Document:

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                                                                    EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT by and between HPSC, Inc., a Delaware corporation (the
"Company"), and John W. Everets (the "Executive"), dated as of July 19, 1999.

                               W I T N E S S E T H

      WHEREAS, the Executive has served as Chairman and Chief Executive Officer
of the Company since July 19, 1993, most recently pursuant to an employment
agreement dated July 19, 1996;

      WHEREAS, the Company wishes to provide for the continued employment by the
Company of the Executive, and the Executive wishes to continue to serve the
Company, on the terms and conditions set forth in this Agreement;

      NOW, THEREFORE, it is hereby agreed as follows:

      1.    EMPLOYMENT PERIOD. The Company shall employ the Executive, and the
Executive shall be an employee of the Company, on the terms and conditions set
forth in this Agreement, for a period (the "Employment Period") commencing on
the date hereof (the "Effective Date") and ending on the third anniversary of
the Effective Date; provided, however, that, on the third anniversary of the
Effective Date and each subsequent anniversary thereof (each of such third and
subsequent anniversaries, an "Extension Date"), the Employment Period shall
automatically be extended for one additional year unless, at least six months
prior to the applicable Extension Date, the Company or the Executive shall have
given notice not to extend this Agreement. The Employment Period shall end upon
the termination of the Executive's employment hereunder, as of the Date of
Termination (as defined in Section 4(d)).

      2.    SCOPE OF EMPLOYMENT. (a) Position. During the Employment Period, the
Executive shall continue to serve as Chairman of the Board of the Directors and
Chief Executive Officer of the Company. The Executive shall adhere to policies
established by the Board of Directors of the Company (the "Board").

            (b)   DUTIES. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive shall devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive under this Agreement,
use the Executive's reasonable best efforts to carry out such responsibilities
faithfully and efficiently. It shall not be considered a violation of the
foregoing for the Executive to serve on corporate, industry, civic or charitable
boards or committees, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.

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            (c)   LOCATION. The Company's headquarters shall be located in
Boston, Massachusetts, and the Executive shall be based and reside in the
general area of Boston, except for reasonable travel obligations.

      3.    COMPENSATION. The Executive's compensation during the Employment
Period shall be determined by the Board upon the recommendation of the committee
of the Board having responsibility for approving the compensation of senior
executives (the "Compensation Committee"), subject to Sections 3(a) through
3(d).

            (a)   BASE SALARY. During the Employment Period, commencing on the
Effective Date, the Executive shall receive an annual base salary ("Base
Salary") as determined by the Compensation Committee from time to time.
Commencing January 1, 2000, the Executive's Base Salary shall be at a rate of
not less than $345,000. The Base Salary shall be payable in accordance with the
Company's regular payroll practice for its senior executives, as in effect from
time to time.

            (b)   INCENTIVE PLAN. The Compensation Committee has developed an
incentive compensation plan ("Incentive Plan") for key management employees. The
Incentive Plan is designed to pay the Executive up to One Hundred Percent (100%)
of his annual base salary for achieving the results established by the
Compensation Committee. The Executive shall be eligible to receive awards under
the Incentive Plan, as determined annually by the Compensation Committee.

            (c)   OTHER INCENTIVE COMPENSATION. During the Employment Period,
the Executive shall be eligible for additional awards under the Company's
Amended and Restated 1998 Stock Incentive Plan, as it may be amended from time
to time, or under any subsequent similar plans, as determined by the
Compensation Committee.

            (d)   OTHER BENEFITS. During the Employment Period, (i) the
Executive shall participate in all applicable savings and retirement plans,
practices, policies and programs of the Company that are from time to time
applicable to senior executives of the Company including the Company's Employee
Stock Ownership Plan and Supplemental Executive Retirement Plan; (ii) the
Executive and/or the Executive's eligible dependents, as the case may be, shall
be eligible for participation in, and shall receive all benefits under, all
applicable welfare benefit plans, practices, policies and programs provided by
the Company, including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life insurance, group life insurance,
accidental death and travel accident insurance plans and programs on the same
basis and subject to the same terms, conditions, cost-sharing requirements and
the like as senior executives of the Company; and (iii) the Executive shall be
entitled to receive fringe benefits on a basis not less favorable than provided
to other senior executives of the Company. Specifically, the Executive shall be
entitled to four (4) weeks of vacation annually and an appropriate vehicle
provided by the Company.

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      4.    TERMINATION OF EMPLOYMENT. This Employment Agreement may be
terminated as provided in Sections 4(a) through 4(d). Termination pursuant to
any of Sections 4(a) through 4(d) is subject to the provisions of Section 5.

            (a)   DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death. The Company shall be
entitled to terminate the Executive's employment because of the Executive's
Disability (as defined in the Company's long-term disability insurance
policies). A termination of the Executive's employment by the Company for
Disability shall be communicated to the Executive by written notice, and shall
be effective on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), unless the Executive returns to full-time
performance of the Executive's duties before the Disability Effective Date.

            (b)   TERMINATION BY THE COMPANY. (i) FOR CAUSE. The Company may
terminate the Executive's employment for Cause at any time during the Employment
Period as follows.

                  (A)   "Cause" means the conviction of the Executive for the
            commission of a crime involving moral turpitude, or willful gross
            misconduct by the Executive in connection with his employment by the
            Company that results in material and demonstrable financial harm to
            the Company. No act or failure to act on the part of the Executive
            shall be considered "willful" unless it is done, or omitted to be
            done, by the Executive in bad faith or without reasonable belief
            that the Executive's action or omission was in the best interests of
            the Company. Any act or failure to act that is based upon authority
            given pursuant to a resolution duly adopted by the Board, or the
            advice of counsel for the Company, shall be conclusively presumed to
            be done, or omitted to be done, by the Executive in good faith and
            in the best interests of the Company. In the event of a dispute
            concerning the application of this provision, no claim by the
            Company that Cause exists shall be given effect unless the Company
            establishes to the Board by clear and convincing evidence that Cause
            exists.

                  (B)   A termination of the Executive's employment for Cause
            shall not be effective unless it is accomplished in accordance with
            the following procedures. The Company shall give the Executive
            written notice ("Notice of Termination for Cause") of its intention
            to terminate the Executive's employment for Cause, setting forth in
            reasonable detail the specific conduct of the Executive that it
            considers to constitute Cause and the specific provisions of this
            Agreement on which it relies, and stating the date, time and place
            of the Special Board Meeting for Cause. The "Special Board Meeting
            for Cause" means a meeting of the Board called and held specifically
            and exclusively for the purpose of considering the Executive's
            termination for Cause, that takes place not less than twenty nor

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            more than thirty business days after the Executive receives the
            Notice of Termination for Cause. The Executive shall be given an
            opportunity, together with counsel, to be heard at the Special Board
            Meeting for Cause. The Executive's termination for Cause shall be
            effective when and if a resolution is duly adopted at the Special
            Board Meeting for Cause by the affirmative vote of three-quarters of
            the entire membership of the Board stating that, in the good faith
            opinion of the Board, the Executive is guilty of the conduct
            described in the Notice of Termination for Cause and that such
            conduct constitutes Cause under this Agreement.

                  (ii)  Without Cause. The Company may terminate the Executive's
      employment without cause at any time during the Employment Period.

            (c)   TERMINATION BY THE EXECUTIVE. (i) FOR GOOD REASON. The
Executive may terminate employment for Good Reason at any time during the
Employment Period as follows.

                  A.    "Good Reason" means:

                        I.    the assignment to the Executive of any duties or
            responsibilities inconsistent in any respect with those customarily
            associated with the position of Chairman of the Board and Chief
            Executive Officer (including status, offices, titles and reporting
            requirements) or any other action by the Company that results in a
            diminution or other material adverse change in the Executive's
            position, authority, duties or responsibilities, other than an
            isolated, insubstantial and inadvertent action that is not taken in
            bad faith and is remedied by the Company promptly after receipt of
            notice thereof from the Executive;

                        II.   any failure by the Company to comply with any
            provision of Section 3 of this Agreement, other than an isolated,
            insubstantial and inadvertent failure that is not taken in bad faith
            and is remedied by the Company promptly after receipt of notice
            thereof from the Executive;

                        III.  any requirement by the Company that the Executive
            be principally based at any office or location more than 25 miles
            from the Company's current offices in Boston, Massachusetts; or

                        IV.   any failure by the Company to comply with Section
            11(c) of this Agreement;

                  (B)   For purposes of this Section 4(c), any reasonable
            determination of "Good Reason" made by the Executive shall be

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            conclusive. A termination of employment by the Executive for Good
            Reason shall be effectuated by giving the Company written notice
            ("Notice of Termination for Good Reason") of the termination,
            setting forth in reasonable detail the specific conduct of the
            Company that constitutes Good Reason and the specific provision(s)
            of this Agreement on which the Executive relies. A termination of
            employment by the Executive for Good Reason shall be effective on
            the fifth business day following the date when the Notice of
            Termination for Good Reason is given, unless the notice sets forth a
            later date (which date shall in no even be later than 30 days after
            the notice is given).

                  (C)   The failure to set forth any fact or circumstance in a
            Notice of Termination for Good Reason shall not constitute a waiver
            of the right to assert, and shall not preclude the Executive from
            asserting, such fact or circumstance in an attempt to enforce any
            right under or provision of this Agreement.

                  (ii)  WITHOUT GOOD REASON. The Executive may terminate his
      employment without Good Reason at any time during the Employment Period by
      giving the Company written notice of the termination.

            (d)   DATE OF TERMINATION. The "Date of Termination" means the date
of the Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause or without
Cause or by the Executive for Good Reason is effective, the date on which the
Executive gives the Company notice of a termination of his employment without
Good Reason, or the date of expiration of this Agreement, as the case may be.

      5.    OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) BY THE COMPANY
OTHER THAN FOR CAUSE; UPON NON-RENEWAL BY THE COMPANY OR THE EXECUTIVE; OR BY
THE EXECUTIVE FOR ANY REASON. Except as provided in Section 6 below, if, during
the Employment Period, the Company terminates the Executive's employment for any
reason, other than Cause or the Executive's death or Disability; the Company or
the Executive notifies the other pursuant to Section 1 of its or his intent not
to extend this Agreement; or the Executive terminates his employment for any
reason; the Company shall

                  (i)   continue to pay the Executive his Base Salary for a
      period of twelve months following the Date of Termination;

                  (ii)  pay the Executive twelve monthly payments, each equal to
      one-twelfth (1/12) of the maximum incentive compensation the Executive
      could have earned during the twelve months following the Date of
      Termination;

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                  (iii) continue benefits to the Executive and/or the
      Executive's family for a period of twelve months following the Date of
      Termination at least equal to those which would have been provided in
      accordance with the applicable health, medical, life, disability and other
      welfare benefit plans, programs, and practices described in Section 3(d)
      as if the Executive's employment had not been terminated; and

                  (iv)  except in the case of termination by the Executive
      without Good Reason, cause all of the Executive's outstanding equity
      awards, to the extent then unvested or forfeitable, to immediately and
      fully vest and, to the extent then not exercisable, to become immediately
      and fully exercisable.

            (b)   DEATH OR DISABILITY. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall

                  (i)   continue to pay to the Executive or, in the case of the
            Executive's death, to the Executive's designated beneficiaries (or,
            if there is no such beneficiary, to the Executive's estate or legal
            representative) the Executive's Base Salary for a period of six
            months following the Date of Termination; and

                  (ii)  continue benefits to the Executive and/or the
            Executive's family for a period of six months following the Date of
            Termination at least equal to those which would have been provided
            in accordance with the applicable health, medical, life, disability
            and other welfare benefit plans, programs, and practices described
            in Section 3(d) as if the Executive's employment had not been
            terminated.

                  (iii) cause all of the Executive's outstanding equity awards,
            to the extent then unvested or forfeitable, to immediately and fully
            vest and, to the extent then not exercisable, to become immediately
            and fully exercisable.

            (c)   BY THE COMPANY FOR CAUSE. If the Executive's employment is
terminated by the Company for Cause, the Company's only obligation to the
Executive will be to pay any arrearages of salary or incentive compensation as
of the Date of Termination.

      6.    CHANGE OF CONTROL. Notwithstanding the provisions of Section 5 to
the contrary, in the event a Change in Control (as such term is defined in the
Company's 1998 Amended and Restated Stock Incentive Plan) occurs, the following
shall apply.

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            (a)   If, during the three (3) year period following a Change in
Control, the Executive's employment is terminated by the Company for any reason
other than for Cause, if the Executive's employment is terminated by reason of
the Executive's death or Disability, or if the Executive terminates his
employment for Good Reason:

                        (i)   The Company shall pay the Executive in a lump sum
            payable within 30 days after the Date of Termination an amount equal
            to the average of his total compensation from the Company which was
            includable in the Executive's gross income for federal income tax
            purposes (as reported on IRS Form W-2) for each of the preceding
            five (5) calendar years ending before the date of the Change of
            Control multiplied by 2.99; provided, however, that the Executive
            may choose, in his discretion, to receive a lesser amount than he is
            entitled to receive under this Section 6(a)(i) if after consultation
            with the Compensation Committee he determines that it is in his best
            interests to accept a lesser amount;

                        (ii)  The Company shall cause all of the Executive's
            outstanding equity awards, to the extent then unvested or
            forfeitable, to immediately and fully vest and, to the extent then
            not exercisable, to become immediately and fully exercisable; and

                        (iii) The Company shall continue benefits to the
            Executive and/or the Executive's family for a period of twelve
            months following the Date of Termination at least equal to those
            which would have been provided in accordance with the applicable
            health, medical, life, disability and other welfare benefit plans,
            programs, and practices described in Section 3(d) as if the
            Executive's employment had not been terminated.

            (b)   If, during the three (3) year period following a Change in
Control, the Executive terminates his employment for any reason other than for
Good Reason:

                        (i)   the Company shall continue to pay the Executive
            his Base Salary for the twelve (12) months following the Date of
            Termination and the Company shall pay the Executive twelve monthly
            payments, each equal to one-twelfth (1/12) of the maximum incentive
            compensation the Executive could have earned during the twelve (12)
            months following the Date of Termination; and

                        (ii)  The Company shall continue benefits to the
            Executive and/or the Executive's family for a period of twelve
            months following the Date of Termination at least equal to those
            which would have been provided in accordance with the applicable
            health, medical, life, disability and other welfare benefit plans,
            programs, and practices described in Section 3(d) as if the
            Executive's employment had not been terminated.

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            (c)   If, during the three (3) year period following a Change in
Control, the Executive is terminated by the Company for Cause, the Company's
only obligation to the Executive will be to pay any arrearages of salary or
incentive compensation as of the Date of Termination.

      7.    NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies for which the Executive may qualify (including, but not limited to,
the Employee Stock Ownership Plan and the Supplemental Executive Retirement
Plan), nor shall anything in this Agreement limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Vested benefits and other amounts
that the Executive is otherwise entitled to receive under any plan, policy,
practice or program of, or any contract of agreement with, the Company or any of
its affiliated companies on or after the Date of Termination shall be payable in
accordance with the terms of each such plan, policy, practice, program, contract
or agreement, as the case may be, except as explicitly modified by this
Agreement.

      8.    FULL SETTLEMENT. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts shall
not be reduced, regardless of whether the Executive obtains other employment.

      9.    CONFIDENTIAL INFORMATION; NON-COMPETITION. (a) The Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies and their respective businesses that the Executive
obtains during the Executive's employment by the Company or any of its
affiliated companies and that is not public knowledge (other than as a result of
the Executive's violation of this Section 9) ("Confidential Information"). The
Executive shall not communicate, divulge or disseminate Confidential Information
at any time during or after the Executive's employment with the Company, except
with the prior written consent of the Company or as otherwise required by law or
legal process.

            (b)   If the Executive has terminated his employment for any reason
other than Good Reason, the Executive agrees not to compete with the business of
the Company or be employed by a competitor of the Company while the Executive is
receiving termination payments under Section 5.

      10.   INDEMNIFICATION; ATTORNEYS' FEES. The Company shall pay or indemnify
the Executive to the full extent permitted by law and the by-laws of the

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Company for all expenses, costs, liabilities and legal fees which the Executive
may incur in the discharge of his duties hereunder. The Company also agrees to
pay, as incurred, to the fullest extent permitted by law, or indemnify Executive
if such payment is not legally permitted, for all legal fees and expenses that
the Executive may in good faith incur as a result of any contest by the Company,
the Executive or others of the validity or enforceability of or liability under,
or otherwise involving, any provision of this Agreement, upon receipt of the
Executive's undertaking to repay any such amount advanced if the Company
prevails upon the final disposition of such action.

      11.   SUCCESSORS. (a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

            (b)   This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.

            (c)   The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "the Company" shall mean
both the Company as defined above and any such successor that assumes and agrees
to perform this Agreement, by operation of law or otherwise.

      12.   MISCELLANEOUS. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts,
without reference to its principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.

            (b)   All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

                                    If to the Executive:

                                    John W. Everets
                                    72 Chestnut Street
                                    Boston, Massachusetts 02108

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                                    If to the Company:

                                    HPSC, Inc.
                                    60 State Street
                                    Boston, Massachusetts 02109

or to such other address as either party furnishes to the other in writing in
accordance with this Section 12(b). Notices and communications shall be
effective when actually received by the addressee.

            (c)   The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.

            (d)   Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.

            (e)   The Executive's or the Company's failure to insist upon strict
compliance with any provisions of, or to assert any right under, this Agreement
(including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to paragraph (c) of Section 4) shall not be
deemed to be a waiver of such provision or right or of any other provision of or
right under this Agreement.

            (f)   The Executive and the Company acknowledge that this Agreement
supersedes any other agreement between them concerning the subject matter
hereof.

            (g)   The rights and benefits of the Executive under this Agreement
may not be anticipated, assigned, alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process except as
required by law. Any attempt by the Executive to anticipate, alienate, assign,
sell, transfer, pledge, encumber or charge the same shall be void. Payments
hereunder shall not be considered assets of the Executive in the event of
insolvency or bankruptcy.

            (h)   This Agreement may be executed in several counterparts, each
of which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.

            (i)   The obligations of the Company and the Executive under
Sections 5, 6, 7, 8, 9, 10 and 11 shall survive the expiration or termination
for any reason of this Agreement.

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      IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its Board, the Company has caused this
Agreement to be executed in its name on its behalf, all as of the day and year
first above written.

                                   HPSC, INC.

                                   By: /s/ J. Kermit Birchfield
                                       ---------------------------------------
                                       J. Kermit Birchfield
                                       Chairman of the Compensation Committee
                                       of the Board of Directors

                                   /s/ John W. Everets
                                   -------------------------------
                                   EXECUTIVE

                                      -11-<PAGE>   1
                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

       THIS AGREEMENT by and between HPSC, Inc., a Delaware corporation (the
"Company"), and Raymond R. Doherty (the "Executive"), dated as of August 2,
1999.

                               W I T N E S S E T H

       WHEREAS, the Executive has served as President and Chief Operating
Officer of the Company since August 2, 1993, most recently pursuant to an
employment agreement dated August 2, 1996;

       WHEREAS, the Company wishes to provide for the continued employment by
the Company of the Executive, and the Executive wishes to continue to serve the
Company, on the terms and conditions set forth in this Agreement;

       NOW, THEREFORE, it is hereby agreed as follows:

       1.     EMPLOYMENT PERIOD. The Company shall employ the Executive, and the
Executive shall be an employee of the Company, on the terms and conditions set
forth in this Agreement, for a period (the "Employment Period") commencing on
the date hereof (the "Effective Date") and ending on the third anniversary of
the Effective Date; provided, however, that, on the third anniversary of the
Effective Date and each subsequent anniversary thereof (each of such third and
subsequent anniversaries, an "Extension Date"), the Employment Period shall
automatically be extended for one additional year unless, at least six months
prior to the applicable Extension Date, the Company or the Executive shall have
given notice not to extend this Agreement. The Employment Period shall end upon
the termination of the Executive's employment hereunder, as of the Date of
Termination (as defined in Section 4(d)).

       2.     SCOPE OF EMPLOYMENT. (a) Position. During the Employment Period,
the Executive shall continue to serve as President and Chief Operating Officer
of the Company, reporting to the Chairman and Chief Executive Officer. The
Executive shall adhere to policies established by the Board of Directors of the
Company (the "Board").

              (b)    DUTIES. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive shall devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive under this Agreement,
use the Executive's reasonable best efforts to carry out such responsibilities
faithfully and efficiently. It shall not be considered a violation of the
foregoing for the Executive to serve on corporate, industry, civic or charitable
boards or committees, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.

<PAGE>   2

              (c)    LOCATION. The Company's headquarters shall be located in
Boston, Massachusetts, and the Executive shall be based and reside in the
general area of Boston, except for reasonable travel obligations.

       3.     COMPENSATION. The Executive's compensation during the Employment
Period shall be determined by the Board upon the recommendation of the committee
of the Board having responsibility for approving the compensation of senior
executives (the "Compensation Committee"), subject to Sections 3(a) through
3(d).

              (a)    BASE SALARY. During the Employment Period, commencing on
the Effective Date, the Executive shall receive an annual base salary ("Base
Salary") as determined by the Compensation Committee from time to time.
Commencing January 1, 2000, the Executive's Base Salary shall be at a rate of
not less than $240,000. The Base Salary shall be payable in accordance with the
Company's regular payroll practice for its senior executives, as in effect from
time to time.

              (b)    INCENTIVE PLAN. The Compensation Committee has developed an
incentive compensation plan ("Incentive Plan") for key management employees. The
Incentive Plan is designed to pay the Executive up to One Hundred Percent (100%)
of his annual base salary for achieving the results established by the
Compensation Committee. The Executive shall be eligible to receive awards under
the Incentive Plan, as determined annually by the Compensation Committee.

              (c)    OTHER INCENTIVE COMPENSATION. During the Employment Period,
the Executive shall be eligible for additional awards under the Company's
Amended and Restated 1998 Stock Incentive Plan, as it may be amended from time
to time, or under any subsequent similar plans, as determined by the
Compensation Committee.

              (d)    OTHER BENEFITS. During the Employment Period, (i) the
Executive shall participate in all applicable savings and retirement plans,
practices, policies and programs of the Company that are from time to time
applicable to senior executives of the Company including the Company's Employee
Stock Ownership Plan and Supplemental Executive Retirement Plan; (ii) the
Executive and/or the Executive's eligible dependents, as the case may be, shall
be eligible for participation in, and shall receive all benefits under, all
applicable welfare benefit plans, practices, policies and programs provided by
the Company, including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life insurance, group life insurance,
accidental death and travel accident insurance plans and programs on the same
basis and subject to the same terms, conditions, cost-sharing requirements and
the like as senior executives of the Company; and (iii) the Executive shall be
entitled to receive fringe benefits on a basis not less favorable than provided
to other senior executives of the Company. Specifically, the Executive shall be
entitled to four (4) weeks of vacation annually and an appropriate vehicle
provided by the Company.

                                      -2-
<PAGE>   3
       4.     TERMINATION OF EMPLOYMENT. This Employment Agreement may be
terminated as provided in Sections 4(a) through 4(d). Termination pursuant to
any of Sections 4(a) through 4(d) is subject to the provisions of Section 5.

              (a)    DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death. The Company shall be
entitled to terminate the Executive's employment because of the Executive's
Disability (as defined in the Company's long-term disability insurance
policies). A termination of the Executive's employment by the Company for
Disability shall be communicated to the Executive by written notice, and shall
be effective on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), unless the Executive returns to full-time
performance of the Executive's duties before the Disability Effective Date.

              (b)    TERMINATION BY THE COMPANY. (i) FOR CAUSE. The Company may
terminate the Executive's employment for Cause at any time during the Employment
Period as follows.

                     (A)    "Cause" means the conviction of the Executive for
              the commission of a crime involving moral turpitude, or willful
              gross misconduct by the Executive in connection with his
              employment by the Company that results in material and
              demonstrable financial harm to the Company. No act or failure to
              act on the part of the Executive shall be considered "willful"
              unless it is done, or omitted to be done, by the Executive in bad
              faith or without reasonable belief that the Executive's action or
              omission was in the best interests of the Company. Any act or
              failure to act that is based upon authority given pursuant to a
              resolution duly adopted by the Board, or the advice of counsel for
              the Company, shall be conclusively presumed to be done, or omitted
              to be done, by the Executive in good faith and in the best
              interests of the Company. In the event of a dispute concerning the
              application of this provision, no claim by the Company that Cause
              exists shall be given effect unless the Company establishes to the
              Board by clear and convincing evidence that Cause exists.

                     (B)    A termination of the Executive's employment for
              Cause shall not be effective unless it is accomplished in
              accordance with the following procedures. The Company shall give
              the Executive written notice ("Notice of Termination for Cause")
              of its intention to terminate the Executive's employment for
              Cause, setting forth in reasonable detail the specific conduct of
              the Executive that it considers to constitute Cause and the
              specific provisions of this Agreement on which it relies, and
              stating the date, time and place of the Special Board Meeting for
              Cause. The "Special Board Meeting for Cause" means a meeting of
              the Board called and held specifically and exclusively for the
              purpose of considering the

                                      -3-
<PAGE>   4
              Executive's termination for Cause, that takes place not less than
              twenty nor more than thirty business days after the Executive
              receives the Notice of Termination for Cause. The Executive shall
              be given an opportunity, together with counsel, to be heard at the
              Special Board Meeting for Cause. The Executive's termination for
              Cause shall be effective when and if a resolution is duly adopted
              at the Special Board Meeting for Cause by the affirmative vote of
              three-quarters of the entire membership of the Board stating that,
              in the good faith opinion of the Board, the Executive is guilty of
              the conduct described in the Notice of Termination for Cause and
              that such conduct constitutes Cause under this Agreement.

                     (ii)   Without Cause. The Company may terminate the
       Executive's employment without cause at any time during the Employment
       Period.

              (c)    TERMINATION BY THE EXECUTIVE. (i) FOR GOOD REASON. The
Executive may terminate employment for Good Reason at any time during the
Employment Period as follows.

                     A.     "Good Reason" means:

                            I.     the assignment to the Executive of any duties
              or responsibilities inconsistent in any respect with those
              customarily associated with the position of President and Chief
              Operating Officer (including status, offices, titles and reporting
              requirements) or any other action by the Company that results in a
              diminution or other material adverse change in the Executive's
              position, authority, duties or responsibilities, other than an
              isolated, insubstantial and inadvertent action that is not taken
              in bad faith and is remedied by the Company promptly after receipt
              of notice thereof from the Executive;

                            II.    any failure by the Company to comply with any
              provision of Section 3 of this Agreement, other than an isolated,
              insubstantial and inadvertent failure that is not taken in bad
              faith and is remedied by the Company promptly after receipt of
              notice thereof from the Executive;

                            III.   any requirement by the Company that the
              Executive be principally based at any office or location more than
              25 miles from the Company's current offices in Boston,
              Massachusetts; or

                            IV.    any failure by the Company to comply with
              Section 11(c) of this Agreement;

                                      -4-
<PAGE>   5
                     (B)    For purposes of this Section 4(c), any reasonable
              determination of "Good Reason" made by the Executive shall be
              conclusive. A termination of employment by the Executive for Good
              Reason shall be effectuated by giving the Company written notice
              ("Notice of Termination for Good Reason") of the termination,
              setting forth in reasonable detail the specific conduct of the
              Company that constitutes Good Reason and the specific provision(s)
              of this Agreement on which the Executive relies. A termination of
              employment by the Executive for Good Reason shall be effective on
              the fifth business day following the date when the Notice of
              Termination for Good Reason is given, unless the notice sets forth
              a later date (which date shall in no even be later than 30 days
              after the notice is given).

                     (C)    The failure to set forth any fact or circumstance in
              a Notice of Termination for Good Reason shall not constitute a
              waiver of the right to assert, and shall not preclude the
              Executive from asserting, such fact or circumstance in an attempt
              to enforce any right under or provision of this Agreement.

                     (ii)   WITHOUT GOOD REASON. The Executive may terminate his
       employment without Good Reason at any time during the Employment Period
       by giving the Company written notice of the termination.

              (d)    DATE OF TERMINATION. The "Date of Termination" means the
date of the Executive's death, the Disability Effective Date, the date on which
the termination of the Executive's employment by the Company for Cause or
without Cause or by the Executive for Good Reason is effective, the date on
which the Executive gives the Company notice of a termination of his employment
without Good Reason, or the date of expiration of this Agreement, as the case
may be.

       5.     OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) BY THE COMPANY
OTHER THAN FOR CAUSE; UPON NON-RENEWAL BY THE COMPANY OR THE EXECUTIVE. Except
as provided in Section 6 below, if, during the Employment Period, the Company
terminates the Executive's employment for any reason, other than Cause or the
Executive's death or Disability; the Company or the Executive notifies the other
pursuant to Section 1 of its or his intent not to extend this Agreement; the
Company shall

                     (i)    continue to pay the Executive his Base Salary for a
       period of twelve months following the Date of Termination;

                     (ii)   pay the Executive twelve monthly payments, each
       equal to one-twelfth (1/12) of the maximum incentive compensation the
       Executive could have earned during the twelve months following the Date
       of Termination;

                                      -5-
<PAGE>   6

                     (iii)  continue benefits to the Executive and/or the
       Executive's family for a period of twelve months following the Date of
       Termination at least equal to those which would have been provided in
       accordance with the applicable health, medical, life, disability and
       other welfare benefit plans, programs, and practices described in Section
       3(d) as if the Executive's employment had not been terminated; and

                     (iv)   cause all of the Executive's outstanding equity
       awards, to the extent then unvested or forfeitable, to immediately and
       fully vest and, to the extent then not exercisable, to become immediately
       and fully exercisable.

              (b)    DEATH OR DISABILITY. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall

                     (i)    continue to pay to the Executive or, in the case of
              the Executive's death, to the Executive's designated beneficiaries
              (or, if there is no such beneficiary, to the Executive's estate or
              legal representative) the Executive's Base Salary for a period of
              six months following the Date of Termination; and

                     (ii)   continue benefits to the Executive and/or the
              Executive's family for a period of six months following the Date
              of Termination at least equal to those which would have been
              provided in accordance with the applicable health, medical, life,
              disability and other welfare benefit plans, programs, and
              practices described in Section 3(d) as if the Executive's
              employment had not been terminated.

                     (iii)  cause all of the Executive's outstanding equity
              awards, to the extent then unvested or forfeitable, to immediately
              and fully vest and, to the extent then not exercisable, to become
              immediately and fully exercisable.

              (c)    BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE FOR ANY REASON.
If the Executive's employment is terminated by the Company for Cause, or by the
Executive for any reason the Company's only obligation to the Executive will be
to pay any arrearages of salary or incentive compensation as of the Date of
Termination.

       6.     CHANGE OF CONTROL. Notwithstanding the provisions of Section 5 to
the contrary, in the event a Change in Control (as such term is defined in the
Company's 1998 Amended and Restated Stock Incentive Plan) occurs, the following
shall apply.

                                      -6-
<PAGE>   7
              (a)    If, during the three (3) year period following a Change in
Control, the Executive's employment is terminated by the Company for any reason
other than for Cause, if the Executive's employment is terminated by reason of
the Executive's death or Disability, or if the Executive terminates his
employment for Good Reason:

                     (i)    The Company shall pay the Executive in a lump sum
       payable within 30 days after the Date of Termination an amount equal to
       the average of his total compensation from the Company which was
       includable in the Executive's gross income for federal income tax
       purposes (as reported on IRS Form W-2) for each of the preceding five (5)
       calendar years ending before the date of the Change of Control multiplied
       by 2.99; provided, however, that the Executive may choose, in his
       discretion, to receive a lesser amount than he is entitled to receive
       under this Section 6(a)(i) if after consultation with the Compensation
       Committee he determines that it is in his best interests to accept a
       lesser amount;

                     (ii)   The Company shall cause all of the Executive's
       outstanding equity awards, to the extent then unvested or forfeitable, to
       immediately and fully vest and, to the extent then not exercisable, to
       become immediately and fully exercisable; and

                     (iii)  The Company shall continue benefits to the Executive
       and/or the Executive's family for a period of twelve months following the
       Date of Termination at least equal to those which would have been
       provided in accordance with the applicable health, medical, life,
       disability and other welfare benefit plans, programs, and practices
       described in Section 3(d) as if the Executive's employment had not been
       terminated.

              (b)    If, during the three (3) year period following a Change in
Control, the Executive terminates his employment for any reason other than for
Good Reason:

                     (i)    the Company shall continue to pay the Executive his
       Base Salary for the twelve (12) months following the Date of Termination
       and the Company shall pay the Executive twelve monthly payments, each
       equal to one-twelfth (1/12) of the maximum incentive compensation the
       Executive could have earned during the twelve (12) months following the
       Date of Termination; and

                     (ii)   The Company shall continue benefits to the Executive
       and/or the Executive's family for a period of twelve months following the
       Date of Termination at least equal to those which would have been
       provided in accordance with the applicable health, medical, life,
       disability and other welfare benefit plans, programs, and practices
       described in Section 3(d) as if the Executive's employment had not been
       terminated.

                                      -7-
<PAGE>   8
              (c)    If, during the three (3) year period following a Change in
Control, the Executive is terminated by the Company for Cause, the Company's
only obligation to the Executive will be to pay any arrearages of salary or
incentive compensation as of the Date of Termination.

       7.     NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies for which the Executive may qualify (including, but not limited to,
the Employee Stock Ownership Plan and the Supplemental Executive Retirement
Plan), nor shall anything in this Agreement limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Vested benefits and other amounts
that the Executive is otherwise entitled to receive under any plan, policy,
practice or program of, or any contract of agreement with, the Company or any of
its affiliated companies on or after the Date of Termination shall be payable in
accordance with the terms of each such plan, policy, practice, program, contract
or agreement, as the case may be, except as explicitly modified by this
Agreement.

       8.     FULL SETTLEMENT. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts shall
not be reduced, regardless of whether the Executive obtains other employment.

       9.     CONFIDENTIAL INFORMATION; NON-COMPETITION. (a) The Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies and their respective businesses that the Executive
obtains during the Executive's employment by the Company or any of its
affiliated companies and that is not public knowledge (other than as a result of
the Executive's violation of this Section 9) ("Confidential Information"). The
Executive shall not communicate, divulge or disseminate Confidential Information
at any time during or after the Executive's employment with the Company, except
with the prior written consent of the Company or as otherwise required by law or
legal process.

              (b)    If the Executive has terminated his employment for any
reason other than Good Reason, the Executive agrees not to compete with the
business of the Company or be employed by a competitor of the Company while the
Executive is receiving termination payments under Section 5.

       10.    INDEMNIFICATION; ATTORNEYS' FEES. The Company shall pay or
indemnify the Executive to the full extent permitted by law and the by-laws of
the

                                      -8-
<PAGE>   9
Company for all expenses, costs, liabilities and legal fees which the Executive
may incur in the discharge of his duties hereunder. The Company also agrees to
pay, as incurred, to the fullest extent permitted by law, or indemnify Executive
if such payment is not legally permitted, for all legal fees and expenses that
the Executive may in good faith incur as a result of any contest by the Company,
the Executive or others of the validity or enforceability of or liability under,
or otherwise involving, any provision of this Agreement, upon receipt of the
Executive's undertaking to repay any such amount advanced if the Company
prevails upon the final disposition of such action.

       11.    SUCCESSORS. (a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

              (b)    This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.

              (c)    The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "the Company" shall mean
both the Company as defined above and any such successor that assumes and agrees
to perform this Agreement, by operation of law or otherwise.

       12.    MISCELLANEOUS. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts,
without reference to its principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.

              (b)    All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

                                    If to the Executive:

                                    Raymond R. Doherty
                                    242 Cross Street
                                    Belmont, Massachusetts 02178

                                      -9-
<PAGE>   10
                                    If to the Company:

                                    HPSC, Inc.
                                    60 State Street
                                    Boston, Massachusetts 02109

or to such other address as either party furnishes to the other in writing in
accordance with this Section 12(b). Notices and communications shall be
effective when actually received by the addressee.

              (c)    The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.

              (d)    Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.

              (e)    The Executive's or the Company's failure to insist upon
strict compliance with any provisions of, or to assert any right under, this
Agreement (including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to paragraph (c) of Section 4)
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.

              (f)    The Executive and the Company acknowledge that this
Agreement supersedes any other agreement between them concerning the subject
matter hereof.

              (g)    The rights and benefits of the Executive under this
Agreement may not be anticipated, assigned, alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process except as
required by law. Any attempt by the Executive to anticipate, alienate, assign,
sell, transfer, pledge, encumber or charge the same shall be void. Payments
hereunder shall not be considered assets of the Executive in the event of
insolvency or bankruptcy.

              (h)    This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument.

              (i)    The obligations of the Company and the Executive under
Sections 5, 6, 7, 8, 9, 10 and 11 shall survive the expiration or termination
for any reason of this Agreement.

                                      -10-
<PAGE>   11

              IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization of its Board, the Company has caused
this Agreement to be executed in its name on its behalf, all as of the day and
year first above written.

                                    HPSC, INC.

                                    By: /s/ John W. Everets
                                        --------------------------------------
                                        John W. Everets
                                        Chairman of the Board and Chief
                                        Executive Officer

                                    /s/ Raymond R. Doherty
                                    --------------------------------------
                                    EXECUTIVE

                                      -11-

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