FIRST AMENDMENT
TO EMPLOYMENT AGREEMENT


THIS FIRST AMENDMENT dated March
7, 2016 (the “Amendment”) is made to the Employment Agreement dated as of January 6, 2015 (the “Employment Agreement”)
by and between ESPEY MG. & ELECTRONICS CORP., a New York corporation (the “Company”) and PATRICK ENRIGHT, JR. (the
“Executive”).


WHEREAS, the Company and the Executive
desire to amend the provisions of the Employment Agreement providing for the CEO Annual Bonus.


NOW, THEREFORE, the parties hereto agree
as follows:


1.          Defined Terms. Capitalized
terms used in this Amendment without definition shall have the respective meanings assigned to such terms in the Employment Agreement.


2.          Annual Bonus. The attachment
to this Amendment identified as Exhibit A is substituted for the Exhibit A attached to the Employment Agreement. Effective with
the Company’s fiscal year ending June 30, 2016, the provisions of Exhibit A attached hereto shall govern the determination
of the CEO Annual Bonus. Exhibit A attached hereto shall remain in effect until replaced by further agreement of the Company and
the Executive. The calculation examples included as part of Exhibit A are examples only and not intended to be indicative of the
actual CEO Annual Bonus to which Executive may be entitled for any fiscal year.


3.          No Other Amendments. In all
other respects the Employment Agreement is ratified and confirmed.


IN WITNESS WHEREOF, the Company and the
Executive have caused this Agreement to be duly executed effective as of the day and year first above written.


 


	 	ESPEY MFG. & ELECTRONICS CORP.
	 	 	 
	 	 	 
	 	By:	/s/ Howard Pinsley
	  	 	Name:  Howard Pinsley
	     	 	Title:   Chairman of the Board
	 	 	 
	 	 	 
	 	/s/ Patrick Enright, Jr.
	 	Patrick Enright, Jr.




    
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Exhibit A to Employment Agreement with Patrick
Enright, Jr.

(effective for Fiscal Year Ending June 30, 2016 and thereafter)


	Component	 	 
	A	
        Discretionary Bonus

        Up to $100k based on non- quantifiable performance as determined
        by the board at its sole discretion.
	 
	B	
        Increase in sales/ backlog

        Dollar increase in combined sales and backlog vs. average of prior
        three years times 0.5%
	 
	C	
        Increase in operating earnings

        Dollar Increase in operating earnings vs average of prior three
        years times 5%
	 


 


	D	Notes	
        Total Earned bonus (A+B+C) shall not exceed CEO base salary.

        Neither Component B or C may exceed $100,000

        The basis for calculating annual increase in each metric shall be
        the average of the prior three years.

        However, due to recent tenure of CEO, basis for 2016 shall be 2015.
        Basis for FYE 2017 shall be average of 2015/ 2016. Basis for FYE 2018 shall be average of 2015/2016/2017

        Incentive on first $20 million of Aberdeen Tactical Power Supply
        order is calculated using 10% of backlog related to that order. Full incentive earned on Aberdeen sales and operating earnings.

        Calculation of any bonus, or bonus component, shall be as determined
        by the Board at its sole discretion.

        President/ CEO must be employed as CEO/President on 31 December
        of award year.

        Executive incentive plan remains in effect until changed by the
        Board.

        Operating Income/ Sales- Backlog defined as per year end 10K



 




    
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CEO ANNUAL BONUS

Calculation Examples


	Component	 	 
	A	
        Discretionary Bonus

        Up to $100k based on non- quantifiable performance as determined
        by the board at its sole discretion.

	B	
        Increase in sales/backlog

        Dollar increase in combined sales and backlog vs. average
        of prior three years times 0.5%



 


	Example	Prior three year avg	Estimated Y/E 2016	Diff	Multiplier	Metric Bonus
	Sales Backlog	
        $ 27,000,000

        $ 36,500,000
	
        $ 28,500,000

        $ 41,000,000
	
        $ 1,500,000

        $ 4,500,000
	 	 
	 	$ 63,500,000	$ 69,500,000	$ 6,000,000	0.50%	$ 30,000


 


	C	
        Increase in operating earnings

        Dollar Increase in operating earnings vs average of prior three
        years times 5%



 


	Example	Prior three year avg	
        Estimated

        Y/E 2016
	Inc/(dec)	Multiplier	 	 
	Operating Earnings	$ 4,400,000	$ 5,100,000	$ 700,000	5%	Total Metrics	
        $ 35,000

        $ 65,000



 


	D	Notes	
        Total Earned bonus (A+B+C) shall not exceed CEO base salary.

        Neither Component B or C may exceed $100,000

        The basis for calculating annual increase in each metric shall be
        the average of the prior three years.

        However, due to recent tenure of CEO, basis for 2016 shall be 2015.
        Basis for FYE 2017 shall be average of 2015/ 2016. Basis for FYE 2018 shall be average of 2015/2016/2017

        Incentive on first $20 million of Aberdeen order is calculated using
        10% of backlog related to that order. Full incentive earned on Aberdeen sales and operating earnings.

        Calculation of any bonus, or bonus component, shall be as determined
        by the Board at its sole discretion.

        President/ CEO must be employed as CEO/President on 31 December
        of award year.

        Executive incentive plan remains in effect until changed by the
        Board.

	E	Definitions	Operating Income/ Sales- Backlog defined as presented in year-end 10K


 


	F	History	Year	Sales	Backlog	Operating Earnings
	 	 	2013	$34,298,000	$42,100,000	$7,782,000
	 	 	2014	$27,000,000	$35,700,000	$1,300,000
	 	 	2015	$27,000,000	$36,500,000	$4,400,000


 


 






    
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