SECOND AMENDMENT TO CREDIT AGREEMENT

SECOND AMENDMENT (the “Amendment”) entered into as of July 7, 2009 by and between CPI AEROSTRUCTURES, INC. (the “Borrower”), and SOVEREIGN BANK (the “Bank”).

WHEREAS , the Borrower and the Bank are parties to that Amended and Restated Loan Agreement dated as of August 13, 2007, as amended by that  First  Amendment dated as of October 22, 2008, as same may be hereafter amended and modified (the “Agreement”); and

WHEREAS , the Borrower has requested that the Bank make available, and the Bank has agreed to extend to Borrower, an additional $1,000,000.00 under the revolving credit facility, subject to the provisions hereof; and

WHEREAS , the Borrower has requested that the Bank amend, and the Bank has agreed to amend, certain provisions of the Agreement, subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE , the parties hereto hereby agree as follows:

1.   All capitalized terms used herein, unless otherwise defined herein, have the same meanings provided therefor in the Agreement.

2.   Subject to the terms and conditions hereof, the Agreement is hereby amended as follows:

(A)   Section 1.1 is amended by deleting the definition of Termination Date contained therein, and  substituting the following therefor:

“‘Termination Date’ shall mean (i) with respect to Revolving Credit Loans, August 31, 2011, or (ii) with respect to the Term Loan, the Maturity Date, or if such dates are not a Business Day, the Business Day next succeeding such date.”

(B)           Section 2.1 is amended by deleting the language contained therein and substituting the following therefor:

“2.1           Revolving Credit Commitment .  Subject to the terms and conditions hereof, the Bank agrees to make

revolving credit loans to the Borrower (collectively, the “Revolving Credit Loans”) from time to time during the Commitment Period in the aggregate principal amount at any one time outstanding of up to (but not exceeding) $3,500,000.00, as such maximum available amount may be hereafter reduced as provided in this Agreement (the “Commitment”).  During the Commitment Period, the Borrower may use the Commitment for obtaining Revolving Credit Loans by borrowing, paying, prepaying in whole or in part and reborrowing on a revolving basis, all in accordance with the terms and conditions hereof provided that no more than six (6) types of Libor Rate Loans may be outstanding at any time.”

(C)           Section 2.2 is amended by deleting the language contained therein and substituting the following therefor:

“2.2            Revolving Credit Note .  The Revolving Credit Loans made by the Bank to the Borrower pursuant to Section 2.1 hereof shall be evidenced by a promissory note of the Borrower substantially in the form of Exhibit A hereto with appropriate insertions (the “Revolving Credit Note”), payable to the order of the Bank and representing the obligation of the Borrower to pay the lesser of (a) the amount of the Commitment, or (b) the aggregate unpaid principal amount of all Revolving Credit Loans made by the Bank to the Borrower, with interest thereon as hereinafter prescribed.  The Revolving Credit Note shall (i) be dated the date hereof, (ii) be stated to mature on the Termination Date and (iii) bear interest with respect to the unpaid principal balance thereof from time to time outstanding at a rate per annum to be elected by the Borrower in accordance with the notice provisions set forth in Section 2.3 hereof, and, in the case of Libor Rate Loans, for the Interest Period therein specified, equal to (y) the greater of 4.0% or 3.5% in excess of the Libor Rate, or (z) the greater of 4% or .75% in excess of the Prime Rate.  All computations of interest under this Agreement shall be made on the basis of a three hundred sixty (360) day year and the actual number of days elapsed.  In all cases, interest shall be payable as provided in Section 2.9(a) hereof, subject to Section 10.13 hereof.  After any stated or accelerated maturity, the Revolving Credit Note shall bear interest at the rate set forth in Section 2.9(c) hereof, subject to Section 10.13 hereof.”

(D)           Section 2.4 is amended by deleting the language contained therein and substituting the following therefor:

“2.4            Commitment Fee .  As additional compensation for the Commitment on the revolving basis provided for herein, the Borrower agrees to pay the Bank a commitment fee for the Commitment Period at the rate of .50% per annum on the average daily unused portion of the Commitment hereunder.  Such commitment fee shall be payable quarterly, on the last day of each March, June, September and December during the Commitment Period, commencing September 30, 2009, and on the Termination Date.  If the Borrower so fails to pay any such amount to the Bank the obligations to make such payment shall bear interest from such date not paid when due at the Post Default Rate.  The obligation to so pay interest shall not be construed so as to waive the requirement to pay the commitment fees as hereinabove set forth.”

(E)           Section 7.7 is amended by deleting the language contained therein and substituting the following therefor:

“7.7            Sales of Receivables; Sale - Leasebacks .  Sell, discount or otherwise dispose of notes, accounts receivable or other obligations owing to the Borrower, with or without recourse, except for the purpose of collection in the ordinary course of business, other than accounts receivable owed by United Technologies Corporation and subject to that Lien Priority Agreement between the Bank and Citibank, N.A.; or sell any asset pursuant to an arrangement to thereafter lease such asset from the purchaser thereof.”

(F)           Exhibit A of the Agreement is hereby amended by deleting same and substituting therefore Exhibit A annexed hereto.

(G)           Except as amended herein, all other provisions of the Agreement shall remain in full force and effect, and are hereby ratified.

3.           The Bank and the Borrower agree that as of June 24, 2009, the aggregate outstanding principal amount of:  (i) the Revolving Credit Loans as evidenced by the Revolving Credit Note is $2,400,000.00, and interest has been paid through June 1, 2009.