EXHIBIT 10.3

SECOND AMENDMENT TO

CREDIT AND SECURITY AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this “Amendment”) is
made as of the          day of                     , 2007 by and among MTC
TECHNOLOGIES, INC., a Delaware corporation (“MTCT”), MTC TECHNOLOGIES, INC.
(formerly known as MODERN TECHNOLOGIES CORP.), an Ohio corporation (together
with MTCT, collectively, “Borrowers” and, individually, each a “Borrower”); the
financial institutions listed on Schedule 1 to the Credit Agreement
(collectively, the “Banks” and, individually, each a “Bank”); NATIONAL CITY
BANK, as lead arranger and administrative agent for the Banks (the “Agent”);
BRANCH BANKING AND TRUST COMPANY, as syndication agent (the “Syndication
Agent”); KEYBANK NATIONAL ASSOCIATION, as co-documentation agent (“KeyBank”);
and FIFTH THIRD BANK, as co-documentation agent (“Fifth Third Bank”; KeyBank and
Fifth Third Bank, collectively, the “Co-Documentation Agents”), under the
following circumstances:

A. The Borrowers, the Banks, the Agent, the Syndication Agent and the
Co-Documentation Agents are parties to a Credit and Security Agreement made
effective as of April 21, 2005, and amended by the First Amendment to Credit and
Security Agreement made effective as of October 27, 2006 (as the same may be
amended, supplemented, modified and/or restated from time to time, the “Credit
Agreement”). Unless otherwise defined herein, all capitalized terms used herein
shall have the respective meanings ascribed to those terms by the Credit
Agreement.

B. The Borrowers, the Banks, the Agent, the Syndication Agent and the
Co-Documentation Agents now desire to amend the Credit Agreement for the reasons
and upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, the Borrowers, the Banks, the Agent, the Syndication Agent and
the Co-Documentation Agents agree as follows:

Section 1. Amendment to Credit Agreement.

(a) Amendment to Section 1.1. The definition of “Consolidated Fixed Charges” is
hereby amended in its entirety to read as follows.

“Consolidated Fixed Charges” shall mean, for any period, with respect to MTCT,
on a Consolidated basis and in accordance with GAAP, without duplication, the
aggregate of (a) Consolidated Interest Expense, (b) scheduled principal payments
on Consolidated Funded Indebtedness due within the current period, (c) lease
payments on Consolidated Rental Obligations for such period, (d) Consolidated
Capital Expenditures (excluding capital expenditures that are financed other
than by the Loans), and (d) all Capital Distributions by any Company.

--------------------------------------------------------------------------------

(b) Amendment to Section 5.7(b). Section 5.7(b) of the Credit Agreement
(captioned Fixed Coverage Charge) is hereby amended in its entirety to read as
follows:

Borrowers shall not suffer or permit at any time the Fixed Charge Coverage Ratio
to be less than 1.20 to 1.00.

(c) Amendment to Section 5.19 of the Credit Agreement. Section 5.19 of the
Credit Agreement (captioned Restricted Payments) is hereby amended in its
entirety to read as follows:

No Company shall make or commit itself to pay any Restricted Payment at any
time. Notwithstanding anything contained in the foregoing however, the
repurchase by MTCT of shares of common stock of MTCT having a fair market value
at the time of such repurchase of no more than $20,000,000 by no later than
December 31, 2007 shall not constitute a Restricted Payment for the purposes of
this Section 5.19.

Section 2. Covenant Violation. The Banks, the Agent, the Syndication Agent and
the Co-Documentation Agents hereby agree that the failure of the Borrowers to be
in compliance with the Fixed Charge Coverage Ratio set forth in Section 5.7(b)
of the Credit Agreement for the four fiscal quarters of MTCT ending on
December 31, 2006 is hereby waived and shall not constitute an Event of Default.
Such waiver shall not constitute a waiver of any other Default or Event of
Default now or hereafter continuing under the Credit Agreement.

Section 3. Effective Date. This Amendment shall take effect immediately upon
Agent’s receipt of an original counterpart of this Amendment and the attached
Confirmation of Guarantees executed by all parties hereto and thereto.

(a) The Agent’s receipt of an original counterpart of this Amendment executed by
all parties hereto;

(b) The Agent’s receipt of the original Confirmation of Guarantees executed by
Aerospace Integration Corporation, Amcomp Corporation, Command Technologies,
Inc., International Consultants, Inc., Manufacturing Technology, Inc., Onboard
Software, Inc., and Vitronics Inc.; and

(c) Receipt by the Agent of all out-of-pocket costs and expenses incurred in
making the Loans and entering into this Agreement (including, without
limitation, all reasonable attorney fees, audit fees and filing fees incurred by
the Agent); and

(d) With respect to MTC Technologies Services, Inc., an Ohio corporation (“MTC
Services”), (i) a Guaranty of Payment of all of the Debt by MTC Services, such
agreement to be in form and substance acceptable to the Agent, (ii) a Pledge
Agreement executed by the appropriate Borrower of all of the share certificates
(or other evidence of equity) of MTC Services, and (iii) any such Security
Documents, corporate governance and authorization documents, and an opinion of
counsel, as may be deemed necessary or advisable by the Agent. Borrowers hereby
represent and warrant to the Banks, the Agent, the Syndication Agent and the
Co-Documentation Agents

 

2

--------------------------------------------------------------------------------

that MTC Services has no location where any Collateral of MTC Services
consisting of tangible personal property having an aggregate value of $1,000,000
or greater is stored or maintained that is not owned by MTC Services or a
Borrower.

Section 4. Costs and Expenses. The Borrowers hereby agree to reimburse the
Banks, the Agent, the Syndication Agent and the Co-Documentation Agents for all
costs and expenses incurred by Agent and Banks in connection with this Amendment
and the transactions contemplated hereby, including their respective legal fees
and expenses.

Section 5. Miscellaneous. The Borrowers, the Banks, the Agent, the Syndication
Agent and the Co-Documentation Agents hereby agree that:

(a) The Credit Agreement, as amended hereby, and the other Loan Documents remain
otherwise unmodified and in full force and effect.

(b) Each Borrower hereby represents and warrants the Banks, the Agent, the
Syndication Agent and the Co-Documentation Agents that as of the date hereof
(i) no Default or Event of Default has occurred and is continuing (ii) the
representations and warranties of such Borrower in the Credit Agreement and the
other Loan Documents are true and correct in all material respects as if made on
the date hereof (except to the extent that any expressly relates to an earlier
date), and (iii) such Borrower has no cause of action, at law or in equity,
against the Banks, the Agent, the Syndication Agent or the Co-Documentation
Agents, including, without limitation, any offset, counterclaim or defense with
respect to the Notes or the Loans evidenced thereby or any Loan Document.

(c) This Amendment is limited precisely as written and shall not (i) constitute
a consent under or waiver or modification of any other term or condition of the
Credit Agreement, the other Loan Documents or any other agreements, instruments
or documents referred to therein, or (ii) prejudice or otherwise affect any
right or privilege which the Banks, the Agent, the Syndication Agent and the
Co-Documentation Agents now have or may have in the future under the Credit
Agreement, the other Loan Documents or under any of the other agreements,
documents or instruments therein.

(d) This Amendment may be executed in any one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

(e) This Amendment shall be governed by, and construed and enforced in
accordance with, the laws of the State of Ohio.

(Balance of Page Intentionally Omitted)

 

3

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused a counterpart of this
Amendment to be duly executed and delivered as of the date first above written.

 

Address:

   4032 Linden Avenue    MTC TECHNOLOGIES, INC., a Delaware    Dayton, OH 45432
   corporation    Attention: Michael Gearhardt       Fax: (937) 252-8240      
   By: /s/ Michael Gearhardt                                       
                        Name: Michael Gearhardt       Title: Senior VP and Chief
Financial Officer

Address:

   4032 Linden Avenue    MTC TECHNOLOGIES, INC., formerly    Dayton, OH 45432   
known as MODERN TECHNOLOGIES CORP.,    Attention: Michael Gearhardt    an Ohio
corporation    Fax: (937) 252-8240          By: /s/ Michael
Gearhardt                                                                Name:
Michael Gearhardt       Title: Senior VP and Chief Financial Officer

Address:

   629 Euclid Avenue    NATIONAL CITY BANK    LOC. 01-3034    as Agent and as a
Bank    Cleveland, Ohio 44114       Attention: Capital Markets Division       -
Loan Syndications    By: /s/ Neal J.
Hinker                                                                     Fax:
(216) 222-7079    Name: Neal J. Hinker       Title: Sr. Vice President

[SIGNATURES OF BANKS CONTINUE ON NEXT PAGE]

 

4

--------------------------------------------------------------------------------

Address:

   200 West Second Street    BRANCH BANKING AND TRUST    16th Floor    COMPANY,
as Syndication Agent and as a    Winston-Salem, NC 27101    Bank    Attention:
Robert Bass       Fax: (336) 733-2740    By: /s/ Roberts A.
Bass                                                                Name:
Roberts A. Bass       Title: Senior Vice President

Address:

   34 North Main Street    KEYBANK NATIONAL ASSOCIATION,    Dayton OH 45402   
as Co-Documentation Agent and as a Bank    Attention: Joseph Zehenny       Fax:
(937) 586-7695    By: /s/ Joseph Zehenny                                       
                          Name: Joseph Zehenny       Title: Senior Vice
President

Address:

   110 North Main Street    FIFTH THIRD BANK,    Dayton, OH 45402    as
Co-Documentation Agent and as a Bank    Attention: Michael Lopez       Fax:
(937) 227-3027    By: /s/ Michael Lopez                                       
                            Name: Michael Lopez       Title: Assistant Vice
President

[SIGNATURES OF BANKS CONTINUE ON NEXT PAGE]

 

5

--------------------------------------------------------------------------------

Address:

   40 North Main Street    JPMORGAN CHASE BANK, N.A    Dayton, OH 45423      
Attention: Lisa Huelskamp    By: /s/ John B. Middleberg                       
Fax: (937) 449-4885    Name: John B. Middleberg       Title: SVP

Address:

   9100 Centre Pointe Drive    COMERICA BANK    Suite 240       West Chester, OH
45069    By: /s/ Harold Dalton                                Attention: Steven
T. Siple    Name: Harold Dalton    Fax: (513) 942-4904    Title: V.P.

Address:

   201 East Fifth Street    PNC BANK, N.A.    Cincinnati, OH 45202      
Attention: Kristina McAneny    By: /s/ Christopher Belletti                    
   Fax: (513) 651-8952    Name: Christopher Belletti       Title: VP

 

6

--------------------------------------------------------------------------------

CONFIRMATION OF GUARANTY

The undersigned, AMCOMP CORPORATION, a California corporation (“Amcomp”),
COMMAND TECHNOLOGIES, INC., a Virginia corporation (“Command”), INTERNATIONAL
CONSULTANTS, INC., an Ohio corporation (“ICI”), VITRONICS INC., a New Jersey
corporation (“Vitronics”), MANUFACTURING TECHNOLOGY, INC., a Florida corporation
(“MTI”), ONBOARD SOFTWARE, INC., a Texas corporation (“Onboard”), and AEROSPACE
INTEGRATION CORPORATION, a Florida corporation (“AIC”; collectively with Amcomp,
Command, ICI, Vitronics, MTI and Onboard, the “Guarantors”), jointly and
severally hereby:

(A) Acknowledge that MTC TECHNOLOGIES, INC., a Delaware corporation (“MTCT”),
MTC TECHNOLOGIES, INC. (formerly known as MODERN TECHNOLOGIES CORP.), an Ohio
corporation (together with MTCT, collectively, “Borrowers” and, individually,
each a “Borrower”), the financial institutions listed on Schedule 1 to the
Credit Agreement (defined herein) (collectively, the “Banks” and, individually,
each a “Bank”); and NATIONAL CITY BANK, as lead arranger and administrative
agent for the Banks (“Agent”) have entered into that certain Credit and Security
Agreement made effective as of April 21, 2005, and amended by the First
Amendment to Credit and Security Agreement dated October 27, 2006 and the Second
Amendment to Credit and Security Agreement dated as of the date hereof (as so
amended and as may be further amended from time to time, the “Credit
Agreement”), whereby the Banks have extended financial accommodations to the
Borrowers, and the Borrowers have executed Notes (as defined in the Credit
Agreement) in favor of the Banks, in evidence thereof. Terms used but not
defined herein shall have the meaning ascribed thereto in the Credit Agreement.

(B) Acknowledge that each Guarantor has guaranteed payment of the principal and
interest of all Notes each pursuant to a separate Guaranty of Payment of Debt
each dated as of the date hereof (collectively, the “Guarantees”).

(D) Acknowledge that the Guarantors have each received and had an opportunity to
review the Second Amendment to Credit and Security Agreement referred to in the
first paragraph of this Confirmation of Guaranty and consent to the amendments
to the Credit Agreement.

(E) Represent and warrant to the Agent and the Banks that the undersigned have
no defenses, offsets or counterclaims, either individually or jointly, with
respect to their obligations under the Guarantees and the Guarantees remain
unmodified and in full force and effect.

(Balance of Page Intentionally Omitted)

--------------------------------------------------------------------------------

This Confirmation of Guaranty is executed as of the 9th day of March, 2007.

 

AMCOMP CORPORATION, a California corporation By:  

/s/ Michael Gearhardt

Name:  

Michael Gearhardt

Title:  

Chief Financial Officer

COMMAND TECHNOLOGIES, INC., a Virginia corporation By:  

/s/ Michael Gearhardt

Name:  

Michael Gearhardt

Title:  

Chief Financial Officer

INTERNATIONAL CONSULTANTS, INC., an Ohio corporation By:  

/s/ Michael Gearhardt

Name:  

Michael Gearhardt

Title:  

Chief Financial Officer

MANUFACTURING TECHNOLOGY, INC., a Florida corporation By:  

/s/ Michael Gearhardt

Name:  

Michael Gearhardt

Title:  

Chief Financial Officer

[SIGNATURES OF GUARANTORS CONTINUE ON NEXT PAGE]

 

2

--------------------------------------------------------------------------------

VITRONICS INC., a New Jersey corporation

By:  

/s/ Michael Gearhardt

Name:  

Michael Gearhardt

Title:  

Chief Financial Officer

ONBOARD SOFTWARE, INC., a Texas

corporation

By:  

/s/ Michael Gearhardt

Name:  

Michael Gearhardt

Title:  

Chief Financial Officer

AEROSPACE INTEGRATION

CORPORATION,

a Florida corporation

By:  

/s/ Michael Gearhardt

Name:  

Michael Gearhardt

Title:  

Senior Vice President

 

3