -     In re: Polymedica Corp. Shareholder Derivative Litig., Civ. A. No.
            01-3446, Superior Court of Middlesex County, Commonwealth of
            Massachusetts

      -     The SEC inquiry and the investigations currently being conducted by
            the United States Attorney's for the Southern District of Florida
            and the Southern District of Illinois

      The Company further acknowledges that, pursuant to such Section 3, the
Company has authorized Executive to employ Hunton & Williams as his counsel with
respect to the matters set forth above. This acknowledgement shall not limit in
any way the right of the Executive to employ his own counsel with respect to
other indemnified claims, as provided in such Section 3.

            4.2 The Company acknowledges that, pursuant to Section 4 of Article
6F and subject to the last sentence of this Section 4.2, it is obligated,
subject to the terms and conditions of such Section 4, to pay the expenses of
the Executive incurred in connection with the matters listed in Section 4.1
above. The Company hereby agrees that the Executive may instruct his attorneys
to forward their invoices for fees and expenses that are considered expenses
under such Section 4 directly to the Company and the Company shall pay such fees
and expenses within 30 days.
<PAGE>
Executive, in order to comply with the provisions of such Section 4 and with
Massachusetts law, hereby undertakes to repay all amounts so advanced in the
event that it shall ultimately be determined that the Executive is not entitled
to be indemnified by the Company in accordance with the Articles.

            4.3 The Company currently maintains Directors and Officers
insurance, the policies for which will be made available to the Executive and
his authorized representatives promptly following any request therefor. The
Company shall use commercially reasonable efforts to keep such policies in
effect as to the Executive after the date hereof.

      5. NON-DISPARAGEMENT.

            5.1 The Company, the Senior Executives and Directors agree not to
take any action or make any statement which is false with respect to,
disparages, criticizes, or is derogatory with respect to, Executive regardless
of whether such statements would be actionable under statutory or common law
liability theories. The Company agrees that, upon Executive's request, or upon
any inquiry regarding Executive, the Company will provide a letter of
recommendation identical to the attached Exhibit C.

            5.2 The Executive understands and agrees that he shall not make any
false, disparaging or derogatory statements to any media outlet, industry group,
financial institution, investor, current or former employee, consultant, client
or customer of the Company or any other third party, regarding the Company or
any of its directors, officers, employees, attorneys, agents or representatives
or about the Company's business affairs or financial condition. The Executive
further agrees not to make any statement of any kind to any media outlet other
than what has been mutually agreed upon as a press release with the Company,
which is attached as Exhibit D hereto.

            5.3 The parties recognize that the Company may provide information
to a Governmental Entity (as defined below) or plaintiffs, as the case may be,
on a voluntary basis. Nothing in this agreement shall be construed to limit or
impede such voluntary cooperation or anyone acting on behalf of the Company from
providing any information, including but not limited to documents, witnesses,
and/or information obtained from any witness, on a voluntary basis. Nor shall it
be construed to limit or impede anyone acting on behalf of the Company from
responding to any legal process. For purposes of this agreement the term
"Governmental Entity" shall mean any court, arbitrational tribunal,
administrative agency or commission of other governmental or regulatory
authority, agency or instrumentality, any entity charged by a Governmental
Entity with the administration of a government program, or any stock market or
stock exchange on which shares of the company's stock are traded.

            5.4 The parties agree that Sections 5.1, 5.3 and 5.4 may be
specifically enforced by Executive or the Company, as applicable, it being
agreed that money damages are not an adequate remedy for breach of Sections 5.1,
5.3 or 5.4.

      6. COOPERATION.

            6.1 The Executive agrees to cooperate fully with the Company in the
defense or prosecution of any claims or actions or investigations which already
have been brought, including, but not limited to, In Re: Polymedica Corp. Sec.
Litig., Civil Action No. 00-12426 REK pending in the United States District
Court for the District of Massachusetts, and In Re: Polymedica Corp. Shareholder
Derivative Lit., Civil Action No. 01-3446 pending in the Superior Court of
Middlesex County for the Commonwealth of Massachusetts, the inquiry by the
United States
<PAGE>
Securities & Exchange Commission, any grand jury investigation or other
investigation currently being conducted by the United States Attorney's Office
for the Southern District of Florida, or the Southern District of Illinois, or
any claims or actions which may be brought in the future against, or on behalf
of or involving the Company wherein the Executive is indemnified by the Company,
whether before or by a state or federal court or by any local, state or federal
government agency. The Executive's full cooperation in connection with such
claims or actions shall include, but not be limited to, his being available to
meet with counsel to prepare its claims or defenses, to prepare for trial or
discovery or an administrative hearing and to act as a witness when requested by
the Company at reasonable times designated by the Company. Executive agrees to
appear voluntarily before any grand jury proceeding relating to any of the
matters set forth in Section 4 above, unless (a) Executive is or may be a
subject or target of said grand jury and (b) Executive has not been granted
formal immunity. By agreeing to cooperate Executive does not waive any of his
constitutional rights or attorney-client or attorney work product privileges and
any assertion of such rights or privileges shall not be considered a violation
of this Agreement. The Executive agrees that he will notify the Company promptly
and in writing in the event that he is served with a subpoena or other such
request for information or documents from a third party concerning the Company.

            6.2 The Executive agrees that, for the period from the date of this
Agreement until December 31, 2003 he shall make himself available at mutually
convenient times to the Senior Executives and the Board of Directors of the
Company from time to time for purposes of providing information and assistance
with respect to the operation of the Company, provided that in no event shall
the Executive be required to devote more than four hours per calendar month in
providing such assistance.

            6.3 The Company agrees that the Company and its lawyers will
cooperate with Executive by providing him and his lawyers with reasonable access
to copies of all business records of the Company, to which the Executive would
have been entitled to access in the ordinary course of business during the
period in which Executive was employed by the Company or served/serves as
Chairman or a member of the Company's Board of Directors, that are necessary to
the Executive's defense of the proceedings described in Section 4.1 above or any
other indemnified activity for so long as such proceedings continue.

      7. NON-DISCLOSURE AND NON-COMPETITION. The Executive acknowledges and
reaffirms his obligations with respect to intellectual property and
non-competition, as stated more fully in the Confidentiality and Proprietary
Information Agreement dated May 16, 1990 (the "Confidentiality Agreement") and
the Agreement Not To Compete dated May 16, 1990 (the "Non-Compete Agreement")
each of which remains in full force and effect.

      8. RETURN OF COMPANY PROPERTY. The Executive agrees to return immediately
all Company property including, but not limited to, keys, files, records (and
copies thereof), computer hardware and software, cellular phones and pagers,
which is in his possession or control, excepting only the leased automobile
(which shall be returned to the leasing company on expiration of the current
lease term) and the computer hardware he is allowed to retain pursuant to this
Agreement. The Executive further agrees to leave intact all electronic Company
documents, including those which he developed or helped develop during his
employment.

      9. CONFIDENTIALITY. To the extent permitted by law, the Executive
understands and agrees that the terms and contents of this Agreement, and the
contents of the negotiations and discussions resulting in this Agreement, shall
be maintained as confidential by the Executive, his
<PAGE>
attorneys, agents and representatives, and none of the above shall be disclosed
except to the extent required by federal or state law or as otherwise agreed to
in writing by the authorized agent of each party.

      10. RELEASES.

            10.1 The Executive hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Company, its officers,
directors, stockholders, corporate affiliates, subsidiaries, and parent
companies, agents, employees, and attorneys from any and all claims, charges,
complaints, demands, actions, causes of action, suits, rights, debts, sums of
money, costs, accounts, reckonings, covenants, contracts, agreements, promises,
doings, omissions, damages, executions, obligations, liabilities, and expenses
(including attorneys' fees and costs), of every kind and nature and whether
known or unknown which he ever had or now has against the Company, its officers,
directors, stockholders, corporate affiliates, subsidiaries and parent
companies, agents, employees and attorneys, arising out of his employment with
or separation from the Company including, but not limited to, all employment
discrimination claims under Title VII of the Civil Rights Act of 1964, 42
U.S.C.ss. 2000e et seq., the Age Discrimination in Employment Act, 29 U.S.C.ss.
621 et seq., the Americans With Disabilities Act of 1990, 42 U.S.C.ss. 12101 et
seq., and the Massachusetts Fair Employment Practices Act, M.G.L. c.151B,ss.1 et
seq., and all claims arising out of the Fair Credit Reporting Act, 15 U.S.C.ss.
1681 et seq., the Employee Retirement Income Security Act of 1974 ("ERISA"), 29
U.S.C.ss. 1001 et seq., the Massachusetts Civil Rights Act, M.G.L. c. 12ss.ss.
11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c. 93ss. 102 and M.G.L.
c. 214,ss. 1C, the Massachusetts Labor and Industries Act, M.G.L. c. 149,ss. 1
et seq., and the Massachusetts Privacy Act, M.G.L. c. 214,ss. 1B, all as
amended, and all common law claims including, but not limited to, actions in
tort, defamation and breach of contract, including but not limited to any claim
concerning any of the Previous Agreements or any amendment thereof entered into
between the Executive and the Company, and any claim or damage arising out of
the Executive's employment with or separation from the Company (including a
claim for retaliation) under any common law theory or any federal, state or
local ordinance not expressly referenced above, provided, however, that nothing
in this Agreement prevents him from filing, cooperating with, or participating
in any proceeding before the EEOC or a state Fair Employment Practices Agency
(except that the Executive acknowledges that he may not be able to recover any
monetary benefits in connection with any such claim, charge or proceeding) and,
provided further, that the foregoing release shall not apply to this Agreement.

            10.2 The Company hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Executive from any and all
claims, charges, complaints, demands, actions, causes of action, suits, rights,
debts, sums of money, costs, accounts, reckonings, covenants, contracts,
agreements, promises, doings, omissions, damages, executions, obligations,
liabilities, and expenses (including attorneys' fees and costs), of every kind
and nature and whether known or unknown which it ever had or now has against the
Executive, his agents, employees and attorneys, arising out of his employment
with or separation from the Company or his role as a member of the Board of
Directors or Chairman of the Board of Directors including, but not limited to,
all statutory or common law claims including, but not limited to, breaches of
duty, actions in tort, defamation and breach of contract, including but not
limited to any claim concerning any of the Previous Agreements or any amendments
thereof entered into between the Executive and the Company, and any claim or
damage arising out of the Executive's employment with or separation from the
Company or his role as a member of the Board of Directors or Chairman of the
Board of Directors, provided the foregoing release shall not apply to this
Agreement, the Non-Compete Agreement or the Confidentiality Agreement.
<PAGE>
Nothing contained in the releases set forth in Sections 10.1 and 10.2 above
shall be deemed to defeat the right, if any, of any issuer or underwriter of
directors' and officers' liability insurance for PolyMedica and its directors
and officers to recover monies on a theory of subrogation, indemnification or
contribution.

      11. VOLUNTARY ASSENT. The Executive affirms that no other promises or
agreements of any kind have been made to or with him by any person or entity
whatsoever to cause him to sign this Agreement, and that he fully understands
the meaning and intent of this Agreement. The Executive states and represents
that he has had an opportunity to fully discuss and review the terms of this
Agreement with an attorney. The Executive further states and represents that he
has carefully read this Agreement, understands the contents herein, freely and
voluntarily assents to all of the terms and conditions hereof, and signs his
name of his own free act.

      12. NATURE OF AGREEMENT. The parties understand and agree that this
Agreement does not constitute an admission of liability or wrongdoing on the
part of the Company or the Executive.

      13. ANNOUNCEMENT. The Company hereby agrees that it shall not disclose
Executive's resignation from the Company to any person, organization, or other
entity, including the media, until such time as the press release described in
Section 5.2 above is made public.

      14. GRAND OPENING. The Company agrees to invite Executive and his wife to
the grand opening of its new Florida facilities, which grand opening is
currently set to take place in September, 2002.

      15. MISCELLANEOUS.

            15.1 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of Executive and the Company in respect of its subject matter and
supersedes all prior oral or written agreements or understandings between
Executive and the Company with respect to such subject matter, including,
without limitation, the Previous Agreements, provided that the Non-Compete
Agreement and the Confidentiality Agreement shall remain in effect as set forth
in Section 7 above.

            15.2 AMENDMENT; WAIVER. This Agreement may not be amended,
supplemented, cancelled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege hereunder shall operate as a waiver thereof. No waiver of any
breach of any provision of this Agreement shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision.

            15.3 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind any successor of the Company by reorganization, merger,
acquisition or consolidation, or any assignee of all or substantially all of the
Company's business and properties. The Company will require any successor to all
or substantially all of the business and/or assets of the company (whether
direct or indirect, by purchase, merger, consolidation, asset or stock
acquisition or otherwise) to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. As used in this
Agreement, "the Company" shall mean the Company as hereinbefore defined and any
successor to all or substantially all of its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law or
otherwise. The Company agrees to require any such successor to acknowledge its
obligation pursuant to this Agreement in a binding written agreement
<PAGE>
approved by Executive prior to such transaction.

            15.4 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.

            15.5 APPLICABLE LAW. This Agreement shall be interpreted and
construed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions. Executive hereby irrevocably submits and
acknowledges and recognizes the jurisdiction of the courts of the Commonwealth
of Massachusetts, or if appropriate, a federal court located in Massachusetts
(which courts, for purposes of this Agreement, are the only courts of competent
jurisdiction), over any suit, action or other proceeding arising out of, under
or in connection with this Agreement or the subject matter hereof.

            15.6 FURTHER ASSURANCES. The Company and Executive agree to execute,
acknowledge, deliver and perform, or cause to be executed, acknowledged,
delivered or performed, at any time, or from time to time, as the case may be,
all such further documents, acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances as may be necessary or proper to carry out the
provisions or intent of this Agreement.

            15.7 SEVERABILITY. If any one or more of the terms, provisions,
covenants or restrictions of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. If, moreover, any one or more of the provisions contained in this
Agreement shall for any reason be determined by a court of competent
jurisdiction to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting or reducing it so as to
be enforceable to the extent compatible with then applicable law.
<PAGE>
      EXECUTION

The parties executed this Agreement as a sealed instrument as of the date first
above written, whereupon it becomes binding in accordance with its terms.

                                             POLYMEDICA CORPORATION


                                             /s/ Arthur A. Siciliano
                                             -----------------------------------
                                             Arthur A. Siciliano
                                             President

                                             Then personally appeared the above
                                             named Arthur A. Siciliano and
                                             acknowledged the foregoing
                                             instrument to be his free act and
                                             deed on behalf of PolyMedica
                                             Corporation, before me,

                                             -----------------------------------
                                             _______________, Notary Public
                                             My commission expires: ______

                                             For purposes of Section 5.4:

AGREED TO AND ACCEPTED:                      BOARD OF DIRECTORS


/s/ Steven J. Lee                            /s/ Samuel L. Shanaman
-----------------------------------          -----------------------------------
Steven J. Lee                                Samuel L. Shanaman
                                             Lead Director, on behalf of
                                             the Board of Directors
Then personally appeared the above
named Steven J. Lee, and                     Then personally appeared the above
acknowledged the foregoing                   named Samuel L. Shanaman and
instrument to be his free act,               acknowledged the foregoing
                                             instrument to be his free act and
-----------------------------------          deed on behalf of the Board of
__________________, Notary Public            Directors of PolyMedica
My commission expires: ______                Corporation, before me,

                                             -----------------------------------
                                             _______________, Notary Public
                                             My commission expires: ______