EMPLOYMENT AGREEMENT

     AGREEMENT dated May 17, 2004 between VINCENT PALAZZOLO, residing at 1595
James Road, Wantagh, New York 11752 ("Executive"), and CPI AEROSTRUCTURES, INC.,
a New York corporation having its principal office at 200A Executive Drive,
Edgewood, New York 11717, ("Company");

     WHEREAS, the Company desires to employ Executive as its Chief Financial
Officer pursuant to the terms and conditions herein set forth, superseding all
prior agreements between the Company, its subsidiaries and/or predecessors and
Executive;

IT IS AGREED:

1.   Employment, Duties and Acceptance.

     1.1 General. The Company shall employ Executive from May 17, 2004 until
December 31, 2006 as its Chief Financial Officer ("CFO") under the terms hereof.
All of Executive's powers and authority in any capacity shall at all times be
subject to the direction and control of the Company's Board of Directors. The
Board may assign to Executive such management and supervisory responsibilities
and executive duties for the Company or any subsidiary of the Company, including
serving as an executive officer and/or director of any subsidiary, as are
consistent with Executive's status as CFO.

     1.2 Full-Time Position. Executive accepts such employment and agrees to
devote substantially all of his business time, energies and attention to the
performance of his duties hereunder. Nothing herein shall be construed as
preventing Executive from making and supervising personal investments, provided
they will not interfere with the performance of Executive's duties hereunder or
violate the provisions of Section 5.4 hereof.

     1.3 Location. The Company will maintain its principal executive offices
within a 30 mile radius of its current location in Edgewood, New York. Executive
shall




undertake such occasional travel, within or without the United States, as is
reasonably necessary in the interests of the Company.

2.   Compensation and Benefits.

     2.1 Salary. The Company shall pay to Executive a salary ("Base Salary") at
the annual rate of not less than $175,000. Executive's compensation shall be
paid in equal, periodic installments in accordance with the Company's normal
payroll procedures.

     2.2 Bonus. In addition to Base Salary, Executive shall be paid a bonus
("Bonus") equal to 1% of the Company's consolidated net income for the year
ending December 31, 2004 (pro-rated to account for Executive's May 17 start
date) and equal to 2% of the Company's consolidated net income for the years
ending December 31, 2005 and 2006, as determined by reference to the Company's
audited financial statements for such year. Consolidated net income shall not
give effect to any extraordinary items of gain or loss. The Bonus with respect
to any year shall be paid on or prior to April 15 of the following year.

     2.3 Additional Compensation. As additional compensation for Executive
entering into this Agreement and agreeing to be bound by its terms (including
Article 5 hereof) and for the services to be rendered by Executive hereunder,
the Company hereby issues to Executive options to purchase 50,000 shares of
Common Stock under the 1995 Stock Option Plan. These options ("Options") shall
be evidenced by a Stock Option Agreement of even date herewith between the
Company and Executive. The Options will have an exercise price of equal to the

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