<PAGE>

                                  EXHIBIT 10.3

                              SEPARATION AGREEMENT

            This Separation Agreement (the "Agreement") is made and entered into
this 31 day of May 2005, by and between The Reynolds and Reynolds Company, an
Ohio corporation ("Reynolds"), and Dale L. Medford ("Medford"). Reynolds and
Medford are hereinafter sometimes referred to individually as a "Party" and
collectively as the "Parties."

            WHEREAS, Medford currently serves as Executive Vice President, Chief
Financial Officer, and Chief administrative Officer of Reynolds and as a member
of the Board of Directors of Reynolds and as an officer and director of certain
Reynolds' subsidiaries and affiliates;

            WHEREAS, Medford desires to retire and resign from his all of his
positions and offices of Reynolds and its subsidiaries and affiliates;

            WHEREAS, Medford and Reynolds have previously entered into the
following agreements (a) a Change in Control Agreement (the "Change in Control
Agreement") executed on May 7, 2001, as amended and restated as of the 1st day
of December 2001, and as amended and restated as of the 11th day of November
2003, (b) an Officer's Agreement (the "Officer's Agreement") executed on October
17, 2002, ( c) a Change in Control Agreement executed on September 30, 2004 (the
"Further Change in Control Agreement"), and (d) a Retention Letter Agreement
dated July 20, 2004 (the "Retention Letter Agreement");

            WHEREAS, Reynolds and Medford have agreed to treat Medford's
retirement as a termination for reasons other than a "Discharge for Cause" as
such term is defined in the Change in Control Agreement for purposes of his
severance benefits and payments;

            WHEREAS, the Parties wish to memorialize the terms of their
separation, all as expressly reflected herein;

            NOW, THEREFORE, for and in consideration of the promises and
covenants made between the Parties and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:

      1.    Termination Date. Effective June 1,2005 (the "Termination Date"),
            Medford will retire and resign from all positions and offices he
            holds as an employee and director of Reynolds and each of its
            subsidiaries and affiliates on the condition that Medford will be
            treated for purposes of his severance benefits and payments as
            though he was terminated by Reynolds for reasons other than a
            "Discharge For Cause" under the Change in Control Agreement. Medford
            agrees to immediately execute any resignations and/or other
            documents as Reynolds may reasonably request in connection with any
            Reynolds' committees or boards on which Medford participated.

      2.    Severance Benefits and Payment. In connection with the termination
            of Medford's employment with Reynolds and as full satisfaction for
            any and all amounts to which Medford is entitled to receive from
            Reynolds under the Change in Control Agreement, Further Change in
            Control Agreement, Retention Letter Agreement, and Officer's
            Agreement (collectively, the "Medford Agreements"), Reynolds agrees
            to provide Medford those benefits and payments (collectively, the
            "Severance Benefits") set forth on Exhibit A attached hereto and
            made a part hereof. Unless otherwise provided herein or on Exhibit
            A, the Severance Benefits shall be paid or made available by
            Reynolds to Medford within thirty (30) days of the Termination Date.
            With regard to that portion of the Severance Benefits listed on
            Exhibit A which are lump sum payments listed under the heading,
            "Non-Qualified Pension Plan Benefits" (including Part I, Part II and
            Part III thereof) (collectively, the "Non-Qualified Pension Plan
            Benefits") and Item 3 on page 2 of Exhibit A, however, such lump sum
            payments shall be made by Reynolds to Medford on December 1, 2005,
            OR SUCH LATER DATE AS REASONABLY REQUESTED BY MEDFORD IN ORDER TO
            COMPLY WITH APPLICABLE LAWS. Medford acknowledges and agrees that
            his receipt of the Non-Qualified Pension Plan Benefits, are subject
            to his compliance with the non-compete provisions of The Reynolds
            and Reynolds Company Supplemental Retirement Plan effective October
            1, 1978, as amended and restated, as such plan has been combined
            with the Officer's Salary Continuation Plan on October 1, 2002
            (collectively, the "Plan"). If Medford is determined to have
            violated such noncompetition provisions, Reynolds may suspend such
            payments and Medford shall forfeit all rights to such payments as
            provided by Section 21 of the Plan.

                                       32
<PAGE>

      3.    Non-Competition. Although Medford's employment with Reynolds will be
            terminated on the Termination Date, Medford will continue to be
            bound by those obligations set forth in the Officer's Agreement that
            survive termination of his employment, including, but not limited
            to, the non-compete, non-solicitation and confidentiality
            obligations set forth therein. For purposes of the non-compete and
            non-solicitation provisions of the Officer's Agreement, the Parties
            agree that the twelve month period shall commence upon the last to
            occur of the following: (a) the Termination Date; or (b) December 1,
            2005 or such later date as Medford may request for payment of
            certain amounts as outlined in Section 2 above.

      4.    Medford Waiver. In consideration of Reynolds' agreement to treat
            Medford's termination as a termination for reasons other than a
            "Discharge for Cause" for purposes of Section 2 of the Change in
            Control Agreement, Medford, for himself and his heirs and estate,
            fully and completely releases Reynolds from any claim or liability
            under the Medford Agreements (other than Reynolds' obligations under
            Section 2 of the Change in Control Agreement), and fully and
            completely releases each of Reynolds' subsidiaries and affiliated
            companies, and each of their stockholders, directors, employees,
            agents, representatives, successors, and assigns from any and all
            claims, liabilities, promises, agreements, and lawsuits arising from
            or related to Medford's employment with Reynolds, and retirement and
            separation from employment, including any and all claims of race,
            color, sex, national origin, ancestry, religion, disability, age or
            other discrimination, harassment, or retaliation, including any and
            all claims under the Ohio Civil Rights Act, Ohio Revised Code
            ("O.R.C.") Section 4112 (and sections following), the Ohio
            Whistleblower's Act, O.R.C. Section 4113.52 (and sections
            following), the Ohio Workers' Compensation Retaliation Law, O.R.C.
            Section 4123.90, Title VII of the Civil Rights Act of 1964,42 USC
            Section 2000e (and sections following), the Employee Retirement
            Income Security Act, 29 USC Section 1001 (and sections following),
            the Reconstruction Era Civil Rights Act, 42 USC Section 1981 (and
            sections following), the Age Discrimination in Employment Act
            ("ADEA"), 29 USC Section 621 (and sections following), the Americans
            with Disabilities Act, 42 USC Section 12101 (and sections
            following), the Family and Medical Leave Act, 29 USC Section
            2601(and sections following), the Worker Adjustment and Retraining
            Notification Act, 29 USC Section 2100 (and sections following), and
            the amendments to such laws, as well as any similar or related
            statute(s) of Ohio or another state or district, and claims for
            breach of contract, promissory estoppel, wrongful termination,
            personal injury, defamation, loss of consortium, distress,
            humiliation, loss of standing and prestige, public policy, or any
            tort, whether such claims are known or unknown, which Medford now
            has, or claims to have, against Reynolds relating to any event or
            circumstance occurring prior to the seventh (7th) day following the
            date of this Agreement, and also including any claims that may
            depend upon the identity person(s) selected to perform some or all
            of the duties that Medford formerly performed. Medford agrees not to
            file any lawsuit against Reynolds in the future with respect to any
            claim released under this Agreement. Medford waives any right to
            reemployment with Reynolds, and agrees that Reynolds may reject any
            application he may make for re-employment without any liability
            whatsoever.

      5.    Right to Rescind. In accordance with applicable law, Medford
            confirms that he has been given twenty-one (21) days to consider
            whether to sign this Agreement, and has the right to rescind this
            Agreement within a period of seven (7) calendar days following its
            execution, by delivering written notice of revocation to Reynolds
            c/o Douglas M. Ventura, Executive Vice President, Corporate Services
            and Reynolds International, The Reynolds and Reynolds Company, One
            Reynolds Way, Kettering, Ohio 45430, 937-4850978 (facsimile), and
            that, in the event of such revocation, Reynolds shall have no
            obligation to Medford under the Change in Control Agreement.

      6.    Governing Law. This Agreement shall be governed by and construed in
            accordance with the laws of the State of Ohio without regard to
            conflicts of laws principles.

      7.    Counterparts. This Agreement may be executed in one or more
            counterparts, each of which will be deemed an original and all of
            which together will constitute one and the same instrument.

      8.    Binding Agreement. The Parties hereto warrant that each has been
            represented by counsel in connection with this Agreement, that they
            have read this Agreement, that they intend to be legally bound by
            the same, that they have entered into this Agreement freely and
            voluntarily, and that they have the full right, power, authority and
            capacity to enter into and execute the same. The Parties hereto
            further warrant that this Agreement is entered into with no Party
            relying upon any statement or representation made by any other Party
            not expressly embodied in this Agreement.

                                       33
<PAGE>

      9.    Entire Agreement. This Agreement sets forth the entire agreement and
            understanding of the Parties relating to the subject matter
            contained herein and merges all prior discussions, correspondence,
            agreements, promises, commitments, contracts or other instruments or
            understandings between them and no Party shall be bound by any
            subsequent instrument, agreement or representation pertaining to the
            subject matter contained herein unless expressed in writing and
            signed by the Parties hereto.

                  IN WITNESS WHEREOF, the Parties have hereunto set their hands
                  as of the date first written above.

                                           /s/ Dale L. Medford
                                           -------------------------
                                           Dale L. Medford

                                           THE REYNOLDS AND REYNOLDS COMPANY

                                           By.: ______________________________

                                           Its._______________________________

                                       34
<PAGE>

                                    EXHIBIT A

                          RETIREMENT BENEFITS ESTIMATE

                                  DALE MEDFORD

Address: 2312 Annandale PI           Benefit Commencement Date:     06/01/2005
City: Beavercreek                    Last Date Employed:            05/31/2005
State/Zip: OH 45385                  Date of Birth:                 05/24/1950
Date of Hire: 03/18/1974             Credited Service:              31.25 years

<TABLE>
<CAPTION>
QUALIFIED PENSION PLAN BENEFIT                                                   ANNUITY               LUMP SUM
                                                                                ---------            -------------
<S>                                                                             <C>                  <C>
Eligible for a monthly life annuity benefit in the amount of                    $2,680.00

NON-QUALIFIED PENSION PLAN BENEFIT

PART I: SALARY CONTINUATION BENEFIT
Present Value of lump sum benefit is                                                                 $1,271,172.00

PART II: SUPPLEMENTAL BENEFIT
Present Value of lump sum benefit is                                                                 $2,643,032.00

PART III: DEFERRED COMPENSATION
Present Value of lump sum benefit is                                                                 $  819,528.00

PART IV: SOCIAL SECURITY SUPPLEMENT - PAYABLE UNTIL AGE 62
Eligible for a monthly annuity benefit in the amount of                         $1.919.00
                                                                                ---------            -------------
                                                                                $4,599.00            $4,733,732.00
</TABLE>

RETIREE MEDICAL PLAN

Benefit will commence 06/01/2005 and includes coverage options for medical,
prescription drugs, dental, vision and life insurance.

NOTES:

-     Retiree Medical Plan is subject to amendment from time to time.

-     Alternate forms of payment other than monthly life annuity are available
      for the Qualified and the Non-Qualified benefits.

-     Details of the plan provisions are found in the plan documents.

                                       35
<PAGE>

                              Exhibit A (Continued)

1.    Pursuant to the Retention Letter Agreement, Reynolds shall make a one time
      payment of One Hundred Twenty Five Thousand Dollars ($125,000) and the
      Restricted Stock Award granted pursuant to such Retention Letter Agreement
      shall vest upon the Termination Date.

2.    In lieu of further participation in the personal performance bonus and
      incentive bonus programs for fiscal year 2005 in which Medford currently
      participates, Reynolds shall make a one-time payment to Medford at the
      time bonuses under such programs have been determined and are payable in
      an amount equal to a pro rata portion (determined based on the portion of
      the fiscal year completed prior to the Termination Date) of the amounts
      Associate would have earned had he remained employed throughout the entire
      fiscal year (using fiscal year 2004's personal performance bonus
      percentage).

3.    Pursuant to Reynolds' standard policies and the Retention Letter
      Agreement, Reynolds shall make a one-time payment to Medford on December
      1, 2005 in the amount of Seven Hundred Thirty Thousand Dollars ($730,000).

4.    Medford shall be responsible for any federal, state or local income taxes
      payable as a result of any payments or other benefits provided under this
      Agreement. Current tax laws require that FICA and Local taxes (if
      applicable) be paid on the present value of all non-qualified plan
      benefits as soon as the benefit is determinable (at
      severance/termination), regardless of whether the benefit is payable at
      that time or at some future date.

5.    As of the Termination Date, eligibility, vesting and benefit accrual
      service under the Reynolds defined benefit plan, the Reynolds 401(k)
      savings plan and any nonqualified plans maintained by Reynolds shall
      cease, and Medford shall no longer be eligible to make elective deferrals
      into, nor receive an allocation of any Reynolds contribution under, the
      Reynolds 401(k) savings plan.

6.    Medford acknowledges that sixty (60) days after the Termination Date, the
      incentive stock options he has available for exercise shall convert to
      non-qualified stock options if he has not exercised them before that date.

                                       36