FOURTH
MODIFICATION AGREEMENT

THIS FOURTH MODIFICATION AGREEMENT (“AGREEMENT”) is made as of December 23,
2009, by and among AVATECH SOLUTIONS, INC., a Delaware corporation, and AVATECH
SOLUTIONS SUBSIDIARY, INC., a Delaware corporation, jointly and severally
(collectively, the “BORROWERS”), and PNC BANK, NATIONAL ASSOCIATION, successor
by merger to Mercantile-Safe Deposit and Trust Company (“LENDER”).

RECITALS

In accordance with the terms and conditions set forth in a Loan and Security
Agreement dated as of January 27, 2006 between the BORROWERS and the LENDER
(“ORIGINAL LOAN AGREEMENT”), the LENDER extended to the BORROWERS a revolving
line of credit in the maximum principal amount outstanding at any one time of
Five Million Dollars ($5,000,000.00) (the “LOAN”). Pursuant to the ORIGINAL LOAN
AGREEMENT, the BORROWERS’ obligations to the LENDER are secured by all of the
BORROWERS’ tangible and intangible assets.

Pursuant to a Modification Agreement dated as of May 30, 2006 (the “FIRST
MODIFICATION”), the LENDER extended to the BORROWERS a short term bridge loan,
in the amount of Six Million Five Hundred Thousand ($6,500,000.00) (“BRIDGE
LOAN”), and the terms of the ORIGINAL LOAN AGREEMENT were modified in certain
respects. All sums due in connection with the BRIDGE LOAN have been repaid by
the BORROWERS.

Pursuant to a Second Modification Agreement dated as of December 31, 2006 and a
Third Modification Agreement dated as of December 31, 2008 (collectively with
the ORIGINAL LOAN AGREEMENT and the FIRST MODIFICATION, the “LOAN AGREEMENT”),
the maturity date of the LOAN was extended and the terms of the ORIGINAL LOAN
AGREEMENT were modified in certain additional respects.

The parties have agreed to modify the terms of the LOAN AGREEMENT in certain
additional respects, in accordance with the terms and conditions set forth
herein. As used herein, the term “LOAN DOCUMENTS” shall collectively mean the
LOAN AGREEMENT and all other documents and agreements evidencing or securing the
LOAN. Unless otherwise defined herein, any terms appearing in all capital
letters in this AGREEMENT shall have the respective meanings ascribed to such
terms in the LOAN AGREEMENT.

NOW, THEREFORE, in consideration of the foregoing premises, the terms and
conditions set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

1. Representations And Warranties Of Borrowers. To induce the LENDER to enter
into this AGREEMENT and to provide the BORROWERS with the accommodations
described herein, the BORROWERS make the representations and warranties set
forth below and acknowledge the LENDER’S justifiable right to rely upon these
representations and warranties.

a. No Litigation. There is no action, suit, investigation, or proceeding pending
against either of the BORROWERS or any other assets of either of the BORROWERS,
except for those proceedings previously disclosed to the LENDER in writing.

b. Organization; Good Standing; Authorization. Each of the BORROWERS: (a) has
the power to enter into this AGREEMENT and all other documents, and agreements
required to be executed pursuant to this AGREEMENT, and has the power to perform
all of its obligations hereunder and thereunder; (b) has duly authorized the
entry into and performance of this AGREEMENT and all other documents and
agreements required to be executed by such BORROWER; and (c) is in good standing
in the state of its incorporation or organization, as applicable, and is in good
standing and qualified as a foreign corporation or limited liability company, as
applicable, in all other states in which such qualification is required.

c. Valid, Binding And Enforceable. This AGREEMENT and all of the other documents
and agreements executed pursuant to this AGREEMENT are the valid and binding
obligations of the BORROWERS and are fully enforceable against each of the
BORROWERS in accordance with their terms.

d. Subsidiaries. AVATECH SOLUTIONS SUBSIDIARY, INC. is a wholly-owned subsidiary
of AVATECH SOLUTIONS, INC. The BORROWERS have no other subsidiaries.

2. Amendments To Loan Agreement. The LOAN AGREEMENT is hereby modified and
amended as follows:

a. Amendment to Definition. The definition of “LOAN DOCUMENTS” contained in
Section 1.66 of the LOAN AGREEMENT shall also include, without limitation, this
AGREEMENT.

b. Financial Statements. Section 5.12.3 of the LOAN AGREEMENT is hereby modified
by replacing the existing provision with the following:

Section 5.12.3. Quarterly Financial Statements. As soon as available and in any
event within forty–five (45) calendar days after the end of each quarter of each
FISCAL YEAR, AVATECH shall submit to the LENDER (i) a consolidated balance sheet
of AVATECH and its SUBSIDIARIES as of the end of such quarter, (ii) a
consolidated statement of income and retained earnings of AVATECH and its
SUBSIDIARIES for such quarter, and (iii) a consolidated statement of cash flow
of AVATECH and its SUBSIDIARIES for such quarter, all in reasonable detail and
stating in comparative form the respective consolidated figures for the
corresponding date and period in the previous FISCAL YEAR and all prepared in
accordance with G.A.A.P. and certified by the Chief Financial Officer of each of
the BORROWERS (subject to year-end adjustment). Together with each such
quarterly financial statement, the BORROWERS shall submit to the LENDER a
report, in form and substance acceptable to the LENDER, detailing the variance
between the sales and net income of the BORROWERS for such quarter from the
corresponding sales and net income amounts shown on the BORROWERS’ final
projections for such quarter.

c. Financial Covenants. Section 5.18 of the LOAN AGREEMENT, entitled “Current
Ratio,” is hereby deleted, and Section 5.20 of the LOAN AGREEMENT is hereby
modified by replacing the existing provision with the following:

5.20. Minimum Tangible Net Worth. The BORROWERS, on a consolidated basis, shall
at all times maintain TANGIBLE NET WORTH in an amount greater than One Million
Five Hundred Thousand Dollars ($1,500,000.00), measured quarterly.

3. No Novation; No Refinance; No Adverse Effect On Liens. The parties hereto do
not intend that a novation of the LOAN or any of the LOAN DOCUMENTS shall be
created or effected because of the modification of the LOAN AGREEMENT, as
described herein. The parties hereto do not intend that the execution of this
AGREEMENT, and the amendments and modifications to be made to the LOAN
AGREEMENT, as described herein, shall: (a) constitute a refinance of the LOAN;
or (b) affect or impair the validity, enforceability, or priority of any of the
liens or security interests imposed by or granted in the LOAN DOCUMENTS.

4. Other Terms; Confirmation Of Obligations. Other than the foregoing, all other
terms and conditions of the LOAN DOCUMENTS shall remain in full force and effect
and are incorporated herein by reference. The BORROWERS acknowledge, ratify and
confirm their respective obligations under the LOAN DOCUMENTS and further
acknowledge and confirm that the BORROWERS are and shall remain absolutely and
unconditionally obligated to pay the LENDER all present and future indebtedness
that is owed to the LENDER under the LOAN DOCUMENTS, as modified hereby, in the
manner provided therein, notwithstanding the LENDER’S execution of this
AGREEMENT and any documents to be executed pursuant to this AGREEMENT, and
notwithstanding the various agreements the LENDER has set forth herein and
therein.

5. Security. The BORROWERS’ obligations under the LOAN DOCUMENTS, as modified
hereby, shall continue to be secured by all of the liens, assignments, and
security interests provided in the LOAN DOCUMENTS.

6. Miscellaneous.

a. Incorporation. The terms and conditions of the LOAN DOCUMENTS are
incorporated herein by reference and made a part hereof as if fully set forth
herein. In the event of any inconsistencies between the terms and conditions of
this AGREEMENT and any of the terms and conditions of the other LOAN DOCUMENTS
(except as to the specific modifications contained herein), the LENDER shall
determine, in its sole discretion, which of the terms and conditions shall
control.

b. Integration. This AGREEMENT, the LOAN DOCUMENTS (as modified), and any other
documents executed pursuant to or in connection with this AGREEMENT, if any,
constitute the entire agreement between the LENDER and the BORROWERS with
respect to the subject matter hereof, and any term or condition not expressed
therein does not constitute a part of the agreement of the LENDER and the
BORROWERS with respect to such subject matter.

c. Severability. If any provision or part of any provision of this AGREEMENT
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this AGREEMENT and this AGREEMENT shall be construed as if such
invalid, illegal or unenforceable provision or part thereof had never been
contained herein, but only to the extent of its invalidity, illegality, or
unenforceability.

d. Number, Gender, And Captions. As used herein, the singular shall include the
plural and the plural may refer to only the singular. The use of any gender
shall be applicable to all genders. The captions contained herein are for
purposes of convenience only and are not a part of this AGREEMENT.

e. Further Assurances. As part of this AGREEMENT, and in consideration for the
agreements of the LENDER as set forth therein, each BORROWER agrees to execute
and deliver to the LENDER such other and further documents as may, from time to
time, in the sole opinion of the LENDER and the LENDER’S counsel, be necessary
or appropriate to carry out the terms and conditions of this AGREEMENT and the
LOAN DOCUMENTS. If either BORROWER fails to execute any such documents within
ten (10) days of being requested to do so by the LENDER, such BORROWER hereby
appoints the LENDER or any officer of the LENDER as the attorney in fact for
such BORROWER for purposes of executing such documents in the name, place and
stead of such BORROWER, which power of attorney shall be considered as coupled
with an interest and irrevocable.

f. Waivers. No failure or delay by the LENDER in the exercise or enforcement of
any of its rights under any LOAN DOCUMENT shall be a waiver of such right or
remedy, nor shall a single or partial exercise or enforcement thereof preclude
any other or further exercise or enforcement thereof or the exercise or
enforcement of any other right or remedy. The LENDER may at any time or from
time to time waive all or any rights under this AGREEMENT or any of the LOAN
DOCUMENTS, but any such waiver must be specific and in writing and no such
waiver shall constitute, unless specifically so expressed by the LENDER in
writing, a future waiver of performance or exact performance by either BORROWER.
No notice to or demand upon either BORROWER in any instance shall entitle such
BORROWER (or the other BORROWER) to any other or further notice or demand in the
same, similar or other circumstance.

g. Choice Of Law. The laws of the State of Maryland (excluding, however,
conflict of law principles) shall govern and be applied to determine all issues
relating to this AGREEMENT and the rights and obligations of the parties hereto,
including the validity, construction, interpretation, and enforceability of this
AGREEMENT and its various provisions and the consequences and legal effect of
all transactions and events which resulted in the execution of this AGREEMENT or
which occurred or were to occur as a direct or indirect result of this AGREEMENT
having been executed.

h. Consent To Jurisdiction; Agreement As To Venue. Each BORROWER irrevocably
consents to the non-exclusive jurisdiction of the courts of the State of
Maryland and of the United States District Court For The District Of Maryland,
if a basis for federal jurisdiction exists. Each BORROWER agrees that venue
shall be proper in any circuit court of the State of Maryland selected by the
LENDER or in the United States District Court For The District Of Maryland if a
basis for federal jurisdiction exists and waive any right to object to the
maintenance of a suit in any of the state or federal courts of the State of
Maryland on the basis of improper venue or of inconvenience of forum.

i. Binding Effect; No Oral Modification. This AGREEMENT shall be binding upon
and shall inure to the benefit of the parties and their respective personal
representatives, successors and assigns. This AGREEMENT may not be altered,
modified or amended unless such alteration, modification or amendment is in
writing and executed by the LENDER.

j. Time. Time is of the essence with respect to all of the obligations of the
BORROWERS under this AGREEMENT and the LOAN DOCUMENTS.

k. Costs Of Transaction. All costs of the transactions contemplated by this
AGREEMENT, including without limitation all of attorneys’ fees and expenses
incurred by the LENDER, shall be paid by the BORROWER, regardless of whether
such costs are incurred before or after the execution and delivery of this
AGREEMENT.

7. Release; Waiver. As part of the agreements set forth herein, and in
consideration of the same, each BORROWER hereby releases the LENDER and all of
the LENDER’S past, present and future directors, officers, employees, agents and
attorneys from any and all claims, causes of action, suits and damages
(including claims for attorneys’ fees) which either of the BORROWERS, jointly or
severally or otherwise, ever had or now have against the LENDER or any of the
LENDER’S past, present and future directors, officers, employees, agents or
attorneys. Without limiting the generality of the foregoing, each BORROWER
acknowledges and agrees that there exists no offset or defense to the
obligations of any BORROWER as stated in the LOAN DOCUMENTS.

8. Waiver Of Jury Trial. The parties hereto agree that any suit, action, or
proceeding, whether claim or counterclaim, brought or instituted by any party to
this AGREEMENT, or any of their successors or assigns, on or with respect to
this AGREEMENT or any LOAN DOCUMENT or which in any way relates, directly or
indirectly, to the obligations of the BORROWERS to the LENDER under this
AGREEMENT or any LOAN DOCUMENT, or the dealings of the parties with respect
thereto, shall be tried only by a court and not by a jury. THE PARTIES EXPRESSLY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDINGS. The
parties acknowledge and agree that this provision is a specific and material
aspect of the agreement between the parties and that the parties would not enter
into this AGREEMENT if this provision were not contained herein.

IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of the date
first above

written with the specific intention of creating a document under seal.

BORROWERS:

AVATECH SOLUTIONS, INC.,
A Delaware Corporation

          By:  
/s/ Lawrence Rychlak
  (SEAL)    
 
 
   
Lawrence Rychlak,
President and Chief Financial Officer
 

AVATECH SOLUTIONS SUBSIDIARY, INC.,
A Delaware Corporation

          By:  
/s/ Lawrence Rychlak
  (SEAL)    
 
 
   
Lawrence Rychlak,
President and Chief Financial Officer
 

LENDER:

PNC BANK, NATIONAL ASSOCIATION

By: /s/ Stephen D. Palmer (SEAL)
Stephen D. Palmer, Senior Vice President