<PAGE>

                                                                    EXHIBIT 10.4


                       SEPARATION AND CONSULTING AGREEMENT


         This Separation and Consulting Agreement (this "Agreement") is made and
entered into on April 29, 2002, by and between SCB Computer Technology, Inc., a
Tennessee corporation (the "Company"), and Lyle J. Seltmann, a resident of
Tennessee ("Seltmann").

         Introduction. Seltmann is an officer and employee of the Company and an
officer of its subsidiaries. The parties have agreed that Seltman will
voluntarily resign from all his positions with the Company and its subsidiaries
and that the Company will provide certain post-termination benefits to Seltmann.
The parties also have agreed that the Company will engage Seltmann to perform
consulting services for the Company following his resignation. Based on the
foregoing, and in consideration of the mutual agreements, covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:

         1.       Resignation. Seltmann hereby resigns as an officer of the
Company and its subsidiaries and as an employee of the Company effective as of
April 29, 2002 (the "Resignation Date").

         2.       Base Salary. Until the Resignation Date, the Company shall
continue to pay to Seltmann his base salary, less all applicable taxes and other
withholdings, in accordance with the Company's payroll practices and procedures.

         3.       Incentive and Special Bonuses.

                  (a)      On or before June 30, 2002, the Company shall pay to
Seltmann an amount equal to his accrued but unpaid incentive bonus for the
fiscal year ending April 30, 2002, less all applicable taxes and other
withholdings, if and to the extent that such incentive bonus is earned under the
Company's incentive bonus program, which provides for the payment of an
incentive bonus to officers of the Company, in an amount equal to up to 50% of
an officer's annual base salary, in the event that certain performance
objectives are achieved. The potential maximum amount of the incentive bonus
payable to Seltmann hereunder is $78,125, less all applicable taxes and other
withholdings.

                  (b)      On or before May 31, 2002, the Company shall pay to
Seltmann a special bonus of $5,467, less all applicable taxes and other
withholdings, in accordance with the Company's special bonus program for certain
executive officers of the Company.

         4.       Vacation. On or before May 31, 2002, the Company shall pay to
Seltmann an amount in lieu of the base salary payable with respect to the
vacation days that Seltmann has earned under the Company's vacation policy but
has not taken as of the Resignation Date, less all applicable taxes and other
withholdings.

         5.       Stock Options. Seltmann has non-qualified options to purchase
30,000 shares of the Company's common stock (the "Options") which were granted
under the Company's 1997 Stock Incentive Plan, as amended (the "SIP"). The
Options are vested and exercisable in accordance with the SIP. After the
Resignation Date, Seltmann shall be entitled to exercise the Options in
accordance with the provisions of Section 5(i) of the SIP.

         6.       KSOP Benefits. Seltmann participates in the Company's KSOP.
After the Resignation Date, Seltmann shall be entitled to receive a distribution
of all amounts credited to the account
<PAGE>


maintained on his behalf under the KSOP in accordance with the provisions of
Section 7.1 of the KSOP.

         7.       Insurance.

                  (a)      Medical Insurance. Seltmann does not participate in
the group medical insurance program provided by the Company. In lieu thereof,
the Company has reimbursed Seltmann, at the rate of $196 per month, for the
premium cost of the medical insurance afforded to him as a retiree under a
program sponsored by the North American Mission Board. Until October 31, 2003,
the Company shall continue to reimburse Seltmann, at a rate not to exceed $196
per month, for the premium cost of such medical insurance.

                  (b)      Dental and Vision Insurance. Seltmann participates in
the group dental and vision insurance programs provided by the Company. The
Company shall continue to provide Seltmann with group dental and vision
insurance under the Company's programs until the Resignation Date. As of the
Resignation Date, the Company shall provide Seltmann with COBRA continuation
coverage under the Company's group dental and vision insurance programs, if
Seltmann elects such coverage, pursuant to Section 4980B of the Internal Revenue
Code in accordance with the provisions of such plans; provided, however, that
until October 31, 2003, the Company shall reimburse Seltmann for the premium
cost of such dental and vision insurance.

                  (c)      Term Life Insurance. Seltmann participates in the
group term life insurance program provided by the Company. The Company shall
continue to provide Seltmann with group term life insurance under the Company's
program until the Resignation Date. As of the Resignation Date, Seltmann shall
be entitled, but not obligated, to convert his coverage under the Company's
group term life insurance program into an individual policy at his sole expense
and in accordance with all applicable requirements.

         8.       Indemnification and Insurance. The Company shall indemnify
Seltmann for his acts and omissions as an officer of the Company and its
subsidiaries and as an employee of the Company to the full extent provided in
the Company's charter and bylaws, it being understood and agreed that such
indemnification shall not be exclusive of any right that Seltmann may have under
the insurance policies maintained by the Company. The Company shall maintain in
effect the directors, officers and corporate liability insurance policies
existing as of the Resignation Date through the end of the policy periods stated
therein.

         9.       Severance. In consideration of the agreements and covenants
made by Seltmann in this Agreement (including, without limitation, the release
provided in Section 21 hereof), provided that this Agreement has not been
terminated and is in full force and effect, and subject to Seltmann's full and
continued compliance with all the agreements and covenants made in this
Agreement and to his full and continued performance of all his obligations under
this Agreement (including, without limitation, the agreements, covenants and
obligations set forth in Sections 12-21 hereof), the Company shall pay to
Seltmann as severance $250,000, less all applicable taxes and other
withholdings, payable in semi-monthly installments from May 1, 2002, through
April 30, 2003.

         10.      Termination of Employment and Right to Receive Compensation
and Benefits. From and after the Resignation Date, except as provided in
Sections 2-9 hereof, (a) Seltmann shall cease to be an employee of the Company
for all purposes; (b) Seltmann shall have no right to receive any base salary,
incentive bonus, or other compensation or any right to participate in or receive
benefits under any benefit plan, program or arrangement maintained by the
Company on account of his employment with the Company or the termination
thereof; and (c) the Company


                                       2
<PAGE>

shall have no obligation to provide Seltmann with any such employment
compensation and benefits.

         11.      Consulting Arrangement.

                  (a)      Engagement. Provided that this Agreement has not been
terminated and is in full force and effect, and subject to Seltmann's full and
continued compliance with all the agreements and covenants made in this
Agreement and to his full and continued performance of all his obligations under
this Agreement (including, without limitation, the agreements, covenants and
obligations set forth in Sections 12-21 hereof), the Company shall engage
Seltmann to perform consulting services for the Company on the terms set forth
in this Section 11.

                  (b)      Term. The term of the consulting engagement shall
begin on April 30, 2002, and shall end on April 30, 2004, unless earlier
terminated under the provisions of Section 22 hereof (the "Term").

                  (c)      Services. During the Term, Seltmann shall perform
such reasonable consulting services relating to the Company's business as the
Company, acting through its Chief Executive Officer, may expressly request from
time to time. Seltmann shall make himself available to the Company at all
reasonable times during the Term to perform the consulting services. The Company
shall be cooperative and flexible with Seltmann in arranging the consulting
services, and in this regard, shall provide Seltmann with reasonable advance
notice of any impending consulting project and shall attempt in good faith to
avoid consulting projects that conflict with any of Seltmann's other business or
personal matters. The Company shall request, and Seltmann shall perform, a
minimum of 333 hours of consulting services during the Term. Seltmann shall not
perform any consulting services not expressly requested by the Company.

                  (d)      Compensation. In consideration of the consulting
services performed by Seltmann hereunder, the Company shall (i) pay to Seltmann
an hourly fee of $250, in semi-monthly installments, for each hour of consulting
services requested by the Company and performed by Seltmann, and (ii) reimburse
Seltmann for all necessary and reasonable expenses incurred and paid by Seltmann
in performing the consulting services, provided that Seltmann delivers to the
Company a reasonably detailed description of and supporting documentation for
such expenses.

                  (e)      Independent Contractor Status. It is understood and
agreed that pursuant to this Section 11, (i) Seltmann is engaged by the Company
and shall perform the consulting services in the capacity of an independent
contractor and not as an employee of the Company, and (ii) the Company will have
no control over or supervisory power as to the manner or method of Seltmann's
performance of the consulting services. The Company will not withhold any amount
from the compensation paid to Seltmann pursuant to this Section 11. Seltmann
alone shall be responsible for the determination and payment of any and all
income, self-employment, and other taxes attributable to the compensation for
the consulting services that he receives from the Company pursuant to this
Section 11.

         12.      Return of Materials. On or before the Resignation Date,
Seltmann shall deliver to the Company (a) any and all books, records, manuals,
notebooks, reports, files, lists, letters, memoranda, notes, statements and
other materials, whether prepared by him or others, and regardless of the medium
in which they are presented or stored, relating or referring in any way to the
Company or its business or affairs, and (b) any and all other property owned or
provided by the Company in connection with Seltmann's service as an officer and
employee of the Company or otherwise; provided, however, that Seltmann shall
return the written materials currently in his


                                       3
<PAGE>

possession in Phoenix, Arizona, and the laptop computer currently at his house
in Collierville, Tennessee, to the Company as soon as practicable after the
Resignation Date.

         13.      Non-Disclosure and Non-Use of Confidential Information. From
and after the Resignation date, Seltmann shall not directly or indirectly (a)
reveal, divulge or otherwise disclose any Confidential Information (as defined
herein) to any person or entity or (b) use or make use of any Confidential
Information in connection with any activity. Notwithstanding the foregoing,
Seltmann shall not be restricted from disclosing Confidential Information that
is required to be disclosed by applicable law or legal process; provided,
however, that if disclosure of any Confidential Information is so required,
Seltmann shall provide the Company with prompt written notice of such
requirement to enable the Company to seek an appropriate protective order before
any such required disclosure is made by Seltmann. The parties acknowledge and
agree that this Section 13 is not intended to, and does not, alter either the
Company's rights or Seltmann's obligations under any applicable law regarding
trade secrets and unfair trade practices.

         As used in this Agreement, the term "Confidential Information" means
any confidential or proprietary information possessed by the Company or any of
its subsidiaries or other affiliates, including, without limitation, any
non-public, confidential Company compilations of supplier lists, details of
supplier contracts, customer lists, details of customer contracts, current or
anticipated customer requirements, pricing policies, price lists, market
studies, business plans, operational methods, marketing plans or strategies,
product or service development techniques or plans, computer software programs
(including object code and source code), data and documentation, database
technologies, systems, structures and architectures, inventions and ideas, past,
current and planned research and development, designs, compilations, devices,
methods, techniques, processes, financial information, business acquisition
plans or strategies, new personnel acquisition plans or strategies, and any
other information that would constitute a trade secret under the statutory law
or common law of the State of Tennessee.

         14.      Non-Competition. From the Resignation Date through April 30,
2004, Seltmann shall not directly or indirectly, unless agreed to in writing in
advance by the Company acting through its Chief Executive Officer, (a) engage
in, own or have a proprietary or equity interest in, be employed by, or serve as
a consultant, advisor or contractor or in any other capacity for, any person or
entity engaged, in whole or in part, in the Business (as defined herein)
anywhere in the United States of America, except that Seltmann may beneficially
own less than five percent (5%) of the outstanding equity of any class of a
corporation or other entity engaged in the Business; (b) solicit any Customer
(as defined herein), on behalf of Seltmann or any other person or entity, to
conduct any business with such Customer that is the same as or similar to, or is
otherwise competitive with, the Business or to terminate such Customer's
business relationship with the Company or any of its subsidiaries or other
affiliates; or (c) solicit any Employee (as defined herein), on behalf of
Seltmann or any other person or entity, to terminate his or her employment
relationship with the Company or any of its subsidiaries or other affiliates.

         As used in this Agreement, the following terms have the meanings
indicated below:

         "Business" means the business of (a) advising persons and entities on
the acquisition or strategic utilization of information technology systems,
planning and designing new information technology systems, and redesigning
existing information technology systems; (b) providing network design and
management, systems support and maintenance, programming and application
software development, computer code review, data center management, and
information technology outsourcing services; (c) recruiting and training persons
with information technology skills; and (d) any other activity substantially
related to any of the foregoing activities.


                                       4
<PAGE>

         "Customer" means any customer or client of the Company, any of its
subsidiaries or other affiliates, or any of its or their predecessor entities
with whom the Company, any such subsidiary or affiliate, or any such predecessor
entity conducted business at any time within two years before the Resignation
Date.

         "Employee" means any employee of the Company, any of its subsidiaries
or other affiliates, or any of its or their predecessor entities who was
employed by the Company, any such subsidiary or affiliate, or any such
predecessor entity at any time within one year before the Resignation Date.

         15.      Non-Disparagement. From and after the Resignation Date,
Seltmann shall not, directly or indirectly, say, write or communicate in any
manner to any person or entity any statement that is derogatory, defamatory or
disparaging about the Company, any of its subsidiaries or other affiliates, or
any of its or their respective directors, officers or employees.

         16.      Business Referrals. From the Resignation Date through April
30, 2004, Seltmann shall promptly refer to the Company, and shall not take for
himself or direct or assist in directing to any other person or entity, any and
all opportunities known to Seltmann for the performance of Business services,
including, without limitation, potential new customers of the Company and
potential projects for existing and new customers of the Company.

         17.      Standstill. From the Resignation Date through April 30, 2004,
without the prior written consent of the Company, Seltmann, whether
individually, as part of a group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), or otherwise,
shall not, and shall not encourage or assist any other person or entity to,
directly or indirectly, (a) acquire, agree, offer, seek or propose to acquire,
or cause to be acquired from any person or entity the ownership (including,
without limitation, beneficial ownership as defined in Rule 13d-3 under the
Exchange Act) of any of the Company's businesses or assets, any common stock or
other voting securities issued by the Company, any bank debt, claims or other
obligations of the Company, or any rights or options to acquire ownership of any
of the foregoing; and (b) make or participate in any way in any solicitation of
proxies (as used in the rules under the Exchange Act) to vote, or seek to advise
or influence any person or entity with respect to the voting of, any voting
securities of the Company. Seltmann also shall promptly advise the Company of
any inquiry or proposal made to Seltmann with respect to any of the foregoing.

         18.      Cooperation. From and after the Resignation Date, Seltmann
shall cooperate fully with the Company in connection with any and all
investigations and legal proceedings - whether instituted by the Company, any
governmental authority, or any other person or entity - relating in any way to
the Company and covering any time during the period of Seltmann's employment
with the Company. Without limiting the generality of the foregoing, Seltmann
shall (a) make himself available at reasonable times and locations to discuss
with the Company and its attorneys and other advisors any and all matters
related to such investigations and legal proceedings; (b) provide truthful and
complete answers to all questions asked of him by the Company and its attorneys
and other advisors; (c) provide to the Company and its attorneys and other
advisors all relevant information known to him; and (d) provide any other
assistance in connection with such investigations and legal proceedings that the
Company may reasonably request from time to time.

         19.      Legal Proceedings. Seltmann hereby agrees not to directly or
indirectly cause, encourage, or participate in any manner in any legal action,
litigation, lawsuit or other legal proceeding against any of the Released
Parties, except (a) if required by law, (b) if necessary to enforce this
Agreement, or (c) if, but only to the extent that, a Released Party directly or
indirectly


                                       5
<PAGE>

brings any legal proceeding against Seltmann, it being understood and agreed
that nothing in this Agreement shall prevent Seltmann from vigorously conducting
his defense of any legal proceeding brought against him.

         20.      Confidentiality. Except as may be required by applicable law
or legal process, Seltmann shall not disclose the existence or terms of this
Agreement or any matter covered herein to any person or entity other than
members of his immediate family and his attorneys and accountants. Except as may
be required by applicable law, legal process, or fiduciary duty, neither the
Company nor its directors, officers or employees shall disclose the existence or
terms of this Agreement or any matter covered herein to any person or entity
other than the Company's attorneys and accountants.

         21.      Release and Acknowledgment.

                  (a)      Seltmann, on behalf of himself and his legal
representatives, executors, administrators, distributees, legatees, heirs and
assigns, hereby voluntarily, fully, unconditionally, finally and forever
discharges, waives and releases the Company, each of its subsidiaries and other
affiliates, and each of its and all of their respective current and former
shareholders, partners, members, directors, officers, managers, employees,
attorneys and accountants, whether acting in a representative or individual
capacity (the Company and all such other persons and entities are referred to
collectively as the "Released Parties"), from any and all claims, charges,
costs, demands, damages, expenses (including attorneys' and other legal fees and
expenses), liabilities, losses and obligations of any kind or nature, whether
known or unknown, foreseen or unforeseen, patent or latent, accrued or which may
hereafter accrue, absolute or contingent, or otherwise, and any and all legal
actions, causes of action, litigation, proceedings and lawsuits in respect
thereof, whether in law or in equity (all such claims, charges, demands,
damages, expenses, liabilities, losses and obligations and all such legal
actions, causes of action, proceedings and lawsuits are referred to collectively
as "Liabilities"), that he had, has or purports to have against any or all of
the Released Parties from the beginning of time to the Resignation Date, and
which Liabilities directly or indirectly arise from his employment with the
Company or the termination thereof, including, without limitation, all
Liabilities arising under (i) all salary, bonus, stock option, incentive,
vacation, insurance and other benefit plans maintained by the Company and (ii)
all federal, state and local anti-discrimination, civil rights and human rights
laws, statutes, ordinances, regulations, and executive orders (including,
without limitation, Title VII of the Civil Rights Act of 1964 (as amended), the
Age Discrimination in Employment Act of 1967 (as amended), and the Americans
with Disabilities Act). The provisions of this Section 21(a) shall not
constitute a release, waiver or discharge by Seltmann of the Company from any
obligation to him under (i) this Agreement, (ii) the indemnification provisions
of the Company's charter, bylaws and relevant statutes, and (iii) third-party
insurance policies.

                  (b)      Section 21(a) of this Agreement includes a release
and waiver of any claims based on the Age Discrimination in Employment Act of
1967, as amended (the "ADEA"). Seltmann acknowledges that his waiver of claims
is knowing and voluntary, and that he understands and agrees to the terms and
conditions of this Agreement. For the purposes of the ADEA only, Seltmann
acknowledges that he is receiving consideration beyond anything of value to
which he is already entitled. The Company and Seltmann acknowledge that Seltmann
does not hereby release any rights or claims that may arise after the execution
of this Agreement. Seltmann acknowledges that the Company has advised him to
consult with an attorney before he executes this Agreement. Seltmann
acknowledges that the Company has advised him that (i) he can have twenty (21)
days to consider this Agreement (the "Review Period"); (ii) if he elects to
execute this Agreement prior to the expiration of the Review Period, he
voluntarily elects to forego waiting for


                                       6
<PAGE>

the duration of the Review Period to execute this Agreement; (iii) he can revoke
this Agreement for a period of seven (7) days following the day that he executes
this Agreement (the "Revocation Period"); and (iv) this Agreement will not
become effective or enforceable until the Revocation Period has expired. To be
effective, any revocation of this Agreement must be made in writing and
delivered to the Company in accordance with Section 24(b) within the Revocation
Period.

         22.      Termination.

                  (a)      This Agreement may be terminated only (i) by the
written agreement of the Company and Seltmann; (ii) by the Company, by written
notice given to Seltmann, if Seltmann breaches any agreement or covenant made or
fails to perform any obligation under in this Agreement, in which event the
termination of this Agreement shall be in addition to (and not in lieu of) any
and all other rights and remedies that the Company may have as a result thereof;
or (iii) automatically, without notice, if Seltmann becomes employed by the
Company or any of its subsidiaries or other affiliates.

                  (b)      Upon the termination of this Agreement, and except as
required by law, the Company shall not be obligated to make any further payments
or provide any further benefits to Seltmann under this Agreement or otherwise.

                  (c)      Notwithstanding the foregoing, the obligations of
Seltmann under Sections 12-21 hereof shall not be affected by the termination of
this Agreement and shall survive and continue in effect for the respective
periods provided therein.

         23.      Notice of Breach; Opportunity to Cure. If either party
breaches any provision of this Agreement, the other party shall provide the
breaching party with written notice of such breach and an opportunity to cure
such breach for a period of ten (10) calendar days after the delivery of such
notice. If the breaching party fails to cure the breach to the satisfaction of
the other party within such period, the other party thereafter shall be entitled
to pursue its rights and remedies under this Agreement or otherwise.

         24.      Miscellaneous Provisions.

                  (a)      Entire Agreement. This Agreement constitutes the
entire understanding between the Company and Seltmann and is a complete and
exclusive statement of the terms and conditions of their agreement relating to
the subject matter hereof and supersedes any and all prior negotiations,
understandings, agreements and arrangements, whether written or oral, and
whether express or implied, between the Company and Seltmann with respect to the
subject matter hereof, all of which prior negotiations, understandings,
agreements and arrangements are hereby rendered null, void and of no further
force or effect.

                  (b)      Notices and Other Communications. All notices and
other communications provided for in this Agreement shall be made in writing,
shall be addressed to the receiving party as set forth below, and shall be
delivered either (i) in person, in which case such notice or other communication
shall be deemed delivered upon its actual receipt, (ii) by FedEx, UPS or any
other nationally recognized express delivery service, in which case such notice
or other communication shall be deemed delivered upon its actual receipt, or
(iii) by the United States mail, return receipt requested, in which case such
notice shall be deemed delivered three (3) days after the same is deposited in a
postal box under the exclusive control of the United States Postal Service. For
the purposes hereof, the addresses of the parties are as follows:


                                       7
<PAGE>

                   Company:         SCB Computer Technology, Inc.
                                    3800 Forest Hill-Irene Road, Suite 100
                                    Memphis, TN 38125
                                    Attention: Chief Executive Officer

                   Seltmann:        Lyle J. Seltmann
                                    4915 Windsong Park Drive
                                    Collierville, TN 38017

Any party may change its address for the purposes hereof by notifying the other
party of such change in the manner provided for herein.

                  (c)      Amendment. This Agreement may be altered, amended,
modified or changed (other than any waiver which shall be effective only if made
in accordance with Section 24(d)) only by a written agreement executed by the
Company and Seltmann.

                  (d)      Waiver. No provision of this Agreement may be waived
by any party hereto unless such waiver is set forth in a written agreement
executed by the waiving party. The waiver of any breach of any provision of this
Agreement shall not be deemed to constitute a waiver of any other breach of the
same or any other provision of this Agreement.

                  (e)      Modification and Severability. If a court of
competent jurisdiction declares that any provision of this Agreement is illegal,
invalid or unenforceable, such provision shall be modified automatically to the
extent necessary to make such provision fully legal, valid or enforceable. If
such court does not modify any such provision as contemplated herein, but
instead declares it to be wholly illegal, invalid or unenforceable, such
provision shall be severed from this Agreement, this Agreement and the rights
and obligations of the parties hereto shall be construed as if this Agreement
did not contain such severed provision, and this Agreement otherwise shall
remain in full force and effect.

                  (f)      Enforceability. This Agreement shall inure to the
benefit of, and shall be enforceable by and against, Seltmann and his legal
representatives, executors, administrators, distributees, legatees, heirs and
permitted assigns and the Company and its successors and assigns.

                  (g)      Breach of Covenant. If Seltmann breaches or threatens
to breach any provision of this Agreement, the Company shall have the right and
remedy to enjoin, preliminarily and permanently, Seltmann from breaching or
threatening to breach such provision and to have such provision specifically
enforced by any court of competent jurisdiction, it being understood and agreed
by Seltmann that any such breach or threatened breach would cause irreparable
injury to the Company and that monetary damages would not provide an adequate
remedy to the Company. The rights and remedies referred to in this Section 24(g)
shall be independent of each other, shall be severally enforceable, and shall be
in addition to (and not in lieu of) any and all other rights and remedies
available to the Company at law or in equity.

                  (h)      Governing Law. This Agreement shall be governed by,
construed under, and enforced in accordance with the laws of the State of
Tennessee without regard to the conflicts-of-laws provisions thereof.


                                       8
<PAGE>

                  (i)      Multiple Counterparts. This Agreement may be executed
by the parties hereto in multiple counterparts, each of which shall constitute
an original, and all of which together shall constitute one and the same
Agreement.

         This Agreement is executed and delivered by the parties hereto on and
as of the date first set forth above.


                                       SCB COMPUTER TECHNOLOGY, INC.



                                       By: /s/  T. Scott Cobb
                                          --------------------------------------
                                           T. Scott Cobb
                                           Chief Executive Officer




                                           /s/  Lyle J. Seltmann
                                           -------------------------------------
                                           Lyle J. Seltmann



                                       9