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                                                                   EXHIBIT 10.70

       SUMMARY OF TERMS OF EXECUTIVE RETENTION AGREEMENT FOR STEVEN J. LEE

     1. NATURE OF AGREEMENT. This Agreement is not an employment contract and
does not specify any terms or conditions of employment. It provides for certain
severance benefits to the Executive in the event his employment is terminated
under specified circumstances following a Change in Control of the Company.

     2. TERM OF AGREEMENT. This Agreement takes effect upon execution and
expires on December 31, 2003; provided that (i) it is subject to automatic
one-year extensions unless prior notice of termination is given by the Company
and (ii) the Executive is entitled to the severance benefits provided therein if
a Change in Control occurs during the term of this Agreement and the Executive's
employment is terminated under specified circumstances within 24 months after
such Change in Control.

     3. KEY DEFINITIONS.

          a. CHANGE IN CONTROL means, in summary: (i) the acquisition by a party
or a group of 20 % or more of the outstanding stock of the Company; (ii) a
change, without Board of Directors approval, of a majority of the Board of
Directors; (iii) the acquisition of the Company by means of a reorganization,
merger, consolidation or asset sale; or (iv) the approval of a liquidation or
dissolution of the Company.

          b. CAUSE means, in summary: (i) the Executive's willful and continued
failure to substantially perform his/her reasonable assigned duties (which
failure continues after a 30-day cure period); or (ii) the Executive's willful
engagement in illegal conduct or gross misconduct injurious to the Company.

          c. GOOD REASON means, in summary: (i) a diminution in the Executive's
position, authority or responsibilities; (ii) a reduction in his/her salary or
benefits; (iii) a relocation of the Executive; or (iv) a breach of an employment
contract with the Executive. In addition, a resignation by the Executive, for
any reason, during the 30-day period immediately following the one-year
anniversary of the Change in Control shall be deemed to be a termination for
Good Reason.

     4. SEVERANCE BENEFITS.

          a. STOCK OPTION ACCELERATION. Upon a Change in Control, all
outstanding stock options of the Executive shall become exercisable in full.
This benefit accrues to the Executive irrespective of whether an employment
termination occurs.

          b. TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the Executive's
employment is terminated by the Company without Cause or by the Executive for
Good Reason within 24 months following a Change in Control, the Executive shall
receive (i) accrued compensation (including a pro rata bonus payment) through
the date of termination; (ii) a lump sum payment equal to three times the sum of
the Executive's highest base salary and highest bonus during the three-year
period prior to the Change in Control; (iii) a continuation of




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all employee benefits during the 12-month period following employment
termination; and (iv) any other post-termination benefits which the Executive is
eligible to receive under any plan or program of the Company.

          c. OTHER EMPLOYMENT TERMINATIONS. In general, if the Executive's
employment terminates for any other reason following a Change in Control, the
Executive shall receive only the benefits described in clauses (i) and (iv) of
the preceding paragraph (provided that the pro rata bonus payment shall not be
made in the event of a termination by the Company for Cause).

          d. TAX TREATMENT. The Internal Revenue Code imposes certain tax
penalties on both the Company and the Executive if the amount of severance
payments to the Executive following a Change in Control exceeds certain limits
(generally three times the average of the Executive's compensation over the
previous five years). The Retention Agreement provides that the Company shall
make a "gross up" payment to the Executive such that his net after-tax severance
benefits are equal to what he would have received absent the penalty tax.

          e. NO MITIGATION. The severance benefits payable to the Executive are
not reduced by payments received by the Executive from a subsequent employer.

     5. EXPENSES. The Company must pay, as incurred, all expenses which the
Executive reasonably incurs as a result of any dispute relating to this
Agreement (regardless of the outcome of such dispute).



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                             POLYMEDICA CORPORATION


                          EXECUTIVE RETENTION AGREEMENT


     THIS EXECUTIVE RETENTION AGREEMENT by and between PolyMedica Corporation, a
Massachusetts corporation (the "Company"), and Steven J. Lee (the "Executive")
is made as of September 1, 2000 (the "Effective Date").

     WHEREAS, the Company recognizes that, as is the case with many
publicly-held corporations, the possibility of a change in control of the
Company exists and that such possibility, and the uncertainty and questions
which it may raise among key personnel, may result in the departure or
distraction of key personnel to the detriment of the Company and its
stockholders, and

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that appropriate steps should be taken to reinforce and encourage the continued
employment and dedication of the Company's key personnel without distraction
from the possibility of a change in control of the Company and related events
and circumstances.

     NOW, THEREFORE, as an inducement for and in consideration of the Executive
remaining in its employ, the Company agrees that the Executive shall receive the
severance benefits set forth in this Agreement in the event the Executive's
employment with the Company is terminated under the circumstances described
below subsequent to a Change in Control (as defined in Section 1.1).

     1. Key Definitions.

     As used herein, the following terms shall have the following respective
meanings:

          1.1 "CHANGE IN CONTROL" means an event or occurrence set forth in any
one or more of subsections (a) through (d) below (including an event or
occurrence that constitutes a Change in Control under one of such subsections
but is specifically exempted from another such subsection):

               (a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership of any
capital stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) 20% or more of either (i) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); PROVIDED, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company (excluding an acquisition pursuant to the
exercise, conversion or exchange of any security exercisable for, convertible
into or exchangeable for common stock or voting securities of the Company,
unless the Person



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exercising, converting or exchanging such security acquired such security
directly from the Company or an underwriter or agent of the Company), (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (iv) any acquisition by any corporation pursuant
to a transaction which complies with clauses (i) and (ii) of subsection (c) of
this Section 1.1; or

               (b) such time as the Continuing Directors (as defined below) do
not constitute a majority of the Board (or, if applicable, the Board of
Directors of a successor corporation to the Company), where the term "Continuing
Director" means at any date a member of the Board (i) who was a member of the
Board on the date of the execution of this Agreement or (ii) who was nominated
or elected subsequent to such date by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election or whose
election to the Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election; PROVIDED, HOWEVER, that there shall be excluded from this clause (ii)
any individual whose initial assumption of office occurred as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents, by
or on behalf of a person other than the Board; or

               (c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a sale or
other disposition of all or substantially all of the assets of the Company in
one or a series of transactions (a "Business Combination"), unless, immediately
following such Business Combination, each of the following two conditions is
satisfied: (i) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns the Company or substantially all of the
Company's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, respectively; and (ii)
no Person (excluding the Acquiring Corporation or any employee benefit plan (or
related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 20 % or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors (except to the extent
that such ownership existed prior to the Business Combination); or

               (d) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

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          1.2 "CHANGE IN CONTROL DATE" means the first date during the Term (as
defined in Section 2) on which a Change in Control occurs. Anything in this
Agreement to the contrary notwithstanding, if (a) a Change in Control occurs,
(b) the Executive's employment with the Company is terminated prior to the date
on which the Change in Control occurs, and (c) it is reasonably demonstrated by
the Executive that such termination of employment (i) was at the request of a
third party who has taken steps reasonably calculated to effect a Change in
Control or (ii) otherwise arose in connection with or in anticipation of a
Change in Control, then for all purposes of this Agreement the "Change in
Control Date" shall mean the date immediately prior to the date of such
termination of employment.

          1.3 "CAUSE" means:

               (a) the Executive's willful and continued failure to
substantially perform his reasonable assigned duties as an officer of the
Company (other than any such failure resulting from incapacity due to physical
or mental illness or any failure after the Executive gives notice of termination
for Good Reason), which failure is not cured within 30 days after a written
demand for substantial performance is received by the Executive from the Board
of Directors of the Company which specifically identifies the manner in which
the Board of Directors believes the Executive has not substantially performed
the Executive's duties; or

               (b) the Executive's willful engagement in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the Company.

     For purposes of this Section 1.3, no act or failure to act by the Executive
shall be considered "willful" unless it is done, or omitted to be done, in bad
faith and without reasonable belief that the Executive's action or omission was
in the best interests of the Company.

          1.4 "GOOD REASON" means the occurrence, without the Executive's
written consent, of any of the events or circumstances set forth in clauses (a)
through (g) below. Notwithstanding the occurrence of any such event or
circumstance, such occurrence shall not be deemed to constitute Good Reason if,
prior to the Date of Termination specified in the Notice of Termination (each as
defined in Section 3.2(a)) given by the Executive in respect thereof, such event
or circumstance has been fully corrected and the Executive has been reasonably
compensated for any losses or damages resulting therefrom (provided that such
right of correction by the Company shall only apply to the first Notice of
Termination for Good Reason given by the Executive).

               (a) the assignment to the Executive of duties inconsistent in any
material respect with the Executive's position (including status, offices,
titles and reporting requirements), authority or responsibilities in effect
immediately prior to the earliest to occur of (i) the Change in Control Date,
(ii) the date of the execution by the Company of the initial written agreement
or instrument providing for the Change in Control or (iii) the date of the
adoption by the Board of Directors of a resolution providing for the Change in
Control (with the earliest to occur of such dates referred to herein as the
"Measurement Date"), or any other action or omission by the Company which
results in a material diminution in such position, authority or
responsibilities;

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               (b) a reduction in the Executive's annual base salary as in
effect on the Measurement Date or as the same was or may be increased thereafter
from time to time;

               (c) the failure by the Company to (i) continue in effect any
material compensation or benefit plan or program (including without limitation
any life insurance, medical, health and accident or disability plan and any
vacation or automobile program or policy) (a "Benefit Plan") in which the
Executive participates or which is applicable to the Executive immediately prior
to the Measurement Date, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan or
program, (ii) continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the Executive's
participation relative to other participants, than the basis existing
immediately prior to the Measurement Date or (iii) award cash bonuses to the
Executive in amounts and in a manner substantially consistent with past practice
in light of the Company's financial performance;

               (d) a change by the Company in the location at which the
Executive performs his principal duties for the Company to a new location that
is both (i) outside a radius of 35 miles from the Executive's principal
residence immediately prior to the Measurement Date and (ii) more than 20 miles
from the location at which the Executive performed his principal duties for the
Company immediately prior to the Measurement Date; or a requirement by the
Company that the Executive travel on Company business to a substantially greater
extent than required immediately prior to the Measurement Date;

               (e) the failure of the Company to obtain the agreement from any
successor to the Company to assume and agree to perform this Agreement, as
required by Section 6.1;

               (f) a purported termination of the Executive's employment which
is not effected pursuant to a Notice of Termination satisfying the requirements
of Section 3.2(a); or

               (g) any failure of the Company to pay or provide to the Executive
any portion of the Executive's compensation or benefits due under any Benefit
Plan within seven days of the date such compensation or benefits are due, or any
material breach by the Company of this Agreement or any employment agreement
with the Executive.

     In addition, the termination of employment by the Executive for any reason
or no reason during the 30-day period beginning on the first anniversary of the
Change in Control Date shall be deemed to be termination for Good Reason for all
purposes under this Agreement.

     The Executive's right to terminate his employment for Good Reason shall not
be affected by his incapacity due to physical or mental illness.

          1.5 "DISABILITY" means the Executive's absence from the full-time
performance of the Executive's duties with the Company for 180 consecutive
calendar days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative.


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     2. TERM OF AGREEMENT. This Agreement, and all rights and obligations of the
parties hereunder, shall take effect upon the Effective Date and shall expire
upon the first to occur of (a) the expiration of the Term (as defined below) if
a Change in Control has not occurred during the Term, (b) the date 24 months
after the Change in Control Date, if the Executive is still employed by the
Company as of such later date, or (c) the fulfillment by the Company of all of
its obligations under Sections 4 and 5.2 if the Executive's employment with the
Company terminates within 24 months following the Change in Control Date. "Term"
shall mean the period commencing as of the Effective Date and continuing in
effect through December 31, 2003; PROVIDED, however, that commencing on January
1, 2001 and each January 1 thereafter, the Term shall be automatically extended
for one additional year unless, not later than 90 days prior to the scheduled
expiration of the Term (or any extension thereof), the Company shall have given
the Executive written notice that the Term will not be extended.

     3. EMPLOYMENT STATUS; TERMINATION FOLLOWING CHANGE IN CONTROL.

          3.1 NOT AN EMPLOYMENT CONTRACT. The Executive acknowledges that this
Agreement does not constitute a contract of employment or impose on the Company
any obligation to retain the Executive as an employee and that this Agreement
does not prevent the Executive from terminating employment at any time. If the
Executive's employment with the Company terminates for any reason and
subsequently a Change in Control shall occur, the Executive shall not be
entitled to any benefits hereunder except as otherwise provided pursuant to
Section 1.2.

          3.2 TERMINATION OF EMPLOYMENT.

               (a) If the Change in Control Date occurs during the Term, any
termination of the Executive's employment by the Company or by the Executive
within 24 months following the Change in Control Date (other than due to the
death of the Executive) shall be communicated by a written notice to the other
party hereto (the "Notice of Termination"), given in accordance with Section 7.
Any Notice of Termination shall: (i) indicate the specific termination provision
(if any) of this Agreement relied upon by the party giving such notice, (ii) to
the extent applicable, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) specify the Date of
Termination (as defined below). The effective date of an employment termination
(the "Date of Termination") shall be the close of business on the date specified
in the Notice of Termination (which date may not be less than 15 days or more
than 120 days after the date of delivery of such Notice of Termination), in the
case of a termination other than one due to the Executive's death, or the date
of the Executive's death, as the case may be. In the event the Company fails to
satisfy the requirements of Section 3.2(a) regarding a Notice of Termination,
the purported termination of the Executive's employment pursuant to such Notice
of Termination shall not be effective for purposes of this Agreement.

               (b) The failure by the Executive or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting any such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.


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               (c) Any Notice of Termination for Cause given by the Company must
be given within 90 days of the occurrence of the event(s) or circumstance(s)
which constitute(s) Cause. Prior to any Notice of Termination for Cause being
given (and prior to any termination for Cause being effective), the Executive
shall be entitled to a hearing before the Board of Directors of the Company at
which he may, at his election, be represented by counsel and at which he shall
have a reasonable opportunity to be heard. Such hearing shall be held on not
less than 15 days prior written notice to the Executive stating the Board of
Directors' intention to terminate the Executive for Cause and stating in detail
the particular event(s) or circumstance(s) which the Board of Directors believes
constitutes Cause for termination. Any such Notice of Termination for Cause must
be approved by an affirmative vote of two-thirds of the members of the Board of
Directors.

               (d) Any Notice of Termination for Good Reason given by the
Executive must be given within 90 days of the occurrence of the event(s) or
circumstance(s) which constitute(s) Good Reason.

     4. BENEFITS TO EXECUTIVE.

          4.1 STOCK ACCELERATION. If the Change in Control Date occurs during
the Term, then, effective upon the Change in Control Date, (a) each outstanding
option to purchase shares of Common Stock of the Company held by the Executive
shall become immediately exercisable in full and will no longer be subject to a
right of repurchase by the Company, (b) each outstanding restricted stock award
shall be deemed to be fully vested and will no longer be subject to a right of
repurchase by the Company.

          4.2 COMPENSATION. If the Change in Control Date occurs during the Term
and the Executive's employment with the Company terminates within 24 months
following the Change in Control Date, the Executive shall be entitled to the
following benefits:

               (a) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the
Executive's employment with the Company is terminated by the Company (other than
for Cause, Disability or Death) or by the Executive for Good Reason within 24
months following the Change in Control Date, then the Executive shall be
entitled to the following benefits:

                    (i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:

                         (1) the sum of (A) the Executive's base salary through
the Date of Termination, (B) the product of (x) the annual bonus paid or payable
(including any bonus or portion thereof which has been earned but deferred) for
the most recently completed fiscal year and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (C) the amount of any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case to the
extent not previously paid (the sum of the amounts described in clauses (A),
(B), and (C) shall be hereinafter referred to as the "Accrued Obligations"); and


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                         (2) the amount equal to (A) three multiplied by (B) the
sum of (x) the Executive's highest annual base salary during the three-year
period prior to the Change in Control Date and (y) the Executive's highest
annual bonus during the three-year period prior to the Change in Control Date.

                    (ii) for 12 months after the Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue to provide benefits to the
Executive and the Executive's family at least equal to those which would have
been provided to them if the Executive's employment had not been terminated, in
accordance with the applicable Benefit Plans in effect on the Measurement Date
or, if more favorable to the Executive and his family, in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies; PROVIDED, however, that if the Executive becomes
reemployed with another employer and is eligible to receive a particular type of
benefits (e.g., health insurance benefits) from such employer on terms at least
as favorable to the Executive and his family as those being provided by the
Company, then the Company shall no longer be required to provide those
particular benefits to the Executive and his family;

                    (iii) to the extent not previously paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive following the Executive's termination of employment under any plan,
program, policy, practice, contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits"); and

                    (iv) for purposes of determining eligibility (but not the
time of commencement of benefits) of the Executive for retiree benefits to which
the Executive is entitled, the Executive shall be considered to have remained
employed by the Company until 12 months after the Date of Termination.

               (b) RESIGNATION WITHOUT GOOD REASON; TERMINATION FOR DEATH OR
DISABILITY. If the Executive voluntarily terminates his employment with the
Company within 24 months following the Change in Control Date, excluding a
termination for Good Reason, or if the Executive's employment with the Company
is terminated by reason of the Executive's death or Disability within 24 months
following the Change in Control Date, then the Company shall (i) pay the
Executive (or his estate, if applicable), in a lump sum in cash within 30 days
after the Date of Termination, the Accrued Obligations and (ii) timely pay or
provide to the Executive the Other Benefits.

               (c) TERMINATION FOR CAUSE. If the Company terminates the
Executive's employment with the Company for Cause within 24 months following the
Change in Control Date, then the Company shall (i) pay the Executive, in a lump
sum in cash within 30 days after the Date of Termination, the sum of (A) the
Executive's annual base salary through the Date of Termination and (B) the
amount of any compensation previously deferred by the Executive, in each case to
the extent not previously paid, and (ii) timely pay or provide to the Executive
the Other Benefits.

<PAGE>   10


          4.3 TAXES.

               (a) In the event that the Company undergoes a "Change in
Ownership or Control" (as defined below) the Company shall, within 30 days after
each date on which the Executive becomes entitled to receive (whether or not
then due) a Contingent Compensation Payment (as defined below) relating to such
Change in Ownership or Control, determine and notify the Executive (with
reasonable detail regarding the basis for its determinations) (i) which of the
payments or benefits due to the Executive (under this Agreement or otherwise)
following such Change in Ownership or Control constitute Contingent Compensation
Payments, (ii) the amount, if any, of the excise tax (the "Excise Tax") payable
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), by the Executive with respect to such Contingent Compensation Payment
and (iii) the amount of the Gross-Up Payment (as defined below) due to the
Executive with respect to such Contingent Compensation Payment. Within 30 days
after delivery of such notice to the Executive, the Executive shall deliver a
response to the Company (the "Executive Response") stating either (A) that he
agrees with the Company's determination pursuant to the preceding sentence or
(B) that he disagrees with such determination, in which case he shall indicate
which payment and/or benefits should be characterized as a Contingent
Compensation Payment, the amount of the Excise Tax with respect to such
Contingent Compensation Payment and the amount of the Gross-Up Payment due to
the Executive with respect to such Contingent Compensation Payment. If the
Executive states in the Executive Response that he disagrees with the Company's
determination, then, for a period of 60 days following delivery of the Executive
Response, the Executive and the Company shall use good faith efforts to resolve
such dispute. If such dispute is not resolved within such 60-day period, such
dispute 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 the arbitrator's award in any court having
jurisdiction. The Company shall, within three business days following delivery
to the Company of the Executive Response, make to the Executive those Gross-up
Payments as to which there is no dispute between the Company and the Executive
regarding whether they should be made. The balance of the Gross-up Payments
shall be made within three business days following the resolution of such
dispute. The amount of any payments to be made to the Executive following the
resolution of such dispute shall be increased by amount of the accrued interest
thereon computed at the prime rate published from time to time by the Wall
Street Journal, compounded monthly from the date that such payments originally
were due.

               (b) For purposes of this Section 4.3, the following terms shall
have the following respective meanings:

                    (i) "Change in Ownership or Control" shall mean a change in
the ownership or effective control of the Company or in the ownership of a
substantial portion of the assets of the Company determined in accordance with
Section 280G(b)(2) of the Code.

                    (ii) "Contingent Compensation Payment" shall mean any
payment (or benefit) in the nature of compensation that is made or made
available (under this Agreement or otherwise) to a "disqualified individual" (as
defined in Section 280G(c) of the Code) and that is contingent (within the
meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or
Control of the Company.


<PAGE>   11

                    (iii) "Gross-Up Payment" shall mean an amount equal to the
sum of (i) the amount of the Excise Tax payable with respect to a Contingent
Compensation Payment and (ii) the amount necessary to pay all additional taxes
imposed on (or economically borne by) the Executive (including the Excise Taxes,
state and federal income taxes and all applicable withholding taxes)
attributable to the receipt of such Gross-Up Payment. For purposes of the
preceding sentence, all taxes attributable to the receipt of the Gross-Up
Payment shall be computed assuming the application of the maximum tax rates
provided by law.

               (f) The provisions of this Section 4.3 are intended to apply to
any and all payments or benefits available to the Executive under this Agreement
or any other agreement or plan of the Company under which the Executive receives
Contingent Compensation Payments.

          4.4 MITIGATION. The Executive shall not be required to mitigate the
amount of any payment or benefits provided for in this Section 4 by seeking
other employment or otherwise. Further, except as provided in Section
4.2(a)(ii), the amount of any payment or benefits provided for in this Section 4
shall not be reduced by any compensation earned by the Executive as a result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.

          4.5 OUTPLACEMENT SERVICES. In the event the Executive is terminated by
the Company (other than for Cause, Disability or Death), or the Executive
terminates employment for Good Reason, within 24 months following the Change in
Control Date, the Company shall provide outplacement services through one or
more outside firms of the Executive's choosing up to an aggregate amount to be
negotiated by the Executive and the Company, with such services to extend until
the earlier of (i) 12 months following the termination of Executive's employment
or (ii) the date the Executive secures full time employment.

     5. DISPUTES.

          5.1 SETTLEMENT OF DISPUTES; ARBITRATION. All claims by the Executive
for benefits under this Agreement shall be directed to and determined by the
Board of Directors of the Company and shall be in writing. Any denial by the
Board of Directors of a claim for benefits under this Agreement shall be
delivered to the Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The
Board of Directors shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim. Any further 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 the
arbitrator's award in any court having jurisdiction.

          5.2 EXPENSES. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal, accounting and other fees and expenses which
the Executive may reasonably incur as a result of any claim or contest
(regardless of the outcome thereof) by the Company, the Executive or others
regarding the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive regarding the amount of any payment or benefits
pursuant to this



<PAGE>   12

Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.

     6. SUCCESSORS.

          6.1 SUCCESSOR TO COMPANY. The Company shall 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 expressly to
assume and agree to perform this Agreement to the same extent that the Company
would be required to perform it if no such succession had taken place. Failure
of the Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if the Executive elects to terminate employment, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as defined above and any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement, by operation of law or otherwise.

          6.2 SUCCESSOR TO EXECUTIVE. This Agreement shall inure to the benefit
of and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be payable to
the Executive or his family hereunder if the Executive had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.

     7. NOTICE. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide overnight courier service, in each case addressed to the Company, at
11 State St., Woburn, MA 01801, and to the Executive at 112 Farm Road, Sherborn,
MA 01770 (or to such other address as either the Company or the Executive may
have furnished to the other in writing in accordance herewith). Any such notice,
instruction or communication shall be deemed to have been delivered five
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service. Either party may give any notice,
instruction or other communication hereunder using any other means, but no such
notice, instruction or other communication shall be deemed to have been duly
delivered unless and until it actually is received by the party for whom it is
intended.

     8. MISCELLANEOUS.

          8.1 EMPLOYMENT BY SUBSIDIARY. For purposes of this Agreement, the
Executive's employment with the Company shall not be deemed to have terminated
solely as a result of the Executive continuing to be employed by a wholly-owned
subsidiary of the Company.

<PAGE>   13

          8.2 SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

          8.3 INJUNCTIVE RELIEF. The Company and the Executive agree that any
breach of this Agreement by the Company is likely to cause the Executive
substantial and irrevocable damage and therefore, in the event of any such
breach, in addition to such other remedies which may be available, the Executive
shall have the right to specific performance and injunctive relief.

          8.4 GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal laws of the
Commonwealth of Massachusetts, without regard to conflicts of law principles.

          8.5 WAIVERS. No waiver by the Executive at any time of any breach of,
or compliance with, any provision of this Agreement to be performed by the
Company shall be deemed a waiver of that or any other provision at any
subsequent time.

          8.6 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.

          8.7 TAX WITHHOLDING. Any payments provided for hereunder shall be paid
net of any applicable tax withholding required under federal, state or local
law.

          8.8 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto in respect of the
subject matter contained herein; and any prior agreement of the parties hereto
in respect of the subject matter contained herein is hereby terminated and
cancelled. Notwithstanding the foregoing, the effectiveness of the Employment
Agreement, dated as of May 16, 1990, between the Company and the Executive (the
"Prior Agreement") shall be suspended during the 24 months following the Change
in Control Date (the "Protected Period"), except as specifically set forth
herein; provided that if the Executive's employment is not terminated on or
before the last day of the Protected Period, then the Prior Agreement shall be
effective during the period, if any, from the end of the Protected Period
through the end of the Employment Period (as defined in the Prior Agreement).

          8.9 AMENDMENTS. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.


<PAGE>   14

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.

                                    PolyMedica Corporation

                                    By: /s/ Steven J. Lee
                                    -------------------------------------------
                                    Title: Chairman and Chief Executive Officer