SCHEDULE 14A
                                 (Rule 14a-101)

                     Information Required in Proxy Statement

                            SCHEDULE 14A INFORMATION

                Proxy Statement Pursuant to Section 14(a) of the
                         Securities Exchange Act of 1934


Filed by the Registrant [ X ]

Filed by a Party other than the Registrant [  ]

Check the appropriate box:

[ ]  Preliminary Proxy Statement
[ ]  Confidential, for Use of the Commission Only (as permitted by
     Rule 14a-6(e)(2))
[X]  Definitive Proxy Statement
[ ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to Rule 14a-12

                        THE DEWEY ELECTRONICS CORPORATION
                ------------------------------------------------
                (Name of Registrant as Specified in Its Charter)

                   (Name of Person(s) Filing Proxy Statement,
                          if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ ] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

    (1) Title of each class of securities to which transaction applies:

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

    (2) Aggregate number of securities to which transaction applies:

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

    (3) Per unit price or other underlying value of transaction computed
        pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
        filing fee is calculated and state how it was determined):

<PAGE>

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

    (4) Proposed maximum aggregate value of transaction:

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

    (5) Total fee paid:

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

[X] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
    0-11(a)(2) and identify the filing for which the offsetting fee was paid
    previously. Identify the previous filing by registration statement number,
    or the Form or Schedule and the date of its filing.

    (1) Amount Previously Paid:

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

    (2) Form, Schedule or Registration Statement No.:

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

    (3) Filing Party:

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

    (4) Date Filed:

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

<PAGE>

                        THE DEWEY ELECTRONICS CORPORATION
                                 27 MULLER ROAD
                            OAKLAND, NEW JERSEY 07436


Dear Stockholders:

      You are cordially  invited to attend the annual meeting of stockholders of
The  Dewey  Electronics  Corporation.  The  annual  meeting  will be held at the
Corporation's headquarters, 27 Muller Road, Oakland New Jersey, on March 8, 2005
at 10 a.m. (Eastern Standard Time).

      As more fully set forth in the accompanying proxy statement, at the annual
meeting  you  will be  asked  to  consider  and  vote  to  approve  the  sale of
approximately  68 acres of undeveloped  and unused land owned by the Corporation
in Oakland,  New Jersey to K. Hovnanian North Jersey  Acquisitions,  L.L.C.  For
many years,  our Board of Directors and management have explored and have sought
to pursue  possible  methods of monetizing  this property for the benefit of the
Corporation  and  its  stockholders.  We  believe  that  our  agreement  with K.
Hovnanian,  which  contemplates  the  development  of the land by K.  Hovnanian,
provides an opportunity  for the Corporation to realize value from the land that
would  otherwise  not be  available  to us. You will also be asked at the annual
meeting to elect the Board of Directors for the ensuing year, as we typically do
at annual meetings.

      It is  very  important  that  you be  represented  at the  annual  meeting
regardless  of the number of shares  you own.  Whether or not you plan to attend
the meeting in person, we urge you to vote as soon as possible.  You may vote by
marking,  signing and dating your proxy card and  returning  it in the  envelope
provided.

      Your  continued   support  of  and  interest  in  The  Dewey   Electronics
Corporation are sincerely appreciated.


                                    Sincerely,


                                    JOHN H.D. DEWEY

                                    PRESIDENT AND CHIEF EXECUTIVE OFFICER



<PAGE>

                        THE DEWEY ELECTRONICS CORPORATION

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


                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS



      NOTICE IS HEREBY  GIVEN that the annual  meeting  of  stockholders  of THE
DEWEY ELECTRONICS  CORPORATION (the "Corporation") will be held at the office of
the Corporation at 27 Muller Road,  Oakland,  New Jersey,  on Tuesday,  March 8,
2005 at 10 a.m. (Eastern Standard Time) for the purposes of

      (1)  electing  five  directors  to serve until the next annual  meeting of
stockholders and until their successors shall be elected and shall qualify;

      (2) approving the sale of approximately 68 acres of undeveloped and unused
land owned by the  Corporation  in  Oakland,  New Jersey to K.  Hovnanian  North
Jersey Acquisitions, L.L.C. ("Buyer"), pursuant to the Agreement of Sale between
the  Corporation  and Buyer dated December 29, 2004 (the "Land Sale  Proposal");
and

      (3)  transacting  such other  business  as may  properly  come  before the
meeting or any adjournment or adjournments thereof.

      The Board of Directors has fixed the close of business on January 25, 2005
as the record date for  determination of stockholders  entitled to notice of and
to vote at the meeting.

      If you  will be  unable  to  attend  the  meeting,  you  are  respectfully
requested to sign and return the accompanying proxy in the enclosed envelope.



                                    By Order of the Board of Directors


                                            FRANCES D. DEWEY

                                                SECRETARY



FEBRUARY 1, 2005



<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
SUMMARY OF LAND SALE PROPOSAL..................................................1
  Proposed Land Sale...........................................................1
  Agreement of Sale............................................................1
  Board Recommendation; Reasons for the Land Sale..............................3
  Use of Proceeds..............................................................3
  Shares Held by Directors and Executive Officers..............................3
  Dissenters' Rights of Appraisal..............................................3
  Questions....................................................................4

PROXY STATEMENT................................................................5

VOTING SECURITIES OUTSTANDING; VOTES REQUIRED..................................5

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................6

PROPOSAL NO. 1 - ELECTION OF DIRECTORS.........................................7
  Information Concerning Directors and Nominees................................7
  Executive Officers...........................................................9
  Summary Compensation Table...................................................9
  Aggregated Option Exercises in Last Fiscal Year and Fiscal
    Year-End Option Values....................................................10
  Option Grants in Last Fiscal Year...........................................10
  Retirement Benefits.........................................................10
  Certain Relationships and Related Transactions..............................11
  Insurance Arrangements......................................................11
  Section 16(a) Beneficial Ownership Reporting Compliance.....................11
  Certain Corporate Governance Matters........................................11

PROPOSAL NO. 2 - SALE OF UNDEVELOPED AND UNUSED LAND..........................13
  General.....................................................................13
  Agreement of Sale...........................................................14
  Board Recommendation; Reasons for the Land Sale.............................17
  Use of Proceeds.............................................................17
  Material Federal Income Tax Consequences....................................17
  Regulatory Approvals........................................................17
  Shares Held by Directors and Executive Officers.............................18
  Dissenters' Rights of Appraisal.............................................18

INDEPENDENT PUBLIC ACCOUNTANTS................................................20
  Fees........................................................................20
  Audit Report................................................................20

STOCKHOLDER PROPOSALS.........................................................21

DISCRETIONARY AUTHORITY.......................................................22

APPENDIX A - AGREEMENT OF SALE...............................................A-1

APPENDIX B - SECTION 623 OF THE NEW YORK BUSINESS CORPORATION LAW............B-1


<PAGE>
                          SUMMARY OF LAND SALE PROPOSAL


      THIS SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION  THAT IS IMPORTANT TO
YOU. YOU SHOULD  CAREFULLY READ THE ENTIRE PROXY  STATEMENT TO FULLY  UNDERSTAND
THE LAND SALE PROPOSAL.  THE AGREEMENT OF SALE IS ATTACHED AS APPENDIX A TO THIS
PROXY  STATEMENT.  WE ENCOURAGE  YOU TO READ THE AGREEMENT OF SALE BECAUSE IT IS
THE LEGAL DOCUMENT THAT GOVERNS THE PROPOSED TRANSACTION.

PROPOSED LAND SALE (SEE "PROPOSAL NO. 2 - GENERAL")

      You are being asked to vote to approve the sale of  approximately 68 acres
of undeveloped and unused land owned by the  Corporation in Oakland,  New Jersey
to K. Hovnanian North Jersey  Acquisitions,  L.L.C.  ("Buyer"),  pursuant to the
Agreement of Sale dated December 29, 2004 (the  "Agreement of Sale") between the
Corporation  and Buyer.  The land is not used, and is not needed for use, in the
Corporation's  business. The property,  created during the construction of Route
287  by  the  New  Jersey  Department  of  Transportation,  is  adjacent  to the
Corporation's executive offices and manufacturing  operations and an interchange
of Interstate  Route 287. Buyer, a New Jersey limited  liability  company,  is a
wholly-owned subsidiary of Hovnanian Enterprises, Inc., a large residential real
estate  developer and homebuilder with projects in New Jersey and other parts of
the United States.

AGREEMENT OF SALE (SEE "PROPOSAL NO. 2 - AGREEMENT OF SALE")

      Buyer has  agreed to pay a  purchase  price of  $18,185,442  for the land,
subject to increase or decrease depending upon the quantity and profitability of
the  homes  Buyer  constructs  on the  property.  The land  would be sold in two
phases, "Phase 1" and "Phase 2".


      o     The  purchase  price of  $18,185,442 is based  upon  174 market rate
            residential units, as follows:

            o     PHASE 1: 78 market rate townhomes multiplied by $111,079,  for
                  a  total  of  $8,664,162.   If  Buyer  obtains  the  necessary
                  regulatory  approvals for fewer than 78 market rate townhomes,
                  then the Phase 1 price  would be reduced  and would  equal the
                  number of homes that are approved multiplied by $111,079.

            o     PHASE  2:  96  active  adult  multifamily   garden-type  homes
                  multiplied  by $99,180,  for a total of  $9,521,280.  If Buyer
                  obtains the necessary  regulatory  approvals for fewer than 96
                  active adult multifamily  garden-type  homes, then the Phase 2
                  price  would be  reduced  and would  equal the number of homes
                  that are approved multiplied by $99,180.

      o     THE PURCHASE PRICE FOR THE LAND INCLUDED IN PHASE 1 AND PHASE 2 WILL
            NOT BE  REDUCED  BELOW  $12,000,000  (A  MINIMUM  PURCHASE  PRICE OF
            $6,000,000  FOR PHASE 1 AND A MINIMUM  PURCHASE  PRICE OF $6,000,000
            FOR PHASE 2).

<PAGE>

      o     Buyer may complete  Phase 1 and elect not to purchase the  remaining
            land in  Phase  2. IN THAT  CASE,  THE  MINIMUM  PURCHASE  PRICE  IS
            $6,000,000.  Buyer would also be required to pay the  Corporation  a
            $125,000 termination fee.

      o     If Phase 1 and/or Phase 2 are completed,  the  Corporation  may also
            receive  additional  payments  from Buyer  based on a portion of the
            Profits (as defined in the  Agreement  of Sale),  if any,  earned by
            Buyer above  specified  thresholds for selling  completed  homes and
            otherwise completing its contemplated development.

      Completion  of the land  sale  depends  on a number  of  conditions  being
satisfied.  These  include:

      o     Buyer must  receive  extensive  approvals  from New Jersey state and
            local   entities,   and  the  land  must  be  rezoned   for  Buyer's
            contemplated residential use.

      o     Stockholders  of  the  Corporation  representing  two-thirds  of the
            outstanding  shares of Common  Stock  must vote in favor of the Land
            Sale Proposal (the "Voting Condition").

      If the Voting  Condition is not satisfied,  the Corporation and Buyer will
each have the right to terminate  the  Agreement of Sale.  The Agreement of Sale
contains additional termination rights, including:

      o     If the Voting  Condition  is  satisfied,  Buyer will have 90 days to
            conduct an  investigation  relating to the land.  During this 90 day
            period,   if  Buyer  is  not  satisfied  with  the  results  of  its
            investigation, it may terminate the Agreement of Sale.

      o     The  Corporation  and Buyer can each terminate the Agreement of Sale
            if the land is not rezoned for Buyer's contemplated residential use.

      o     Buyer  can   terminate  the  Agreement  of  Sale  if  the  necessary
            regulatory approvals are received for fewer than 130 homes.

      The Agreement of Sale provides that if Buyer does not obtain all necessary
regulatory   approvals  within  24  months  after  satisfaction  of  the  Voting
Condition, the Corporation will grant to Buyer, at Buyer's request, a maximum of
12 extensions,  each for a period of six months, and Buyer will make payments to
the Corporation ranging from $25,000 to $400,000 per extension (depending on the
timing of the extension).  In addition,  commencing June 1, 2005 and terminating
upon the sale of the land included in Phase 1, Buyer will pay to the Corporation
each year the amount of $125,000  (less certain of the extension  payments),  in
consideration  of the  Corporation's  carrying  costs of the land for the  prior
year.

      UNDER THE  AGREEMENT  OF SALE,  BUYER HAS A MAXIMUM  OF EIGHT  YEARS  FROM
SATISFACTION  OF THE  VOTING  CONDITION  TO  RECEIVE  THE  NECESSARY  REGULATORY
APPROVALS.  THE  CORPORATION  BELIEVES  THAT EIGHT  YEARS  WOULD BE AN  UNLIKELY
DURATION FOR THE REGULATORY  PROCESS,  BUT CANNOT GIVE ANY  ASSURANCES  THAT THE
LAND SALE WILL BE COMPLETED OR (IF THE SALE IS COMPLETED) THE TIMING THEREOF. IF
THE LAND SALE IS COMPLETED, THE NUMBER OF MARKET RATE RESIDENTIAL UNITS APPROVED
BY THE REGULATORY AUTHORITIES, THE PROFITABILITY OF BUYER'S DEVELOPMENT PROJECT,
AND WHETHER BUYER  PURCHASES THE LAND INCLUDED IN PHASE 1 AND PHASE 2 (OR SOLELY
PHASE 1) WILL INFLUENCE THE TOTAL PAYMENTS BY BUYER TO THE CORPORATION,  SUBJECT
TO THE MINIMUM PURCHASE PRICE DESCRIBED ABOVE.










                                       2

<PAGE>

BOARD RECOMMENDATION; REASONS FOR THE LAND SALE (SEE "PROPOSAL NO. 2 - BOARD
RECOMMENDATION; REASONS FOR THE LAND SALE")

      The   Corporation's   Board  of  Directors   believes  that  the  sale  of
approximately  68 acres of undeveloped  and unused land to Buyer pursuant to the
Agreement  of  Sale  is in  the  best  interests  of  the  Corporation  and  its
stockholders.  THE BOARD  RECOMMENDS THAT THE  CORPORATION'S  STOCKHOLDERS  VOTE
"FOR" APPROVAL OF THE LAND SALE PROPOSAL.

      The  Corporation  has  owned the land,  which is  carried  on its books at
approximately $500,000,  since 1979. The land is not used, and is not needed for
use, in the Corporation's  business.  For many years, the Corporation's Board of
Directors  and  management  have  explored  and have  sought to pursue  possible
methods of monetizing  this property for the benefit of the  Corporation and its
stockholders.  In 2003, the Corporation  retained one of the largest  commercial
real estate  brokerage houses serving the New York - New Jersey region to assist
in these efforts and,  after  considering  expressions  of interest from several
potential buyers, the Board instructed  management to commence negotiations with
Buyer.  On  December  29,  2004,  the  Corporation  and Buyer  entered  into the
Agreement of Sale.

      In approving  the  Agreement of Sale,  the Board of Directors  considered,
among  other  factors  it  deemed  relevant,  the  purchase  price  for the land
(including the minimum  purchase  price) and the other terms of the Agreement of
Sale;  Hovnanian  Enterprises,  Inc.'s  reputation as a residential  real estate
developer including its ability to deal with the complex regulatory requirements
applicable  to  real  estate  projects  of  this  nature;   the  advice  of  the
Corporation's  legal  and real  estate  advisors;  the  nature  of the  proposed
development;  the Corporation's  knowledge of the community in which the land is
located;  and the efforts  previously  made by the  Corporation  to monetize the
land.  The Board also took into  account,  among other things,  the  undeveloped
condition  of the land and the fact that the  Corporation  is not a real  estate
developer.  The Board concluded that a transaction  structure which contemplates
the  development of the land by a third party (without any financial  investment
by the Corporation in the development project), while involving uncertainties as
to timing and  completion  and other risks  outside the  Corporation's  control,
would provide an opportunity  for the Corporation to realize value from the land
that would otherwise not be available to it.

USE OF PROCEEDS (SEE "PROPOSAL NO. 2 - USE OF PROCEEDS")

      The  Corporation  has not made a  determination  as to the use of proceeds
from the land sale, if completed.

SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS (SEE "PROPOSAL NO. 2 - SHARES
HELD BY DIRECTORS AND EXECUTIVE OFFICERS")

      As of January  25,  2005,  the  directors  and  executive  officers of the
Corporation  beneficially owned 603,549 shares of Common Stock (including 37,000
shares  issuable upon  exercise of stock  options),  representing  approximately
43.14% of the Common  Stock as of that date.  The  Corporation  expects that its
directors  and  executive  officers  will vote all their issued and  outstanding
Common Stock as of the record date in favor of the Land Sale Proposal.

DISSENTERS' RIGHTS OF APPRAISAL (SEE "PROPOSAL NO. 2 - DISSENTERS' RIGHTS OF
APPRAISAL")

      If the proposed  land sale is  completed  and the  transaction  were to be
deemed to constitute a sale of "all or substantially  all" of the  Corporation's









                                       3

<PAGE>

assets under New York law,  holders of the  Corporation's  Common Stock would be
entitled  to  certain   dissenters'   rights  upon  compliance  with  procedures
prescribed by New York law. The  Corporation  does not believe that the proposed
sale of the land to Buyer,  if  completed,  would  constitute  a sale of "all or
substantially  all"  of the  Corporation's  assets  under  New  York  law.  If a
stockholder  were to attempt to exercise  dissenters'  rights in connection with
the land sale, the Corporation reserves the right to challenge such exercise.

QUESTIONS

      If you have  additional  questions  about the land  sale or other  matters
discussed in this proxy statement after reading this proxy statement, you should
contact:

                  The Dewey Electronics Corporation
                  27 Muller Road
                  Oakland, New Jersey 07436
                  Attention: Investor Relations
                  201-337-4700

















































                                       4

<PAGE>

                        THE DEWEY ELECTRONICS CORPORATION
                     ---------------------------------------

                                 PROXY STATEMENT

      This  proxy  statement  is  furnished  to the  stockholders  of The  Dewey
Electronics  Corporation  (hereinafter  referred  to as  the  "Corporation")  in
connection  with  the   solicitation  of  proxies  for  the  annual  meeting  of
stockholders  to  be  held  on  March  8,  2005.  The  mailing  address  of  the
Corporation's  executive offices is 27 Muller Road,  Oakland,  New Jersey 07436,
and its telephone  number is (201) 337-4700.  The Corporation  plans to commence
the mailing of this proxy  statement  to  stockholders  on or about  February 1,
2005.

      The enclosed  proxy is solicited by the management of the  Corporation.  A
person  giving  the proxy has the  power to  revoke  it at any time  before  its
exercise by notice to such effect delivered to the Secretary of the Corporation.

      The  Corporation  will  bear  the  cost of the  solicitation  of  proxies,
including the charges and expenses of brokerage  firms and others for forwarding
solicitation  material to beneficial  owners of stock. In addition to the use of
the mails, proxies may be solicited by personal  interviews,  by telephone or by
electronic  means. No additional  compensation will be paid to the Corporation's
directors,  officers or other  employees for such services.  Regan & Associates,
Inc.  has been  retained by the  Corporation  to assist in the  solicitation  of
proxies for the annual meeting and to act as the Corporation's  paying agent for
certain  invoices  normally  received by the  Corporation in connection with its
annual  meetings.  For such services,  the Corporation has agreed to pay Regan &
Associates  a fee of $5,000  for  acting as proxy  solicitor  (to be  reduced to
$2,500 if the Land Sale Proposal is not approved by the scheduled  meeting date)
plus a fee of approximately $30 for acting as payment agent.

      IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING.

      WHETHER OR NOT YOU EXPECT TO ATTEND THE  MEETING,  PLEASE BE SURE THAT THE
ENCLOSED PROXY CARD IS PROPERLY  COMPLETED,  DATED,  SIGNED AND RETURNED WITHOUT
DELAY IN THE  ENCLOSED  ENVELOPE,  WHICH  REQUIRES  NO  POSTAGE IF MAILED IN THE
UNITED  STATES.  YOU MAY  REVOKE  YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS
VOTED.

                  VOTING SECURITIES OUTSTANDING; VOTES REQUIRED

      Shares of Common  Stock,  1,362,031  of which were  outstanding  as of the
close of business on January 25,  2005,  are the only voting  securities  of the
Corporation and are entitled to one vote per share. Only holders of Common Stock
of record at the close of business on January 25, 2005, will be entitled to vote
at the annual meeting of stockholders.

      The  affirmative  vote  of  two-thirds  of the  total  outstanding  shares
entitled  to vote at the annual  meeting is  required  to approve  the Land Sale
Proposal. A plurality of the votes cast by the stockholders  entitled to vote at
the annual meeting is required to elect the director nominees, and a majority of
the votes cast by the  stockholders  entitled  to vote at the annual  meeting is
required to take any other action.

      For purposes of  determining  whether the Land Sale  Proposal has received
the required vote,  abstentions  and "broker  non-votes" will be included in the
vote totals and will have the same effect as negative  votes.  Broker  non-votes










                                       5

<PAGE>

occur when a broker holding customer  securities in street name has not received
voting  instructions  from the  customer  on certain  non-routine  matters  and,
therefore,  is barred by the rules of the  applicable  securities  exchange from
exercising discretionary authority to vote those securities.  IF YOUR SHARES ARE
HELD IN STREET  NAME,  PLEASE  FOLLOW THE  DIRECTIONS  PROVIDED  BY YOUR  BROKER
REGARDING HOW TO INSTRUCT  YOUR BROKER TO VOTE YOUR SHARES.  Shares that abstain
or for which the authority to vote is withheld on certain matters will, however,
be treated as present for quorum purposes on all matters.

      In the event that sufficient  votes in favor of any of the matters to come
before the  meeting  are not  received  by the date of the annual  meeting,  the
persons  named as proxies  may propose  one or more  adjournments  of the annual
meeting to permit further  solicitation of proxies.  Any such  adjournment  will
require  the  affirmative  vote of the  holders of a  majority  of the shares of
Common Stock  present in person or by proxy at the annual  meeting.  Shares that
abstain or for which the  authority to vote is withheld on certain  matters will
be treated as present for quorum  purposes on all matters.  The persons named as
proxies will vote in favor of any such proposed adjournment or adjournments.

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

            The  following  table  sets  forth  certain  information   regarding
ownership of the  Corporation's  Common Stock, as of January 25, 2005 (except as
otherwise  noted),  by: (i) each person who is known by the  Corporation  to own
beneficially more than five percent of the Corporation's Common Stock, (ii) each
of the  Corporation's  directors  and nominees for  director,  (iii) each of the
Corporation's  executive  officers  for  whom  information  is  provided  in the
"Summary  Compensation  Table"  below,  and  (iv)  all  executive  officers  and
directors  as a group.  The  information  presented  in the table is based  upon
certain filings with the Securities and Exchange  Commission by such persons, as
indicated  in the  notes  to the  table  below,  or upon  information  otherwise
provided by such persons to the Corporation.  According to such filings or other
information,  such persons have sole voting and investment power with respect to
shares reported as  beneficially  owned (except as indicated in the notes to the
table below).

            The  address  of each  person  who is a  director  or officer of the
Corporation is 27 Muller Road, Oakland, New Jersey 07436.

 ----------------------------------------------------------------------------
|                                        |                       |  % of the |
|                                        |    Number of Shares   |    Common |
|Name of Beneficial Owner                |  Beneficially owned   |     Stock |
|----------------------------------------|-----------------------|-----------|
|Frances D. Dewey                        |        474,383 (1)    |   34.83%  |
|----------------------------------------|-----------------------|-----------|
|Asset Value Fund Limited Partnership    |                       |           |
|376 Main Street, P.O. Box 74            |                       |           |
|Bedminster, New Jersey 07921            |        135,000 (2)    |    9.91%  |
|----------------------------------------|-----------------------|-----------|
|Alexander A. Cameron                    |         12,649        |        *  |
|----------------------------------------|-----------------------|-----------|
|John H.D. Dewey                         |         69,317 (3)    |    5.04%  |
|----------------------------------------|-----------------------|-----------|
|LTG. James M. Link (USA Retired)        |             --        |       --  |
|----------------------------------------|-----------------------|-----------|
|Nathaniel Roberts                       |          1,475        |        *  |
|----------------------------------------|-----------------------|-----------|
|Edward Proskey                          |         15,010 (4)    |    1.10%  |
|----------------------------------------|-----------------------|-----------|
|Thom A. Velto                           |         15,715 (4)    |    1.15%  |
|----------------------------------------|-----------------------|-----------|
|All Directors and Executive Officers    |        603,549 (5)    |   43.14%  |
|as a Group (8 persons)                  |                       |           |
 ----------------------------------------------------------------------------
* Less than 1%.


                                       6

<PAGE>

(1)   Does not include  any shares of Common  Stock  beneficially  owned by Mrs.
      Dewey's son, John H.D. Dewey. Mrs. Dewey disclaims any beneficial interest
      in the shares of Common Stock beneficially owned by John H.D. Dewey.

(2)   Based upon a Form 4 dated  August 6, 2004 filed  with the  Securities  and
      Exchange Commission.

(3)   Includes  27,258 shares of Common Stock owned of record by a trust for the
      benefit of a daughter of Frances D. Dewey,  of which John H.D. Dewey (Mrs.
      Dewey's  son) is the sole  trustee.  Does not include any shares of Common
      Stock beneficially owned by Mrs. Dewey. Mr. Dewey disclaims any beneficial
      interest in the shares of Common Stock  beneficially  owned by Mrs. Dewey.
      Also  includes  12,000  shares  issuable  upon  exercise of stock  options
      granted under the Corporation's 1998 Stock Option Plan.

(4)   Includes  5,000 shares  issuable upon  exercise of stock  options  granted
      under the Corporation's 1998 Stock Option Plan.

(5)   Includes 37,000 shares issuable upon exercise of stock options.


                                 PROPOSAL NO. 1
                              ELECTION OF DIRECTORS

      At the annual meeting of  stockholders,  five directors are to be elected,
to serve for the ensuing year and until their respective  successors are elected
and qualify.  The shares represented by the accompanying proxy will be voted for
the re-election of Alexander A. Cameron,  Frances D. Dewey, John H.D. Dewey, LTG
James M. Link (USA Ret) and Nathaniel Roberts,  unless a contrary  specification
is made. If any such nominee becomes unavailable for any reason, or if a vacancy
should occur before the election (which events are not anticipated),  the shares
represented by the accompanying  proxy may be voted for such other person as may
be  determined  by the holders of such  proxies,  or the Board of Directors  may
elect to  reduce  the  number  of  directors.  In the  coming  year,  the  Board
anticipates  that it will consider the  possibility of expanding the size of the
Board.

      Directors  are elected by a plurality of the votes cast.  Votes  withheld,
and  abstentions  and broker  non-votes,  will not have the effect of votes cast
either in favor of or in opposition to a nominee.

         THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
                  ELECTION OF THE ABOVE NOMINEES AS DIRECTORS.

INFORMATION CONCERNING DIRECTORS AND NOMINEES

      The  following  table sets forth the name of each  nominee for election to
the Board of Directors,  his or her age,  principal  occupation  during the past
five  years  and  the  name  and  principal   business  of  any  corporation  or
organization in which such occupation is carried on, and the period during which
he or she has served as director. John H.D. Dewey is a son of Frances D. Dewey.

















                                       7
<PAGE>

 ------------------------------------------------------------------------------
|      NAME           AGE    PRINCIPAL OCCUPATION DURING PAST       DIRECTOR   |
|                            FIVE YEARS OTHER DIRECTORSHIPS          SINCE     |
|                            AND POSITIONS WITH CORPORATION                    |
|                                                                              |
|Alexander A. Cameron  84   President, Key Research and Market           1964  |
|                           Development, Inc. Business Consultants             |
|                                                                              |
|Frances D. Dewey      78   Director of the Corporation                  1955  |
|                           (Chairperson of the Board since                    |
|                           June 14, 2002)                                     |
|                           Secretary of the Corporation                       |
|                                                                              |
|John H.D. Dewey       39   President and Chief Executive Officer        1999  |
|                           of the Corporation (since December 4,              |
|                           2002; Acting Chief Executive Officer               |
|                           from June 14, 2002 until December 4,               |
|                           2002)                                              |
|                                                                              |
|                           Management Consultant (until June 14,              |
|                           2002)                                              |
|                           President, Monastery Graphics, Inc.                |
|                           Information Technology Consulting                  |
|                                                                              |
|LTG James M. Link     62   President                                    2001  |
|(USA Retired)              Director (since July 21, 2001)                     |
|                           Teledyne Brown Engineering                         |
|                           Systems Engineering                                |
|                                                                              |
|Nathaniel Roberts     38   General Manager                              1999  |
|                           Callery-Judge Grove                                |
|                           Citrus Suppliers                                   |
 ------------------------------------------------------------------------------


      During the  Corporation's  last fiscal year ended June 30, 2004, the Board
of Directors held four meetings. Each incumbent director attended all meetings.

      The Corporation's current policy regarding compensation of directors is to
pay $4,000 per annum plus $400 for each Board meeting attended.  No payments for
services as a director during fiscal year 2004 were made to John H.D. Dewey (who
received compensation as an officer of the Corporation).  Annual compensation of
$25,000 was paid to Frances D. Dewey as Chairperson of the Board, in lieu of the
directors fees described above. In December 2001,  stockholders approved a Stock
Option Plan for  Non-Employee  Directors  under which options  exercisable for a
total of 50,000 shares of Common Stock may be granted.  To date, no options have
been granted under this plan, which is administered by the Board.

      The  Board has a Stock  Option  Committee  which is  composed  of  Messrs.
Cameron and Roberts. The Committee administers the 1998 Stock Option Plan of the
Corporation.  One  meeting was held  during the last  fiscal  year;  all members
attended.  The Board also has an Executive  Compensation  Committee  composed of
















                                       8
<PAGE>

Messrs.  Roberts and Cameron. The Committee administers  executive  compensation
and held one meeting  during the last fiscal  year;  all  members  attended  the
meeting.

      The Board also has a Business Development  Committee composed of John H.D.
Dewey and General  Link.  During the last fiscal  year,  General  Link  received
$24,000 for serving on this Committee. No payments for serving on this Committee
were made to John H.D.  Dewey (who  received  compensation  as an officer of the
Corporation).

      The Board does not have a nominating committee or an audit committee.

EXECUTIVE OFFICERS

      In addition to John H. D. Dewey (see "Information Concerning Directors and
Nominees" above),  the Corporation's  executive officers are: Thom A. Velto, age
54, who has been Treasurer of the  Corporation  since  February 1990;  Edward L.
Proskey,  age 48, who was elected Vice President,  Operations of the Corporation
in June 1994 (this  title was changed to Senior Vice  President,  Operations  in
June 2003);  and Francis  DeLorenzo,  age 44, who was  elected  Vice  President,
Business  Development  and  Marketing on June 3, 2000 (this title was changed to
Vice President,  Government Programs in June 2003). Prior to such election,  Mr.
DeLorenzo had been  employed by the  Corporation  since 1991 in various  program
management capacities.

SUMMARY COMPENSATION TABLE

      The  following  table sets forth the  aggregate  compensation  paid by the
Corporation  during the  Corporation's  last three fiscal years to (1) the chief
executive officer of the Corporation and (2) the other executive officers of the
Corporation whose aggregate of salary and bonus compensation for the fiscal year
ended June 30, 2004 exceeded $100,000.

  Name and Principal        Fiscal        Salary     Bonus        Securities
       Position           Year Ended                              Underlying
                                                                Options/SARs (#)

John H.D. Dewey,         June 30, 2004   $128,461   $15,000            --
  President and Chief    June 30, 2003   $120,000      --            12,000
  Executive Officer (1)  June 30, 2002   $  4,615      --              --

Edward L. Proskey        June 30, 2004   $96,812    $10,000            --
  Senior Vice President  June 30, 2003   $88,866    $10,000           3,000
  Operations             June 30, 2002   $86,284    $34,250            --

Thom A. Velto            June 30, 2004   $104,130    $8,000            --
  Treasurer              June 30, 2003    $99,109   $10,000           3,000
                         June 30, 2002    $96,223   $30,000            --

(1) John H. D.  Dewey  was  appointed  Acting  Chief  Executive  Officer  of the
Corporation  on June 14, 2002 at an annual  salary of  $120,000.  On December 4,
2002,  Mr.  Dewey was  elected  President  and Chief  Executive  Officer  of the
Corporation.  In addition to the salary set forth in the table above,  Mr. Dewey
received  payments under the  Corporation's  policy  regarding  compensation  of














                                       9
<PAGE>

directors  for the  following  fiscal  years:  2004 -- $0.  2003 -- $0.  2002 --
$6,000.  Pursuant to an advisory  agreement entered into in 2001, and terminated
in 2002 when Mr. Dewey became an employee of the  Corporation,  the  Corporation
made  payments  to  Monastery  Graphics,  Inc.,  a  management  and  information
technology consulting company of which Mr. Dewey is President,  in the following
amounts:  2004 -- $0. 2003-- $0. 2002 -- $44,625.  Since becoming an employee of
the Corporation,  Mr. Dewey has not played an active role in Monastery Graphics'
business.

AGGREGATED  OPTION  EXERCISES  IN LAST  FISCAL YEAR AND FISCAL  YEAR-END  OPTION
VALUES

      None of the executive  officers of the Corporation for whom information is
provided in the "Summary  Compensation  Table" above exercised any stock options
during the  Corporation's  fiscal year ended June 30, 2004. The following  table
sets forth, for each such executive officer,  (1) the total number of securities
underlying  unexercised  options as of the end of the Corporation's  last fiscal
year (June 30, 2004) and (2) the value of unexercised,  in-the-money  options as
of the end of the Corporation's last fiscal year.


                   NUMBER OF SECURITIES
                        UNDERLYING              VALUE OF UNEXERCISED
                   UNEXERCISED OPTIONS          IN-THE-MONEY OPTIONS
NAME              AT FISCAL YEAR END (#)        AT FISCAL YEAR END ($)
----              ----------------------        ----------------------
                EXERCISABLE  UNEXERCISABLE   EXERCISABLE  UNEXERCISABLE
                -----------  -------------   -----------  -------------

John H.D. Dewey    6,000        6,000             --           --

Edward L.          3,500        1,500           $3,750         --
Proskey

Thom A. Velto      3,500        1,500           $3,750         --


OPTION GRANTS IN LAST FISCAL YEAR

      The Corporation did not grant any stock options to its executive  officers
during the fiscal year ended June 30, 2004.

RETIREMENT BENEFITS

      The  Corporation  has a  non-contributory  pension  plan  for  all  active
employees,  under which, in general,  employees with 25 or more years of service
can receive 20% of their average monthly  earnings (based on earnings during the
five years preceding retirement) up to a specified maximum of $850 per month for
life  assuming  normal  retirement  at age 65 and vested  employees  with lesser
service receive lesser amounts.  Upon the employee's  death,  50% of the monthly
benefit is payable  to the  employee's  spouse  for life.  Mrs.  Dewey  receives
survivor's benefits of $602 per month but does not otherwise  participate in the
pension  plan.  The  Corporation's  executive  officers will receive the monthly
maximum amount of $850 at retirement, based upon current compensation levels and
assuming normal retirement at age 65.














                                       10
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      During  1988,  Gordon C. Dewey,  the  Corporation's  co-founder,  lent the
Corporation a total of $200,000. The loans, which are unsecured, provide for the
payment of interest at the fixed rate of 9%. The loans are repayable upon demand
by Frances D. Dewey,  his widow, but are subordinate to the  Corporation's  term
loan with Sovereign Bank, its principal lender.

INSURANCE ARRANGEMENTS

      The  Corporation  has  insurance  coverage  under which its  directors and
officers  (as  well  as  the   Corporation)   are   indemnified   under  certain
circumstances with respect to litigation and other costs and liabilities arising
out of  actual  or  alleged  misconduct  of such  directors  and  officers.  The
Corporation pays all premiums to the insurer,  the Federal  Insurance Company of
the Chubb Group of Insurance Companies.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      For the  fiscal  year  ended June 30,  2004,  based  solely on a review of
copies of reports furnished to the Corporation or written  representations  that
no other  reports  were  required,  the  Corporation  believes  that all  filing
requirements  under  Section  16(a)  of the  Securities  Exchange  Act  of  1934
applicable to its  executive  officers and directors  were complied  with.  With
respect to holders of more than 10 percent of the Corporation's  Common Stock as
of June 30, 2004, the Corporation  does not have any  information  regarding the
Section 16(a)  beneficial  ownership  reporting  compliance of Mr. Paul Koether,
other than his filings with the Securities and Exchange Commission (which do not
include a Form 5).

CERTAIN CORPORATE GOVERNANCE MATTERS

      CODE OF BUSINESS CONDUCT AND ETHICS. The Corporation has adopted a Code of
Business  Conduct and Ethics that applies to all of its directors,  officers and
employees. A copy of the code is available, free of charge, upon written request
to  the  Corporate  Secretary,  The  Dewey  Electronics   Corporation,   at  the
Corporation's  executive offices. Any substantive amendments to the code and any
grant of a  waiver  from a  provision  of the code  requiring  disclosure  under
applicable SEC rules will be disclosed in a report on Form 8-K.

      STOCKHOLDER  COMMUNICATIONS WITH THE BOARD OF DIRECTORS. The Corporation's
Board of Directors has adopted the following  policy by which  stockholders  may
communicate with the Board or with individual directors or Board committees. The
communication  should  be in  writing,  addressed  to the  Board  or  applicable
committee  or  directors,   c/o  Corporate  Secretary,   The  Dewey  Electronics
Corporation,  at the Corporation's  executive offices.  The Corporate  Secretary
will review all such  correspondence  received and will  periodically,  at least
quarterly,   forward  to  the  applicable   directors  a  summary  of  all  such
correspondence  together  with  copies  of  correspondence  that  the  Corporate
Secretary  believes should be seen in its entirety.  Correspondence or summaries
will be forwarded to the  applicable  directors on an expedited  basis where the
Corporate  Secretary  deems  it  appropriate.  Communications  raising  concerns
related to the Corporation's accounting,  internal controls, or auditing matters
will be  immediately  brought to the  attention of those members of the Board of
Directors who are responsible for the oversight of the Corporation's  accounting
and financial reporting practices (currently, the entire Board of Directors).












                                       11
<PAGE>

      Directors may at any time review a log of  correspondence  received by the
Corporation  that is  addressed to the director (or to the full Board or a Board
committee  on  which  he or she  serves)  and may  request  copies  of any  such
correspondence.

      The  Corporation  believes  that it is important for directors to directly
hear concerns  expressed by stockholders.  Accordingly,  it is the Corporation's
policy  that  Board  members  are  expected  to attend  the  Annual  Meeting  of
Stockholders absent a compelling  commitment that prevents such attendance.  All
of the members of the Board of Directors at the time of the 2004 Annual  Meeting
attended such meeting.

      DIRECTOR  NOMINATIONS.  The  candidates  for  election as directors at the
annual meeting have been nominated by the Board. The Corporation does not have a
nominating committee; the Board believes that it is desirable for such decisions
to be made by the entire Board.  Recently implemented SEC rules require that the
Corporation  disclose  whether  members  of  the  Board  of  Directors  who  are
responsible  for the  nominating  function  are  "independent",  as that term is
defined in stock exchange or Nasdaq rules.  Although the Corporation's shares do
not trade on Nasdaq, if the Nasdaq  definition of "independence"  were to apply,
Alexander  A.  Cameron,  LTG  James  M.  Link  and  Nathaniel  Roberts  would be
"independent"  directors for these  purposes and John H.D.  Dewey and Frances D.
Dewey would not be "independent" directors for these purposes.

      In evaluating  director  candidates for purposes of recommending  director
candidates  to the Board,  the Board will consider the  following  factors:  the
candidate's  moral character and personal  integrity;  whether the candidate has
expertise and experience  relevant to the  Corporation's  business;  whether the
candidate's expertise and experience complements the expertise and experience of
the  other  directors;  whether  the  candidate  would  be  independent  of  any
particular  constituency and able to represent the interests of all stockholders
of the Corporation;  the congeniality of the candidate with the other directors;
whether the candidate  would have  sufficient  time available to devote to Board
activities; and any other factors deemed relevant by the Board.

      The Board will consider director candidates recommended by stockholders of
the Corporation.  Stockholders may recommend an individual for  consideration by
submitting  to the  Board  the  name of the  individual,  his or her  background
(including  education and  employment  history),  a statement of the  particular
skills and  expertise  that the  candidate  would bring to the Board,  the name,
address  and  number  of  shares of the  Corporation  beneficially  owned by the
stockholder submitting the recommendation,  any relationship or interest between
such stockholder and the proposed candidate, and any additional information that
would be required under applicable SEC rules to be included in the Corporation's
proxy statement if such proposed candidate were to be nominated as a director.

      Such  submissions  should  be  addressed  to the  Board of  Directors  c/o
Corporate  Secretary,  at the Corporation's  executive  offices.  In order for a
candidate  to be  considered  for any annual  meeting,  the  submission  must be
received  by the  Corporation  no later than the May 15  preceding  such  annual
meeting. The Corporation anticipates that its next annual meting will be held in
December 2005 (the month when it has typically held its annual meetings).

      The Board  will  evaluate  the  biographical  information  and  background
material   relating  to  each  potential   candidate  and  may  seek  additional
information from the submitting  stockholder,  the potential  candidate,  and/or
other  sources.   The  Board  may  hold  interviews  with  selected  candidates.











                                       12
<PAGE>

Individuals  recommended  by  stockholders  will be  considered  under  the same
factors as individuals recommended by other sources.

      "AUDIT  COMMITTEE  FINANCIAL  EXPERT."  The  Corporation  does not have an
"audit committee  financial  expert" serving on its Board of Directors,  as that
term is defined by SEC rules. The Board believes that the directors collectively
have  sufficient  knowledge of financial  and  auditing  matters to  effectively
oversee  the  Corporation's   accounting  and  financial  reporting   practices.
Furthermore,  the Board has the power to engage  experts  or  consultants  as it
deems appropriate to carry out its responsibilities.

                                 PROPOSAL NO. 2

                       SALE OF UNDEVELOPED AND UNUSED LAND

GENERAL

      Stockholders  are being asked to vote to approve the sale of approximately
68 acres of undeveloped and unused land (the "Land") owned by the Corporation in
Oakland, New Jersey to K. Hovnanian North Jersey Acquisitions, L.L.C. ("Buyer"),
pursuant to the  Agreement of Sale dated  December 29, 2004 (the  "Agreement  of
Sale") between the Corporation and Buyer (the "Land Sale  Proposal").  The Land,
created  during the  construction  of Route 287 by the New Jersey  Department of
Transportation,   is  adjacent  to  the  Corporation's   executive  offices  and
manufacturing operations and an interchange of Interstate Route 287.

      The Corporation (1) produces electronic and electromechanical  systems for
the Armed Forces of the United States and (2) designs,  manufactures and markets
advanced,  sophisticated  snowmaking  equipment.  Buyer,  a New  Jersey  limited
liability company, is a wholly-owned subsidiary of Hovnanian Enterprises,  Inc.,
a large  residential  real estate developer and homebuilder with projects in New
Jersey and other parts of the United States.  Buyer's  address is 110 Fieldcrest
Avenue, CN7825, Edison, New Jersey.

      The  Corporation is a New York  corporation.  Under Section 909 of the New
York Business  Corporation Law (the "BCL"),  the sale by the Corporation of "all
or  substantially  all" of its assets (other than in the usual or regular course
of its business) would require approval by the holders of at least two-thirds of
the voting power of all outstanding  shares of the  Corporation's  Common Stock.
The  Corporation  does not believe  that  Section 909 applies to the sale of the
Land to Buyer  because,  among other  things,  the Land is not used,  and is not
needed for use, in the  Corporation's  business,  and the transaction  would not
involve the disposition of any of the Corporation's operating assets,  business,
income or  revenues.  However,  the New York  statute  does not  define  "all or
substantially all", and for this reason the Corporation's Board of Directors has
determined that it would be prudent to submit to stockholders  the proposed sale
of the Land to Buyer  pursuant to the  Agreement of Sale,  in order to eliminate
any potential uncertainty under Section 909 with respect to this transaction.

      THE LAND  SALE  PROPOSAL  REQUIRES  THE  AFFIRMATIVE  VOTE OF  HOLDERS  OF
TWO-THIRDS OF THE COMPANY'S ISSUED AND OUTSTANDING COMMON STOCK AS OF THE RECORD
DATE,  JANUARY 25, 2005.  IF YOUR SHARES ARE HELD BY A BROKER,  YOUR BROKER WILL
VOTE YOUR  SHARES ONLY IF YOU PROVIDE  YOUR BROKER WITH  INSTRUCTIONS  ON HOW TO
VOTE. AS DESCRIBED  BELOW,  THE AGREEMENT OF SALE PROVIDES THAT IF THE LAND SALE














                                       13
<PAGE>

PROPOSAL  IS  NOT  APPROVED  BY  THE  CORPORATION'S  STOCKHOLDERS,   EITHER  THE
CORPORATION OR BUYER MAY TERMINATE THE AGREEMENT OF SALE.

      The following is a description  of the material terms of the proposed Land
sale, including the Board's reasons for entering into the Agreement of Sale with
Buyer.  The summary of the Agreement of Sale is not complete and is qualified in
its  entirety by reference to the copy of the  Agreement of Sale  included  with
this  proxy  statement  as  Appendix  A. You  should  carefully  read this proxy
statement,  including the Agreement of Sale, for a complete understanding of the
terms of the proposed Land sale.

AGREEMENT OF SALE

      PURCHASE  PRICE;  SALE IN TWO  PHASES.  Buyer has agreed to pay a purchase
price of  $18,185,442  for the Land,  subject to increase or decrease  depending
upon the  quantity  and  profitability  of the  homes  Buyer  constructs  on the
property. The Land would be sold in two phases, "Phase 1" and "Phase 2".

      o   The  purchase  price of  $18,185,442  is based  upon 174  market  rate
          residential units, as follows:

            o     PHASE 1: 78 market rate townhomes multiplied by $111,079,  for
                  a  total  of  $8,664,162.   If  Buyer  obtains  the  necessary
                  regulatory  approvals for fewer than 78 market rate townhomes,
                  then the Phase 1 price  would be reduced  and would  equal the
                  number of homes that are approved multiplied by $111,079.

            o     PHASE  2:  96  active  adult  multifamily   garden-type  homes
                  multiplied  by $99,180,  for a total of  $9,521,280.  If Buyer
                  obtains the necessary  regulatory  approvals for fewer than 96
                  active adult multifamily  garden-type  homes, then the Phase 2
                  price  would be  reduced  and would  equal the number of homes
                  that are approved multiplied by $99,180.

      o     THE PURCHASE PRICE FOR THE LAND INCLUDED IN PHASE 1 AND PHASE 2 WILL
            NOT BE  REDUCED  BELOW  $12,000,000  (A  MINIMUM  PURCHASE  PRICE OF
            $6,000,000  FOR PHASE 1 AND A MINIMUM  PURCHASE  PRICE OF $6,000,000
            FOR PHASE 2).

            o     EXAMPLE - PHASE 1: By way of  illustration  only, if there are
                  40 townhomes  in Phase 1, the Phase 1 purchase  price would be
                  $6,000,000  rather  than  the  "per  home"  purchase  price of
                  $4,443,160  (determined  by multiplying 40 homes by $111,079).
                  The  difference  between  the  minimum  price and the per home
                  price -- $1,556,840  -- would be credited  towards the Phase 2
                  purchase  price,  provided  that the credit may not reduce the
                  total  Phase  1 and  Phase  2  purchase  price  to  less  than
                  $12,000,000.

            o     EXAMPLE  - PHASE 2: In the  above  example,  if  there  are 77
                  active adult homes in Phase 2, the purchase  price for Phase 2
                  would be $6,080,020.  It would be determined by multiplying 77
                  homes  by  $99,180  (for  a  total  of  $7,636,860)  and  then
                  subtracting the Phase 1 credit of $1,556,840.  The total Phase
                  1 and Phase 2 purchase price would be $12,080,020  ($6,000,000
                  +  $6,080,020).  That  amount  would  also be  adjusted  by an
                  interest factor, as described below.











                                       14
<PAGE>

      o     Buyer may complete  Phase 1 and elect not to purchase the  remaining
            Land in  Phase  2. IN THAT  CASE,  THE  MINIMUM  PURCHASE  PRICE  IS
            $6,000,000. Buyer would also be required to pay to the Corporation a
            $125,000 termination fee.

      o     If Phase 1 is completed  and Buyer does not  exercise its  election,
            described   above,  to  terminate  the  Agreement  of  Sale  without
            purchasing  the remaining Land in Phase 2, the Phase 2 closing would
            (if all other conditions are satisfied) occur within 24 months after
            the Phase 1 closing.  During the period  between the Phase 1 closing
            and the Phase 2 closing,  the $99,180  amount used to calculate  the
            Phase 2 purchase  price  would  increase  by an amount  equal to six
            percent simple interest per year, prorated monthly.

      o     If Buyer is unable to obtain the necessary  regulatory  approvals in
            such a manner that the Land can be  subdivided  as  contemplated  by
            Phase 1 and Phase 2, then, if the Phase 1 sale is completed, (1) the
            Corporation  would  convey  title to all the  Land to Buyer  and (2)
            Buyer would pay the Phase 1 portion of the purchase price along with
            a non-recourse mortgage and note (the "Mortgage Documents") securing
            the Phase 2 portion of the  purchase  price.  If the Phase 2 closing
            did not occur,  the  Corporation  could  foreclose  on the  Mortgage
            Documents and recover title to the Phase 2 portion of the Land.

      o     If Phase 1 and/or Phase 2 are completed,  the  Corporation  may also
            receive  additional  payments  from Buyer  based on a portion of the
            "Profits" (as defined in the Agreement of Sale),  if any,  earned by
            Buyer above  specified  thresholds for selling  completed  homes and
            otherwise completing its contemplated development. Such payments, if
            applicable,  would  range from 10% of the Profits in excess of a 10%
            Profit  threshold to Buyer, to 40% of the Profits in excess of a 16%
            Profit threshold to Buyer.

      CLOSING  CONDITIONS.  Completion  of the Land sale  depends on a number of
conditions  being  satisfied.  These  include:

      o     Buyer must  receive  extensive  approvals  from New Jersey state and
            local regulatory authorities ("Regulatory Approvals"),  and the Land
            must be  rezoned  for  Buyer's  contemplated  residential  use.  See
            "Regulatory Approvals" below.

      o     Stockholders  of  the  Corporation  representing  two-thirds  of the
            outstanding  shares of Common  Stock  must vote in favor of the Land
            Sale Proposal (the "Voting Condition").

      TERMINATION  RIGHTS.  If  the  Voting  Condition  is  not  satisfied,  the
Corporation  and Buyer will each have the right to  terminate  the  Agreement of
Sale. The Agreement of Sale contains additional termination rights, including:

      o     If the Voting  Condition  is  satisfied,  Buyer will have 90 days to
            conduct an  investigation  relating to the Land (the  "Investigation
            Period"). During the Investigation Period, if Buyer is not satisfied
            with  the  results  of  its  investigation,  it  may  terminate  the
            Agreement of Sale.

      o     The  Corporation  and Buyer can each terminate the Agreement of Sale
            if the Land is not rezoned for Buyer's contemplated  residential use
            within 24 months after the expiration of the  Investigation  Period,
            except  that if a rezoning  ordinance  is  recommended  by the local
            planning board within that 24 month period,  Buyer may not terminate








                                       15
<PAGE>

            the Agreement of Sale unless the municipality's governing body fails
            to  adopt  the  rezoning   ordinance  within  36  months  after  the
            expiration of the Investigation Period.

      o     Buyer can terminate  the  Agreement of Sale if Regulatory  Approvals
            are received for fewer than 130 homes.

      DEPOSIT; EXTENSION PAYMENTS; OPTION PAYMENTS.

      If the  Voting  Condition  is  satisfied,  Buyer  will pay  into  escrow a
$200,000  deposit,  to be released to the Corporation over a two year period and
credited  against the purchase  price for the Land, or returned to Buyer,  under
certain circumstances described in the Agreement of Sale.

      If Buyer does not obtain all Regulatory  Approvals  within 24 months after
satisfaction of the Voting  Condition,  the Corporation  will grant to Buyer, at
Buyer's  request,  a maximum of 12 extensions,  each for a period of six months,
and Buyer will make the following  extension payments to the Corporation.  These
payments will be nonrefundable  (except for the first four payments,  which will
refundable to Buyer under the same conditions as the $200,000 deposit  described
above) and will not be credited against the purchase price for the Land.

      o     Extensions 1-4: $25,000 each.

      o     Extensions 5-6: $100,000 each.

      o     Extensions 7-8: $200,000 each.

      o     Extensions 9-10: $300,000 each.

      o     Extensions 11-12: $400,000 each.

      Commencing June 1, 2005 and terminating upon the sale of the Land included
in Phase 1, Buyer will make option payments to the Corporation  each year in the
amount of $125,000 (offset by the payments for Extensions 1-4 described  above),
in consideration of the  Corporation's  carrying costs of the Land for the prior
year.  Option  payments will not be refundable to Buyer and will not be credited
against the purchase price for the Land.

      OTHER.  The  Agreement  of  Sale  contains  other  important  information,
including  representations and warranties of the Corporation and Buyer, remedies
in the event of default,  and  provisions  relating  to title and  environmental
matters. Please see Appendix A for the text of the Agreement of Sale.

      UNDER THE  AGREEMENT  OF SALE,  BUYER HAS A MAXIMUM  OF EIGHT  YEARS  FROM
SATISFACTION  OF THE  VOTING  CONDITION  TO  RECEIVE  THE  NECESSARY  REGULATORY
APPROVALS.  THE  CORPORATION  BELIEVES  THAT EIGHT  YEARS  WOULD BE AN  UNLIKELY
DURATION FOR THE REGULATORY  PROCESS,  BUT CANNOT GIVE ANY  ASSURANCES  THAT THE
LAND SALE WILL BE COMPLETED OR (IF THE SALE IS COMPLETED) THE TIMING THEREOF. IF
THE LAND SALE IS COMPLETED, THE NUMBER OF MARKET RATE RESIDENTIAL UNITS APPROVED
BY THE REGULATORY AUTHORITIES, THE PROFITABILITY OF BUYER'S DEVELOPMENT PROJECT,
AND WHETHER BUYER  PURCHASES THE LAND INCLUDED IN PHASE 1 AND PHASE 2 (OR SOLELY
PHASE 1) WILL INFLUENCE THE TOTAL PAYMENTS BY BUYER TO THE CORPORATION,  SUBJECT
TO THE MINIMUM PURCHASE PRICE DESCRIBED ABOVE.














                                       16
<PAGE>

BOARD RECOMMENDATION; REASONS FOR THE LAND SALE

      The   Corporation's   Board  of  Directors   believes  that  the  sale  of
approximately  68 acres of undeveloped  and unused Land to Buyer pursuant to the
Agreement  of  Sale  is in  the  best  interests  of  the  Corporation  and  its
stockholders.  THE BOARD OF DIRECTORS  RECOMMENDS THAT  STOCKHOLDERS  VOTE "FOR"
APPROVAL OF THE LAND SALE PROPOSAL.

      The  Corporation  has  owned the Land,  which is  carried  on its books at
approximately $500,000,  since 1979. The Land is not used, and is not needed for
use, in the Corporation's  business.  For many years, the Corporation's Board of
Directors  and  management  have  explored  and have  sought to pursue  possible
methods of monetizing  this property for the benefit of the  Corporation and its
stockholders.  In 2003, the Corporation  retained one of the largest  commercial
real estate  brokerage houses serving the New York - New Jersey region to assist
in these efforts and,  after  considering  expressions  of interest from several
potential buyers, the Board instructed  management to commence negotiations with
Buyer.  Following approval by the Board of Directors,  on December 29, 2004, the
Corporation and Buyer entered into the Agreement of Sale.

      In approving  the  Agreement of Sale,  the Board of Directors  considered,
among  other  factors  it  deemed  relevant,  the  purchase  price  for the Land
(including the minimum  purchase  price) and the other terms of the Agreement of
Sale;  Hovnanian  Enterprises,  Inc.'s  reputation as a residential  real estate
developer including its ability to deal with the complex regulatory requirements
applicable  to  real  estate  projects  of  this  nature;   the  advice  of  the
Corporation's  legal  and real  estate  advisors;  the  nature  of the  proposed
development;  the Corporation's  knowledge of the community in which the Land is
located;  and the efforts  previously  made by the  Corporation  to monetize the
Land.  The Board also took into  account,  among other things,  the  undeveloped
condition  of the Land and the fact that the  Corporation  is not a real  estate
developer.  The Board concluded that a transaction  structure which contemplates
the  development of the Land by a third party (without any financial  investment
by the Corporation in the development project), while involving uncertainties as
to timing and  completion  and other risks  outside the  Corporation's  control,
would provide an opportunity  for the Corporation to realize value from the Land
that would otherwise not be available to it.

USE OF PROCEEDS

      The  Corporation  has not made a  determination  as to the use of proceeds
from the Land sale, if completed.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

      If the Land sale is  completed,  it will not, in and of itself,  result in
any federal income tax consequences to our stockholders.

REGULATORY APPROVALS

      Completion of the Land sale is dependent on Buyer receiving  nonappealable
approvals,  permits and agreements containing terms and conditions acceptable to
Buyer from New Jersey  state and local  regulatory  authorities,  including  the
governing body of Oakland  Township,  Township  Planning and Zoning Boards,  New
Jersey  Department  of  Environmental  Protection,   New  Jersey  Department  of
Transportation,  New Jersey Department of Community Affairs Registration, County
Planning Board, Municipal or Regional  Sewerage/Utilities  Authority and Country
Soil  Conservation  District.  Completion of the Land sale is also  dependent on










                                       17
<PAGE>

Buyer  obtaining  a final and  nonappealable  municipal  rezoning of the Land to
permit the contemplated residential use.

SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS

      As of January  25,  2005,  the  directors  and  executive  officers of the
Corporation  beneficially  owed 603,549 shares of Common Stock (including 37,000
shares  issuable upon  exercise of stock  options),  representing  approximately
43.14% of the Common  Stock as of that date.  The  Corporation  expects that its
directors  and  executive  officers  will vote all their issued and  outstanding
Common Stock as of the record date in favor of the Land Sale Proposal.

DISSENTERS' RIGHTS OF APPRAISAL

      If the proposed  Land sale is  completed  and the  transaction  were to be
deemed to constitute a sale of "all or substantially  all" of the  Corporation's
assets under New York law,  holders of the  Corporation's  Common Stock would be
entitled  to  certain   dissenters'   rights  upon  compliance  with  procedures
prescribed by the BCL. AS DESCRIBED ABOVE UNDER "GENERAL",  THE CORPORATION DOES
NOT BELIEVE THAT THE PROPOSED  SALE OF THE LAND TO BUYER,  IF  COMPLETED,  WOULD
CONSTITUTE  A SALE OF "ALL OR  SUBSTANTIALLY  ALL" OF THE  CORPORATION'S  ASSETS
UNDER NEW YORK LAW BECAUSE, AMONG OTHER THINGS, THE LAND IS NOT USED, AND IS NOT
NEEDED FOR USE, IN THE  CORPORATION'S  BUSINESS,  AND THE TRANSACTION  WOULD NOT
INVOLVE THE DISPOSITION OF ANY OF THE CORPORATION'S OPERATING ASSETS,  BUSINESS,
INCOME OR REVENUES.  ACCORDINGLY,  IF A STOCKHOLDER  WERE TO ATTEMPT TO EXERCISE
DISSENTERS'  RIGHTS IN CONNECTION WITH THE LAND SALE, THE  CORPORATION  RESERVES
THE RIGHT TO CHALLENGE SUCH EXERCISE.

      Stockholders who want to invoke  dissenters'  rights, if these rights were
determined  to be  applicable  to the Land sale,  should  follow the  procedures
described below.  The following  description is not complete and is qualified in
its  entirety by  reference  to the text of Section  623 of the BCL  included as
Appendix B to this proxy statement.  The Corporation urges  stockholders to read
these requirements and follow the procedures  precisely as failure to follow all
of the steps  required  by Section 623 would  result in the loss of  dissenters'
rights, if otherwise applicable.

      If the Land sale is  completed  and the  transaction  were to be deemed to
constitute  a sale of "all or  substantially  all" of the  Corporation's  assets
under New York law,  the BCL would  afford  stockholders  who  dissent  from the
transaction  the right to obtain  payment of the "fair value" of their shares as
determined by a court. A dissenting  stockholder  must exercise such rights with
respect to all shares of the Corporation's Common Stock that are owned of record
and beneficially by the stockholder.  A nominee or fiduciary who holds shares of
record for a beneficial  owner may not dissent on behalf of the beneficial owner
with respect to less than all shares held on behalf of the beneficial owner.

      To assert dissenters' rights, a stockholder must:

      o     file with the  Corporation,  prior to or at the annual  meeting  and
            before the vote on the Land Sale  Proposal,  a written  objection to
            the Land sale (and not withdraw the objection before the vote); and

      o     not vote in favor of the Land Sale Proposal.














                                       18
<PAGE>

      The written objection sent by the dissenting  stockholder must comply with
the  requirements of Section 623 of the BCL. MERELY VOTING AGAINST THE LAND SALE
PROPOSAL WILL NOT SATISFY THE  REQUIREMENTS FOR A WRITTEN DEMAND FOR THE PAYMENT
OF FAIR  VALUE OF A  STOCKHOLDER'S  SHARES OR THE  OTHER  ACTIONS  SPECIFIED  IN
SECTION 623 OF THE BCL TO PERFECT SUCH  DISSENTERS'  RIGHTS.  THE WRITTEN DEMAND
MUST BE IN ADDITION TO AND SEPARATE FROM ANY PROXY OR VOTE AGAINST THE LAND SALE
PROPOSAL.

      Within 10 days after the vote of stockholders approving the Land sale, the
Corporation must give written notice of such authorization by registered mail to
each dissenting  stockholder who filed written objection and who did not vote in
favor  of the  Land  Sale  Proposal.  If the  Land  sale  is  completed  and the
transaction were to be deemed to constitute a sale of "all or substantially all"
of the Corporation's assets under New York law, each dissenting  stockholder who
dissents  in the  manner  set forth  above  will  cease to have any  rights as a
stockholder,  except  the  right to be paid the  fair  value of such  dissenting
stockholder's  shares of the  Corporation's  Common  Stock and any other  rights
under Section 623 of the BCL.

      At the time of filing the written  notice of election to dissent or within
a month thereafter, a dissenting stockholder must submit all of the certificates
representing the stockholder's  shares to the Corporation or its transfer agent.
The  Corporation  (or the  Corporation's  transfer agent) will then note thereon
that a written  notice of  election to dissent has been filed in respect of such
shares and will then return them to the dissenting  stockholder.  Any dissenting
stockholder  who  fails  to  submit  certificates  representing  shares  of  the
Corporation's  Common Stock for such notation will, if the  Corporation,  at its
option, so notifies such dissenting  stockholder in writing within 45 days after
the date that the written  notice of  election  to dissent was filed,  lose such
stockholder's  dissenters'  rights (unless the New York Supreme Court,  for good
cause shown, otherwise directs).

      Within 90 days  after  stockholder  approval  of the Land  Sale  Proposal,
Section  623  requires  that the  Corporation  send by  registered  mail to each
dissenting  stockholder  who has filed a notice of election,  a written offer to
pay for the dissenting  stockholder's  shares, upon completion of the Land sale,
at a specified  price which the  Corporation  considers to be the shares'  "fair
value"  together with a statement  setting forth the aggregate  number of shares
with respect to which  notices of election to dissent have been received and the
aggregate  number of holders of such shares.  The dissenting  stockholder has 30
days to accept this written offer.

      If the  Corporation  fails to make an offer to the dissenting  stockholder
(or the  Corporation  makes an offer  and the  dissenting  stockholder  fails to
accept  it) as  provided  above,  the  Corporation  has 20 days to  institute  a
proceeding  in New York  Supreme  Court to  determine  the rights of  dissenting
stockholders  and to fix the fair  value  of the  Corporation's  shares.  If the
Corporation does not institute such a proceeding, any dissenting stockholder may
do so, but if the  proceeding is not  instituted by any  dissenting  stockholder
within 30 days after such 20 day period expires, all dissenters' rights would be
extinguished  unless the New York Supreme Court, by good cause shown,  otherwise
directs.  In any such court  proceeding,  each party will bear its own costs and
expenses,  unless the court otherwise determines. If the court were to determine
that a  dissenting  stockholder  is entitled  to payment for such  stockholder's
shares if the Land sale is  completed,  it will fix the value  based on the fair
value of the  Corporation's  Common Stock as of the close of business on the day
prior to the  annual  meeting  and will  consider  the  nature  of the Land sale
transaction  and  its  effects  on the  Corporation  and its  stockholders,  the
concepts and methods then customary in relevant securities and financial markets










                                       19
<PAGE>

for  determining  fair value of shares of a  corporation  engaging  in a similar
transaction under comparable circumstances and all other relevant factors.

      As discussed  above,  the  Corporation  does not believe that  dissenters'
rights apply to the proposed  Land sale and reserves the right to challenge  any
attempted  exercise of  dissenters'  rights on that basis.  Even if the New York
Supreme  Court,  in  a  proceeding  described  above,  were  to  determine  that
dissenters' rights are applicable,  no dissenting  stockholder would be entitled
to any payment from the Corporation prior to the consummation of the transaction
constituting the sale of "all or substantially all" of the Corporation's assets.
The Corporation  cannot give any assurances that the Land sale will be completed
or (if the sale is completed) the timing thereof.  See "Agreement of Sale" above
for  information  with respect to the terms and conditions of the proposed sale.
In view of the  complexity  of the  provisions  of the  appraisal  statute,  the
Corporation recommends that stockholders who are considering dissenting from the
Land Sale Proposal under Section 623 of the BCL consult their legal advisors.

                         INDEPENDENT PUBLIC ACCOUNTANTS

      The  principal  accountant  selected  by the  Board of  Directors  for the
Corporation's  current fiscal year is Deloitte & Touche LLP. It is expected that
a representative  of Deloitte & Touche LLP will be present at the annual meeting
of stockholders with the opportunity to make a statement if they desire to do so
and to respond to appropriate questions.

FEES

      AUDIT  FEES.  The  aggregate  fees  billed by  Deloitte  & Touche  LLP for
professional  services  rendered  to  the  Corporation  for  the  audit  of  the
Corporation's  annual  financial  statements  for the fiscal year ended June 30,
2004 and reviews of the financial statements included in the Corporation's Forms
10-Q for such year were  $68,900.  Such fees for the fiscal  year ended June 30,
2003 were $59,838.

      TAX FEES.  The  aggregate  fees  billed by  Deloitte  & Touche LLP for tax
services rendered to the Corporation  during the fiscal year ended June 30, 2004
were $3,470. Such services consisted of research for tax planning. There were no
such fees for the fiscal year ended June 30, 2003.

      AUDIT-RELATED  FEES; ALL OTHER FEES.  Deloitte & Touche LLP did not render
any other services to the  Corporation  for the fiscal years ended June 30, 2004
and June 30, 2003.

AUDIT REPORT

      The  Board  does  not  have an audit  committee.  The  Board as a whole is
responsible  for the  oversight of the  Corporation's  accounting  and financial
reporting  practices.  Management is responsible for preparing the Corporation's
financial  statements and the independent  auditors are responsible for auditing
those statements.

      In discharging  its oversight  responsibility,  the Board (1) reviewed and
discussed the audited  financial  statements of the  Corporation  at and for the
fiscal  year  ended  June  30,  2004  with  management,  (2)  received  from the
independent  auditors  in writing the matters  required  to be  communicated  by
Statement on Auditing Standards No. 61, (3) received the written disclosures and
the letter from the independent auditors required by the Independence  Standards












                                       20
<PAGE>

Board's  Standard  No. 1 and (4)  discussed  with the  independent  auditors the
matters referred to in Statement on Auditing  Standards No. 61 and the auditors'
independence from the Corporation.

      Based on the reviews and discussions referred to above, the Board included
the  Corporation's  audited  financial  statements in the  Corporation's  Annual
Report on Form 10-K for the fiscal year ended June 30, 2004, for filing with the
Securities and Exchange Commission.


Submitted by the Board of Directors,

Alexander A. Cameron
Frances D. Dewey
John H.D. Dewey
LTG James M. Link (USA Ret)
Nathaniel Roberts

                              STOCKHOLDER PROPOSALS

      Under Securities and Exchange  Commission rules, if a stockholder wants to
submit a proposal for inclusion in the Corporation's proxy statement relating to
an annual meeting of stockholders, the proposal normally must be received at the
Corporation's  executive  offices  not less than 120  calendar  days  before the
anniversary of the date of the  Corporation's  proxy  statement  relating to the
previous year's annual meeting.  However,  if the date of the annual meeting has
been changed by more than 30 days from the date of the previous  year's meeting,
then the deadline for receiving  stockholder  proposals is "a  reasonable  time"
before  the  Corporation  mails  its  proxy  materials  for  the  meeting.   The
Corporation  anticipates  that its next annual  meeting will be held in December
2005 (the month when it has typically held its annual  meetings),  which is more
than 30 days prior to the anniversary  date of the March 8, 2005 annual meeting.
For purposes of these rules and assuming the next annual meeting will be held in
December 2005, if a stockholder  proposal relating to the next annual meeting is
received by the  Corporation  by July 3, 2005,  the  Corporation  will treat the
proposal as having been received a reasonable time before the Corporation  mails
its proxy materials for such meeting.

      Under  Securities  and Exchange  Commission  rules,  the persons  named as
proxies in the Corporation's form of proxy for an annual meeting of stockholders
are normally entitled to exercise their discretionary  voting power with respect
to any stockholder proposal received by the Corporation less than 45 days before
the  anniversary  of the date on which the  Corporation  first  mailed its proxy
materials  for the prior  year's  annual  meeting.  However,  if the date of the
annual  meeting  has  been  changed  by more  than 30 days  from the date of the
previous year's meeting,  then such discretionary  authority may be exercised if
the proposal has not been  received "a reasonable  time" before the  Corporation
mails its proxy  materials  for the  meeting.  For  purposes  of these rules and
assuming the next annual meeting will be held in December 2005, if a stockholder
proposal  relating  to the next annual  meeting is  received by the  Corporation
after September 16, 2005, the Corporation  will treat the proposal as not having
been received a reasonable time before the Corporation mails its proxy materials
for such meeting.
















                                       21
<PAGE>

                             DISCRETIONARY AUTHORITY

      While the notice of annual meeting of  stockholders  calls for transaction
of such  other  business  as may come  before  the  meeting,  management  has no
knowledge of any matters to be presented  for action by the  stockholders  other
than as set forth  above.  The  accompanying  form of proxy gives  discretionary
authority,  however,  in  the  event  that  any  additional  matters  should  be
presented.

                                    By Order of the Board of Directors

                                            FRANCES D. DEWEY

                                                SECRETARY
February 1, 2005






















































                                       22
<PAGE>

                                   APPENDIX A








                                AGREEMENT OF SALE


                                     BETWEEN


                         DEWEY ELECTRONICS CORPORATION,
                                   AS "SELLER"


                                      -AND-


                 K. HOVNANIAN NORTH JERSEY ACQUISITIONS, L.L.C.,
                                   AS "BUYER"


                             FOR PREMISES LOCATED IN

                         OAKLAND BOROUGH, BERGEN COUNTY
                                   NEW JERSEY


                                    - DATED -


                                DECEMBER 29, 2004



<PAGE>
                               TABLE OF CONTENTS
                                                                            PAGE

1.  PREMISES/PHASED PURCHASE...................................................1

2.  PURCHASE PRICE/CLOSING.....................................................1

3.  INVESTIGATION PERIOD.......................................................6

4.  DEPOSIT/ADDITIONAL DEPOSITS/OPTION PAYMENTS................................7

5.  GOVERNMENTAL APPROVALS CONTINGENCY.........................................9

6.  TITLE AND SURVEY INVESTIGATION............................................12

7.  ENVIRONMENTAL MATTERS.....................................................13

8.  EMINENT DOMAIN............................................................15

9.  DEFAULTS..................................................................15

10. REAL ESTATE COMMISSION....................................................16

11. NEW JERSEY LAW............................................................16

12. POSSESSION ON CLOSING/RISK OF LOSS........................................16

13. TAXES, ADJUSTMENTS AND INCIDENTAL COSTS...................................16

14. NOTICES...................................................................17

15. CAPTIONS/HEADINGS.........................................................18

16. DRAFTING OF AGREEMENT.....................................................18

17. INITIALING BY PARTIES.....................................................19

18. ENTIRE AGREEMENT/COUNTERPARTS/SURVIVAL....................................19

19. EXECUTION OF DOCUMENTS....................................................19

20. RECORDING.................................................................19

21. BUYER'S REPRESENTATIONS...................................................19

22. SELLER'S REPRESENTATIONS..................................................20

23. LICENSE TO ERECT SIGNS/TRAILERS...........................................21

24. DOCUMENTS TO BE DELIVERED AT CLOSING......................................21

25. ASSIGNMENT OF CONTRACT....................................................22

26. OTHER MATTERS.............................................................22


[EXHIBITS OMITTED]

<PAGE>
                                AGREEMENT OF SALE

      THIS AGREEMENT made on December 29, 2004, (the "Agreement")  between Dewey
Electronics  Corporation,  a corporation of the State of New York,  with offices
located at 27 Muller Road, Oakland, New Jersey 07436 ("Seller") and K. Hovnanian
North Jersey  Acquisitions,  L.L.C., a limited liability company of the State of
Delaware,  with offices located at 110 Fieldcrest  Avenue, CN 7825,  Edison, New
Jersey 08818-7825 ("Buyer").

      WHEREAS, Seller is the fee simple owner of Block 2.18, Lot 1201 in Oakland
Borough,  Bergen County, New Jersey,  described in Exhibit A attached hereto and
made a part hereof and has full authority to enter into this Agreement; and

      WHEREAS,  Seller wishes to convey its  ownership  interest in a portion of
Block 1201, Lot 2.18,  consisting of approximately  sixty-eight (68) acres, (the
"Premises")  and  generally  consisting  of Tract  III as shown on the  location
survey prepared by Andrew Marshall,  Jr., dated 9/12/97, last revised on 9/17/97
attached  hereto and made a part  hereof as Exhibit A pursuant  to the terms and
conditions of this Agreement; and

      WHEREAS,  Buyer wishes to purchase the Premises  pursuant to the terms and
conditions of this Agreement.

      NOW,  THEREFORE,  in  consideration of the mutual covenants and conditions
contained herein, Buyer and Seller agree as follows:

                           1. PREMISES/PHASED PURCHASE

      A.    Seller  agrees to convey to Buyer and Buyer  agrees to purchase  the
Premises  upon and subject to the terms and  conditions of this  Agreement.  The
Premises shall be conveyed free from all liens and encumbrances,  except as this
Agreement may otherwise  provide,  by Bargain and Sale Deeds with Covenant as to
Grantor's  Acts,  on the  dates  hereinafter  fixed  for the  closings  of title
(separately,  a "Closing" and  collectively,  the  "Closings").  The deeds shall
contain either:  (1) a metes and bounds  description in accordance with a survey
prepared in accordance  with Paragraph 6, below;  and/or (2) a reference to lots
on a plat that has been or will be filed  simultaneously  with  Closing with the
Clerk of Bergen County,  and/or (3) reference to units in a recorded Master Deed
creating a condominium for the Phase then subject to Closing.

      B.     The  purchase  of  the  Premises  shall  occur  in  two (2)  phases
(hereinafter referred to in this Agreement as Phase I and Phase II.) While it is
Buyer's  intention to purchase all Phases,  Buyer's purchase of Phase I does not
in any way obligate it to purchase Phase II. A conceptual  site plan is attached
hereto as Exhibit F.

                            2. PURCHASE PRICE/CLOSING

      A.    The  Purchase Price for the Premises  shall be Eighteen  Million One
Hundred  Eighty Five  Thousand  Four  Hundred  Forty Two  ($18,185,442)  Dollars
subject to  adjustment as set forth in this  Agreement  (the  "Purchase  Price")
based  upon one  hundred  seventy  four  (174)  market  rate  residential  units
consisting  of seventy  eight (78) market rate  townhomes  ("Townhomes")  at One
Hundred Eleven Thousand Seventy Nine Dollars  ($111,079) per home in Phase I and
















                                       A-1
<PAGE>

ninety-six  (96) active  adult  multi-family  garden type homes  ("Active  Adult
Homes") at Ninety Nine Thousand One Hundred Eighty ($99,180) Dollars per home in
Phase II.

      B.    The  Purchase  Price  shall be paid at each  Phase  Closing  by wire
transfer or bank teller's check at Buyer's option, as follows:

      (1)   PHASE I PURCHASE PRICE.  Phase I shall consist of Seventy Eight (78)
Townhomes.  The Phase I Purchase  Price shall be calculated by  multiplying  the
number  of market  rate  townhomes  in Phase I by One  Hundred  Eleven  Thousand
Seventy Nine  ($111,079)  Dollars but in no event shall be less than Six Million
($6,000,000)  Dollars ("Phase I Minimum  Purchase  Price").  The Phase I Closing
shall take place  within  thirty (30) days after  receipt of All  Approvals  (as
defined in Paragraph 5, below).

      (2)   PHASE II PURCHASE PRICE. Phase II shall consist of Ninety Six Active
Adult Homes.  The Phase II Purchase Price shall be calculated by multiplying the
number of market  Active  Adult  Homes in Phase II by Ninety Nine  Thousand  One
Hundred  Eighty Dollars  ($99,180) but in no event shall the cumulative  Phase I
and Phase II Purchase  Price be less than Twelve Million  ($12,000,000)  Dollars
(the "Phase I and Phase II Minimum Purchase  Price").  A credit in the amount by
which the Phase I Minimum  Purchase  Price paid by Buyer  exceeded  the purchase
price  which  would  have  been due on a per  home  basis  for  Phase I shall be
credited at the Phase II Closing.  However,  in no event shall the credit reduce
the cumulative purchase price paid by Buyer for Phases I and II to less than the
Phase I and Phase II Minimum Purchase Price. By way illustration  only, if there
are forty  townhomes in Phase I, the Phase I Purchase  Price would be $6,000,000
and not the per home purchase price of $ 4,443,160.  The Minimum  Purchase Price
is $1,556,840  more than the per home price.  If there were 77active adult homes
in Phase II, the Phase II  Purchase  Price  would be  $6,080,020  ($7,636,860  -
$1,556,840).  The Phase I and Phase II Purchase Price would be $12,080,020.  The
Phase II Purchase Price shall be increased by an escalator as hereafter defined.
The Phase II  Closing  shall take place not more than  twenty  four (24)  months
after the Phase I Closing.

      (4)   ESCALATOR.  The  "Escalator"  shall be six (6%)  percent  PER  ANNUM
simple interest  prorated  monthly  commencing to run on the date of the Phase I
Closing until the date of the next Phase Closing.

      (5)   DEPOSIT.  The Deposit shall be released to Seller by Escrow Agent as
follows:

      (a)   Fifty   Thousand   ($50,000)   Dollars  at  the  expiration  of  the
            Investigation   Period,   provided  Buyer  has  not  terminated  the
            Agreement as set forth in Paragraph 3 (the Investigation Period) ;

      (b)   One Hundred Thousand ($100,000) Dollars on the six month anniversary
            of the Agreement; and

      (c)   Fifty Thousand Dollars upon the rezoning of the Property for Buyer's
            intended residential use.

      (6)   PURCHASE  PRICE  ADJUSTMENT.  Subject to Buyer's  right to terminate
pursuant  to  Paragraph  2(B)(7)  below,  in the event  that Buyer  obtains  All
Approvals  for  more/less  than One Hundred and Thirty  (130) Homes the Purchase
Price shall be  increased/decreased  by the applicable per home price, but in no
event shall be less than the applicable  Minimum Purchase Price. If Buyer closes












                                       A-2
<PAGE>

title without All Approvals based on the Minimum Purchase Price and subsequently
obtains All  Approvals,  the Purchase Price shall be increased by the applicable
per home price. This provision survives closing of title.

      (7)   A.  In the event that All  Approvals are received for fewer than one
hundred thirty (130) Homes Buyer may either:  (1) terminate this  Agreement,  in
which event this  Agreement  shall become null and void and neither  party shall
have any further  obligation to the other,  except for those  obligations  which
expressly  survive  the  termination  of this  Agreement,  or (2) proceed to the
Phased Closings and pay an adjusted  Purchase Price based on the number of Homes
for which All  Approvals  are  obtained,  but in no event less than the  Minimum
Purchase Price applicable to that Phase..

      B.    Reserved

      C.    No  consideration  shall be paid for lots on which Mt.  Laurel Homes
shall be  constructed.  The  Purchase  Price is based upon the  parties'  mutual
understanding  that no Mt. Laurel Homes (defined in this  Paragraph,  below) are
required  to be  constructed  on the  Premises  and that Buyer is able to obtain
certificates  of  occupancy  for all Market  Homes  (defined in this  Paragraph,
below) on the Premises  without any  requirements to construct Mt. Laurel Homes.
"Market  Home" is  defined  as any home for which  there is no  restrictions  or
limitations  on the sales or rental prices.  In the event that the  municipality
requires  the payment of  affordable  housing  fees,  these fees shall be deemed
Construction  Costs  for  the  purposes  of  calculating  Profit  Sharing  under
Paragraph  2 J. An  affordable  housing  fee is defined as a payment of any kind
required in lieu of  restrictions  or limitations on the sales or rental prices,
which  restrictions or payments are imposed by any governmental  entity or court
or pursuant to any court order or governmental implementation of any court order
or  settlement  to  satisfy in whole or in part the  municipality's  obligations
under the _Mt.  Laurel II decision of the New Jersey  Supreme  Court or the Fair
Housing Act or under any Council on Affordable Housing certified plan.

      D.    In the  event that  Buyer  elects not to  purchase  Phase II,  Buyer
shall pay Seller a  termination  fee in the amount of One  Hundred  Twenty  Five
thousand ($125,000) Dollars.

      E.    Buyer shall have the right to pay the Purchase Price and Close title
to any Phase,  before the outside dates set forth above,  without penalty,  upon
ten (10) days written  notice to Seller.  However,  acceleration  of the Closing
date for any Phase  shall not  accelerate  the Closing  date for any  subsequent
Phase.  Rather, the remaining Phase shall not be accelerated a similar number of
months,  but shall take place in  accordance  with the schedule set forth above.
For  example,  if Buyer  accelerates  the Phase I Closing,  the Phase II Closing
shall  nonetheless take place twenty four (24) months after the required Phase I
Closing Date,

      F.    Reserved.

      G.    Buyer  shall  have the right to  commence  site  development  of the
Premises  prior to the Phase I Closing with Seller's  consent which shall not be
unreasonably  withheld or delayed,  provided that prior to  commencing  any such
site activities,  Buyer shall have posted any necessary  performance  guarantees
required by under this Agreement and named the Seller as an additional  obligee.
Such site  development  shall be  limited  to  environmental  remediation,  soil
balancing, and installation of sewer, water, drainage,  utilities and roads. All
such site  development  shall  conform with All  Approvals  and with  applicable
construction  codes and shall be at Buyer's sole cost and  expense.  In no event
shall Buyer perform any activities for which a building permit is required until
such time as Buyer has closed title to the relevant  Phases of the Premises.  In
the event that Buyer  fails to close  title to any Phases of the  Premises,  all








                                       A-3
<PAGE>

such improvements and site development shall be for the benefit of Seller. Buyer
and Seller shall grant to each other the necessary  cross-easements at the Phase
I Closing.

      H.    No consideration shall be paid for the transfer of Lots and/or lands
on which Buyer,  in accordance  with All  Approvals,  does not  construct  homes
(referred  to as  "Non-Home  Lands").  Non-Home  Lands are used for open  space,
stormwater detention/retention basins or culverts, buffers, wetlands and similar
use.  If Buyer must  construct  such  improvements  on the Phase II  Property in
connection with the Phase I development,  Buyer shall bond said improvements and
name Seller as an obligee on these bonds.  Seller shall not have any  obligation
to  construct  improvements  on lands not  bought by Buyer  but  required  by an
Approval  in  connection  with a Phase  that  Buyer has  bought.  At each  Phase
Closing,   Buyer  and  Seller  shall  grant  to  each  other  easements   and/or
cross-easements  necessary for access and for the proper  functioning of utility
and  drainage  systems and for roadway  access,  and as  otherwise  necessary to
facilitate  construction  as  contemplated  by All Approvals for the Phase being
Closed.

      I.    If Buyer is unable to obtain All Approvals in such a manner that the
Phases of the Premises are subdivided  from each other Seller shall convey title
to the entire Premises to Buyer.  Buyer shall pay to Seller the Phase I Purchase
Price by wire  transfer  or, bank  teller's  check at Buyer's  option,  with the
balance  of the  Purchase  Price  for  Phase II being  secured  by the  Mortgage
Documents.  Buyer shall  deliver to Seller a Note (in the general form  attached
hereto as Exhibit B) and a  non-recourse  Mortgage (in the general form attached
hereto as Exhibit C) for the  Premises.  The Note and  Mortgage  are referred to
collectively  as the Mortgage  Documents.  Seller shall deliver to Eastern Title
Agency a Release of Part of Mortgaged  Premises (in the form attached  hereto as
Exhibit D) for those Homes which are included in Phase I and are paid for by the
Buyer at the Phase I  Closing  (the  "Release");  The  Release  shall be held in
escrow by Eastern  Title Agency until the Master Deed  creating the  condominium
regime for Phase I of the Premises  has been  recorded  with the County  Clerk's
Office or a final  subdivision plat has been filed in the County Clerk's Office.
Immediately thereafter, Eastern Title Agency shall deliver the Release to Buyer;
and the releases of the subsequent Phase shall take place in accordance with the
terms of the Mortgage Documents. In the alternative,  at Buyer's request, Seller
shall at each Phase Closing convey title to the condominium units located within
that Phase together with an undivided percentage interest in the common elements
for the Condominium. The Master Deed shall give Developer the right to construct
the  improvements on the Premises  required to serve the units being conveyed in
that Phase,  shall not obligate  Seller to make any  improvements  and shall not
require the construction of any future  condominium units beyond those contained
in the Phase being conveyed. In addition,  Seller shall have the right to review
and approve the Master Deed, which review and approval shall not be unreasonably
withheld  or delayed  and shall sign same for the  purpose of  establishing  its
consent to the filing of the Master Deed.

      This  Subparagraph  shall  survive the Closing of Title.  Buyer shall also
deliver to Seller any Bond naming Seller as an Obligee to secure the performance
of any on and off-site improvements and requirements in the Master Deed.

      Seller shall not be  obligated  to sign any document  which would have the
effect of Seller owning land which is subject to a  condominium  regime if Buyer
elects not to acquire the subsequent phase except if the condominium  regime may
be abandoned at the time that Buyer elects not to acquire the subsequent Phase.

      J.    PROFIT SHARING

      (1)   As  additional  consideration  for  the  transfer  and  sale  of the
Premises,  the Purchase price Shall be increased by a portion of the Profits, if
any (and not in any losses)  earned by Buyer in the  build-out of the  community







                                       A-4
<PAGE>

(i.e.,  construction and  installation of required on and off-site  improvements
and sale of completed  homes and all other assets to third-party  purchasers and
all steps necessary to commence and complete the contemplated development). Such
profit sharing,  hereinafter  referred to as "Profit  Participation" shall be as
follows:

     (a)    Ten (10%)  percent of the  Profits in excess of a ten (10%)  percent
            Profit  Threshold  to  Buyer  on  the  build-out  and  sale  of  the
            development.

     (b)    Twenty  (20%)  percent of the  Profits  in excess of a twelve  (12%)
            percent  Profit  Threshold to Buyer on the build-out and sale of the
            development.

     (c)    Thirty  (30%)  percent of the Profits in excess of a fourteen  (14%)
            percent  Profit  Threshold to Buyer on the build-out and sale of the
            development.

     (d)    Forty  (40%)  percent of the  Profits  in excess of a sixteen  (16%)
            percent   Profit   Threshold  to  Buyer  on  the  build-out  of  the
            development.

      (2)    Profits shall be calculated on Buyer's fiscal year and shall be the
positive amount,  if any,  determined by calculating  Total Housing Revenue from
this  Community  (which  revenue shall include sales prices of Homes,  including
premiums,  discounts,  extras and profit  realized  from the resale of  off-site
property  bought to satisfy an Approval  obligation but no longer  needed),  and
subtracting  from that sum Construction  Costs for this Community (i.e.  "bricks
and mortar" construction costs, land development costs, affordable housing fees,
land  purchase  price,  real estate taxes and  homeowner  association  operating
subsidy);  Construction and Service Overheads allocable to this Community (i.e.,
construction,  services);  Selling  Overhead  allocable to this Community (i.e.,
prepaid marketing expenses, financing and closing costs, commissions,  salaries,
advertising  and general  expenses);  Capital Cost  allocable to this  Community
(i.e.. interest) and Administrative  Overhead allocable to this Community (i.e.,
Division, Region and Corporate Overhead.) In addition, an amount of One Thousand
Dollars  ($1,000)  per closed  home shall be deducted  for future home  warranty
service until Final Profit  Participation is calculated).  In calculating Profit
Threshold to Buyer, the numerator shall be Profits and the denominator  shall be
Total Housing Revenue.

      (3)   Reserved

      (4) The following  costs for the purpose of  calculating  Profits shall be
based  on  the  actual  costs  incurred  but  shall  not  exceed  the  following
percentages:

      (a)   Construction Overhead  and Service Overhead at 1.5% of Total Housing
            Revenue;

      (b)   Selling Overhead at 6% of Total Housing Revenue;

      (c)   Capital Cost, at 6% of Total Housing Revenue; and.

      (d)   Administrative Overhead is preset at 3.5% of Total Housing Revenue.

      (5)   Commencing  on the  first  quarter  following  the date  that  Buyer
conveys  its  first  home  to a  third  party  purchaser  and  on  each  quarter
thereafter, Seller shall be entitled to Interim Profit Participation

      (6)   Buyer  shall  calculate the first Interim Profit  Participation  due
Seller within ninety (90) days  following the end of the fiscal  quarter  within
which the  first  sale of a home to a third  party  purchaser  occurs  and shall







                                       A-5
<PAGE>

provide quarterly  community Interim Profit  Participation  statements until the
last  home is sold to a third  party  purchaser.  Seller  may,  upon  reasonable
advance notice and during  reasonable  business hours inspect or audit the books
and records of Buyer upon which the Interim Profit  Participation  statement was
based.  If Seller objects to the Interim  Profit  Participation  Statement,  the
procedures set forth in Paragraph 2 J(9) below shall apply.

      (7)   The Profit  Participation  due Seller shall be adjusted each quarter
based upon cumulative  revenues and expenses  incurred from  commencement of the
community.

      (8)   If Seller receives Interim Profit Participation and the Final Profit
Participation  determines  that Seller was not entitled to receive  Final Profit
Participation  or an amount  less than what Seller  received  as Interim  Profit
Participation, Seller shall, within thirty (30) days notice, refund to Buyer the
appropriate amount.

      (9)   A final  accounting of the  community,  for purposes of  determining
Seller's  Final Profit  Participation  shall be conducted one (1) year after the
quarter in which the last home in the  community  is closed.  At this time Buyer
will pay to Seller its share,  if any, of any  additional  Profit  Participation
which  may be  due.  Seller,  at its  own  expense,  may  review  Buyer's  final
accounting and may upon reasonable advance notice and during reasonable business
hours  inspect  or audit the books and  records  of Buyer  upon  which the Final
Profit  Participation  Statement  was  based.  If  Seller  disagrees  with  such
accounting,  it will  provide  Buyer  with a copy of report  from an  accountant
outlining in what  respects it disagrees  with Buyer's  accounting.  The parties
will then have  twenty  (20) days to see if the matter can be  resolved.  If the
matter is not resolved,  Seller's accountant and Buyer's accountant shall select
an independent  accountant who shall make a final  determination on the issue of
Profit  Participation  based on the parameters set forth in this paragraph.  The
parties agree that any amount in dispute shall be held by Eastern Title Company.
The costs of the accountant's services shall be split evenly by the parties, but
Buyer's share of the cost shall be capped at Twenty Thousand ($20,000) Dollars.

      (10)  Buyer shall pay Seller Interim Profit Participation and Final Profit
Participation  together with the Interim/Final Profit Participation  Statements.
Seller shall pay Buyer any refund within thirty (30) days of receiving the Final
Profit Participation Statement.

      (11)  Any  information collected by Seller during the course of its review
of any  Interim  or  Final  Profit  Participation  shall be  deemed  proprietary
information  of Buyer  and  shall be kept  strictly  confidential  except to the
extent  required  to  resolve  any  controversy   between  the  parties  in  any
administrative or legal proceeding.

                             3. INVESTIGATION PERIOD

      A.    Buyer has ninety (90) days from the Effective Date of this Agreement
to conduct investigations,  tests, studies and inspections of any kind or nature
whatsoever including,  without limitation, soil and groundwater sampling, and to
make a complete and independent  investigation of all aspects of the transaction
contemplated by this Agreement  including,  but not limited to, the condition of
the Premises, all correspondence,  instruments,  agreements,  contracts,  books,
documents,  records,  plans,  drawings,   specifications,   brochures,  permits,
licenses,  registrations,  consents, approvals and authorizations concerning the
Premises  to  determine  the  feasibility  of  development  of the  Premises  in
accordance with Buyer's plans (the "Investigation Period").











                                       A-6
<PAGE>

      B.    Reserved.

      C.    Buyer  and its agents have the right,  upon prior  notice,  to enter
onto the Premises for all purposes  contemplated  by this  Agreement  during the
term of this Agreement.

      D.    Buyer shall provide Seller with proof of Buyer's liability insurance
coverage naming Seller as an additional insured with respect to the Premises and
having  a  combined  single  limit  of  not  less  than  Three  Million  Dollars
($3,000,000.) with at least Ten Million Dollars  ($10,000,000.) excess liability
coverage.  Buyer or  Buyer's  agents  shall  also  carry  worker's  compensation
insurance  for such  activities.  Buyer shall  repair any damage  caused by such
testing and shall restore the Premises to  substantially  the same  condition as
existed  immediately prior to such testing.  Buyer hereby  indemnifies and holds
Seller harmless from any liability to the extent related to any negligent act or
omission of Buyer or Buyer's agents or representatives in the performance of any
and all activities  conducted on the Premises by Buyer until Closing,  except to
the extent such liability is the result of Seller's acts or omissions..

      E.    Seller shall make available at its office for inspection and copying
on and after the date of this  Agreement,  copies  of any and all  documents  in
Seller's or Seller's agents'  possession  concerning the portion of the Premises
to be purchased by Buyer for development  which includes the documents set forth
in Exhibit E.

      F.    Buyer  may  terminate  this  Agreement  in its  sole,  absolute  and
unfettered  discretion prior to the end of the  Investigation  Period.  If Buyer
terminates  this  Agreement  pursuant to this Paragraph  3(F),  Buyer shall give
written notice to Seller and Escrow Agent (as defined in Paragraph 4 (A), below)
on or before the expiration of the  Investigation  Period.  Upon receipt of such
notice,  the Escrow Agent shall,  within  three (3)  business  days,  return the
Deposit (as defined in Paragraph 4, below) with all interest  accrued thereon to
Buyer,  in which  event this  Agreement  shall  become null and void and neither
party shall have any further obligation to the other. Failure of Buyer to send a
timely  notice  of  termination,  shall  not be  deemed a waiver of the right to
terminate.  If Seller does not receive a notice of termination,  it shall send a
notice to Buyer that the Investigation  Period has expired and if Buyer fails to
terminate  within  three (3) days of receipt of  Seller's  notice,  the right of
Buyer to terminate under this Paragraph shall expire.  If Buyer  terminates,  it
shall provide copies of  non-proprietary  investigation  reports  concerning the
condition of the Premises,  such as soils reports and  environmental  reports to
the  Escrow  Agent,  who must hold such  reports  in  escrow  and treat  them as
confidential  material  until such time as Buyer has  received  the Deposit from
Escrow  Agent  after which date these  investigation  reports can be released to
Seller.  Buyer shall have the right to use these reports to the extent permitted
by the  applicable  consultant  and Buyer shall have no  liability  to Seller in
connection with its use and reliance on any report or document.

                       4. DEPOSIT/ADDITIONAL DEPOSITS/OPTION PAYMENTS

      A.    Upon  the  Effective  Date of this  Agreement,  Buyer  shall  pay to
Seller's  attorney Jerome Vogel,  Jeffer Hopkinson & Vogel,  1600 Rt. 208 N. Box
507,  Hawthorne,  NJ 07507 ("Escrow  Agent"),  a deposit of Two Hundred Thousand
($200,000.00)  Dollars (the "Deposit").  The Escrow Agent shall hold the Deposit
in a federally  insured  interest  bearing attorney trust account located in the
State of New Jersey.  If Buyer does not terminate the Agreement prior to the end
of the  Investigation  Period,  the Deposit,  together with all interest accrued
thereon,  shall be released to Seller in accordance with Paragraph 2.(B)(5), and
the Deposit plus interest shall become  non-refundable unless Buyer subsequently
terminates  this Agreement  based upon: (a) the failure of Seller to clear title
or survey  objections  pursuant to Paragraph 6;  (b)eminent  domain  pursuant to
Paragraph  8;  (c)  the  default  of  Seller  pursuant  to  Paragraph  9; or (d)
misrepresentations by Seller pursuant to Paragraph 22.






                                       A-7
<PAGE>

      B.    The  Deposit  shall be credited  against the Purchase  Price at each
closing, pro rata at each closing, pro rata per home.

      C.    If  Buyer  exercises  its right to an Extension of the Agreement (as
defined in Paragraph 5(C) (1),  below),  Buyer shall pay to Seller an additional
deposit (the "Additional Deposit") of Twenty Five Thousand ($25,000) Dollars for
each such Extension. The Additional Deposit(s) shall be non-refundable except in
those  instances where Buyer is entitled to a return of the Deposit as set forth
in this Paragraph,  above, in which case the Deposit and Additional  Deposit(s),
together  with all  interest  accrued  thereon  shall be refunded to Buyer.  The
Additional Deposit(s) shall not be credited in part or in their entirety against
the Purchase Price.

      D.    Escrow Agent.

      (1)   If,  for any reason, Closing does not occur and either party makes a
written  demand upon Escrow  Agent  hereunder,  Escrow  Agent shall give written
notice to the other  party of such  demand.  If Escrow  Agent does not receive a
written  objection from the other party to the proposed  payment within ten (10)
business  days after the giving of such notice,  Escrow Agent is  authorized  to
make such payment.  If Escrow Agent does receive such written  objection  within
such 10 day  period,  or, if for any other  reason,  Escrow  Agent in good faith
elects not to make such payment,  Escrow Agent shall:  (i) continue to hold such
amount until otherwise directed by written instructions from the parties to this
Agreement or a final judgment  (beyond any applicable  appeal period) of a court
of competent  jurisdiction  or (ii) deposit such funds with a court of competent
jurisdiction  selected  by the Escrow  Agent,  in which event all  liability  of
Escrow Agent with respect to such funds shall terminate.

      (2)   The  duties  of  Escrow  Agent as set  forth in this  Paragraph  are
subject to the following  provisions which are expressly  approved by Seller and
Buyer;

      (a)   Escrow  Agent shall be liable as a depository  only and shall not be
responsible for the  sufficiency or accuracy of the form,  execution or validity
of any documents  delivered to Escrow Agent  hereunder or any description of the
Premises or other thing contained  therein or the identity,  authority or rights
of the persons  executing or  delivering or purporting to execute or deliver any
such document. Escrow Agent's duties hereunder are limited to the safekeeping of
the Deposit and such other as are  delivered to it, and the delivery of the same
in accordance herewith.

      (b)   Escrow  Agent  shall not be liable for any act or  omission  done in
good  faith,  or for any claim,  demand,  loss or damage made or suffered by any
party to this  Agreement,  excepting  such as may arise  through or be caused by
Escrow Agent's willful misconduct or gross negligence.

      (c)   Escrow  Agent  shall not be liable for  collection  items  until the
proceeds of the same in actual cash have been received by Escrow  Agent.  Escrow
Agent is  authorized  to rely on any  document  believed  by Escrow  Agent to be
authentic in making any delivery of funds or Premises hereunder.

      (d)   In the event of a dispute arising under this Agreement, Escrow Agent
shall not be disqualified from representing Seller

      F.    Seller's  and  Buyer's  Federal  Tax  Identification  Numbers are as
follows:

            Seller:           13-1803-974
            Buyer:            22-3556344










                                       A-8
<PAGE>

      G.    Commencing  June 1,  2005 and  terminating  on the date of the first
Phase Closing,  Buyer shall pay Seller each year an Option Payment in the amount
of One Hundred  Twenty Five  ($125,000)  Thousand  Dollars in  consideration  of
Seller's  carrying costs of the Premises for the prior year. An adjustment shall
be made at the Phase I Closing  for the number of days  between  the last option
payment and the date of the Phase I Closing.  The Option  Payments  shall not be
applicable  to the  Purchase  Price but shall be  applicable  to any  Additional
Payments due in connection  with Buyer  exercising  its right to an extension of
the Agreement pursuant to Paragraph 4C.

                      5. GOVERNMENTAL APPROVALS CONTINGENCY


      A.    Unless waived by Buyer in writing, Buyer's obligation to close title
pursuant to this  Agreement is contingent on Buyer's  receiving All Approvals as
defined as all necessary  nonappealable rezoning,  final approvals,  permits and
agreements  containing  terms and conditions  acceptable to Buyer needed for the
uninterrupted  development  of at least one  hundred  seventy  four (174)  Homes
consisting of ninety-six (96) Active Adult Garden Homes and  seventy-eight  (78)
Townhomes  (collectively  the  "Development")  to  completion  and  which  final
approvals  shall  include,  but  not be  limited  to the  governing  body of the
Township,  Township  Planning  and  Zoning  Boards,  New  Jersey  Department  of
Environmental  Protection,  New Jersey Department of Transportation,  New Jersey
Department of Community Affairs Registration,  County Planning Board,  Municipal
or Regional Sewerage/Utilities  Authority, County Soil Conservation District and
any and all other approvals,  permits and agreements  necessary or desirable for
the development and construction of the Premises,  including the right to obtain
a building  permit for the first Home in the  development  but not the  building
permit itself. Each such approval shall be referred to as an "Approval."

      B.    The  Premises are not currently  zoned for the use  contemplated  by
this Agreement..  Unless waived by Buyer in writing, Buyer's obligation to close
title pursuant to this Agreement is contingent on Buyer's  obtaining a final and
nonappealable  municipal rezoning of the Premises to permit the use contemplated
in this Agreement (hereinafter  "Rezoning").  After the end of the Investigation
Period,  Buyer shall submit a written  request to the  municipality's  governing
body for the Rezoning.  If the municipality's  governing body fails to adopt the
Rezoning  ordinance  within twenty four (24) months after the  expiration of the
Investigation  Period (the  "Rezoning  Period"),  either  party may upon written
notice to the other terminate this Agreement in which event this Agreement shall
become null and void and neither party shall have any further  obligation to the
other.. Notwithstanding the foregoing in the event that a rezoning ordinance has
been  recommended  by the Planning Board prior to the expiration of the Rezoning
Period,  Seller shall not be permitted to  terminate  the  Agreement  unless the
municipality's  governing  body  fails to adopt the  Rezoning  ordinance  within
thirty six (36) months after the expiration of the Investigation  Period. In the
event  that the  Agreement  is  terminated  because  the  Premises  has not been
rezoned, Seller shall be entitled to a quit claim assignment of all applications
with  related  documents  submitted  by Buyer to  obtain  the  Rezoning  and All
Approvals  and due  diligence  documents  as set forth in  Paragraph 3 F. Seller
shall not be entitled to any proprietary  information  which includes Buyer's an
internal work product.

      C.    (1) Buyer shall have twenty-four (24) months from the Effective Date
of this Agreement to obtain All Approvals (the "Approval  Period").  If Buyer is
unable to obtain All Approvals within the Approval  Period,  provided that Buyer
is diligently  seeking All Approvals,  upon written notice to Seller and payment
of the Additional  Deposit in accordance with Paragraph 4C, above,  Seller shall
grant to Buyer four (4)  extensions  of the  Approval  Period,  each for six (6)
months.  The first such extension period shall be known as the "First Extension"
and the second such  extension  period shall be known as the "Second  Extension"








                                       A-9
<PAGE>

and the third  such  extension  period  shall be known as the  "Third  Extension
Period"  and the fourth  such  extension  period  shall be known as the  "Fourth
Extension Period." The right to the First through Fourth Extension Periods shall
not be  applicable  to the  grant of the  Rezoning  set forth in  Paragraph  5B.
However,  these extension  periods shall be applicable if the  municipality  has
granted the rezoning  and it is being  challenged  by a third party.  The Fourth
through Twelfth Extension  Payments are not refundable and are not applicable to
the purchase  price.  These  extension  payments are independent of the $125,000
Option Payments due under Paragraph 4 G.

      (2)   In  the event this  Agreement is extended for any of the reasons set
forth in Paragraph  5(D),  each six month time period by which this Agreement is
extended beyond the expiration of the Fourth  Extension period shall be known as
the Fifth  through  Twelfth  Extension  Periods,  respectively.  Buyer shall pay
Seller the sum of $100,000 for the Fifth  Extension  Period and $100,000 for the
Sixth  Extension  Period.  Buyer  shall pay Seller the sum of  $200,000  for the
Seventh  Extension  Period and $200,000 for the Eighth Extension  Period.  Buyer
shall pay Seller the sum of $300,000 for the Ninth Extension Period and $300,000
for the Tenth Extension  Period.  Buyer shall pay Seller the sum of $400,000 for
the Eleventh Extension Period and $400,000 for the Twelfth Extension Period.

      (3)   Not later than ten (10) days prior to the end of the Approval Period
and not later than ten (10) days prior to the end of any prior extension period,
Buyer shall deliver  written notice to Seller as to whether or not Buyer intends
to exercise  its right to an  extension,  as set forth above  together  with any
applicable  payment due for that extension  period.  Failure of Buyer to deliver
such  notice  shall be deemed to be a default  under this  Agreement  and Seller
shall proceed in accordance with Paragraph 9, below.

      D.    Buyer shall have the right, but not the obligation, to undertake any
litigation  in  order  to  obtain  All  Approvals  with  conditions   reasonably
satisfactory to Buyer including,  without  limitation,  the right to litigate to
the ultimate  decision maker.  While this Agreement is in effect,  Seller is not
permitted to initiate  litigation  challenging  any  Approval for the  Premises.
However,  if any party,  person or entity  including,  but not limited to, Buyer
initiates  litigation or otherwise  appeals any Approval or permit or the denial
of any Approval or permit for the  Premises or the  revocation  thereof,  or any
administrative  actions or inactions or the denial or  revocation  thereof,  the
time  periods in this  Agreement  shall be extended by the length of time during
which any such  appeal is  pending,  but not beyond a date which is 8 years from
the  date  of this  Agreement..  Notwithstanding  the  foregoing,  this  tolling
provision shall not apply if the municipality  denies the rezoning request,  but
shall  apply  if the  municipality  grants  the  rezoning  and the  rezoning  is
challenged by a third party. Similarly, the time periods in this Agreement shall
be extended by the length of time during which any moratorium is in effect as to
utility connections or usage, approvals,  permits or applications related to the
development  of the  Premises,  but not  beyond a date which is 8 years from the
date of this Agreement..  If an  appeal/litigation  results in the denial of any
Approval  or sustains  the denial of any permit or  Approval  by a  governmental
agency  relating to the  development  of the Premises,  Buyer has the right,  by
written  notice to Seller  within  twenty  (20) days after the date of the Court
Order memorializing such denial, to: (1) waive any such Approval and close title
to the  Premises  and  pay the  Purchase  Price  therefore  in  accordance  with
Paragraph 2 of this Agreement;  or (2) terminate this Agreement,  in which event
neither  party shall have any further  obligation  to the other except for those
obligations that expressly survive the termination of this Agreement

      E.    Seller  agrees to execute  promptly  all  applications  and  related
documents  that are  presented  to Seller by Buyer in  connection  with  Buyer's
pursuit  of All  Approvals,  at no  cost  to  Seller.  All  costs  and  expenses
associated  with obtaining All Approvals shall be the  responsibility  of Buyer.
Buyer has total control of the approval process, including,  without limitation,







                                      A-10
<PAGE>

the right to designate all professionals who will be engaged during the approval
process.  Buyer shall also apply for other  Approvals  within the foregoing time
period.

      F.    Reserved.

      G.    Buyer  has the right to waive the  receipt of All  Approvals  at any
time and proceed to Closing upon ten (10) days written notice to Seller. In such
event, the Purchase Price shall be determined by the number of Homes approved in
the preliminary site plan/subdivision  approval granted by the Township Planning
Board, or if no such approval has been granted,  the Purchase Price shall be the
Minimum Purchase Price for the Premises.

      H.    Seller  shall join Buyer: (1) in  filing/recording a condominium map
or subdivision  plat in the County Clerk's office;  and (2) in the dedication of
streets,  rights-of-way,  and any easements to the extent reasonably  necessary,
prior or  subsequent to the Phase I Closing;  provided  however,  that:  (a) any
plats, plans, dedications of streets, rights-of-way,  and easements are approved
in writing by Seller,  which  approval  shall not be  unreasonably  withheld  or
delayed;  and (b) all costs incident thereto shall be paid by Buyer.  Buyer will
post the necessary performance guarantees and escrow fees and pay any inspection
fees required by the Township and County  Planning Boards in order to permit the
condominium  map  and/or  subdivision  plat to be  filed in the  County  Clerk's
Office. If Buyer has posted said guarantees and paid such fees, and Closing does
not occur pursuant to this Agreement (1) as a result of Seller's default; or (2)
Seller  develops the Premises in accordance  with any Approvals for the Premises
obtained by Buyer,  Buyer shall  terminate the bonds  (except if the  obligation
survives  a Phase I  Closing)  and  Seller as  obligee  under  these  bonds must
consent.  Buyer shall be entitled to a refund of its still outstanding  deposits
and  inspection  fees  from  the  relevant  governmental  authority.  It is  the
obligation of a successor developer to replace the guarantees and fees.

      I.   If any Approval requires that a Developer's Agreement be entered into
with the  appropriate  governmental  agency prior to the Phase I Closing,  Buyer
shall  submit  such  Developer's  Agreement  to Seller  for its  prompt  review,
approval and  signature,  which shall not be  unreasonably  withheld or delayed.
Buyer shall indemnify and hold Seller harmless for any obligations arising or in
any way connected with the Developer's Agreement it is signing on Buyer's behalf
and shall name Seller as an Obligee on any bonds,.  J. Seller shall be deemed to
have  approved  any  application,  document  and/or plan  delivered to Seller if
Seller fails to respond to Buyer within ten (10) business days of said documents
being provided to the Seller.

      K.    Buyer  and Seller  acknowledge  and agree that the  Premises are not
currently zoned for Buyer's intended use as a residential condominium and that a
rezoning of the Premises will be required as part of the Governmental  Approvals
Contingency.

      L.    Buyer  and  Seller  acknowledge  and agree that the  Premises  are a
portion of Block 1201 Lot 2.18 and accordingly,  Buyer must obtain a subdivision
of Block 2.18 Lot 1201 to create  Tract II and Tract III as  generally  shown on
Exhibit A.  Seller  shall agree to changes in the  location  of the  subdivision
lines required by governmental  reviewing agencies and authorities provided that
such changes would not adversely affect Seller's ability to use Tract II for its
current use..

      M.   Buyer  shall name Seller as a joint obligee on all performance  bonds
in  connection  with  development  of Phase I and Phase II to the extent that it
covers work on land not  acquired by Buyer.  Seller must release the bond if the










                                      A-11
<PAGE>

primary  obligee  releases it as a function of the completion of the obligations
covered by the bond(s).

                       6. TITLE AND SURVEY INVESTIGATION

      A. TITLE AND SURVEY

            (1) Within five (5) days from the Effective Date of this  Agreement,
Seller  shall  deliver  to Buyer a copy of the most  current  commitment  and/or
binder and/or policy used to insure title to the Premises and any surveys of the
Premises in Seller's possession.

            (2)  Within  sixty  (60)  days  from  the  Effective  Date  of  this
Agreement,  Buyer shall deliver to Seller (a) a copy of the commitment to insure
title  from the  title  company  chosen  by Buyer or the  report  from the title
company  chosen by Buyer  refusing to issue a  commitment  to insure  marketable
title ("Buyer's  Title  Report"),  together with a list of items which appear on
Buyer's Title Report to which Buyer objects;  and (b) a certified  survey of the
premises  together  with a list of any items  appearing  on the  survey to which
Buyer objects.

            (3) Not later than twenty (20) days after  Seller  receives  Buyer's
title and survey  objections,  Seller shall notify Buyer which of the objections
Seller shall cure prior to or at the Phase I Closing, including when and in what
manner  said  items  are to be cured.  If Buyer is  dissatisfied  with  Seller's
response  or lack of  response,  Buyer has from the  latter of (a) ten (10) days
from receipt of Seller's  response or (b) the  expiration  of the  Investigation
Period to either:  (i)  terminate  this  Agreement  and  receive a refund of the
Deposit  together  with  all  interest  accrued  thereon,  in which  event  this
Agreement  shall  become null and void and neither  party shall have any further
obligation to the other; or (ii) agree to accept the exceptions  which appear on
the Title Report and which are not  identified as those which are to be cured by
the Seller prior to or at the Phase I Closing (the "Permitted  Exceptions")  and
proceed under this Agreement.

            (4) If Seller  agrees to cure under  Paragraph  6(A)(3)  above,  but
fails to do so,  Buyer has the right to:  (i) delay any Phase  Closing to a date
specified by Buyer so that Seller or Buyer  removes or cures such  objections at
Seller's  expense;  or (ii) close title to that Phase for which Closing is being
held  and pay the  Purchase  Price  (or  portion  thereof)  when  due;  however,
sufficient  sums  from  the  proceeds  due  Seller  at such  Phase  Closing,  as
determined by Buyer's title insurance company,  shall be placed into escrow with
Buyer's  title  insurance  company,  and shall be used by Buyer to cure or clear
such objections at Seller's expense,  with Seller being obligated to satisfy any
deficiency and Buyer  refunding any portion  remaining after curing said defect;
or (iii)  terminate this Agreement and receive a full refund of the Deposit plus
all interest  accrued thereon plus Approvals costs  (including,  but not limited
to,  consultants',  engineering and application fees) and interest  thereon,  in
which event this  Agreement  shall become null and void and neither  party shall
have any further obligation to the other.

      B. As a condition  precedent to Buyer's  closing title to any Phase of the
Premises,  at each  Closing,  Seller shall convey fee simple,  marketable  title
insurable at regular rates by Buyer's title insurance  company,  subject only to
the Permitted Exceptions.

      C. From the date of this  Agreement,  Seller  shall not permit any further
encumbrance  to appear of record on the Premises  without  Buyer's prior written
approval which shall not be  unreasonable  withheld or delayed.  Notwithstanding
the foregoing,  Seller can mortgage the Premises before the Phase I Closing from
an institutional  lender provided that either (I) the amount of the mortgage can








                                      A-12
<PAGE>

be  satisfied  from the Phase I Closing  Proceeds or (ii) the lender  provides a
recordable  Discharge  of  Mortgage  for the  Premises  at the  time of the loan
transaction which Discharge of Mortgage shall be held in escrow by Buyer's title
insurance  company.  Seller can mortgage the Premises  from a  non-institutional
lender  provided that the lender provides a Discharge of Mortgage at the time of
the loan  transaction  which  Discharge  of Mortgage  shall be held in escrow by
Buyer's title company.

      D. Within  thirty (30) days of the date of  execution  of this  Agreement,
Seller shall cause any  person(s) or entities who have liens on the Premises to:
(i)  deliver to Buyer a  schedule,  certified  by such  lienholder,  showing the
amount of money due on its lien; (ii) affirm to Buyer in a signed document which
shall be in recordable  form,  that to the extent payments are made to Seller in
accordance with the terms and amounts set forth in this Agreement,  as adjusted,
said  lienholder  agrees to release its lien at the time of each Phase  Closing.
Seller shall provide Buyer with evidence of the  appropriate  release  documents
prior to each Phase Closing.

                            7. ENVIRONMENTAL MATTERS

      A. Seller  represents  and  warrants to Buyer  that:  with  respect to the
portion  of the  Premises  to be  conveyed  to  Buyer  (1)  that  Seller  has no
knowledge,  about Hazardous  Substances (as defined in Subparagraph 7(B), below)
on,  under,  at,  emanating  from or  affecting  the  Premises in  violation  of
Environmental  Laws (as defined in Subparagraph 7(B), below); (2) to the best of
Seller's  knowledge  Seller has never used the  Premises  for the use,  storage,
release,  dumping,  treating or disposal of any Hazardous  Substance  except for
testing diesel fuel generators.;  (3) to the best of Seller's knowledge,  Seller
has not created, suffered or permitted the Discharge (as defined in Subparagraph
7(B),  below) of any  Hazardous  Substance  on,  under,  at,  emanating  from or
affecting the Premises,  nor directly or indirectly  into any waterways  flowing
upon, under or near the Premises, nor does Seller have any knowledge of any such
Discharge of a Hazardous  Substance by any third party;  (4) there is no pending
or threatened claim, directive,  suit, action,  complaint,  notice of violation,
investigation  or  proceeding  by any  governmental  authority  or  third  party
respecting the Premises arising out of the violation or alleged violation of any
Environmental Laws or the Discharge of any Hazardous  Substance;  (5) Seller has
provided  Buyer with all  Environmental  Documents  (as defined in  Subparagraph
7(B),  below) in Seller's  possession or under Seller's  control  concerning the
Premises;  and (6) the New Jersey  Department of  Transportation  placed crushed
stone of the  premises  in  connection  with the  construction  of Route 287 and
Seller has no knowledge about the nature of the crushed stone and whether or not
it contained  Hazardous  Substances or any other discharges which may have taken
place in connection with construction of Route 287.

      B. The following definitions shall apply in the Agreement:

            1.  "Discharge"  shall  mean  the use,  generation,  transportation,
manufacture,  treatment,  delivery,  storage,  handling,  release,  spill, leak,
disposal, pouring, emitting, emptying or dumping of a Hazardous Substance.

            2.   "Environmental   Documents"   shall   mean  all   environmental
documentation  in the  possession or under the control of Seller  concerning the
Premises or its environs,  including without limitation,  Phase I reports or any
other  plans,  reports  and  sampling  results and any  correspondence  or other
documentation to or from any governmental authority.













                                      A-13
<PAGE>

            3.  "Environmental  Laws" (and  individually,  "Environmental  Law")
shall  mean each and  every  applicable  federal,  state,  county  or  municipal
statute, ordinance, rule, regulation, order, code, directive or requirement.

            4. "Hazardous  Substance"  shall include,  without  limitation,  any
regulated  substance,  toxic substance,  hazardous  substance,  hazardous waste,
pollutant or contaminant defined or referred to in Environmental Laws.

      C.  Seller  shall  use its  best  efforts  to  deliver  to  Buyer,  within
forty-five (45) days of the date of this Agreement,  a  nonapplicability  letter
issued by the Industrial Site Evaluation Element of the New Jersey Department of
Environmental Protection ("NJDEP") pursuant to the Industrial Site Recovery Act,
N.J.S.A.   13:1K-6   ET   SEQ.,   with   respect   to  this   transaction   (the
"Nonapplicability Letter"). Seller shall promptly apply for the Nonapplicability
Letter and shall provide Buyer with a copy of the application and submission. In
the event that Seller fails to deliver the Nonapplicability Letter as aforesaid,
Buyer shall retain the right to terminate  the  Agreement of Sale for failure to
provide  the LNA  until  the date that the LNA is  procured  but not later  than
expiration of the Investigation Period.

      D. Reserved.

      E. In the event that Seller  receives notice from Buyer or any third party
or  entity  at any time  prior to any  Phase  Closing  that any  Discharge  of a
Hazardous  Substances  has been  discovered at the Premises,  and such Discharge
occurred after the date on which Buyer conducts its  environmental due diligence
of the Premises,  Seller shall provide  notice to Buyer within three (3) days of
Seller's receiving such Notice from a third party or entity. Seller shall advise
Buyer,  within  thirty (30) days of  Seller's  receipt of such  notice,  whether
Seller shall address or remediate  such  Discharge  prior to the next Closing in
accordance  with  Environmental  Laws  and  provide  Buyer  with an NFA or other
similar  documentation  evidencing  that the  Discharge  has been  addressed  or
remediated in accordance with  Environmental  Laws. If Seller advises Buyer that
it shall not address or remediate such  Discharge,  Buyer shall have the option,
on thirty (30) days' prior written  notice to Seller,  to either:  (1) terminate
this  Agreement  in which event this  Agreement  shall  become null and void and
neither  party shall have any further  obligation  to the other except for those
obligations  which expressly  survive the termination of this Agreement;  or (2)
accept the Premises  with the Discharge and proceed to the next Phase Closing in
accordance with this Agreement in which event the term of the Agreement shall be
extended as required by Buyer to obtain  approval for the required  remediation.
Notwithstanding the foregoing,  Seller shall not have any obligations under this
Paragraph  if  the  Discharge  was  caused  by  Buyer  or  Buyer's  contractors,
consultants or purchasers in which event Buyer shall be liable for any necessary
remediation.  In addition,  Buyer shall be responsible for future  environmental
conditions of the Phase II after the Phase I Closing provided that the Discharge
was not caused by Seller or Seller's  contractors,  consultants or purchasers in
which event Seller shall be liable for any necessary  remediation and that Buyer
takes title to the Phase II Property.

      F. In the event that  Seller  advises  Buyer that it will  address  and/or
remediate the Discharge  pursuant to Paragraph 7 (E), above, and Seller fails to
provide  the NFA prior to the date set for the Phase I Closing,  then Buyer may,
at its option:  (1) delay any Closing to a date  specified by Buyer,  and Seller
shall obtain the NFA, at Seller's expense, prior to the date specified by Buyer;
or (2)  close  title to and pay the  total  Purchase  Price for the Phase of the
Premises to be conveyed; provided, however, that a sum equal to all or a portion
of the  proceeds  due Seller at Closing,  which shall be  determined  jointly by
Buyer's and Seller's environmental consultants, shall be placed into escrow with
Buyer's attorney,  which shall be used by Seller and Buyer jointly to address or
remediate  such Discharge and obtain the NFA at Seller's  expense.  In addition,








                                      A-14
<PAGE>

Seller shall be  obligated to pay to Buyer any sums  expended by Buyer in excess
of the sum placed in escrow,  and Buyer's  attorney  shall  refund to Seller any
sums  remaining in escrow;  or (3) terminate  this  Agreement and receive a full
refund of the Deposit and any  Additional  Deposit(s)  and all interest  accrued
thereon,  together with the cost of All Approvals  accrued by Buyer after Seller
advised Buyer that it will address and/or remediate the Discharge in which event
this  Agreement  shall  become  null and void and  neither  party shall have any
further obligation to the other except as set forth herein.

      G. In no event shall any  remediation by Seller pursuant to this Paragraph
7  involve  any  engineering  or  institutional   controls,   including  without
limitation,  capping, a deed notice, a groundwater classification exception area
or a well restriction area without the consent of Buyer..

      H. The provisions of this Paragraph 7 shall survive all Phase Closings.

                                8. EMINENT DOMAIN

      A. If,  prior to the any  Closing,  any  condemnation  or  eminent  domain
proceeding has been commenced by any governmental or  quasi-governmental  entity
or any utility authority, company or other agency against all or any part of the
Premises,  Seller  shall so  notify  Buyer  and  shall  provide  Buyer  with all
information  concerning  such  proceedings.  Buyer may then, at its sole option,
either:  (a)  terminate  this  Agreement by providing  written  notice to Seller
within twenty (20) days after receipt of the notice from Seller,  in which event
this Agreement  shall become null and void and Seller shall  immediately  return
the Deposit and any  Additional  Deposit(s)  together with all interest  accrued
thereon;  or (b) proceed to Closing as provided  hereunder,  in which case,  any
award in  condemnation  and/or unpaid  claims or rights in connection  with such
condemnation  shall be assigned to Buyer at Closing,  or if paid to Seller prior
to Closing,  credited to Buyer against the Purchase  Price at such  Closing.  If
Buyer does not terminate this Agreement,  Seller shall: (a) not adjust or settle
any  condemnation  proceedings  without the prior written approval of Buyer; (b)
keep Buyer  fully  advised as to the  status of the  proceedings;  and (c) allow
Buyer to participate in all proceedings.  Condemnation  shall include a transfer
resulting from negotiations under threat of taking.

      B. From the date of this Agreement, Seller shall not be permitted to
communicate with the Municipality or County regarding possible governmental
acquisition of the Premises for open space and/or park land without Buyer's
written consent, which may be withheld for any reason.

      C. If the Municipality or County exercises its powers of condemnation or
eminent domain for the purpose of acquiring the property for open space and/or
park land, and Buyer elects to terminate this Agreement, Seller will reimburse
to Buyer (i) the Deposit and Additional Deposits paid to Seller, (ii) ten (10%)
percent of the actual condemnation or settlement amount for the acquisition or
taking of the Premises in excess of the Minimum Purchase Price, if any, in
compensation for the value added to the Premises by Buyer by virtue of this
Agreement and Buyer's efforts in endeavoring to obtain All Approvals for the
Premises and (iii) Buyer's fees to consultants and other third parties in
pursuing the Rezoning and All Approvals provided that payment of this sum shall
not reduce the actual condemnation or settlement amount to Seller below the
Minimum Purchase Price..

                                   9. DEFAULTS

      A.  If  Buyer  or  Seller  defaults  as to any of the  provisions  of this
Agreement,  and the nondefaulting party serves the defaulting party with written
notice  specifying the default,  the defaulting  party has twenty (20) days from
receipt of such notice to cure such default.  Failure of the defaulting party to








                                      A-15
<PAGE>

cure the  default  within  such time  period  shall  automatically  entitle  the
nondefaulting party to exercise its rights set forth below.

      B. Buyer's failure to cure a default:  Seller shall retain the Deposit and
any Additional  Deposits as and for  liquidated  damages as Seller's sole remedy
against  Buyer,  in which event  Seller shall have no further  recourse  against
Buyer  except  with  respect  to its rights as an oblige  under any bond  posted
pursuant to this  Agreement and this  Agreement  shall then become null and void
and  neither  party shall have any further  obligation  to the other  except for
those obligations which expressly survive the termination of this Agreement.

      C. Seller's failure to cure a default: Buyer shall be entitled to specific
performance  and direct  costs  limited to the value of the  Premise as its sole
remedy against Seller.

      Notwithstanding  the foregoing,  the parties shall be liable to each other
for monetary  damages in the event of a false  representation  set forth in this
Agreement.

                           10. REAL ESTATE COMMISSION

      A. Seller and Buyer  hereby  represent to each other that they have had no
dealings with any broker,  salesperson  or agent in connection  with the sale of
the Premises  other than SBWE,  Inc. and Richard  Meyers.  The parties agrees to
defend and indemnify each other  (including  its  affiliates,  subsidiaries  and
officers)  harmless  from and against any and all claims,  liabilities,  losses,
damages and expenses (including court costs and attorney's fees) asserted by any
and all other brokers,  salespersons  or agents with whom they have had dealings
in   connection   with  the  sale  of  the  Premises   inconsistent   with  this
representation.

      B.  Seller  shall be  responsible  for any and all  brokerage  commissions
payable to the party named in Subparagraph 10(A).

                               11. NEW JERSEY LAW

      This Agreement will be construed in accordance  with the laws of the State
of New Jersey.

                     12. POSSESSION ON CLOSING/RISK OF LOSS

      Possession of the Premises,  including, without limitation, all buildings,
garages  and other  structures,  shall be  delivered  to Buyer by Seller at each
Phase Closing:  (1) vacant and free of any leases,  licenses or rights of use by
others;  and  (2)  free  of all  furniture,  furnishings,  fixtures,  equipment,
machinery, inventory, drums and/or containers. Until delivery of the Premises at
each Phase Closing, all risks of loss with respect to the Premises,  except with
respect to Buyer's activities on the Premises,  shall be Seller's.  Seller shall
deliver the  Premises at each Phase  Closing in the same  physical  condition as
exists  at the  time of  execution  of this  Agreement,  with the  exception  of
conditions resulting from Buyer's activities on the Premises.

                   13. TAXES, ADJUSTMENTS AND INCIDENTAL COSTS

      A. Seller shall keep all real estate taxes current for the entire Premises
during the term of this  Agreement.  As Phase  Closings  occur,  Buyer  shall be
responsible  for the real  estate  taxes only on the Phases of the  Premises  to
which it has taken title.











                                      A-16
<PAGE>

      B. Except as set forth in Paragraph 3 F, all assessments for  improvements
(confirmed or unconfirmed),  as of each Phase Closing,  except those which are a
result of Buyer's  Approvals for the Premises,  shall be paid by Seller prior to
each Phase Closing or shall be deducted from the Purchase Price. Assessments for
improvements shall include, but are not limited to, assessments for water, sewer
and other charges  against the Premises.  This  paragraph  does not apply to any
increase in real estate  taxes  relating to a  reassessment  of the value of the
land which is governed by Paragraph 13 F.

      C. In the event Seller fails to keep taxes or assessments for improvements
current,  and Buyer is thereby  prevented  from  applying for or  obtaining  any
Approval,  including  a  rezoning,  Buyer  shall  have  the  right,  but not the
obligation,  to pay all outstanding  real estate taxes or  assessments.  In such
event, Seller shall immediately  reimburse Buyer for all amounts so expended. In
the event Seller fails to reimburse Buyer immediately,  interest shall accrue on
the amount so expended by Buyer at the rate of twelve (12%) per cent PER ANNUM.

      D. All tax apportionment,  except rollback taxes, shall be on the basis of
the fiscal year used by the municipal  taxing authority and shall be prorated to
the date of each Phase Closing. If, at Closing, the tax rate for the fiscal year
in which the Closing occurs is not fixed, the tax apportionment at Closing shall
be tentative and shall be made on the basis of the preliminary tax bills for the
Premises.  A final tax  adjustment  shall be made promptly after final tax bills
have been issued.

      E. Seller shall pay for all rollback taxes, if any,  against the Premises.
If, at the time of Closing, the final rollback tax bill has not been determined,
the  rollback  tax  adjustment  at  Closing  shall  be  tentative  and  shall be
determined  by Buyer's title  company,  which shall hold in escrow the estimated
amount of any such adjustment until the final rollback tax adjustment is made. A
final  rollback tax  adjustment on the basis of the final  rollback tax bill for
the Premises shall be made promptly after such bill has been issued.

      F. Buyer shall be liable for and shall pay for any increase in real estate
taxes attributable to a reevaluation of the Premises arising from the receipt of
Approvals  or the filing of the Master  Deed until all phases are  purchased  or
Buyer notifies Seller that it is not purchasing the next phase.

                                   14. NOTICES

      All notices,  demands or requests under this Agreement shall be in writing
and shall be hand delivered by messenger (with receipt acknowledged in writing),
delivered by courier guarantying  overnight delivery (with receipt  acknowledged
in writing) or delivered by electronic  facsimile (with receipt  acknowledged by
automated electronic response) to the parties as follows:

            TO BUYER:   K. Hovnanian North Jersey Acquisitions, L.L.C.
                        Attn: Joseph F. Riggs
                        President-Northeast Region
                        110 Fieldcrest Avenue, CN 7825
                        Edison, New Jersey 08818-7825
                        Phone: (732)-225-4001
                        Fax: (732) 225-0131
















                                      A-17
<PAGE>

                        K. Hovnanian  North Jersey  Acquisitions,  L.L.C.
                        Attn: James Driscoll
                        President
                        110 Fieldcrest Avenue, CN 7825
                        Edison, New Jersey 08818-7825
                        Phone: (732) 225-4001
                        Fax: (732) 225-3549

                        K. Hovnanian  North Jersey  Acquisitions,  L.L.C.
                        Attn: Francine  Chesler,  Esq.
                        Legal  Counsel
                        110  Fieldcrest Avenue, CN 7825
                        Edison, New Jersey 08818-7825
                        Phone: (732) 225-4001
                        Fax: (732) 225-3530
                        E-Mail:

            TO SELLER:  Dewey Electronics Corporation
                        27 Muller Road
                        Oakland, New Jersey 07436
                        Phone:
                        Fax:
                        E-Mail:

                        With a Copy to Seller's Counsel:

                        Jerome Vogel, Esq.
                        Jeffer Hopkinson & Vogel
                        1600 Rt. 208 N
                        Box 507
                        Hawthorne, NJ 07507
                        Phone: 973-423-0100
                        Fax:  973-423-5614
                        E-Mail:

      Either party may change its notice address,  entity or party upon not less
than ten (10) days prior written notice to the other party. All notices shall be
effective when received.

                              15. CAPTIONS/HEADINGS

      All captions and  headings  are for  reference  only and are not deemed to
define, limit, explain or amplify any provisions of this Agreement.

                            16. DRAFTING OF AGREEMENT

      This Agreement,  as a matter of convenience to both parties, was initially
prepared  by the  attorney  for Buyer.  Both  parties  agree that if there is an
ambiguity in this Agreement,  such ambiguity shall not be resolved against Buyer
solely on the basis that the Agreement was prepared by Buyer's attorney.


















                                      A-18
<PAGE>

                            17. INITIALING BY PARTIES

      The  parties'  initials  at the  bottom  of each  page of this  Agreement,
including each of the exhibits hereto,  constitute  acknowledgment that each has
read the  Agreement  and that all terms  hereof were  complete  and  understood.
Specific  changes,  deletions and/or additions to this typed Agreement must also
be  initialed  by both  parties,  and  initials  of  specific  changes on a page
supersede initials at the bottom of the same page.

                   18. ENTIRE AGREEMENT/COUNTERPARTS/SURVIVAL

      A. This Agreement constitutes the entire agreement between the parties. No
representations  have been made by the parties and the realtors or their agents,
except as set forth herein.  Any  modifications and amendments to this Agreement
shall be in writing  signed by Buyer and Seller.  This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be original, but
all of which together shall constitute one and the same instrument.

      B.  Notwithstanding  any  presumption  to  the  contrary,  all  covenants,
conditions  and  representations  contained in this  Agreement  which,  by their
nature,  impliedly or expressly involve performance in any way after Closing, or
which cannot be  ascertained to have been fully  performed  until after Closing,
shall survive Closing.

                           19. EXECUTION OF DOCUMENTS

      Each party shall, at the other party's request,  take such further actions
and execute such further  documents that are reasonably  necessary to effectuate
the purposes and terms of this  Agreement.  This  obligation  shall  survive the
Phase Closing(s).

                                  20. RECORDING

      Except as set forth in this  Paragraph,  neither  this  Agreement  nor any
document  referenced in this Agreement shall be recorded in any public office by
or on behalf of either party. Any recording not permitted by this Agreement may,
at the other party's option, be a default by the party doing the recording or on
whose  behalf  such  recording  was  done.   Buyer  and  Seller  shall  execute,
contemporaneously  with  the  execution  of  this  Agreement,  the  "Short  Form
Agreement"  attached  hereto as  Exhibit H and the  "Cancellation  of Short Form
Agreement" attached hereto as Exhibit I. Buyer is authorized to record the Short
Form  Agreement in the Bergen  County  Clerk's  Office  after the  Investigation
Period has expired.  The  Termination of Agreement shall be held by Escrow Agent
until the earlier of (a) the final Phase Closing; (b) written authorization from
Buyer to release  the  document  to Seller;  or (c) upon the Order of a court of
competent jurisdiction.  Notwithstanding the foregoing, Seller may disclose this
Agreement  and the terms  hereof as  necessary  to  comply  with any  applicable
Securities and Exchange Commission filing and disclosure requirements.

    Buyer has the  right to file a Notice of  Settlement  in the  Bergen  County
Clerk's Office.

                           21. BUYER'S REPRESENTATIONS

      Buyer  represents that it has the full right and authority to execute this
Agreement and consummate all of the transactions hereby contemplated. Buyer is a
limited liability company which is duly organized and validly existing under the
laws of the State of New Jersey and is in good standing.











                                      A-19
<PAGE>

Buyer  further   represents   that  it  will  not  make,   any   commitments  or
representations  to any applicable  governmental  authorities or to adjoining or
surrounding property owners, which would, in any manner, be binding upon Seller,
or interfere with Seller's ability to improve the Premises,  if Buyer terminates
this  Agreement  or Buyer  fails to close on all Phases.  These  representations
shall be true and correct as of each Phase  Closing and shall survive each Phase
Closing.

                          22. SELLER'S REPRESENTATIONS

      A. Seller represents and warrants,  to the best of Seller's knowledge,  as
follows:

            1. AUTHORITY.  Subject to Paragraph 26.A:  Seller has the full right
and authority to execute this Agreement and  consummate all of the  transactions
hereby  contemplated.  This  Agreement  has been duly  authorized,  executed and
delivered  by  and  on  behalf  of  Seller.  The  execution,  delivery  and  the
performance  of and  compliance  with this Agreement by Seller will not (with or
without the giving of notice or lapse of time,  or both) result in any violation
of, or be in conflict  with,  or  constitute a default  under,  the terms of any
contract,  note, indenture or other agreements to which Seller is a party, or of
any  judgment,  decree,  order,  statute,  rule or regulation to which Seller is
subject.

            2. NO ATTACHMENT. There are no attachments,  executions, assignments
for the benefit of creditors  or any pending  proceedings,  either  voluntary or
involuntary, in bankruptcy, which are contemplated or threatened against Seller.

            3. NO  LITIGATION.  There are no  existing  or  pending  litigation,
claims,  condemnations or sales in lieu thereof,  contracts of sale,  options to
purchase or rights of first  refusal  with  respect to the  Premises or any part
thereof,  nor have any such actions,  suits,  proceedings,  claims or other such
matters  been,  to the best of  Seller's  knowledge  and belief,  threatened  or
asserted.

            4.  NO  ASSESSMENTS.  Seller  has  received  no  notice  and  has no
knowledge of any pending  improvements,  liens or special assessments to be made
against the Premises by any governmental authority.

            5. ALL OWNERS BOUND.  The  execution of this  Agreement by Seller is
effectual  without the joinder of any other party and no  signatures  other than
Seller's will be required to be affixed to the deed of  conveyance  hereunder in
order to close title as contemplated by the Agreement.

            6.  NO  VIOLATION.  There  are no  violations  of law,  statutes  or
ordinances  against  the  Premises  nor any  notice  thereof,  nor have any such
violations been committed by Seller.

            7. FIRPTA. Seller represents that it is not now, nor will be at time
of closing,  a "foreign  person" as  described  in Section  1445 of the Internal
Revenue Code of 1986, as amended.

            8. ACCURACY.  All of the  documentation  supplied by Seller to Buyer
pursuant to this  Agreement,  whether an exhibit to this Agreement or otherwise,
is true and accurate in all material respects.

            9.  Seller  has not made,  and will not  make,  any  commitments  or
representations to any applicable governmental  authorities,  or to adjoining or
surrounding  property owners, which would, in any manner, be binding upon Buyer,
or interfere with Buyer's ability to improve the Premises with the  construction
of Homes.








                                      A-20
<PAGE>

            10.  Seller has granted no person any contract  right or other legal
right to the use of any portion of the Premises,  or the  furnishings  or use of
any facility or amenity on, or relating to, the Premises.

      B. The  representations  and warranties set forth in this Paragraph and in
Paragraph 7, above shall: (1) be true and correct as of each Phase Closing;  and
(2) survive each Phase Closing. In addition,  the truth of these representations
and  warranties  is  a  condition   precedent  to  Buyer's  performance  of  its
obligations under this Agreement. Seller has an affirmative obligation to notify
Buyer of any changes in the  representations  and warranties  during the term of
this Agreement.

      C. If any of  Seller's  representations  or  warranties  set forth in this
Agreement are not true as of the date of each Phase Closing,  Buyer, at its sole
option,  shall have the right to either:  (1) close  title to the portion of the
Premises to be conveyed at the Phase  Closing;  or terminate  this Agreement and
sue  Seller for any  damages,  which  damages  shall not exceed the value of the
Premises.  Seller shall have no liability for damages if the representations and
warranties  are not true because of a change in the law between the date of this
Agreement and the date of Closing.

      D. Reserved.

                       23. LICENSE TO ERECT SIGNS/TRAILERS

      A. Buyer is hereby granted the right to erect signs and place sales and/or
construction   trailers  with  adequate  parking  at  appropriate  locations  as
determined by Buyer on any portion of the Premises after the Rezoning Period and
before or after any Phase  Closing.  In addition,  Buyer shall have the right to
have temporary utility connections made to the trailers.

      B. The right to erect  signs or place  trailers  is subject to  compliance
with all governmental regulations after the Rezoning Period and so long as Buyer
maintains insurance naming Seller as an additional insured.

      C. If this  Agreement is  terminated  for any reason,  Buyer will promptly
remove,  at  Buyer's  sole cost and  expense,  any  signs,  trailers  or utility
connections installed in accordance herewith.

                    24. DOCUMENTS TO BE DELIVERED AT CLOSING

      A. Seller  shall  deliver the  following  documents at Closing in form and
substance  satisfactory  to Buyer and to Buyer's title  insurance  company:  (1)
Deed; (2) Affidavit of Title;  (3) Corporate  Resolution;  (4) Bonds.  (5) other
document(s)   required   under  the  Master  Deed  to  transfer   easements  and
rights-of-way;  (6)  (Partial)  Release of Mortgage;  (7)  UCC-3's;  (8) Blanket
Assignment  of  Rights  in  and  to  Approvals,   Surveys,   Engineering  Plans,
Environmental  and Other Reports and Other Matters;  (9)  Compliance  Agreement;
(10) Reserved(11) Reserved;  (12) Reserved. (13) Representations and Warranties;
(14) Paid  Receipt of Real  Estate  Broker;  (15) Tax and  Utility  Bills;  (16)
Certificate  of  Compliance  with  Section  1445 of the  Internal  Revenue  Code
(FIRPTA);  (17) Bill of Sale for Personalty;  (18) Reserved. (19) Reserved. (21)
Cross-Easement Agreement

      B. The Buyer shall deliver the  following  documents at Closing:
(1) Cross-Easement  Agreement; (2) Title Closing Statement; (3) Escrow
Agreement;  (4) Limited  Liability  Company  Certificate,  (5) Closing
proceeds and (6) copies of Bonds in which Seller is named as an oblige











                                      A-21
<PAGE>

      C. If Buyer takes title to the entire Premises by reference to a filed
Master Deed and gives back a Note and Mortgage to Seller for the Phase II
condominium units, Buyer at Seller's option, shall convey to Seller a contingent
assignment of all approvals and permits which would permit Seller to complete
the community in accordance with the approvals, permits and condominium
association documents in the event that Buyer does not take title to that
portion of the condominium which is located on the Phase II property.

                           25. ASSIGNMENT OF CONTRACT

      A. This Agreement is binding on the parties and on their respective heirs,
executors, administrators, successors and assigns.

      B. Buyer may not assign this Agreement except to another "Hovnanian"
affiliated entity or to an unrelated third party for financing purposes,
provided that such assignment shall not relieve Buyer of its obligations under
this Agreement ("Permitted Hovnanian Assignee"). In addition, once all
conditions precedent to Closing have been met, Buyer may assign all or a portion
of this Agreement to one or more unrelated entities provided that such
assignments shall not relieve Buyer of its obligations as more fully set forth
in this Agreement.

      C. Seller may assign this Agreement upon written notice to Buyer but
without the approval of Buyer provided that the Assignee assumes the obligations
under this Agreement and further provided that such assignment shall not relieve
Seller of its financial obligations under this Agreement..

                                26. OTHER MATTERS

      A. Notwithstanding anything to the contrary in this Agreement, Seller
shall be entitled to submit the sale of the Premises hereunder to a vote of its
stockholders at its next Annual Meeting, in which case (i) Seller shall use
reasonable efforts to obtain the approval of its stockholders, by the
affirmative vote of stockholders representing 2/3 of the outstanding common
stock, and (ii) the obligations of Buyer and Seller to complete the Closings
shall be conditioned upon receipt of such approval (and if such approval is not
obtained by March 20, 2005, either party may terminate this Agreement without
liability to the other). The date that Buyer receives notice of such approval is
referred to herein as the Seller Approval Date. Wherever any time period is
measured from the date or Effective Date of this Agreement, it shall mean the
Seller Notice of Approval Date.

      B Nothing in this Agreement is intended to, or shall, confer upon any
third party any legal or equitable right, benefit or remedy of any nature
whatsoever except to a Permitted Hovnanian Assignee.

      C. Nothing in this Agreement is intended or shall be deemed to constitute
a partnership, agency, employer-employee or joint venture relationship between
Buyer and Seller. Neither party shall incur any debts or make any commitments
for the other, except to the extent, if at all, specifically provided herein.



















                                      A-22
<PAGE>



      IN WITNESS WHEREOF, each party hereto, being authorized to do so and
intending to be legally bound hereby, has duly executed and entered into this
Agreement on the date first set forth above.

ATTEST/WITNESS:                K. Hovnanian North Jersey Acquisitions, L.L.C., a
                               limited liability company of the State of
                               Delaware, Buyer

/s/Richard Meyers          By:  /s/ James Driscoll
                           Name:  James Driscoll
                           Title:     Area President

ATTEST/WITNESS:            Dewey Electronics Corporation, a corporation of the
                           State of New York, Seller

/s/Carol F. Grofsik        By:  /s/ John H.D. Dewey
                           Name:  John H.D. Dewey
                           Title:   CEO

















































                                      A-23
<PAGE>
                                   APPENDIX B

                    Section 623 of the New York Business Corporation Law

Section 623.  Procedure to Enforce Shareholder's Right to Receive Payment
              for Shares

      (a) A  shareholder  intending to enforce his right under a section of this
chapter  to receive  payment  for his shares if the  proposed  corporate  action
referred to therein is taken shall file with the corporation, before the meeting
of  shareholders  at which the action is submitted to a vote, or at such meeting
but before the vote,  written  objection  to the  action.  The  objection  shall
include a notice of his election to dissent, his name and residence address, the
number and classes of shares as to which he dissents and a demand for payment of
the fair  value of his  shares if the  action is taken.  Such  objection  is not
required from any  shareholder  to whom the  corporation  did not give notice of
such meeting in  accordance  with this  chapter or where the proposed  action is
authorized by written consent of shareholders without a meeting.

      (b) Within ten days after the shareholders' authorization date, which term
as used  in  this  section  means  the  date on  which  the  shareholders'  vote
authorizing  such action was taken,  or the date on which such consent without a
meeting was obtained from the requisite shareholders, the corporation shall give
written  notice of such  authorization  or  consent by  registered  mail to each
shareholder who filed written  objection or from whom written  objection was not
required, excepting any shareholder who voted for or consented in writing to the
proposed  action and who  thereby is deemed to have  elected  not to enforce his
right to receive payment for his shares.

      (c) Within twenty days after the giving of notice to him, any  shareholder
from whom written  objection  was not  required and who elects to dissent  shall
file with the  corporation a written notice of such  election,  stating his name
and residence address,  the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares.  Any  shareholder  who
elects  to  dissent  from a merger  under  section  905  (Merger  of  subsidiary
corporation)  or  paragraph  (c) of  section  907  (Merger or  consolidation  of
domestic and foreign  corporations) or from a share exchange under paragraph (g)
of section 913 (Share exchanges) shall file a written notice of such election to
dissent  within  twenty  days  after the  giving to him of a copy of the plan of
merger or exchange or an outline of the material  features thereof under section
905 or 913.

      (d) A shareholder may not dissent as to less than all of the shares, as to
which  he has a  right  to  dissent,  held  by  him  of  record,  that  he  owns
beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial
owner as to less than all of the shares of such owner,  as to which such nominee
or  fiduciary  has a right  to  dissent,  held of  record  by  such  nominee  or
fiduciary.

      (e) Upon consummation of the corporate action, the shareholder shall cease
to have any of the rights of a shareholder  except the right to be paid the fair
value of his  shares  and any  other  rights  under  this  section.  A notice of
election may be withdrawn by the shareholder at any time prior to his acceptance
in writing of an offer made by the  corporation,  as provided in paragraph  (g),
but in no case  later  than  sixty  days  from the date of  consummation  of the
corporate action except that if the corporation fails to make a timely offer, as
provided in paragraph  (g), the time for  withdrawing a notice of election shall
be extended until sixty days from the date an offer is made.  Upon expiration of
such time,  withdrawal of a notice of election shall require the written consent
of the corporation. In order to be effective, withdrawal of a notice of election
must be accompanied by the return to the corporation of any advance payment made
to the  shareholder  as  provided in  paragraph  (g). If a notice of election is
withdrawn, or the corporate action is rescinded, or a court shall determine that
the  shareholder  is not  entitled to receive  payment  for his  shares,  or the






                                       B-1
<PAGE>

shareholder  shall otherwise lose his dissenters'  rights, he shall not have the
right to receive  payment for his shares and he shall be  reinstated  to all his
rights  as a  shareholder  as of  the  consummation  of  the  corporate  action,
including  any  intervening  preemptive  rights  and the right to payment of any
intervening  dividend or other  distribution or, if any such rights have expired
or any such dividend or distribution  other than in cash has been completed,  in
lieu thereof, at the election of the corporation, the fair value thereof in cash
as determined by the board as of the time of such expiration or completion,  but
without  prejudice  otherwise to any  corporate  proceedings  that may have been
taken in the interim.

      (f) At the time of filing the notice of  election to dissent or within one
month  thereafter the shareholder of shares  represented by  certificates  shall
submit the certificates  representing  his shares to the corporation,  or to its
transfer agent, which shall forthwith note  conspicuously  thereon that a notice
of election has been filed and shall return the  certificates to the shareholder
or other person who  submitted  them on his behalf.  Any  shareholder  of shares
represented  by  certificates  who fails to  submit  his  certificates  for such
notation as herein specified  shall, at the option of the corporation  exercised
by written notice to him within  forty-five days from the date of filing of such
notice of election to dissent,  lose his dissenter's  rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer of a certificate bearing
such  notation,  each new  certificate  issued  therefor  shall  bear a  similar
notation together with the name of the original  dissenting holder of the shares
and a transferee  shall acquire no rights in the corporation  except those which
the original dissenting shareholder had at the time of transfer.

      (g) Within  fifteen days after the  expiration  of the period within which
shareholders  may file their notices of election to dissent,  or within  fifteen
days after the proposed corporate action is consummated, whichever is later (but
in no case later than ninety days from the  shareholders'  authorization  date),
the corporation or, in the case of a merger or  consolidation,  the surviving or
new  corporation,  shall  make a  written  offer  by  registered  mail  to  each
shareholder  who has filed such  notice of  election  to pay for his shares at a
specified  price which the  corporation  considers to be their fair value.  Such
offer shall be accompanied by a statement  setting forth the aggregate number of
shares with respect to which  notices of election to dissent have been  received
and the aggregate number of holders of such shares.  If the corporate action has
been consummated, such offer shall also be accompanied by (1) advance payment to
each such shareholder who has submitted the certificates representing his shares
to the  corporation,  as provided in paragraph (f), of an amount equal to eighty
percent of the amount of such offer,  or (2) as to each  shareholder who has not
yet submitted his  certificates  a statement  that advance  payment to him of an
amount  equal to eighty  percent of the amount of such offer will be made by the
corporation  promptly  upon  submission  of his  certificates.  If the corporate
action has not been  consummated  at the time of the  making of the offer,  such
advance  payment  or  statement  as to  advance  payment  shall  be sent to each
shareholder  entitled  thereto  forthwith  upon  consummation  of the  corporate
action.  Every advance  payment or statement as to advance payment shall include
advice to the shareholder to the effect that acceptance of such payment does not
constitute a waiver of any dissenters'  rights.  If the corporate action has not
been  consummated  upon the  expiration  of the  ninety  day  period  after  the
shareholders'  authorization  date,  the  offer  may  be  conditioned  upon  the
consummation  of such  action.  Such  offer  shall be made at the same price per
share to all  dissenting  shareholders  of the same  class,  or if divided  into
series,  of the same series and shall be  accompanied  by a balance sheet of the
corporation  whose  shares  the  dissenting  shareholder  holds as of the latest
available date,  which shall not be earlier than twelve months before the making
of such offer, and a profit and loss statement or statements for not less than a
twelve  month  period  ended  on the  date  of such  balance  sheet  or,  if the
corporation was not in existence  throughout  such twelve month period,  for the
portion thereof during which it was in existence. Notwithstanding the foregoing,
the  corporation  shall not be required to furnish a balance sheet or profit and
loss  statement or statements to any  shareholder  to whom such balance sheet or
profit and loss statement or statements  were  previously  furnished,  nor if in




                                       B-2
<PAGE>

connection with obtaining the shareholders'  authorization for or consent to the
proposed  corporate  action  the  shareholders  were  furnished  with a proxy or
information  statement,   which  included  financial  statements,   pursuant  to
Regulation  14A or Regulation  14C of the United States  Securities and Exchange
Commission.  If  within  thirty  days  after  the  making  of  such  offer,  the
corporation making the offer and any shareholder agree upon the price to be paid
for his  shares,  payment  therefor  shall be made  within  sixty days after the
making of such  offer or the  consummation  of the  proposed  corporate  action,
whichever is later,  upon the surrender of the  certificates for any such shares
represented by certificates.

      (h) The following  procedure shall apply if the corporation  fails to make
such offer within such period of fifteen  days, or if it makes the offer and any
dissenting  shareholder or shareholders  fail to agree with it within the period
of thirty days thereafter upon the price to be paid for their shares:

            (1) The corporation  shall,  within twenty days after the expiration
of  whichever  is  applicable  of the two periods  last  mentioned,  institute a
special  proceeding in the supreme  court in the judicial  district in which the
office of the  corporation  is located  to  determine  the rights of  dissenting
shareholders  and to fix the  fair  value of their  shares.  If,  in the case of
merger  or  consolidation,  the  surviving  or  new  corporation  is  a  foreign
corporation without an office in this state, such proceeding shall be brought in
the county where the office of the domestic corporation,  whose shares are to be
valued, was located.

            (2) If the  corporation  fails to institute such  proceeding  within
such period of twenty  days,  any  dissenting  shareholder  may  institute  such
proceeding  for the same purpose not later than thirty days after the expiration
of such twenty day period.  If such  proceeding  is not  instituted  within such
thirty day  period,  all  dissenter's  rights  shall be lost  unless the supreme
court, for good cause shown, shall otherwise direct.

            (3) All dissenting shareholders, excepting those who, as provided in
paragraph  (g), have agreed with the  corporation  upon the price to be paid for
their  shares,  shall be made parties to such  proceeding,  which shall have the
effect of an action quasi in rem against their  shares.  The  corporation  shall
serve a copy of the petition in such proceeding upon each dissenting shareholder
who is a resident of this state in the manner provided by law for the service of
a summons, and upon each nonresident dissenting shareholder either by registered
mail and  publication,  or in such  other  manner as is  permitted  by law.  The
jurisdiction of the court shall be plenary and exclusive.

            (4) The court shall determine  whether each dissenting  shareholder,
as to whom the  corporation  requests the court to make such  determination,  is
entitled to receive payment for his shares.  If the corporation does not request
any such determination or if the court finds that any dissenting  shareholder is
so entitled,  it shall  proceed to fix the value of the shares,  which,  for the
purposes of this section, shall be the fair value as of the close of business on
the day prior to the shareholders'  authorization date. In fixing the fair value
of the shares,  the court shall  consider the nature of the  transaction  giving
rise to the shareholder's right to receive payment for shares and its effects on
the corporation and its shareholders, the concepts and methods then customary in
the relevant  securities  and financial  markets for  determining  fair value of
shares of a  corporation  engaging  in a similar  transaction  under  comparable
circumstances and all other relevant factors. The court shall determine the fair
value of the shares  without a jury and  without  referral  to an  appraiser  or
referee.  Upon  application by the  corporation or by any  shareholder  who is a
party to the  proceeding,  the court may,  in its  discretion,  permit  pretrial
disclosure,  including,  but not limited to,  disclosure of any expert's reports










                                       B-3
<PAGE>

relating to the fair value of the shares  whether or not intended for use at the
trial in the proceeding and  notwithstanding  subdivision (d) of section 3101 of
the civil practice law and rules.

            (5) The final order in the proceeding  shall be entered  against the
corporation  in  favor  of each  dissenting  shareholder  who is a party  to the
proceeding and is entitled thereto for the value of his shares so determined.

            (6) The final order shall  include an allowance for interest at such
rate as the court finds to be equitable,  from the date the corporate action was
consummated  to the date of payment.  In determining  the rate of interest,  the
court shall consider all relevant factors,  including the rate of interest which
the corporation would have had to pay to borrow money during the pendency of the
proceeding. If the court finds that the refusal of any shareholder to accept the
corporate offer of payment for his shares was arbitrary,  vexatious or otherwise
not in good faith, no interest shall be allowed to him.

            (7) Each  party to such  proceeding  shall  bear its own  costs  and
expenses,  including  the fees and  expenses  of its  counsel and of any experts
employed by it. Notwithstanding the foregoing, the court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees incurred by
the  corporation  against  any or all of the  dissenting  shareholders  who  are
parties to the  proceeding,  including any who have  withdrawn  their notices of
election as provided in paragraph  (e), if the court finds that their refusal to
accept the  corporate  offer was  arbitrary,  vexatious or otherwise not in good
faith. The court may, in its discretion, apportion and assess all or any part of
the  costs,  expenses  and  fees  incurred  by any  or  all  of  the  dissenting
shareholders  who are parties to the proceeding  against the  corporation if the
court  finds  any of the  following:  (A) that the fair  value of the  shares as
determined  materially exceeds the amount which the corporation  offered to pay;
(B) that no offer or required advance payment was made by the  corporation;  (C)
that the  corporation  failed to  institute  the special  proceeding  within the
period  specified  therefor;  or (D)  that  the  action  of the  corporation  in
complying  with its  obligations  as  provided in this  section  was  arbitrary,
vexatious  or  otherwise  not in good  faith.  In making  any  determination  as
provided  in clause  (A),  the  court  may  consider  the  dollar  amount or the
percentage, or both, by which the fair value of the shares as determined exceeds
the corporate offer.

            (8) Within sixty days after final  determination  of the proceeding,
the corporation shall pay to each dissenting  shareholder the amount found to be
due him, upon surrender of the certificates  for any such shares  represented by
certificates.

      (i) Shares  acquired  by the  corporation  upon the  payment of the agreed
value  therefor or of the amount due under the final order,  as provided in this
section, shall become treasury shares or be cancelled as provided in section 515
(Reacquired shares), except that, in the case of a merger or consolidation, they
may be held and disposed of as the plan of merger or consolidation may otherwise
provide.

      (j) No  payment  shall  be made to a  dissenting  shareholder  under  this
section at a time when the  corporation  is insolvent or when such payment would
make it insolvent.  In such event,  the  dissenting  shareholder  shall,  at his
option:

            (1) Withdraw  his notice of  election,  which shall in such event be
deemed withdrawn with the written consent of the corporation; or

            (2) Retain his status as a claimant  against the corporation and, if
it is liquidated, be subordinated to the rights of creditors of the corporation,
but have rights superior to the  non-dissenting  shareholders,  and if it is not







                                       B-4
<PAGE>

liquidated,  retain  his  right  to be paid  for his  shares,  which  right  the
corporation  shall be obliged to satisfy when the restrictions of this paragraph
do not apply.

            (3) The  dissenting  shareholder  shall  exercise  such option under
subparagraph  (1) or (2) by written  notice  filed with the  corporation  within
thirty days after the  corporation has given him written notice that payment for
his shares cannot be made because of the restrictions of this paragraph.  If the
dissenting   shareholder  fails  to  exercise  such  option  as  provided,   the
corporation  shall  exercise  the option by written  notice  given to him within
twenty days after the expiration of such period of thirty days.

       (k) The  enforcement by a shareholder of his right to receive payment for
his shares in the manner  provided  herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by virtue
of share  ownership,  except as provided in paragraph  (e), and except that this
section shall not exclude the right of such  shareholder to bring or maintain an
appropriate  action to obtain  relief on the ground that such  corporate  action
will be or is unlawful or fraudulent as to him.

      (l) Except as otherwise expressly provided in this section,  any notice to
be given by a corporation to a shareholder  under this section shall be given in
the manner provided in section 605 (Notice of meetings of shareholders).

      (m) This  section  shall  not  apply to  foreign  corporations  except  as
provided  in  subparagraph  (e)(2) of section 907  (Merger or  consolidation  of
domestic and foreign corporations).










































                                       B-5
<PAGE>
                                 REVOCABLE PROXY
                        THE DEWEY ELECTRONICS CORPORATION
 ---
|   |
| X |   PLEASE MARK VOTES
|   |   AS IN THIS EXAMPLE
 ---

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

      The undersigned hereby appoints FRANCES D. DEWEY AND JOHN H.D. DEWEY, or
either of them, with power of substitution, attorneys and proxies to represent
the undersigned at the annual meeting of stockholders of The Dewey Electronics
Corporation to be held on March 8, 2005 at 10 a.m. (Eastern Standard Time) at
the offices of the Corporation at 27 Muller Road, Oakland, New Jersey, and any
adjournments thereof with all power which the undersigned would possess if
personally present and to vote all shares of common stock of the Corporation
held by the undersigned, which may be entitled to vote at said meeting upon the
following matters and upon other matters as may come before the meeting.

   1. ELECTION OF DIRECTORS (except as marked to the contrary below)

      Alexander A. Cameron, Frances D. Dewey, John H.D. Dewey, LTG James M. Link
(USA Ret), Nathaniel Roberts

 ------             -------                 -------
|      | FOR       |       | WITHHOLD      |       | FOR ALL EXCEPT
 ------             -------                 -------

INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK "FOR
ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.

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


   2. SALE OF UNDEVELOPED AND UNUSED LAND

      The sale of approximately 68 acres of undeveloped and unused land owned by
the Corporation in Oakland, New Jersey to K. Hovnanian North Jersey
Acquisitions, L.L.C. ("Buyer"), pursuant to the Agreement of Sale between the
Corporation and Buyer dated December 29, 2004.

 ------             -------                 -------
|      | FOR       |       | WITHHOLD      |       | ABSTAIN
 ------             -------                 -------


      This proxy, when properly  executed,  will be voted in the manner directed
herein.  IF NO DIRECTION IS GIVEN,  THIS PROXY WILL BE VOTED FOR THE ELECTION OF
THE NOMINEES LISTED ABOVE AND FOR THE LAND SALE PROPOSAL.

      Please sign exactly as your name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a

<PAGE>

corporation, please sign in full corporate name by President, or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.


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

 ------------------------------------------------------------------------------
|                                    |    Date                                 |
|                                    |                                         |
|------------------------------------|-----------------------------------------|
|                                    |                                         |
|                                    |                                         |
|Stockholder sign below              |    Co-holder (if any) sign below        |
 ------------------------------------------------------------------------------


    Detach above card, sign, date and mail in postage paid envelope provided.
                        THE DEWEY ELECTRONICS CORPORATION

 ------------------------------------------------------------------------------
|                             PLEASE ACT PROMPTLY                              |
|                   SIGN, DATE & MAIL YOUR PROXY CARD TODAY                    |
 ------------------------------------------------------------------------------


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.


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