Exhibit 10.2

 

  Veritec, Inc.   2445 Winnetka Avenue N.   Golden Valley, MN 55427   Facsimile:
(763) 253-0503

 

 

May 18, 2012

 

John Johanns

255 No. Sterra St. #1119

Reno, Nevada 89501

 

Mary Adams

1521 71st St.

Keystone,

IA 52249

 

Larry L. Konfirst

7942 Zionsville Road

Indianapolis, IN 46268

 

 

Re: Letter Agreement

 

Ladies and Gentlemen:

 

Reference is made to that certain promissory note dated January 16, 2012 in the
principal amount of $500,000 issued by Veritec, Inc., a Nevada corporation (the
“Company”) in favor of Larry L. Konfirst (the “Note Holder”), as amended and
restated May 18, 2012 (the “Note”).

 

RECITALS

 

WHEREAS, John Johanns (J Technologies) owns 1,328,004 unrestricted shares of
common stock of the Company and Mary Adams owns 211,996 unrestricted shares of
common stock of the Company for an aggregate of 1.6 million shares (the
“Shares”). John Johanns and Mary Adams are individually referred to herein as a
“Shareholder”, collectively as the “Shareholders”;

 

WHEREAS, it was in the best interests of the Company and its shareholders to
borrow $500,000 from the Note Holders to be held in a certificate of deposit for
the purpose of providing security for the Company’s credit card distribution at
Palm Desert Bank (later assigned to First California Bank);

 

WHEREAS, in order to induce the Note Holder to extend the $500,000 loan to the
Company, the Shareholders agreed to provide the Note Holders with an option to
purchase the Shares at a price per share of $0.40 for an aggregate purchase
price of $640,000, for a term of one year, terminating on January 16, 2013; and

 

WHEREAS, the Option is exercisable by cancelling principal and interest due
under the Note and by remitting the remaining proceeds, if any, to the
Shareholders subject to issuance by the Company of a convertible promissory note
in favor of the Shareholders.

 

NOW THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties set forth in this Letter Agreement, the parties,
desiring to be legally bound hereby, agree as follows:

 

AGREEMENT

 

1. The Shareholders hereby grant the Note Holder an option (“Option”) to acquire
the Shares at a price of $0.40 per Share for an aggregate purchase price up to
$640,000 (the “Exercise Price”).

 

2. The foregoing Option shall be exercisable up to the whole by the Note Holder,
until its expiration date which shall be January 16, 2013.

 

3. Except as specifically provided herein, the Exercise Price for the Option may
be paid only by cancellation of outstanding principal and accrued interest under
the Note as of the exercise date (“Payoff Amount”). If the Exercise Price
exceeds the Payoff Amount, the Company shall cancel the Note, and the Note
Holder shall within five (5) days tender cash to the Shareholders equal to the
difference between the Exercise Price and the Payoff Amount. If the Payoff
Amount under the Note exceeds the Exercise Price, the Company shall cancel the
Note and re-issue a remainder note of like tenor and terms, with the same
maturity date, in the principal amount equal to (a) the Payoff Amount, less (b)
the total Exercise Price.

 

4. Upon exercise of the Option by the Note Holder, the Company will issue a
convertible promissory note to the Shareholders (“Convertible Note”). If the
Exercise Price exceeds the Payoff Amount, the principal amount of the
Convertible Note will equal the Payoff Amount. If the Payoff Amount exceeds the
Exercise Price, the principal amount of the Convertible Note will equal the
Exercise Price. The Convertible Note will bear interest at a rate of four
percent (4%) per annum, will mature after a period of 180 days, and will provide
for the conversion of principal and interest due under the Convertible Note to
restricted shares of common stock of the Company at a rate of $0.08 per share,
at the option of the holder, at any time prior to the maturity date. No payments
will be due under the Convertible Note until the maturity date, and the
Convertible Note will not provide for prepayment premiums or penalties, late
fees or default interest rate. The Convertible Note will contain customary terms
and conditions defining the Shareholders’ rights in the event of default by the
Company.

 

5. The Option will be deemed exercised by the Note Holder upon delivery of
written notice to each of the Company and the Shareholders specifying the Note
Holder’ election to exercise the Option (“Notice of Exercise”), together with
the originally executed Note to be surrendered to the Company for cancellation.

 

6. The Option may be exercised by less than all of the Note Holder provided that
the Note Holder electing not to participate in the exercise of the Option assign
their interest in the Note to the Note Holder electing to exercise the Option.

 

7. Each Shareholder agrees to refrain from selling, transferring, pledging or
hypothecating its interest in the Shares prior to expiration of the Option.

 

8. The Option is not transferrable by the Note Holder except amongst each other.

 

9. The parties agree and covenant to use their best efforts to comply with
applicable laws regarding the issuance of Convertible Note, which may include
but shall not be limited to the preparation and delivery of information and
disclosures required under securities laws.

 

10. This Letter Agreement and any term hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Letter Agreement will be interpreted, construed, and governed by the internal
laws of the State of Minnesota without regard for principles of conflicts of
law. The parties hereby submit to the jurisdiction of the state and federal
courts located in the State of Minnesota, County of Hennepin in any proceeding
arising out of or relating to this Letter Agreement. In any litigation between
the parties arising under this Letter Agreement, the prevailing party shall be
entitled to recover reasonable attorneys’ fees and other litigation costs from
the non-prevailing party. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision. This Letter Agreement, except for the Note, contains the entire
agreement between the parties regarding the subject matter set forth herein.

 

11. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (a) the next business day after the date of
transmission, if such notice or communication is delivered via facsimile on any
business day, (b) the next business day following the date of mailing, if sent
by U.S. nationally recognized overnight courier service, or (c) upon actual
receipt by the party to whom such notice is required to be given. The addresses
and facsimile numbers for such notices and communications are as set forth on
the first page of this Letter Agreement.

 

 

This letter agreement has been executed and delivered by the parties as of this
18th day of May, 2012.

 

COMPANY:

VERITEC, INC.,

a Nevada corporation

/s/ Van Tran

Van Tran, Chief Executive Officer

 

AGREED TO AND ACCEPTED:

 

SHAREHOLDERS:
                                                               JOHN JOHANNS

 

/s/ John Johanns

John Johanns, an individual

 

 

MARY ADAMS

 

/s/ Mary Adams

Mary Adams, an individual

 

 

NOTE HOLDERS:
                                                                  LARRY L.
KONFIRST,

   /s/ Larry L. Konfirst

   Larry L. Konfirst, an individual