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Exhibit 10.1

EIGHTH MODIFICATION AGREEMENT
(Increase)
 
THIS EIGHTH MODIFICATION AGREEMENT (this “Agreement”), effective as of the 17th
day of March 2010, is by and between UNITED BANK, a Virginia banking corporation
(the “Bank”); and VERSAR, INC. a Delaware corporation (“Versar”), GEOMET
TECHNOLOGIES, LLC, a Maryland limited liability company (“Geomet”), VERSAR
GLOBAL SOLUTIONS, INC., a Virginia corporation (“VGS”), VEC CORP., a
Pennsylvania corporation and successor to Versar Environmental Company, Inc.
(“VEC”), VERSAR INTERNATIONAL, INC., a Delaware corporation, formerly known as
VIAP, Inc. (“Versar International”) and ADVENT ENVIRONMENTAL, INC., a Kentucky
corporation (“Advent” and, together with Versar, Geomet, VGS, VEC and Versar
International, individually and collectively, the “Borrower”).
 
WITNESSETH THAT:
 
WHEREAS, the Bank is the owner and holder of that certain Revolving Commercial
Note dated September 26, 2003, in the original principal amount of Five Million
and No/100 Dollars ($5,000,000.00), made by the Borrower payable to the order of
the Bank and bearing interest and being payable in accordance with the terms and
conditions therein set forth (the “Note”); and

WHEREAS, the Note is issued pursuant to the terms of a certain Loan and Security
Agreement dated September 26, 2003, between the Borrower and the Bank (as
modified in accordance with that certain First Modification Agreement dated as
of May 12, 2004, that certain Third Modification Agreement dated as of November
30, 2005 (a second modification having been drafted but never executed and
delivered), that certain Fourth Modification Agreement dated as of September 28,
2006, as increased to Seven Million Five Hundred Thousand and No/100 Dollars
($7,500,000.00) pursuant to that certain Fifth Modification Agreement dated as
of September 24, 2007, that certain Sixth Modification Agreement dated September
30, 2009, and that certain Seventh Modification Agreement dated January 5, 2010,
and as otherwise amended, extended, increased, replaced and supplemented from
time to time, the “Loan Agreement”);
 
                         WHEREAS, the Borrower is in violation of Section
VI(C)(16) of the Loan Agreement for failing to add Versar International as a
co-borrower (the “Versar International Default”);
 
                         WHEREAS, on or about the effective date hereof, Versar
entered into that certain Stock Purchase Agreement with Advent and the
shareholders of Advent (the “Purchase Agreement”), in which Versar, on the
Closing Date (as defined in the Purchase Agreement), will purchase and acquire
from the Shareholders (as defined in the Purchase Agreement) all or
substantially all of the share capital and voting ownership interests of Advent,
free and clear of all Liens, for the Purchase Price (as said terms are defined
in the Purchase Agreement) (the “Acquisition”).  Upon the Closing Date, Advent
will become a wholly-owned subsidiary of Versar.  As part of the Purchase Price
of Advent, Versar will issue Seller Notes (as defined in the Purchase Agreement)
to the Shareholders in the aggregate principal amount of One Million Seven
Hundred Fifty Thousand and No/100 Dollars ($1,750,000.00), subject to adjustment
pursuant to the Purchase Agreement.  Unless consented to by the Bank, the
Acquisition would violate the provisions of Sections VI(C)(7), (12) and (16) of
the Loan Agreement; and
 
 
 

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WHEREAS, in furtherance of the Acquisition, the Bank and each Borrower are
entering into that certain Joinder Agreement (the “Joinder Agreement”) dated as
of the date hereof to add Versar International and Advent as co-borrowers under
the Loan Agreement.  Moreover, the Borrower has requested that the Bank (i)
consent to the Acquisition, (ii) waive the Versar International Default, (iii)
increase the principal amount of the Note and (iv) make certain other
modifications to the Loan Agreement as more fully set forth herein, and the Bank
has consented to such requests subject to the execution of this Agreement and
the satisfaction of the conditions specified herein.
 
NOW, THEREFORE, for Ten and No/100 Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

1.           Definitions.  All capitalized terms used in this Agreement will
have the respective meanings assigned thereto in the Loan Agreement unless
otherwise defined in this Agreement.
 
2.           Consent and Waiver.  Subject to the satisfaction of the terms and
conditions of Sections 3 and 10 below, the Bank hereby (i) consents to the
Acquisition, the Purchase Agreement and the transactions contemplated thereby
and agrees that neither the Acquisition, nor the Purchase Agreement, nor the
transactions contemplated thereby, shall constitute a Default under Sections
VI(C)(7), (12) and (16) of the Loan Agreement and (ii) waives the Versar
International Default.  Additionally, notwithstanding anything to the contrary
in the Loan Agreement, Bank hereby agrees that Advent Environmental Puerto Rico,
Inc. (the “Dissolving Puerto Rican Subsidiary”) is not subject to the
requirements of Section VI(C)(16) of the Loan Agreement, which among other
things, requires that any Subsidiary of Versar be added as a Borrower and become
jointly and severally liable with each other Borrower for the payment in full of
the Obligations.  The consent and waiver as set forth above shall not be deemed
or otherwise construed to constitute a waiver of any provisions of the Loan
Agreement in connection with any other transaction, and the waivers contained
herein are otherwise subject to Sections VIII(B) and (E) of the Loan Agreement.
 
3.           Dissolution of Puerto Rican Subsidiary.  The Borrower hereby
acknowledges and agrees (a) that Advent is in the process of dissolving the
Dissolving Puerto Rican Subsidiary, (b) that the Dissolving Puerto Rican
Subsidiary is neither an operating entity or owns any material property or
assets, (c) that no Borrower shall cause or permit any property or assets to be
conveyed, sold or otherwise transferred to the Dissolving Puerto Rican
Subsidiary, and (d) the dissolution of the Dissolving Puerto Rican Subsidiary
shall be completed on or before May 31, 2010.
 
4.           Amendments to Loan Agreement.  Subject to the satisfaction of the
terms and conditions of Section 10 below, from and after the date of this
Agreement, the Loan Agreement and Loan Documents are hereby amended as follows:
 
  (a)         The definition of “Eligible Accounts” in Section I(A) of the Loan
Agreement is hereby amended by adding the following subsection after section
(xi):
 
        (xii)        accounts of any Account Debtor if 50% or more of such
accounts are unpaid more than 90 days after the date of the original bill.
 
 
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  (b)         Section II(E) of the Loan Agreement is hereby amended by replacing
it with the following:
 
  (E)         Fees.

(1)         Administrative Fee.  During the Commitment Period, the Borrower
shall pay to the Bank an administration fee of $1,000.00 per month, commencing
on the same day of the month following the Effective Date, and on the Date of
Maturity.

(2)         Letter of Credit Fee.  The Borrower shall pay to the Bank a
non-refundable letter of credit fee in the amount equal to the greater of (a)
two percent (2.0%) per annum of the outstanding amount of each Letter of Credit
or (b) $450.00.  For each Letter of Credit, said fee shall be payable in advance
on the date a Letter of Credit is issued, and on each anniversary of the
issuance thereof, for the number of days the Letter of Credit is to be
outstanding (calculated on the basis of a year of 360 days).
 
  (c)         Section II(F)(1) of the Loan Agreement is hereby amended by
replacing it with the following:

(1)        As a subfeature under the Commitment, the Bank agrees, on the terms
and conditions set forth in this Agreement and in the applicable Applications,
to make loans to the Borrower by issuing Letters of Credit for the account of
any Borrower (“Letter of Credit Loans”); provided, that the amount allocated to
the Letter of Credit Loans is a permissive use of such amount, and not a
mandatory allocation of the proceeds of the Commitment.  At no time shall the
Outstanding Letter of Credit Balance exceed the lesser of (i) $5,000,000.00 and
(ii) Commitment minus the outstanding principal balance of Advances at such time
(the “Letter of Credit Commitment”).  Each Letter of Credit shall be issued for
a term not to exceed one (1) year, although any Letter of Credit may be
automatically renewed in accordance with the terms and conditions of said Letter
of Credit and the related Application.  A Letter of Credit may be denominated
only in U.S. Dollars.  Each draft paid by the Bank under a Letter of Credit
shall, if such amount is available under the Letter of Credit Commitment, be
deemed an Advance and shall accrue interest at the rate then applicable under
the Note.  To the extent the amount of a draft paid by the Bank as aforesaid is
unavailable under the Letter of Credit Commitment, said amount shall be payable
by the Borrower ON DEMAND and until paid in full shall accrue interest at the
rate then applicable under the Note.  Subject to the foregoing, the Borrower may
borrow under this Section II(F)(1), prepay and re-borrow.
 
  (d)         Section VI(A)(4) of the Loan Agreement is hereby amended by
replacing “$22,500,000.00” with “$17,500,000.00”.

5.           Increase in Principal Sum of Note.  The maximum principal amount of
the Note is hereby increased from Seven Million Five Hundred Thousand and no/100
Dollars ($7,500,000.00) to Ten Million and no/100 Dollars ($10,000,000.00).  The
definition of “Principal Sum” in the Note is hereby changed to “Ten Million and
no/100 Dollars ($10,000,000.00)”.
 
 
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6.           Field Examinations.  The Borrower shall allow the Bank to audit the
Borrower’s Collateral at the Borrower’s expense if required by the Bank in its
sole discretion.
 
7.           BB&T Bank Accounts; Bank of Deposit.  On or before April 30, 2010,
Advent shall close all of its accounts at Branch Banking and Trust Company (the
“BB&T Bank Accounts”) and move all funds in such BB&T Bank Accounts to an
account maintained with Bank.  Pursuant to the terms of Section III(C)(2) of the
Loan Agreement, all Account Debtors of Advent shall be notified to make payments
under Receivables directly to the Bank, in accordance with the Bank’s standard
lockbox agreement.  Each Borrower shall at all times maintain its primary
deposit accounts with Bank.
 
8.           Post-Closing Conditions.  Bank shall have received, in form and
substance satisfactory to Bank, the following:
 
  (i)      evidence that the insurance policies of Advent, as required by the
Loan Agreement, are in full force and effect, together with appropriate evidence
showing loss payable and/or additional insured clauses or endorsements in favor
of the Bank on or before March 26, 2010; and
 
  (ii)      a favorable opinion of counsel for Advent addressed to the Bank on
or before April 2, 2010.
 
9.           Purchase Agreement.  Attached hereto as Exhibit A is a true,
correct and complete copy of the Purchase Agreement, which will be executed in
connection with the Acquisition.  The Purchase Agreement has not been modified,
changed, supplemented, canceled, amended or otherwise altered or affected; and
neither the Purchase Agreement nor any of the Seller Notes will be modified,
changed, supplemented, canceled, amended or otherwise altered, waived or
affected without the Bank’s prior written consent.  The Acquisition will be
effected, closed and consummated pursuant to, and in accordance with, the terms
and conditions of the Purchase Agreement and with all applicable laws.  Versar
promptly notify the Bank when the Purchase Agreement has been executed and is
effective.
 
10.         Limitation of Consent, Waiver and Amendments.  The consent, waiver
and amendments set forth in Sections 2 through 6, above, are effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (a) be a waiver of any existing or future Default or a consent
to amend or modify any other term or condition of any Loan Documents, other than
as necessary to the consummation of the transactions contemplated by the
Purchase Agreement, or (b) otherwise prejudice any right or remedy which the
Bank may now have or may have in the future under or in connection with any Loan
Documents.  The Bank’s agreement to consent to the Acquisition and the consent,
waiver and amendments set forth herein shall in no way obligate the Bank to make
any other modifications to the Loan Agreement or to waive the Borrower’s
continued compliance with any other terms of the Loan Documents, and shall not
limit or impair the Bank’s right to demand strict performance of all other terms
and covenants as of any date.
 
 
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11.           Representations and Warranties of the Borrower.  The Borrower
represents and warrants to the Bank that:
 
(a)           It has the power and authority to enter into and to perform this
Agreement, to execute and deliver all documents relating to this Agreement, and
to incur the obligations provided for in this Agreement, all of which have been
duly authorized and approved in accordance with the Borrower’s organizational
documents;
 
(b)           This Agreement, together with all documents executed pursuant
hereto, shall constitute when executed the valid and legally binding obligations
of the Borrower and all guarantors, if any, as the case may be, in accordance
with their respective terms;
 
(c)           Except with respect to events or circumstances occurring
subsequent to the date thereof and known to the Bank, all representations and
warranties made in the Loan Agreement are true and correct as of the date
hereof, with the same force and effect as if all representations and warranties
were fully set forth herein;
 
(d)           The Borrower’s obligations under the Loan Documents remain valid
and enforceable obligations;
 
(e)           As of the date hereof, the Borrower has no offsets or defenses
against the payment of any of the Obligations and no claims against the Bank;
and
 
(f)           As of the date hereof, no Default exists, other that the Versar
International Default.
 
12.           Waiver of Claims.  As a specific inducement to the Bank without
which the Borrower acknowledges the Bank would not enter into this Agreement and
the other documents executed in connection herewith, the Borrower hereby waives
any and all claims that it may have against the Bank, as of the date hereof,
arising out of or relating to the Loan Agreement or any Loan Document whether
sounding in contract, tort or any other basis.
 
13.           Conditions of Effectiveness.  This Agreement shall become
effective when, and only when, the Bank shall have received:
 
(i)          this Agreement, executed by each Borrower;
 
(ii)         the Joinder Agreement substantially in the form attached hereto as
Exhibit B, executed by each Borrower;
 
(iii)        the Subordination Agreement substantially in the form attached
hereto as Exhibit C, executed by each Borrower and each Junior Creditor named
therein;
 
(iv)        true and complete copies of the organizational documents and
governing documents and all recorded amendments thereto of Versar International
and Advent for its respective jurisdiction of organization;
 
(v)         good standing certificate of Versar International and Advent for its
respective jurisdiction of organization and for each jurisdiction in which
Versar International and Advent conducts business as of a date no earlier than
thirty (30) days prior to the date of this Agreement;
 
 
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(vi)        a certificate dated as of the date of this Agreement by the
Secretary of Versar International and Advent covering:
 
(A)           true and complete copies of Versar International and Advent’s
organizational and governing documents and all amendments thereto;
 
(B)           true and complete copies of the resolutions of its respective
Board of Directors authorizing (1) the execution, delivery and performance of
the Loan Documents to which it is a party, (2) the borrowings under the Loan
Documents, and (3) the granting of the Liens contemplated by the Loan Agreement
and the Loan Documents to which Versar International and Advent is a party;
 
(C)           the incumbency, authority and signatures of the officers of Versar
International and Advent authorized to sign this Agreement and the other Loan
Documents to which Vesar International and Advent is a party; and
 
(D)           the identity of current directors, common stock holders and other
equity holders of Versar International and Advent, as well as their respective
percentage ownership interests;
 
(vii)        certified copies, dated as of a recent date, of financing statement
searches of Versar International and Advent, as the Bank shall request,
accompanied by written evidence (including any termination statements) that the
Liens indicated in any such financing statements either constitute Permitted
Liens or have been or, will be terminated or released;
 
(viii)        evidence satisfactory to the Bank that financing statements in
form and substance reasonably satisfactory to the Bank have been properly filed
in each office where necessary to perfect the security interest of the Bank in
the Collateral of Versar International and Advent;
 
(ix)        evidence satisfactory to the Bank that the insurance policies of
Versar International, as required by the Loan Agreement, are in full force and
effect, together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements in favor of the Bank;
 
(x)        the favorable opinion of counsel for Versar International addressed
to the Bank; and
 
(xi)       payment of the Bank’s attorneys’ fees and expenses regarding this
Agreement, the Joinder Agreement and the review of the Acquisition Agreement.
 
14.           Loan Documents.  The other “Loan Documents”, as defined in the
Note, are hereby modified to the extent necessary to carry out the purposes of
this Agreement.
 
15.           Outstanding Balance.  The Borrower hereby acknowledges and agrees
that, as of the effective date hereof, the unpaid principal balance of the Note
is Zero Dollars ($0.00) and that there are no set-offs or defenses against the
Note, the Loan Agreement, or the other Loan Documents.
 
 
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16.           No Impairment.  This Agreement shall become a part of the Loan
Agreement by reference and nothing herein contained shall impair the security
now held for the Obligations, nor waive, annul, vary or affect any provision,
condition, covenant or agreement contained in the Loan Agreement except as
herein amended, nor affect or impair any rights, powers or remedies under the
Loan Agreement as hereby amended.  Furthermore, the Bank does hereby reserve all
rights and remedies it may have as against all parties who may be or may
hereafter become primarily or secondarily liable for the repayment of the
Obligations.
 
17.           No Novation.  The parties to this Agreement do not intend that
this Agreement be construed as a novation of the Note, the Loan Agreement, or
any of the other Loan Documents.
 
18.           Ratification.  Except as hereby expressly modified, the Note and
Loan Agreement shall otherwise be unchanged, shall remain in full force and
effect, and are hereby expressly approved, ratified and confirmed.  A legend
shall be placed on the face of the Note indicating that its terms have been
modified hereby, and the original of this Agreement shall be affixed to the
original of the Note.
 
19.           Applicable Law; Binding Effect.  This Agreement shall be governed
in all respects by the laws of the Commonwealth of Virginia and shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, personal representatives, successors and
assigns.
 
20.           Counterparts; Telecopied Signatures.  This Agreement may be
executed in any number of counterparts and by different parties to this
Agreement on separate counterparts, each of which, when so executed, shall be
deemed an original but all such counterparts shall constitute one and the same
instrument.  Any signature delivered by a party by facsimile transmission shall
be deemed to be an original signature to this Agreement.
 
[Signatures Appear on the Following Pages]
 
 
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WITNESS the following signatures and seals.

 
UNITED BANK
[SEAL]
           
By: 
  /s/ E. Allen Schirmer        
E. Allen Schirmer
       
Senior Vice President
 

 
[Signature Page to 8th Modification Agreement]
 
 
 

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VERSAR, INC.
[SEAL]
           
By: 
  /s/ James Charles Dobbs        
Name: James Charles Dobbs
       
Title: Senior Vice President
             
GEOMET TECHNOLOGIES, LLC
[SEAL]
           
By:
  /s/ James Charles Dobbs        
Name: James Charles Dobbs
       
Title: Vice President
             
VERSAR GLOBAL SOLUTIONS, INC.
[SEAL]
           
By:
  /s/ James Charles Dobbs        
Name: James Charles Dobbs
       
Title: Vice President
             
VEC CORP.
[SEAL]
           
By:
  /s/ James Charles Dobbs        
Name: James Charles Dobbs
       
Title: Vice President
             
VERSAR INTERNATIONAL, INC.
[SEAL]
           
By:
  /s/ James Charles Dobbs        
Name: James Charles Dobbs
       
Title: Vice President
             
ADVENT ENVIRONMENTAL, INC.
[SEAL]
           
By:
  /s/ Jeffrey C. Smoak        
Name: Jeffrey C. Smoak
       
Title: President
 

 
[Signature Page to 8th Modification Agreement]