Exhibit 10.3



TWELFTH AMENDMENT TO CREDIT AGREEMENT



THIS TWELFTH AMENDMENT TO CREDIT AGREEMENT (the Twelfth Amendment) is made effective as of
August 12, 2005, among PEMCO AVIATION GROUP, INC.,a Delaware corporation, PEMCO AEROPLEX, INC., an Alabama corporation, PEMCO ENGINEERS, INC., a Delaware corporation, PEMCO WORLD AIR SERVICES, INC., a Delaware
corporation, SPACE VECTOR CORPORATION, a Delaware corporation (collectively, the Borrowers), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (successor by merger to SouthTrust Bank), as Agent (the
Agent), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (successor by merger to SouthTrust Bank), as a Lender, and COMPASS BANK, an Alabama banking corporation, as a Lender. Capitalized terms used herein
but not defined shall have the meanings as set forth in the Credit Agreement, as amended (as hereinafter defined).



WHEREAS, pursuant to that certain Credit Agreement dated as of December 16, 2002, among Borrowers, Agent, and the other Lender Parties a party
thereto (the Credit Agreement), Lenders made available, subject to the terms and conditions thereof, (i) the Revolving Loan of up to $20,000,000.00, (ii) the Swing Line Loan of up to $5,000,000.00, and (iii) the Term Loan
of up to $5,000,000.00; and



WHEREAS, pursuant to that
certain First Amendment to Credit Agreement dated as of May 22, 2003, among Borrowers, Agent, and the other Lender Parties a party thereto (the First Amendment), the Credit Agreement was amended in order to extend to Borrowers the
Treasury Stock Loan in the amount of up to $5,000,000.00; and



WHEREAS, pursuant to that certain Second Amendment to Credit Agreement dated as of November 24, 2003, among Borrowers, Agent, and the other Lender Parties a party thereto (the Second Amendment), the Credit Agreement
was amended in order to (i) temporarily increase the Swing Line Loan Commitment to up to $7,000,000.00, and (ii) temporarily increase the Revolving Loan Commitment to up to $22,000,000.00; and



WHEREAS, pursuant to that certain Third Amendment to Credit Agreement
dated as of December 16, 2003, among Borrowers, Agent, and the other Lender Parties a party thereto (the Third Amendment), the Credit Agreement was amended in order to (i) increase the Swing Line Loan Commitment to up to
$6,000,000.00, (ii) increase the Revolving Loan Commitment to up to $25,000,000.00, and (iii) extend the Revolving Loan Maturity Date from December 16, 2004 until December 16, 2005; and



WHEREAS, pursuant to that certain Fourth Amendment to Credit Agreement
dated as of May 7, 2004, among Borrowers, Agent, and the other Lender Parties a party thereto (the Fourth Amendment), the Credit Agreement was amended in order to (i) temporarily increase the Revolving Loan Commitment to up to
$27,000,000.00, and (ii) increase the Letter of Credit Commitment to up to $1,500,000.00; and



WHEREAS, pursuant to that certain Fifth Amendment to Credit Agreement dated as of May 22, 2004, among Borrowers, Agent, and the other Lender
Parties a party thereto (the Fifth



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Amendment), the Credit Agreement was amended in order to, among other things, extend the Treasury Stock Loan Advancement Termination Date from
May 22, 2004 to May 22, 2005;



WHEREAS,
pursuant to that certain Sixth Amendment to Credit Agreement dated as of August 1, 2004, among Borrowers, Agent, and the other Lender Parties a party thereto (the Sixth Amendment), the Credit Agreement was amended in order to extend
until December 31, 2004 the temporary increase of the Revolving Loan Commitment to up to $27,000,000.00; and



WHEREAS, pursuant to that certain Seventh Amendment to Credit Agreement dated as of November 5, 2004, among Borrowers, Agent, and the other
Lender Parties a party thereto (the Seventh Amendment), the Credit Agreement was amended in order to, among other things, temporarily increase the Revolving Loan Commitment to up to $33,000,000.00; and



WHEREAS, pursuant to that certain Eighth Amendment to Credit Agreement
dated as of December 22, 2004, among Borrowers, Agent, and the other Lender Parties a party thereto (the Eighth Amendment), the Credit Agreement was amended in order to, among other things, (i) extend until April 30, 2005
the temporary increase of the Revolving Loan Commitment to up to $33,000,000.00, and (ii) extend the Revolving Loan Maturity Date from December 16, 2005 until April 30, 2006; and



WHEREAS, pursuant to that certain Ninth Amendment to Credit Agreement
dated as of March 31, 2005, among Borrowers, Agent, and the other Lender Parties a party thereto (the Ninth Amendment), the Credit Agreement was amended in order to, among other things, amend certain of the financial covenants set
forth therein;



WHEREAS, pursuant to that certain Tenth
Amendment to Credit Agreement dated as of April 30, 2005, among Borrowers, Agent, and the other Lender Parties a party thereto (the Tenth Amendment), the Credit Agreement was amended in order to (i) extend until June 30,
2005 the temporary increase of the Revolving Loan Commitment to up to $33,000,000.00, and (ii) amend the repayment terms of the Treasury Stock Loan; and



WHEREAS, pursuant to that certain Eleventh Amendment to Credit Agreement dated as of June 28, 2005, among Borrowers, Agent, and the other
Lender Parties a party thereto (the Eleventh Amendment), the Credit Agreement was amended in order to (i) extend the Revolving Loan Maturity Date from April 30, 2006 until October 15, 2006, (ii) change the Revolving
Loan Commitment to $28,000,000.00, and (iii) amend the Borrowing Base (the Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the
Seventh Amendment, the Eighth Amendment, the Ninth Amendment, the Tenth Amendment and the Eleventh Amendment, hereinafter referred to as the Credit Agreement, as amended); and



WHEREAS, Lender Parties and Borrowers have agreed to amend the Credit Agreement, as amended, in order to, among other
things, amend certain of the financial covenants set forth therein, all as hereinafter provided .



NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree that the Credit Agreement, as amended, is hereby amended as follows:



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1. The Credit Agreement, as amended, is hereby amended by deleting Section 10.3(A) in its entirety,
and by substituting the following new Section 10.3(A) in lieu thereof:



(A) Borrower will maintain or cause to be maintained at all times during the term of this Agreement:



(1) Beginning with the Fiscal Year-End of December 31, 2005, a Fixed Charge Coverage of not less than 1.0 to 1.0;



(2) Beginning with the Quarter-End of September 30,
2005, Adjusted Tangible Net Worth of not less than $38,449,000.00, plus 60% of the Net Income as of each Quarter-End beginning December 31, 2005; and



(3) A ratio of Adjusted Liabilities to Adjusted Tangible Net Worth of not more than 2.5 to 1.0; and



(4) A Borrowing Base such that the balance of the Revolving
Loan will not, at any time, exceed the Borrowing Base;



2. The
Credit Agreement, as amended, is hereby amended by deleting Section 11.1(A) in its entirety, and by substituting the following new Section 11.1(A) in lieu thereof:



(A) Except as may be waived by Agent in its discretion, Borrower shall fail to pay as and when due any
installment of principal or interest or fee or any other amount payable under this Agreement or any Note.



3. As a condition to the effectiveness of this Twelfth Amendment (a) Agent shall have received appropriate resolutions of Borrowers directors,
in a form satisfactory to Agent, authorizing Borrowers to enter into this Twelfth Amendment and any other documentation required by Agent in connection with this Twelfth Amendment; (b) Agent shall have received a Bringdown and Incumbency
Certificate of each Borrower, in a form satisfactory to Agent; (c) Borrowers shall have executed and delivered to Agent all further documents and performed all other acts which Agent reasonably deems necessary or appropriate to perfect or
protect its security for the Loans; (d) Borrowers shall have paid to Agent (for the account of the Revolving Loan Lenders, Pro Rata) a fee in the amount of $50,000.00; and (e) Borrowers shall have delivered to Agent such other
documentation, if any, as may be requested by Agent to satisfy Agent that this Twelfth Amendment, and all other documents and instruments executed by Borrowers in connection with this Twelfth Amendment or in furtherance hereof have each been duly
authorized, executed and delivered on behalf of Borrowers, and constitute valid and binding obligations of Borrowers.



4. Each Borrower represents and warrants to Lender Parties that all representations and warranties given by such Borrower in Article IX of the Credit
Agreement, as amended, are true and correct as of the date of this Twelfth Amendment, except to the extent affected by this Twelfth Amendment. Each Borrower represents and warrants to Lender Parties that as of the date of this Twelfth Amendment,
such Borrower is in full compliance with all of the covenants of such Borrower contained in Article X of the Credit Agreement, as amended, except (i)



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Borrowers are not in compliance with respect to the financial covenant regarding Fixed Charge Coverage (and Agent and Lenders hereby waive such
non-compliance for the Quarter-Ends of June 30, 2005 and September 30, 2005), and (ii) to the extent affected by this Twelfth Amendment.



5. Except as heretofore or herein expressly modified, or as may otherwise be inconsistent with the terms of this Twelfth Amendment (in which case the
terms and conditions of this Twelfth Amendment shall govern), all terms of the Credit Agreement, as amended, and all documents and instruments executed and delivered in furtherance thereof shall be and remain in full force and effect, and the same
are hereby ratified and confirmed in all respects.



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IN WITNESS WHEREOF, this Twelfth Amendment has been duly executed as of the day and year first
above written.



|                 |  |              |  |                                                       |  |                  |  |                                                
|---------------- |  | ------------ |  | ----------------------------------------------------- |  | ---------------- |  | -----------------------------------------------
|WITNESS:         |  |              |  | BORROWERS:  PEMCO AVIATION GROUP, INC.               
|                 |  |              | 
|/s/ Doris Sewell |  |              |  | By:                                                   |  | /s/ John R. Lee 
|Print Name:      |  | Doris Sewell |  |                                                       |  | Its:             |  | Senior Vice President & Chief Financial Officer
|                 |  |             
|                 |  |              |  | PEMCO AEROPLEX, INC.                                 
|                 |  |              | 
|/s/ Doris Sewell |  |              |  | By:                                                   |  | /s/ John R. Lee 
|Print Name:      |  | Doris Sewell |  |                                                       |  | Its:             |  | Chief Financial Officer                        
|                 |  |             
|                 |  |              |  | PEMCO ENGINEERS, INC.                                
|                 |  |              | 
|/s/ Doris Sewell |  |              |  | By:                                                   |  | /s/ John R. Lee 
|Print Name:      |  | Doris Sewell |  |                                                       |  | Its:             |  | Chief Financial Officer                        
|                 |  |             
|                 |  |              |  | PEMCO WORLD AIR SERVICES, INC.                       
|                 |  |              | 
|/s/ Doris Sewell |  |              |  | By:                                                   |  | /s/ John R. Lee 
|Print Name:      |  | Doris Sewell |  |                                                       |  | Its:             |  | Chief Financial Officer                        
|                 |  |             
|                 |  |              |  | SPACE VECTOR CORPORATION                             
|                 |  |              | 
|/s/ Doris Sewell |  |              |  | By:                                                   |  | /s/ John R. Lee 
|Print Name:      |  | Doris Sewell |  |                                                       |  | Its:             |  | Chief Financial Officer                        
|                 |  |             
|                 |  |              |  | AGENT:  WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent
|                 |  |              | 
|/s/ Chris Abele  |  |              |  | By:                                                   |  | /s/ Austin Davis
|Print Name:      |  | Chris Abele  |  |                                                       |  | Its:             |  | Vice President                                 





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|                |  |             |  |                                               |  |                  |  |               
|--------------- |  | ----------- |  | --------------------------------------------- |  | ---------------- |  | --------------
|                |  |             |  | LENDERS:  WACHOVIA BANK, NATIONAL ASSOCIATION
|                |  |             | 
|/s/ Chris Abele |  |             |  | By:                                           |  | /s/ Austin Davis
|Print Name:     |  | Chris Abele |  |                                               |  | Its:             |  | Vice President



|                   |  |                |  |              |  |                 |  |                      
|------------------ |  | -------------- |  | ------------ |  | --------------- |  | ---------------------
|                   |  |                |  | COMPASS BANK
|                   |  |                | 
|/s/ Evelyn Mauldin |  |                |  | By:          |  | /s/ Alex Morton
|Print Name:        |  | Evelyn Mauldin |  |              |  | Its:            |  | Senior Vice President



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