PRELIMINARY COPY

                         ESPEY MFG. & ELECTRONICS CORP.

                                 --------------
                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                          TO BE HELD NOVEMBER 12, 2004
                                 --------------

                                                                October 12, 2004

To the Shareholders of

      ESPEY MFG. & ELECTRONICS CORP.:

      You are cordially  invited to attend the Annual Meeting of Shareholders of
Espey Mfg. &  Electronics  Corp.,  which will be held at the  Holiday  Inn,  232
Broadway,  Saratoga  Springs,  New York,  on November 12,  2004,  at 10:00 a.m.,
Eastern Standard Time, for the following purposes:

      1.    To elect two  Class B  Directors  to serve for a three  year term or
            until their respective successors are duly elected and qualify; and

      2.    To vote on the approval of an Amendment to the Company's Certificate
            of Incorporation, as amended, to change the number of members of the
            Board of  Directors  from nine to a number not less than three,  nor
            more than nine; and

      3.    To ratify the  appointment of KPMG LLP as the Company's  independent
            public accountants for the fiscal year ending June 30, 2005.

      No other business may be transacted at the meeting.

      The Board of Directors has fixed the close of business on October 5, 2004,
as the record  date for the  purpose of  determining  shareholders  entitled  to
notice of, and to vote at, said meeting or any  adjournment  thereof.  The books
for transfer of the Company's capital stock will not be closed.

      Even if you  expect to attend the  meeting  in person,  it is urged by the
Company that you mark,  sign, date and return the enclosed proxy.  The proxy may
be revoked at any time before it is voted and  shareholders  who execute proxies
may  nevertheless  attend the  meeting  and vote their  shares in person.  Every
properly signed proxy will be voted as specified unless previously revoked.

                                             By Order of the Board of Directors,


                                                      PEGGY A. MURPHY
                                                    Corporate Secretary

      Please make your specification and sign and date the enclosed proxy and
mail it promptly in the accompanying pre-addressed, postage-free envelop.



                                [LOGO OF ESPEY]
                            An ISO Certified Company



                         ESPEY MFG. & ELECTRONICS CORP.
                               233 Ballston Avenue
                        Saratoga Springs, New York 12866

                                 PROXY STATEMENT

      The enclosed  proxy is solicited by the Board of Directors of Espey Mfg. &
Electronics Corp. (the "Company") for use in voting at the Annual Meeting of the
Shareholders  of the  Company  to be  held at the  Holiday  Inn,  232  Broadway,
Saratoga  Springs,  New York,  on November  12,  2004,  at 10:00  a.m.,  Eastern
Standard Time, and at any postponement or adjournment  thereof, for the purposes
set forth in the attached Notice of Meeting.  It is anticipated  that the Notice
of Annual Meeting of  Shareholders,  this Proxy  Statement and the form of proxy
will be mailed on or about October 12, 2004.

Voting and Revocability of Proxies

      Every  properly  dated,  executed and returned  proxy will be voted at the
Annual Meeting in accordance  with the  instructions of the  shareholder.  If no
specific  instructions are given,  the shares  represented by such proxy will be
voted for the election of Class B Directors nominated by the Board of Directors.
Any  shareholder  giving a proxy has the power to revoke it at any time prior to
the voting thereof by voting in person at the Annual Meeting,  by giving written
notice  to the  Secretary  prior  to  the  Annual  Meeting,  or by  signing  and
delivering a new proxy card bearing a later date.

      The Company's  only class of voting  securities  is its Common Stock,  par
value  $.33-1/3  per share (the  "Common  Stock").  Each  share of Common  Stock
outstanding  on the record date will be entitled to one vote on all matters.  In
accordance with the Company's  By-Laws and applicable state law, the election of
directors  will be determined by a plurality of the votes cast by the holders of
shares of Common  Stock  present and entitled to vote  thereon,  in person or by
proxy, at the Annual Meeting.  Shares present which are properly  withheld as to
voting with respect to any one or more nominees, and shares present with respect
to which a broker  indicates  that it does not have  authority to vote  ("broker
non-vote")  will  not be  counted.  Cumulative  voting  in  connection  with the
election of directors is not permitted. In accordance with the Company's By-Laws
and applicable state law, the affirmative vote of shares representing a majority
of all outstanding  shares entitled to vote thereon at a meeting of shareholders
is  required  to  approve  the  Amendment  to  the  Company's   Certificate   of
Incorporation and the affirmative vote of shares  representing a majority of the
votes cast by the holders of shares  present and entitled to vote is required to
approve the other matters to be voted on at the Annual  Meeting.  Shares,  which
are voted to abstain and broker non-votes,  are not counted as votes cast on any
matter to which they relate.

      The By-Laws of the Company  provide that the majority of the shares of the
Common Stock of the Company issued and outstanding and entitled to vote, present
in person or by proxy, shall constitute a quorum at the Annual Meeting.  Shares,
which are voted to abstain,  are considered as present at the Annual Meeting for
the purposes of  determining a quorum.  Broker  non-votes are  considered as not
present at the Annual Meeting for the purposes of determining a quorum.

Record Date and Share Ownership

      Only  holders of Common Stock of record on the books of the Company at the
close of business  on October 5, 2004 will be  entitled to vote at the  meeting.
There were outstanding and entitled to vote on October 5, 2004, 1,010,804 shares
of Common Stock.

                              ELECTION OF DIRECTORS

      The Company's Certificate of Incorporation,  as amended, provides that the
Board of Directors shall consist of three classes of directors (Class A, Class B
and Class C) with overlapping  three-year terms. One class of directors is to be
elected each year for a term  extending to the third  succeeding  Annual Meeting
after such election or until their  respective  successors  are duly elected and
qualify.  The terms of the two Class B Directors  expire at the  current  Annual
Meeting.  The Board of Directors has nominated two persons to stand for election
as Class B Directors.

      The votes will be cast pursuant to the enclosed  proxy for the election of
each  of  the  Class  B  nominees  named  below  unless  specification  is  made
withholding such authority. Each of the nominees is presently a director of the
Company.  Should any of said nominees for Class B Directors become  unavailable,
which is not anticipated,  the proxies named in the enclosed proxy will vote for
the  election of such other  persons as the Board of  Directors  may  recommend.
Proxies  may not be voted for a  greater  number of  persons  than the  nominees
named.


                                       1


      Currently, the Company's Certificate of Incorporation,  as amended, states
that the Company shall have nine Directors  serve on its Board of Directors.  In
the event the shareholders elect the two nominees named herein, the Company will
have  eight  members  serving  on its  Board of  Directors.  As is stated in the
attached  Notice of  Meeting,  the  Company has  included  an  amendment  to the
Certificate  of  Incorporation  as an  additional  item to be voted  upon by the
Company  shareholders  at the Annual Meeting.  If approved,  the amendment would
permit  the  Company  to have no less than  three and no more than nine  members
serving on the Board of Directors.

      The  names and  business  experience  for the past  five  years of the two
persons who have been  nominated by the Board of Directors to stand for election
as Class B Directors at the Annual  Meeting and the  remaining  directors  whose
terms are continuing until the 2005 or 2006 Annual Meeting appear below.

      THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE FOLLOWING
NOMINEES FOR CLASS B DIRECTORS.

                  NOMINEES FOR CLASS B DIRECTORS -- SERVING FOR
              A THREE YEAR TERM EXPIRING AT THE 2007 ANNUAL MEETING



                                                                                                                   Period to
                                              Offices and                                                             Date
                                            Positions Held                                                         Served as
       Name                   Age            with Company             Principal Occupation or Employment            Director
       ----                   ---            ------------             ----------------------------------            --------
                                                                                                          
William P. Greene .........   74                  --               Mr. Greene was Vice President of Operations        1992
                                                                   from March 1, 1999, and resigned as an
                                                                   executive officer effective December 31,
                                                                   2000. Prior to joining the Company, he was
                                                                   Vice President of Finance for ComCierge,
                                                                   LLC, San Diego, CA, since August 1997.
                                                                   Prior to that position, he was Vice
                                                                   President of Operations for Bulk Materials
                                                                   International Co., Newton, CT, from 1993 to
                                                                   July 1997. From 1991 to 1993, Mr. Greene
                                                                   was Associate Professor of Finance and
                                                                   International Business, Pennsylvania State
                                                                   University in Kutztown, PA. From 1985 to
                                                                   1990, he was Associate Dean of the School
                                                                   of Business, United States International
                                                                   University, San Diego, CA. From 1992 to
                                                                   1995, he was Chairman of the Department of
                                                                   Business, Skidmore College, Saratoga
                                                                   Springs, NY. Prior to that he had been
                                                                   employed as an officer for several
                                                                   financial institutions.

Seymour Saslow ............   83                  --               Mr. Saslow was Senior Vice President since         1992
                                                                   December 6, 1996, and resigned as an
                                                                   executive officer effective December 31,
                                                                   1999. Prior to being elected to Senior Vice
                                                                   President, Mr. Saslow served as Vice
                                                                   President- Engineering since April 3, 1992.


                       CLASS C DIRECTORS -- SERVING FOR A
               THREE YEAR TERM EXPIRING AT THE 2005 ANNUAL MEETING



                                                                                                                    Period to
                                              Offices and                                                              Date
                                            Positions Held                                                          Served as
       Name                   Age            with Company             Principal Occupation or Employment            Director
       ----                   ---            ------------             ----------------------------------            --------
                                                                                                          
Paul J. Corr ..............   60                  --               Certified Public Accountant and a Professor        1992
                                                                   of Business, Skidmore College, in Saratoga
                                                                   Springs, NY, since 1981, currently holding
                                                                   the position of Associate Professor; Mr.
                                                                   Corr is also a shareholder in the Latham,
                                                                   New York accounting firm of Rutnik, Matt &
                                                                   Corr, P.C. and a principal in Capital
                                                                   Financial Advisors, LLC since 2003.



                                       2


                       CLASS C DIRECTORS -- SERVING FOR A
         THREE YEAR TERM EXPIRING AT THE 2005 ANNUAL MEETING (continued)



                                                                                                                 Period to
                                              Offices and                                                           Date
                                            Positions Held                                                       Served as
       Name                   Age            with Company             Principal Occupation or Employment          Director
       ----                   ---            ------------             ----------------------------------          --------
                                                                                                        
Barry Pinsley (1) .........   62        Non-Executive Officer      Certified Public Accountant who for five         1994
                                                                   years acted as a consultant to the
                                                                   Company prior to his election as a Vice
                                                                   President- Special Projects on March 25,
                                                                   1994. On December 6, 1997, Mr. Pinsley
                                                                   was elected to the position of Vice
                                                                   President-Investor Relations and Human
                                                                   Resources, from which he resigned on June
                                                                   9, 1998. Mr. Pinsley has been a
                                                                   practicing Certified Public Accountant in
                                                                   Saratoga Springs, New York since 1975,
                                                                   and is currently semi-retired.

Michael W. Wool ...........   58                  --               Attorney engaged in private practice             1990
                                                                   of law and Senior Partner since 1982 in
                                                                   the law firm of Langrock, Sperry & Wool,
                                                                   with offices in Burlington, VT and
                                                                   Middlebury, VT. Mr. Wool also serves on
                                                                   the board of the New England Board of
                                                                   Higher Education and the Burlington Boys
                                                                   and Girls Club.


                                     CLASS A DIRECTORS -- SERVING FOR A
                             THREE YEAR TERM EXPIRING AT THE 2006 ANNUAL MEETING



                                                                                                                 Period to
                                              Offices and                                                           Date
                                            Positions Held                                                       Served as
       Name                   Age            with Company             Principal Occupation or Employment          Director
       ----                   ---            ------------             ----------------------------------          --------
                                                                                                        
Howard Pinsley (1) ........   64          President, Chief         Howard Pinsley for more than the past five       1992
                                          Executive Officer        years has been employed by the Company on
                                          and Chairman of          a full-time basis as Program Director
                                          the Board                prior to being elected Vice President-
                                                                   Special Power Supplies on April 3, 1992.
                                                                   On December 6, 1996, Mr. Pinsley was
                                                                   elected to the position of Executive Vice
                                                                   President. On June 9, 1998 he was elected
                                                                   to the positions of President and Chief
                                                                   Operating Officer. Subsequently he became
                                                                   Chief Executive Officer and Chairman of
                                                                   the Board.

Alvin O. Sabo .............   61                  --               Attorney engaged in private practice of law      1999
                                                                   and Senior Partner of the law firm of
                                                                   Donohue, Sabo, Varley & Armstrong, P.C.
                                                                   in Albany, NY since 1980. Prior to that
                                                                   position, he was Assistant Attorney
                                                                   General, State of New York, Department of
                                                                   Law for eleven years.

Carl Helmetag .............   56                  --               President and CEO of UVEX Inc. in                1999
                                                                   Providence, RI. From 1996 to 1999, he was
                                                                   President and CEO of HEAD USA Inc. Prior
                                                                   to that position, Mr. Helmetag was
                                                                   Executive Vice President and then
                                                                   President at Dynastar Inc. from 1978 to
                                                                   1996. He is an MBA graduate from The
                                                                   Wharton School of Business, University of
                                                                   Pennsylvania.



                                        3


----------
(1) Barry Pinsley and Howard Pinsley are cousins.

      Howard  Pinsley serves as a director of All American  Semiconductor,  Inc.
None of the other  directors  holds a  directorship  in any other company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or subject to the  requirements  of Section 15(d) of the  Securities
Act of 1933  or any  company  registered  as an  Investment  Company  under  the
Investment Company Act of 1940.

      The  only  individuals  currently  considered  executive  officers  of the
Company not identified above are:

      Garry M. Jones, 63, Assistant  Treasurer and Principal  Accounting Officer
of the Company since August 4, 1988. He was also the Principal Financial Officer
from August 4, 1988 to September 10, 1993.  Prior to being elected an officer of
the Company,  Mr.  Jones was  employed by the Company on a full-time  basis as a
Senior Accountant.

      John J. Pompay, Jr. for more than the past five years has been employed by
the Company on a  full-time  basis as Vice  President-Marketing  and Sales since
December 6, 1996.  Effective  April 5, 2004,  Mr. Pompay retired as an executive
officer.

      Peggy Murphy,  45,  Secretary of the Company since  December 11, 1998. She
has been  employed by the Company as Director of Human  Resources  since October
1998.

      David A. O'Neil,  38,  Treasurer  and  Principal  Financial  Officer since
January 4, 2000.  Mr.  O'Neil is a Certified  Public  Accountant  who,  prior to
joining the Company, was a Senior Manager at the accounting firm of KPMG LLP.

      Timothy A. Polidore is currently  the Assistant  Treasurer of the Company.
Mr. Polidore joined the Company on May 17, 1999. Prior to joining the Company he
was Accounting  Manager for Brinks,  Inc. Effective August 6, 2004, Mr. Polidore
resigned.

                   BOARD OF DIRECTORS MEETINGS AND COMMITTEES

      During  the  Company's  fiscal  year  ended  June 30,  2004,  the Board of
Directors held a total of 10 meetings, and each director then in office attended
at least 75% of such  meetings.  Under the policies of the Board,  Directors are
expected to attend regular Board meetings,  Board committee  meetings and annual
stockholder  meetings.  All of the Company's  directors attended the 2003 Annual
Meeting.

      The Board has a standing Audit  Committee  whose members are Paul J. Corr,
Chairman,  Alvin O. Sabo and Carl  Helmetag.  The  functions  of this  Committee
include reviewing the engagement of the independent  accountants,  the scope and
timing of the audit and any non-audit services to be rendered by the independent
accountants,  reviewing  with the  independent  accountants  and  management the
Company's policies and procedures with respect to internal auditing,  accounting
and financial controls, and reviewing the report of the independent  accountants
upon  completion of its audit.  During the fiscal year ended June 30, 2004,  the
Audit Committee held 5 meetings, and each Committee member attended at least 75%
of such meetings.

      The Board has a  standing  Nominating  Committee  whose  members  are Carl
Helmetag,  Chairman,  Michael  Wool,  and  Paul  J.Corr.  The  function  of this
Committee is to identify and recommend to the Board  individuals  for nomination
to fill  vacancies in, and for  renomination  to,  positions as Directors of the
Corporation.  During fiscal year ended June 30, 2004, the Nominatiang  Committee
held 2  meetings  and  each  committee  member  attended  at  least  75% of such
meetings.

      All of the members of the Audit  Committee  and the  Nominating  Committee
meet the  independence  criteria for audit  committee and  nominating  committee
members  as set  forth  the in  the  listing  standards  of the  American  Stock
Exchange.

      The Board has a standing Stock Option Committee whose members are William
P. Greene, Chairman, Howard Pinsley, and Barry Pinsley. The functions of this
Committee include determining to whom, and the time or times at which, options
will be granted, the number of shares of common stock that comprise each option
and the exercise price and vesting schedule for options granted pursuant to the
Company's 2000 Stock Option Plan. During the fiscal year ended June 30, 2004,
the Stock Option Committee did not meet and no options were granted.

                            COMPENSATION OF DIRECTORS

      The  Company's  standard  arrangement  compensates  each  director  of the
Company an annual  fee in the amount of $15,000  for being a member of the Board
of Directors.  Each Director that also serves as a member of the Audit Committee
is compensated an additional annual fee of $5,000.  Each director that serves as
a member of the Succession Committee or the Mergers and Acquisition Committee is
compensated an additional $2,500 for each committee. These fees are paid monthly
to the Directors.  No other Committee members receive  additional  compensation.
Executive  officers that also serve on the  Company's  Board of Directors do not
receive director's fees.


                                       4


      Directors  are also eligible to receive stock options under the 2000 Stock
Option Plan at the discretion of the Stock Option Committee.  For the year ended
June 30, 2004, no options were granted and the following  options remain granted
and unexercised by the Directors in accordance with the 2000 Stock Option Plan.

      Name                         Number of Options        Exercise Price Range
      ----                         -----------------        --------------------

Seymour Saslow                           1,500                 $17.95 - 19.85

Barry Pinsley                            1,500                  13.25 - 19.85

Michael W. Wool                          1,500                  17.95 - 19.85

William P. Greene                          900                  17.95 - 19.85

Paul J. Corr                             1,600                  13.25 - 19.85

Alvin O. Sabo                            1,400                  13.25 - 19.85

Carl Helmetag                              800                  13.25 - 19.85

Howard Pinsley                           6,000                  17.95 - 19.85

In  accordance  with the 2000 Stock Option Plan the above  options have exercise
dates that range from March 1, 2002 through and expiring on March 4, 2013.

                       COMPENSATION OF EXECUTIVE OFFICERS

      The following  table  summarizes the annual  compensation  for each of the
fiscal years ended June 30, 2004,  June 30, 2003,  and June 30, 2002 received by
the Company's Chief Executive  Officer (or acting in a similar capacity) and the
other highest paid executive officers of the Company that received over $100,000
in total compensation as of June 30, 2004.

                           SUMMARY COMPENSATION TABLE



                                                                                           Long Term
                                                                                         Compensation
                                                                                         ------------
                                                                                          Securities
          Name and                                          Annual Compensation           Underlying       All Other
     Principal Position            Fiscal Year          Salary              Bonus           Options     Compensation(1)
     ------------------            -----------          ------              -----           -------     ---------------
                                                                                            
     Howard Pinsley                   2004             $190,120            $20,000               0         $ 34,826
       President and                  2003             $180,404            $12,500           2,000         $ 19,109
       Chief Executive Officer        2002             $173,120            $25,000           2,000         $ 11,841

     John J. Pompay, Jr.(2)           2004             $165,622            $25,000               0         $ 34,733
      Vice President-Sales            2003             $160,554            $25,000             800         $ 19,244
                                      2002             $154,340            $25,000             800         $ 12,134

     David A. O'Neil                  2004             $112,250            $12,500               0         $ 13,101
       Treasurer and Principal        2003             $105,490            $10,000             800         $ 10,738
       Financial Officer              2002             $ 99,950            $12,500             800         $  9,899


----------
(1)   Represents  (a) the cash and market value of the shares  allocated for the
      respective  fiscal years under the  Company's  ESOP to the extent to which
      each named  executive  officer is vested,  and (b) the Company's  matching
      contribution under the 401K plan.

(2)   Mr. Pompay retired, effective April 5, 2004, as an executive officer.

                        OPTION GRANTS IN LAST FISCAL YEAR

      There were no options granted during the year ended June 30, 2004.


                                       5


      The following table sets forth information  concerning unexercised options
held on June 30, 2004 by the named executive officers:

     AGGREGATED OPTIONS AT FISCAL YEAR-END AND FISCAL YEAR-END OPTION VALUES



                                                                    Number of Securities           Value of Unexercised
                                 Shares                            Underlying Unexercised              In-the-Money
                                Acquired                                 Options at                     Options at
                                   On              Value             Fiscal Year-End ()             Fiscal Year-End ($)
      Name                      Exercise         Realized         Exercisable/Unexercisable     Exercisable/Unexercisable)
      ----                      --------         --------         -------------------------     --------------------------
                                                                                          
Howard Pinsley                      0                0                   4,000/2,000                  15,800/8,700

John J. Pompay Jr.*                 0                0                     800/800                     2,400/3,480

David A. O'Neil                     0                0                     800/800                     2,400/3,480



----------
*Mr. Pompay retired, effective April 5, 2004, as an executive officer.


In accordance  with the 2000 Stock Option Plan,  the above options have exercise
dates that range from March 4, 2002 through and expiring on March 4, 2013.


Insurance

      The  executive  officers  and  directors  of the  Company  can elect to be
covered under the  company-sponsored  health plans, which do not discriminate in
favor of the  officers,  or  directors  of the Company  and which are  available
generally to all  employees.  In addition,  the  executive  officers are covered
under a group life plan,  which does not  discriminate,  and is available to all
employees.

      The Company maintains insurance coverage,  as authorized by Section 726 of
the New York Business  Corporation Law,  providing for (a)  reimbursement of the
Company  for  payments  it makes to  indemnify  officers  and  directors  of the
Company,  and (b) payment on behalf of officers and directors of the Company for
losses, costs and expenses incurred by such individuals in any actions.

               Employment Contracts and Termination of Employment

      The  Company  has an  employment  contract  with  John J.  Pompay  Jr.  in
connection with his duties as Vice  President-Marketing  and Sales. The contract
was effective as of January 1, 2003,  and allowed,  on April 5, 2004, Mr. Pompay
to  voluntarily  resign as Vice  President of Marketing  and Sales and accept an
option  under the contract as a  non-executive  officer in which he will receive
full  benefits  plus  full  compensation  for 13 weeks and then for the next 143
weeks receive $1,000 per week for services to be rendered. This contract expires
on April 5, 2007.

      The Company entered into an agreement with Howard  Pinsley,  President and
CEO effective July 1, 2002. The contract allows Mr. Pinsley upon his resignation
or termination to become a non-executive  officer of the Company for a period of
thirty-six  months.  In consideration for services to be provided by Mr. Pinsley
for the equivalent of two days a month after his resignation or termination, and
to perform duties as reasonably  requested by the Company,  he will receive full
benefits plus $15,000 per month for the first three months, and $4,333 per month
for the next thirty-three  consecutive months. This ageement expires on December
31, 2005.

                             AUDIT COMMITTEE REPORT

      The Audit  Committee of which the Board of Directors (the  "Committee") is
comprised of three  independent  directors and operates under a written charter,
which is attached as Exhibit A to this Proxy Statement.

      In  fulfilling  its  responsibilities,  the  Committee  has  reviewed  and
discussed the Company's audited consolidated financial statements for the fiscal
year ended June 30, 2004 with management and the independent auditors.

      The  Committee  has discussed  with the  independent  auditors the matters
required  to  be  discussed  by   Statement  on  Auditing   Standards   No.  61,
Communication with Audit Committees. In addition, the Committee has received and
reviewed the written  disclosures and the letter from the  independent  auditors
required by  Independence  Standard No.1,  Independence  Discussions  with Audit
Committees, and has discussed with the auditors the auditors' independence.

      The Committee  considered  and  concluded  that the provision of non-audit
services by the  independent  auditors was  compatible  with  maintaining  their
independence.


                                       6


      In  reliance  on the  reviews  and  discussions  referred  to  above,  the
Committee  recommended to the Board of Directors  that the audited  consolidated
financial  statements  referred  to above be included  in the  Company's  Annual
Report on Form 10-K for the fiscal year ended June 30, 2004.

                                                       Audit Committee:
                                                       Paul J. Corr, Chairman
                                                       Carl Helmetag
                                                       Alvin O. Sabo

                              NOMINATING COMMITTEE

      The  Nominating  Committee  of the  Board of  Directors  (the  "Nominating
Committee")  is comprise of three  independent  directors  and operates  under a
written charter, which is attached as Exhibit B to this Proxy Statement.

      The  Nominating  Committee  will review the present needs of the Board and
establish  criteria as to particular  qualifications  in terms of background and
experience  that could meet such needs. At a minimum,  the Nominating  Committee
believes  that  nominees  for  Directors  should have either  experience  in the
industry in which the Corporation engages or professional,  business or academic
qualifications  that differ from existing members of the Board and could augment
the aggregate expertise possessed by Board members. The Company further believes
that all nominees  should be able to make a contribution  to the Board that will
enhance the development and growth of the Corporation's business and stockholder
value;  devote adequate time to service as a Director;  and work well with other
Board members in a collegial manner.

      The Nominating Committee evaluates  prospective nominees identified on its
own  initiative  or  referred  to  it  by  other  Board   members,   management,
stockholders  or  external  sources  and  all  self  nominated  candidates.  The
Nominating Committee uses the same criteria for evaluating  candidates nominated
by stockholders  and self nominated as it does for those proposed by other Board
members, management an search companies.

      The  Nominating  Committee  will  consider  bona fide  recommendations  by
stockholders as to potential Director nominees,  who meet the above standards. A
stockholder  wishing  to  submit  such a  recommendation  should  send a letter,
postmarked  no later than 120 days prior to the date on which the  Corporation's
annual  meeting  was  held  during  the  prior  year,  to the  Secretary  of the
Corporation.  The  letter  must  identify  its  writer as a  stockholder  of the
Company, provide evidence of the writer's stock ownership and provide:

      o     The name,  address,  telephone  number and social security number of
            the candidate to be considered;

      o     A description of understandings,  contractual,  business or familial
            relationships between the stockholder and the candidate, if any, and
            an  unexecuted  written  consent  of the  candidate  to  serve  as a
            director of the Company, if nominated and elected;

      o     The candidate's resume and at least three references;

      o     A statement of the candidate's  qualifications to serve on the Board
            of Directors and specified Board  committees  which shall include an
            explanation  as to how elements of the  candidate's  background  and
            experience would be a benefit to the Corporation and its business.

      All  candidates  recommended  to the  Nominating  Committee  must meet the
independence  standards of the American  Stock  Exchange and the  definition  of
"independent director" in the Corporation's by-laws.

      All nominees for election at this Annual Meeting were  previously  elected
by the stockholders.

                    SHAREHOLDER COMMUNICATIONS WITH THE BOARD

      Mail can be addressed to Directors in care of the Office of the Secretary,
Espey Mfg. & Electronics Corp. 233 Ballston Avenue,  Saratoga Springs,  New York
12866.  At the  direction of the Board of  Directors,  all mail received will be
opened and screened for security purposes.  The mail will then be logged in. All
mail, other than trivial or obscene items, will be forwarded. Trivial items will
be  delivered  to the  Directors  at the  next  scheduled  Board  meeting.  Mail
addressed  to a  particular  Director  will be  forwarded  or  delivered to that
Director.  Mail addressed to "Outside  Directors" or "Non-Management  Directors"
will be forwarded or  delivered  to the  Chairman of the Audit  Committee.  Mail
addressed  to the "Board of  Directors"  will be  forwarded  or delivered to the
Chairman of the Board.


                                       7


                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

      The  following  table sets forth  information  regarding  ownership of the
Company's  outstanding  Common Stock as of September 14, 2004, by each person or
group who is known to the Company to be the  beneficial  owner of more than five
percent of the outstanding shares of Common Stock.



Title                               Name and Address of                       Amount and Nature                      Percent
Class                                Beneficial Owner                      of Beneficial Ownership                  of Class
-----                                ----------------                      -----------------------                  --------
                                                                                                            
Common Stock                   Franklin Advisory Services, LLC                 78,000 - Direct (1)                    7.70%
                               777 Mariners Island Blvd
                               P.O. Box 7777 San Mateo, CA 94403-7777

Common Stock                   The Adirondack Trust Company,                  236,735 - Direct (2)                   23.42%
                               as Trustee of the Company's Employee
                               Retirement Plan and Trust
                               473 Broadway
                               Saratoga Springs, NY 12866

Common Stock                   Advisory Research, Inc.                         70,700 - Direct (3)                    7.00%
                               180 North Stetson St.
                               Suite 5780
                               Chicago, IL 60601

Common Stock                   Howard Pinsley,                                 46,634-Direct (4)                      5.65%
                               233 Ballston Avenue                             10,712-Indirect (4)
                               Saratoga Springs, NY 12866


----------
(1)   The information as to the number of shares of Common Stock and the percent
      of class ownership of the Company that may be deemed beneficially owned by
      Franklin  Advisory  Services,  LLC  ("Franklin") is from the Schedule 13G,
      dated February 4, 2004 filed with the  Securities and Exchange  Commission
      (the "SEC"). The Franklin statement  indicated that Franklin's  investment
      "advisory  subsidiaries,"  have sole  voting  and  dispositive  power with
      respect to all of the shares of Common  Stock shown in the table above for
      Franklin. The Franklin statement indicates that the Common Stock set forth
      in the  table  is  beneficially  owned by one or more  open or  closed-end
      investment companies or other managed accounts which are advised by direct
      and indirect Franklin investment advisory subsidiaries. The statement also
      indicated  that  it  filed  the  Schedule  13G on  behalf  of  itself  and
      Franklin's  principal  shareholders,  Charles  B.  Johnson  and  Rupert H.
      Johnson,  Jr.  (the  "Principal  Shareholders"),  all of which are  deemed
      beneficial  owners of the shares of Common  Stock shown in the above table
      for  Franklin.  Franklin  and  the  Principal  Shareholders  disclaim  any
      economic interest or beneficial ownership in any of the Common Stock shown
      in the table for Franklin.

(2)   The  information as to the number of shares of Common Stock of the Company
      that may be deemed  beneficially owned by The Adirondack Trust is from the
      Form 4 dated  August 26,  2004 filed with the SEC by the Trustee on behalf
      of the Company's ESOP. The ESOP Trustee has sole voting power with respect
      to unallocated  common shares owned by the Trust,  as directed by the ESOP
      Committee appointed by the Company's Board of Directors.  As to the common
      shares  allocated to  participants,  236,735 shares as of August 26, 2004,
      the ESOP  Trustee  has the power to vote such  shares as  directed by such
      ESOP Committee to the extent the  participants do not direct the manner in
      which such shares are to be voted.

(3)   The information as to the number of shares of Common Stock and the percent
      of class ownership of the Company that may be deemed beneficially owned by
      advisory clients of Advisory Research, Inc. ("Advisory") is from the
      Schedule 13G dated February 12, 2004 filed with the SEC. Advisory, a
      registered investment advisor, is deemed to have beneficial ownership of
      70,700 shares of the Company's Common Stock as of February 12, 2004, all
      of which shares are held in Advisory investment companies, trusts and
      accounts. Advisory, in its role as investment advisor and/or manager,
      reported sole voting power with respect to 70,700 shares.

(4)   This  information  is from Form 4 dated  July 29,  2004.  Indirect  shares
      represent  stock being held in the Company  ESOP.  Direct  shares  include
      options to acquire  4,000  shares of Common  Stock  which are  exercisable
      within 60 days.


                                       8


                        SECURITY OWNERSHIP OF MANAGEMENT

      The  following  information  is furnished as of September 14, 2004 (unless
otherwise  indicated),  as to each  class of equity  securities  of the  Company
beneficially  owned by all Directors and Executive Officers and by Directors and
Executive Officers of the Company as a Group:



Title                               Name and Address of                       Amount and Nature                      Percent
Class                                Beneficial Owner                      of Beneficial Ownership                  of Class
-----                                ----------------                      -----------------------                  --------
                                                                                                             
Common Stock                        Paul J. Corr ....................           2,000-Direct (1)                          *

Common Stock                        William P. Greene ...............             100-Direct                              *

Common Stock                        Carl Helmetag ...................           3,400-Direct (1)                          *
                                                                                  500-Indirect (2)

Common Stock                        Garry M. Jones ..................             400-Direct (1)                          *
                                                                                4,923-Indirect (3)

Common Stock                        Peggy Murphy ....................             600-Direct (1)                          *
                                                                                3,644-Indirect (3)

Common Stock                        David A. O'Neil .................           3,200-Direct (1)                          *
                                                                                2,382-Indirect (3)

Common Stock                        Barry Pinsley ...................          34,830-Direct (1)                      3.78%
                                                                                3,370-Indirect (3,4)

Common Stock                        Howard Pinsley ..................          46,634-Direct (1)                      5.65%
                                                                               10,712-Indirect (3)

Common Stock                        Alvin O. Sabo ...................           1,100-Direct (1)                          *

Common Stock                        Seymour Saslow ..................           8,559-Direct (1)                          *

Common Stock                        Michael W. Wool .................           1,100-Direct (1)                          *

Common Stock                        Officers and Directors ..........         102,523-Direct (1)                     10.14%
                                    as a Group (13 persons)                    26,614-Indirect (2,3,4)


----------
*     Less than one percent

(1)   Direct  shares  include  options to acquire  shares which are  exercisable
      within 60 days as follows:



      Name of                  Exercisable                      Name of                  Exercisable
      Beneficial Owner           Options                        Beneficial Owner           Options
      ----------------         -----------                      ----------------         -----------
                                                                                  
      Paul J. Corr                 1,000                        William P. Greene            600

      Carl Helmetag                  400                        Garry M. Jones               400

      Peggy Murphy                   600                        David A. O'Neil              800

      Barry Pinsley                1,000                        Howard Pinsley             4,000

      Alvin O. Sabo                  900                        Seymour Saslow             1,000

      Michael W. Wool              1,000


(2)   Includes 500 shares owned by the trust of Molly K. Helmetag. As trustee of
      the trust,  Mr.  Helmetag is deemed  beneficial  owner, as defined in rule
      13d-3,  of the shares held by the trust.  Excludes 806 shares owned by the
      spouse  of  Mr.  Helmetag.  Beneficial  ownership  is  disclaimed  by  Mr.
      Helmetag.

(3)   Includes shares allocated to named director or officer as of June 30, 2004
      as a participant in the Company's  ESOP. Each such person has the right to
      direct the manner in which such shares  allocated  to him or her are to be
      voted by the ESOP Trustee.

(4)   Excludes  2,000  shares owned by the spouse of Barry  Pinsley.  Beneficial
      ownership of the shares is disclaimed by Mr. Pinsley.


                                       9


      There are no arrangements known to the Company, the operation of which may
at a subsequent date, result in change of control of the Company.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      As previously reported, the Company established and sold to the ESOP Trust
on June 5, 1989,  331,224  shares of the Company's  treasury stock at a price of
$26.50 per share,  which  purchase price was funded by the Company making a cash
contribution  and loan. Each year, the Company makes  contributions to the ESOP,
which are used to make loan interest and principal payments to the Company. With
each such  payment,  a portion of the Common Stock held by the ESOP is allocated
to  participating  employees.  As of June 30, 2004,  there were  240,749  shares
allocated to  participants.  The loan from the Company to the ESOP was repayable
in annual installments of $1,039,605, including interest, through June 30, 2004.
Officers of the Company,  including  Howard Pinsley who is also a director,  are
eligible to  participate  in the ESOP and to have shares and cash  allocated  to
their accounts and distributed to them in accordance with the terms of the ESOP.

      The Company paid the law firm of Langrock, Sperry & Wool, of which Michael
W. Wool, a director of the Company,  is a partner,  a total of $11,524 for legal
services during the fiscal year ended June 30, 2004.

BOARD OF DIRECTORS' PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
            CHANGING THE NUMBER OF MEMBERS OF THE BOARD OF DIRECTORS
         FROM NINE TO A NUMBER NOT LESS THAN THREE, NOR MORE THAN NINE.

      The current Article SEVENTH of the Company's  Certificate of Incorporation
reads:

      "The  entire  Board  of  Directors  shall  consist  of nine  members.  The
directors  shall be divided into three  classes,  each class to consist of three
directors.  The term of office of the first class  (Class A) shall expire at the
first annual meeting of the Company after their election,  the term of office of
the second class (Class B) shall expire at the second succeeding annual meeting,
and the third class (Class C) at the third  succeeding  annual meeting.  At each
annual meeting after the election of the first classified Board, directors shall
be elected for a term of three years to replace those whose terms expire."

      The Board of Directors has determined  that it is in the best interests of
the  Company  and  its  shareholders  that  Article  SEVENTH  of  the  Company's
Certificate of Incorporation be amended and restated to provide as follows:

      SEVENTH:  The entire  Board of Directors  shall  consist of not fewer than
three  persons  and not more than nine  persons,  with the  actual  number to be
determined in accordance  with the by-laws.  The directors shall be divided into
three classes,  Class A, Class B and Class C, and all classes shall be as nearly
equal in number as possible. At each annual meeting,  successors to the class of
directors  whose term  expires at that  annual  meeting  shall be elected  for a
three-year  term.  The Class A  directors  at the time of the  adoption  of this
Article  SEVENTH,  as amended,  have a term expiring at the 2006 Annual Meeting.
The Class B  directors  elected at the meeting of the  adoption of this  Article
SEVENTH, as amended,  will have a term expiring at the 2007 Annual Meeting.  The
Class C  directors  at the time of the  adoption  of this  Article  SEVENTH,  as
amended, have a term expiring at the 2005 Annual Meeting.

   THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE COMPANY'S
    CERTIFICATE OF INCORPORATION TO CHANGE THE NUMBER OF MEMBERS OF THE BOARD
   OF DIRECTORS FROM NINE TO A NUMBER NOT LESS THAN THREE, NOR MORE THAN NINE.


                     BOARD OF DIRECTORS' PROPOSAL TO RATIFY
                  APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

      The Board of Directors,  upon the  recommendation  of the Audit Committee,
has recommended the appointment of KPMG LLP as the Company's  independent public
accountants  for the fiscal year ending June 30,  2005.  KPMG LLP was engaged by
the Company on September  25, 2003.  Also upon the  recommendation  of the Audit
Committee, on September 9, 2003, the Board notified  PricewaterhouseCoopers LLP,
the Company's  independent public accountants for the fiscal year ended June 30,
2003, that the Company would not engage them as independent  public  accountants
for the fiscal year ending June 30, 2004.

      The reports of  PricewaterhouseCoopers  LLP on the Company's  consolidated
financial  statements  for the fiscal years ended June 30, 2003 and 2002 did not
contain any adverse  opinion or  disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope, or accounting principles.

      In connection with its audits for the two fiscal years ended June 30, 2003
and 2002 and through  September 9, 2003, there have been no  disagreements  with
PricewaterhouseCoopers LLP on any matters of accounting principles or practices,
financial statement  disclosure,  or auditing scope or procedure,  which, if not
resolved to the  satisfaction of  PricewaterhouseCoopers  LLP, would have caused
PricewaterhouseCoopers   LLP  to  make  reference  thereto  in  the  reports  of
PricewaterhouseCoopers LLP on the financial statements for such years.


                                       10


      During  the two fiscal  years  ended  June 30,  2003 and 2002 and  through
September 9, 2003, there have been no reportable events (as that term is defined
in Item 304(a)(1)(v) of Regulation S-K).

      The Company  has  provided  PricewaterhouseCoopers  LLP with a copy of the
foregoing  statements.  Attached as Exhibit 16.1 to the Company's Current Report
on Form 8-K, filed with the Securities and Exchange  Commission on September 16,
2003,  is a letter from  PricewaterhouseCoopers  LLP stating that it agrees with
such statements that concern PricewaterhouseCoopers LLP.

      The  Company  engaged  KPMG  LLP  as  the  Company's   independent  public
accountants  effective September 25, 2003. During the Company's two fiscal years
ended June 30, 2003 and 2002 and the subsequent interim period prior to engaging
KPMG LLP,  neither the Company nor anyone on its behalf  consulted with KPMG LLP
with respect to (i) the  application  of  accounting  principles  to a specified
transaction,  either completed or proposed;  (ii) the type of audit opinion that
might be rendered on the  Company's  financial  statements;  or (iii) any matter
that was either the subject of a disagreement (as defined in Item  304(a)(1)(iv)
of  Regulation  S-K and the related  instructions  to such item) or a reportable
event (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

      Unless otherwise specified by the shareholders,  the shares represented by
their  properly   executed  proxies  will  be  voted  for  ratification  of  the
appointment of KPMG LLP as independent  public  accountants  for the fiscal year
ending June 30, 2005.  The Company is advised by said firm that neither KPMG LLP
nor any of its  partners now has, or during the past three years had, any direct
financial  interest or material  indirect  financial  interest or any connection
with the Company.

      A  representative  of KPMG LLP is  expected  to be  present  at the Annual
Meeting with the  opportunity  to make a statement if he or she desires to do so
and to be available to respond to  appropriate  questions from  shareholders.  A
representative  of  PricewaterhouseCoopers  LLP is not expected to be present at
the Annual Meeting.

      THE  BOARD  OF  DIRECTORS  RECOMMENDS  A  VOTE  FOR  RATIFICATION  OF  THE
APPOINTMENT OF KPMG LLP AS INDEPENDENT  PUBLIC  ACCOUNTANTS  FOR THE COMPANY FOR
FISCAL YEAR ENDING JUNE 30, 2005.

      The   Company's   Audit   Committee  has  policies  and   procedures   for
pre-approving  all audit and non-audit work performed by  PricewaterhouseCoopers
LLP, the auditor of the Company's  annual  financial  statements  for the fiscal
year ended June 30, 2003 and  performed  and to be performed by KPMG LLP for the
fiscal year ended June 30, 2004 and 2005. Specifically,  the Audit Committee has
pre-approved the use of KPMG LLP for performance of audit services and detailed,
specific types of services within the following  categories of audit related and
tax services.  In each other case, the Committee  requires  management to obtain
specific  pre-approval  from  the  Audit  Committee  for  any  other  work to be
performed by KPMG LLP.

      The    aggregate    fees    billed   for    professional    services    by
PricewaterhouseCoopers  LLP and KPMG LLP in the fiscal years ended June 30, 2003
and 2004, respectively, for these various services were:

                TYPES OF FEES                     2003              2004
                                             Amount Billed     Amount Billed
                                             -------------     -------------

                (1) Audit Fees                  $ 64,815          $ 97,515

                (2) Audit Related Fees             4,100          $  6,100

                (3) Tax Fees                    $ 11,040          $ 12,580

                (4) All Other Fees                  None              None
                                                --------          --------

                Total                           $ 79,995          $116,195
                                                ========          ========

      In the  above  table,  in  accordance  with the  Securities  and  Exchange
Commission's  definitions and rules,  "audit fees" are fees the Company paid for
professional  services  for the  audit  of the  Company's  financial  statements
included in Form 10-K and review of financial statements included in Form 10-Qs,
and for services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements;  "audit-related  fees" are fees
for assurance and related  services that are related to the  performance  of the
audit of the Company's  employee benefit plan financial  statements;  "tax fees"
are fees for tax compliance,  tax advice and tax planning;  and "all other fees"
are fees for any services not  included in the first three  categories.  100% of
the services  set forth in sections  (1) through (3) above were  approved by the
Audit Committee in accordance with its charter.


                                       11


          COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

      Section  16(a)  of the  Securities  Exchange  Act  of  1934,  as  amended,
generally requires the Company's directors,  executive officers, and persons who
own  more  than ten  percent  of a  registered  class  of the  Company's  equity
securities,  to file reports of  beneficial  ownership and changes in beneficial
ownership  with the Securities  and Exchange  Commission.  Based solely upon its
review of copies of such reports received by it, or upon written representations
obtained from certain reporting persons, the Company believes that its officers,
directors,  and  stockholders  who own more than ten  percent  of the  Company's
equity securities have complied with all Section 16(a) filing requirements.

                                 ANNUAL REPORTS

      The Annual Report of the Company to the  shareholders  for the fiscal year
ended June 30, 2004,  including  financial  statements,  accompanies  this Proxy
Statement. Such financial statements are not incorporated herein by reference.

      A copy of the Company's  Annual Report on Form 10-K  (including  financial
statements and schedules  thereto) for the fiscal year ended June 30, 2004 filed
with the Securities and Exchange Commission will be provided without charge upon
the  written  request  of  shareholders  to  Espey  Mfg.  &  Electronics  Corp.,
attention:  Investor Relations,  233 Ballston Avenue, Saratoga Springs, New York
12866.  The Company's Form 10-K for the fiscal year ended June 30, 2004 can also
be   viewed   electronically   through   a  link   at  the   Company's   website
(www.espey.com).

                              SHAREHOLDER PROPOSALS

      Any  shareholder  proposal  which may be a proper subject for inclusion in
the proxy  statement and for  consideration  at the 2005 Annual  Meeting must be
received by the Company at its principal executive office no later than June 13,
2005,  if it is to be included in the Company's  2005 proxy  statement and proxy
form. In addition,  the Company's  bylaws outline  procedures that a shareholder
must  follow  to  nominate   directors  or  to  bring  other   business   before
shareholders' meetings.


                               PROXY SOLICITATION

      The  solicitation  of the  enclosed  proxy is being  made on behalf of the
Board of Directors  and the cost of preparing and mailing the Notice of Meeting,
Proxy Statement and form of proxy to shareholders is to be borne by the Company.


                                             By Order of the Board of Directors,


                                                       HOWARD PINSLEY
                                             President, Chief Executive Officer
                                             and Chairman of the Board

October 12, 2004
Saratoga Springs, New York


                                       12


                                   APPENDIX A                          Exhibit A

                         ESPEY MFG. & ELECTRONICS CORP.
                             AUDIT COMMITTEE CHARTER

      Purpose

      The primary purpose of the Audit Committee (the  "Committee") is to assist
the Board of Directors (the "Board") in fulfilling its responsibility to oversee
management's conduct of the Company's financial reporting process,  including by
over viewing the financial reports and other financial  information  provided by
the Company to any  governmental  or regulatory  body, the public or other users
thereof,  the Company's systems of internal  accounting and financial  controls,
and the annual independent audit of the Company's financial statements.

      In  discharging   its  oversight  role,  the  Committee  is  empowered  to
investigate  any matter  brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain outside
counsel, auditors or other experts for this purpose. The Board and the Committee
are in place to represent the Company's shareholders;  accordingly,  the outside
auditor is ultimately accountable to the Board and the Committee.

      The  Committee  shall  review the  adequacy  of this  Charter on an annual
basis.

      Membership and Meetings

      The  Committee  shall be comprised  of not less than three  members of the
Board, and the Committee's  composition will meet the requirements of applicable
American Stock Exchange rules and regulations.

      Accordingly, all of the members will be directors:

      1.    Who have no material  relationship to the Company that may interfere
            with the  exercise of their  independence  from  management  and the
            Company; and

      2.    Who are  financially  literate  or who become  financially  literate
            within  a  reasonable  period  of  time  after  appointment  to  the
            Committee.  In addition,  at least one member of the Committee  will
            have accounting or related financial management expertise.

      The Committee shall meet at least four times annually,  or more frequently
as circumstances  dictate. As part of its job to foster open communication,  the
Committee  should  meet at  least  annually  with  management,  and the  outside
auditors separately to discuss any matters that the Committee believes should be
discussed privately.

      Key Responsibilities

      The  Committee's  job is one of  oversight  and  it  recognizes  that  the
Company's  management is  responsible  for  preparing  the  Company's  financial
statements  and that the outside  auditors are  responsible  for auditing  those
financial  statements.  Additionally,  the Committee  recognizes  that financial
management  including the internal  accounting  and audit staff,  as well as the
outside auditors, have more time, knowledge and more detailed information on the
Company than do Committee members;  consequently,  in carrying out its oversight
responsibilities, the Committee is not providing any expert or special assurance
as to the Company's financial statements or any professional certification as to
the outside auditor's work.

      The following  functions shall be the common  recurring  activities of the
Committee in carrying out its  oversight  function.  These  foundations  are set
forth as a guide with the understanding that the Committee may diverge from this
guide as appropriate given the circumstances.

      o     The Committee  shall review the management and the outside  auditors
            the audited  financial  statements  to be included in the  Company's
            Annual Report on Form 10-K (or the Annual Report to  Shareholders if
            distributed  prior  to the  filing  of Form  10-K)  and  review  and
            consider  with the  outside  auditors  the  matters  required  to be
            discussed by Statement of Auditing Standards (`SAS') No. 61.

      o     As a whole,  or through the Committee  chair,  the  Committee  shall
            review with the outside  auditors the  Company's  interim  financial
            results to be  included  in the  Company's  quarterly  reports to be
            filed with the  Securities  and Exchange  Commission and the matters
            required to be discussed by SAS No. 61; this review will occur prior
            to the Company's filing of the Form 10-Q.


                                      A-1


The Committee shall:

      o     request  from  the  outside  auditors  annually,  a  formal  written
            statement  delineating all relationships between the auditor and the
            Company consistent with Independence Standards Board Standard Number
            1;

      o     discuss with the outside  auditors any such disclosed  relationships
            and their impact on the outside auditor's independence; and

      o     recommend that the Board take appropriate action, if necessary, to
            oversee the independence of the outside auditors.

The Committee,  subject to any action that may be taken by the full Board, shall
have the  ultimate  authority  and  responsibility  to select (or  nominate  for
shareholder  approval),  evaluate and,  where  appropriate,  replace the outside
auditor.

Maintain minutes of meetings of the Committee.

Report to the Board subsequent to meetings of the Committee.


                                      A-2


                                                                       Exhibit B

                         ESPEY MFG. & ELECTRONICS CORP.
                          NOMINATING COMMITTEE CHARTER
                          ----------------------------

      I. PURPOSE

      The nominating  committee,  composed of three (3)  directors,  all of whom
shall be "independent directors" as defined in the by-laws of the Company, shall
identify and recommend to the Board of Directors (the "Board")  individuals  for
nomination to fill vacancies in, and for renomination to, positions as directors
of the Company.

      II. APPOINTMENT AND REMOVAL

      The members of the nominating  committee  shall be appointed by the Board,
which shall also  designate a chairman of the nominating  committee.  Nominating
committee  members  shall  serve  until their  successors  are duly  elected and
qualified or until their  resignation or removal.  The members of the nominating
committee  may be  removed,  with or without  cause,  by a majority  vote of the
Board.

      III. MEETINGS

      The  nominating  committee  shall  meet  as  frequently  as  circumstances
dictate. Meetings may be called by the chairman of the Board or by any member of
the  nominating  committee.  Meetings of the  nominating  committee  may be held
telephonically.

      The nominating  committee may invite to its meetings such persons it deems
appropriate in order to carry out its responsibilities. The nominating committee
may also exclude from meetings of the nominating  committee any persons it deems
appropriate in order to carry out its responsibilities.

      IV. RESPONSIBILITIES AND DUTIES

      The nominating  committee may consult with the Corporation's  attorneys in
carrying out its responsibilities and shall have the authority to retain experts
and search firms as it deems appropriate, including the authority to approve the
fees payable to such parties.  The nominating committee shall have the following
functions in carrying out its responsibilities as set forth in Section I of this
Charter:

      1.    Establishing criteria for the selection of new directors to serve on
            the Board.

      2.    Identifying  individuals  believed to be qualified as  candidates to
            serve on the Board and  recommending to the Board the candidates for
            all  directors  positions  to be  filled  by  the  Board  or by  the
            shareholders  at an annual or special meeting in accordance with the
            Company's  by-laws.  In identifying  candidates  for the Board,  the
            nominating  committee  shall take into  account all factors  that it
            considers appropriate,  including,  without limitation: (a) ensuring
            that the Board  consists of  individuals  with  various and relevant
            career experience, relevant technical skills, industry knowledge and
            experience,  financial  expertise  (including  experience that could
            qualify a director as a  "financial  expert" as that term is defined
            by the rules of the United States Securities and Exchange Commission
            (the "SEC")), local or community ties, (b) individual qualifications
            such as  strength  of  character,  familiarity  with  the  Company's
            business and industry, independence and ability to work collegially,
            (c)  recommendations  from the Company's  chief  executive  officer,
            which may  include  recommendations  for Board  membership  by other
            senior members of management.  It is anticipated that the nominating
            committee  will consider the extent to which a particular  candidate
            would fill a present need on the Board.

      3.    Making  recommendations  to the Board as to whether the Board should
            adopt age or term limits or other retirement policies.

      4.    Evaluating  candidates for nomination to the Board,  including those
            recommended by shareholders.

      5.    Conducting   appropriate   inquiries   into  the   backgrounds   and
            qualifications of possible candidates.

      6.    Considering matters of independence,  possible conflicts of interest
            of  members  of  the  Board  and  executive   officers  and  whether
            candidates  for the Board have special  interests  that might impair
            their  ability to represent  the  interests of all  shareholders  or
            interact collegially with the other directors.

      7.    Maintaining  minutes or other records of meetings and  activities of
            the  nominating  committee  and  reporting  regularly  to the  Board
            concerning the meetings and activities of the nominating committee.


                                      B-1


      V. ANNUAL PERFORMANCE EVALUATION

      The nominating  committee shall,  periodically,  perform a self-review and
evaluation  as to its  performance  and  the  performance  of its  members.  The
nominating  committee shall make  recommendations  to the Board  concerning such
improvements   to  and   amendments  of  this   Corporation's   certificate   of
incorporation as the nominating  committee considers  necessary,  appropriate or
valuable to the Corporation.


                                      B-2

          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
                         ESPEY MFG. & ELECTRONICS CORP.

C
O
M
M
O
N

                                 PROXY FOR THE
                      2004 ANNUAL MEETING OF SHAREHOLDERS
                               November 12, 2004
The undersigned hereby appoints Carl Helmetag and Alvin Sabo as Proxies, each
with the power to appoint his substitute, and hereby authorizes them or any one
of them to represent and to vote, as designated below, all the shares of common
stock of ESPEY MFG. & ELECTRONICS CORP. which the undersigned would be entitled
to vote if personally present at the 2004 Annual Meeting of Shareholders to be
held on November 12, 2004 or any adjournment thereof.

Please be sure to sign and date
this Proxy in the box below.


Date

Stockholder sign above

Co-holder (if any) sign above



1.   TO ELECT TWO CLASS B DIRECTORS TO SERVE FOR A THREE YEAR TERM OR UNTIL
     THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFY.

[_] FOR all nominees listed below
   (except as marked to the contrary below)
[_] WITHHOLD AUTHORITY
    to vote for all nominees listed below

WILLIAM P. GREENE

SEYMOUR SASLOW

The Board of Directors recommends a vote FOR these nominees.

INSTRUCTION: To withhold authority to vote for any individual nominee, mark the
"For" box above and write the nominee's name in the space provided below.

2.   TO VOTE ON THE APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
     INCORPORATION changing the number of members of the Board of Directors from
     nine to a number not less that three nor more than nine.

[_]  FOR           [_] AGAINST           [_]  ABSTAIN

The Board of Directors recommends a vote FOR this proposal.

3.   TO RATIFY THE APPOINTMENT OF KPMG LLP as the independent public accountants
     of the Company for fiscal year ending June 30, 2005.

[_]  FOR           [_] AGAINST           [_]  ABSTAIN

          The Board of Directors recommends a vote FOR this proposal.
              No other business may be transacted at the meeting.




--------------------------------------------------------------------------------
      Detach here, sign, date and mail in postage paid envelope provided.

                         ESPEY MFG. & ELECTRONICS CORP.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE ABOVE SIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.

Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporation name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

If your address has changed, please correct the address in the space provided
below and return this portion with the proxy in the envelope provided.


----------------------------------------

----------------------------------------

----------------------------------------








          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
                         ESPEY MFG. & ELECTRONICS CORP.

E
S
O
P
P
L
A
N

                                 PROXY FOR THE
                      2004 ANNUAL MEETING OF SHAREHOLDERS
                               November 12, 2004

The undersigned hereby appoints Carl Helmetag and Alvin Sabo as Proxies, each
with the power to appoint his substitute, and hereby authorizes them or any one
of them to represent and to vote, as designated below, all the shares of common
stock of ESPEY MFG. & ELECTRONICS CORP. which the undersigned would be entitled
to vote if personally present at the 2004 Annual Meeting of Shareholders to be
held on November 12, 2004 or any adjournment thereof.


Please be sure to sign and date
this Proxy in the box below.


Date

Stockholder sign above

Co-holder (if any) sign above


1.   TO ELECT TWO CLASS B DIRECTORS TO SERVE FOR A THREE YEAR TERM OR UNTIL
     THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFY.

[_] FOR all nominees listed below
   (except as marked to the contrary below)
[_]   WITHHOLD AUTHORITY
  to vote for all nominees listed below

WILLIAM P. GREENE

SEYMOUR SASLOW

The Board of Directors recommends a vote FOR these nominees.

INSTRUCTION: To withhold authority to vote for any individual nominee, mark the
"For" box above and write the nominee's name in the space provided below.

2.   To vote on the approval of an Amendment to the Company's Certificate of
     Incorporation changing the number of members of the Board of Directors from
     nine to a number not less that three nor more than nine.

[_]  FOR           [_] AGAINST           [_]  ABSTAIN

The Board of Directors recommends a vote FOR this proposal.

3.   To RATIFY the appointment of KPMG LLP as the independent public accountants
     of the Company for fiscal year ending June 30, 2005.

[_]  FOR           [_] AGAINST           [_]  ABSTAIN

The Board of Directors recommends a vote FOR this proposal.
No other business may be transacted at the meeting.



--------------------------------------------------------------------------------
      Detach here, sign, date and mail in postage paid envelope provided.

                         ESPEY MFG. & ELECTRONICS CORP.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE ABOVE SIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.

Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporation name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

If your address has changed, please correct the address in the space provided
below and return this portion with the proxy in the envelope provided.

----------------------------------------

----------------------------------------

----------------------------------------