<PAGE>   1

                                                                   EXHIBIT 10.21


                                January 20, 1998

John J. McDonald
17 Smith Farm Trail
Lynnfield, MA 01940

Dear Jack:

     The purpose of this letter agreement is to set forth our mutual
understanding and agreement with respect to: (i) your separation from the
Company; and (ii) the establishment of the terms of your severance and
separation from employment. We have agreed as follows:

     1. SEPARATION FROM EMPLOYMENT. Effective as of the close of business on
        Friday, September 12, 1997 (your "separation date"), you are no longer a
        full-time employee of the Company, as the Company terminated your
        employment without cause, and you relinquished as of that date any
        positions that you held with the Company. By signing this letter
        agreement, you hereby waive the ten day written notice requirement
        provided in Paragraph 2.2 of the Employment Agreement between you and
        the Company, dated April 1, 1997 (the "Employment Agreement").

     2. SEVERANCE PAYMENT. The Company shall provide you with severance pay
        equivalent to your regular base salary (less all applicable federal,
        state, or local tax withholding, F.I.C.A., and any other applicable
        payroll deductions) through March 31, 1998, in accordance with the
        Company's regular pay practices. Such payments shall be made in
        installments corresponding to the regular pay periods of the Company and
        shall be mailed to you at 17 Smith Farm Trail, Lynnfield, MA 01940.

     3. MONETARY CONSIDERATION. In consideration of this letter agreement and
        your General Release, the Company has offered and you have accepted to
        act as a part-time employee of the Company, commencing April 1, 1998 and
        terminating at the close of business on October 1, 1999. In this
        position, you shall provide advice and assistance to the Company from
        time to time, as directed by management, for which you shall be paid at
        a rate of three hundred fifty dollars ($350) per month (less all
        applicable federal, state or local tax withholding, F.I.C.A., and any
        other applicable payroll deductions), but for which you shall receive no
        other benefits, except that your rights to participate in the Company's
        1994 Stock Option Plan shall continue throughout the period of your
        part-time employment and except those benefits provided for below and/or
        are required by law. You acknowledge that you are not otherwise entitled
        to the benefits described in this paragraph pursuant to the Employment
        Agreement or any other agreement or understanding. The parties
        understand and agree that your role as a part-time employee of the


<PAGE>   2

John J. McDonald 
January 20, 1998
Page 2



        Company as provided under this paragraph does not preclude you from
        seeking or securing any full-time or other part-time employment after
        your separation date, provided you agree that any such full-time or
        part-time employment shall be consistent with your post-employment
        obligations described in paragraph 9 below.

     4. COMPENSATION RECEIVED TO DATE. You agree that you have received all
        compensation to which you are entitled for services rendered to the
        Company through your separation date and agree to make no claims for
        further compensation from the Company of any type, including bonus
        payments, commission payments, and vacation pay, except such sums as are
        provided for in this letter agreement.

     5. TRANSFER OF RESPONSIBILITIES AND CONTINUING Cooperation. You shall
        cooperate fully with the Company and its personnel on an as needed and
        as required basis to provide an orderly transfer of your duties and
        responsibilities and to provide continuing assistance in connection with
        on-going litigation and investigation matters. This cooperation includes
        timely compliance with all reasonable requests for information and other
        materials. This cooperation also includes timely compliance with all
        reasonable requests for information and assistance in connection with
        any and all on-going Company litigation, investigations, and legal
        inquiries. The Company agrees to reimburse you for any reasonable travel
        costs and expenses, including meals and lodging, incurred by you in
        connection with such compliance, and to make available to you upon
        reasonable request and notice pertinent records and documents related to
        such litigation, investigations and legal inquiries, which you agree
        will be used solely in relation thereto and for no other purpose.

     6. CONFIDENTIALITY. You agree that you will not, without the Company's
        prior written consent, reveal or disclose to any person or entity
        outside of the Company or use for your own benefit or for the benefit of
        any other person or entity, any confidential information concerning the
        business or affairs of the Company, or concerning the Company's
        customers, clients, or employees ("Confidential Information"). You
        further agree that until July 31, 1998, you will refer all requests by
        any third party or the media regarding the Company, your employment, or
        your termination to the Company's General Counsel.

     7. RETURN OF PROPERTY. You acknowledge that you have returned to the
        Company all property of the Company that is in your possession or under
        your control, including, without limitation, any and all files,
        documents and other information with respect to the Company's
        management, operations or customers, including all files, documents, or
        other information containing Confidential Information.


<PAGE>   3

John J. McDonald 
January 20, 1998
Page 3



     8. NON-DISPARAGEMENT. You further agree that you will not, at any time
        after the date hereof, make any remarks or comments, orally or in
        writing, to customers, potential customers, regulators or others, which
        or who have, or could reasonably be anticipated to have, business
        dealings with the Company, which remarks or comments reasonably could be
        construed to be derogatory or disparaging to the Company or any of its
        shareholders, officers, directors, employees, attorneys or agents, or
        which reasonably could be anticipated to be damaging or injurious to the
        Company's reputation or good will or to the reputation or good will of
        any person associated with the Company.

     9. NON-COMPETITION, RELATED AGREEMENTS. You shall continue to be bound by
        and to observe the terms and provisions set forth in Paragraphs 6, 7, 8,
        10 and Exhibit C of the Employment Agreement, and you hereby agree that
        these obligations, terms and provisions shall be extended through and
        until the close of business on August 1, 1999, at which time all such
        obligations shall cease. Furthermore, you agree that the Company's
        obligation, if any, to pay you a "Special Benefit" pursuant to paragraph
        7.4.2 of your Employment Agreement shall be effective, if at all, only
        from April 1, 1998 through July 31, 1998.

    10. REMEDIES OF THE COMPANY. You acknowledge that the restrictions
        contained in paragraphs 6, 8, and 9 of this letter agreement are
        reasonable and necessary for the protection of the legitimate interests
        of the Company, that any violation of those restrictions would cause
        substantial injury to the Company, and that the Company would not have
        entered into this letter agreement without your agreement to be bound by
        those restrictions. In addition, you recognize and agree that the
        Company's remedy at law for material breaches of those restrictions is
        inadequate, that the damages for any material breach thereof would be
        irreparable, and that the Company shall be entitled to preliminary and
        permanent injunctive relief and specific performance thereof, in
        addition to any remedies it may have for monetary damages or other
        relief. You further recognize and agree that the covenants contained in
        paragraphs 6, 8, and 9 shall be construed as independent of any other
        provision of this letter agreement and that the existence of any claim
        or cause of action by you against the Company shall not constitute a
        defense to the enforcement by the Company of said covenants.

    11. BREACH OF AGREEMENT. You understand and agree that any material breach
        of your obligations under this letter agreement will immediately render
        the Company's obligations and agreements hereunder null and void, and
        all payments pursuant to paragraph 3 hereof shall immediately cease and
        you shall repay to the Company forthwith all sums you have been paid or
        sums paid on your behalf pursuant to paragraph 3.


<PAGE>   4

John J. McDonald 
January 20, 1998
Page 4


    12. REFERENCES. In response to inquiries from your prospective employers,
        the Company shall state that it is the policy of the Company to verify
        only dates of employment and titles. Upon receipt from you or your
        counsel of a proposed letter of reference, the Company agrees to execute
        and deliver such a letter to you, so long as such letter is acceptable
        to the Company in its exercise of reasonable judgment.

    13. GENERAL RELEASE. In consideration of the good and valuable
        consideration set forth in this letter agreement, the receipt and
        sufficiency of which consideration you hereby acknowledge, and except
        for any indemnification rights that you may have pursuant to the By-Laws
        of the Company and as provided by law, which rights, if any, are
        specifically excepted from the scope of this release, you, for yourself
        and your heirs, legal representatives, beneficiaries, assigns and
        successors in interest, hereby knowingly and voluntarily release, remise
        and forever discharge the Company and its successors, assigns, former,
        current or future shareholders, officers, directors, employees, agents,
        attorneys and representatives, whether in their individual or official
        capacities, from any and all actions or causes of action, suits, debts,
        claims, complaints, contracts, controversies, agreements, promises,
        damages, claims for attorneys' fees, punitive damages or reinstatement,
        judgments and demands whatsoever, in law or equity, you ever had from
        the beginning of the world to this date, including, without limitation,
        any claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
        ss.2000e et seq.; the Employee Retirement Income Security Act of 1974,
        as amended, 29 U.S.C. ss.1000 et seq., Massachusetts General Laws,
        Chapter 151B; the Americans with Disabilities Act, 42 U.S.C. ss.12101 et
        seq.; claims for breach of contract or based on tort; and any other
        statutory, regulatory or common law causes of action. You hereby
        acknowledge and understand that this is a General Release.

    14. ACKNOWLEDGMENT. You acknowledge and agree that you understand the
        meaning of this letter agreement, that you freely and voluntarily enter
        into it and the General Release contained herein, and that the Company
        has advised you to consult an attorney of your choosing prior to signing
        this letter agreement. You agree that no fact, evidence, event, or
        transaction occurring before the execution of this letter agreement,
        which is currently unknown to you, but which may hereafter become known
        to you, shall affect in any manner the final and unconditional nature of
        the agreements and releases set forth herein.

    15. MISCELLANEOUS. This letter agreement shall be construed in accordance
        with the laws of the Commonwealth of Massachusetts. A waiver of any
        breach of or failure 


<PAGE>   5

John J. McDonald 
January 20, 1998
Page 5



        to comply fully with any provision of this letter agreement by either
        party shall not operate or be construed as a waiver of any subsequent
        breach thereof or failure to comply. If any portion or provision of this
        letter agreement shall to any extent be deemed invalid or unenforceable,
        the remainder of this letter agreement, or the application of such
        portion or provision in circumstances other than those as to which it is
        held invalid or unenforceable, shall not be affected thereby and each
        portion and provision of this letter agreement shall be valid and
        enforceable to the fullest extent permitted.

     To avoid any possible misunderstanding, the Company intends this letter
agreement to be a comprehensive statement of the terms of your separation from
employment. This letter agreement supersedes any prior understanding or
statement made to you by the Company regarding your positions with the Company
or your arrangements with the Company for the period after your separation from
employment. For the same reason, any modifications of the terms set forth in
this letter agreement must be in writing and signed by you and by me on behalf
of the Company.

     Please indicate your agreement to the terms of this letter agreement by
signing and dating the last page of the enclosed copy of this letter agreement,
and return it to me.

                                 Sincerely,



                                 L. Michael Hone
                                 President and Chief Executive Officer




AGREED TO AND EXECUTED UNDER SEAL THIS ___ day of January, 1998.



                                 --------------------------------------
                                 John J. McDonald