Document:

Exhibit 10.40

                                                                January 10, 2002

VIA FACSIMILE (212) 889-7577

Herrick, Feinstein LLP
Two  Park Avenue
New York, New York   10016

Attention: Andrew Gold, Esq.

                                           Re:     Kolar, Inc.
                                                   407 Cliff Street,
                                                   618-620 West Buffalo Street,
                                                   604 and 612 Elmira Road,
                                                   239 Cherry Street,
                                                   Ithaca, New York

Dear Mr. Gold:

The following is Daley-Hodkin Corporation's ("DHC") proposal to conduct an
auction sale of the machinery, equipment and vehicles ("Personal Property") as
set forth in Schedule A, annexed hereto, located at Kolar, Inc., at the above
mentioned facility addresses ("Kolar"). The auction sale will be conducted on a
date to be agreed upon between DHC, JPMorgan Chase ("JPMorgan") and J.P. Morgan
Leasing, Inc. ("Chase Equipment"), (JPMorgan Chase and Chase Equipment are
collectively referred to as the ("Secured Lenders") and no later then March 1,
2002.

1. METHODOLOGY OF SALE

DHC proposes to conduct a public auction sale of the Personal Property, which
will be offered for sale "As Is," "Where Is," without representations or
warranties, other then the transfer of title. The Personal Property as set forth
in Schedule A annexed hereto, will be offered for sale in the order set forth
below and in the following categories:

a)       Bulk bid for all Personal Property
b)       Bulk bid for Machinery and Equipment
c)       Bulk bid for Vehicles
d)       Individual bids

The combination of individual categories of Personal Property and/or equivalent
bulk categories must exceed the bulk bid for all of the Personal Property
(indicated above as "a") by five (5%) percent in order to be successful.
Additionally, the sum of the individual bids must exceed the related bulk bid
for those items by five (5%) percent in order to be successful.

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                                                        Page 2
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.

2. SALE AND DISPOSITION OF PERSONAL PROPERTY

Immediately following our retention, DHC will contact other secured parties
which have equipment at Kolar. Those secured parties which opt to include their
equipment in the sale will share expenses on a pro rata basis, which will result
in a mitigation of the Secured Lender's expenses.

This proposal is predicated upon the assumption that Kolar will provide DHC with
a minimum of seven Kolar employees to assist us in preparing for the auction
sale with Kolar paying all costs. The Kolar employees will work under the
supervision of DHC personnel and will be made available to assist DHC on a
full-time basis through the end of the auction sale removal period.

DHC personnel will prepare the Personal Property for sale. This preparation will
include but not be limited to: organizing, grouping and lotting the items to be
sold. Where determined to be appropriate, DHC will cosmetically clean certain
items to enhance their marketability.

When everything is lotted and in good order, our staff will prepare a detailed
schedule of all of the Personal Property to be sold. Each lot, as assembled by
our lotting personnel, will be assigned a Lot Number Tag. The Lot Number Tag
will correspond to a description in a lot-numbered Sale Catalog to be
distributed to the bidders on sale day.

3. TERMS OF SALE

Our Terms of Sale require a non-refundable minimum deposit in the form of cash,
cashier's check, wire transfer or other certified funds equal to twenty-five
(25%) percent of the bid price from the successful bidder(s) at the time of
knockdown, with the balance payable within twenty-four (24) hours following
conclusion of the auction sale. DHC will assume the credit risk for all
deposits.

4.  MARKETING

A detailed listing of the Personal Property to be sold will be assembled in a
direct mail brochure. Incorporated in this brochure will be a prominently
displayed invitation for the public to inspect the Personal Property prior to
the sale. Display advertisements will be placed in appropriate newspapers and
trade publications. DHC proposes to market the Personal Property as follows:

              Direct Mail Brochures                               Qty. 15,000

              Newspaper/Trade Publication                        # of Insertions
              The New York Times                                           2
              The Syracuse Post Standard                                   2
              The Ithaca Journal                                           2
              The Binghamton Press and Sun Bulletin                        2
              American Metal Market                                        2
              Metalworking Machinery Mailer                                2

<page>
                                                        Page 3
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.

In addition, the advertising information will be posted on DHC's Internet Web
Site (www.daley-hodkin.com) with links to DHC's site from appropriate industry
web sites, the Industrial Auctioneers Association and National Auctioneers
Association Web Pages.

5.  SALE DAY PROCEDURES

All bidders must register and obtain a bid paddle in order to bid. This provides
a permanent registration of all bidders at the sale.

         o        Our auction bookkeeping system is totally computerized with
                  full duplication of all records permanently maintained;

         o        The entire auction sale is audio recorded;

         o        Daley-Hodkin Corporation assumes full responsibility for all
                  monies collected, including payment of applicable sales taxes;

         o        You, or a representative that you designate, will be provided
                  with a duplicate copy of the Auctioneer's selling sheets on
                  which you may record each and every lot as sold for your own
                  accounting.

         o        The sale will be conducted in accordance with the Terms of
                  Sale, annexed hereto, or any modifications agreed to among the
                  parties.

6.  POST-SALE REMOVAL

DHC personnel will remain on the premises after the auction sale for a period of
approximately three weeks to supervise the removal of the Personal Property
("Removal"). This supervision is provided to ensure an orderly and controlled
Removal, as well as to guard against damage to the real property during the
Removal period.

7.  ACCOUNTING

Within ten business days following conclusion of the sale and Removal,
seventy-five (75%) percent of the estimated net proceeds, which have cleared the
banking system will be provided to the Secured Lenders. A complete accounting
along with the balance of the remittance, net of DHC's fee and expenses, will be
provided within thirty days following conclusion of the auction sale and Removal
period. DHC's accounting will include a detailed summary of the auction sale and
will be accompanied by our check for the net proceeds.

<page>
                                                        Page 4
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.

8.  FEE AND EXPENSE STRUCTURE

There will be no fee charged directly to the Secured Lenders. DHC's fee will be
derived from a ten (10%) percent buyer's premium, which will be added to each
buyers invoice. This buyer's premium will limit your cost of sale to expenses
only. We anticipate the expenses to include but will not be limited to: DHC
labor, including: lotting, cataloging, bookkeeping, supervision of delivery;
advertising and marketing, travel, legal, telephone and trash removal. All
expenses advanced by DHC shall be deducted from the gross proceeds of sale.

In the event that JPMorgan or Chase Equipment shall terminate this Agreement
anytime after execution hereof except for cause (i.e. DHC's negligence or
intentional misconduct) prior to DHC's insertion of advertising, the party
terminating this Agreement shall pay to DHC the sum of $10,000 plus
reimbursement of all out of pocket expenses advanced. If JPMorgan or Chase
Equipment terminates this Agreement after DHC's insertion of advertising, the
party terminating this Agreement will pay to DHC the sum of $25,000 plus
reimbursement of all expenses advanced. Once DHC is retained, the Secured
Lenders agree not to withdraw any of the Personal Property from the sale. All
Personal Property sold within 120 days of the date hereof shall be subject to a
ten (10%) percent commission payable by the Secured Lenders to DHC and may be
deducted from the auction proceeds.

Expenses incurred in connection with marketing will not exceed $30,000. Labor,
travel and miscellaneous expenses through completion of final will not exceed
$40,000. Total expenses will be capped at $70,000.

In the event Kolar is unable to provide all seven Kolar employees, our expenses
will be increased by approximately $35,000, which will be prorated based upon
the number of additional personnel required.

9.  TERMS & CONDITIONS

         A.       DHC is retained as The Secured Lenders' exclusive agent for
                  the sale of the Personal Property from the time of execution
                  of this Agreement and for an additional ninety days from the
                  date of the auction sale.

         B.       Kolar will provide unrestricted access to DHC to enter and use
                  the premises from the date of execution of this Agreement and
                  for an additional three weeks following the conclusion of the
                  auction sale for the purposes of (i) preparing the Personal
                  Property for sale; (ii) conducting the sale thereon; and (iii)
                  delivery of the Personal Property to the purchasers. DHC shall
                  not be charged any fees associated with its use of the
                  premises and Kolar shall provide adequate utilities to the
                  premises at no charge to DHC.

         C.       In the event that prior to the sale of all of the Personal
                  Property, all or a material portion of the Personal Property
                  shall be lost or damaged by fire or other casualty, or by
                  theft or vandalism, neither the Secured Lenders nor DHC will
                  be required to proceed with the auction sale and the Secured
                  Lenders shall reimburse DHC for all expenses advanced.

         D.       If not executed, this proposal shall expire ten days after the
                  date first written above.

<page>
                                                        Page 5
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.

         E.       Certain purchasers of Personal Property, or their agents, may
                  be required by DHC and/or the Secured Lenders to provide a
                  current certificate of insurance in favor of DHC and the
                  Secured Lenders, in the amount of $1,000,000, before they are
                  permitted to remove those items from the premises.

         F.       The Personal Property which was contained in the facility at
                  the time of DHC's inspection on December 21 and 22, 2001 and
                  as set forth in Schedule A hereto, shall be (i) contained in
                  the facility as of the date DHC first enters the facility to
                  begin its preparations for sale and (ii) shall remain at the
                  facility through the date of sale.

         G.       DHC has no obligation to remove any "Hazardous Substances"1
                  that may be located at the premises or otherwise associated
                  with the Personal Property.

10.  REPRESENTATIONS OF THE SECURED LENDERS AND KOLAR

The Secured Lenders represents and warrants to DHC that:

         (a)      The Secured Lenders have not received written notice of any
                  lien encumbering the Personal Property other than and the
                  liens of Kolar Machine, Inc. now known as Ralok, Inc.;

         (b)      The Personal Property will be sold free and clear of all
                  liens, claims, encumbrances, security interests, adverse
                  claims, mortgages, pledges, liabilities, conditional sale
                  agreements, restrictions, and charges of any kind
                  (collectively, "Liens");

         (c)      The Secured Lenders have the authority and have performed all
                  acts necessary to sell, transfer and deliver good and
                  merchantable title to the Personal Property to the purchaser
                  free and clear of all liens;

         (d)      The persons executing this Agreement on behalf of JPMorgan and
                  Chase Equipment are duly authorized to do so;

         (e)      The terms of this Agreement are binding upon and enforceable
                  against JPMorgan and Chase Equipment;

         (f)      To the best of Kolar's knowledge, information or belief, the
                  Personal Property has never been and is not being used to
                  make, store, handle, treat, dispose, generate or transport
                  "Hazardous Substances" in violation of any applicable laws.

-----------------
1 The term "Hazardous Substances" means collectively, any chemical, solid,
liquid, gas, or other substance having the characteristics identified in, listed
under, or designated pursuant to any law, statute, or regulation of a government
or political subdivision or agency thereof, as presenting an imminent and
substantial danger to the public health or welfare or to the environment, or as
otherwise requiring special handling, collection, storage, treatment, disposal
or transportation.

<page>
                                                        Page 6
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.
11. REPRESENTATIONS OF DHC

DHC represents and warrants to the Secured Lenders:

         (a)      All necessary authority to conduct the sale has been obtained
                  by DHC;

         (b)      The person executing this Agreement on behalf of DHC is duly
                  authorized to do so;

         (c)      The terms of this Agreement are binding upon and enforceable
                  against DHC;

         (d)      DHC shall conduct the auction, including but not limited to
                  the marketing of same, in a commercially reasonable manner in
                  accordance with this Agreement;

         (e)      DHC carries comprehensive insurance, which includes: general
                  liability and worker's compensation.

12. INDEMNIFICATION BY JPMORGAN

JPMorgan hereby indemnifies, defends and agrees to hold harmless DHC and DHC's
officers, agents and employees from and against any and all claims, demands,
liabilities, judgments, damages, settlements, costs and expenses (including but
not limited to court costs and reasonable attorney's fees), (the "Claims"), but
only to the extent that such Claims are not compensated by any policies of
insurance, that may be sustained or incurred by DHC or DHC's officers, agents
and employees as a result of or arising from or in connection with the auction
sale, except those Claims arising from DHC's negligence, intentional misconduct
or breach of this Agreement.

13. INTENTIONALLY OMMITTED

14. INDEMNIFICATION BY DHC

DHC hereby indemnifies and agrees to hold harmless the Secured Lenders and the
Secured Lenders' officers, agents and employees from and against any and all
claims that may be incurred by the Secured Lenders as a result of DHC's
negligence, intentional misconduct or breach of this Agreement.

<page>
                                                        Page 7
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.

15. BINDING OBLIGATION; ASSIGNMENT

This Agreement shall be binding upon the Parties and their respective successors
and assigns. Neither party may assign its interest in this Agreement without the
prior written consent of the other party.

16. FINAL AGREEMENT

This Agreement and any and all (i) exhibits that are attached hereto and made a
part hereof, and (ii) side agreements, letter agreements, and amendments (if
any) that are executed by the Secured Lenders and DHC in furtherance of this
Agreement contain the final and entire Agreement and understanding of the
Parties, and any terms and conditions not set forth in this Agreement (or in
such exhibits, side letters, letter agreements, and amendments) are not a part
of this Agreement and the understanding of the Parties. This Agreement may be
modified, amended or altered only in writing signed by the Party to be bound by
the change or alteration.

17. NOTICES

Any notice required or permitted by or in connection with this Agreement,
without implying the obligation to provide any such notice, shall be in writing
and shall be made by certified mail, return receipt requested, postage prepaid,
addressed to the respective Parties at the appropriate address set forth below.
If notice is tendered pursuant to the provisions of this Section and is refused
by the intended recipient thereof, the notice, nevertheless, shall be considered
to have been given.

                  If to JPMorgan:
                           JPMorgan Chase
                           395 North Service Road - 3rd Floor
                           Melville, New York 11747
                           Attention:  Richard E. Grabowski

                  If to Chase Equipment:
                           J.P. Morgan Leasing Inc.
                           One Chase Square (MC-6)
                           Rochester, New York 14643
                           Attention: Michael O'Hern
                                Operations Manager

                  If to DHC:
                            Daley-Hodkin Corporation
                            135 Pinelawn Road
                            Melville, New York 11747
                            Attention: Morris Hodkin

<page>
                                                        Page 8
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.

                  If to Kolar:
                            Kolar, Inc.
                            200A Executive Drive,
                            Edgewood, New York 11717
                            Attention: Edward J. Fred

If the within meets with your approval, please sign where indicated below,
return by fax and mail the original to my attention.

                                                     Yours truly,

                                                     DALEY-HODKIN CORPORATION

                                                     /s/ Morris Hodkin

                                                     Morris Hodkin

Accepted and agreed to
this 14th day of January 2002

/s/ Emilia Teige
-------------------------
Emilia Teige, VP
JPMorgan Chase

Accepted and agreed to
this 31st day of January 2002

/s/ Michael J. O'Hern
-------------------------
Michael J. O'Hern, Sernior Vice President
J.P. Morgan Leasing, Inc.

Accepted and agreed to
this 31st day of January 2002

/s/ Edward J. Fred
-------------------------
Edward J. Fred
Kolar, Inc.

cc: Cindy Korman, Esq.

<page>
Kolar, Inc.                                                 February 14, 2002

                                  TERMS OF SALE

Daley-Hodkin Corporation (the "Auctioneer") hereby sells on account of the
Secured Parties (all Secured Parties will be defined) its right, title and
interest in all of the machinery, equipment, office furniture, office equipment
and vehicles (the "Items") of Kolar, Inc. All Items are offered "AS IS" and
"WHERE IS" without any representation or warranty whatsoever, either expressed
or implied, including but not limited to representations or warranties as to
quality, quiet enjoyment, condition, mileage, OSHA safety equipment,
description, merchantability or fitness for known use for any particular
purpose.

All bidders must register to become eligible to bid. All bidders are required to
provide their paddle number at time of knockdown and a minimum first deposit of
$200 or 25% of the Bid Price, whichever is greater. Payment of the balance in
full must be made within 24 hours after the sale is concluded. Payment of the
entire balance due must be made prior to the removal of any item(s) purchased.

In the event a bidder fails to give the required deposit or fails to pay balance
in full as above, the Auctioneer may, without notice to the purchaser, resell
the Items any time during or after the sale. All deposits and payments shall
consist of cash, cashier's check, or other certified funds made payable to
Daley-Hodkin Corporation. Signed checks will be accepted only if accompanied by
a bank letter drawn by a bank which is reasonably acceptable to the Auctioneer
and which states that the bank will guarantee payment up to a specified amount
(this letter MUST contain the words "guarantee payment"). Signed checks
delivered to the Auctioneer by the Buyer, omitting the dollar amounts will be
completed and deposited by the Auctioneer at the conclusion of the auction sale.

A ten (10 %) percent buyer's premium will be added to the purchase price of each
lot and will be added to your invoice.

The Auctioneer reserves the right to sell in bulk, consecutive lot number order,
or in any order, he deems suitable. To be successful, the cumulative total of
the individual bids must exceed the bulk bid(s) by five (5 %) percent. In the
event of any disputed bid, the Auctioneer reserves the right to put the disputed
Item up for sale to the highest bidder. The auction sheets and records of sale
as set forth by the Auctioneer shall be deemed to be accepted as final by all
purchasers. The Auctioneer is not bound by any actions or statements made by any
person other than itself. In the event the Auctioneer is unable to release any
Item to a purchaser, the extent of the Auctioneer's and the Secured Party's
liability will be to refund any funds collected against that Item.

Removal of the Items purchased must be completed in accordance with the Terms Of
Sale. All Items are required to be removed by the purchaser at its own risk and
expense and in compliance with all applicable laws, regulations or ordinances
including State and Federal Environmental laws. No allowances or adjustment of
any kind will be made once the Items purchased are removed from the sale
premises. Items CANNOT be removed until the day after the sale has been
completed. All Items must be removed from the premises during normal business
hours, Monday through Friday during the hours of 8:00a.m to 4:00p.m. and must be
completed as set forth in the following removal schedule:

Daley-Hodkin Corporation                                     Auctioneers     1

<page>
Kolar, Inc.                                                 February 14, 2002

         Item                 Starting Removal Date         Final Removal Date
-----------------------     -------------------------      ---------------------
Items including, but not    Friday, February 15, 2002      Friday, March 1, 2002
limited to,  office
furniture, hand tools,
inspection equipment, and
otherreadily movable items

All Shelving and racking     Friday, February 15, 2002     Friday, March 1, 2002

All other Items              Friday, February 15, 2002     Friday, March 8, 2002
--------------------------------------------------------------------------------

Removal on Saturdays and Sundays will be by appointment only at the Auctioneer's
discretion. Buyers will be assigned a checker to escort them to their purchases
on a first come first serve basis.

Any Items purchased, which are not removed by the required dates, or if the
purchaser fails to comply with the terms of final payment and/or removal as
required, shall be deemed abandoned and forfeited. The Auctioneer reserves the
right to resell the Items concerned, without notice to the purchaser and the
purchaser's payments will be forfeited. The purchaser will remain liable for any
deficiency as well as any expenses incurred in connection with the resale or
removal of any abandoned and forfeited Item.

All lots offered for sale that have drawers, storage compartments or any other
areas for storage, are sold without contents therein or thereon unless
specifically announced otherwise by the Auctioneer. The obligation to obtain
applicable permits, licenses and registration fees (i.e.: software, vehicles,
etc.) are the sole responsibility of the purchaser. Computers are sold as
hardware only; purchasers do not have rights to any information or software,
which may be in the system.

All purchasers and their agents who assist in removal of the Items may, at the
Auctioneer's discretion, be required to provide a Certificate of Insurance
naming Daley-Hodkin Corporation, JPMorgan Chase and Chase Equipment Leasing,
Inc. as loss payee with a minimum coverage of one million ($1,000,000) dollars.
All chemicals, fluids, filters or storage containers associated with any Items
purchased must be removed by qualified personnel in an environmentally safe
manner before any Item will be released. All overflows or spills must be cleaned
up with absorbent material, which must be removed from the premises. Removal
will not be permitted until Daley-Hodkin Corporation has inspected the clean up.
All purchasers are required to disconnect and cap electrical and water lines in
a professional and reasonable manner. Failure to do so will result in the
purchaser being held responsible for any costs or damages incurred.

All information, materials and reports verbal or printed that have been provided
by the Auctioneer are correct to the best of our knowledge and in no other way
is accuracy of same guaranteed by the Auctioneer. Vehicle odometers readings are
correct to the best of our knowledge; however, the Auctioneer does not warrant
or guarantee their accuracy. Purchasers shall rely on their own due diligence
and inspection.

The Secured Parties reserve the right to confirm or reject any and all bids.

NEW YORK: Applicable 8% sales tax must be paid to the Auctioneer. Exceptions:
New York State Resale Certificates and/or Exemption Certificates will be
accepted. New York State Exemption Certificates will be accepted for purchases
of machinery and equipment. Sales tax will be collected from all out of state
purchasers and will be refunded directly to the purchaser upon receipt of a
properly completed bill of lading from a common carrier showing out of state
delivery, if received prior to the 15th day of next month. Otherwise, refunds
must be obtained directly from the New York State Sales Tax Bureau. IRS
regulations require us to report all cash payments, as defined by the IRS,
exceeding $10,000.00 from any one purchaser for one transaction or two or more
related transactions.

Daley-Hodkin Corporation                                        Auctioneers   2

<page>
Kolar, Inc.                                                 February 14, 2002

VEHICLES: All buyers must pay state sales tax to the department of motor
vehicles of the respective state in which the vehicle will be registered. The
exact name and address in which the vehicle will be registered must be submitted
to the Auctioneer at the time of payment.

These terms supersede any other posted or printed Terms of Sale. These Terms of
Sale are read at the beginning of the sale and posted on the premises so that
all prospective purchasers are deemed to have full knowledge of same regardless
of what time they entered the sale premises. Modification to these terms or
additional terms and conditions of sale may be announced and/or posted by the
Auctioneer at any time. A successful bid is considered acceptance of the above
terms and is a binding contract.

Daley-Hodkin Corporation                                       Auctioneers     3Exhibit 10.41

         NINTH AMENDMENT, dated as of December 31, 2001 (the "Amendment"), to
the Credit Agreement, dated as of October 9, 1997 (as amended, supplemented or
otherwise modified from time, the "Credit Agreement"), among CPI AEROSTRUCTURES,
INC., a New York corporation ("Holdings"), KOLAR, INC., a Delaware corporation
(the "Borrower"), the several banks and other financial institutions from time
to time parties thereto (collectively, the "Lenders"), and JPMORGAN CHASE BANK,
a New York banking corporation, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent").

                              W I T N E S S E T H:
                               - - - - - - - - - -

         WHEREAS, Holdings, the Borrower, the Lenders and the Administrative
Agent are parties to the Credit Agreement; and

         WHEREAS, Holdings, and the Borrower have requested that the Lenders
agree to amend certain provisions in the Credit Agreement upon the terms and
subject to the conditions set forth herein; and

         WHEREAS, the Administrative Agent and the Lenders are willing to agree
to the requested amendments;

         NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, the parties hereto hereby agree as follows

1.       Defined Terms. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.

2.       Amendment to Section 2.3(a) of the Credit Agreement. Section 2.3(a) of
the Credit Agreement is hereby amended by deleting such Section in its entirety
and substituting in lieu thereof the following:

         "(a) The Tranche A Term Loans shall mature on June 30, 2002 with the
         amount outstanding on the effective date of the Amendment to this
         Agreement to be paid in seven (7) consecutive monthly installments
         payable on the Business Day of each month as follows:

            December 31, 2001                                   $25,000.00
            January 31, 2002                                    $50,000.00
            February 28, 2002                                   $50,000.00
            March 31, 2002                                      $50,000.00
            April 30, 2002                                     $100,000.00
            May 30, 2002                                       $100,000.00
            June 30, 2002                                    $2,188,500.00
<page>

3.       Representations and Warranties. On and as of the date hereof, Holdings
and the Borrower hereby jointly and severally confirm, reaffirm and restate the
representations and warranties set forth in Section 3 of the Credit Agreement
mutatis mutandis. To the extent that any of the representations and warranties
set forth in Section 3 of the Credit Agreement expressly relate to a specific
earlier date, Holdings and the Borrower jointly and severally hereby confirm,
reaffirm and restate such representations and warranties as of such earlier
date.

4.       Effectiveness. This Amendment shall become effective on the date (the
"Amendment Effective Date") on which the Administrative Agent shall have
received:

         (i)      an executed counterpart of this Amendment from Holdings, the
                  Borrower, and the Required Lenders; and

         (ii)     on or before January 31, 2002, stock certificates representing
                  (a) 30,000 shares of common stock in Holdings in the name of
                  JPMorgan Chase Bank, Chase Equity Associates L.P. or its or
                  their designee, and (b) 20,000 shares of common stock in
                  Holdings in the name of Mellon Bank, N.A. or its designee.
                  Such shares shall be duly issued, fully paid and
                  non-assessable subject to appropriate registration rights, and
                  free and clear of all liens, encumbrances and restrictions on
                  transferability.

         (iii)    on or before January 31, 2002, payment and performance of such
                  additional obligations as Borrower or Holdings shall have
                  hereunder, including but not limited to the obligations
                  described in paragraph 6 hereof.

5.       Continuing Effect: No Other Amendments, Waivers or Consents. Except as
expressly provided herein, all of the terms and provisions of the Credit
Agreement are and shall remain in full force and effect. The amendments provided
for herein are limited to the specific subsections of the Credit Agreement
specified herein and shall not constitute a consent, waiver or amendment of, or
an indication of the Administrative Agent's or the Lenders' willingness to
consent to any action requiring consent under any other provisions of the Credit
Agreement or the same subsection for any other date or time period.

6.       Expenses. Holdings and the Borrower agree to pay and reimburse the
Administrative Agent for all its reasonable costs and out-of-pocket expenses
incurred in connection with the preparation and delivery of this Amendment,
including, without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent, and to, compensate, pay and/or reimburse
Administrative Agent in accordance with such additional agreements as may have
been entered into between Borrower, Holdings, and Administrative Agent.

7.       Counterparts. This Amendment may be executed in any number of
counterparts by the parties hereto (including by facsimile transmission), each
of which counterparts when so executed shall be an original, but all the
counterparts shall together constitute one and the same instrument.

8.       GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

<Page>

         WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
date written next to the signature of each party.

                                               CPI AEROSTRUCTURES, INC.

                                               By:  /s/ Edward J. Fred
                                                  ------------------------------
                                                     Name: Edward J. Fred
                                                     Title: President and Chief
                                                              Financial Officer

                                               KOLAR, INC.

                                               By:  /s/ Edward J. Fred
                                                  ------------------------------
                                                     Name: Edward J. Fred
                                                     Title: Executive Vice
                                                              President and
                                                              Chief Financial
                                                              Officer

                                               JPMORGAN CHASE BANK
                                               As administrative Agent
                                                 and as Lender

                                               By: /s/ Richard E. Grabowski
                                                  ------------------------------
                                                     Name: Richard E. Grabowski
                                                     Title: Vice President

                                               MELLON BANK, N.A.
                                               As Lender

                                               By: /s/  Kim D. Elm
                                                  ------------------------------
                                                      Name: Kim D. elm
                                                      Title: First Vice
                                                                President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}]]