<PAGE>
 
                                                                    EXHIBIT 1O.3


                           Template Software & BAFS
                           ------------------------


SALE AND PURCHASE AGREEMENT for the supply to BAFS of

A    Template Software Licensed Products which are
     .SNAP and Web Template Development Environment complete with GUI Extensions
     .SNAP and Web Template User Environment complete with GUI Extensions

B    Maintenance services for the SNAP and Web Template Development Environment
complete with GUI Extensions and the SNAP and Web Template User Environment
complete with GUI Extensions.

C    The development of commissioned bespoke software called "the Process
Engine" and the provision of a license to use the Process Engine for BAFS
internal business processes.

D    Training and Support services

1.        Parties
          -------

1.1. Template Software (UK) Limited (Template)

1.2. British American Financial Services IT & Group Services Limited (BAFS).

1.3. BAFS acts as authorised agent for and on behalf of British American
Financial Services (UK and International) Limited and its subsidiaries (the BAFS
Group) and BAFS and the BAFS Group are jointly and severally liable to Template
under this agreement.

1.4. Template Software (UK) Ltd is authorised to license the software products
defined herein as the Licensed Products on behalf of its parent company Template
Software Inc., who owns the intellectual property in these products.

2.        Introduction
          ------------

2.1. Template has agreed to supply BAFS with

     2.1.1.    The right for 30 Developers to use the SNAP and Web Template
     Development Environment complete with GUI Extension and the right for 300
     Users to use the SNAP and Web Template User Environment complete with GUI
     Extensions, initially on a temporary basis. It is intended that this right
     will be extended to 80 developer and 5,000 user perpetual licences on or
     after 1/st/ January 1998, subject to clause 13.

     2.1.2.    "GUI" tool development to extend the SNAP and Web Template
     Development Environment adding extra functionality which will be
     incorporated into the development Environment.

                                       1
<PAGE>
 
     2.1.3.    Maintenance to support the Developers use of the SNAP and Web
     Component Development Environment (including the GUI developments) and
     Users use of the SNAP and Web Component User Environment (including the GUI
     developments).

2.2. Template and BAFS have collaborated to produce a design and functional
specification for bespoke software called "the Process Engine" and BAFS have
commissioned Template to develop the software.  The development is at an
advanced stage and Template  and BAFS have started testing version one of the
Process Engine.

2.3. Template have agreed to provide professional services comprising support
and training on an as and when needed basis to be covered by a separate Services
Agreement

3.        Definitions
          -----------

3.1. Licensed Product - Template standard SNAP and Web Component products with
GUI extensions as defined in Appendix 1 and Process Engine as specified in
appropriate License Schedule.

3.2. Licence Agreement - Template licence agreement for SNAP and Web Component,
GUI Extensions and Process Engine as attached and incorporated by reference.

3.3. GUI Extensions - the tools to be developed by Template as described in
Appendix 1.

3.4. Maintenance Agreement - Templates service level agreement - set out in
Appendix 3.

3.5. Functional Specification - the functional specification for the Process
Engine as set out in Appendix 2.

3.6. Process Engine - the bespoke software to be developed by Template.

3.7. Professional Services - the training and support described in Appendix 4.

3.8. Delivery of the Process Engine will occur when BAFS confirms in writing
that the software complies with the acceptance tests or when the Process Engine
is in regular use by BAFS other than for acceptance testing, whichever occurs
first.

3.9. Delivery of the SNAP and Web Template Development Environment will occur on
receipt of the full product release of SNAP version 8.0 which shall not occur
later than July 1997.

4.        Obligations of Template
          -----------------------

4.1. To supply the right for 30 Developers and 300 Users with the right to use
the  Licensed Products for a temporary period and to extend this right for an
unlimited time in 

                                       2
<PAGE>
 
accordance with the terms of this agreement and the License Agreements and
License Schedules referenced herein and incorporated by reference.

4.2.  To develop the GUI Extensions and extend the SNAP and Web Component
Development Environment to include these extensions.

4.3.  To provide maintenance for the SNAP and Web Component Development and User
Environments including the GUI Extensions to the standard described in the
Maintenance Agreement.
To complete the development and testing of the Process Engine bespoke software
to conform with the acceptance tests, defined in Appendix 5, based on the
Functional Specification. There is no requirement to supply maintenance for the
Process Engine in this agreement.

5.         Delivery and Acceptance of the Process Engine
           ---------------------------------------------
5.1.  Template will prepare acceptance tests for the Process Engine making
reference to the Functional Specification.

5.2.  Template will make the Process Engine available to BAFS by July 1997.
Installation, testing and acceptance will be complete by the end of August 1997.

6.         Proprietary Rights - standard products
           --------------------------------------
6.1.  Template owns all intellectual property rights in Template Licensed
Products as defined herein

6.2.  BAFS will not have a right to sub-licence to other parties.  The terms of
Template's  Licence and related License Schedules will apply.

7.         Proprietary Rights - Process Engine
           -----------------------------------

7.1.  Template owns all intellectual property rights in the implemented Process
Engine.

7.2.  BAFS owns the intellectual property rights in the Functional Specification
and Design.

7.3.  On BAFS acceptance of the Process Engine Template will grant BAFS a non-
exclusive royalty free licence to use the Process Engine for its internal
business purposes in accordance with the License and License Schedule attached.
BAFS will not have a right to sub-licence to other parties.  The terms of
Template's Licence and related License Schedules will apply.

8.         Alterations to the Functional Specification of the Process Engine
           -----------------------------------------------------------------

A cut off date for interpretation of the Functional Specification has been set
as 23rd May 1997.  Any alterations or clarifications of the specifications after
this date may alter the contract price and delivery dates.

9.         Obligations of BAFS
           -------------------

                                       3
<PAGE>
 
9.1.       Payment
------------------
           9.1.1.    BAFS will pay for

           9.1.1.1.  the Developer Licence and User Licences;

           9.1.1.2.  the GUI extension development;

           9.1.1.3.  development of the Process Engine; and

           9.1.1.4.  the Developer and User software maintenance
           from January 1997 over three years in accordance with the agreed
           payment schedule as attached (prices stated VAT inclusive and VAT
           exclusive)

           9.1.2.    Template will give credits against the prepaid maintenance
           fees in accordance with the Maintenance Agreement (Appendix 3)

           9.1.3.    BAFS will pay for the professional services in accordance
           with Templates daily/monthly rates as specified in Appendix 6

           9.1.4.    Invoices are payable within 30 days of receipt.

           9.1.5.    BAFS does not have the right to set off counter claims
           against payments.

9.2.       Computer and Office Facilities and Staff
---------------------------------------------------
           9.2.1.    BAFS will provide Template with appropriate computer
           facilities, accommodation and staff to carry out the testing [and
           installation] of the Process Engine and provide the Maintenance
           Services and the Professional Services.

           9.2.2.    Template and its employees and sub-contractors will respect
           and comply with BAFS security and safety procedures as specified in

           Appendix 7.
9.3.       Compliance with Template's Licences
--------------------------------------------------

           9.3.1.    BAFS will comply with the terms of the Licence and the
           Licence Schedules as they apply to the Licensed Products. 10.   

10.        Insurance
           ---------

10.1.      Both parties will maintain

           10.1.1.   employers liability insurance at least to a value of
           (Pounds)5m;

           10.1.2.   public liability insurance at least to a value of (Pounds)2
           million.

           10.1.3.   professional indemnity - Template has cover for $1 million
           to be increased to $3 million at end of September 1997.

10.2.      Each party has the right to view the others policy.

10.3.      Copies of both party's policies in force at time of contract signing
are included in Appendix 8.

                                       4
<PAGE>
 
11.        Confidentiality
           ---------------
Template will undertake to keep secret BAFS confidential information which is
specifically marked confidential or described as confidential.  This undertaking
of confidentiality shall not extend to information which is already known to
Template or is public knowledge.  A specific confidentiality agreement has been
signed by both parties and is attached in Appendix 9.

12.        Restrictions on Users
           ---------------------
12.1.  Template's Licence and License Schedule only applies to BAFS employees,
agents and prior approved third parties by Template such as Independent
Financial Advisers, defined in the appropriate License Schedule. The maximum
number of users with the right to use the Licensed Products is also set out in
the appropriate License Schedule.

12.2.  BAFS must give notice to Template if it requires the right to use the
Licensed Products for additional Users  or Developers and on payment of
additional Licence fees Template will grant this right.

12.3.  BAFS must give notice to Template if it wishes third parties who sell or
market BAFS products not covered by the License Schedule to be granted the right
to use the Licensed Products and Template's consent to the extension of such
right shall not be unreasonably withheld on BAFS payment of additional User
Licence fees.

12.4.  Template has the right to monitor and audit the number of users and if
the number of Developers or Users, as defined in the appropriate License
Schedule exceed the maximum number set out in said License Schedule then
additional licence fees become payable back dated to the start of additional
use.

13.           Contract Review and Breaks
              --------------------------
13.1.  BAFS and Template will hold a formal review of the contract prior to

       13.1.1.   the end of December 1997; and

       13.1.2.   the end of March 1998.

13.2.  Following each review BAFS may terminate this agreement on 31 December
1997 or 30 March 1998. Termination of this agreement will terminate all rights
granted to BAFS to use the Licensed Products and the Maintenance Agreement and
neither party shall have any liability or obligation to the other except as
provide herein.

13.3.  Should termination of the contract occur on 31 December 1997 the right
for 30 Developers and 300 Users to use the Licensed Products as set out in the
License Schedules shall expire and subject to BAFS right to terminate Template
will provide the right for 14 

                                       5
<PAGE>
 
Developers and up to 300 Users to use the Licensed Products for an unlimited
time and BAFS shall pay additional licence fees in accordance with the payment
schedule. On continuation of the contract following 31 December 1997, the right
for 30 Developers and 300 Users to use the Licensed Products as set out in the
License Schedules shall be extended to 31 March 1998 on payment of the agreed
fees.

13.4.  On 31 March 1998 the right for 30 Developers and 300 Users to use the
Licensed Products as set out in the License Schedules shall expire and subject
to BAFS right to terminate Template will provide the right for 80 Developers and
5000 Users to use the Licensed Software for an unlimited time and BAFS shall pay
additional licence fees in accordance with the payment schedule.

14.    Term and Termination
       --------------------
The term is 3 years from April 1997.

14.1.  The agreement may be terminated early by BAFS in accordance with the
Contract Review and Breaks clause above.

14.2.  Either party may terminate immediately if the other becomes insolvent and
unable to pay its debts in the normal course of business.

14.3.  Either party has the right to terminate should the other party fail to
meet any of its obligations under this contract.  The aggrieved party shall
notify the other in writing of any such breach, and shall give 4 weeks to
rectify the breach prior to the contract being terminated.

15.    Source Code Deposit
       -------------------
BAFS will have the benefit of Template source code deposit agreement as defined
in Appendix 10.

16.    Force Majeure
       -------------
If Template cannot complete the development and delivery of the Process Engine
or the Developer or User software for reasons beyond its control Template will
give notice and the agreement will be suspended for 4 weeks without liability
after which either party has the right to terminate.

17.    Applicable Law
       --------------
English law shall apply and the parties agree to submit to the non-exclusive
jurisdiction of the English Courts.

18.    Entire Agreement
       ----------------

                                       6
<PAGE>
 
This is the entire agreement between BAFS and Template regarding this subject
matter with the exception of those agreements referenced herein and incorporated
by reference.

19.    Amendment
       ---------
No amendment to this agreement may be made unless in made in writing and signed
by both BAFS and Template.

20.    Waiver
       ------
Waiver of a breach is not to be considered as waiver of any subsequent breach.

21.    Notices
       -------
Notices required by this agreement may be made by Facsimile transmission in
which case they shall be deemed to have arrived on the day of transmission or by
Post in which case they shall be deemed to have been delivered 2 working days
after posting.

                                       7
<PAGE>
 
signed
for and on behalf of Template Software (UK) Limited,

/s/ R H Collard                               Date: 27/5/95
----------------------                              -------
R H Collard - Managing Director, Template Software (UK) Ltd.
          Vice President, Template Software Inc.


for and on behalf of BAFS,

/s/ Ian Seward                                Date:     27 May 1997
----------------                                    ---------------------   
Name: Ian Seward                              Position: Managing Director
      ----------                                        -----------------

/s/ Phil Smith                                Date:     27 May 1997  
----------------                                    ---------------------
Name: Phil Smith                              Position: Chairman
      ----------                                        -----------------