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                                                                     Exhibit 10E

                              EMPLOYMENT AGREEMENT
                              --------------------


          EMPLOYMENT AGREEMENT ("Agreement") made and entered into as of the 1st
day of February, 1997, by and between THE REYNOLDS AND REYNOLDS COMPANY, a
corporation existing under the laws of the State of Ohio ("Reynolds"), and
RODNEY A. HEDEEN ("Hedeen").

                              W I T N E S S E T H:

         WHEREAS, Hedeen is now President of the Business Systems Division of
Reynolds; and 

         WHEREAS, Reynolds desires to retain Hedeen's services and has offered
him substantial inducements so that he would deem continued employment by
Reynolds beneficial to him and to provide him reasonable employment security and
economic protection; and

         WHEREAS, Hedeen is willing to accept the same and continue in the
employ of Reynolds;

         NOW THEREFORE, in consideration of the foregoing premises and of the
mutual promises set forth below, Reynolds and Hedeen hereby agree as follows:

1.       DEFINITIONS.

         For purposes of this Agreement, the terms set forth below shall have
the following meanings:

         (a) "Annual Compensation Value" shall mean Hedeen's then-current Base
Compensation plus an amount equal to the average of all Bonuses (excluding any
compensation attributable to stock options of any type granted by Reynolds)
earned by Hedeen during the three (3) calendar years preceding the date upon
which the valuation is made.

         (b) "Base Compensation" shall mean the then-current annual base salary
(exclusive of Bonuses) of Hedeen.


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         (c) "Bonuses" shall mean bonus payments earned by Hedeen under
Reynolds' Incentive Compensation Plans and under any future bonus or incentive
compensation plans of Reynolds for its executive officers.

         (d) "Change in Control" shall mean the occurrence of any of the
following:

             (i) Any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
than Richard H. Grant, Jr., his children or his grandchildren, Reynolds, any
trustee or other fiduciary holding securities under an employee benefit plan of
Reynolds, or any company owned, directly or indirectly, by the shareholders of
Reynolds in substantially the same proportions as their ownership of stock of
Reynolds), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of Reynolds
representing fifty percent (50%) or more of the combined voting power of
Reynolds' then outstanding securities;

             (ii) during any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, any new director (other than a
director designated by a person who has entered into an agreement with Reynolds
to effect a transaction described in clause (i), (iii) or (iv) of this Section
whose election by the Board or nomination for election by Reynolds' shareholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election was previously so approved) cease for any reason to constitute at least
a majority thereof;

             (iii) the shareholders of Reynolds approve a merger or
consolidation of Reynolds with any other company, other than (1) a merger or
consolidation which would result in the voting


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securities of Reynolds outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the
combined voting power of the voting security of Reynolds or such surviving
entity outstanding immediately after such merger or consolidation or (2) a
merger or consolidation effected to implement a recapitalization of Reynolds (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than fifty percent (50%) of the combined voting power of Reynolds' then
outstanding securities; or

             (iv) the shareholders of Reynolds approve a plan of liquidation,
dissolution or winding up of Reynolds or an agreement for the sale or
disposition by Reynolds of all or substantially all of Reynolds' assets.

         (e) "Discharge For Cause" shall be construed to have occurred whenever
occasioned by reason of felonious acts on the part of Hedeen, actions by Hedeen
involving serious moral turpitude or his misconduct in such manner as to bring
substantial and material discredit upon Reynolds, following the giving of thirty
(30) days' written notice to Hedeen specifying the respect in which Reynolds
claims Hedeen has violated this provision and the failure, inability or
unwillingness of Hedeen to remedy the situation to the satisfaction of Reynolds
within said thirty-day period. In establishing whether a Discharge For Cause
shall have occurred, the standard for judgment shall be the level of conduct by
Hedeen and by other comparably situated executive officers prior to the alleged
improper activity of Hedeen for which the Discharge For Cause has been made.

         (f) "Escrow Agreement" shall mean the agreement dated entered into
simultaneously herewith between Reynolds and Bank One, Dayton, NA, a copy of
which is attached hereto and made a part hereof as Exhibit A.


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         (g) "Escrow Agent" shall mean Bank One, Dayton, NA.

         (h) "Escrow Amount" shall mean the amounts placed in escrow by Reynolds
pursuant to subsection (e)(iii) of Section 5 of this Agreement.

         (i) "Escrow Funding Event" shall mean the occurrence of any of the
following events:

             (i) Class A Common Shares of Reynolds have been acquired other than
directly from Reynolds in exchange for cash or property by any person (other
than Richard H. Grant, Jr., his children or his grandchildren, Reynolds, any
trustee or other fiduciary holding securities under an employee benefit plan of
Reynolds, or any company owned directly or indirectly by the shareholders of
Reynolds in substantially the same proportions as their ownership of the stock
of Reynolds) who either thereby becomes the owner of more than nine and one half
percent (9.5%) of Reynolds' outstanding Class A Common Shares, or having
directly or indirectly become the owner of more than five percent (5%) of
Reynolds' Class A Common Shares either alone or in conjunction with another
person has expressed an intent to continue acquiring Reynolds' outstanding Class
A Common Shares so as to become thereby the owner of more than nine and one-half
percent (9.5%) of such stock either directly or indirectly;

             (ii) Any person (other than Richard H. Grant, Jr., his children or
grandchildren, Reynolds, any trustee or other fiduciary holding securities under
an employee benefit plan of Reynolds, or any company owned directly or
indirectly by the shareholders of Reynolds in substantially the same proportions
as their ownership of stock of Reynolds) has made a tender offer for, or a
request for invitations for tenders of, Class A Common Shares of Reynolds.

             (iii) Any person forwards or causes to be forwarded to shareholders
of Reynolds proxy statement(s) in any period of twenty-four (24) consecutive
months, soliciting proxies, to elect


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to the Board of Reynolds two (2) or more candidates who were not nominated as
candidates in proxy statements forwarded to shareholders during such period by
the Board; or

             (iv) The Board adopts a resolution to the effect that, for purposes
of this Agreement, an Escrow Funding Event has occurred.

         (j) "Final Annual Compensation" shall mean Hedeen's Base Compensation
at the time of termination of employment plus an amount equal to the average of
all Bonuses (excluding any compensation attributable to stock options of any
type granted by Reynolds) earned by Hedeen during the three (3) calendar years
preceding his termination of employment.

         (k) "Final Average Annual Compensation" shall mean the average of
Hedeen's Base Compensation and Bonuses (excluding any compensation attributable
to stock options of any type granted by Reynolds) as determined for the five (5)
consecutive calendar years of the last ten (10) calendar years preceding and
including the calendar year in which Hedeen's employment terminates which yields
the highest sum.

         (l) "Pension Plan" shall mean the existing Reynolds and Reynolds
Company Non-Union Pension Plan, as the same may be amended from time to time.

         (m) "Supplemental Plan" shall mean Reynolds' existing Supplemental
Retirement Plan, as the same may be amended from time to time.

2.       TERMS AND DUTIES.

         (a) The term of this Agreement shall continue from the date hereof and
end on February 1, 2001, unless extended in accordance herewith. Hedeen shall
continue in the employ of Reynolds as President of the Business Systems Division
or such other substantially equivalent position designated by the Board,
consistent with the provisions of this Agreement. In addition, 


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Hedeen agrees to perform such other duties as may be specifically designated for
him from time to time by the Board, consistent with the provisions of this
Agreement. Subject to Hedeen's willingness to so extend his employment, Reynolds
may extend the term of this Agreement for additional renewal periods of one (1)
year each by giving written notice thereof not less than twelve (12) months
prior to February 1, 2001, initially and not less than twelve (12) months prior
to each succeeding February 1st thereafter.

         (b) At all times Hedeen will, to the best of his ability, energy and
skill, faithfully perform all of the duties that may be required of him from
time to time by the Board and diligently devote his entire working time,
attention and efforts to the business affairs and best interests of Reynolds,
except for absences for sickness and vacations. If the Board determines that any
outside activity engaged in by him is detrimental to the best interests of
Reynolds, he will discontinue such outside activity within thirty (30) days
after written notice from the Board.

         (c) For a period of two (2) years from and after Hedeen's employment
with Reynolds shall have terminated (provided, however, in the event of
termination of Hedeen's employment due to Reynolds' decision not to renew this
Agreement the period shall be one (1) year) and after he shall have ceased
receiving severance or disability benefits under this Agreement, whichever shall
last occur, and during the period of his employment by Reynolds, he will not,
directly or indirectly, further the affairs of any other corporation,
partnership, or any business enterprise by employment 



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of any kind (except as otherwise permitted under Section 6(d) below), counseling
or otherwise, if the same is in competition with Reynolds, without the written
consent of the Board. This provision, however, shall not be construed to prevent
him from pursuing personal investments in any business or enterprise which is
not in competition with Reynolds and which do not interfere with his employment
and the performance of his duties to Reynolds hereunder.

3.       COMPENSATION AND FRINGE BENEFITS.

         (a) The Base Compensation of Hedeen during the term of this Agreement
shall be $250,000, which may be increased from time to time by the Board or, in
the case of any proposed decrease, such other amount as mutually may be agreed
upon by Hedeen and Reynolds; provided, however, that such Base Compensation may
not be reduced below said rate of $250,000 without Hedeen's consent, unless
necessitated by general business conditions adversely affecting Reynolds'
operations; but, in the event of a reduction, his Base Compensation shall be
fair and reasonable, and any disagreement concerning the same shall be resolved
by arbitration in the manner provided in Section 7 below. Hedeen's Base
Compensation shall be reviewed at least annually to determine whether in view of
Reynolds' performance during the year any increase is warranted. Responsibility
for this determination rests within the sole discretion of the Board, and this
provision shall not be construed as requiring any such increase for any given
year.

         (b) Hedeen shall continue his participation in the existing bonus plan
arrangements under the Incentive Compensation Plans (or their equivalent) for
executive officers of Reynolds and shall be entitled to such awards under any
future bonus, incentive, or similar compensation plans of Reynolds, as shall, in
the determination of the Board, be appropriate and consistent with the purposes
of such plans and with the awards granted to other executive officers of
Reynolds.


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         (c) Hedeen shall continue to be eligible for participation in the Stock
Option Plan - 1995 of Reynolds and shall be entitled to the grant of such
options to purchase shares of Class A Common Stock of Reynolds under any other
future stock option plans for employees and to participate in such other
executive compensation incentive plans awarding stock as shall, in the
determination of the Board, be appropriate and consistent with the purposes of
the plans and with the grants of such options to the executive officers of
Reynolds.

         (d) In addition to the specific benefits provided for Hedeen under the
terms of this Agreement, Reynolds shall provide him with other fringe benefits
(including bonuses, vacations, health and disability insurance, pension plan
participation and others) at least equivalent to those of the other executive
officers of Reynolds and as set forth on Exhibit B attached hereto and made a
part hereof. 

4. EXPENSES.

         Hedeen shall be reimbursed for his reasonable business-related expenses
incurred for the benefit of Reynolds in accordance with Reynolds' policies
governing such reimbursement in effect from time to time. Such expenses shall
include, but shall not be limited to, travel, lodging away from home,
entertainment, and meals. With respect to any expenses which are reimbursed by
Reynolds to Hedeen, Hedeen shall account to Reynolds in sufficient detail to
entitle Reynolds to a federal income tax deduction for such reimbursed item if
such item is deductible.

5.       TERMINATION; DISCHARGE.

         (a) TERMINATION OR DISCHARGE WITHOUT CAUSE. Reynolds reserves the right
to discharge Hedeen at any time and for any reason and not to renew this
Agreement; but such non-renewal or discharge, unless a Discharge For Cause,
shall not extinguish the obligation of Reynolds to provide


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Hedeen (and, in the event of his prior death, his designated beneficiary or
beneficiaries or his estate) with the following severance benefits:

             (i) If Reynolds does not renew this Agreement, Hedeen shall be
entitled to receive for a period expiring one (1) year from February 1, 2001 (or
any renewal thereof) payments from Reynolds in an amount equal to his Annual
Compensation Value.

             (ii) If such discharge occurs prior to February 1, 2001, Hedeen
shall be entitled to receive for a period expiring two (2) years from the date
of discharge, payments from Reynolds in an amount equal to his Annual
Compensation Value.

             (iii) Hedeen shall be entitled, during the period expiring on the
earlier of Hedeen's securing other employment or two (2) years from the date of
discharge (or such longer period as required by law), to continuing coverage
under the then-existing Reynolds-sponsored medical benefits program, which, at
the option of Reynolds, may be provided outside of such program through the
purchase of insurance or otherwise.

             (iv) For purposes of determining Hedeen's benefits under the
Supplemental Plan, Hedeen shall receive credit toward his Years of Service under
the Supplemental Plan for the time period that he receives or is entitled to
receive payments under subsections (i) or (ii) of this Section 5(a). In
addition, during the time period that he receives or is entitled to receive
payments under said subsections (i) or (ii) of this Section 5(a), Hedeen's Base
Compensation shall be deemed to be increased by the annual economic range
adjustment for Reynolds' salaried employees announced in October of each year
(or, if there is no such announced economic range adjustment in a given year, by
an assumed five (5%) increase for that year) in order to calculate his highest
earnings during five (5) consecutive years out of the last ten (10) years prior
to retirement under the Supplemental Plan,


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and his Final Annual Compensation (see Section 5(d) below) and Final Average
Annual Compensation shall be deemed to increase in the same manner for purposes
of determining the amount of his Retirement Benefits under this Agreement.

             (v) Hedeen shall be reimbursed for up to $20,000 for out-placement
fees if he chooses to seek other employment following his discharge by Reynolds.
Hedeen shall not be obligated to seek other employment in order to mitigate his
damages resulting from his discharge.

             Hedeen acknowledges that he shall remain subject to and bound by
the restrictive provisions of Section 6 below.

         (b) DISCHARGE FOR CAUSE. If Hedeen's employment with Reynolds is
terminated by a Discharge For Cause, regardless of whether such Discharge For
Cause occurs after the occurrence of any of the events set forth in Sections
5(d) or 5(e) below, he shall be entitled to receive only his Base Compensation
up to the date of his discharge and no further payments hereunder shall be
required from Reynolds; provided, however, that Hedeen shall be entitled to
receive his benefits, if any, under the Pension Plan and the Supplemental Plan
to the extent applicable. Hedeen shall remain subject to the restrictive
provisions of Section 6 below for a period for two (2) years from the date of
discharge. Should Hedeen disagree that his discharge was a Discharge For Cause
the question shall be submitted to arbitration in accordance with Section 7
below.

         (c) TERMINATION DUE TO DISABILITY OR DEATH. If, by reason of illness,
disability, or other incapacity certified by two (2) physicians competent to do
so in the opinion of the Board, Hedeen is unable to perform the duties required
of him under this Agreement for a period of six (6) consecutive months,
Reynolds, following the giving of thirty (30) days' written notice to Hedeen and
the failure of Hedeen by reason of illness, disability, or other incapacity to
resume his duties within 


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such thirty (30) days and thereafter perform the same for a period of two (2)
consecutive months, may terminate Hedeen's employment by giving Hedeen written
notice thereof; and in that event all obligations of Reynolds hereunder shall
cease on the date such notice of termination is given except for disability
benefits, including medical benefits, to which Hedeen may then be entitled by
virtue of his participation in any Reynolds' sponsored programs then in effect.
Similarly, upon his death, all obligations of Reynolds hereunder shall cease
except for any death benefits to which Hedeen (or his beneficiaries) may be
entitled by virtue of his participation in any Reynolds' sponsored programs then
in effect.

         (d) BENEFITS UPON TERMINATION UNDER CERTAIN CIRCUMSTANCES. If Hedeen
voluntarily terminates his employment or Hedeen is discharged by Reynolds and
such discharge is not a Discharge For Cause, and if such voluntary termination
or involuntary discharge takes place within eighteen (18) months after the
occurrence of any of the following events:

             (i) Hedeen is required by Reynolds, prior to a Change in Control,
to perform duties or services which differ significantly from those performed by
him on the effective date hereof, or which are not ordinarily and generally
performed by a President of a division or corporation similar in size and scope
to the Reynolds Business Systems Division; or

             (ii) The nature of the duties or services which Reynolds, prior to
a Change in Control, requires him to perform necessitates absence overnight from
his place of residence on the effective date hereof, because of travel involving
the business or affairs of Reynolds, for more than ninety (90) days during any
period of twelve (12) consecutive months; Hedeen shall be entitled to receive
from Reynolds all of the severance benefits set forth in Section 5(a) above,
except that severance payments shall be made until the later of the end of the
term of this Agreement or two (2)


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years from the date of his termination of employment. Hedeen shall remain
subject to and bound by the restrictive provisions of Section 6 below.

         (e) BENEFITS UPON A CHANGE IN CONTROL. Reynolds recognizes that the
threat of a Change in Control would be of significant concern to Hedeen. The
following provisions provide termination protection for Hedeen in the event of a
Change in Control. These provisions, among other purposes, are intended to
foster and encourage Hedeen's continued attention and dedication to his duties
in the event of such potentially disturbing and disruptive circumstances.
Reynolds, therefore, agrees to do the following:

             (i) If Reynolds terminates Hedeen's employment for any reason other
than a Discharge for Cause, or if Hedeen terminates his employment with Reynolds
voluntarily for any reason other than disability or retirement within the
twenty-four (24) month period following a Change in Control, Hedeen shall be
entitled to receive from Reynolds the following benefits:

                (A) A lump sum severance payment (the "Severance Payment"), in
cash, equal to three (3) times the sum of (i) the higher of Hedeen's annual Base
Compensation in effect immediately prior to the occurrence of the event or
circumstance upon which such termination of employment is based or in effect
immediately prior to the Change in Control, and (ii) the average of Hedeen's
Bonuses during the three (3) calendar years immediately preceding the year in
which the date of termination occurs.

                (B) Hedeen shall be entitled, during the period expiring on the
earlier of Hedeen's securing other employment or twenty-four (24) months from
the date of such termination of employment (or such longer period as required by
law), to continued coverage under the Reynolds sponsored medical benefits
program in existence on such date of termination or, if such continued


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coverage is barred, Reynolds shall provide equivalent medical benefit coverage
through the purchase of insurance or otherwise.

                (C) For purposes of determining Hedeen's benefits under the
Supplemental Plan, Hedeen shall receive credit toward his Years of Service under
the Supplemental Plan for the two (2) year period following such termination of
employment. In addition, with respect to the two (2) year period following such
termination of employment, Hedeen's Base Compensation shall be deemed to be
increased by the annual economic range adjustment for Reynolds' salaried
employees announced in October of each year (or, if there is no such announced
economic range adjustment in a given year, by an assumed five percent (5%)
increase for that year) in order to calculate his highest earnings during five
(5) consecutive years out of the last ten (10) years prior to retirement under
the Supplemental Plan.

                (D) Hedeen shall be reimbursed for up to $20,000 for
outplacement fees if he chooses to seek other employment following his discharge
by Reynolds. Hedeen shall not be obligated to seek other employment in order to
mitigate his damages resulting from his discharge.

             The benefits provided in this Section 5(e) shall be in lieu of any
benefits provided under Section 5(d) of this Agreement.

             (ii) Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by Hedeen in
connection with a Change in Control or the termination of Hedeen's employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with Reynolds, any person whose actions result in a Change in
Control or any person affiliated with Reynolds or such person) (all such
payments and benefits, including the Severance Payment, being hereinafter called
"Total Payments") would be subject (in


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whole or part), to an excise tax pursuant to Sections 280G and 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (such tax hereinafter
referred to as the "Excise Tax"), then the Severance Payment shall be reduced to
the extent necessary so that no portion of the Total Payments is subject to
Excise Tax (after taking into account any reduction in the Total Payments
provided by reason of Section 280G of the Code in such other plan, arrangement
or agreement) if (A) the net amount of such Total Payments, as so reduced, (and
after deduction of the net amount of federal, state and local income tax on such
Total Payments), is greater than (B) the excess of (i) the net amount of such
Total Payments, without reduction (but after deduction of the net amount of
federal, state and local income tax on such Total Payments), over (ii) the
amount of Excise Tax to which Hedeen would be subject in respect of such Total
Payments. For purposes of determining whether and the extent to which the Total
Payments will be subject to the Excise Tax, (i) no portion of the Total Payments
the receipt or enjoyment of which Hedeen shall have effectively waived in
writing prior to the date of this termination of employment shall be taken into
account, (ii) no portion of the Total Payments shall be taken into account which
in the opinion of tax counsel selected by Reynolds does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code,
(including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating
the Excise Tax, no portion of such Total Payment shall be taken into account
which constitutes reasonable compensation for services actually rendered, within
the meaning of Section 280G(b)(4)(B) of the Code, in excess of the base amount
as defined in Section 280G(b)(3) of the Code allowable to such reasonable
compensation, and (iii) the value of any non-cash benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
Reynolds in accordance with the principles of Sections 280G(d)(3) and (4) of the
Code. Prior to the fifth day following the date of


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Hedeen's termination of employment, Reynolds shall provide Hedeen with its
calculation of the amounts referred to in this Section and such supporting
materials as are reasonably necessary for Hedeen to evaluate Reynolds'
calculations. If Hedeen objects to Reynolds' calculations, he shall notify
Reynolds of his objections prior to the initial payment date set forth in
Section 8(e)(vi) hereof, and Reynolds shall pay to Hedeen such portion of the
Severance Payment (up to one hundred percent (100%) thereof) as Hedeen
determines is necessary to result in Hedeen's receiving the greater of clauses
(A) and (B) of this Section.

             (iii) Upon the occurrence of an Escrow Funding Event, Reynolds
shall pay into an escrow account at the Escrow Agent an amount equal to three
(3) times the sum of (i) Hedeen's Base Compensation in effect immediately prior
to the Escrow Funding Event and (ii) the average of Hedeen's Bonuses during the
three (3) calendar years immediately preceding the year in which the Escrow
Funding Event occurs. Subsequent to the delivery to the Escrow Agent of the
Escrow Amount, Reynolds shall, in the event that either Hedeen's Base
Compensation is increased (or decreased) or he receives a Bonus that affects the
amount described in Section 5(e)(i)(A), unless the Escrow Amount shall
theretofore have been released pursuant to this subsection, recalculate the
Escrow Amount as of the date such change in Base Compensation or receipt of
Bonus occurs, treating the Escrow Funding Event as having occurred on such date.
If the amount so calculated exceeds the fair market value of the Escrow Amount,
Reynolds shall promptly (and in no event later than seven (7) days from such
date) pay to the Escrow Agent an amount in cash (or marketable securities or any
combination thereof) equal to such excess. If the Escrow Amount so calculated is
less than the fair market value of the Escrow Amount then held in the escrow
account, the Escrow Agent, upon receipt of a written request from Reynolds,
shall distribute to Reynolds such difference


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in cash; provided, however, that this sentence shall not apply after the
occurrence of a Change in Control.

             (iv) Unless the parties otherwise agree, Reynolds may withdraw the
Escrow Amount when and only when two (2) years have expired from the date of
deposit and no proper demand pursuant to Section 5(e)(vi) below has been made
during the time, or when the conditions requiring the deposit have ceased to
exist for a period of ninety (90) days without a demand right having been
created, or when Hedeen's right to a payment under this Section 5(e) has been
forfeited, whichever occurs first. If, before the expiration of such period or
forfeiture, there shall occur another Escrow Funding Event, Reynolds will not be
required to make an additional deposit, but the two (2) year period shall then
be measured from the date of the last such event. Notwithstanding a deposit with
the Escrow Agent pursuant to subsection (iii) of this Section 5(e), Hedeen shall
continue to be entitled to receive all of the benefits from Reynolds under this
Agreement until a termination of employment shall occur.

             (v) Reynolds shall pay the charges of the Escrow Agent for its
services under the Escrow Agreement, and Reynolds will be entitled to any
interest or other income arising from the date of the deposit of the Escrow
Amount until all payments have been made under the Escrow Agreement to Hedeen.
All interest or other income arising from the Escrow Amount deposited with the
Escrow Agent shall be paid monthly to Reynolds.

             (vi) If Reynolds terminates Hedeen's employment for any reason but
a Discharge for Cause, or if Hedeen terminates his employment with Reynolds
voluntarily for any reason other than disability or retirement within the
twenty-four (24) month period following the date of a Change in Control, the
Escrow Agent, upon written demand made on or after the tenth (10th) day
following


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such termination of employment, shall pay the Escrow Amount in accordance with
this Section and Hedeen shall no longer be subject to the restrictive provisions
of Section 6 below, except for Section 6(e). Hedeen shall notify the Escrow
Agent prior to the tenth (10th) day following his termination of employment as
to whether he has accepted the determination of Reynolds of the amount of the
Severance Payments pursuant to Section 5(e)(iii). If he has accepted such
determination, Reynolds shall provide the Escrow Agent with Reynolds' written
determination as set forth in Section 5(e)(iii) and the Escrow Agent shall pay
to Hedeen all or a portion of the Escrow Amount as provided in such
determination, and any remaining amount shall be paid to Reynolds. If Hedeen
does not accept Reynolds' determination, Hedeen shall provide to the Escrow
Agent his determination of the Severance Payment, and the Escrow Agent shall pay
to Hedeen all or a portion of the Escrow Amount as provided in Hedeen's
determination and any remaining amount shall be paid to Reynolds.

             (vii) In the event that, following the creation of a demand right
pursuant to Section 5(e)(vi) above, Hedeen incurs any costs or expenses,
including attorneys' fees, in the enforcement of rights under this Section 5(e)
or under any plan for the benefit of employees of Reynolds, including without
limitation the stock option plan, pension plans, payroll-based stock ownership
plan, tax deferred savings and protection plan, bonus arrangements, supplemental
pension plan, deferred compensation agreements, incentive compensation plans,
and life insurance and compensation program, then, unless Reynolds or the
consolidated, surviving or transferee entity in the event of a consolidation,
merger or sale of assets, is wholly successful in defending against the
enforcement of such rights, Reynolds, or such consolidated, surviving or
transferee entity, shall promptly pay to Hedeen all such costs and expenses.


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6. NON-COMPETITION; CONFIDENTIALITY.

         (a) In order to protect Reynolds, it is understood that a covenant not
to compete is a necessary and appropriate adjunct to the other provisions of
this Agreement. Therefore, should Hedeen at any time determine prior to the
expiration of this Agreement that he does not desire to remain an employee of
Reynolds and shall terminate his employment for any reason other than the
grounds specified in Section 5(e) above, or should he be Discharged For Cause by
Reynolds, Hedeen shall remain subject to the restrictive provisions hereinafter
set forth. In addition, these restrictive provisions shall remain in full force
and effect at any other time during which payments are required to be made by
Reynolds pursuant to the severance or disability provisions (Section 5) of this
Agreement. These restrictive provisions are as follows:

         (b) For a period of two (2) years from and after Hedeen's employment
with Reynolds shall have terminated (provided, however, in the event of
termination of Hedeen's employment due to Reynolds' decision not to renew this
Agreement the period shall be one (1) year) and after he shall have ceased
receiving severance or disability benefits under this Agreement, whichever shall
last occur, he shall not, directly or indirectly, compete with Reynolds or any
of its related or affiliated companies. For purposes of this Agreement,
competition with Reynolds or any of its related or affiliated companies shall
include the manufacture, distribution, and sale of business forms and computer
hardware and software and the furnishing of EDP services which are similar in
nature or function to the products and/or services then being furnished by
Reynolds for sale in the same vertical markets in which Reynolds' products
and/or services are then being marketed at the time of Hedeen's termination of
employment or upon the cessation of any retirement, severance or disability
benefits under this Agreement.


                                                                              18
<PAGE>   19

         (c) From and after the execution of this Agreement and for a period of
two (2) years after termination (provided, however, in the event of termination
of Hedeen's employment due to Reynolds' decision not to renew this Agreement the
period shall be one (1) year) of his employment with Reynolds and after he shall
have ceased receiving severance or disability benefits under this Agreement,
whichever shall last occur, Hedeen shall not, directly or indirectly, by direct
participation, by purchase of stocks or bonds or other evidences of
indebtedness, by loaning of money, by guarantee of loans of others, by gift to
establish or assist others, or in any other manner or fashion, engage in any
such restricted activity in competition with Reynolds or any of its related or
affiliated companies, nor shall he assist any present employees of Reynolds or
any other person similarly to engage in such competing business for the full
two-year prohibition period set forth in this Agreement.

         (d) The restrictive provisions of this Section 6, however, are in no
way intended to prohibit Hedeen from acquiring in open market transactions
investments in equity stock or evidences of indebtedness of a corporation if the
said stock or if the said evidence of indebtedness is traded on a national or
regional securities exchange or in the over-the-counter market and the
investment therein represents no more than five percent (5%) of the outstanding
securities of the issue being acquired. Moreover, it is not the intention of
this Section 6 to limit in any way Hedeen's ability to invest in businesses not
competitive with Reynolds.

         (e) Hedeen shall keep secret and inviolate all knowledge or information
of a confidential nature (which is not then nor later, through no breach of this
Agreement, in the public domain), including all unpublished matters related to,
without limitation thereof, the business, properties, accounts, books and
records, research and development information, processes, procedures, products,


                                                                              19
<PAGE>   20

know-how, trade secrets, memoranda, devices, suppliers, and customers of
Reynolds which he may now know or hereafter come to know as a result of his
affiliation in business with Reynolds.

         (f) All copyrights, improvements, discoveries and inventions and all
claims, interest and rights thereto relating to any part of the business of
Reynolds conceived, developed or made by Hedeen, either alone or with others,
during the period of his employment, and whether conceived, developed or made
during his regular working hours or at any other time during such period, shall
be and are the sole property of Reynolds and Hedeen hereby assigns to Reynolds
all right, title and interest in and to such copyrights, improvements,
discoveries and inventions. Further, Hedeen will, at any time in the future upon
Reynolds' request, execute specific assignments of any said copyrights,
improvements, discoveries and inventions as well as execute all documents and
perform all lawful acts which Reynolds deems necessary or advisable to vest full
ownership thereof in Reynolds, to register same in the name of Reynolds or its
designee or otherwise to provide legal protection for Reynolds' ownership
interests therein.

         (g) This Agreement shall be without geographical limitation in
continental North America and, in addition, in any other areas of the world in
which Reynolds or any of its related or affiliated companies shall be doing
business at the time of the proposed competing entry into business by Hedeen, it
being agreed that the contacts of Hedeen and the potential scope of operation of
Reynolds is without any limitation within the area of prohibition. Any violation
of this covenant may be enforced by specific performance in any court of
competent jurisdiction within the area of limitation imposed by this provision.
If any court of competent jurisdiction shall determine that either the period or
the territory covered by this provision against competition in unreasonable,
said 


                                                                              20
<PAGE>   21

provision shall not be determined to be null, void, and of no effect but shall
be reformed by said court to impose a reasonable period or a reasonable
geographical limitation, as the case may be.

7.       RESOLUTION OF DISPUTES; ARBITRATION.

         (a) Except for the breach or threatened breach by Hedeen of the
noncompetition provisions of this Agreement which may be enforced by appropriate
injunctive relief at the option of Reynolds, any dispute or controversy arising
out of or relating to this Agreement, including, but not limited to, whether
Hedeen has been Discharged for Cause, shall be submitted to and settled by
arbitration in Dayton, Ohio in accordance with the rules then pertaining of the
American Arbitration Association.

         (b) Should Hedeen disagree that his determination was due to a
Discharge for Cause, the question shall, within thirty (30) days after the
termination, be submitted to arbitration by three (3) arbitrators, one of whom
shall be selected by Reynolds, another of whom shall be selected by Hedeen, and
the third of whom shall be selected by the two arbitrators so appointed. The
decision of these arbitrators on the question shall be final and conclusive upon
Reynolds and upon Hedeen and his wife or widow, personal representatives,
designated beneficiaries and heirs, and shall be enforceable in any court having
competent jurisdiction thereof. A discharge which is eventually determined under
arbitration to have been a Discharge for Cause, or no arbitration having been
requested and the discharge being one which Reynolds had determined was for a
Discharge for Cause, shall extinguish any and all liability of Reynolds under
this Agreement from and after the date of termination.

         (c) The arbitrators for all other disputes or controversies under this
Agreement shall be selected as set forth above and the parties shall select the
arbitrators within thirty (30) days after


                                                                              21
<PAGE>   22

demand from Hedeen or Reynolds to the other to settle matters by arbitration. As
stated above, the decision of the arbitrators shall be final and conclusive.

8.       NONASSIGNABLE RIGHTS.

         Hedeen, his wife, or his widow after his death, or his personal
representatives, designated beneficiaries and heirs, shall not have the right to
anticipate or commute, or to sell, assign, transfer, or otherwise alienate or
convey the right to receive any payments hereunder, whether by his, her or their
voluntary or involuntary act, or by operation of law and, in particular, that
any payments due hereunder shall not be subject to attachment or garnishment or
any other legal proceedings by any creditor, or be in any way responsible for
the debts or liabilities of Hedeen or his wife or his widow after his death or
his personal representatives, designated beneficiaries and heirs. Should Hedeen
or his wife or his widow after his death or his personal representatives,
designated beneficiaries and heirs, voluntarily attempt to breach this Section
of this Agreement, Reynolds' liability to make payments hereunder from and after
the date of said attempt shall be extinguished; and should any attempt be made
to reach the payments by other than Hedeen or his wife or his widow after his
death or his personal representatives, designated beneficiaries and heirs,
Reynolds shall make each payment as it becomes due to such person or persons for
the sole benefit of Hedeen or his wife or his widow or his personal
representatives, designated beneficiaries and heirs, as the case may be, as
Reynolds may deem expedient. 

9. UNFUNDED AGREEMENT.

         (a) Reynolds' obligation under this Agreement shall be unfunded, but
Reynolds reserves the right to provide for its liability under this Agreement in
any manner it deems advisable, including the purchasing of such assets
(including an insurance policy or policies on Hedeen's life) as it may


                                                                              22
<PAGE>   23

deem necessary or proper; provided, however, that Hedeen's insurability or
non-insurability shall in no way affect Reynolds' obligations pursuant to this
Agreement. Any asset so purchased by Reynolds shall be the sole property of
Reynolds and shall not be deemed to provide funding of Reynolds' obligations
under this Agreement.

         (b) In the event Reynolds determines to purchase any insurance policy
or policies on Hedeen's life, Hedeen agrees to submit to such examination and to
supply information as may be required by the insurer.

         (c) Any policy so purchased by Reynolds shall be issued so that
Reynolds is the sole, full, and complete owner of the policy or policies, with
the right and power to exercise any and all privileges and options thereof or
available under the rules of the issuing insurer without the consent of any
other persons.

         (d) Hedeen, his wife, or his widow after his death, or his designated
beneficiaries, personal representatives, heirs, successors and assigns shall
have no claim or rights with respect to, and shall have no property or equitable
interests whatsoever in, any specific funds or assets of Reynolds and shall have
only the status of a general creditor with respect to Reynolds hereunder.

10.      FACILITY OF PAYMENT.

         In the event of a physical or mental illness or disability of Hedeen or
of his widow after his death or of his designated beneficiaries at a time when
he or she (or they) is (are) entitled to payments hereunder, such payments as
may be due shall be paid to such person or persons for the benefit of Hedeen or
his widow or his designated beneficiaries, as the case may be, as Reynolds or,
if applicable, the Escrow Agent may deem proper. In the event of Hedeen's death
after he has made demand pursuant to Section 5(e)(v) above, the Escrow Agent
shall pay such amounts as thereafter


                                                                              23
<PAGE>   24

are due to such beneficiary or beneficiaries as Hedeen shall have designated in
writing, or failing such writing, to his estate. No liability shall accrue to
Reynolds or Escrow Agent for any alleged payment to an improper person or
representative if so made after such reasonable investigation and Reynolds and
Escrow Agent shall have no responsibility to see to the proper application of
such payments.

11.      MISCELLANEOUS PROVISIONS.

         (a) All notices required or permitted to be given under this Agreement
shall be in writing and shall be mailed, postage prepaid, by registered or
certified mail or personally delivered, if to Reynolds, addressed to:

                  The Reynolds and Reynolds Company
                  Attention:  Vice President, Corporate Finance and
                                 Chief Financial Officer
                  115 South Ludlow St.
                  Dayton, Ohio  45402

                  and, if to Hedeen, addressed to:

                  Rodney A. Hedeen
                  3961 Applewood Lane
                  Dayton, Ohio  45429

Either party may change the address to which notices to such party are to be
sent by giving written notice of such change to the other party in the manner
specified in this provision.

         (b) (i) This Agreement shall be binding upon Hedeen, his wife, and upon
his or her heirs, executors, administrators, designated beneficiaries and upon
anyone claiming under him or his wife or widow, and upon Reynolds and its
successor or assigns.

                  (ii) Reynolds shall not merge or consolidate with any other
entity unless and until such other entity shall expressly assume Reynolds'
obligations under this Agreement or Reynolds 


                                                                              24
<PAGE>   25

has provided an appropriate alternative arrangement covering its contingent
liabilities under this Agreement, and Reynolds shall not voluntarily dissolve
without first providing an appropriate arrangement covering its contingent
liabilities under this Agreement.

         (c) This Agreement may be amended, but only with the consent of Hedeen
during his lifetime and, after his death only with the consent of his widow
during her lifetime or his other designated beneficiaries during their lifetime,
as the case may be. Any agreement of amendment shall be executed with the same
formality as this Agreement.

         (d) This Agreement supersedes any prior agreements or understandings
covering the subject matter hereof, either written or oral, between the parties.

         (e) This Agreement shall be construed under the laws of the State of
Ohio.

         (f) The paragraph headings used in this Agreement are for convenience
of reference only and shall not be considered in construing this Agreement.

         IN WITNESS WHEREOF, the parties hereto have hereunto set their
respective hands the year and date first above written.

                                      THE REYNOLDS AND REYNOLDS COMPANY


                                      By___________________________________




                                      _____________________________________
                                      RODNEY A. HEDEEN


                                                                              25
<PAGE>   26

                                                                       EXHIBIT A

                                ESCROW AGREEMENT
                                ----------------


         This Escrow Agreement made and entered into as of this 1st day of
February, 1997, by and between THE REYNOLDS AND REYNOLDS COMPANY, an Ohio
corporation (hereinafter referred to as "REYNOLDS") and BANK ONE, DAYTON, N.A.
(hereinafter referred to as the "ESCROW AGENT"),

                                   WITNESSETH:

         WHEREAS, REYNOLDS, has agreed to provide termination pay protection for
Rodney A. Hedeen ("Employee") under conditions set forth in an Employment
Agreement with Employee dated February 1, 1997 (hereinafter referred to as the
"Agreement"); and

         WHEREAS, the required protective payments under the Agreement are to be
paid to an escrow account at Bank One, Dayton, N.A.;

         NOW, THEREFORE, in consideration of the covenants and agreements
contained in this ESCROW AGREEMENT, the parties hereby do agree as follows:

         1. ACCEPTANCE OF ESCROW. The ESCROW AGENT shall serve as ESCROW AGENT
in accordance with the provisions of this ESCROW AGREEMENT, and the duties of
the ESCROW AGENT shall be solely those imposed by this ESCROW AGREEMENT.

         2. TERMS. The ESCROW AGENT shall receive, hold and disburse funds as
ESCROW AGENT in accordance with the Agreement, in the form attached hereto as
Exhibit A and made a part hereof. The ESCROW AGENT acknowledges that it has
reviewed and is familiar with the Agreement and shall be bound by the
obligations, terms and conditions therein relating to the ESCROW AGENT and its
duties.

<PAGE>   27

         However, the ESCROW AGENT is not a party to or bound by the Agreement,
except as specifically provided for therein and as provided in Sections 2, 4, 6,
7 and 8 of this ESCROW AGREEMENT. The ESCROW AGENT shall be liable for only such
funds and items as are actually deposited and received by it for the purposes of
said escrow.

         3. INDEMNIFICATION. So long as the ESCROW AGENT shall follow the terms
of this ESCROW AGREEMENT and any instructions issued hereunder in good faith,
relying upon documents which it believes to be genuine and properly signed and
executed, it shall be held free, clear and harmless and shall incur no liability
hereunder. REYNOLDS shall indemnify and hold the ESCROW AGENT harmless from any
loss, liability, cost, or expense, including reasonable legal fees, which may
arise or be incurred by reason of this ESCROW AGREEMENT or the ESCROW AGENT's
performance in good faith of any duty or obligation hereunder.

         The ESCROW AGENT shall not be liable for any error of judgment or for
any act done or omitted by it in good faith, or for anything which it may in
good faith do or refrain from doing in connection with said escrow; nor will any
liability be incurred by the ESCROW AGENT if, in the event of any dispute or
question as to the construction of, this ESCROW AGREEMENT or any demand or
notice hereunder, the ESCROW AGENT acts in accordance with the opinion of its
legal counsel.

         4. INVESTMENTS BY ESCROW AGENT; INCOME. The ESCROW AGENT shall invest
escrow funds in federally-insured interest bearing accounts selected by the
ESCROW AGENT or in any one or more of the following investments, selected by the
ESCROW AGENT:

            (a) Certificates of Deposit of United States commercial banks
                holding membership in the Federal Reserve System. Such U.S.
                banks shall have minimum total assets of $1,000,000,000 and
                shall not be currently 


                                       2
<PAGE>   28

                listed n any publicly-disclosed report of U.S. banks having
                financial problems warranting close monitoring by the Federal
                Reserve Board.

            (b) Euro-dollar Certificates of Deposit issued by the twenty-five
                (25) largest United States commercial banks, which banks shall
                have minimum total assets of $1,000,000,000 and shall not be
                currently listed on any publicly-disclosed report of U. S. banks
                having financial problems warranting close monitoring by the
                Federal Reserve Board.

            (c) Bankers Acceptances of United States commercial banks holding
                membership in the Federal Reserve System. Such U.S. banks shall
                have minimum total assets of $1,000,000,000 and shall not be
                currently listed on any publicly- disclosed report of U.S. banks
                having financial problems warranting close monitoring by the
                Federal Reserve Board.

            (d) United States Treasury Bills.

            (e) United States Treasury Notes.

            (f) United States Government Guaranteed "Project Notes" and/or
                Tax-Exempt Notes rated MIG 1 by Moody's rating agency.

            (g) Debt instruments issued by the following five United States
                Government agencies:

                         Federal Intermediate Credit Banks
                         Banks for Cooperatives
                         Federal Land Banks
                         Federal Home Loan Banks
                         Federal National Mortgage Association

            (h) Commercial Paper rated Prime-1 by Moody's rating agency or rated
                A-1 by Standard & Poors rating agency. In addition, with respect
                to any corporation's commercial paper being purchased, such
                corporation's long-term debt, if any, must be rated either A by
                Moody's rating agency or A by Standard & Poors rating agency.

The total investments in the above-described approved Certificates of Deposit,
Bankers Acceptances, Commercial Paper, and/or Tax-Exempt Notes shall be limited
to a maximum of $1,000,000 at any one time in any one single bank, corporation,
state and/or municipality.


                                                                               3
<PAGE>   29

         With respect to funds deposited in escrow by REYNOLDS pursuant to the
terms of the Agreement, principal shall be used only for the payments to the
Employee. Any and all income on invested funds shall be paid to REYNOLDS in
accordance with subsection (c) of Section 2 of the Agreement. Fees of the Escrow
Agent shall be paid by REYNOLDS in accordance with subsection (e)(v) of Section
5 of the Agreement.

         With respect to funds deposited pursuant to the Agreement, the ESCROW
AGENT shall be authorized to invest such funds. The ESCROW AGENT will maintain
such liquidity in the investments as will permit them to be cashed when
necessary to fund the required distributions to Employee.

         5. TERMINATION. This ESCROW AGREEMENT and all obligations of the ESCROW
AGENT shall terminate upon satisfaction by the ESCROW AGENT of all of its
obligations under this ESCROW AGREEMENT and the Agreement.

         6. ADVERSE CLAIMS. ESCROW AGENT shall make delivery or disbursement of
the funds deposited hereunder in accordance with the terms of the ESCROW
AGREEMENT and the Agreement, regardless of any disagreement or the presentation
of any adverse claims or demands of any person, unless such person shall have
obtained an injunction from a court having proper jurisdiction, enjoining ESCROW
AGENT from making such delivery or disbursement. ESCROW AGENT shall not become
liable to REYNOLDS or to any other person, for or because of such delivery or
disbursement of such funds, even with knowledge of a disagreement or adverse
claim or demand.

         7. DEMANDS. Except in cases where demand or notice by a single party is
specifically provided for in this ESCROW AGREEMENT or in the Agreement, the
ESCROW AGENT shall not


                                                                               4
<PAGE>   30

be bound to recognize any notice, demand or change of instructions as having any
effect on this escrow unless given in writing and signed by all parties
considered by the ESCROW AGENT to be affected thereby.

         8. NOTICES. Any notice required or permitted to be given hereunder
shall be given in writing and shall be sufficiently delivered if sent by
registered or certified mail, return receipt requested, prepaid, addressed as
follows:

                             _________________________, Trust Officer
                             Trust Division
                             Bank One, Dayton, NA
                             Kettering Tower
                             Dayton, Ohio 45423

                             The Reynolds and Reynolds Company
                             115 S. Ludlow Street
                             Dayton, Ohio 45402
                             Attn:   Chief Financial Officer

Should the address of any party identified above change for the purposes herein,
such party shall give written notice of the new address to the other parties
identified above.
        
         All notice hereunder to the ESCROW AGENT shall be given in writing to
an officer of the ESCROW AGENT. Unless written notice shall so be given, the
ESCROW AGENT shall not be required to take or be bound by said notice or to take
action concerning such notice. If written notice be properly given and the
ESCROW AGENT is required upon receipt thereof to take any action hereunder and
such action involves any expense or liability, the ESCROW AGENT shall not be
required to take any such action unless it is indemnified against such expense
or liability in a manner reasonably satisfactory to the ESCROW AGENT. At the
time of depositing funds into escrow on behalf of Employee, REYNOLDS shall
deliver to the ESCROW AGENT a written notice setting


                                                                               5
<PAGE>   31

forth such person's name and address, and social security number identifying the
amounts being deposited on such person's behalf, and the conditions of the
Agreement, which have been met and which, therefore, require that such deposit
be made.

         9. RECORD KEEPING. The ESCROW AGENT shall maintain records showing the
amount and date of all deposits made by REYNOLDS for the benefit of Employee and
the amount and date of all disbursements made to Employee, his heirs, successors
and assigns. REYNOLDS shall be given access to said records at reasonable times
upon request.

         10. ESCROW FEE. REYNOLDS shall pay to the ESCROW AGENT for its services
hereunder an escrow fee based upon the then-current schedule of charges for such
services promulgated by the ESCROW AGENT and shall pay additional reasonable
compensation for any further or extraordinary service which the ESCROW AGENT may
be required to render pursuant to the terms of this ESCROW AGREEMENT.

         11. BINDING EFFECT. This ESCROW AGREEMENT shall be binding upon and
inure to the heirs, executors, administrators, personnel representatives,
successors and assigns of all parties hereto.

         12. MISCELLANEOUS. Employee is acknowledged to be third party
beneficiary upon the deposit of any amounts under this ESCROW AGREEMENT for his
benefit. This ESCROW AGREEMENT may be modified or amended only by a writing
signed (i) by all parties hereto, (ii) by the third party beneficiary and (iii)
by any other person the ESCROW AGENT considers to be affected by said
modification or amendment. This ESCROW AGREEMENT shall be construed and enforced
in accordance with the laws of the State of Ohio.


                                                                               6
<PAGE>   32

         IN WITNESS WHEREOF, the parties hereto have set their respective hands
the year and date first hereinabove written.

                                        THE REYNOLDS AND REYNOLDS
                                        COMPANY


                                        By_____________________________________

                                                               "REYNOLDS"


                                        BANK ONE, DAYTON, NA


                                        By_____________________________________

                                                               "ESCROW AGENT"


                                                                               7
<PAGE>   33

                                                                       EXHIBIT B

                          SCHEDULE OF FRINGE BENEFITS
                            PURSUANT TO SECTION 3(d)

<TABLE>
<CAPTION>

         Benefit                                     Amount
         -------                                     ------

<S>                                          <C>         
Annual Physical Exam                         Local Clinic, maximum of $600

Auto/Gas Allowance                           $916 monthly

Charitable Allowance                         $1,000 annually to charities of his choice

Income Tax Planning and Preparation          $1,000 annually

Estate Planning and Will Preparation
Initial Service                              $900
Updates                                      $300 annually

Country Club Dues                            50% annually, including initiation fee up to
                                             $3,500

Luncheon Club Dues                           100% annually

Corporate aircraft (personal use)            Yes; in connection with company business use 
                                             Hedeen may include personal passengers,      
                                             subject to seat availability. Hedeen shall   
                                             receive W-2 for personal use value per IRS   
                                             regulations                                  
                                             
Vacation                                     Five (5) weeks annually at mutually agreed 
                                             times.                                     
                                             
                                    
</TABLE>