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 (Amendment No.   )

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 Under Rule 14a-12


                         Espey Mfg. & Electronics Corp.
--------------------------------------------------------------------------------
                (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):

[X]  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:

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2)   Aggregate number of securities to which transaction applies:

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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):

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4)   Proposed maximum aggregate value of transaction:

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5)   Total fee paid:

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[_]  Fee paid previously with preliminary materials:

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[_]  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.:

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     3)   Filing Party:

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     4)   Date Filed:

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<PAGE>

                         ESPEY MFG. & ELECTRONICS CORP.


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

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                          TO BE HELD NOVEMBER 20, 2006

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


                                                                October 17, 2006

To the Shareholders of

     ESPEY MFG. & ELECTRONICS CORP.:


     You are cordially  invited to attend the Annual Meeting of  Shareholders of
Espey Mfg. & Electronics Corp., which will be held at the Courtyard by Marriott,
11 Excelsior Avenue,  Saratoga Springs,  New York, on November 20, 2006, at 2:00
p.m., Eastern Standard Time, for the following purposes:

          1.   To elect three  Class A Directors  to serve for a three year term
               expiring  at the 2009 Annual  Meeting or until  their  respective
               successors are duly elected and qualify; and

          2.   To ratify  the  appointment  of  Rotenberg & Company,  LLP as the
               Company's  independent  public  accountants  for the fiscal  year
               ending June 30, 2007.

     No other business may be transacted at the meeting.

     The Board of Directors  has fixed the close of business on October 2, 2006,
as the record  date for the  purpose of  determining  shareholders  entitled  to
notice of, and to vote at, said meeting or any  adjournment  thereof.  The books
for transfer of the Company's capital stock will not be closed.

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


                                           By Order of the Board of Directors,

                                                /s/ PEGGY A. MURPHY

                                                  PEGGY A. MURPHY
                                                Corporate Secretary


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

<PAGE>

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

                                 PROXY STATEMENT


     The  enclosed  proxy is solicited by the Board of Directors of Espey Mfg. &
Electronics Corp. (the "Company") for use in voting at the Annual Meeting of the
Shareholders  of the  Company  to be  held  at the  Courtyard  by  Marriott,  11
Excelsior  Avenue,  Saratoga  Springs,  New York,  on November 20, 2006, at 2:00
p.m., Eastern Standard Time, and at any postponement or adjournment thereof, for
the purposes set forth in the attached Notice of Meeting. It is anticipated that
the Notice of Annual Meeting of Shareholders,  this Proxy Statement and the form
of proxy will be mailed on or about October 17, 2006.

                       VOTING AND REVOCABILITY OF PROXIES

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

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

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

                         RECORD DATE AND SHARE OWNERSHIP

     Only  holders of Common  Stock of record on the books of the Company at the
close of business  on October 2, 2006 will be  entitled to vote at the  meeting.
There were outstanding and entitled to vote on October 2, 2006, 2,312,596 shares
of Common Stock.

                              ELECTION OF DIRECTORS

     The Company's Certificate of Incorporation,  as amended,  provides that the
Board of  Directors  shall  consist  of not less  than  three nor more than nine
persons with the actual  number  determined  in  accordance  with the  Company's
bylaws.  The Certificate of  Incorporation  further provides that there shall be
three  classes  of  directors  (Class A,  Class B and Class C) with  overlapping
three-year  terms and that all  classes  shall be as  nearly  equal in number as
possible.

     The Board of Directors fixed the present number of directors at seven.  The
terms of three  Class A  Directors  expire  at the  Annual  Meeting.  There  are
presently two Class B Directors,  whose terms expire at the 2007 Annual Meeting,
and two Class C Directors, whose terms expire at the 2008 Annual Meeting.

     The Board of Directors has nominated three persons to stand for election as
Class A Directors.

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

                                       1
<PAGE>

     The  names and  business  experience  for the past five  years of the three
persons who have been  nominated by the Board of Directors to stand for election
as Class A Directors at the Annual  Meeting and the  remaining  directors  whose
terms are continuing until the 2007 or 2008 Annual Meeting appear below.

     The Board has  determined  that the Board  members  with the  exception  of
Howard Pinsley and Barry Pinsley are  independent in accordance with the listing
standards of the American Stock Exchange.

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

                  NOMINEES FOR CLASS A DIRECTORS -- SERVING FOR
              A THREE YEAR TERM EXPIRING AT THE 2009 ANNUAL MEETING

<TABLE>
<CAPTION>
                                                                                                   Period to
                                 Offices and                                                          Date
                                Positions Held                                                     Served as
     Name               Age      with Company          Principal Occupation or Employment           Director
     ----               ---      ------------          ----------------------------------           --------
<S>                    <C>      <C>                 <C>                                              <C>
Howard Pinsley (1) .....66      President, Chief    Howard Pinsley for more than the past             1992
                                Executive Officer   five years has been employed by the Company
                                and Chairman of     on a full-time basis as Program Director
                                the Board           prior to being elected Vice President-
                                                    Special Power Supplies on April 3, 1992. On
                                                    December 6, 1996, Mr. Pinsley was elected
                                                    to the position of Executive Vice President.
                                                    On June 9,1998 he was elected to the positions
                                                    of  President and Chief Operating Officer.
                                                    Subsequently he became Chief Executive Officer
                                                    and Chairman of the Board.


Alvin O. Sabo ..........63           --             Attorney engaged in private practice of law and   1999
                                                    Senior Partner of the law firm of Donohue,
                                                    Sabo, Varley & Armstrong, P.C. in Albany, NY
                                                    since 1980. Prior to that position, he was
                                                    Assistant Attorney General, State of New York,
                                                    Department of Law for eleven years.

Carl Helmetag ..........58           --             President and CEO of UVEX Sports Inc. in          1999
                                                    Cranston, RI. From 1996 to 1999, he was
                                                    President and CEO of HEAD USA Inc. Prior to
                                                    that position, Mr. Helmetag was Executive
                                                    Vice President and then President at Dynastar
                                                    Inc. from 1978 to 1996. He is an MBA graduate
                                                    from The Wharton School of Business,
                                                    University of Pennsylvania.
</TABLE>

                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                   Period to
                                 Offices and                                                          Date
                                Positions Held                                                     Served as
     Name               Age      with Company          Principal Occupation or Employment           Director
     ----               ---      ------------          ----------------------------------           --------
<S>                    <C>      <C>                 <C>                                              <C>
Barry Pinsley (1) ......65           --             Certified Public Accountant who for five         1994
                                                    years acted as a consultant to the
                                                    Company prior to his election as a Vice
                                                    President. Special Projects
                                                    on March 25, 1994. On December 6, 1997, Mr.
                                                    Pinsley was elected to the position of Vice
                                                    President-Investor Relations and Human
                                                    Resources, from which he resigned on June 9,
                                                    1998. He continued as a non-executive officer
                                                    through December 31, 2005. Mr. Pinsley was a
                                                    practicing Certified Public Accountant in
                                                    Saratoga Springs, New York since 1975, and
                                                    is currently semi-retired.

Seymour Saslow .........85           --             Mr. Saslow was Senior Vice President from        1992
                                                    1992 until December 31, 1999. From 1973
                                                    until being elected Senior Vice President, he
                                                    served as Vice President. He joined the company
                                                    on July 22, 1952. Mr. Saslow graduated from
                                                    the City College of New York in 1944 with a
                                                    degree of the Institute of Electrical and
                                                    Electronics Engineers Inc. He holds many
                                                    patents and serves on the board of several
                                                    charitable organizations
</TABLE>

                  CONTINUING CLASS C DIRECTORS -- SERVING FOR A
               THREE YEAR TERM EXPIRING AT THE 2008 ANNUAL MEETING
<TABLE>
<CAPTION>
                                                                                                   Period to
                                 Offices and                                                          Date
                                Positions Held                                                     Served as
     Name               Age      with Company          Principal Occupation or Employment           Director
     ----               ---      ------------          ----------------------------------           --------
<S>                    <C>      <C>                 <C>                                              <C>
Paul J. Corr ...........62           --             Certified Public Accountant and a Professor      1992
                                                    of Business, Skidmore College, in Saratoga
                                                    Springs, NY, since 1981, currently holding
                                                    the position of Associate Professor. Mr.
                                                    Corr is also a shareholder in the Latham,
                                                    New York accounting firm of Rutnik & Corr, P.C.
                                                    and he has been a principal at Capital Financial
                                                    Advisors, LLC since 2003.

Michael W. Wool (2) ....60           --             Attorney engaged in private practice of law and  1990
                                                    Senior Partner since 1982 in the law firm of
                                                    Langrock, Sperry & Wool,  with offices in
                                                    Burlington, VT and Middlebury, VT. Mr. Wool also
                                                    serves on the board of the New England Board of
                                                    Higher Education and the Burlington Boys and
                                                    Girls Club.
</TABLE>

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

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

(2)  Mr. Wool's law firm  performed  legal  services for the Company  during the
     fiscal year ended June 30, 2006 and may perform additional  services during
     the current fiscal year in connection with the Company's ESOP. See
     "Certain Relationships and Related Transactions."

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

                                       3
<PAGE>

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

     James  Clemens,  57, Vice  President of Sales and  Marketing of the Company
since March 1, 2004. He was elected as an executive officer on May 19, 2006. Mr.
Clemens held various  positions  in the power  systems  industry for seven years
prior to joining the  Company.  From 1997 to 1999,  he was  President  and Chief
Executive Officer of Ling Electronics,  Inc., which was acquired by SatCon Power
Systems.  He then served as  Transition  Manager and  consultant to SatCon until
2003.

     Katrina L.  Sparano,  35,  Assistant  Treasurer  and  Principal  Accounting
Officer of the Company  since  November  12,  2004.  Ms.  Sparano is a Certified
Public  Accountant.  Prior to joining the Company on July 29, 2004,  she was the
Assistant Controller for Cambridge Heart, Inc.

     Peggy A. Murphy,  48, Secretary of the Company since December 11, 1998. She
has been  employed by the Company as Director of Human  Resources  since October
1998.

     David A. O'Neil,  41,  Treasurer  and  Principal  Financial  Officer  since
January 4, 2000.  Mr.  O'Neil is a Certified  Public  Accountant  who,  prior to
joining the Company, was a Senior Manager at the accounting firm of KPMG LLP.

     The terms of office of Ms. Peggy A. Murphy,  Mr. David A. O'Neil, Mr. James
Clemens and Mrs.  Katrina Sparano are until the next annual meeting of the Board
of Directors  unless  successors are sooner appointed by the Board of Directors.
The term of office of Mr. Howard Pinsley is subject to his employment  agreement
with the Company. See "Employment Contracts and Termination of Employment."

                   BOARD OF DIRECTORS MEETINGS AND COMMITTEES

     During  the  Company's  fiscal  year  ended  June 30,  2006,  the  Board of
Directors  held a total of four  meetings,  and  each  director  then in  office
attended  at least  75% of such  meetings.  Under  the  policies  of the  Board,
Directors  are  expected  to attend  regular  Board  meetings,  Board  committee
meetings,  as  applicable,  and  the  annual  stockholder  meeting.  All  of the
Company's directors attended the 2005 Annual Meeting.

     The Board has a standing  Audit  Committee  whose members are Paul J. Corr,
Chairman,  Alvin O. Sabo and Carl  Helmetag.  The  functions  of this  Committee
include reviewing the engagement of the independent  accountants,  the scope and
timing of the audit and any non-audit services to be rendered by the independent
accountants,  reviewing  with the  independent  accountants  and  management the
Company's policies and procedures with respect to internal auditing,  accounting
and financial controls, and reviewing the report of the independent  accountants
upon  completion of its audit.  During the fiscal year ended June 30, 2006,  the
Audit Committee held five meetings,  and each Committee member attended at least
75% of such meetings.

     The  Board has a  standing  Nominating  Committee  whose  members  are Carl
Helmetag,  Chairman,  Michael  Wool,  and Paul J.  Corr.  The  function  of this
Committee is to identify and recommend to the Board  individuals  for nomination
to fill  vacancies in, and for  renomination  to,  positions as Directors of the
Corporation.  During fiscal year ended June 30, 2006, the  Nominating  Committee
held one meeting and each committee member attended the meeting.

     The Board has determined that all of the members of the Audit Committee and
the Nominating Committee meet the independence  criteria for audit committee and
nominating  committee  members  as set  forth in the  listing  standards  of the
American  Stock  Exchange.  The  Board  has  further  determined  that Mr.  Corr
qualifies as an audit committee financial expert in accordance with the rules of
the United States Securities and Exchange Commission ("SEC").

     The Board has a standing Stock Option  Committee  whose current members are
Paul J. Corr, Chairman, Howard Pinsley, and Barry Pinsley. The functions of this
Committee include  determining to whom, and the time or times at which,  options
will be granted,  the number of shares of common stock that underlie each option
and the exercise price and vesting  schedule for options granted pursuant to the
Company's  2000 Stock Option  Plan.  During the fiscal year ended June 30, 2006,
the Stock Option  Committee held two meetings and each committee member attended
such meetings.

     The Board also has a  Succession  Committee  and a Mergers and  Acquisition
Committee,  members of which are Paul J. Corr, Howard Pinsley, Alvin O. Sabo and
Michael Wool.

                            COMPENSATION OF DIRECTORS

     Directors of the Company receive an annual fee in the amount of $21,000 for
being a member of the Board of  Directors.  Each  Director  who also serves as a
member of the Audit Committee is compensated an additional annual fee of $5,000.
Each director who serves as a member of the Succession  Committee or the Mergers
and  Acquisition   Committee  is  compensated  an  additional  $2,500  for  each
committee. These fees are paid monthly to the Directors.  Executive officers who
also serve on the Company's Board of Directors do not receive director's fees.

                                       4
<PAGE>

     Directors  are also  eligible to receive stock options under the 2000 Stock
Option Plan at the  discretion of the Stock Option  Committee.  The Stock Option
Committee  consists of three appointed board members.  At June 30, 2006, members
of the Board of  Directors  held the  following  number of  unexercised  options
granted under the Plan:

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

Seymour Saslow                     4,000                       $9.25 - 17.80

Barry Pinsley                      2,800                       17.36 - 17.80

Michael W. Wool                    7,200                        8.98 - 17.80

Paul J. Corr                       5,200                       11.25 - 17.80

Alvin O. Sabo                      4,200                       11.25 - 17.80

Carl Helmetag                      5,200                        9.25 - 17.80

Howard Pinsley                    20,000                        9.25 - 17.80

The above options have exercise dates ranging from March 1, 2003 and expiring on
May 19, 2016.

                       COMPENSATION OF EXECUTIVE OFFICERS

     The following  table  summarizes  the annual  compensation  for each of the
fiscal years ended June 30, 2006,  June 30, 2005,  and June 30, 2004 received by
the Company's Chief Executive  Officer (or acting in a similar capacity) and the
other highest paid executive officers of the Company that received over $100,000
in total compensation as of June 30, 2006.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                     Long Term
                                                                                    Compensation
                                                                                    ------------
                                                                                     Securities
     Name and                                          Annual Compensation           Underlying       All Other
Principal Position            Fiscal Year          Salary              Bonus         Options (#)   Compensation(1)
------------------            -----------          ------              -----         -----------   ---------------
<S>                              <C>              <C>                 <C>               <C>           <C>

Howard Pinsley                   2006             $198,024            $30,000           8,000         $  8,922
  President and                  2005             $191,976            $20,000           4,000         $  7,681
  Chief Executive Officer        2004             $190,120            $20,000               0         $ 34,826

David A. O'Neil                  2006             $119,082            $15,000           3,600         $  3,338
  Treasurer and Principal        2005             $113,830            $12,500           1,600         $  2,932
  Financial Officer              2004             $112,250            $12,500               0         $ 13,101

James Clemens                    2006             $132,540            $ 5,000           3,600               --
  Vice President
  Sales and Marketing

</TABLE>

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

     The following  table sets forth  information  with respect to  compensation
plans  maintained by the Company,  as of June 30, 2006, under which Common Stock
of the Company is authorized for issuance:

<TABLE>
<CAPTION>
                        SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

                              Number of securities to           Weighted-average          Number of Securities remaining
                              be issued upon exercise           exercise price of      available for future issuance under
                              of outstanding options,         outstanding options,     equity compensation plan (excluding
Plan Category                   warrants and rights            warrants and rights      securities reflected in column (a))
---------------------------------------------------------------------------------------------------------------------------
                                        (a)                             (b)                              (c)
---------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                              <C>                             <C>
Equity compensation
    plans approved by
    security holders                  146,200                          14.02                           96,600
Equity compensation
    plans not approved
    by security holders                  --                               --                               --
                                      -------                                                          ------
            Total                     146,200                                                          96,600
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       5
<PAGE>

                           GRANTS IN LAST FISCAL YEAR
     The following  table sets forth  information  concerning the grant of stock
options to the named executive officers during the year ended on June 30, 2006.

<TABLE>
<CAPTION>
                                                                                    Potential
                                                                                    Realizable
                                                                                     Value at
                                                                                   Assumed Annual
                     Number of     Percent of                                     Rates of Stock
                    Securities    Total Options                                 Price Appreciation
                    Underlying     Granted to      Exercise                     for Option Term (1)
                      Options     Employees in      Price      Expiration      ---------------------
      Name            Granted      Fiscal Year      ($/SH)        Date         5% ($)        10% ($)
      ----            -------      -----------      ------        ----         ------        -------
<S>                    <C>            <C>           <C>           <C>          <C>          <C>
Howard Pinsley         4,000          10.8%         $17.36        2015         43,670       110,669
                       4,000          10.2%         $17.80        2016         44,777       113,474

David A. O'Neil        1,600           4.3%         $17.36        2015         17,468        44,268
                       2,000           5.1%         $17.80        2016         22,389        56,737

James Clemens          1,600           4.3%         $17.36        2015         17,468        44,268
                       2,000           5.1%          17.80        2016         22,389        56,737
</TABLE>

-----------------
(1)  Amounts  reflect  certain  assumed rates of  appreciation  set forth in the
     Commission's executive compensation disclosure rules. Actual gains, if any,
     on stock option  exercises will depend on future  performance of the Common
     Stock. No assurance can be made that the amounts reflected in these columns
     will be achieved.  The values in these columns  assume that the fair market
     value on the date of grant of each option was equal to the  exercise  price
     thereof.

     The following table sets forth information concerning the exercise of stock
options by the named executive  officers during the year ended June 30, 2006 and
the year-end value of unexercised options:

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

<TABLE>
<CAPTION>
                                               Number of Securities         Value of Unexercised
                     Shares                   Underlying Unexercised            In-the-Money
                    Acquired                        Options at                   Options at
                       On          Value        Fiscal Year-End (#)          Fiscal Year-End ($)
      Name          Exercise     Realized    Exercisable/Unexercisable    Exercisable/Unexercisable
      ----          --------     --------    -------------------------    -------------------------
<S>                     <C>          <C>            <C>                          <C>
James Clemens           0            0              800/3,600                     4,360/0

Howard Pinsley        4,000        43,280         16,000/8,000                   109,600/0

David A. O'Neil         0            0             4,800/3,600                    31,480/0
</TABLE>

In  accordance  with the 2000 Stock Option Plan the above  options have exercise
dates that range from March 1, 2003 through and expiring on May 19, 2016.

                                    INSURANCE

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

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

                       EMPLOYEE RETIREMENT PLAN AND TRUST

     Under the  Company's  ESOP,  approved by the Board of  Directors on June 2,
1989, effective July 1, 1988, all non-union employees of the Company,  including
the Company's executive and non-executive  officers are eligible to participate.
The ESOP is a  non-contributory  plan,  which is designed to invest primarily in
shares  of  common  stock  of the  Company.  Certain  technical  amendments  not
considered  material were adopted  effective as of June 10, 1994,  July 1, 2003,
and July 1, 2005.

                                       6
<PAGE>

     Of the  446,418  shares  of  common  stock  of  the  Company  allocated  to
participants  of the ESOP as of June 30, 2006,  23,460 shares were  allocated to
Howard Pinsley,  5,699 shares were allocated to David A. O'Neil and 5,301 shares
were allocated to Barry Pinsley and 774 shares were allocated to James Clemens.

               EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT

     The Company  entered into an agreement with Howard  Pinsley,  President and
CEO as of May 25, 2006 which extended an agreement  originally effective July 1,
2002. The contract  allows Mr.  Pinsley,  upon his resignation or termination as
chief executive officer, to become a non-executive  officer of the Company for a
period of thirty-six months. In consideration for services to be provided by Mr.
Pinsley  for the  equivalent  of five  days a month  after  his  resignation  or
termination,  and  the  performance  of  such  other  duties  as are  reasonably
requested by the Company,  he will receive full  benefits plus $15,000 per month
for the first  three  months,  and  $4,333  per month for the next  thirty-three
consecutive months. The number of days of service required by Mr. Pinsley may be
reduced to a number not less then two, provided,  however, in no event shall the
reduction  trigger  a  separation  from  service  while  Mr.  Pinsley  is a "key
employee" for the purposes of Section 409A of the Internal Revenue Code of 1986,
as amended the agreement expires on December 31, 2008.

                             AUDIT COMMITTEE REPORT

     The  Audit  Committee  of the  Board  of  Directors  (the  "Committee")  is
comprised of three  independent  directors and operates under a written charter,
adopted by the Board on May 13, 2005.

     In  fulfilling  its  responsibilities,   the  Committee  has  reviewed  and
discussed the Company's audited consolidated financial statements for the fiscal
year ended June 30, 2006 with management and the independent auditors.

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

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

     In reliance on the reviews and discussions referred to above, the Committee
recommended  to the Board of Directors that the audited  consolidated  financial
statements  referred to above be included in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 2006.

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

                              NOMINATING COMMITTEE

     The  Nominating  Committee  of the  Board  of  Directors  (the  "Nominating
Committee")  is comprised of three  independent  directors and operates  under a
written charter,  which was most recently filed with the SEC as Exhibit B to the
Company's  Proxy  Statement for its Annual  Meeting held on November 12, 2004. A
copy of the charter is available on the Company's website, www.espey.com,  under
                                                           -------------
the tab  "Investors"  by requesting a copy of an SEC report and then clicking on
the Definitive Proxy Statement filed October 12, 2004.

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

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

     The  Nominating  Committee  will  consider  bona  fide  recommendations  by
shareholders as to potential Director nominees,  who meet the above standards. A
shareholders  wishing  to submit  such a  recommendation  should  send a letter,
postmarked no

                                       7
<PAGE>

later than 120 days prior to the date on which the  Company  annual  meeting was
held during the prior year,  to the  Secretary of the  Company.  The letter must
identify its writer as a shareholders  of the Company,  provide  evidence of the
writer's stock ownership and provide:

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

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

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

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

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

     All nominees for election at this Annual Meeting were previously elected by
the shareholders and are standing for re-election.

                    SHAREHOLDER COMMUNICATIONS WITH THE BOARD

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

                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The  following  table sets forth  information  regarding  ownership  of the
Company's  outstanding  Common Stock as of September 30, 2006, by each person or
group who is known to the Company to be the  beneficial  owner of more than five
percent of the outstanding shares of Common Stock.

<TABLE>
<CAPTION>

Title                   Name and Address of                       Amount and Nature          Percent
Class                    Beneficial Owner                      of Beneficial Ownership      of Class
-----                    ----------------                      -----------------------      --------
<S>                 <C>                                               <C>                      <C>
Common Stock       Franklin Advisory Services, LLC                156,000 - Direct (1)         6.7%
                   777 Mariners Island Blvd
                   P.O. Box 7777 San Mateo, CA 94403-7777

Common Stock       Espey Mfg. & Electronics Corp.                 718,369 - Direct (2)        31.0%
                   Employee Retirement Plan and Trust
                   233 Ballston Ave
                   Saratoga Springs, NY 12866

Common Stock       Advisory Research, Inc.                        190,000 - Direct (3)         8.2%
                   180 North Stetson St.
                   Suite 5780
                   Chicago, IL 60601

Common Stock       Howard Pinsley,                                101,268 - Direct (4)         5.4%
                   233 Ballston Avenue                           23,460 - Indirect (4)
                   Saratoga Springs, NY 12866
</TABLE>

---------------
(1)  The  information as to the number of shares of Common Stock and the percent
     of class ownership of the Company that may be deemed  beneficially owned by
     Franklin  Advisory  Services,  LLC  ("Franklin")  is from the Schedule 13G,
     dated   February   4,  2004  filed  with  the   Securities   and   Exchange
     Commission (the "SEC").  The Franklin  statement  indicated that Franklin's
     investment "advisory  subsidiaries," have sole voting and dispositive power
     with  respect to all of the shares of Common Stock shown in the table above
     for Franklin.  The Franklin  statement  indicates that the Common Stock set
     forth

                                       8
<PAGE>

     in the  table  is  beneficially  owned  by one or more  open or  closed-end
     investment  companies or other managed accounts which are advised by direct
     and indirect Franklin investment advisory subsidiaries.  The statement also
     indicated that it filed the Schedule 13G on behalf of itself and Franklin's
     principal shareholders,  Charles B. Johnson and Rupert H. Johnson, Jr. (the
     "Principal Shareholders"), all of which are deemed beneficial owners of the
     shares of Common Stock shown in the above table for Franklin.  Franklin and
     the  Principal  Shareholders  disclaim any economic  interest or beneficial
     ownership in any of the Common Stock shown in the table for Franklin.

(2)  The  shares  of  common  stock  owned by the ESOP  Trust  are  voted by the
     Trustees in the manner directed by the ESOP Committee. The Trustees, Howard
     Pinsley and Peggy A. Murphy, are the Chairman of the Board, Chief Executive
     Officer  and  President  of the  Company  and  Secretary  of  the  Company,
     respectfully.  The ESOP  Committee,  which  is  appointed  by the  Board of
     Directors, is comprised of Mr. Howard Pinsley, Ms. Murphy, Director Michael
     W. Wool and David A. O'Neil, the Treasurer and Principal  Financial Officer
     of the  Company.  As to shares that have been  allocated to the accounts of
     participants  in the ESOP,  the Trustees  are directed by the  Committee to
     vote such shares in accordance with instructions of the participants. As to
     unallocated shares and allocated shares for which voting  instructions have
     not been received from participants, the Committee instructs the Trustee to
     vote  such  votes   proportionately  to  the  shares  as  to  which  voting
     instructions have been received.  As of September 30, 2006,  444,202 shares
     were  allocated to the  accounts of  participants  and 274,167  shares were
     unallocated.

(3)  The  information as to the number of shares of Common Stock and the percent
     of class ownership of the Company that may be deemed  beneficially owned by
     advisory  clients  of  Advisory  Research,  Inc.  ("Advisory")  is from the
     Schedule  13G dated  February  14,  2006  filed with the SEC.  Advisory,  a
     registered  investment advisor,  is deemed to have beneficial  ownership of
     190,000  shares of the Company's  Common Stock as of February 14, 2006, all
     of which  shares  are held in  Advisory  investment  companies,  trusts and
     accounts.  Advisory,  in its role as  investment  advisor  and/or  manager,
     reported sole voting power with respect to 190,000 shares.

(4)  This  information  is from Form 4 dated  August 2, 2006 filed with the SEC.
     Indirect  shares  represent  stock being held in the Company  ESOP.  Direct
     shares  include  options to acquire  8,000 shares of Common Stock which are
     exercisable within 60 days.

                        SECURITY OWNERSHIP OF MANAGEMENT

     The  following  information  is  furnished  as of October  6, 2006  (unless
otherwise  indicated),  as to each  class of equity  securities  of the  Company
beneficially  owned by all Directors and Executive Officers and by Directors and
Executive Officers of the Company as a Group:

<TABLE>
<CAPTION>

Title              Name and Address of                  Amount and Nature              Percent
Class               Beneficial Owner                 of Beneficial Ownership          of Class
-----               ----------------                 -----------------------          --------
<S>                <C>                                     <C>                             <C>
Common Stock       James Clemens ................           800-Direct                      *
                                                            774-Indirect (2)

Common Stock       Paul J. Corr .................         6,400-Direct (1)                  *

Common Stock       Carl Helmetag ................        10,900-Direct (1)                  *

Common Stock       Peggy A. Murphy ..............         3,600-Direct (1)                  *
                                                          7,951-Indirect (2)

Common Stock       David A. O'Neil ..............         9,600-Direct (1)                  *
                                                          5,699-Indirect (2)

Common Stock       Barry Pinsley ................        59,660-Direct (1)               2.8%
                                                          5,301-Indirect (2)

Common Stock       Howard Pinsley ...............       101,268-Direct (1)               5.4%
                                                         23,460-Indirect (2)

Common Stock       Alvin O. Sabo ................         7,500-Direct (1)                  *

Common Stock       Seymour Saslow ...............        14,016-Direct (1)                  *

Common Stock       Katrina Sparano ..............           423-Indirect (2)                *

Common Stock       Michael W. Wool ..............         4,700-Direct (1)                  *

Common Stock       Officers and Directors .......       217,644-Direct (1)                11%
                   as a Group (13 persons)               42,834-Indirect (2)
</TABLE>

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

                                       9
<PAGE>

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

     Name of                Exercisable       Name of               Exercisable
     Beneficial Owner         Options         Beneficial Owner        Options
     ----------------         -------         ----------------        -------

     James Clemens               800          Howard Pinsley           8,000

     Paul Corr                  1,200         Alvin O. Sabo            1,000

     Carl Helmetag              2,400         Seymour Saslow           2,000

     Peggy A. Murphy            3,600         Michael W. Wool          4,000

     David A. O'Neil            4,800

(2)  Includes shares  allocated to named director or officer as of June 30, 2006
     as a participant in the Company's  ESOP.  Each such person has the right to
     direct the manner in which such  shares  allocated  to him or her are to be
     voted by the ESOP Trustee.

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

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Company's ESOP Trust owns 718,369 shares of the Company's  common stock
as of September 30, 2006, of which 444,202 were allocated to participants in the
ESOP.  On July 15, 2005,  the Company sold an additional  150,000  shares of its
common stock to the ESOP Trust for an aggregate purchase price of $4,335,000, or
$28.90,  per share.  The ESOP  borrowed  from the Company an amount equal to the
purchase  price.   The  loan  will  be  repaid  in  fifteen  (15)  equal  annual
installments  of principal and the unpaid  balance will bear interest at a fixed
rate of 6.25% per annum,  the "prime rate" as quoted in The Wall Street  Journal
on the date of closing.  The Board of  Directors  of the Company had  approved a
purchase price per share equal to a 5% discount on the average  trading price of
the common stock on the American Stock Exchange on the date before closing,  but
in no event greater than the fair market value of the stock as determined by the
ESOP  trustees,  in  reliance  upon a  "fairness  opinion"  from an  independent
valuation firm retained by the ESOP.

     Each year,  the Company makes  contributions  to the ESOP which are used to
make loan interest and principal payments to the Company. Following each payment
of principal on the loan, a portion of the  unallocated  shares held by the ESOP
are allocated to participants. Officers of the Company, including Howard Pinsley
who is also Chairman of the Board,  are eligible to  participate in the ESOP and
to have shares and cash allocated to their  accounts and  distributed to them in
accordance with the terms of the ESOP.

     The Company paid the law firm of Langrock,  Sperry & Wool, of which Michael
W. Wool,  a  director  of the  Company,  is a  partner,  a total of $19,658  and
$72,979,  for legal  services  during fiscal years ended June 30, 2006 and 2005,
respectively.  Included  in the  payment of $19,658  and $72,979 for fiscal year
ended June 30,  2006 and 2005,  was $9,085 and  $23,750,  respectively,  held in
trust  by the firm and paid to  other  service  providers  relating  to the ESOP
transaction described above.

                                 CODE OF ETHICS

     The Company has adopted a Code of Ethics  which is available on our website
at www.espey.com.
   -------------

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

     The Audit Committee has selected Rotenberg & Company,  LLP as the Company's
independent  public  accountants  for the  fiscal  year  ending  June 30,  2007.
Rotenberg  &  Company,  LLP was first  selected  by the Audit  Committee  as the
Company's  independent  public  accountants  for the fiscal year ending June 30,
2006.

     Unless otherwise  specified by the shareholders,  the shares represented by
their  properly   executed  proxies  will  be  voted  for  ratification  of  the
appointment  of  Rotenberg & Company,  LLP as  independent  accountants  for the
fiscal  year  ending  June 30,  2007.  The  Company is advised by said firm that
neither the firm nor any of its partners now has, or during the past three years
had, any direct financial  interest or material indirect  financial  interest or
any connection with the Company.

     A representative  of Rotenberg & Company,  LLP is expected to be present at
the Annual Meeting with the opportunity to make a statement if he or she desires
to do so and to be  available  to  respond  to  appropriate  questions  from the
shareholders.

                                       10
<PAGE>

     The Audit  Committee had determined not to re-engage KPMG LLP, which served
as the Company's  independent  accountants  for the fiscal years ending June 30,
2004 and June 30, 2005. There were no disagreements  with KPMG LLP on any matter
of accounting  principles  or  practices,  financial  statement  disclosure,  or
auditing scope or procedure.  Rather, the Audit Committee determined that if was
in the  Company's  best  interest to seek audit  services  from a  regional,  as
opposed to one of the "big four" accounting firms.

     THE  BOARD  OF  DIRECTORS   RECOMMENDS  A  VOTE  FOR  RATIFICATION  OF  THE
APPOINTMENT OF ROTENBERG & COMPANY,  LLP AS INDEPENDENT  PUBLIC  ACCOUNTANTS FOR
THE COMPANY FOR FISCAL YEAR ENDING JUNE 30, 2007.

     The  Company's   Audit  Committee  has  had  policies  and  procedures  for
pre-approving all audit and non-audit work performed by KPMG LLP and Rotenberg &
Company  LLP for the  fiscal  year ended  June 30,  2005 and 2006  respectively.
Specifically,  the Audit  Committee  has  pre-approved  the use of  Rotenberg  &
Company LLP for  performance of audit  services and detailed,  specific types of
services within the following  categories of audit-related and tax services.  In
each other case,  the Audit  Committee  requires  management to obtain  specific
pre-approval  from the Audit Committee for any other work to be performed by its
outside auditors.

     The  aggregate  fees  billed  for  professional  services  by KPMG  LLP and
Rotenberg  & Company  LLP in the  fiscal  years  ended  June 30,  2005 and 2006,
respectively, for these various services were:

     TYPES OF FEES                              2006                 2005
                                                ----                 ----
                                            Amount Billed        Amount Billed
                                            -------------        -------------

     (1) Audit Fees                           $ 84,900             $ 79,850

     (2) Audit Related Fees                       None                 None

     (3) Tax Fees                               12,900               13,450

     (4) All Other Fees                         10,750                 None
                                              --------             --------

     Total                                    $108,550             $ 93,300
                                              ========             ========

     In the  above  table,  in  accordance  with  the  Securities  and  Exchange
Commission's  definitions and rules,  "audit fees" are fees the Company paid for
professional  services  for the  audit  of the  Company's  financial  statements
included in Form 10-K and review of financial statements included in Form 10-Qs,
and for services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements;  "audit-related  fees" are fees
for assurance and related  services that are related to the  performance  of the
audit of the Company's  employee benefit plan financial  statements;  "tax fees"
are fees for tax compliance,  tax advice and tax planning;  and "all other fees"
are fees paid to KPMG LLP for services rendered in connection with the review of
Form S-8 and issuance of consent  related to the Espey Mfg. & Electronics  Corp.
2000 Stock Option  Plan.  100% of the services set forth in sections (1) through
(4) above were approved by the Audit Committee in accordance with its charter.

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

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's directors,  executive officers,  and persons who own more than ten
percent  of a  registered  class of the  Company's  equity  securities,  to file
reports of beneficial  ownership and changes in  beneficial  ownership  with the
Securities  and Exchange  Commission.  Based solely upon its review of copies of
such  reports  received by it, or upon  written  representations  obtained  from
certain reporting  persons,  the Company believes that its officers,  directors,
and  stockholders  who  own  more  than  ten  percent  of the  Company's  equity
securities  complied with all Section 16(a) filing  requirements  for the fiscal
year ended June 30, 2006.

                                 ANNUAL REPORTS

     The Annual  Report of the Company to the  shareholders  for the fiscal year
ended June 30, 2006,  including  financial  statements,  accompanies  this Proxy
Statement. Such financial statements are not incorporated herein by reference.

     A copy of the Company's Annual Report on Form 10-KSB  (including  financial
statements and schedules  thereto) for the fiscal year ended June 30, 2006 filed
with the Securities and Exchange Commission will be provided without charge upon
the  written  request  of  shareholders  to  Espey  Mfg.  &  Electronics  Corp.,
attention:  Investor Relations,  233 Ballston Avenue, Saratoga Springs, New York
12866.  The  Company's  Form  10-KSB for the fiscal year ended June 30, 2006 can
also be  viewed  electronically  through  a link  at the  Company's  website  at
www.espey.com.
-------------

                                       11
<PAGE>


                             SHAREHOLDER PROPOSALS

     Any shareholder proposal which may be a proper subject for inclusion in the
proxy  statement  and for  consideration  at the  2007  Annual  Meeting  must be
received by the Company at its principal executive office no later than June 17,
2007,  if it is to be included in the Company's  2007 proxy  statement and proxy
form. In addition,  the Company's  bylaws outline  procedures that a shareholder
must  follow  to  nominate   directors  or  to  bring  other   business   before
shareholders' meetings.

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

                                            By Order of the Board of Directors,

                                            /S/ HOWARD PINSLEY

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

October 17, 2006
Saratoga Springs, New York




                                       12
<PAGE>

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

                         ESPEY MFG. & ELECTRONICS CORP.


                                  PROXY FOR THE
                       2006 ANNUAL MEETING OF SHAREHOLDERS
                                November 20, 2006

                                     COMMON

The undersigned hereby appoints Paul Corr and Seymour Saslow as Proxies, each
with the power to appoint his substitute, and hereby authorizes them or any one
of them to represent and to vote, as designated below, all the shares of common
stock of ESPEY MFG. & ELECTRONICS CORP. which the undersigned would be entitled
to vote if personally present at the 2006 Annual Meeting of Shareholders to be
held on November 20, 2006 or any adjournment thereof.

1.   TO ELECT THREE CLASS A DIRECTORS TO SERVE FOR A THREE YEAR TERM EXPIRING AT
     THE 2009  ANNUAL  MEETING  OR  UNTIL  HIS  SUCCESSOR  IS DULY  ELECTED  AND
     QUALIFIES.

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

             HOWARD PINSLEY      ALVIN O. SABO    CARL HELMETAG

          The Board of Directors recommends a vote FOR these nominees.
                                                   ---

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

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

2.   TO RATIFY the  appointment of Rotenberg & Company,  LLP as the  independent
     public accountants of the Company for fiscal year ending June 30, 2007.

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

           The Board of Directors recommends a vote FOR this proposal.
                                                    ---

               No other business may be transacted at the meeting.

                                                        ------------------------
         Please be sure to sign and date                | Date                 |
           this Proxy in the box below.                 |                      |
--------------------------------------------------------------------------------
|                                                                              |
|                                                                              |
-----------Shareholder sign above----------Co-holder (if any) sign above-------

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

                         ESPEY MFG. & ELECTRONICS CORP.

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

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

PLEASE MARK,  SIGN,  DATE AND RETURN THE PROXY CARD PROMPTLY  USING THE ENCLOSED
ENVELOPE.
--------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED,  PLEASE  CORRECT THE ADDRESS IN THE SPACE  PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.

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

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

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

<PAGE>


           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

                         ESPEY MFG. & ELECTRONICS CORP.


                                  PROXY FOR THE
                       2006 ANNUAL MEETING OF SHAREHOLDERS
                                November 20, 2006

                                      ESOP

The undersigned hereby appoints Paul Corr and Seymour Saslow as Proxies, each
with the power to appoint his substitute, and hereby authorizes them or any one
of them to represent and to vote, as designated below, all the shares of common
stock of ESPEY MFG. & ELECTRONICS CORP. which the undersigned would be entitled
to vote if personally present at the 2006 Annual Meeting of Shareholders to be
held on November 20, 2006 or any adjournment thereof.

1.   TO ELECT THREE CLASS A DIRECTORS TO SERVE FOR A THREE YEAR TERM EXPIRING AT
     THE 2009  ANNUAL  MEETING  OR  UNTIL  HIS  SUCCESSOR  IS DULY  ELECTED  AND
     QUALIFIES.

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

             HOWARD PINSLEY      ALVIN O. SABO    CARL HELMETAG

          The Board of Directors recommends a vote FOR these nominees.
                                                   ---

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

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2.   TO RATIFY the  appointment of Rotenberg & Company,  LLP as the  independent
     public accountants of the Company for fiscal year ending June 30, 2007.

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

           The Board of Directors recommends a vote FOR this proposal.
                                                    ---

               No other business may be transacted at the meeting.

                                                        ------------------------
         Please be sure to sign and date                | Date                 |
           this Proxy in the box below.                 |                      |
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|                                                                              |
|                                                                              |
-----------Shareholder sign above----------Co-holder (if any) sign above-------

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

                         ESPEY MFG. & ELECTRONICS CORP.

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

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

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