EIGHTH AMENDMENT TO CREDIT AGREEMENT

4.           The Borrower hereby represents and warrants to the Bank that:

(a)           Each and every of the representations and warranties set forth in the Agreement is true as of the date hereof and with the same effect as though made on the date hereof, and is hereby incorporated herein in full by reference as if fully restated herein in its entirety; provided, however, that the December 31, 2006 date in Section 3.1 of the Agreement shall be deemed to be December 31, 2010, and the March 31, 2007 date in Section 3.1 of the Agreement shall be deemed to be September 30, 2011.

(b)           No Default or Event of Default and no event or condition which, with the giving of notice or lapse of time or both, would constitute such a Default or Event of Default, now exists or would exist after giving effect hereto.

(c)           There are no defenses or offsets to the Borrower’s obligations under the Agreement, the Notes or the Loan Documents or any of the other agreements in favor of the Bank referred to in the Agreement.

(a) The Bank shall have received four (4) executed, original counterparts of this Amendment together with the original, executed Second Term Note.

(b) The Bank shall have received the documents set forth in Section 4.1.2 of the Agreement.

(c) The Bank shall have received four (4) executed counterparts of the Officer’s Certificate of the Borrower together with any other action (in form and substance satisfactory to the Bank and its counsel) taken by the Borrower to authorize the execution, delivery and performance of this Amendment and such other documents as the Bank or its counsel may require.

(d) The Bank shall have received payment of the fees and disbursements of the Bank’s outside counsel with respect to this Amendment and the related documents.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers as of the date first above written.

CPI AEROSTRUCTURES, INC.

By:______________________

      Vincent Palazzolo

      Chief Financial Officer

SOVEREIGN BANK, N.A.

By:______________________

     Christine Gerula

     Senior Vice President

On the ____ day of March, in the year 2012, before me the undersigned, personally appeared VINCENT PALAZZOLO, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual or the person upon behalf of which the individual acted, executed the instrument.

______________________________

Notary Public

On the ____ day of March, in the year 2012, before me the undersigned, personally appeared CHRISTINE GERULA, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her capacity, and that by her signature on the instrument, the individual or the person upon behalf of which the individual acted, executed the instrument.

_____________________________

Notary Public

 
 

$4,500,000.00 As of March 9, 2012

FOR VALUE RECEIVED, on the applicable Maturity Date (as defined in the Agreement), CPI AEROSTRUCTURES, INC., a New York corporation, having its principal place of business at 91 Heartland Boulevard, Edgewood, New York 11717 (”Borrower”), promises to pay to the order of SOVEREIGN BANK, N.A., formerly known as Sovereign Bank (“Bank”), at its offices located at 330 South Service Road, Melville, New York 11747, the principal sum of FOUR MILLION FIVE HUNDRED THOUSAND AND 00/100 ($4,500,000.00) DOLLARS payable in consecutive monthly installments, each in the amount set forth in Section 2.9.2 of the Agreement, due on the first day of each month commencing May 1, 2012 and on the first day of each month thereafter with a final installment equal to the then unpaid principal balance of this Note payable on the Maturity Date for the Second Term Loan.  The Borrower further promises to pay interest at said office in like money on the unpaid principal balance of this Note from time to time outstanding at an annual rate as selected by the Borrower pursuant to the terms of Section 2 of the Agreement, as hereinafter defined.  Interest shall be computed on the basis of a 360-day year for actual days elapsed and shall be payable as provided in the Agreement.  After the stated or accelerated maturity hereof, this Note shall bear interest at a rate as set forth in the Agreement, payable on demand, but in no event in excess of the maximum rate of interest permitted under any applicable law.

The Borrower shall make payment to the Bank at the Bank’s address above or such other place as Bank may from time to time specify in writing in lawful currency of the United States of America in immediately available funds, not later than 12:00 noon, New York City time on the date when due, without counterclaim or setoff and free and clear of, and without any deduction or withholding for, any taxes or other payments.  The Borrower authorizes the Bank to charge its deposit account maintained at the Bank for any payment due under this Second Term Note on the due date thereof.  Except as provided in the definition of “Interest Period” in the Agreement, if any payment on this Second Term Note becomes due and payable on a day which is not a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable during such extension.

This Note is the Second Term Note referred to in that certain Credit Agreement between Borrower and Bank dated as of August 13, 2007, as amended pursuant to that certain First Amendment dated October 22, 2008, that Second Amendment dated as of July 7, 2009, that Third Amendment dated as of May 21, 2010, that Fourth Amendment dated as of March 14, 2011, that Fifth Amendment dated as of May 10, 2011, Sixth Amendment dated as of September 1, 2011, that Seventh Amendment dated as of November 28, 2011 and that Eighth Amendment dated as of March 7, 2012 as same may be further amended from time to time (the “Agreement”), and is subject to prepayment and its maturity is subject to acceleration upon the terms contained in said Agreement.  This Second Term Note is secured by the collateral described in the Agreement.  All capitalized terms used in this Second Term Note and not defined herein shall have the meanings given them in the Agreement.

Upon the occurrence of any one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Second Term Note may be declared to be immediately due and payable as provided in the Agreement.

If any action or proceeding be commenced to collect this Second Term Note or enforce any of its provisions, Borrower further agrees to pay all costs and expenses of such action or proceeding and attorneys' fees and expenses and further expressly waives any and every right to interpose any counterclaim in any such action or proceeding.  Borrower hereby submits to the jurisdiction of the Supreme Court of the State of New York and agrees with Bank that personal jurisdiction over Borrower shall rest with the Supreme Court of the State of New York for purposes of any action on or related to this Second Term Note, the liabilities, or the enforcement of either or all of the same.  Borrower hereby waives personal service by manual delivery and agrees that service of process may be made by post-paid certified mail directed to the Borrower at the Borrower's address set forth above or at such other address as may be designated in writing by the Borrower to Bank in accordance with Section 10.1 of the Agreement, and that upon mailing of such process such service be effective with the same effect as though personally served.  Borrower hereby expressly waives any and every right to a trial by jury in any action on or related to this Second Term Note, the liabilities or the enforcement of either or all of the same.

Bank may transfer this Second Term Note and may deliver the security or any part thereof to the transferee or transferees, who shall thereupon become vested with all the powers and rights above given to Bank in respect thereto, and Bank shall thereafter be forever relieved and fully discharged from any liability or responsibility in the matter.  The failure of any holder of this Second Term Note to insist upon strict performance of each and/or all of the terms and conditions hereof shall not be construed or deemed to be a waiver of any such term or condition.

Borrower and all endorsers and guarantors hereof waive presentment and demand for payment, notice of non-payment, protest, and notice of protest.  This Second Term Note shall be construed in accordance with and governed by the laws of the State of New York.

CPI AEROSTRUCTURES, INC.