TAX INDEMNIFICATION AGREEMENT



         TAX INDEMNIFICATION AGREEMENT, dated as of June 10, 2002 (the

"Agreement"), between MTC Technologies, Inc., a Delaware corporation (the

"Company"), and the person listed on the signature page hereto (the

"Stockholder").



         WHEREAS, the execution and delivery by the Company and the Stockholder

of this Agreement is a condition to the closing of the Public Offering (as

hereinafter defined);



         WHEREAS, the Company has been an "S corporation" (as defined in section

1361(a)(1) of the Code (as hereinafter defined)) for federal tax purposes since

April 2002 and the Predecessor (as hereinafter defined) was an S

corporation for federal tax purposes since October 1986.



         WHEREAS, the Company and the Stockholder plan to terminate the S

corporation status of the Company prior to the closing of the Public Offering

and, as a result, the Company will be a "C corporation" (as defined in section

1361(a)(2) of the Code) beginning on the Termination Date (as hereinafter

defined); and



         WHEREAS, the Company and the Stockholder wish to provide for the

termination of this Agreement such that it has no effect should the Public

Offering not close.



         NOW, THEREFORE, in consideration of the foregoing premises and the

covenants and agreements hereinafter set forth, and other good and valuable

consideration, the receipt and sufficiency of which are hereby acknowledged, and

intending to be legally bound hereby, the parties hereto agree as follows:



                             ARTICLE I. DEFINITIONS



         1.1.     DEFINITIONS. The following terms as used herein have the

following meanings:



         "Adjustment Amount" means the net increase in taxable income of the

Stockholder or the Company based on a Final Determination and that gives rise to

a payment pursuant to Section 3.3 or 3.4 hereof.



         "Affected Stockholder" means the Stockholder where his tax returns are

adjusted in a manner which gives rise to an obligation of the Company (whether

directly or as successor to the Predecessor) pursuant to Section 3.3 hereof.



         "Blended Rate" means a percentage that equals the sum of the maximum

marginal federal and state individual income tax rates for an individual

residing in Ohio (after giving effect to the full deductibility of state income

taxes for federal income tax purposes) in effect for the year of the adjustment

to a tax return of the Company, the Predecessor or the Stockholder that gives

rise to a correlative adjustment to a tax return of the Stockholder, the

Predecessor or the Company, respectively. For example, if an adjustment results

in an amount due from the Stockholder hereunder, the year of the Company's

return or the Predecessor's return, as the case





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may be, that was adjusted will determine the Blended Rate to be used in

computing the amount due.



         "Closing Date" means the date on which the Public Offering closes.



         "Code" means the Internal Revenue Code of 1986, as amended.



         "C Short Year" means that portion of the Company's year beginning on

the Termination Date until and including the last day of the S Termination Year.



         "C Taxable Year" means any taxable year (or portion thereof) of the

Company during which the Company is a C corporation, including the C Short Year.



         "Final Determination" means the final resolution of any income tax

liability (including all related interest and penalties) for a taxable period. A

Final Determination will result from the first to occur of: (i) the expiration

of 30 days after acceptance by the Internal Revenue Service (the "IRS") of a

Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and

Acceptance of Overassessment (the "Waiver") on Federal Revenue Form 870 or

870-AD (or any successor comparable form or the expiration of a comparable

period with respect to any comparable agreement or form under the laws of any

other jurisdiction), unless, within such period, the applicable taxpayer gives

notice of that taxpayer's intention to attempt to recover all or part of any

amount paid pursuant to the Waiver by filing a timely claim for refund; (ii) a

decision, judgment, decree or other order by a court of competent jurisdiction

that is not subject to further judicial review (by appeal or otherwise) and has

become final; (iii) the execution of a closing agreement under section 7121 of

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