**Exhibit99.3**

 

January 22, 2003

 

StevenFlagg 

Chairmanand President 

PurchaseSoft,Inc. 

7514Girard Avenue 

Suite1440 

LaJolla, California 92037

 

DearSteven:

 

Re:      Settlement ofOutstanding PurchaseSoft Obligations

 

This letter is written to you as President and Chairman ofPurchaseSoft, Inc. (“PurchaseSoft”) with respect to our outstanding claim ofunpaid fees of $90,000 (the “Unpaid Fees”) under the engagement letteragreement, dated as of March 1, 2001, between PurchaseSoft and DevonshireHoldings, L.L.C. (“Devonshire”), as amended by the First Amendment toEngagement Agreement, dated as of May 24, 2001 (collectively, the “EngagementAgreement”).

 

1.                                    Devonshire will release the claim for theUnpaid Fees in consideration of the following:

 

(a)          PurchaseSoft shallpay to Devonshire the amount of US $6,000 by delivery of a check in immediatelyavailable funds to the order of Devonshire Holdings L.L.C. within threebusiness days of your execution of this letter agreement (subject tocollection) and upon acceptance of the deliverables described in Section l(c)of this letter agreement by Devonshire’s representative in accordance withSection l(c);

 

(b)          PurchaseSoft herebygrants to Devonshire an exclusive, irrevocable, transferable, worldwide,perpetual license (with right to sublicense and assign in Devonshire’s solediscretion) to commercially exercise any and all intellectual property rightsin the Product (defined below) that PurchaseSoft owns, including copyright,patent and trade secret rights under the laws of all jurisdictions of theworld, upon the terms more fully described in Sections 2 through 8 below; and

 

(c)           PurchaseSoftwill deliver, at its expense, to Devonshire at its principal place of businessat 2363 Clove Road, LaGrangeville, N.Y., 12450, “as is,” a copy of the portionof the Product set forth on Exhibit B, on paper, within 3 days of execution ofthis letter agreement, and such copy shall be satisfactory to Devonshire afterinspection by its representative, and Devonshire’s failure to object to thedelivered Product within 7 calendar days of receipt thereof shall be evidencethat such copy is satisfactory to Devonshire.

 

For the purposes of this letter agreement,the “Product” means the PurchaseSoft V4 product, developed by Tata Infotech Ltd(“Tata”) for PurchaseSoft, pursuant to the contracts set forth in thisparagraph, including (i) the Deliverables and New Agreement Material (includingall source code, base code and object code with respect thereto) defined in andreferred to and set forth in (w) the letter agreement, dated as of May 14, 2002(“Tata Letter Agreement”), by and between PurchaseSoft and Tata, (x) theAgreement for Computer Consultancy Services (“Services

 

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Agreement”), effective as ofMarch 15, 2001, between the same parties, (y) the Agreement for ComputerConsultancy Services, dated September 1, 2001 (the “Consultancy ServicesAgreement”), between the same parties and (z) the Contract (No. 200100044),commenced on September 1, 2001, between the same parties for software developmentservices (the “Tata Development Contract”) and (ii) the materials anddeliverables set forth on Exhibit A attached hereto, including all source code,base code and object code with respect thereto (clause (i) and (ii) of thisparagraph, collectively, the “Tata Deliverables and New AgreementMaterial”),  (iii) any relevant sourcecode and documentations provided to Tata by PurchaseSoft pursuant to Section13.2 of the Services Agreement or provided to Tata pursuant to the TataDevelopment Contract or Article 13 of the Consultancy Services Agreement (the“PurchaseSoft Relevant Source Code and Documentation”) and (iv) all materials,source code, based code, object code and deliverables of the PurchaseSoft V4product other than the Tata Deliverables and New Agreement Material and thePurchaseSoft Relevant Source Code and Documentation.

 

2.            All ownership rights and title tothe derivative works of the Product created by Devonshire shall vest solely inDevonshire and assignees.

 

3.            Subject to being able to realizeupon the right and license to the Product set forth in this letter agreement,Devonshire (or sublicensees or assigns of Devonshire) agrees to pay toPurchaseSoft during the period of 36 months from the date of this letteragreement, by way of royalty, a sum equal to 3% of the net license feesreceived from third parties by Devonshire arising from licensing of theProduct; provided, that Devonshire shall have entered into an agreementwith Tata, within 18 months of the date of this letter agreement, for thedevelopment of the Product. Devonshire will provide PurchaseSoft with a copy ofsuch agreement within 60 days of its execution. Devonshire will provide aquarterly report to PurchaseSoft during the term of the royalty obligationsunder this letter agreement detailing all licensing revenues covered by thisletter agreement. The royalties and fees will be paid by Devonshire toPurchaseSoft within 60 days following the end of each applicable twelve-monthperiod.

 

4.            PurchaseSoft represents and warrantsto Devonshire that (i) to the best of its knowledge, the use of the Productdoes not infringe any copyright, trademark, patent or other proprietary rightsof any third party other than the Tata rights set forth in the Tata LetterAgreement; (ii) PurchaseSoft has the authority to grant the licenses grantedherein; (iii) the licenses granted herein do not breach any other agreement towhich PurchaseSoft is a party; (iv) PurchaseSoft has the full right, power andauthority to enter into this agreement; (v) other than the licenses grantedherein and pursuant to the Tata Letter Agreement, PurchaseSoft has not grantedany licenses to any third party with respect to the Product; and (vi) to thebest of its knowledge, the Product to the extent described in Exhibit B of thisagreement consists of the entire portion of the Product in PurchaseSoft’spossession.

 

5.            PurchaseSoft indemnifies and holdsDevonshire harmless from any liability arising out of any lawsuit, claim ordemand arising out of or relating to any breach of any warranty,representation, term or condition of this agreement.

 

6.            Under no circumstances is Devonshireauthorized to use PurchaseSoft’s name, copyrights (other than any copyrights inconnection with the Product) or trademarks in the further marketing

 

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of this material, orrepresent to any PurchaseSoft customers or business partners that it is anauthorized representative of or providing product of PurchaseSoft.

 

7.            If, as a result of bankruptcyproceedings, Devonshire is not allowed the rights and licenses granted byPurchaseSoft in this letter agreement, Devonshire reserves all legal andequitable rights to assert its claim for the residual amount of the UnpaidFees. In addition, all rights and licenses granted under or pursuant to thisletter agreement by PurchaseSoft to Devonshire are, for all purposes of Section365(n) of Title 11 of the U.S. Code (“Title11”). licenses ofrights to intellectual property as defined in Title 11. If a case is commencedby or against PurchaseSoft under Title 11, then, unless and until this letteragreement is rejected as provided in Title 11, PurchaseSoft (in any capacity,including debtor-in-possession) and its successors and assigns (including aTitle 11 trustee) shall perform all of the obligations provided herein to beperformed by PurchaseSoft and such successors and assigns, as Devonshire mayelect in a written request, immediately upon such request. All rights, powersand remedies of Devonshire provided herein are in addition to and not insubstitution for any and all other rights, powers and remedies now or hereafterexisting at law or in equity (including Title 11) in the event of thecommencement of a Title 11 case by or against PurchaseSoft. Devonshire, inaddition to the rights, powers and remedies expressly provided herein, shall beentitled to exercise all other such rights and powers and resort to all othersuch remedies as may now or hereafter exist at law or in equity (includingTitle 11) in such event.

 

8.            No waiver or change of any of theterms or conditions herein shall be valid or binding unless in writing andsigned by the party or parties intended to be bound by it. This letteragreement (which may be executed in a number of counterparts, all of whichshall constitute one agreement) shall be binding on, and inure to the benefitof, the parties hereto and their respective agents, subsidiaries, affiliates,successors, assigns. This letter agreement shall be governed in all respects bythe substantive law of the State of New York, where it was made, without regardto its conflicts of laws rules.

 

9.            Subject to Section 1, Devonshire andits affiliated companies on behalf of itself, their directors, managers,officers, stockholders, members, employees, consultants, agents, attorneys,representatives, successors and assigns (collectively, the “DevonshireEntities”), and PurchaseSoft, its directors, officers, stockholders, employees,consultants, agents, representatives, successors and assigns (collectively, the“PurchaseSoft Entities”), release, discharge and waive any and all claims andcauses of action they have or may have had under the Engagement Agreement (the“Claims”), or otherwise, against the PurchaseSoft Entities or the DevonshireEntities, and such entities covenant not to institute any suit with respect tothe Claims; provided, that the forgoing is not a release of PurchaseSoft of itsobligations of indemnification under Section 5 of the Engagement Agreement.Nothing contained in this Section 9**shallbe deemed to release PurchaseSoft from its obligations under this letteragreement.

 

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Please indicate youragreement with the terms of this letter by signing in the space provided belowon the enclosed copy and return such executed copy to the undersigned,whereupon this letter becomes a binding agreement between the parties.

 
|                           | DEVONSHIRE HOLDINGS,  L.L.C.           |
|--------------------------------|----------------------------------------|
|                           |                                   |   |
|                           | By:                                    | /s/ William T. Nolan |   |
|                           |                                   | William T. Nolan, President |
|                           |
| Agreed to:  PURCHASESOFT, INC. |
|                           |
| By:                            | /s/ Steven Flagg                       |   |
|                           | Steven  Flagg,  Chairman and President |
|                                |                                        |  |  |  |  |

 

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Exhibit A

 

 

a.                                       Vision Document Version 1.6

 

b.                                      Supplementary Specifications Version 1.2

 

c.                                       Use case specifications and models – RequisitioningVersion 1.3

 

d.                                      Use case specifications and models –RFQ

 

e.                                       Use case specifications and models – PurchaseOrders Version 1.2

 

f.                                         Use case specifications and models –Quotations & Bid Analysis Version 1.2

 

g.                                      Use case specifications and models – ReceiptsVersion 1.1 

 

h.                                      Use case specifications and models –Inventory Version 1.2

 

i.                                          Use case specifications and models –Asset Tracking Version 1.1

 

j.                                          Use case specifications and models –Invoice Matching Version 1.2

 

k.                                       Use case specifications and models – CatalogManagement Version 1.1

 

1.                                       Technical Architecture Document Version 1.0

 

m.                                    Design Document Version 0.51

 

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Exhibit B

 

a.                                       Vision Document Version 1.6

 

b.                                      Supplementary Specifications Version 1.2

 

c.                                       Use case specifications and models –Requisitioning Version 1.3

 

d.                                      Use case specifications and models – PurchaseOrders Version 1.2

 

e.                                       Use case specifications and models –Quotations & Bid Analysis Version 1.2

 

f.                                         Use case specifications and models – ReceiptsVersion 1.1

 

g.                                      Use case specifications and models –Inventory Version 1.2

 

h.                                      Use case specifications and models – AssetTracking Version 1.1

 

i.                                          Use case specifications and models – InvoiceMatching Version 1.2

 

j.                                          Use case specifications and models – CatalogManagement Version 1.1

 

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| **PurchaseSoft, Inc.**    |   |     |   |          |   |              |   |            |
|---------------------------|--------|----------|--------|---------------|--------|-------------------|--------|-----------------|
| Devonshire  Holdings, LLC |   |     |   | 1/31/2003     |   |              |
|                      |   |     |   |          |   |              |
| **Date**                  |   | **Type** |   | **Reference** |   | **Original Amt.** |   | **Balance Due** |   | **Discount** |   | **Payment** |
| 01/31/2003                |   | Bill     |   |          |   | 6,000.00          |   | 6,000.00        |   |   |   | 6,000.00 |
|                      |   |     |   |          |   |              |   |            |   | Check Amount |   | 6,000.00 |
|                           |        |          |        |               |        |                   |        |                 |  |  |  |  |  |  |  |  |  |  |  |  |

 

 

 
| Checking - Alliance  Bank          Settlement Payment in Full |   | 6,000.00 |
|------------------------------------------------------------------------------------------------------------|--------|----------|

 

 

 

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