Exhibit 10.05

Settlement and Release Agreement

             This is a Settlement and ReleaseAgreement (“Agreement”) between Zamba Corporation (“Zamba”) and Paul Edelhertz(“Edelhertz”) providing for Edelhertz’ friendly transition from the Zambapayroll to a more traditional Chairman role.

1.          EffectiveDate. The Effective Date of this Agreement shall be the sixteenth (16th)day following Zamba’s receipt of an unmodified version of this document bearingEdelhertz’ original signature. May 22, 2001, will be considered the last dateon which Edelhertz will be on the regular Zamba payroll (“Transition Date”),and no payment will be provided by Zamba after that date except as stated inthis Settlement and Release Agreement.

2.          Consideration.In exchange for Edelhertz’ written consent to this Agreement, Zamba agrees topay Edelhertz on a salary continuation basis through the earlier of December31, 2001, or until Employee begins receiving regular income from consulting oremployment (the “Pay Period”); (ii) except as set forth at the end of thisSection 2, allow Edelhertz’ existing stock options to continue to vestaccording to their current schedules for so long as Edelhertz remains a memberof the Board of Directors of Zamba; and (iii) enter into that certain StockOption Agreement attached hereto and incorporated herein as Exhibit A.

             Salary continuation will be basedon Edelhertz’ current base salary, and will not include bonuses, commissions,amounts realized from the exercise of stock options, or any other form ofmonetary or non-monetary compensation, except as expressly set forth in thisAgreement. For Edelhertz’ consent to be valid, he must return this Agreement ina signed and unmodified manner to Zamba, in accordance with the terms of thisAgreement.  Settlement pay will bereduced by usual and customary withholdings and deductions.  Edelhertz acknowledges that none of theconsideration or benefits set forth in this Agreement are to be made until thisAgreement is properly executed and returned to Zamba, and that any paymentsthat are tolled because the Agreement is not executed will be paid in thepayroll following execution and return of this Agreement.  Following the end of the Pay Period, Zambawill also pay Edelhertz the value of his accrued yet unused Personal Time Off(“PTO”) as of that date.  PTO shall notcontinue to accrue following the Transition Date.  Notwithstanding anything else in this Agreement regarding hisstock options, Edelhertz acknowledges and agrees that, as further considerationfor Zamba’s consent to this Agreement, all stock options granted by Zamba tohim in December 2000 shall be cancelled and of no further effect, and Edelhertzwill take all such actions as may be reasonably requested by Zamba toeffectuate such cancellation.

3.          Benefits.  Until the Transition Date, Zamba willcontinue Edelhertz’ benefits on the same basis as Edelhertz currentlyreceives.  Following the TransitionDate, Edelhertz will be eligible to continue his benefits as provided under theContinuing Omnibus Budget Reconciliation Act (“COBRA”), *provided that* during the PayPeriod, Zamba will continue to pay the premiums for Edelhertz’ benefits as suchare currently being paid by Zamba, subject to prior receipt from Edelhertz ofthe same contributions that Edelhertz currently makes through salarywithholding.

4.          No Other Remuneration.  Edelhertz acknowledges and agrees that he isnot entitled to any remuneration from Zamba, except as provided in thisAgreement, that a material portion of the payments and other benefits containedin this Agreement are good and valuable consideration to which he would not beentitled in the absence of this Agreement, and, provided that Zamba does notbreach this Agreement, that he will not seek any further compensation fromZamba, or its current or former officers, directors, shareholders, employees,attorneys, successors and assigns for any claimed damages, expenses, costs,fees or other liability of any kind in connection with his employment withZamba and the termination of that employment.

5.          Release.  Edelhertz accepts the valuable benefits ofthis Agreement, and acknowledges that Zamba owes him nothing else.  In return, Edelhertz releases and foreverdischarges Zamba, and any company associated or affiliated with Zamba, andZamba’s officers, directors, shareholders, employees, agents and anybody elsewho works for or with Zamba, of and from any and all legal claims, rights,demands, actions, obligations, and causes of action of any and every kind,nature and character, known or unknown, which Edelhertz may now have, or hasever had, arising from or in any way connected to Edelhertz’ employment withZamba, and the termination of that employment.

             Notwithstanding any other federal, state or localstatute, regulation, rule or order, Edelhertz agrees that this Release applies to any and all legalclaims of any kind whatsoever, whether statutory, common law, constitutional,or otherwise, including but not limited to: all “wrongful discharge” and”constructive damage” claims; all claims related to any contracts ofemployment, express or implied; any claims for defamation, misrepresentation,fraud, or breach of the covenant of good faith and fair dealing, express orimplied; any claim for negligent or intentional infliction of emotionaldistress; any claim for negligence; any claims for attorneys’ fees or costs;any tort claims of any nature; any claims under federal, state, or municipalstatute or ordinance; any other contract, tort, and employment discriminationclaims, including those under the Age Discrimination in Employment Act, theOlder Workers’ Benefit Protection Act, Title VII of the Civil Rights Act of1964, the Civil Rights Act of 1991, 42 U.S.C. Section 1981, the Americans withDisabilities Act (the “ADA”), the Employee Retirement Income and Security Act,the Federal Rehabilitation Act of 1973, the Federal Family and Medical LeaveAct, the Worker Adjustment and Retraining Notification Act, Massachusetts General Laws Chapter 151B, asamended, and any and all other age, sex and disability claims recognizedunder the Minnesota Human Rights Act and all other federal, state, and locallaws.

             Edelhertz acknowledges and agrees thatfor his waiver, he received consideration in exchange, in excess of anything ofvalue to which he may already have been entitled.  Edelhertz further acknowledges that he was and hereby is advisedto consult with an attorney prior to executing this Agreement.  Edelhertz also acknowledges that he wasgiven a reasonable period of time to consider whether or not to sign this Agreementstarting from the date Edelhertz first receives a copy of this Agreement.

             Edelhertz also promises not to sueor start any other legal proceedings against any party he released above.  Edelhertz understands that while he isgiving up legal claims he may think he has, Zamba would dispute those claims,vigorously defend itself, and not pay Edelhertz any of the benefits of thisAgreement.  Thus, this Agreement willavoid costly and lengthy legal disputes, and allows Zamba and Edelhertz tocompromise any differences they may have and buy the peace.

6.          NoClaims Previously Made by Edelhertz.       Edelhertz represents that he has not filed anycomplaints, claims, or actions against Zamba, or its current or formerofficers, directors, shareholders, Employees, attorneys, successors and assigns, or representatives with any state, federal, orlocal agency or court, and that he will not do so at any time after theEffective Date.

7.          No Admission of Liability.  This Agreement and compliance with this Agreement shall not beconstrued as an admission by Zamba of any liability to Edelhertz,whatsoever.  Zamba specificallydisclaims any liability to Edelhertz for any matter arising from or in any wayconnected with Edelhertz’ employment with Zamba and the Transition of thatemployment.

8.          Rescission Notice.  Within fifteen calendar days after signingthis Agreement, Edelhertz has the right to rescind only that provision of thisparagraph releasing Zamba from liability for charges or actions broughtpursuant to the ADEA, Title VII, ADA and Minnesota Human Rights Act.  To be effective, the rescission must be inwriting and delivered to Zamba, at 3033 Excelsior Blvd., Suite 200,Minneapolis, MN 55416.  If delivered bymail, the rescission must be:

| A. | Postmarked within the 15-day period;               |
|----|----------------------------------------------------|
| B. | Properly addressed to Zamba; and                   |
| C. | Sent by certified mail, return receipt  requested. |

             In the event Edelhertz rescindsthis Agreement, Zamba has no obligations to him under this Agreement, andEdelhertz agrees to repay Zamba any funds already paid to him under thisAgreement.  This Agreement shall notbecome effective until the 15-day rescission period has elapsed.

9.          Confidentiality.  It is the intent of the parties that theterms upon which this agreement is based will be forever treated asconfidential.  Edelhertz may disclosethe terms of this Agreement only to his spouse, attorney, accountant, and taxadvisor or preparer.  Zamba may disclosethe terms of this Agreement to those of its agents or Employees who have alegitimate need to know such terms. Both parties agree not to make anydisparaging or negative statements about the other party or the employmentrelationship between Edelhertz and Zamba, either in the employment or personalcontext.  Edelhertz shall not in any wayassist or encourage any individual to pursue a claim against Zamba.

10.        Covenants of Non-Competition andNon-Solicitation.  Edelhertz held aposition of trust with Zamba, which allowed Edelhertz access to extremelyconfidential information regarding Zamba’s clients, employees and employmentpractices.  Therefore, as a separatecovenant of this Agreement, Edelhertz agrees that, for a period beginning onthe Effective Date and continuing for one (1) year following the end of the PayPeriod, Edelhertz shall not (a) directly or indirectly solicit, do businesswith, deliver products to, render services to or adversely affect Zamba’srelationship with any client or prospective client of Zamba; or (b) solicit foremployment or discuss employment opportunities with any of Zamba’spersonnel.  These covenants apply toEdelhertz regardless of whether he is acting in his individual capacity or asan employee, contractor, advisor, director, officer, or partner of any thirdparty.  Further, Edelhertz expresslyacknowledges the confidentiality of Zamba’s client and employment information,including the names of Zamba’s clients and employees and their contactinformation, needs, wants, tasks, skills, compensation, and opinions aboutZamba, and agrees not to disclose such confidential information to any thirdparty, regardless of Edelhertz’ relationship with such third party, for so longas such information remains confidential.

11.        Voluntary Agreement.  Both Zamba and Edelhertz enter into thisAgreement voluntarily, after having had the opportunity to review it andconsult with advisors, including legal counsel, of their choice.  This Agreement sets forth the entireagreement between the parties regarding the subject matter herein, supersedingany and all other agreements, understandings, memoranda, or proposals, whetherwritten or oral, between the parties regarding the same or similar subjectmatter.

12.        No Reliance on Representations.  Each party to this Agreement represents andacknowledges that in executing this Agreement that party does not rely and hasnot relied upon any representation or statement made by the other party or byany of such other party’s agents, attorneys, or representatives with regard tothe subject matter, basis or effect of this Agreement or otherwise, other than thoserepresentations and statements specifically stated in this written Agreement.

13.        Successors and Assigns.  This Agreement shall be binding upon theparties to this Agreement and upon their respective heirs, administrators,representatives, executors, successors, and assigns, and shall inure to thebenefit of those parties and each of them and to their respective heirs,administrators, representatives, executors, successors, and assigns.

14.        Severability.  Should any provision of this Agreement bedeclared or be determined by any court of competent jurisdiction to be illegal,invalid, or unenforceable, the legality, validity, and enforceability of theremaining parts, terms, or provisions shall not be affected thereby, and saidillegal, unenforceable, or invalid part, term, or provision shall be deemed notto be a part of this Agreement.

15.        Interpretation of Agreement.  This Agreement shall be interpreted inaccordance with the plain meaning of its terms and not strictly for or againstany of the parties.

16.        Legal Expenses.  In the event of litigation or arbitrationbetween the parties arising out or relating to this Agreement, the prevailingparty will be entitled to recover court or arbitration costs and reasonablefees of attorneys, accountants and expert witnesses incurred by such party inconnection with the action or arbitration, including such costs and feesincurred because of any appeals.  Theprevailing party also shall be entitled to recover all such costs and fees thatmay be incurred in enforcing any judgment or award, and this provision shallnot be merged into any judgment but shall survive any judgment.

17.        Specific Performance. Each party agrees that a breachof this Agreement would cause irreparable harm to the other party, and thereforeagrees that the non-breaching party may seek a temporary restraining order, atemporary or permanent injunction or any other equitable relief by initiating acourt action upon a breach or threatened breach of this Agreement.

18.        Governing Law.  This Agreement shall be governed in allrespects, including validity, interpretation and effect, by the laws of theState of Minnesota, except for its choice of laws principles.

 

| \s\ Paul Edelhertz | Date: August 2, 2001 |
|--------------------|----------------------|
| Paul Edelhertz     |                 |
|               |                 |
|               |                 |
|               |                 |
| \s\ Michael Carrel | Date: August 2, 2001 |
| Zamba Corporation  |                 |

**ExhibitA****STOCK OPTION AGREEMENT**

 

             THIS STOCK OPTION AGREEMENT is madeas of this ______ day of ________________, _______, by and between PAULEDELHERTZ (Edelhertz) and ZAMBA CORPORATION, a Delaware corporation (Zamba).

             IN CONSIDERATION of the mutualpromises of the parties hereto and the mutual benefits to be gained by theperformance herein, the parties agree as follows:

| 1.)    | Grant of Option – Edelhertz hereby grants to Zamba an option  to purchase an aggregate of Two Hundred Fifty Thousand (250,000) shares of  the common stock of Zamba owned by him (collectively “the Shares”) for an  agreed upon amount (“the Purchase Price”).   Zamba hereby grants to Edelhertz an option to put the Shares to Zamba  for the same Purchase Price. Unless otherwise agreed, Zamba must exercise the  option to purchase all of the shares if it desires to purchase any of the  shares, and Edelhertz must put to Zamba all of the shares if he desires to  put any of the shares.                                                                                                |
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| 2.)    | Purchase Price – The Purchase Price shall be equal to the  total cumulative amount due and payable (i.e., principal and interest) on a  Promissory Note dated December 26, 2000, between Zamba and Edelhertz, as of  the date of the exercise of an option under this Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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| 3.)    | Exercise of Options – If Edelhertz or Zamba desire to  execute one of the foregoing options, they may do so by written notice to the  other.  The notice shall:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | State the election to exercise the option; and |
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Be signed by the party exercising the option. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Within fifteen (15) days following the date of  such notice, Edelhertz shall deliver, assign and transfer to Zamba, stock  certificates representing 250,000 shares of Zamba. Representing full payment  for the Shares, Zamba shall release Edelhertz from any further obligations on  a Promissory Note dated December 26, 2000, and treat such note as paid in  full and deliver evidence of such to Edelhertz.                                                                                                                                                                                                                                                                                                                 |
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| 4.)    | Adjustment Provision – If there is any capital  reorganization or reclassification of the capital stock of Zamba, or stock  dividend, or any consolidation or merger of Zamba with any other entity, the  options granted herein shall apply to all new shares acquired by Edelhertz  with respect to the Shares.  Thus, by  way of example, if there is a stock split, the options described in the  Agreement shall apply not only to the Shares, but also to the additional  shares acquired by Edelhertz with respect to the Shares, without any increase  in the purchase price.  This  adjustment shall not, however, apply to any other shares of Zamba that may be  acquired by Edelhertz through purchase. |

 

| 5.)    | Term of Options – If neither of the options described in this  Agreement are exercised within ten (10) years from the date hereof, then  either party shall have the right to terminate both options at any time  thereafter upon delivery of thirty (30) days’ prior written notice to the  other.  If neither party exercised  their option within thirty (30) days or receipt of such notice, all options  described herein shall expire.                                                                                                                                                                                                                                                                            |
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| 6.)    | Representations of Edelhertz – Edelhertz represents and warrants  that he is the owner, beneficially and of record, of all the Shares, free and  clear of all liens and encumbrances; that the sale of the Shares to Zamba  will not result in or constitute a breach of any term or provision of any  agreement to which Edelhertz is a party; that Edelhertz has the right, power,  legal capacity, and authority to enter into and perform his obligations under  this Agreement, and no approval or consent of another person is necessary in  connection with it; and that Edelhertz shall take no action that will result  in these representations being untrue at any time prior to the purchase of  the Shares by Zamba. |
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| 7.)    | Miscellaneous –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Counterparts – This Agreement may be executed in any  number of counterparts, each of which shall be deemed an original, but all of  which shall constitute one and the same instrument. |
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Amendments – This Agreement may be amended in whole or  in part at any time by a written instrument setting forth such changes and  signed by all of the parties hereto. |
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Benefit – This Agreement shall be binding upon and  inure to the benefit of all of the parties hereto, their heirs, executors,  administrators, successors and assigns, and the parties hereby agree for  themselves and their heirs, executors, administrators, successors and assigns  to execute any instrument and to perform any acts which may be necessary or  proper to carry out the purposes of this Agreement. |
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Situs – This Agreement was executed in Minneapolis,  Minnesota and shall be governed by the laws of the State of Minnesota. |
|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Entire Agreement – This Agreement sets fort the entire  understanding between the parties, there being no terms, conditions,  warranties or representations other than those contained herein. |

 

             IN WITNESS WHEREOF, the partieshave duly executed this Agreement as of the day and year first above written.

 

| \s\ Paul Edelhertz |
|--------------------|
|                    |
| PAUL EDELHERTZ     |
|               |
| \s\ Michael Carrel |
|                    |
| ZAMBA CORPORATION  |
| By:                |
|               |
| Michael Carrel     |
|                    |
| Name               |

 

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