VSR Versar, Inc. (delisted)

As previously disclosed by Versar, Inc. (the “Company”), on May 26, 2016, the Company, certain of its subsidiaries and Bank America. N.A. (the “Lender”) as the lender and letter of credit issuer for a revolving credit facility in the amount of $25 million and a term facility in the amount of $5 million entered into a Second Forbearance Agreement pursuant to which the Lender agreed to forbear from exercising any and all rights or remedies available to it under the Loan Agreement and applicable law related to certain covenant defaults for a period ending on the earliest to occur of: (a) a breach by the Company of any obligation or covenant under the Forbearance Agreement, (b) any other default or event of default under the Loan Agreement or (c) June 30, 2016 (the “Forbearance Period”).

The covenant defaults under the credit facility have continued through the fiscal quarter ended July 1, 2016 and on July 1, 2016, the Company and the Lender entered into a Third Forbearance Agreement (“Third Agreement”), superseding the Second Forbearance Agreement. The Third Agreement extends the Forbearance Period through September 30, 2016 and allows the Company to borrow funds pursuant to the Loan Agreement, consistent with current Company needs as set forth in a 13-week cash flow forecast required by the Third Agreement and subject to certain caps on revolving borrowings initially of $15.5 million and reducing to $13.5 million for the period September 1 through September 30, 2016 as set forth therein. In addition, the Third Agreement provides that from and after June 30, 2016 outstanding amounts under the credit facility will bear interest at the default interest rate set forth in the credit facility equal to the LIBOR Daily Floating Rate (as defined in the credit facility) plus 3.95%, requires that the Company provide a 13 week cash flow forecast updated on a weekly basis to the Lender, and waives any provisions prohibiting the financing of insurance premiums for policies covering the period of July 1, 2016 to June 30, 2017 in the ordinary course of the Company’s business and in amounts consistent with past practices. The Third Agreement also requires the Company to pursue alternative sources of funding for its ongoing business operations.