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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000950136-04-001732.txt : 20040526
<SEC-HEADER>0000950136-04-001732.hdr.sgml : 20040526
<ACCEPTANCE-DATETIME>20040526115620
ACCESSION NUMBER:		0000950136-04-001732
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20040524
ITEM INFORMATION:		Other events
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20040526

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CPI AEROSTRUCTURES INC
		CENTRAL INDEX KEY:			0000889348
		STANDARD INDUSTRIAL CLASSIFICATION:	AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728]
		IRS NUMBER:				112520310
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-11398
		FILM NUMBER:		04831564

	BUSINESS ADDRESS:	
		STREET 1:		200A EXECUTIVE DR
		CITY:			EDGEWOOD
		STATE:			NY
		ZIP:			11717
		BUSINESS PHONE:		5165865200
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>file001.htm
<DESCRIPTION>FORM 8-K
<TEXT>
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<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">SECURITIES
AND EXCHANGE COMMISSION</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 6pt; background-color: #ffffff;">WASHINGTON, D.C. 20549</p>
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<td><img src="spacer.gif" height="1" width="237"></td>
<td bgcolor="#000000"><img src="spacer.gif" height="1"><img src="spacer.gif" height="1" width="127"></td>
<td><img src="spacer.gif" height="1" width="237"></td>
<td><img src="spacer.gif" height="1" width="475"></td>
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<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">FORM 8-K<br> CURRENT REPORT</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">PURSUANT TO SECTION 13 OR 15(d) OF THE<br> SECURITIES EXCHANGE ACT
OF 1934</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top:16pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 0pt; background-color: #ffffff">Date of Report (Date of earliest
event reported): <u>May 24, 2004</u>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top:16pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 0pt; background-color: #ffffff">
<u>CPI AEROSTRUCTURES, INC.</u>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 0pt; background-color: #ffffff">(Exact Name of Registrant as Specified in
Charter)</p>
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<table cellpadding="0" cellspacing="0" border="0" width="602" bgcolor="#ffffff">
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<td><img src="spacer.gif" height="1" width="24"></td>
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<td style="font-family: serif; font-size: 9pt; color: #000000; font-weight: normal; font-style: normal; border-bottom: 1px solid #000000 ;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt" align="center" valign="top" colspan="3">New
York</td>
<td style="padding-top: 0pt "><img src="spacer.gif" height="1" width="2"></td>
<td style="font-family: serif; font-size: 9pt; color: #000000; font-weight: normal; font-style: normal; border-bottom: 1px solid #000000 ;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt" align="center" valign="top" colspan="3">1-11398</td>
<td style="padding-top: 0pt "><img src="spacer.gif" height="1" width="2"></td>
<td style="font-family: serif; font-size: 9pt; color: #000000; font-weight: normal; font-style: normal; border-bottom: 1px solid #000000 ;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt" align="center" valign="top" colspan="3">11-2520310</td>
</tr>
<tr>
<td style="font-family: serif; font-size: 9pt; color: #000000; font-weight: normal; font-style: normal; border-bottom: 3px double #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt" align="center" valign="top" colspan="3">(State or Other Jurisdiction<br> of
Incorporation)</td>
<td style="padding-top: 0pt "><img src="spacer.gif" height="1" width="2"></td>
<td style="font-family: serif; font-size: 9pt; color: #000000; font-weight: normal; font-style: normal; border-bottom: 3px double #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt" align="center" valign="top" colspan="3">(Commission<br> File Number)</td>
<td style="padding-top: 0pt "><img src="spacer.gif" height="1" width="2"></td>
<td style="font-family: serif; font-size: 9pt; color: #000000; font-weight: normal; font-style: normal; border-bottom: 3px double #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt" align="center" valign="top" colspan="3">(IRS Employer<br> Identification
No.)</td>
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<td><img src="spacer.gif" height="10" width="1"></td>
</tr>
</table>
</div>
<table cellpadding="0" cellspacing="0" border="0" width="602" style="margin-left: 0pt; margin-right: 0pt; margin-top:41.04pt;">
<tr>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; font-style: normal;"><u>200A Executive Drive,
Edgewood, New York</u></td>
<td align="right" style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; font-style: normal;"><u> 11717</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602" style="margin-left: 0pt; margin-right: 0pt; margin-top:0pt;">
<tr>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; font-style: normal;">(Address of Principal Executive Offices)</td>
<td align="right" style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; font-style: normal;"> (Zip
Code)</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:29.04pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 0pt; background-color: #ffffff">Registrant's telephone number,
including area code <u>(631) 586-5200</u>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top:36pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 0pt; background-color: #ffffff">
<u>Not Applicable</u>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 0pt; background-color: #ffffff">(Former Name or Former Address, if Changed
Since Last Report)</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">Item 5.&nbsp;&nbsp;&nbsp;&nbsp;Other Events</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">On May
24, 2004, CPI Aerostructures, Inc.
("Company") issued a press release announcing
that it has hired Vincent Palazzolo as its Chief Financial Officer. The
press release is included as Exhibit 99.1 hereto.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The Company
entered into an employment agreement with Mr. Palazzolo, pursuant to
which he will act as Chief Financial Officer until December 31, 2006.
Under the employment agreement, Mr. Palazzolo will receive (i) a base
salary of $175,000 per year, (ii) a bonus equal to 1% of the
Company's consolidated net income for the year ending December
31, 2004 (pro rated to account for his May 17, 2004 start date) and
equal to 2% of the Company's consolidated net income for
the years ending December 31, 2005 and 2006 and (iii) an option to
purchase 50,000 shares of the Company's common stock under the
Company's 1995 Stock Option Plan at a price of $10.48 per share,
exercisable as to 25,000 shares on each of the first and second
anniversaries of the date of grant. The employment agreement also
provides that Mr. Palazzolo will not compete with the Company during
the employment term and for a period of two years from the date of his
termination.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">Item 7.&nbsp;&nbsp;&nbsp;&nbsp;Financial Statement and Exhibits</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="53"></td>
<td><img src="spacer.gif" height="1" width="549"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 20pt; text-align: left;  font-style: normal; width: 39.96pt">(c)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 416pt">Exhibits:</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
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<td><img src="spacer.gif" height="1" width="53"></td>
<td><img src="spacer.gif" height="1" width="42"></td>
<td><img src="spacer.gif" height="1" width="507"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 40pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 32.04pt">10.21&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 384pt">Employment
Agreement between CPI Aerostructures, Inc. and Vincent Palazzolo, dated
as of May 17, 2004</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="53"></td>
<td><img src="spacer.gif" height="1" width="42"></td>
<td><img src="spacer.gif" height="1" width="507"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 40pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 32.04pt">10.22&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 384pt">Stock
Option Agreement between CPI Aerostructures, Inc. and Vincent
Palazzolo, dated as of May 17,
2004</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="53"></td>
<td><img src="spacer.gif" height="1" width="42"></td>
<td><img src="spacer.gif" height="1" width="507"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 40pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 32.04pt">99.1&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 384pt">Press release, dated May
24, 2004</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">2</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">SIGNATURE</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:12pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 0pt; background-color: #ffffff">Dated: May 25, 2004
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CPI
AEROSTRUCTURES, INC.</p>
<div style="width: 593;">
<table border="0" cellpadding="0" cellspacing="0" width="593">
<tr>
<td style="font-family: serif; font-size: 10pt; color: #000000; font-weight: normal; font-style: normal; padding-top: 18pt" valign="top" align="left" width="301"><img src="spacer.gif" height="1" width="301"></td>
<td style="font-family: serif; font-size: 10pt; color: #000000; font-weight: normal; font-style: normal; padding-top: 18pt" valign="top" align="left">By: <u>/s/ Edward J.
Fred&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></td>
</tr>
</table>
</div>
<div style="width: 593;">
<table border="0" cellpadding="0" cellspacing="0" width="593">
<tr>
<td style="font-family: serif; font-size: 10pt; color: #000000; font-weight: normal; font-style: normal; padding-top: -6pt" valign="top" align="left" width="323"><img src="spacer.gif" height="1" width="323"></td>
<td style="font-family: serif; font-size: 10pt; color: #000000; font-weight: normal; font-style: normal; padding-top: -6pt" valign="top" align="left">Edward J. Fred<br> Chief Executive
Officer</td>
</tr>
</table>
</div>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">3</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
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<DOCUMENT>
<TYPE>EX-10.21
<SEQUENCE>3
<FILENAME>file002.htm
<DESCRIPTION>EMPLOYMENT AGREEMENT
<TEXT>
<HTML><HEAD><TITLE></TITLE></HEAD><BODY><PRE>
<PAGE>


                                                                   EXHIBIT 10.21

                              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


<PAGE>

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
closing price of the common stock on the date of grant and will vest as to
25,000 shares on May 17, 2005 and as to the remaining 25,000 shares on May 17,
2006, subject to the terms of the Stock Option Agreement. The Compensation
Committee may, in its discretion, grant additional options to Executive during
the term of this Agreement.

     2.4 Benefits. Executive shall be entitled to such medical, life, disability
and other benefits as are generally afforded to other executives of the Company,
subject to applicable waiting periods and other conditions.


<PAGE>

     2.5 Vacation. Executive shall be entitled to such paid vacation days in
each year during the Employment Term and to a reasonable number of other days
off for religious and personal reasons in accordance with customary Company
policy.

     2.6 Automobile.

          (a) The Company shall reimburse Executive for all reasonable costs
     associated with the use of an automobile, including lease and insurance
     costs, repairs and maintenance, upon the presentation of appropriate
     receipts or other evidence of such expenditures, not to exceed $3,000 per
     annum until August 15, 2005 (pro rated for partial years).

          (b) Commencing August 16, 2005, the Company shall lease a luxury class
     automobile (reasonably satisfactory to Executive) for Executive during the
     remainder of the term of this Agreement to be used in connection with the
     business of the Company. The Company shall reimburse Executive for all
     costs associated with the use of this luxury automobile, including lease
     and insurance costs, repairs and maintenance.

     2.7 Expenses. The Company shall pay or reimburse Executive for all
transportation, hotel and other expenses reasonably incurred by Executive on
business trips and for all other ordinary and reasonable out-of-pocket expenses
actually incurred by him in the conduct of the business of the Company against
itemized vouchers submitted with respect to any such expenses and approved in
accordance with customary procedures.

     2.8 Club Membership. Executive shall be entitled, during the term of this
Agreement, to a membership at the Hamlet Windwatch Golf Course, Hauppauge, as
long as the Company maintains its group membership at such club.


3.   Term. The term of Executive's employment hereunder shall commence as of May
     17, 2004 and shall continue until December 31, 2006 (as it may be extended,
     the "Employment Term"), unless sooner terminated as herein provided. The
     Employment Term shall be automatically renewed for successive one year
     periods


<PAGE>

     unless terminated by the Company or Executive by written notice to the
     other party at least thirty (30) days before the end of the Employment Term
     or any renewal thereof.

4.   Termination.

     4.1 Death. If Executive dies during the term of this Agreement, Executive's
employment hereunder shall terminate and the Company shall pay to Executive's
estate the amount set forth in Section 4.6.

     4.2 Disability. The Company, by written notice to Executive, may terminate
Executive's employment hereunder if Executive shall fail because of illness or
incapacity to render, for six consecutive months, services of the character
contemplated by this Agreement. Upon such termination, the Company shall pay to
Executive the amount set forth in Section 4.6.

     4.3 By Company for "Cause". The Company, by written notice to Executive,
may terminate Executive's employment hereunder for "Cause". As used herein,
"Cause" shall mean: (a) the refusal or failure by Executive to carry out
specific directions of the Board which are of a material nature and consistent
with his status as CFO (or whichever positions Executive holds at such time), or
the refusal or failure by Executive to perform a material part of Executive's
duties hereunder; (b) the commission by Executive of a material breach of any of
the provisions of this Agreement; (c) fraud or dishonest action by Executive in
his relations with the Company or any of its subsidiaries or affiliates
("dishonest" for these purposes shall mean Executive's knowingly or recklessly
making of a material misstatement or omission for his personal benefit); or (d)
the conviction of Executive of a felony under federal or state law.
Notwithstanding the foregoing, no "Cause" for termination shall be deemed to
exist with respect to Executive's acts described in clauses (a) or (b) above,
unless the Company shall have given written notice to Executive specifying the
"Cause" with reasonable particularity and, within thirty calendar days after
such notice, Executive shall not have cured or eliminated the problem or thing
giving rise to such "Cause;" provided, however, no more than two cure periods


<PAGE>

need be provided during any twelve-month period. Upon such termination, the
Company shall pay to Executive the amount set forth in Section 4.6.

     4.4 By Company Without "Cause". The Company may terminate Executive's
employment hereunder without "Cause" by giving at least 30 days written notice
to Executive. Upon such termination, the Company shall pay to Executive the
amount set forth in Section 4.6.

     4.5 By Executive for "Good Reason". The Executive, by written notice to the
Company, may terminate Executive's employment hereunder if a "Good Reason"
exists. For purposes of this Agreement, "Good Reason" shall mean the occurrence
of any of the following circumstances without the Executive's prior written
consent: (a) a substantial and material adverse change in the nature of
Executive's title, duties or responsibilities with the Company that represents a
demotion from his title, duties or responsibilities as in effect immediately
prior to such change; (b) material breach of this Agreement by the Company; (c)
a failure by the Company to make any payment to Executive when due, unless the
payment is not material and is being contested by the Company, in good faith; or
(d) a liquidation, bankruptcy or receivership of the Company. Notwithstanding
the foregoing, no "Good Reason" shall be deemed to exist with respect to the
Company's acts described in clauses (a), (b) or (c) above, unless Executive
shall have given written notice to the Company specifying the "Good Reason" with
reasonable particularity and, within thirty calendar days after such notice, the
Company shall not have cured or eliminated the problem or thing giving rise to
such "Good Reason"; provided, however, that no more than two cure periods shall
be provided during any twelve-month period of a breach of clauses (a), (b) or
(c) above. Upon such termination, the Company shall pay to Executive the amount
set forth in Section 4.6.

     4.6 Compensation Upon Termination. In the event that Executive's employment
hereunder is terminated, the Company shall pay to Executive the following
compensation:

          (a) Payment Upon Death or Disability. In the event that Executive's
     employment is terminated pursuant to Sections 4.1 or 4.2, the


<PAGE>

     Company shall pay to Executive (or his executor, administrator or personal
     representative), (i) the Base Salary due Executive pursuant to Section 2.1
     hereof through the date of termination; (ii) any Bonus which would have
     become payable under Section 2.2 for the year in which the employment was
     terminated prorated by multiplying the full amount of the Bonus by a
     fraction, the numerator of which is the number of "full calendar months"
     worked by Executive during the year of termination and the denominator of
     which is 12 (a "full calendar month" is a month in which the Executive
     worked at least two weeks); (iii) all earned and previously approved but
     unpaid Bonuses for any year prior to the year of termination; (iv) all
     valid expense reimbursements, and (v) all accrued but unused vacation pay.

          (b) Payment Upon Termination by the Company For "Cause". In the event
     that the Company terminates Executive's employment hereunder pursuant to
     Section 4.3, the Company shall pay to Executive his Base Salary, all valid
     expense reimbursements and all unused vacation pay required by law through
     the date of termination.

          (c) Payment Upon Termination by Company Without Cause or Executive for
     Good Reason. In the event that Executive's employment is terminated
     pursuant to Sections 4.4 or 4.5, the Company shall continue to pay to
     Executive (or in the case of his death, the legal representative of
     Executive's estate or such other person or persons as Executive shall have
     designated by written notice to the Company), all payments, compensation
     and benefits required under Section 2 hereof through December 31, 2006.
     Notwithstanding the foregoing, if any person or entity other than the
     Company and/or any officer or director of the Company as of the date of
     this Agreement and/or their respective affiliates acquires securities of
     the Company (in one or more transactions) having 30% or more of the total
     voting power of all of the Company's securities then outstanding ("Change
     In Control"), prior to December 31, 2006 and thereafter Executive's
     employment is terminated pursuant to Sections 4.4 or 4.5, then at the
     election of Executive, in lieu of the above compensation and benefits, the


<PAGE>

     Company shall pay to Executive a lump sum payment of $50,000 within ten
     days of such election.

          (d) Payment Upon Termination by Executive Upon Change in Control. If
     at any time prior to December 31, 2006, a "change of control" of the
     Company (as described in Section 4.6(c)) occurs, then within ten days of
     the consummation of the Change in Control, Executive shall have the right
     to terminate his employment by notice of the Company. In such event, the
     Company shall pay to Executive the lesser of (i) $50,000 in a lump sum
     within ten days after receipt of notice of termination from Executive or
     (ii) the Base Salary due Executive pursuant to Section 2.1 hereof through
     December 31, 2005.

          (e) Executive shall have no duty to mitigate awards paid or payable to
     him pursuant to this Agreement, and any compensation paid or payable to
     Executive from sources other than the Company will not offset or terminate
     the Company's obligation to pay to Executive the full amounts pursuant to
     this Agreement.

5.   Protection of Confidential Information; Non-Competition.

     5.1 Acknowledgment. Executive acknowledges that:

          (a) As a result of his current and prior employment with the Company,
     Executive has obtained and will obtain secret and confidential information
     concerning the business of the Company and its subsidiaries (referred to
     collectively in this Article 5 as the "Company"), including, without
     limitation, financial information, proprietary rights, trade secrets and
     "know-how," customers and sources ("Confidential Information").

          (b) The Company will suffer substantial damage which will be difficult
     to compute if, during the period of his employment with the Company or
     thereafter, Executive should enter a business competitive with the Company
     or divulge Confidential Information.

<PAGE>

          (c) The provisions of this Agreement are reasonable and necessary for
     the protection of the business of the Company.

     5.2 Confidentiality. Executive agrees that he will not at any time, during
the Employment Term or thereafter, divulge to any person or entity any
Confidential Information obtained or learned by him as a result of his
employment with the Company, except (i) in the course of performing his duties
hereunder, (ii) with the Company's prior written consent; (iii) to the extent
that any such information is in the public domain other than as a result of
Executive's breach of any of his obligations hereunder; or (iv) where required
to be disclosed by court order, subpoena or other government process. If
Executive shall be required to make disclosure pursuant to the provisions of
clause (iv) of the preceding sentence, Executive promptly, but in no event more
than 48 hours after learning of such subpoena, court order, or other government
process, shall notify, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.

     5.3 Documents. Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, that Executive shall be entitled to retain copies of such documents
reasonably necessary to document his financial relationship with the Company.

     5.4 Non-competition. During the Employment Term and for a period of two
years thereafter, Executive, without the prior written permission of the
Company, shall not, anywhere in the world, (i) be employed by, or render any
services to, any person, firm or corporation engaged in any business
("Competitive Business") which is directly in competition with any "material"
business conducted by the Company or any of its subsidiaries at the time of
termination (as used herein "material" means the business


<PAGE>

generated at least 10% of the Company's consolidated revenues for the last full
fiscal year for which audited financial statements are available); (ii) engage
in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (iv) employ or
retain, or have or cause any other person or entity to employ or retain, any
person who was employed or retained by the Company while Executive was employed
by the Company (other than Executive's personal secretary and assistant); or (v)
solicit, interfere with, or endeavor to entice away from the Company, for the
benefit of a Competitive Business, any of its customers or other persons with
whom the Company has a contractual relationship. Notwithstanding the foregoing,
nothing in this Agreement shall preclude Executive from investing his personal
assets in any manner he chooses, provided, however, that Executive may not,
during the period referred to in this Section 5.4, own more than 4.9% of the
equity securities of any Competitive Business.

     5.5 Injunctive Relief. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy to seek to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that the services being rendered hereunder
to the Company are of a special, unique and extraordinary character and that any
such breach or threatened breach will cause irreparable injury to the Company
and that money damages will not provide an adequate remedy to the Company. The
rights and remedies enumerated in this Section 5.5 shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or equity. In connection with any legal action or proceeding arising out of or
relating to this Agreement, the prevailing party in such action or proceeding
shall be entitled to be reimbursed by the other party for the reasonable
attorneys' fees and costs incurred by the prevailing party.

     5.6 Modification. If any provision of Sections 5.2 or 5.4 is held to be
unenforceable because of the scope, duration or area of its applicability, the
tribunal making such determination shall have the power to modify such scope,
duration, or area,


<PAGE>

or all of them, and such provision or provisions shall then be applicable in
such modified form.

     5.7 Survival. The provisions of this Article 5 shall survive the
termination of this Agreement for any reason, except in the event Executive is
terminated by the Company without "Cause, " or if Executive terminates this
Agreement with "Good Reason," in either of which events, this Section 5.4 shall
be null and void and of no further force or effect.

6.   Miscellaneous Provisions.

     6.1 Notices. All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.


     If to Executive:

     Vincent Palazzolo
     1595 James Road
     Wantagh, New York 11752


     If to the Company:

     CPI Aerostructures, Inc.
     200A Executive Drive
     Edgewood, New York 11717
     Attn: Edward J. Fred


     With a copy in either case to:

     Graubard Miller
     600 Third Avenue
     New York, New York 10016


<PAGE>

     Attn: David Alan Miller, Esq.

     6.2 Entire Agreement; Waiver. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive and is intended
to supersede all prior negotiations, understandings and agreements. No
provisions of this Agreement, may be waived or changed except by a writing by
the party against whom such waiver or change is sought to be enforced. The
failure of any party to require performance of any provision hereof or thereof
shall in no manner affect the right at a later time to enforce such provision.

     6.3 Governing Law. All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder, shall be
determined in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely in New York.

     6.4 Binding Effect; Nonassignability. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company. This
Agreement shall not be assignable by Executive, but shall inure to the benefit
of and be binding upon Executive's heirs and legal representatives.

     6.5 Severability. Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent the
unenforceable provision.



<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.



CPI AEROSTRUCTURES, INC.


/s/ Edward J. Fred
- ---------------------
By: Edward J. Fred
Chief Executive Officer


/s/ Vincent Palazzolo
- ---------------------
VINCENT PALAZZOLO





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<DOCUMENT>
<TYPE>EX-10.22
<SEQUENCE>4
<FILENAME>file003.htm
<DESCRIPTION>STOCK OPTION AGREEMENT
<TEXT>
<HTML><HEAD><TITLE></TITLE></HEAD><BODY><PRE>
<PAGE>


                                                                   EXHIBIT 10.22

                             STOCK OPTION AGREEMENT

     AGREEMENT, dated May 17, 2004, by and between CPI Aerostructures, Inc., a
New York corporation ("Company") with principal offices located at 200A
Executive Drive Edgewood, New York 11717, and Vincent Palazzolo ("Employee")
residing at 1595 James Road, Wantagh, New York 11752.

     WHEREAS, pursuant to the terms and conditions of the Company's 1995 Stock
Option Plan ("Plan"), the Board of Directors of the Company authorized the grant
to the Employee of an option ("Option") to purchase an aggregate of 50,000
shares of the authorized but unissued common stock of the Company, $.001 par
value ("Common Stock"), conditioned upon the Employee's acceptance thereof upon
the terms and conditions set forth in this Agreement and subject to the terms of
the Plan (capitalized terms used herein and not otherwise defined have the
meanings set forth in the Plan); and

     WHEREAS, the Employee desires to acquire the Option on the terms and
conditions set forth in this Agreement and subject to the terms of the Plan;

     IT IS AGREED:

     1. Grant of Stock Option. The Company hereby grants to the Employee the
right and option to purchase all or any part of an aggregate of 50,000 shares of
the Common Stock ("Option Shares") on the terms and conditions set forth herein
and subject to the provisions of the Plan.

     2. Incentive Stock Option. The Option represented hereby is intended to be
an Option that qualifies as an "Incentive Stock Option" up to the maximum extent
allowable under Section 422 of the Internal Revenue Code of 1986, as amended.

     3. Exercise Price. The exercise price ("Exercise Price") of the Option is
$10.48 per share, subject to adjustment as hereinafter provided.

     4. Exercisability. Subject to the terms and conditions of the Plan and this
Agreement, (i) this Option is exercisable as to 25,000 of the Option Shares on
May 17, 2005 and

<PAGE>

as to the remaining 25,000 Option Shares on May 17, 2006; and (ii) after a
portion of the Option becomes exercisable, it shall remain exercisable until the
close of business on May 16, 2014 ("Exercise Period").

     5. Effect of Termination of Employment.

     5.1. Termination Due to Death. If Employee's employment by the Company
terminates by reason of death, the Option may thereafter be exercised by the
legal representative of the estate or by the legatee of the Employee under the
will of the Employee, for a period of 12 months from the date of such death or
until the expiration of the Exercise Period, whichever period is shorter.

     5.2. Termination Due to Disability. If Employee's employment by the Company
terminates by reason of physical of mental impairment as determined under
procedures established by the Committee for purposes of the Plan ("Disability"),
the Option may thereafter be exercised by the Employee or legal representative
for a period of 12 months from the date of such termination or until the
expiration of the Exercise Period, whichever period is shorter.

     5.3. Termination by the Company Without Cause and/or Due to Retirement.
Subject to Section 5.5, if Employee's employment is terminated by the Company
without "Cause" (as defined in Section 4.3 of the Employment Agreement between
the Company and Employee, dated June 30, 2003) or due to Normal Retirement (as
defined below), then the Option may be exercised for a period of three months
from the date of such termination or until the expiration of the Exercise
Period, whichever is shorter. "Normal Retirement" means retirement from active
employment with the Company or any subsidiary on or after such age which may be
designated by the Committee as "retirement age" for any particular holder. If no
age is designated, it will be 62.

     5.4. Other Termination.

          (a) If Employee's employment is terminated for any reason other than
(i) death, (ii) Disability, (iii) Normal Retirement, or (iv) without Cause by
the Company, the Option shall expire on the date of termination of employment.

<PAGE>

          (b) In the event the Employee's employment is terminated by the
Company for Cause, the Board of Directors, in its sole discretion, may annul any
award granted hereunder and require the Employee to return to the Company the
economic benefit of any Option Shares purchased hereunder by the Employee within
the 12 month period prior to the date of termination. In such event, the
Employee hereby agrees to remit to the Company, in cash, an amount equal to the
difference between the Fair Market Value of the Option Shares on the date of
termination (or the sales price of such Shares if the Option Shares were sold
during such 12 month period) and the Exercise Price of such Shares.

     5.5. Competing With the Company. If a Employee's employment with the
Company or a Subsidiary is terminated for any reason whatsoever, and within 12
months after the date thereof such Employee either (i) accepts employment with
any competitor of, or otherwise engages in competition with, the Company or any
of its Subsidiaries, (ii) solicits any customers or employees of the Company or
any of its Subsidiaries to do business with or render services to the Employee
or any business with which the Employee becomes affiliated or to which the
Employee renders services or (iii) uses or discloses to anyone outside the
Company any confidential information or material of the Company or any of its
Subsidiaries in violation of the Company's policies or any agreement between the
Employee and the Company or any of its Subsidiaries, the Committee, in its sole
discretion, may require such Employee to return to the Company the economic
value of any award that was realized or obtained by such Employee at any time
during the period beginning on the date that is 12 months prior to the date such
Employee's employment with the Company is terminated. In such event, Employee
agrees to remit the economic value to the Company in accordance with Section
5.4(b).

     6. Withholding Tax. Not later than the date as of which an amount first
becomes includible in the gross income of the Employee for Federal income tax
purposes with respect to the Option, the Employee shall pay to the Company, or
make arrangements satisfactory to the Committee regarding the payment of, any
Federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount ("Withholding Tax"). The obligations of the
Company under the Plan and pursuant to this Agreement shall be conditional upon
such payment or arrangements with the Company and the Company shall, to the
extent permitted by


<PAGE>

law, have the right to deduct any Withholding Taxes from any payment of any kind
otherwise due to the Employee from the Company.

     7. Adjustments. In the event of any change in the shares of Common Stock of
the Company as a whole occurring as the result of a common stock split, or
reverse split, common stock dividend payable on shares of Common Stock,
combination or exchange of shares, or other extraordinary or unusual event
occurring after the grant of the Option, the Board of Directors shall determine,
in its sole discretion, whether such change equitably requires an adjustment in
the terms of this Option or the aggregate number of shares reserved for issuance
under the Plan. Any such adjustments will be made by the Board of Directors,
whose determination will be final, binding and conclusive.

     8. Method of Exercise.

     8.1. Notice to the Company. The Option shall be exercised in whole or in
part (but in no case may this Option be exercised as to less than 100 shares of
Common Stock at any one time) by written notice in substantially the form
attached hereto as Exhibit A directed to the Company at its principal place of
business accompanied by full payment as hereinafter provided of the exercise
price for the number of Option Shares specified in the notice and of the
Withholding Taxes, if any.

     8.2. Delivery of Option Shares. The Company shall deliver a certificate for
the Option Shares to the Employee as soon as practicable after payment therefor.

     8.3. Payment of Purchase Price.

          8.3.1. Cash Payment. The Employee shall make cash payments by wire
transfer, certified or bank check or personal check, in each case payable to the
order of the Company; the Company shall not be required to deliver certificates
for Option Shares until the Company has confirmed the receipt of good and
available funds in payment of the purchase price thereof.

          8.3.2. Cashless Payment. Provided that prior approval of the Company
has been obtained, the Employee may use Common Stock of the Company owned by him
or her to pay the purchase price for the Option Shares by delivery of stock
certificates in negotiable form which


<PAGE>

are effective to transfer good and valid title thereto to the Company, free of
any liens or encumbrances. Shares of Common Stock used for this purpose shall be
valued at the Fair Market Value.

          8.3.3. Payment of Withholding Tax. Any required Withholding Tax may be
paid in cash or with Common Stock in accordance with Sections 8.3.1 and 8.3.2.

     9. Transfer. The Option Shares shall not be transferable by the Employee
other than by will or by the laws of descent and distribution, and the Option
shall be exercisable, during the Employee's lifetime, only by the Employee (or
in the event of legal incapacity or incompetency, the Employee's guardian or
legal representative).

     10. Accelerated Vesting and Exercisability. If any "person" (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act of 1934, as amended
("Exchange Act")) other than any of the Company's existing current directors
and/or their affiliates, is or becomes the "beneficial owner" (as referred in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the Company's
then outstanding securities in one or more transactions, then the vesting
periods of the Option shall be accelerated and the entire Option shall become
exercisable immediately.

     11. Company Representations. The Company hereby represents and warrants to
the Employee that:

          (i) the Company, by appropriate and all required action, is duly
authorized to enter into this Agreement and consummate all of the transactions
contemplated hereunder; and

          (ii) the Option Shares, when issued and delivered by the Company to
the Employee in accordance with the terms and conditions hereof, will be duly
and validly issued and fully paid and non-assessable.

     12. Employee Representations. The Employee hereby represents and warrants
to the Company that:

          (i) he is acquiring the Option and shall acquire the Option Shares for
his own account and not with a view towards the distribution thereof;


<PAGE>

          (ii) he has received a copy of the Plan as in effect as of the date of
this Agreement;

          (iii) he has received a copy of all reports and documents required to
be filed by the Company with the Securities and Exchange Commission pursuant to
the Exchange Act, within the last 24 months and all reports issued by the
Company to its stockholders;

          (iv) he understands that he must bear the economic risk of the
investment in the Option Shares, which cannot be sold by him unless they are
registered under the Securities Act of 1933 ("1933 Act") or an exemption
therefrom is available thereunder and that the Company is under no obligation to
register the Option Shares for sale under the 1933 Act;

          (v) in his position with the Company, he has had both the opportunity
to ask questions and receive answers from the officers and directors of the
Company and all persons acting on its behalf concerning the terms and conditions
of the offer made hereunder and to obtain any additional information to the
extent the Company possesses or may possess such information or can acquire it
without unreasonable effort or expense necessary to verify the accuracy of the
information obtained pursuant to clause (iii) above;

          (vi) he is aware that the Company shall place stop transfer orders
with its transfer agent against the transfer of the Option Shares in the absence
of registration under the 1933 Act or an exemption therefrom as provided herein;

          (vii) if, at the time of issuance of the Option Shares, the issuance
of such shares have not been registered under the 1933 Act, the certificates
evidencing the Option Shares shall bear the following legend:

     "The shares represented by this certificate have been acquired for
     investment and have not been registered under the Securities Act of 1933.
     The shares may not be sold or transferred in the absence of such
     registration or an exemption therefrom under said Act."

     ; and

          (viii) he is aware of and understands that he is subject to the
Company's Insider Trading Policy and has received a copy of such policy as of
the date of this Agreement.

<PAGE>

     13. Restriction on Transfer of Option Shares. Anything in this Agreement to
the contrary notwithstanding, the Employee hereby agrees that he shall not sell,
transfer by any means or otherwise dispose of the Option Shares acquired by him
without registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, (ii) the Employee has furnished the Company with notice
of such proposed transfer and the Company's legal counsel, in its reasonable
opinion, shall deem such proposed transfer to be so exempt, and (iii) such
transfer is in compliance with the Company's Insider Trading Policy, as in
effect at such time.

     14. Miscellaneous.

          14.1. Notices. All notices, requests, deliveries, payments, demands
and other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or sent
by registered or certified mail, or by private courier to the parties at their
respective addresses set forth herein, or to such other address as either party
shall have specified by notice in writing to the other. Notice shall be deemed
duly given hereunder when delivered or mailed as provided herein.

          14.2. Conflicts with the Plan. In the event of a conflict between the
provisions of the Plan and the provisions of this Agreement, the provisions of
the Plan shall in all respects be controlling.

          14.3. Employee and Stockholder Rights. The Employee shall not have any
of the rights of a stockholder with respect to the Option Shares until such
shares have been issued after the due exercise of the Option. Nothing contained
in this Agreement shall be deemed to confer upon Employee any right to continued
employment with the Company or any subsidiary thereof, nor shall it interfere in
any way with the right of the Company to terminate Employee, who understands
that he is an employee-at-will.

          14.4. Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.

<PAGE>

          14.5. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. This
Agreement may not be amended except by writing executed by the Employee and the
Company.

          14.6. Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.

          14.7. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York (without regard to choice
of law provisions).

          14.8. Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.

     IN WITNESS WHEREOF, the parties hereto have signed this Agreement on the
day and year first above:


CPI AEROSTRUCTURES, INC.



By: /s/ Edward J. Fred
- -----------------------------------
Name: Edward J. Fred
Title: Chief Executive Officer



EMPLOYEE

/s/ Vincent Palazzolo
- --------------------------------
VINCENT PALAZZOLO


<PAGE>


                                                                       EXHIBIT A

                      FORM OF NOTICE OF EXERCISE OF OPTION


- ---------------
     DATE

CPI AEROSTRUCTURES, INC.
200A Executive Drive
Edgewood, New York 11717
Attention:

                 Re:  Purchase of Option Shares

Gentlemen:

     In accordance with my Stock Option Agreement dated as of May ___, 2004 with
CPI Aerostructures, Inc. ("Company"), I hereby irrevocably elect to exercise the
right to purchase _________ shares of the Company's common stock, par value
$.001 per share ("Common Stock"), which are being purchased for investment and
not for resale.

     As payment for my shares, enclosed is (check and complete applicable
box[es]):

     [ ]  a [personal check] [certified check] [bank check] payable to the order
          of "CPI Aerostructures, Inc." in the sum of $_________;

     [ ]  confirmation of wire transfer in the amount of $_____________; and/or

     [ ]  with the consent of the Company, a certificate for __________ shares
          of the Company's Common Stock, free and clear of any encumbrances,
          duly endorsed, having a Fair Market Value (as such term is defined in
          the 1995 Stock Option Plan of $_________.

     I hereby represent and warrant to, and agree with, the Company that:

     (i) I am acquiring the Option Shares for my own account, for investment,
and not with a view towards the distribution thereof;

     (ii) I have received a copy of the Plan and all reports and documents
required to be filed by the Company with the Commission pursuant to the Exchange
Act within the last 24 months and all reports issued by the Company to its
stockholders;

     (iii) I understand that I must bear the economic risk of the investment in
the Option Shares, which cannot be sold by me unless they are registered under
the Securities Act of 1933 ("1933 Act") or an exemption therefrom is available
thereunder and that the Company is under no obligation to register the Option
Shares for sale under the 1933 Act;


<PAGE>

     (iv) I agree that I will not sell, transfer by any means or otherwise
dispose of the Option Shares acquired by me hereby except in accordance with
Company's policy, if any, regarding the sale and disposition of securities owned
by employees and/or directors of the Company;

     (v) in my position with the Company, I have had both the opportunity to ask
questions and receive answers from the officers and directors of the Company and
all persons acting on its behalf concerning the terms and conditions of the
offer made hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it without
unreasonable effort or expense necessary to verify the accuracy of the
information obtained pursuant to clause (ii) above;

     (vi) my rights with respect to the Option Shares shall, in all respects, be
subject to the terms and conditions of the Company's Performance Equity Plan
2000 and the Agreement.

     (vii) I am aware that the Company shall place stop transfer orders with its
transfer agent against the transfer of the Option Shares in the absence of
registration under the 1933 Act or an exemption therefrom as provided herein;

     (viii) if, at the time of issuance of the Option Shares, the issuance of
such shares have not been registered under the 1933 Act, the certificates
evidencing the Option Shares shall bear the following legend:

     "The shares represented by this certificate have been acquired for
     investment and have not been registered under the Securities Act of 1933.
     The shares may not be sold or transferred in the absence of such
     registration or an exemption therefrom under said Act."

; and

     (ix) I am aware of and understand that I am subject to the Company's
          Insider Trading Policy and have received a copy of such policy as of
          the date of this Agreement.

     Kindly forward to me my certificate at your earliest convenience.


Very truly yours,

- --------------------------------------------------------------------------------
(Signature)(Address)


- --------------------------------------------------------------------------------
(Print Name)

                                        (Social Security Number)
- ----------------------------------------




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<PAGE>


                                                                    EXHIBIT 99.1


                                   [CPI LOGO]
                              AEROSTRUCTURES, INC.
                 200A EXECUTIVE DRIVE o EDGEWOOD, NEW YORK 11717
                        (631)586-5200 o FAX (631)586-5814

                              FOR IMMEDIATE RELEASE


               VINCENT PALAZZOLO NAMED CHIEF FINANCIAL OFFICER OF
                               CPI AEROSTRUCTURES

EDGEWOOD, NY - MAY 24, 2004 -- CPI Aerostructures, Inc. ("CPI") (AMEX: CVU)
today announced that Vincent Palazzolo, C.P.A., has been named Chief Financial
Officer. Mr. Palazzolo, age 40, succeeds CPI CEO & President Edward J. Fred, who
had been acting CFO since January 2004. Mr. Palazzolo brings a strong financial
background as well as an in-depth understanding of CPI's business.

From 1988 to 2003, Mr. Palazzolo was employed by Goldstein Golub Kessler LLP
("GGK"), where he was Audit Partner from 1999 to 2003. In that role, he managed
all aspects of the firm's audit practice, including SEC reporting and
compliance. Mr. Palazzolo also has extensive experience working with
manufacturing and distribution companies, as well as corporate finance and
mergers and acquisitions. GGK was retained by CPI Aerostructures from 1994
through May 2004, and during this time, Mr. Palazzolo was an integral member of
the CPI audit team. Concurrently with his GGK duties, Mr. Palazzolo was Managing
Director at American Express Tax and Business Services, Inc. In December 2003,
he joined JH Cohn, LLP as Audit Partner, where he was responsible for
coordinating and managing the SEC audit practice for the New York region. Mr.
Palazzolo holds a Bachelor of Business Administration in Accounting from Hofstra
University, is a Certified Public Accountant, and is a member of AICPA and
NYSSCPA.

Edward J. Fred, CPI's CEO & President, stated, "Vince is the perfect fit for
CPI; he is already familiar with our financial statements and accounting and
reporting systems as well as our organization, our people and the programs we
supply. Vince joins the Company at a pivotal time. In light of our recent C-5
contract award, we need someone of Vince's caliber to help manage our growth as
a major prime contractor."

In related news, the Company announced that because Mr. Palazzolo was a Partner
at GGK, working on the CPI audit during the past year, GGK cannot continue to
serve as the Company's auditors. The Company is presently in the process of
interviewing accounting firms to serve as its new auditors.

Founded in 1980, CPI Aerostructures is engaged in the contract production of
structural aircraft parts principally for the U.S. Air Force and other branches
of the armed forces. In conjunction with its assembly operations, CPI provides
engineering, technical and program management services. Among the key programs
that CPI supplies are the C-5A Galaxy cargo jet, the T-38 Talon jet trainer and
the E-3 Sentry AWACS jet.

                                     (more)


<PAGE>

CPI Aerostructures, Inc. News Release
Page 2
May 24, 2004

The above statements include forward looking statements that involve risks and
uncertainties, which are described from time to time in CPI's SEC reports,
including CPI's Form 10-KSB for the year ended December 31, 2003 and Form 10-QSB
for the quarter ended March 31, 2004.


CONTACT:
Edward J. Fred                        Investor Relations Counsel
CEO & President                       The Equity Group Inc.
CPI Aerostructures, Inc.              Linda Latman (212)836-9609
(631) 586-5200                              Sarah Torres (212)836-9611
www.cpiaero.com                             www.theequitygroup.com




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